EXHIBIT 13.1

The summary information presented below at or
for each of the five years in the period ended December 31, 2009 is derived in
part from and should be read in conjunction with the consolidated financial
statements and notes thereto included with this Annual Report.

|                                   |  |                                                   |         |      |   |         |  |   |         | 
|---------------------------------- |  | ------------------------------------------------- | ------- | ---- | - | ------- |  | - | ------- | 
|                                   |  | SELECTED FINANCIAL AND OTHER DATA
 (in thousands) |        
|                                   |  |                                                   |         |      |   |         |  |   |         | 
|                                   |  | 2009                                              |         | 2008 |   | 2007    | 
|                                   |  |                                                   |         |      |   |         |  |   |         | 
|Selected Financial Condition Data: |  |                                                   |         |      |   |         |  |   |         | 
|Total assets                       |  | $                                                 | 329,922 |      | $ | 337,886 |  | $ | 318,131 | 
|Loans, net                         |  |                                                   | 285,617 |      |   | 298,453 |  |   | 281,042 | 
|Securities                         |  |                                                   | 14,677  |      |   | 8,588   |  |   | 6,165   | 
|Total cash and cash equivalents    |  |                                                   | 7,574   |      |   | 9,579   |  |   | 8,018   | 
|Total deposits                     |  |                                                   | 216,638 |      |   | 205,932 |  |   | 203,032 | 
|Borrowings                         |  |                                                   | 47,869  |      |   | 66,324  |  |   | 40,333  | 
|Total equity                       |  |                                                   | 60,365  |      |   | 60,344  |  |   | 69,037  | 
|Allowance for loan losses          |  |                                                   | 2,132   |      |   | 1,936   |  |   | 1,910   | 
|Non-performing loans               |  |                                                   | 1,915   |      |   | 1,273   |  |   | 1,003   | 
|Non-performing assets              |  |                                                   | 1,915   |      |   | 1,604   |  |   | 1,100   | 

|                                                     |  |      |        |      |   |        |   |   |        | 
|---------------------------------------------------- |  | ---- | ------ | ---- | - | ------ | - | - | ------ | 
|                                                     |  | 2009 |        | 2008 |   | 2007   |  
|                                                     |  |      |        |      |   |        |   |   |        | 
|Selected Operating Data:                             |  |      |        |      |   |        |   |   |        | 
|Interest income                                      |  | $    | 17,291 |      | $ | 17,954 |   | $ | 17,919 | 
|Interest expense                                     |  |      | 4,250  |      |   | 4,887  |   |   | 4,798  | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Net interest income                                  |  |      | 13,041 |      |   | 13,067 |   |   | 13,121 | 
|Provision for loan losses                            |  |      | 300    |      |   | 300    |   |   | 50     | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Net interest income after provision for
 loan losses |  |      | 12,741 |      |   | 12,767 |   |   | 13,071 | 
|Non-interest income:                                 |  |      |        |      |   |        |   |   |        | 
|Service charges and other income                     |  |      | 2,449  |      |   | 2,209  |   |   | 2,152  | 
|Net gain (loss) on securities transactions           |  |      | 73     |      |   | (265   | ) |   | 11     | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Total non-interest income                            |  |      | 2,522  |      |   | 1,944  |   |   | 2,163  | 
|Total non-interest expense                           |  |      | 10,689 |      |   | 10,410 |   |   | 10,572 | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Income before income taxes                           |  |      | 4,574  |      |   | 4,301  |   |   | 4,662  | 
|Income taxes                                         |  |      | 1,487  |      |   | 1,396  |   |   | 1,608  | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Net income                                           |  | $    | 3,087  |      | $ | 2,905  |   | $ | 3,054  | 
|                                                     |  |      |        |      |   |        |   |   |        | 

---



|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|------------------------------------------------------------------------ |  | ------------------------------------- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                         |  | At or for the Year Ended December 31, |       
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|                                                                         |  | 2009                                  |        | 2008 |   | 2007   |  
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|Selected Financial Ratios and Other Data                                 |  |                                       |        |      |   |        |   |   |        |  
|Performance Ratios:                                                      |  |                                       |        |      |   |        |   |   |        |  
|Basic earnings per share                                                 |  | $                                     | 0.47   |      | $ | 0.42   |   | $ | 0.39   |  
|Diluted earnings per share                                               |  | $                                     | 0.47   |      | $ | 0.41   |   | $ | 0.39   |  
|Return on average assets                                                 |  |                                       | 0.92   | %    |   | 0.89   | % |   | 1.00   | %
|Return on average equity                                                 |  |                                       | 5.27   | %    |   | 4.47   | % |   | 4.14   | %
|Net interest rate spread (tax equivalent)                                |  |                                       | 3.85   | %    |   | 3.90   | % |   | 4.06   | %
|Net interest margin (tax equivalent)                                     |  |                                       | 4.24   | %    |   | 4.40   | % |   | 4.74   | %
|Non-interest expense to average assets                                   |  |                                       | 3.18   | %    |   | 3.18   | % |   | 3.45   | %
|Efficiency ratio (1)                                                     |  |                                       | 68.95  | %    |   | 68.04  | % |   | 68.99  | %
|Average interest earning assets to average
 interest-bearing liabilities |  |                                       | 128.39 | %    |   | 130.86 | % |   | 139.84 | %
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|Capital Ratios:                                                          |  |                                       |        |      |   |        |   |   |        |  
|Average equity to average assets                                         |  |                                       | 17.46  | %    |   | 19.84  | % |   | 24.09  | %
|Equity to total assets at end of period                                  |  |                                       | 18.30  | %    |   | 17.86  | % |   | 21.70  | %
|Book value per share                                                     |  | $                                     | 8.88   |      | $ | 8.55   |   | $ | 8.86   |  
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|Regulatory Capital Ratios:                                               |  |                                       |        |      |   |        |   |   |        |  
|Core capital (Tier 1 capital) (2)                                        |  |                                       | 16.27  | %    |   | 17.15  | % |   | 20.24  | %
|Total risk-based capital (2)                                             |  |                                       | 23.04  | %    |   | 24.45  | % |   | 27.73  | %
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|Asset Quality Ratios:                                                    |  |                                       |        |      |   |        |   |   |        |  
|Nonperforming loans as percent of loans                                  |  |                                       | 0.67   | %    |   | 0.42   | % |   | 0.35   | %
|Nonperforming assets as percent of total
 assets                         |  |                                       | 0.58   | %    |   | 0.47   | % |   | 0.35   | %
|Allowance for loan losses as a percent of
 loans                         |  |                                       | 0.74   | %    |   | 0.64   | % |   | 0.68   | %
|Allowance for loan losses as a percent of
 non-performing loans          |  |                                       | 111.4  | %    |   | 152.1  | % |   | 190.4  | %
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|Other Data:                                                              |  |                                       |        |      |   |        |   |   |        |  
|Number of:                                                               |  |                                       |        |      |   |        |   |   |        |  
|Deposit accounts                                                         |  |                                       | 34,618 |      |   | 35,159 |   |   | 35,484 |  
|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.
|    |                                                                                                                                                                  
|(2) | Regulatory
 capital ratios are computed for The Rome Savings Bank.                                                                                               

---



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

Forward-Looking Statements

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

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

General

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

On April 27,
2004, Rome Savings converted from a New York-chartered savings bank regulated
by the New York State Banking Department and the Federal Deposit Insurance
Corporation (the FDIC) to a federal savings bank regulated by the Office of
Thrift Supervision (the OTS).

On March 30,
2005, Rome, MHC converted from mutual to stock form (the Conversion). In
connection with the Conversion, the 61.5% of outstanding shares of Rome Bancorp
common stock owned by Rome, MHC were sold to depositors of Rome Savings and the
public (the Offering). Following the completion of the Conversion and
Offering, Rome Bancorp was succeeded by a new, fully public, Delaware
corporation with the same name and Rome, MHC ceased to exist.

Rome Bancorps
sole business is conducted by its wholly-owned subsidiary, Rome Savings. Rome
Savings principal business is accepting deposits from the general public and
using those deposits to make residential and commercial real estate loans, as
well as commercial and consumer loans to individuals and small businesses
primarily in Oneida County and also elsewhere in New York State. Rome Savings
also invests in long and short-term marketable securities and other liquid
investments.

2009 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, 2009 and 2008
and Rome Bancorps results of operations for the three years ended December 31,
2009. The consolidated financial statements and related notes for the three
years ended December 31, 2009 should be read in conjunction with this review.

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

Rome Savings
results of operations depend primarily on its net interest income, which is the
difference between the interest income it earns on its loans and investments
and the interest it pays on its deposits and other interest-bearing
liabilities. Net interest income is affected by the relative amounts of
interest-bearing assets and interest-

---



bearing
liabilities and the interest rates earned or paid on these balances. Rome
Savings operations are also affected by non-interest income, such as service
fees and gains and losses on sales of securities 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
2009 increased to $3.1 million compared to $2.9 million in the prior year. The
significant factors and trends impacting 2009, which are discussed in greater
depth below, were as follows:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net interest income before
 loan loss provision was $13.0 million and $13.1 million in 2009 and 2008,
 respectively. 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 decreased to 128.39% in 2009 from 130.86% in the prior year,
 while the yield on earning assets decreased to 5.62% in 2009 from 6.05% in
 2008. The cost of funds decreased to 1.77% in 2009 from 2.15% the previous
 year.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Rome Bancorps provision
 for loan losses remained constant at $300,000 in both 2009 and 2008. While
 2009 loan charge-off levels are lower than 2008 levels, the 2009 provision
 was deemed necessary in light of current economic conditions and non-performing
 loan balances. Rome Savings does not originate or hold any sub-prime mortgage
 loans in its portfolio.                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Non-interest income
 increased by $578,000 to $2.5 million in 2009 from $1.9 million in 2008. This
 was primarily due to an increase in fee revenue and other income in 2009 and
 the 2008 $265,000 impairment charge on an equity security held by the
 Company.                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Non-interest
 expense increased by $279,000 from $10.4 million in 2008 to $10.7 in 2009.
 The majority of this increase is related to increases in regulatory
 assessments and higher compensation and benefits costs.                                                                                                                                                                                                                                                                                                                                                                

Critical Accounting Policies

It is managements opinion that accounting estimates covering certain
aspects of the business have more significance than others due to the relative importance
of those areas to overall performance, or the level of subjectivity required in
making these estimates. Management of 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.

Management of Interest Rate Risk

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

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

A simulation
model is the primary tool used to assess the impact of changes in interest
rates on net interest income. Key assumptions used in the model include
prepayment speeds on loans and mortgage-backed securities, loan volumes and
pricing and customer preferences, and sensitivity to changing rates. These
assumptions are compared to actual results and revised as necessary. Rome
Bancorps analysis compares net interest income under a scenario of no change
from current interest rates with one of a 100, 200 and 300 basis point increase
in interest rates and one of a 100 basis point decrease in rates. The change in
interest rates is assumed to occur in the first twelve months following the
current financial statement date. Net interest income is measured for each of
the three twelve-month periods following the balance sheet date. Rome Bancorps
policy is that net interest income should not vary by more than 20% for each of
the three forecasted twelve-month periods. At December 31, 2009, based on
simulation model results, Rome Bancorp was within these guidelines.

The following
table sets forth at December 31, 2009 and 2008 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.

---



| |                                               |  |                            |        |                            |   |                             |   |                         |       |                           |   |                             |  |   |      |   |  |       |   
| | --------------------------------------------- |  | -------------------------- | ------ | -------------------------- | - | --------------------------- | - | ----------------------- | ----- | ------------------------- | - | --------------------------- |  | - | ---- | - |  | ----- | --
| |                                               |  | 2009                       |        | 2008                       |  
| |                                               |  |                            |        |                            |  
| |                                               |  | Annual Net Interest Income |        | Annual Net Interest Income |  
| |                                               |  |                            |        |                            |  
| | Change inInterest
 Rates 
 inBasis
 Points(1) |  | Dollar 
 Amount            |        | Dollar 
 ChangeFrom
 Base  |   | PercentageChange 
 FromBase |   | Dollar 
 Amount         |       | Dollar 
 ChangeFrom
 Base |   | PercentageChange 
 FromBase | 
| |                                               |  |                            |        |                            |   |                             |   |                         |       |                           |   |                             | 
| |                                               |  |                            |        |                            |   |                             |   | (Dollars
 in thousands) |       |                           |   |                             |  |   |     
| |                                               |  |                            |        |                            |   |                             |   |                         |       |                           |   |                             |  |   |      |   |  |       |   
| | +300                                          |  | $                          | 13,456 |                            | $ | (280                        | ) |                         | (2.04 | )%                        | $ | 13,451                      |  | $ | (289 | ) |  | (2.10 | )%
| | +200                                          |  |                            | 13,537 |                            |   | (199                        | ) |                         | (1.45 | )                         |   | 13,588                      |  |   | (152 | ) |  | (1.11 | ) 
| | +100                                          |  |                            | 13,599 |                            |   | (137                        | ) |                         | (1.00 | )                         |   | 13,749                      |  |   | 9    |   |  | 0.07  |   
| | Base                                          |  |                            | 13,736 |                            |   |                            |   |                         |      |                           |   | 13,740                      |  |   |     |   |  |      |   
| | -100                                          |  |                            | 13,240 |                            |   | (496                        | ) |                         | (3.61 | )                         |   | 13,476                      |  |   | (264 | ) |  | (1.92 | ) 

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

The above table reflects
that as of both December 31, 2009 and 2008, 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, 2009 was equal to or slightly
higher than in 2008, exhibiting negative variances in periods of rising and
decreasing interest rates. In the upward rate environments, the most immediate
interest rate risk lies with the Companys $71.9 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.

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, 2009                                                  |         | December 31, 2008        |   | December 31, 2007     |  
|                                                                  |  |                                                                    |         |                          |   |                       |  
|                                                                  |  | AverageBalance                                                     |         | Interest
 Income/Expense |   | Average
 Yield/
 Cost |   | AverageBalance |      | Interest
 Income/Expense |   | Average
 Yield/
 Cost |  | Average
 Balance |        | Interest
 Income/
 Expense |  | Average
 Yield/
 Cost |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |  
|                                                                  |  | (Dollars in thousands)                                             |        
|Assets:                                                           |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Interest-earning assets:                                          |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Loans                                                             |  | $                                                                  | 289,010 |                          | $ | 16,763                |   |                | 5.80 | %                        | $ | 288,630               |  | $                | 17,561 |                            |  | 6.08                  | % | $ | 270,373 |  | $ | 17,481 |   |  | 6.47 | %
|Securities                                                        |  |                                                                    | 11,557  |                          |   | 529                   |   |                | 4.58 |                          |   | 7,488                 |  |                  | 392    |                            |  | 5.24                  |   |   | 6,452   |  |   | 437    |   |  | 6.77 |  
|Federal funds sold & other
 interest bearing deposits             |  |                                                                    | 7,456   |                          |   | 11                    |   |                | 0.15 |                          |   | 1,250                 |  |                  | 26     |                            |  | 2.04                  |   |   | 1,110   |  |   | 52     |   |  | 4.67 |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total interest-earnings assets                                    |  |                                                                    | 308,023 |                          |   | 17,303                |   |                | 5.62 |                          |   | 297,368               |  |                  | 17,979 |                            |  | 6.05                  |   |   | 277,935 |  |   | 17,970 |   |  | 6.47 |  
|Noninterest-earning assets                                        |  |                                                                    | 27,609  |                          |   |                       |   |                |      |                          |   | 29,994                |  |                  |        |                            |  |                       |   |   | 28,625  |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total assets                                                      |  | $                                                                  | 335,632 |                          |   |                       |   |                |      |                          | $ | 327,362               |  |                  |        |                            |  |                       |   | $ | 306,560 |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Liabilities and Shareholders Equity:                             |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Interest-bearing liabilities:                                     |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Savings accounts                                                  |  | $                                                                  | 82,315  |                          | $ | 330                   |   |                | 0.40 |                          | $ | 80,971                |  | $                | 446    |                            |  | 0.55                  |   | $ | 82,355  |  | $ | 454    |   |  | 0.55 |  
|Time deposits                                                     |  |                                                                    | 72,291  |                          |   | 1,852                 |   |                | 2.56 |                          |   | 72,347                |  |                  | 2,634  |                            |  | 3.64                  |   |   | 69,822  |  |   | 2,834  |   |  | 4.06 |  
|Money market accounts                                             |  |                                                                    | 15,125  |                          |   | 189                   |   |                | 1.25 |                          |   | 9,833                 |  |                  | 193    |                            |  | 1.97                  |   |   | 6,994   |  |   | 139    |   |  | 1.99 |  
|Other interest bearing deposits                                   |  |                                                                    | 13,970  |                          |   | 55                    |   |                | 0.40 |                          |   | 13,357                |  |                  | 69     |                            |  | 0.51                  |   |   | 11,695  |  |   | 65     |   |  | 0.56 |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total interest-bearing deposits                                   |  |                                                                    | 183,701 |                          |   | 2,426                 |   |                | 1.32 |                          |   | 176,508               |  |                  | 3,342  |                            |  | 1.89                  |   |   | 170,866 |  |   | 3,492  |   |  | 2.04 |  
|Borrowings                                                        |  |                                                                    | 56,216  |                          |   | 1,824                 |   |                | 3.25 |                          |   | 50,737                |  |                  | 1,545  |                            |  | 3.04                  |   |   | 27,883  |  |   | 1,306  |   |  | 4.68 |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total interest-bearing
 liabilities                               |  |                                                                    | 239,917 |                          |   | 4,250                 |   |                | 1.77 |                          |   | 227,245               |  |                  | 4,887  |                            |  | 2.15                  |   |   | 198,749 |  |   | 4,798  |   |  | 2.41 |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Noninterest-bearing deposits                                      |  |                                                                    | 30,065  |                          |   |                       |   |                |      |                          |   | 29,331                |  |                  |        |                            |  |                       |   |   | 28,337  |  |   |        |   |  |      |  
|Other liabilities                                                 |  |                                                                    | 7,033   |                          |   |                       |   |                |      |                          |   | 5,849                 |  |                  |        |                            |  |                       |   |   | 5,622   |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total liabilities                                                 |  |                                                                    | 277,015 |                          |   |                       |   |                |      |                          |   | 262,425               |  |                  |        |                            |  |                       |   |   | 232,708 |  |   |        |   |  |      |  
|Shareholders equity                                              |  |                                                                    | 58,617  |                          |   |                       |   |                |      |                          |   | 64,937                |  |                  |        |                            |  |                       |   |   | 73,852  |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total liabilities and
 shareholders equity                       |  | $                                                                  | 335,632 |                          |   |                       |   |                |      |                          | $ | 327,362               |  |                  |        |                            |  |                       |   | $ | 306,560 |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Net interest income                                               |  |                                                                    |         |                          |   | 13,053                |   |                |      |                          |   |                       |  |                  | 13,092 |                            |  |                       |   |   |         |  |   | 13,172 |   |  |      |  
|Tax equivalent adjustment on
 securities                          |  |                                                                    |         |                          |   | (12                   | ) |                |      |                          |   |                       |  |                  | (25    | )                          |  |                       |   |   |         |  |   | (51    | ) |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Net interest income per
 consolidated financial statements        |  |                                                                    |         |                          | $ | 13,041                |   |                |      |                          |   |                       |  | $                | 13,067 |                            |  |                       |   |   |         |  | $ | 13,121 |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Net interest rate spread                                          |  |                                                                    |         |                          |   |                       |   |                | 3.85 | %                        |   |                       |  |                  |        |                            |  | 3.90                  | % |   |         |  |   |        |   |  | 4.06 | %
|Net interest margin                                               |  |                                                                    |         |                          |   |                       |   |                | 4.24 | %                        |   |                       |  |                  |        |                            |  | 4.40                  | % |   |         |  |   |        |   |  | 4.74 | %
|Ratio of interest-earning
 assets to interest-bearing liabilities |  |                                                                    |         |                          |   |                       |   |                | 1.28 | x                        |   |                       |  |                  |        |                            |  | 1.31                  | x |   |         |  |   |        |   |  | 1.40 | x

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

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|                                    |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|----------------------------------- |  | --------------------------------------------------------------------------- | ------ | --------------------------------------------------------------------------- | - | --- | - | ---- | ---- | ------ | - | ------ | - | - | ----- | - | - | ---- | -
|                                    |  | Rate Volume Analysis                                                        |       
|                                    |  |                                                                             |       
|                                    |  | Year Ended
 December 31, 
 2009
 Compared to Year Ended 
 December 31, 2008 |        | Year Ended
 December 31, 
 2008
 Compared to Year Ended 
 December 31, 2007 |  
|                                    |  |                                                                             |        |                                                                             |  
|                                    |  | Increases
 (decreases) due to                                               |        | Increases (decreases) due to                                                |  
|                                    |  |                                                                             |        |                                                                             |  
|                                    |  | Rate                                                                        |        | Volume                                                                      |   | Net |   | Rate |      | Volume |   | Net    |  
|                                    |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |  
|                                    |  | ( in thousands)                                                             |       
|                                    |  |                                                                             |       
|Assets:                             |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Interest-earning assets:            |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Loans                               |  | $                                                                           | (837   | )                                                                           | $ | 39  |   | $    | (798 | )      | $ | (1,125 | ) | $ | 1,205 |   | $ | 80   |  
|Securities                          |  |                                                                             | (76    | )                                                                           |   | 213 |   |      | 137  |        |   | (115   | ) |   | 70    |   |   | (45  | )
|Federal funds sold & other          |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Interest bearing deposits           |  |                                                                             | (142   | )                                                                           |   | 127 |   |      | (15  | )      |   | (33    | ) |   | 7     |   |   | (26  | )
|                                    |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Total interest-earnings assets      |  |                                                                             | (1,055 | )                                                                           |   | 379 |   |      | (676 | )      |   | (1,273 | ) |   | 1,282 |   |   | 9    |  
|                                    |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Interest-bearing liabilities:       |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Savings accounts                    |  |                                                                             | (123   | )                                                                           |   | 7   |   |      | (116 | )      |   |       |   |   | (8    | ) |   | (8   | )
|Time deposits                       |  |                                                                             | (780   | )                                                                           |   | (2  | ) |      | (782 | )      |   | (302   | ) |   | 102   |   |   | (200 | )
|Money market accounts               |  |                                                                             | (109   | )                                                                           |   | 104 |   |      | (5   | )      |   | (2     | ) |   | 56    |   |   | 54   |  
|Other interest bearing deposits     |  |                                                                             | (16    | )                                                                           |   | 3   |   |      | (13  | )      |   | (6     | ) |   | 10    |   |   | 4    |  
|                                    |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Total interest-bearing deposits     |  |                                                                             | (1,028 | )                                                                           |   | 112 |   |      | (916 | )      |   | (310   | ) |   | 160   |   |   | (150 | )
|                                    |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Borrowings                          |  |                                                                             | 113    |                                                                             |   | 166 |   |      | 279  |        |   | (832   | ) |   | 1,071 |   |   | 239  |  
|                                    |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Total interest-bearing
 liabilities |  |                                                                             | (915   | )                                                                           |   | 278 |   |      | (637 | )      |   | (1,142 | ) |   | 1,231 |   |   | 89   |  
|                                    |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  
|Net change in interest income       |  | $                                                                           | (140   | )                                                                           | $ | 101 |   | $    | (39  | )      | $ | (131   | ) | $ | 51    |   | $ | (80  | )
|                                    |  |                                                                             |        |                                                                             |   |     |   |      |      |        |   |        |   |   |       |   |   |      |  

Comparison of
Financial Condition at December 31, 2009 and December 31, 2008

Rome Bancorps total assets
at December 31, 2009 were $329.9 million, a decrease of $8.0 million or 2.4%
from $337.9 million at December 31, 2008. The majority of this decrease was attributable
to contraction of the Companys loan portfolio.

Cash and cash equivalents
decreased to $7.6 million at December 31, 2009 from $9.6 million a year
earlier. Securities available for sale were $10.0 million at December 31, 2009,
an increase of $6.4 million from $3.6 million at December 31, 2008. This
increase was due to the purchase of eighteen bonds, partially offset by
principal reductions and maturities in the existing bond portfolio. Rome
Bancorp investment in Federal Home Loan Bank stock decreased by $356,000 in
2009, in connection with a reduction in its line of credit borrowing with this
institution.

Total loans decreased by
$12.7 million, or 4.2% to $287.7 million at December 31, 2009 from $300.4
million at December 31, 2008. During the year ended December 31, 2009, Rome
Bancorp originated approximately $51.5 million of loans. The Companys
residential mortgage construction and loan portfolio, decreased by $14.7
million, or 8.4%, primarily due to the sale of the majority of the Companys 2009
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 0.67% at
December 31, 2009 as compared to 0.42% at December 31, 2008, primarily due to
increased residential mortgage delinquencies and decreased loan balances. The
allowance for loan losses as a percent of non-performing loans decreased to
111.4% at December 31, 2009, from 152.4% at December 31, 2008.

Total deposits increased by
$10.7 million or 5.2% from $205.9 million at December 31, 2008 to $216.6
million at December 31, 2009, 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 $235,000, or 0.3%. Money
market balances grew by $3.7 million, or 31.1%, in 2009, increasing from $12.0
million at December 31, 2008 to $15.7 million at December 31, 2009.
Non-interest bearing deposits increased by $3.4 million, or 12.0%, over the
past year. Savings deposits increased $2.8 million from $79.2 million at
December

---



31, 2008 to $82.0 million at
December 31, 2009. Other interest bearing deposits increased by $985,000, or
6.9%, from $14.2 million at December 31, 2008 to $15.2 million at year end
2009.

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.

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
the current year. 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 over the past year, the Company has had a reduction in its actual
loan losses. 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 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 $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. Rome Savings does not originate or hold subprime mortgage loans or
securities collateralized by subprime loans.

In determining
the level of the provision for loan losses necessary to absorb probable
incurred credit losses, management considers 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.

---



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.

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

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

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

---



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

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

Provision for Loan
Losses.The provision for loan losses was $300,000 in
2008 compared to $50,000 in 2007, reflecting a higher level of charge-offs and
loan growth in 2008. Net loan charge-offs increased to $274,000 in 2008 from
$105,000 in the prior year. The allowance for loan losses was $1.9 million or
0.64% of total loans at December 31, 2008 compared to $1.9 million and 0.68% of
total loans at December 31, 2007. The allowance for loan losses as a percent of
non-performing loans decreased to 152.1% at December 31, 2008 compared to
190.4% at December 31, 2007. Management considers these ratios to be
appropriate due to the net growth in Rome Bancorps residential mortgage and
construction loan portfolio of $21.5 million, or 14.1% in 2008. Due to
stringent underwriting standards, the history of losses on the residential
mortgage loan portfolio is significantly lower than on the other types of
loans. Non-performing loans, consisting of non-accrual loans and loans 90 days
past due and still accruing, were $1.3 million or 0.42% of total loans at
December 31, 2008 compared to $1.0 million or 0.35% at December 31, 2007. Rome
Savings does not originate or hold subprime mortgage loans or securities
collateralized by subprime loans.

In determining
the level of the provision for loan losses necessary to absorb probable
incurred credit losses, management considers 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 2008.

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

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

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

---



security has in fact increased during 2009. Service
charge income increased commensurate with deposit and loan activity.

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

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

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

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

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 $44.1
million on a line of credit. At December 31, 2009, Rome Savings had outstanding
borrowings of $1.1 million against this line of credit, in addition to bullet
maturity and amortizing notes totaling $46.8 million. At December 31, 2009, the
Company also had approximately $8.5 million in unused short term borrowing
capacity at the Federal Reserve Bank of New York.

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 2009, Rome Bancorp originated approximately $51.5 million in
loans compared to approximately $66.4 million in 2008. Purchases of investment
securities were $7.8 million in 2009 and $3.6 million in 2008. At December 31,
2009, Rome Bancorp had loan commitments to borrowers of approximately $7.5
million, and customer available letters and lines of credit of approximately
$19.4 million.

Total deposits were $216.6 million at December 31,
2009, an increase of 5.2% from $205.9 million at December 31, 2008. Time
deposit accounts scheduled to mature within one year were $50.4 million at
December 31, 2009. 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 2009 Rome Bancorp repurchased 260,788
outstanding shares of its common stock at a total cost of $2.1 million. Rome
Bancorp paid cash dividends of $0.34 per share in 2009, requiring a cash outlay
of $2.2 million.

At December 31, 2009 and 2008, Rome Savings exceeded
each of the applicable regulatory capital requirements. Rome Savings leverage
(Tier 1) capital at December 31, 2009 and 2008 was $54.0 million and $58.2
million or 16.27% and 17.15% of adjusted assets, respectively. In order to be
classified as well-capitalized by the OTS and the FDIC at December 31, 2009
and 2008, Rome Savings was required to have leverage (Tier 1) capital of $16.6
million and $17.0 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, 2009 and
2008, Rome Savings had a risk-based total capital ratio of 23.04% and 24.45%,
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 September 2006, the Financial Accounting Standards
Board (FASB) issued guidance that defines fair value, establishes a framework
for measuring fair value and expands disclosures about fair value measurements.
This guidance also establishes a fair value hierarchy about the assumptions
used to measure fair value and clarifies assumptions about risk and the effect
of a restriction on the sale or use of an asset. The guidance was effective for
fiscal years beginning after November 15, 2007. In February 2008, the FASB issued guidance
that delayed the effective date of this fair value guidance for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods within
those fiscal years. The effect of adopting this new guidance was
immaterial to the Company.

In June 2009, the FASB replacedThe Hierarchy of Generally
Accepted Accounting Principles, with the FASB Accounting Standards CodificationTM
(The Codification) as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in conformity with GAAP. Rules and
interpretive releases of the Securities and Exchange Commission under authority
of federal securities laws are also sources of authoritative GAAP for SEC
registrants. The Codification was effective for financial statements issued for
periods ending after September 15, 2009.

In June 2008, the FASB issued guidance which
addresses whether instruments granted in share-based payment transactions are
participating securities prior to vesting and, therefore, included in the
earnings allocation in computing earnings per share (EPS) under the two-class
method. Unvested share-based payment awards that contain non-forfeitable rights
to dividends or dividend equivalents (whether paid or unpaid) are participating
securities and shall be included in the computation of EPS pursuant to the
two-class method. This guidance was effective for financial statements issued
for fiscal years beginning after December 15, 2008, and interim periods
within those years. All prior-period EPS data presented have been adjusted
retrospectively (including interim financial statements, summaries of earnings,
and selected financial data) to conform to the provisions of this
guidance. The adoption of this new guidance and the effect on earnings per
share has been presented in the notes to the consolidated financial statements.

---



In December 2008, the FASB issued guidance on an
employers disclosures about plan assets of a defined benefit pension or other
post-retirement plan. These additional disclosures include disclosure of
investment policies and fair value disclosures of plan assets, including fair
value hierarchy. The guidance also includes a technical amendment that requires
a nonpublic entity to disclose net periodic benefit cost for each annual period
for which a statement of income is presented. This guidance is effective for
fiscal years ending after December 15, 2009. Upon initial application,
provisions of the FSP are not required for earlier periods that are presented
for comparative purposes. The new disclosures have been presented in the notes
to the consolidated financial statements.

In April 2009, the FASB amended existing guidance
for determining whether impairment is other-than-temporary for debt securities.
The guidance requires an entity to assess 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 these criteria is met, the entire difference between amortized cost and fair
value is recognized as impairment through earnings. For securities that do not
meet the aforementioned criteria, the amount of impairment is split into two
components as follows: 1) other-than-temporary impairment (OTTI) related to
other factors, which is recognized in other comprehensive income and 2) OTTI
related to credit loss, which must be recognized in the income statement. 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. Additionally, disclosures
about other-than-temporary impairments for debt and equity securities were
expanded. This guidance was effective for interim and annual reporting periods
ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009. The Company elected to early-adopt this
guidance as of March 31, 2009.

In April 2009, the FASB issued guidance that
emphasizes that the objective of a fair value measurement does not change even
when market activity for the asset or liability has decreased significantly.
Fair value is the price that would be received for an asset sold or paid to
transfer a liability in an orderly transaction (that is, not a forced
liquidation or distressed sale) between market participants at the measurement
date under current market conditions. When observable transactions or quoted
prices are not considered orderly, then little, if any, weight should be
assigned to the indication of the asset or liabilitys fair value. Adjustments
to those transactions or prices should be applied to determine the appropriate
fair value. The guidance, which was applied prospectively, was effective for
interim and annual reporting periods ending after June 15, 2009 early adoption
for periods ending after March 15, 2009. The effect of adopting this new
guidance was not material to the Company.

---



MARKET FOR THE COMPANYS COMMON STOCK

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

At December 31, 2009, the last trading date in Rome
Bancorps fiscal year, the common stock of Rome Bancorp closed at $7.96 per
share. At March 2, 2010, there were 6,797,119 shares of Rome Bancorps common
stock outstanding, which were held of record by approximately 1,640 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, 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 | 
|                                  |  |             |       |     |   |           |  |   |       | 
|Year ended December 31, 2008      |  |             |       |     |   |           |  |   |       | 
|                                  |  |             |       |     |   |           |  |   |       | 
|Quarter ended March 31, 2008      |  | $           | 11.86 |     | $ | 10.91     |  | $ | 0.085 | 
|Quarter ended June 30, 2008       |  |             | 11.70 |     |   | 9.54      |  |   | 0.085 | 
|Quarter ended September 30,
 2008 |  |             | 11.20 |     |   | 9.50      |  |   | 0.085 | 
|Quarter ended December 31,
 2008  |  |             | 11.00 |     |   | 7.82      |  |   | 0.085 | 

Rome Bancorp paid cash dividends of $0.34 per share in
2009. Rome Bancorp also paid a 2010 quarterly cash dividend of $0.09 per share
to shareholders of record as of February 5, 2010. 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.

---



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING

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

Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. Management assessed the effectiveness
of Rome Bancorp, Inc.s internal control over financial reporting as of
December 31, 2009. In making this assessment, management used the criteria set
forth by the Committee for Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control-Integrated Framework. Based on our assessment and those
criteria, management concluded that Rome Bancorp, Inc. maintained effective
internal control over financial reporting as of December 31, 2009.

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 Securities and
Exchange Commission 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 10,
 2010                                               | 
|                                                              | 
|/s/ David C.
 Nolan                                           | 
|                                                              | 
|David C.
 Nolan                                               | 
|Executive
 Vice President and Chief Financial Officer        
|March 10,
 2010                                               | 

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

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

We have
audited the accompanying balance sheets of Rome Bancorp, Inc. and subsidiary as
of December 31, 2009 and 2008 and the related statements of income,
shareholders equity and comprehensive income, and cash flows for each of the
three years in the period ended December 31, 2009. 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 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 financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Rome Bancorp, Inc. and subsidiary
as of December 31, 2009 and 2008 and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2009,
in conformity with U.S. generally accepted accounting principles.

|                       | 
|---------------------- | 
|/s/ Crowe
 Horwath LLP | 
|                       | 
|Crowe
 Horwath LLP     | 
|Cleveland,
 Ohio       | 
|March 10,
 2010        | 

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

December 31, 2009 and 2008

(In thousands, except share data)

|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- | - | ------- | -
|                                                                                                                                                                                                                         |  | 2009 |         | 2008 |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Assets                                                                                                                                                                                                                   |  |      |         |      |   |         |  
|Cash and due from banks                                                                                                                                                                                                  |  | $    | 6,547   |      | $ | 6,823   |  
|Federal funds sold and other short-term investments                                                                                                                                                                      |  |      | 1,027   |      |   | 2,756   |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Total cash and cash equivalents                                                                                                                                                                                          |  |      | 7,574   |      |   | 9,579   |  
|Securities available for sale, at fair value                                                                                                                                                                             |  |      | 10,024  |      |   | 3,563   |  
|Securities held to maturity (fair value of $1,502 and $1,561 at
 December 31, 2009 and 2008, respectively)                                                                                                               |  |      | 1,431   |      |   | 1,447   |  
|Federal Home Loan Bank stock                                                                                                                                                                                             |  |      | 3,222   |      |   | 3,578   |  
|Loans                                                                                                                                                                                                                    |  |      | 287,749 |      |   | 300,389 |  
|Less: Allowance for loan losses                                                                                                                                                                                          |  |      | (2,132  | )    |   | (1,936  | )
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Net loans                                                                                                                                                                                                                |  |      | 285,617 |      |   | 298,453 |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Premises and equipment, net                                                                                                                                                                                              |  |      | 6,041   |      |   | 6,372   |  
|Accrued interest receivable                                                                                                                                                                                              |  |      | 1,117   |      |   | 1,085   |  
|Bank-owned life insurance                                                                                                                                                                                                |  |      | 9,415   |      |   | 9,006   |  
|Other assets                                                                                                                                                                                                             |  |      | 5,481   |      |   | 4,803   |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Total assets                                                                                                                                                                                                             |  | $    | 329,922 |      | $ | 337,886 |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Liabilities and Shareholders Equity Liabilities:                                                                                                                                                                        |  |      |         |      |   |         |  
|Deposits:                                                                                                                                                                                                                |  |      |         |      |   |         |  
|Non-interest bearing                                                                                                                                                                                                     |  | $    | 31,790  |      | $ | 28,373  |  
|Savings                                                                                                                                                                                                                  |  |      | 82,031  |      |   | 79,221  |  
|Money market                                                                                                                                                                                                             |  |      | 15,726  |      |   | 11,996  |  
|Time                                                                                                                                                                                                                     |  |      | 71,903  |      |   | 72,138  |  
|Other interest bearing                                                                                                                                                                                                   |  |      | 15,189  |      |   | 14,204  |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Total deposits                                                                                                                                                                                                           |  |      | 216,639 |      |   | 205,932 |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Federal home Loan Bank advances                                                                                                                                                                                          |  |      | 47,869  |      |   | 66,324  |  
|Other liabilities                                                                                                                                                                                                        |  |      | 5,049   |      |   | 5,286   |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Total liabilities                                                                                                                                                                                                        |  |      | 269,557 |      |   | 277,542 |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Commitments and contingencies (Note 14)                                                                                                                                                                                  |  |      |        |      |   |        |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Shareholders equity:                                                                                                                                                                                                    |  |      |         |      |   |         |  
|Common stock, $.01 par value; 30,000,000 shares authorized; issued:
 9,895,757 shares; outstanding: 6,800,119 shares at December 31, 2009; issued:
 9,893,716 shares; outstanding: 7,058,866 shares at December 31, 2008 |  |      | 99      |      |   | 99      |  
|Additional paid-in capital                                                                                                                                                                                               |  |      | 62,794  |      |   | 62,440  |  
|Retained earnings                                                                                                                                                                                                        |  |      | 37,588  |      |   | 36,721  |  
|Treasury stock, at cost; 3,095,638 and 2,834,850 shares at December
 31, 2009 and 2008, respectively                                                                                                                     |  |      | (36,720 | )    |   | (34,662 | )
|Accumulated other comprehensive income (loss)                                                                                                                                                                            |  |      | (1,574  | )    |   | (2,212  | )
|Unallocated shares of employee stock ownership plan (ESOP) 278,275
 and 324,239 shares at December 31, 2009 and 2008, respectively                                                                                       |  |      | (1,822  | )    |   | (2,042  | )
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Total shareholders equity                                                                                                                                                                                               |  |      | 60,365  |      |   | 60,344  |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Total liabilities and shareholders equity                                                                                                                                                                               |  | $    | 329,922 |      | $ | 337,886 |  
|                                                                                                                                                                                                                         |  |      |         |      |   |         |  

See
accompanying notes to consolidated financial statements.

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income

Years ended December 31, 2009, 2008 and 2007

(In thousands, except share data)

|                                                     |  |      |        |      |   |        |   |   |        | 
|---------------------------------------------------- |  | ---- | ------ | ---- | - | ------ | - | - | ------ | 
|                                                     |  | 2009 |        | 2008 |   | 2007   |  
|                                                     |  |      |        |      |   |        |   |   |        | 
|Interest income:                                     |  |      |        |      |   |        |   |   |        | 
|Loans                                                |  | $    | 16,763 |      | $ | 17,561 |   | $ | 17,481 | 
|Securities                                           |  |      | 517    |      |   | 367    |   |   | 386    | 
|Other short-term investments                         |  |      | 11     |      |   | 26     |   |   | 52     | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Total interest income                                |  |      | 17,291 |      |   | 17,954 |   |   | 17,919 | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Interest expense:                                    |  |      |        |      |   |        |   |   |        | 
|Deposits                                             |  |      | 2,426  |      |   | 3,342  |   |   | 3,492  | 
|Borrowings                                           |  |      | 1,824  |      |   | 1,545  |   |   | 1,306  | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Total interest expense                               |  |      | 4,250  |      |   | 4,887  |   |   | 4,798  | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Net interest income                                  |  |      | 13,041 |      |   | 13,067 |   |   | 13,121 | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Provision for loan losses                            |  |      | 300    |      |   | 300    |   |   | 50     | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Net interest income after provision for
 loan losses |  |      | 12,741 |      |   | 12,767 |   |   | 13,071 | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Non-interest income:                                 |  |      |        |      |   |        |   |   |        | 
|Service charges                                      |  |      | 1,815  |      |   | 1,706  |   |   | 1,654  | 
|Net gain (loss) on securities                        |  |      | 73     |      |   | (265   | ) |   | 11     | 
|Earnings on bank owned life insurance                |  |      | 409    |      |   | 408    |   |   | 383    | 
|Other income                                         |  |      | 225    |      |   | 95     |   |   | 115    | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Total non-interest income                            |  |      | 2,522  |      |   | 1,944  |   |   | 2,163  | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Non-interest expense:                                |  |      |        |      |   |        |   |   |        | 
|Salaries and employee benefits                       |  |      | 6,143  |      |   | 5,733  |   |   | 5,887  | 
|Building, occupancy and equipment                    |  |      | 1,918  |      |   | 1,903  |   |   | 1,896  | 
|FDIC and OTS assessments                             |  |      | 416    |      |   | 140    |   |   | 114    | 
|Outside consulting and professional fees             |  |      | 421    |      |   | 580    |   |   | 712    | 
|ATM service fees                                     |  |      | 251    |      |   | 236    |   |   | 236    | 
|Other                                                |  |      | 1,540  |      |   | 1,818  |   |   | 1,727  | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Total non-interest expense                           |  |      | 10,689 |      |   | 10,410 |   |   | 10,572 | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Income before income tax expense                     |  |      | 4,574  |      |   | 4,301  |   |   | 4,662  | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Income tax expense                                   |  |      | 1,487  |      |   | 1,396  |   |   | 1,608  | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Net income                                           |  | $    | 3,087  |      | $ | 2,905  |   | $ | 3,054  | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Basic earnings per share                             |  | $    | 0.47   |      | $ | 0.42   |   | $ | 0.39   | 
|                                                     |  |      |        |      |   |        |   |   |        | 
|Diluted earnings per share                           |  | $    | 0.47   |      | $ | 0.41   |   | $ | 0.39   | 
|                                                     |  |      |        |      |   |        |   |   |        | 

See
accompanying notes to consolidated financial statements.

---



ROME BANCORP, INC. AND SUBSIDIARY Consolidated
Statements of Shareholders Equity and Comprehensive Income 
Years ended December 31, 2009, 2008 and 2007 
(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, 2006                                              |  | $             | 97 |                              | $ | 60,712             |  | $               | 35,643 |                                                 | $ | (16,307                     | ) | $     | (633   | ) | $ | (2,481 | ) | $ | 77,031  |  
|Comprehensive income:                                                      |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   |         |  
|Net income                                                                 |  |               |   |                              |   |                   |  |                 | 3,054  |                                                 |   |                            |   |       |       |   |   |       |   |   | 3,054   |  
|Other comprehensive income                                                 |  |               |   |                              |   |                   |  |                 |       |                                                 |   |                            |   |       | 257    |   |   |       |   |   | 257     |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   |         |  
|Total comprehensive income                                                 |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   | 3,311   |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   |         |  
|Purchase of 838,100 treasury
 shares                                       |  |               |   |                              |   |                   |  |                 |       |                                                 |   | (10,181                     | ) |       |       |   |   |       |   |   | (10,181 | )
|Exercise of stock options and
 related tax benefit 164,943 shares, net     |  |               | 2  |                              |   | 510                |  |                 |       |                                                 |   |                            |   |       |       |   |   |       |   |   | 512     |  
|Amortization and tax benefits
 of stock option and restricted share grants |  |               |    |                              |   | 325                |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   | 325     |  
|Dividends paid ($0.32 per
 share)                                          |  |               |   |                              |   |                   |  |                 | (2,518 | )                                               |   |                            |   |       |       |   |   |       |   |   | (2,518  | )
|ESOP shares released for
 allocation (45,967 shares)                       |  |               |   |                              |   | 337                |  |                 |       |                                                 |   |                            |   |       |       |   |   | 220    |   |   | 557     |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   |         |  
|Balances at December 31, 2007                                              |  |               | 99 |                              |   | 61,884             |  |                 | 36,179 |                                                 |   | (26,488                     | ) |       | (376   | ) |   | (2,261 | ) |   | 69,037  |  
|Comprehensive income:                                                      |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   |         |  
|Net income                                                                 |  |               |   |                              |   |                   |  |                 | 2,905  |                                                 |   |                            |   |       |       |   |   |       |   |   | 2,905   |  
|Other comprehensive loss                                                   |  |               |   |                              |   |                   |  |                 |       |                                                 |   |                            |   |       | (1,836 | ) |   |       |   |   | (1,836  | )
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   |         |  
|Total comprehensive income                                                 |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   | 1,069   |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   |         |  
|Purchase of 731,750 treasury
 shares                                       |  |               |   |                              |   |                   |  |                 |       |                                                 |   | (8,174                      | ) |       |       |   |   |       |   |   | (8,174  | )
|Exercise of stock options and
 related tax benefit 2,201 shares, net       |  |               |   |                              |   |                   |  |                 |       |                                                 |   |                            |   |       |       |   |   |       |   |   |        |  
|Amortization and tax benefits
 of stock option and restricted share grants |  |               |   |                              |   | 280                |  |                 |       |                                                 |   |                            |   |       |       |   |   |       |   |   | 280     |  
|Dividends paid ($0.34 per
 share)                                          |  |               |   |                              |   |                   |  |                 | (2,387 | )                                               |   |                            |   |       |       |   |   |       |   |   | (2,387  | )
|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 income                                                 |  |               |   |                              |   |                   |  |                 |       |                                                 |   |                            |   |       | 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  |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                             |   |       |        |   |   |        |   |   |         |  

See accompanying notes to consolidated financial statements.

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

Years ended December 31, 2009, 2008 and 2007

(In thousands)

|                                                                                    |  |      |         |      |   |         |   |   |         |  
|----------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                                                    |  | 2009 |         | 2008 |   | 2007    |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash flows from operating activities:                                               |  |      |         |      |   |         |   |   |         |  
|Net income                                                                          |  | $    | 3,087   |      | $ | 2,905   |   | $ | 3,054   |  
|Adjustments to reconcile net income to net cash provided by operating
 activities:  |  |      |         |      |   |         |   |   |         |  
|Depreciation                                                                        |  |      | 513     |      |   | 563     |   |   | 587     |  
|(Increase)
 decrease in accrued interest receivable                                 |  |      | (32     | )    |   | 39      |   |   | (30     | )
|Provision
 for loan losses                                                          |  |      | 300     |      |   | 300     |   |   | 50      |  
|Net
 loss on other than temporary securities impairment                             |  |      |        |      |   | 265     |   |   |        |  
|Net
 gains on securities transactions                                               |  |      | (73     | )    |   |        |   |   | (11     | )
|Gain
 on sales of loans                                                             |  |      | (155    | )    |   | (17     | ) |   | (18     | )
|Proceeds
 from sale of loans                                                        |  |      | 11,173  |      |   | 1,180   |   |   | 1,509   |  
|Origination
 of loans for sale                                                      |  |      | (11,018 | )    |   | (1,163  | ) |   | (1,491  | )
|Net
 accretion (amortization) on securities                                         |  |      | 7       |      |   | 3       |   |   | (5      | )
|Increase
 in cash surrender value of Bank-owned life insurance                      |  |      | (409    | )    |   | (408    | ) |   | (383    | )
|(Gain)
 loss on sale of other real estate                                           |  |      | (2      | )    |   | 18      |   |   |        |  
|(Decrease)
 increase in other liabilities                                           |  |      | (237    | )    |   | (3,527  | ) |   | 178     |  
|Deferred
 income tax (benefit) expense                                              |  |      | (107    | )    |   | 126     |   |   | (37     | )
|(Increase)
 decrease in other assets                                                |  |      | (526    | )    |   | 3,122   |   |   | (65     | )
|Allocation
 of ESOP shares                                                          |  |      | 384     |      |   | 495     |   |   | 557     |  
|Amortization
 of stock-based compensation                                           |  |      | 228     |      |   | 280     |   |   | 313     |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net cash provided by operating activities                                           |  |      | 3,133   |      |   | 4,181   |   |   | 4,208   |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash flows from investing activities:                                               |  |      |         |      |   |         |   |   |         |  
|Net decrease (increase) in loans                                                    |  |      | 12,344  |      |   | (18,216 | ) |   | (18,572 | )
|Proceeds from sales of securities available for sale                                |  |      | 1,314   |      |   |        |   |   | 357     |  
|Proceeds from maturities and principal reductions of securities available
 for sale |  |      | 349     |      |   | 921     |   |   | 1,209   |  
|Purchases of securities available for sale                                          |  |      | (7,477  | )    |   | (3,244  | ) |   | (1,000  | )
|Purchases of securities held to maturity                                            |  |      |        |      |   | (326    | ) |   |        |  
|Proceeds from maturities and principal reductions of securities held
 to maturity   |  |      | 9       |      |   | 23      |   |   | 34      |  
|Proceeds from sale of real estate owned                                             |  |      | 525     |      |   | 253     |   |   |        |  
|Purchases of premises and equipment, net                                            |  |      | (176    | )    |   | (361    | ) |   | (1,077  | )
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net cash provided by (used in) investing activities                                 |  |      | 6,888   |      |   | (20,950 | ) |   | (19,049 | )
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash flows from financing activities:                                               |  |      |         |      |   |         |   |   |         |  
|(Decrease) increase in time deposits                                                |  |      | (235    | )    |   | (1,071  | ) |   | 6,808   |  
|Increase in other deposits                                                          |  |      | 10,942  |      |   | 3,971   |   |   | 219     |  
|Repayments of borrowings                                                            |  |      | (33,409 | )    |   | (12,709 | ) |   | (3,239  | )
|Advances on borrowings                                                              |  |      | 14,954  |      |   | 38,700  |   |   | 23,400  |  
|Purchase of treasury stock                                                          |  |      | (2,058  | )    |   | (8,174  | ) |   | (10,181 | )
|Dividends                                                                           |  |      | (2,220  | )    |   | (2,387  | ) |   | (2,518  | )
|Exercise of stock options and related tax benefits                                  |  |      |        |      |   |        |   |   | 512     |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net cash (used in) provided by financing activities                                 |  |      | (12,026 | )    |   | 18,330  |   |   | 15,001  |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net (decrease) increase in cash and cash equivalents                                |  |      | (2,005  | )    |   | 1,561   |   |   | 160     |  
|Cash and cash equivalents at beginning of year                                      |  |      | 9,579   |      |   | 8,018   |   |   | 7,858   |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents at end of year                                            |  | $    | 7,574   |      | $ | 9,579   |   | $ | 8,018   |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  

(Continued)

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows (continued)

Years ended December 31, 2009, 2008 and 2007

(In thousands)

|                                          |  |   |       |  |   |       |  |   |       | 
|----------------------------------------- |  | - | ----- |  | - | ----- |  | - | ----- | 
|                                          |  |   | 2009  |  |   | 2008  |  |   | 2007  | 
|                                          |  |   |       |  |   |       |  |   |       | 
|Other non-cash activities:                |  |   |       |  |   |       |  |   |       | 
|Transfers from loans to real estate owned |  | $ | 192   |  | $ | 505   |  | $ | 52    | 
|Cash paid during the year
 for:           |  |   |       |  |   |       |  |   |       | 
|Interest                                  |  |   | 4,244 |  |   | 4,795 |  |   | 4,802 | 
|Income taxes                              |  |   | 1,097 |  |   | 1,514 |  |   | 1,056 | 

See
accompanying notes to consolidated financial statements.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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                                                                                                                                                                                                                                                                                                                                                                                     
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|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                             | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 | The
 consolidated financial statements have been prepared in conformity with
 accounting principles generally accepted in the United States of America.
 Amounts in the prior years consolidated financial statements are
 reclassified when necessary to conform with the current years presentation.
 A description of the significant accounting policies is presented below. To
 prepare financial statements in conformity with accounting principles
 generally accepted in the United States of America (U.S. generally accepted
 accounting principles), management makes estimates and assumptions based on
 the available information. Management is required to make estimates and
 assumptions that affect the reported amounts of assets and liabilities as of
 the date of the balance sheet and disclosures of contingent assets and
 liabilities and the reported amounts of revenues and expenses for the period.
 Significant estimates include the allowance for loan losses, valuation of
 securities, deferred tax assets and employee benefit obligations. Actual
 results could differ from those estimates.
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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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|    | (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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

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| | (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.                                                                                                                                                                                                                                                                                                                                                                                     
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| | (d) | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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| |     | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
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| | (e) | Allowance for Loan Losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The
 allowance for loan losses is a valuation allowance for probable incurred
 credit losses. The allowance for loan losses is increased by the provision
 for loan losses charged to operations and is decreased by the charge-off of
 loans, net of recoveries. Loans are charged off when management determines
 that ultimate success of the loans collectibility is remote.                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Managements
 evaluation of the adequacy of the allowance considers the Companys
 historical loan loss experience, review of specific loans, current economic
 conditions and such other factors considered appropriate to estimate losses.
 Management uses presently available information to estimate probable losses
 on loans; however, future additions to the allowance may be necessary based
 on changes in estimates, assumptions or economic conditions. In addition,
 various regulatory agencies, as an integral part of their examination
 process, periodically review the Companys allowance for loan losses and may
 require the Company to recognize additions to the allowance based on their
 judgment of information available to them at the time of their examination.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The
 allowance consists of specific and general components. The specific component
 relates to loans that are individually classified as impaired or loans
 otherwise classified as substandard or doubtful. The general component covers
 non-classified loans and is based on historical loss experience adjusted for
 current factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The
 allowance for loan losses is evaluated on a quarterly basis by management in
 order to maintain the allowance at a level sufficient to absorb probable
 incurred loan losses based upon known and inherent risks in the loan
 portfolio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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| |     | The Company
 estimates losses on impaired loans based on the present value of expected
 future cash flows (discounted at the loans effective interest rate) or the
 fair value of the underlying collateral if the loan is collateral dependent.
 An impairment loss exists if the recorded investment in a loan exceeds the
 value of the loan as measured by the aforementioned methods. Impairment
 losses are included as a component of the allowance for loan losses. A loan
 is considered impaired when it is probable that the Company will be unable to
 collect all amounts due according to the contractual terms of the loan
 agreement. Generally, all commercial mortgage loans and commercial loans
 greater than $250,000 in a non-accrual status are considered impaired.
 Commercial mortgage loans and commercial loans less than $250,000 and all
 residential mortgage loans, consumer loans and education loans are evaluated
 collectively by portfolio since they are homogeneous and generally carry
 smaller individual balances. The Company recognizes interest income on
 impaired loans using the cash basis of income recognition. Cash receipts on
 impaired loans are generally applied according to the terms of the loan
 agreement, or as a reduction of principal, based upon managements judgment
 and the related factors discussed above.
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| | (f) | Real Estate Owned                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Real estate
 acquired through foreclosure or deed in lieu of foreclosure is recorded at
 fair value less estimated costs to sell. Write-downs from cost to fair value
 which are required at the time of foreclosure are charged to the allowance
 for loan losses. Adjustments to the carrying value of such properties that
 result from subsequent declines in value are charged to operations in the
 period in which the declines occur. Operating costs associated with the
 properties are charged to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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| | (g) | Premises and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Land is
 carried at cost and buildings and improvements and furniture and equipment
 are carried at cost less accumulated depreciation and amortization.
 Depreciation is computed on the straight-line method over the estimated
 useful lives of the assets (7 to 40 years for buildings and 3 to 10 years for
 furniture and equipment).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
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| | (h) | Employee Benefit Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
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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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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| |     | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
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| |     | The Company
 also sponsors a non-contributory Employee Stock Ownership Plan (ESOP)
 covering substantially all full time employees. The number of shares
 allocable to                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | 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.                                                                                                                                                                                                                                                                                                                                                    
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| | (i) | 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.                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The Company
 adopted guidance issued by the FASB with respect to accounting for uncertainty
 in income taxes as of January 1, 2007. a tax position is recognized as a
 benefit only if it is more likely than not that the tax position would be
 sustained in a tax examination, with a tax examination being presumed to
 occur. The amount recognized is the largest amount of tax benefit that is
 greater than 50% likely of being realized on examination. For tax positions
 not meeting the more likely than not test, no tax benefit is recorded. The
 effect of adopting this guidance was not material.                                                          
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| | (j) | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | For purposes
 of reporting cash flows, cash and cash equivalents include cash on hand,
 amounts due from banks, and federal funds sold which represents short-term
 highly liquid investments. Net cash flows are reported for customer loan and
 deposit transactions, interest bearing deposits in other financial
 institutions, and federal funds purchased agreements.                                                                                                                                                                                                                                                                                                     
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| | (k) | Financial Instruments With Off-Balance
 Sheet Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The
 Companys off-balance sheet financial instruments are limited to commitments
 to extend credit and standby letters of credit. The Companys policy is to
 record such instruments when funded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    
| | (l) | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Basic earnings per 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.

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Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

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| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (m) | Segment Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The
 Companys operations are solely in the financial services industry providing
 traditional community banking services in the geographical region of Oneida
 County and surrounding areas in New York State. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (n) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (o) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Compensation
 cost is recognized for stock options and restricted stock awards issued to
 employees, based on the fair value of these awards at the date of grant. A
 Black-Scholes model is utilized to estimate the fair value of stock options,
 while the market price of the 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                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (p) | Recently Adopted Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | In September 2006, the
 Financial Accounting Standards Board (FASB) issued guidance that defines
 fair value, establishes a framework for measuring fair value and expands
 disclosures about fair value measurements. This guidance also establishes a
 fair value hierarchy about the assumptions used to measure fair value and
 clarifies assumptions about risk and the effect of a restriction on the sale
 or use of an asset. The guidance became effective for fiscal years beginning
 after November 15, 2007. In February 2008, the FASB issued
 guidance that delayed the effective date of this fair value guidance for all
 nonfinancial assets and nonfinancial liabilities, except those that are
 recognized or disclosed at fair value on a recurring basis (at least
 annually) to fiscal years beginning after November 15, 2008, and interim
 periods within those fiscal years. The effect of adopting this new guidance was immaterial to the
 Company.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | In June 2009, the
 FASB replacedThe Hierarchy of Generally Accepted Accounting
 Principles, with the FASB
 Accounting Standards CodificationTM (The Codification)
 as the source of authoritative accounting principles recognized by the FASB
 to be applied by nongovernmental entities in the preparation of financial
 statements in conformity with GAAP. Rules and interpretive releases of the
 Securities and Exchange Commission under authority of federal securities laws
 are also sources of authoritative GAAP for SEC registrants. The Codification
 was effective for financial statements issued for periods ending after
 September 15, 2009.                                                                                                                                                                                                                                                                                                                 

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Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

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| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 2008, the
 FASB issued guidance which addresses whether instruments granted in
 share-based payment transactions are participating securities prior to
 vesting and, therefore, included in the earnings allocation in computing
 earnings per share (EPS) under the two-class method. Unvested share-based
 payment awards that contain non-forfeitable rights to dividends or dividend
 equivalents (whether paid or unpaid) are participating securities and shall
 be included in the computation of EPS pursuant to the two-class method. This
 guidance was effective for financial statements issued for fiscal years
 beginning after December 15, 2008, and interim periods within those
 years. The adoption of this new guidance and the effect on earnings per share
 has been presented in the notes to the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | In December 2008, the FASB
 issued guidance on an employers disclosures about plan assets of a defined
 benefit pension or other post-retirement plan. These additional disclosures
 include disclosure of investment policies and fair value disclosures of plan
 assets, including fair value hierarchy. This guidance is effective for fiscal
 years ending after December 15, 2009. Upon initial application, provisions of
 the FSP are not required for earlier periods that are presented for
 comparative purposes. The new disclosures have been presented in the notes to
 the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | In April 2009, the
 FASB amended existing guidance for determining whether impairment is
 other-than-temporary for debt securities. The guidance requires an entity to
 assess 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 these criteria is met, the
 entire difference between amortized cost and fair value is recognized as
 impairment through earnings. For securities that do not meet the
 aforementioned criteria, the amount of impairment is split into two
 components as follows: 1) other-than-temporary impairment (OTTI) related to
 other factors, which is recognized in other comprehensive income and 2) OTTI related
 to credit loss, which must be recognized in the income statement. 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. Additionally,
 disclosures about other-than-temporary impairments for debt and equity
 securities were expanded. This guidance was effective for interim and annual
 reporting periods ending after June 15, 2009, with early adoption
 permitted for periods ending after March 15, 2009. The Company elected
 to early-adopt this guidance as of March 31, 2009. Adoption of this new
 guidance was immaterial to the Company.
|
| | In April 2009, the FASB
 issued guidance that emphasizes that the objective of a fair value
 measurement does not change even when market activity for the asset or
 liability has decreased significantly. Fair value is the price that would be
 received for an asset sold or paid to transfer a liability in an orderly
 transaction (that is, not a forced liquidation or distressed sale) between
 market participants at the measurement date under current market conditions.
 When observable transactions or quoted prices are not considered orderly,
 then little, if any, weight should be assigned to the indication of the asset
 or liabilitys fair value. Adjustments to those transactions or prices should
 be applied to determine the appropriate fair value. The guidance, which was
 applied prospectively, was effective for interim and annual reporting periods
 ending after June 15, 2009 early adoption for periods ending after March 15,
 2009. The effect of adopting this new guidance was not material to the
 Company.                                                                                                                                                                                                                                                                                                                                                                                           

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

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

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

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

The investment securities shown
above with unrealized losses at December 31, 2009 and 2008 were in a continuous
loss position for less than 12 months.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of December 31, 2009,
 the Companys security portfolio consisted of 42 securities, 8 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, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 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. The fair
 market value of the security may increase or decrease on a going forward
 basis. At December 31, 2009, the Companys investment in this equity fund had
 an unrealized gain of $96,000.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | The
 following table presents the amortized cost and fair value of debt securities
 based on the contractual maturity date (in thousands). Expected maturities
 will differ from contractual maturities because issuers may have the right to
 call or prepay obligations without call or prepayment penalties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                        |  |                   |       |              |   |       | 
|--------------------------------------- |  | ----------------- | ----- | ------------ | - | ----- | 
|                                        |  | December 31, 2009 |      
|                                        |  |                   |      
|                                        |  | Amortized
 Cost   |       | Fair 
 Value |  
|                                        |  |                   |       |              |  
|Available-for-sale:                     |  |                   |       |              |   |       | 
|Due within one year                     |  | $                 | 1,199 |              | $ | 1,200 | 
|Due after one year through five
 years  |  |                   | 6,401 |              |   | 6,493 | 
|Due after five years through
 ten years |  |                   | 1,291 |              |   | 1,363 | 
|Due after ten years                     |  |                   |      |              |   |      | 
|                                        |  |                   |       |              |   |       | 
|                                        |  | $                 | 8,891 |              | $ | 9,056 | 
|                                        |  |                   |       |              |   |       | 
|Held-to-maturity:                       |  |                   |       |              |   |       | 
|Due within one year                     |  | $                 | 1     |              | $ | 1     | 
|Due after one year through five
 years  |  |                   | 1,316 |              |   | 1,387 | 
|Due after five years through
 ten years |  |                   |      |              |   |      | 
|Due after ten years                     |  |                   | 114   |              |   | 114   | 
|                                        |  |                   |       |              |   |       | 
|                                        |  | $                 | 1,431 |              | $ | 1,502 | 
|                                        |  |                   |       |              |   |       | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

|    |                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Gross gains
 of $73,000, $0 and $11,000 were realized on sales of securities in 2009, 2008
 and 2007, respectively. The tax provision related to these realized gains was
 $29,000, $0 and $4,000, respectively.                                                                                             
|    |                                                                                                                                                                                                                                                                                                              
|    | Securities
 pledged at both year ends 2009 and 2008 had a carrying amount of $1.3
 million. These securities collateralize state and Treasury department
 programs. At year end 2009 and 2008, there were no holdings of securities of
 any one issuer in an amount greater than 10% of shareholders equity.
|    |                                                                                                                                                                                                                                                                                                              
|(4) | Loans                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                              
|    | Loans are
 summarized as follows (in thousands) at December 31:                                                                                                                                                                                                                                              

|                                    |  |      |         |      |   |         | 
|----------------------------------- |  | ---- | ------- | ---- | - | ------- | 
|                                    |  | 2009 |         | 2008 |  
|                                    |  |      |         |      |  
|Mortgage loans:                     |  |      |         |      |   |         | 
|Residential (1-4 family)            |  | $    | 155,547 |      | $ | 170,197 | 
|Commercial                          |  |      | 52,557  |      |   | 49,231  | 
|Construction and land               |  |      | 4,381   |      |   | 5,827   | 
|                                    |  |      |         |      |   |         | 
|Total Mortgage loans                |  |      | 212,485 |      |   | 225,255 | 
|                                    |  |      |         |      |   |         | 
|                                    |  |      |         |      |   |         | 
|Other loans:                        |  |      |         |      |   |         | 
|Commercial                          |  |      | 30,429  |      |   | 28,472  | 
|Automobile loans                    |  |      | 9,377   |      |   | 12,927  | 
|Property improvement and
 equipment |  |      | 19,251  |      |   | 17,459  | 
|Other consumer                      |  |      | 16,207  |      |   | 16,276  | 
|                                    |  |      |         |      |   |         | 
|Total Other loans                   |  |      | 75,264  |      |   | 75,134  | 
|                                    |  |      |         |      |   |         | 
|Total Loans                         |  | $    | 287,749 |      | $ | 300,389 | 
|                                    |  |      |         |      |   |         | 

| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | The Company
 serviced loans for third parties totaling $18,101,000 and $7,138,000 at
 December 31, 2009 and 2008, respectively.
| |                                                                                                                                
| | Changes in
 the allowance for loan losses are summarized as follows (in thousands):                                            

|                                |  |                          |       |      |   |       |   |   |       |  
|------------------------------- |  | ------------------------ | ----- | ---- | - | ----- | - | - | ----- | -
|                                |  | Years ended December 31, |      
|                                |  |                          |      
|                                |  | 2009                     |       | 2008 |   | 2007  |  
|                                |  |                          |       |      |   |       |  
|                                |  |                          |       |      |   |       |   |   |       |  
|Balance at beginning of period  |  | $                        | 1,936 |      | $ | 1,910 |   | $ | 1,965 |  
|Provision charged to operations |  |                          | 300   |      |   | 300   |   |   | 50    |  
|Loans charged off               |  |                          | (170  | )    |   | (348  | ) |   | (233  | )
|Recoveries                      |  |                          | 66    |      |   | 74    |   |   | 128   |  
|                                |  |                          |       |      |   |       |   |   |       |  
|                                |  |                          |       |      |   |       |   |   |       |  
|Balance at end of period        |  | $                        | 2,132 |      | $ | 1,936 |   | $ | 1,910 |  
|                                |  |                          |       |      |   |       |   |   |       |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The
 Companys recorded investment in loans that are considered impaired totaled
 $698,000 and $710,000 at December 31, 2009 and 2008, respectively. These impaired
 loans carried allowances of $242,000 and $246,000, at December 31, 2009 and
 2008, respectively. The average recorded investment in impaired loans was
 $704,000, $904,000 and $224,000 in 2009, 2008 and 2007, respectively. The
 Company recognized no interest on impaired loans during the three years ended
 December 31, 2009. Year-end loans with no allocated allowance for loan losses
 totaled $165,000. Year end loans with an allocated allowance for loan losses
 totaled $533,000.                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The
 principal balances of loans not accruing interest amounted to $1.9 million
 and $1.3 million at December 31, 2009 and 2008, respectively. Loans 90
 days or more past due and accruing interest amounted to $43,000 and $0 at
 December 31, 2009 and 2008, respectively. The differences between the amount
 of interest income that would have been recorded if non-accrual loans had
 been paid in accordance with their original terms and the amount of interest
 income that was recorded during the years ended December 31, 2009, 2008 and
 2007 was $65,300, $85,800 and $78,000, respectively. There are no commitments
 to extend further credit on non-accruing loans.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Nonaccrual
 loans and loans past 90 days still on accrual include both smaller balance
 homogenous loans that are collectively evaluated for impairment and
 individually classified impaired loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | A
 substantial portion of the Companys loans are mortgage and consumer loans in
 Oneida County. Accordingly, the ultimate collectibility of a substantial
 portion of the Companys loan portfolio is susceptible to changes in market
 conditions in this area. A majority of the Companys loan portfolio is
 secured by real estate. Other than general economic risks, management is not
 aware of any material concentrations of credit risk to any industry or individual
 borrower. The Company does not originate sub-prime mortgage loans and has not
 purchased investments collateralized by sub-prime loans.                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(5) | Premises and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Premises and
 equipment at December 31 are summarized as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                                |  |      |        |      |   |        | 
|----------------------------------------------- |  | ---- | ------ | ---- | - | ------ | 
|                                                |  | 2009 |        | 2008 |  
|                                                |  |      |        |      |  
|                                                |  |      |        |      |   |        | 
|Land                                            |  | $    | 2,638  |      | $ | 2,638  | 
|Buildings and improvements                      |  |      | 6,374  |      |   | 6,369  | 
|Furniture and equipment                         |  |      | 8,186  |      |   | 8,015  | 
|                                                |  |      |        |      |   |        | 
|                                                |  |      | 17,198 |      |   | 17,022 | 
|Less accumulated depreciation
 and amortization |  |      | 11,157 |      |   | 10,650 | 
|                                                |  |      |        |      |   |        | 
|                                                |  | $    | 6,041  |      | $ | 6,372  | 
|                                                |  |      |        |      |   |        | 

| |                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Depreciation
 and amortization expense included in building, occupancy and equipment
 expense amounted to $513,000, $563,000 and $587,000 during the years ended
 December 31, 2009, 2008 and 2007, respectively.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

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

|                         |  |      |        | 
|------------------------ |  | ---- | ------ | 
|                         |  | 2009 |       
|                         |  |      |       
|                        
|Within one year          |  | $    | 50,422 | 
|One through two years    |  |      | 12,331 | 
|Two through three years  |  |      | 3,990  | 
|Three through four years |  |      | 1,767  | 
|Four through five years  |  |      | 3,393  | 
|                         |  |      |        | 
|Total time deposits      |  | $    | 71,903 | 
|                         |  |      |        | 

| | At December
 31, 2009 and 2008, time deposits with balances of $100,000 or more totaled
 approximately $16,485,000 and $16,031,000, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                  
| | Interest
 expense on deposits for the years ended December 31 is summarized as follows
 (in thousands):                                          

|                       |  |      |       |      |   |       |  |   |       | 
|---------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                       |  | 2009 |       | 2008 |   | 2007  | 
|                       |  |      |       |      |   |       | 
|                      
|Savings                |  | $    | 330   |      | $ | 446   |  | $ | 454   | 
|Money market           |  |      | 189   |      |   | 193   |  |   | 139   | 
|Time                   |  |      | 1,852 |      |   | 2,634 |  |   | 2,834 | 
|Other interest bearing |  |      | 55    |      |   | 69    |  |   | 65    | 
|                       |  |      |       |      |   |       |  |   |       | 
|                       |  | $    | 2,426 |      | $ | 3,342 |  | $ | 3,492 | 
|                       |  |      |       |      |   |       |  |   |       | 

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

|                         |  |      |        |      |   |        | 
|------------------------ |  | ---- | ------ | ---- | - | ------ | 
|                         |  | 2009 |        | 2008 |  
|                         |  |      |        |      |  
|                        
|Overnight line of credit |  | $    | 1,100  |      | $ | 23,700 | 
|Fixed rate advances      |  |      | 46,769 |      |   | 42,624 | 
|                         |  |      |        |      |   |        | 
|Total borrowings         |  | $    | 47,869 |      | $ | 66,324 | 
|                         |  |      |        |      |   |        | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Advances at December 31,
 2009 have maturity dates as follows (balances in thousands):

|                         |  |                |  |              |  |         |       
|------------------------ |  | -------------- |  | ------------ |  | ------- | ------
|                         |  | Range of Rates |  | Average Rate |  | Balance
|                         |  |                |  |              |  |        
|Overnight Line of Credit |  | 0.32%          |  | 0.32%        |  | $       | 1,100 
|2010                     |  | 0.93% - 3.70%  |  | 2.85%        |  |         | 16,173
|2011                     |  | 1.29% - 3.91%  |  | 2.90%        |  |         | 11,167
|2012                     |  | 2.10% - 3.67%  |  | 2.37%        |  |         | 8,582 
|2013                     |  | 3.24% - 3.67%  |  | 4.66%        |  |         | 3,712 
|2014                     |  | 2.85% - 3.67%  |  | 3.10%        |  |         | 2,931 
|Due after 2014           |  | 3.67% - 4.36%  |  | 4.31%        |  |         | 4,203 
|                         |  |                |  |              |  |         |       
|Total                    |  |                |  |              |  | $       | 47,869
|                         |  |                |  |              |  |         |       

|    |                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | At December 31, 2009, the
 Company had additional availability on its FHLB line of credit of $43.0
 million. This line of credit is subject to periodic review and renewal. At
 December 31, 2009, the Company also had approximately $8.5 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):                                                                                                                                                                                                                                                        

|                         |  |      |       |      |   |       |   |   |       |  
|------------------------ |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                         |  | 2009 |       | 2008 |   | 2007  |  
|                         |  |      |       |      |   |       |  
|Current:                 |  |      |       |      |   |       |   |   |       |  
|Federal                  |  | $    | 1,513 |      | $ | 1,143 |   | $ | 1,539 |  
|State                    |  |      | 81    |      |   | 127   |   |   | 106   |  
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      | 1,594 |      |   | 1,270 |   |   | 1,645 |  
|                         |  |      |       |      |   |       |   |   |       |  
|Deferred:                |  |      |       |      |   |       |   |   |       |  
|Federal                  |  |      | (130  | )    |   | 172   |   |   | (38   | )
|State                    |  |      | 23    |      |   | (46   | ) |   | 1     |  
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      | (107  | )    |   | 126   |   |   | (37   | )
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      |       |      |   |       |   |   |       |  
|Total income tax expense |  | $    | 1,487 |      | $ | 1,396 |   | $ | 1,608 |  
|                         |  |      |       |      |   |       |   |   |       |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

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

|                                                               |  |      |       |      |   |       |   |   |       |  
|-------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                                                               |  | 2009 |       | 2008 |   | 2007  |  
|                                                               |  |      |       |      |   |       |  
|Computed expected tax expense                                |  | $    | 1,555 |      | $ | 1,462 |   | $ | 1,585 |  
|Increases (decreases) in income
 taxes resulting from:         |  |      |       |      |   |       |   |   |       |  
|State taxes, net of Federal tax
 benefit                       |  |      | 69    |      |   | 54    |   |   | 71    |  
|Tax exempt interest, net                                       |  |      | (11   | )    |   | (19   | ) |   | (33   | )
|Tax exempt increase in cash
 surrender value of life insurance |  |      | (139  | )    |   | (139  | ) |   | (130  | )
|Non-deductible ESOP expense                                    |  |      | 16    |      |   | 57    |   |   | 107   |  
|Other, net                                                     |  |      | (3    | )    |   | (19   | ) |   | 8     |  
|                                                               |  |      |       |      |   |       |   |   |       |  
|                                                               |  |      |       |      |   |       |   |   |       |  
|                                                               |  | $    | 1,487 |      | $ | 1,396 |   | $ | 1,608 |  
|                                                               |  |      |       |      |   |       |   |   |       |  
|                                                               |  |      |       |      |   |       |   |   |       |  
|Effective tax rate                                             |  |      | 32.5  | %    |   | 32.5  | % |   | 34.5  | %
|                                                               |  |      |       |      |   |       |   |   |       |  

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

|                                                                              |  |      |       |      |   |       |  
|----------------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | -
|                                                                              |  | 2009 |       | 2008 |  
|                                                                              |  |      |       |      |  
|Deferred tax assets:                                                          |  |      |       |      |   |       |  
|Allowance for loan losses                                                     |  | $    | 758   |      | $ | 677   |  
|Accrued postretirement benefits                                               |  |      | 922   |      |   | 1,000 |  
|Deferred compensation                                                         |  |      | 639   |      |   | 737   |  
|Stock-based compensation and
 benefits                                        |  |      | 488   |      |   | 560   |  
|Unrealized loss on investments
 due to other than temporary impairment charge |  |      | 100   |      |   | 100   |  
|Accrued pension cost                                                          |  |      | 329   |      |   | 430   |  
|Other                                                                         |  |      | 62    |      |   | 79    |  
|                                                                              |  |      |       |      |   |       |  
|                                                                              |  |      |       |      |   |       |  
|Total gross deferred tax assets                                               |  |      | 3,298 |      |   | 3,583 |  
|                                                                              |  |      |       |      |   |       |  
|                                                                              |  |      |       |      |   |       |  
|Deferred tax liabilities:                                                     |  |      |       |      |   |       |  
|Depreciation                                                                  |  |      | (217  | )    |   | (196  | )
|Undistributed income of
 subsidiary                                           |  |      |      |      |   | (71   | )
|Unrealized gains on
 available-for-sale securities                            |  |      | (104  | )    |   | (17   | )
|Deferred loan costs                                                           |  |      | (113  | )    |   | (158  | )
|Other                                                                         |  |      | (57   | )    |   | (15   | )
|                                                                              |  |      |       |      |   |       |  
|                                                                              |  |      |       |      |   |       |  
|Total gross deferred tax
 liabilities                                         |  |      | (491  | )    |   | (457  | )
|                                                                              |  |      |       |      |   |       |  
|Net deferred tax assets                                                       |  | $    | 2,807 |      | $ | 3,126 |  
|                                                                              |  |      |       |      |   |       |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, 2009, since the
 Company does not expect that these amounts will become taxable in the
 foreseeable future. Under the tax laws, as amended, events that would result
 in taxation of these reserves include redemptions of Rome Savings stock or
 certain excess distributions to the Holding Company. The unrecognized
 deferred tax liability at December 31, 2009 with respect to the base-year
 reserve was approximately $1.3 million.                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | At December
 31, 2009 and 2008, the Company had approximately $27,000 and $18,000,
 respectively, of unrecognized tax benefits and interest. As of December 31,
 2009 and 2008, $27,000 and $18,000, respectively, of these tax benefits would
 affect the effective tax rate if recognized. As of December 31, 2009 and
 2008, accrued interest related to uncertain tax positions was $3,000 and
 $2,000, 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
 2006. The Company has been notified of an upcoming New York State examination
 of tax years 2006  2008. The tax years 2006-2008 remain open to federal and
 state examination.                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Unrecognized
 Tax Benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | A
 reconciliation of the beginning and ending amount of unrecognized tax
 benefits (excluding interest and the federal income tax benefit of
 unrecognized state tax benefits) is as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                                              |  |      |    |      |   |      |   |   |    | 
|------------------------------------------------------------- |  | ---- | -- | ---- | - | ---- | - | - | -- | 
|                                                              |  | 2009 |    | 2008 |   | 2007 |  
|                                                              |  |      |    |      |   |      |  
|Balance at January 1                                          |  | $    | 24 |      | $ | 64   |   | $ | 15 | 
|Additions based on tax
 positions related to the current year |  |      | 3  |      |   | 3    |   |   |   | 
|Additions based on tax
 positions of prior years              |  |      | 7  |      |   | 21   |   |   | 49 | 
|Reductions for tax
 positions of prior years                  |  |      |   |      |   |     |   |   |   | 
|Reductions due to statute
 of limitations                     |  |      |   |      |   |     |   |   |   | 
|Settlements                                                   |  |      |   |      |   | (64  | ) |   |   | 
|                                                              |  |      |    |      |   |      |   |   |    | 
|Balance at December 31                                        |  | $    | 34 |      | $ | 24   |   | $ | 64 | 
|                                                              |  |      |    |      |   |      |   |   |    | 

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

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

| |                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, 2009 and 2008:

|                                                                     |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|-------------------------------------------------------------------- |  | ---------------- | ----- | ----------------------- | - | ------ | - | ---- | ------ | - | - | ------ | -
|                                                                     |  | Pension benefits |       | Postretirement benefits |  
|                                                                     |  |                  |       |                         |  
|(in thousands)                                                       |  | 2009             |       | 2008                    |   | 2009   |   | 2008 |       
|                                                                     |  |                  |       |                         |   |        |   |      |       
|Change in benefit obligation:                                        |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|Benefit obligation at beginning
 of year                             |  | $                | 5,951 |                         | $ | 6,970  |   | $    | 2,564  |   | $ | 2,440  |  
|Adjustment for measurement date
 change                              |  |                  |      |                         |   | 80     |   |      |       |   |   | 40     |  
|Service cost                                                         |  |                  |      |                         |   |       |   |      | 19     |   |   | 21     |  
|Interest cost                                                        |  |                  | 346   |                         |   | 353    |   |      | 149    |   |   | 147    |  
|Amendments and settlements                                           |  |                  | (112  | )                       |   | (1,219 | ) |      |       |   |   |       |  
|Actuarial(gain)/ loss                                                |  |                  | 204   |                         |   | 185    |   |      | (315   | ) |   | (28    | )
|Benefits paid                                                        |  |                  | (346  | )                       |   | (418   | ) |      | (97    | ) |   | (101   | )
|Participant contributions                                            |  |                  |      |                         |   |       |   |      | 43     |   |   | 45     |  
|                                                                     |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|Benefit obligation at end of
 year                                   |  |                  | 6,043 |                         |   | 5,951  |   |      | 2,363  |   |   | 2,564  |  
|                                                                     |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|Change in plan assets:                                               |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|Fair value of plan assets at
 beginning of year                      |  |                  | 4,971 |                         |   | 8,869  |   |      |       |   |   |       |  
|Actual return on plan assets                                         |  |                  | 793   |                         |   | (2,261 | ) |      |       |   |   |       |  
|Employer contributions                                               |  |                  |      |                         |   |       |   |      | 54     |   |   | 56     |  
|Settlements                                                          |  |                  | (112  | )                       |   | (1,219 | ) |      |       |   |   |       |  
|Participant contributions                                            |  |                  |      |                         |   |       |   |      | 43     |   |   | 45     |  
|Benefits paid                                                        |  |                  | (346  | )                       |   | (418   | ) |      | (97    | ) |   | (101   | )
|                                                                     |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|Fair value of plan assets at
 end of year                            |  |                  | 5,306 |                         |   | 4,971  |   |      |       |   |   |       |  
|                                                                     |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|                                                                     |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|Funded status at end of year
 (plan assets less benefit obligations) |  | $                | (737  | )                       | $ | (980   | ) | $    | (2,363 | ) | $ | (2,564 | )
|                                                                     |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|                                                                     |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|Assumptions as of measurement
 dates - December 31, 2009 and 2008:   |  |                  |       |                         |   |        |   |      |        |   |   |        |  
|Discount rate                                                        |  |                  | 6.00  | %                       |   | 6.00   | % |      | 6.00   | % |   | 6.00   | %
|Expected return on plan assets                                       |  |                  | 9.00  | %                       |   | 9.00   | % |      |       |   |   |       |  
|Rate of compensation increase                                        |  |                  | N/A   |                         |   | N/A    |   |      |       |   |   |       |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In September 2006, the
 Financial Accounting Standards Board (FASB) issued guidance which requires
 defined benefit plan assets and obligations to be measured as of the date of
 the employers fiscal year-end, starting in 2008. Through 2007, the Company utilized the early measurement date option
 available under previous FASB guidance and measured the funded status of the
 defined benefit plan and postretirement benefits plan assets and obligations
 as of September 30 each year. In
 accordance with the adoption provisions, the net periodic benefit cost for
 the period between the September 30 measurement date and the 2008 fiscal year
 end measurement were allocated proportionately between amounts to be
 recognized as an adjustment to retained earnings and net periodic benefit
 cost for the fiscal year. As a result of this adoption, the Company increased
 January 1, 2008 opening retained earnings by $24,000, increased deferred
 income tax liability by $16,000, decreased the pension liability by $80,000,
 and increased the other postretirement liability by $40,000.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Amounts recognized in
 accumulated other comprehensive income (net of tax) at December 31 consist
 of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                            |  |                   |        |                         |   |        |   |      |     |  |   |    | 
|--------------------------- |  | ----------------- | ------ | ----------------------- | - | ------ | - | ---- | --- |  | - | -- | 
|                            |  | Pension
 benefits |        | Postretirement benefits |  
|                            |  |                   |        |                         |  
|                            |  | 2009              |        | 2008                    |   | 2009   |   | 2008 |    
|                            |  |                   |        |                         |   |        |   |      |    
|Net actuarial gain (loss)   |  | $                 | (1,988 | )                       | $ | (2,312 | ) | $    | 240 |  | $ | 22 | 
|Prior service credit (cost) |  |                   |       |                         |   |       |   |      | 17  |  |   | 52 | 
|                            |  |                   |        |                         |   |        |   |      |     |  |   |    | 
|Total                       |  | $                 | (1,988 | )                       | $ | (2,312 | ) | $    | 257 |  | $ | 74 | 
|                            |  |                   |        |                         |   |        |   |      |     |  |   |    | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 $(325,000) and $20,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | The long
 term rate of return on plan assets assumption was set based on historical
 returns earned by equities and fixed income securities, adjusted to reflect
 expectations of future returns as applied to the plans target allocation of
 asset classes. Equities and fixed income securities were assumed to earn real
 rates of return in the ranges of 5-9% and 2-6%, respectively. The long term
 inflation rate was estimated to be 3%. When these overall return expectations
 are applied to the plans target allocation, the expected rate of return is
 determined to be 9%, which is roughly the midpoint of the range of expected
 return.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | The
 Companys pension plan weighted average allocations at December 31, 2009 and
 2008, by asset category are summarized in the following table:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                  |  |                              |     |      |  |     |  
|----------------- |  | ---------------------------- | --- | ---- |  | --- | -
|                  |  | Plan
 assets at December 31, |    
|                  |  |                              |    
|Asset Category    |  | 2009                         |     | 2008 | 
|                  |  |                              |     |      | 
|Equity Securities |  |                              | 63  | %    |  | 59  | %
|Debt Securities   |  |                              | 37  | %    |  | 41  | %
|                  |  |                              |     |      |  |     |  
|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). 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

| |                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.
| |                                                                                                                                                                                          
| | The fair value of plan
 assets at December 31, 2009, by asset category, is as follows (dollars in
 thousands):                                                                           

|                     |  |                 |       |                                                                    |   |                                            |  |   |       | 
|-------------------- |  | --------------- | ----- | ------------------------------------------------------------------ | - | ------------------------------------------ |  | - | ----- | 
|                     |  |                 |       | Fair Value Measurements at
 December 31, 2009 Using:               |  
|Plan
 Assets:        |  | Carrying
 Value |       | Quoted Prices
 in Active
 Markets for
 Identical Assets
 (Level 1) |   | Significant
 observable
 Inputs
 (Level 2) | 
|                     |  |                 |       |                                                                    |   |                                            | 
|Equity
 Mutual Funds |  | $               | 1,029 |                                                                    | $ | 1,029                                      |  | $ |      | 
|Equity
 Trusts       |  |                 | 2,324 |                                                                    |   |                                           |  |   | 2,324 | 
|Fixed Income
 Trusts |  |                 | 1,953 |                                                                    |   |                                           |  |   | 1,953 | 
|                     |  |                 |       |                                                                    |   |                                            |  |   |       | 
|Total                |  | $               | 5,306 |                                                                    | $ | 1,029                                      |  | $ | 4,277 | 
|                     |  |                 |       |                                                                    |   |                                            |  |   |       | 

| |                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the
 fiscal year ended December 31, 2010, the Company expects to make no
 contributions to the pension plan. The following estimated future benefit
 payments, which reflect expected future service, as appropriate, are expected
 to be paid (in thousands):

|                 |  |                   |       |                          |   |     | 
|---------------- |  | ----------------- | ----- | ------------------------ | - | --- | 
|Asset
 Category  |  | Pension
 Benefits |       | Postretirement
 Benefits |  
|                 |  |                   |       |                          |  
|Fiscal 2010      |  | $                 | 375   |                          | $ | 142 | 
|Fiscal 2011      |  |                   | 395   |                          |   | 148 | 
|Fiscal 2012      |  |                   | 424   |                          |   | 155 | 
|Fiscal 2013      |  |                   | 432   |                          |   | 156 | 
|Fiscal 2014      |  |                   | 446   |                          |   | 161 | 
|Fiscal 2015-2019 |  |                   | 2,337 |                          |   | 823 | 

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

|                                                                              |  |                  |      |                         |   |       |   |      |      |      |   |      |   |   |     |   |   |     |  
|----------------------------------------------------------------------------- |  | ---------------- | ---- | ----------------------- | - | ----- | - | ---- | ---- | ---- | - | ---- | - | - | --- | - | - | --- | -
|                                                                              |  | Pension benefits |      | Postretirement benefits |  
|                                                                              |  |                  |      |                         |  
|(in thousands)                                                                |  | 2009             |      | 2008                    |   | 2007  |   | 2009 |      | 2008 |   | 2007 |  
|                                                                              |  |                  |      |                         |   |       |   |      |      |      |   |      |  
|Service cost                                                                  |  | $                |     |                         | $ |      |   | $    |     |      | $ | 19   |   | $ | 21  |   | $ | 25  |  
|Interest cost                                                                 |  |                  | 346  |                         |   | 353   |   |      | 430  |      |   | 149  |   |   | 147 |   |   | 140 |  
|Expected return on assets                                                     |  |                  | (431 | )                       |   | (673  | ) |      | (734 | )    |   |     |   |   |    |   |   |    |  
|Settlement charge                                                             |  |                  |     |                         |   | 134   |   |      |     |      |   |     |   |   |    |   |   |    |  
|Amortization                                                                  |  |                  | 383  |                         |   |      |   |      | 42   |      |   | (8   | ) |   | (8  | ) |   | (8  | )
|                                                                              |  |                  |      |                         |   |       |   |      |      |      |   |      |   |   |     |   |   |     |  
|Net periodic cost (benefit)                                                   |  |                  | 298  |                         |   | (186  | ) |      | (262 | )    |   | 160  |   |   | 160 |   |   | 157 |  
|                                                                              |  |                  |      |                         |   |       |   |      |      |      |   |      |   |   |     |   |   |     |  
|                                                                              |  |                  |      |                         |   |       |   |      |      |      |   |      |   |   |     |   |   |     |  
|Net (gain) loss                                                               |  |                  | (157 | )                       |   | 3,280 |   |      | (504 | )    |   | (315 | ) |   | (30 | ) |   | (24 | )
|Recognition of loss                                                           |  |                  |     |                         |   | (134  | ) |      |     |      |   |      |   |   |    |   |   |    |  
|Amortization of prior service
 cost                                           |  |                  | (383 | )                       |   |      |   |      |     |      |   | 8    |   |   | 8   |   |   | 8   |  
|                                                                              |  |                  |      |                         |   |       |   |      |      |      |   |      |   |   |     |   |   |     |  
|Total recognized in other
 comprehensive income                               |  |                  | (540 | )                       |   | 3,146 |   |      | (504 | )    |   | (307 | ) |   | (22 | ) |   | (16 | )
|                                                                              |  |                  |      |                         |   |       |   |      |      |      |   |      |   |   |     |   |   |     |  
|Total recognized in net
 periodic benefit cost and other comprehensive income |  | $                | (242 | )                       | $ | 2,960 |   | $    | (766 | )    | $ | (147 | ) | $ | 138 |   | $ | 157 |  
|                                                                              |  |                  |      |                         |   |       |   |      |      |      |   |      |   |   |     |   |   |     |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | During the
 quarter ended March 31, 2008, the Company recorded a curtailment charge of
 $134,000 related to a partial settlement of the defined benefit pension plan.
 In December of 2002, the Companys Board of Directors amended the defined
 benefit pension plan to cease the accrual of further benefits. There is no
 assumed increase in the per capita cost of current health care benefits since
 the employer contributions are fixed with the retiree paying for any cost
 increases.                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(10) | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | On May 3, 2000, the
 Companys shareholders approved the Rome Bancorp, Inc. 2000 Stock Option Plan
 (the 2000 Stock Option Plan). The primary objective of the 2000 Stock
 Option Plan is to provide officers and directors with a proprietary interest
 in the Company and an incentive to encourage such persons to remain with the
 Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | Under the
 2000 Stock Option Plan, 517,952 shares of authorized but unissued common
 stock are reserved for issuance upon option exercises. The Company also has
 the alternative to fund the 2000 Stock Option Plan with treasury stock.
 Options under the plan may be either non-qualified stock options or incentive
 stock options. Each option entitles the holder to purchase one share of
 common stock at an exercise price equal to the fair market value on the date
 of grant. On June 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, 2009 and 2008 the remaining contractual life of
 these options was 0.5 years and 1.5 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, 2009
 and December 31, 2008 the remaining contractual life of these options was 6.4
 years and 7.4 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, 2009.                                                                                                                                         

---



|                                            
|--------------------------------------------
|Rome Bancorp, Inc and Subsidiary            
|Notes to Consolidated Financial Statements  
|Years ended December 31, 2009, 2008 and 2007

Information related to the
stock option plans during each year follows: 2009
 
 2008
 
 2007Intrinsic
 value of options exercised
 
 $
 18,000
 
 $
 25,000
 
 $
 1.7 millionCash
 received from option exercises
 
 
 
 
 
 
 
 
 356,000Tax benefit
 realized from option exercises
 
 
 
 
 
 
 
 
 156,000Weighted
 average fair value of options granted
 
 
 
 
 
 
 
 
  As of December 31, 2009,
there was $71,000 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 1.42 years. At December 31, 2009, the
intrinsic value of all outstanding options and exercisable options was $0. The following
table presents the stock option activity for the year ended December 31, 2009: 2009Shares
 
 Weighted Average
 Exercise PriceOutstanding at beginning of year
 
 
 356,726
 
 $
 12.76Exercised
 
 
 (2,726
 )
 
 2.19Granted
 
 
 
 
 
 Outstanding at end of year
 
 
 354,000
 
 $
 12.84Exercisable at end of year
 
 
 212,400
 
 $
 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, $231,000
 and $263,000 related to RRP awards was recorded in 2009, 2008 and 2007, 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.

---



|                                            
|--------------------------------------------
|Rome Bancorp, Inc and Subsidiary            
|Notes to Consolidated Financial Statements  
|Years ended December 31, 2009, 2008 and 2007

| |                                                                              
| | -----------------------------------------------------------------------------
| | 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, 2009   |  |        | 100,980 |                                        |   |      | 
|Granted                         |  |        |        |                                        |   |      | 
|Vested                          |  |        | 33,660  |                                        | $ | 12.84 | 
|Forfeited                       |  |        |        |                                        |   |      | 
|                                |  |        |         |                                        |   |       | 
|Nonvested at
 December 31, 2009 |  |        | 67,320  |                                        | $ | 12.84 | 
|                                |  |        |         |                                        |   |       | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | As of December 31, 2009,
 there was $252,000 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 1.4 years. The total fair value of shares vested
 during the years ended December 31, 2009, 2008 and 2007 was $300,000,
 $384,000 and $416,000.                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(12) | Other Employee Benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | The Company
 has a defined contribution 401(k) Savings Plan for all full time salaried
 employees. Employees are permitted to contribute up to 75% of base pay to the
 Savings Plan, subject to certain limitations. The Company matches 50% of each
 employees contributions up to a limit of 3% of the employees base pay.
 Contributions to the defined contribution 401(k) Savings Plan were $88,000,
 $86,000 and $77,000 during the years ended December 31, 2009, 2008 and 2007,
 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, 2009, 332,547 of the
 original ESOP shares had been released or committed to be released of which
 120,941 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,
 2009, 78,666 of these shares had been released or committed to be released
 and 157,334 remained as unallocated shares.                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | The fair
 value of the unallocated shares on December 31, 2009 was $2.2 million. The
 Company recognized compensation expense of $384,000, $495,000 and $557,000 in
 2009, 2008 and 2007, 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 $527,000 and $685,000 at
 December 31, 2009 and December 31, 2008, respectively.

---



|                                            
|--------------------------------------------
|Rome Bancorp, Inc and Subsidiary            
|Notes to Consolidated Financial Statements  
|Years ended December 31, 2009, 2008 and 2007

|     |                                                                                                                                                                                                                                                                                                                                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(13) | Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                       
|     | Comprehensive
 income represents net income and other comprehensive income (loss) which is
 the net change in the unrealized gains or losses on securities
 available-for-sale and unrealized gains and losses on pension and
 postretirement liabilities, net of taxes. The following summarizes the
 components of other comprehensive income (loss) (in thousands):

|                                                                                 |  |                          |       |      |   |        |   |   |     |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ----- | ---- | - | ------ | - | - | --- | -
|                                                                                 |  | Years ended December 31, |      
|                                                                                 |  |                          |      
|                                                                                 |  | 2009                     |       | 2008 |   | 2007   |  
|                                                                                 |  |                          |       |      |   |        |  
|Unrealized holding gains
 (losses) arising during the period                     |  | $                        | 1,136 |      | $ | (3,325 | ) | $ | 439 |  
|Reclassification adjustment for
 net realized (gain) loss included in net income |  |                          | (73   | )    |   | 265    |   |   | (11 | )
|                                                                                 |  |                          |       |      |   |        |   |   |     |  
|                                                                                 |  |                          |       |      |   |        |   |   |     |  
|Other comprehensive income
 (loss), before tax                                   |  |                          | 1,063 |      |   | (3,060 | ) |   | 428 |  
|Deferred tax expense (benefit)                                                   |  |                          | 425   |      |   | (1,224 | ) |   | 171 |  
|                                                                                 |  |                          |       |      |   |        |   |   |     |  
|                                                                                 |  |                          |       |      |   |        |   |   |     |  
|Other comprehensive income
 (loss), net of tax                                   |  | $                        | 638   |      | $ | (1,836 | ) | $ | 257 |  
|                                                                                 |  |                          |       |      |   |        |   |   |     |  

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

|                                                                 |  |                     |        |             |   |                     |  |   |        |  
|---------------------------------------------------------------- |  | ------------------- | ------ | ----------- | - | ------------------- |  | - | ------ | -
|                                                                 |  | Balance
at
12/31/08 |        | 2009
Change |   | Balance
at
12/31/09 | 
|                                                                 |  |                     |        |             |   |                     | 
|Unrealized gains on available for sale securities                |  | $                   | 26     |             | $ | 130                 |  | $ | 156    |  
|Unrealized gains (losses) on pension and postretirement benefits |  |                     | (2,238 | )           |   | 508                 |  |   | (1,730 | )
|                                                                 |  |                     |        |             |   |                     |  |   |        |  
|                                                                 |  | $                   | (2,212 | )           | $ | 638                 |  | $ | (1,574 | )
|                                                                 |  |                     |        |             |   |                     |  |   |        |  

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

---



Rome Bancorp, Inc
and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | At December 31, 2009 and 2008 the Company was
 committed to originate mortgage and other loans of approximately $7.5 million
 and $3.3 million, respectively. At December 31, 2009 and December 31, 2008,
 the Companys fixed rate loan commitments totaled $7.5 million and $1.4
 million, respectively. The range of interest rates on these fixed rate
 commitments was 4.50% to 6.75% at December 31, 2009 and 5.875% to 8.5% at
 December 31, 2008. Commitments under unused lines of credit and letters of
 credit were approximately $19.4 million and $18.7 million at December 31,
 2009 and 2008, 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):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                             |  |      |       |      |   |       |   |   |       |  
|-------------------------------------------- |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                                             |  | 2009 |       | 2008 |   | 2007  |  
|                                             |  |      |       |      |   |       |  
|Basic earnings per share:                    |  |      |       |      |   |       |   |   |       |  
|Net Income                                   |  | $    | 3,087 |      | $ | 2,905 |   | $ | 3,054 |  
|                                             |  |      |       |      |   |       |   |   |       |  
|Weighted average basic shares
 outstanding   |  |      | 6,900 |      |   | 7,353 |   |   | 8,234 |  
|Less: Average unallocated ESOP
 shares       |  |      | (307  | )    |   | (353  | ) |   | (399  | )
|                                             |  |      |       |      |   |       |   |   |       |  
|Average basic shares                         |  |      | 6,593 |      |   | 7,000 |   |   | 7,835 |  
|                                             |  |      |       |      |   |       |   |   |       |  
|Basic earnings per share                     |  | $    | 0.47  |      | $ | 0.42  |   | $ | 0.39  |  
|                                             |  |      |       |      |   |       |   |   |       |  
|Diluted earnings per share:                  |  |      |       |      |   |       |   |   |       |  
|Net Income                                   |  | $    | 3,087 |      | $ | 2,905 |   | $ | 3,054 |  
|                                             |  |      |       |      |   |       |   |   |       |  
|Weighted average basic shares
 outstanding   |  |      | 6,593 |      |   | 7,000 |   |   | 7,835 |  
|Effect of dilutive securities:               |  |      |       |      |   |       |   |   |       |  
|Stock options                                |  |      |      |      |   | 3     |   |   | 19    |  
|                                             |  |      |       |      |   |       |   |   |       |  
|Weighted average diluted
 shares outstanding |  |      | 6,593 |      |   | 7,003 |   |   | 7,854 |  
|                                             |  |      |       |      |   |       |   |   |       |  
|Diluted earnings per share                   |  | $    | 0.47  |      | $ | 0.41  |   | $ | 0.39  |  
|                                             |  |      |       |      |   |       |   |   |       |  

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, 2009 because they were anti-dilutive.

---



Rome Bancorp, Inc
and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(16) | Shareholders Equity and Regulatory
 Matters                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | Rome Savings is required to maintain certain
 reserves of vault cash and/or deposits with the Federal Reserve Bank of New
 York. The amount of this reserve requirement, included in cash on hand, is
 $1.7 million at December 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | The Companys ability to pay dividends is primarily
 dependent upon the ability of its subsidiary bank to pay dividends to the
 Company. The payment of dividends by Rome Savings is subject to continued
 compliance with minimum regulatory capital requirements. In addition,
 regulatory approval is generally required prior to Rome Savings declaring
 dividends in an amount in excess of net income for that year plus net income
 retained in the preceding two years. Further, under the OTS conversion
 regulations, the Company could not return any capital, other than ordinary
 dividends, to its stockholders during the three years following the
 conversion and offering completed in March of 2005.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | The Company and Rome
 Savings are subject to various regulatory requirements administered by the
 federal banking agencies and Rome Savings is a federal savings bank regulated
 by the Office of Thrift Supervision (OTS). The Company is a Delaware
 corporation and is regulated as a savings and loan holding company by the
 OTS. The Bank must obtain regulatory approval to pay cash dividends
 to the Company.                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | Under capital adequacy guidelines and the regulatory
 framework for prompt corrective action, Rome Savings must meet specific
 guidelines that involve quantitative measures of assets, liabilities, and
 certain off-balance sheet items as calculated under regulatory accounting
 practices.                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | Capital amounts are also subject to qualitative
 judgments by the regulators about components, risk weightings, and other
 factors. Failure to meet minimum capital requirements can initiate certain
 mandatory and possibly additional discretionary, actions by the regulators
 that, if undertaken, could have a direct material effect on the Companys and
 Banks financial statements.                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | The Federal Deposit Insurance Corporation
 Improvement Act of 1991 (FDICIA), established capital levels for which
 insured institutions are categorized as well capitalized, adequately
 capitalized, undercapitalized, significantly undercapitalized, or critically
 undercapitalized.                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | As of August 21, 2008, the most recent notification
 from the OTS categorized Rome Savings as well capitalized under the
 regulatory framework for prompt corrective actions. There have been no
 conditions or events since that notification that management believes have
 changed Rome Savings category. Management believes, as of December 31, 2009,
 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.                                                                                                                                                                                                                                                                                                                                                               

---



Rome Bancorp, Inc
and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008 and 2007

| |                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following is a summary of Rome Savings actual
 capital amounts and ratios compared to the regulatory minimum capital
 adequacy requirements and the OTS and FDIC requirements for classification as
 a well capitalized institution under prompt corrective action provisions
 (dollars in thousands):

|                                          |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|----------------------------------------- |  | ------ | ------ | --------------------------------------- |  | ---------------------------------------------------------------------------------- | - | ----- | ------ | ------ |  | ----- | - | - | ------ |  |  | ---- | -
|                                          |  | Actual |        | Minimum capital
 adequacy
 requirements |  | To be classified as
 Well-capitalized
 under prompt
 corrective action
 provisions |  
|                                          |  |        |        |                                         |  |                                                                                    |  
|                                          |  | Amount |        | Ratio                                   |  | Amount                                                                             |   | Ratio |        | Amount |  | Ratio |  
|                                          |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |  
|As of December 31, 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  | %
|                                          |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|As of December 31, 2008:                  |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Total capital (to risk weighted assets):  |  | $      | 59,845 |                                         |  | 24.45                                                                              | % | $     | 19,579 |        |  | >=8   | % | $ | 24,474 |  |  | >=10 | %
|                                          |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Tier 1 Capital (to risk weighted assets): |  |        | 58,229 |                                         |  | 23.79                                                                              | % |       | 9,790  |        |  | >=4   | % |   | 14,684 |  |  | >=6  | %
|                                          |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Tier 1 Capital (to adjusted assets):      |  |        | 58,229 |                                         |  | 17.15                                                                              | % |       | 10,186 |        |  | >=3   | % |   | 16,977 |  |  | >=5  | %

| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | Following is a reconciliation of Rome Savings GAAP
 shareholders equity to regulatory Tier 1 capital at December 31, 2009 and
 2008.

|                                                                                                          |  |                     |        |                     |   |        |  
|--------------------------------------------------------------------------------------------------------- |  | ------------------- | ------ | ------------------- | - | ------ | -
|                                                                                                          |  | December
 31,
 2009 |        | December
 31,
 2008 |  
|                                                                                                          |  |                     |        |                     |  
|GAAP
 Shareholders Equity                                                                                |  | $                   | 52,540 |                     | $ | 55,983 |  
|Plus: Minority interest
 in consolidated subsidiary and other comprehensive loss related to SFAS No.
 158 |  |                     | 1,730  |                     |   | 2,342  |  
|Less: Disallowed assets
 and unrealized gains on available-for-sale securities, net of tax                |  |                     | (224   | )                   |   | (26    | )
|                                                                                                          |  |                     |        |                     |   |        |  
|Tier 1 Capital                                                                                            |  |                     | 54,046 |                     |   | 58,229 |  
|                                                                                                          |  |                     |        |                     |   |        |  
|                                                                                                          |  |                     |        |                     |   |        |  
|Plus: Allowance
 for loan losses                                                                          |  |                     | 2,132  |                     |   | 1,936  |  
|Allowed
 unrealized gain on available-for-sale securities                                                 |  |                     |       |                     |   |       |  
|Less: Real estate
 held for investment                                                                    |  |                     | (312   | )                   |   | (320   | )
|                                                                                                          |  |                     |        |                     |   |        |  
|                                                                                                          |  |                     |        |                     |   |        |  
|Total Regulatory
 Capital                                                                                 |  | $                   | 55,866 |                     | $ | 59,845 |  
|                                                                                                          |  |                     |        |                     |   |        |  

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2009, 2008 and 2007

|     |                                                                                                                                                                                                                                                                                                                                                        
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 appraisers to adjust for differences
 between the comparable sales and income data available. Such adjustments are
 typically significant and result in a Level 3 classification of the inputs
 for determining fair value.

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

|                               |  |                                                                    |     |                                                   |   |       | 
|------------------------------ |  | ------------------------------------------------------------------ | --- | ------------------------------------------------- | - | ----- | 
|                               |  | Fair Value Measurements
 at December 31, 2009 Using                |    
|                               |  |                                                                    |    
|                               |  | Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1) |     | Significant
 Other
 Observable
 Inputs
 (Level 2) |  
|                               |  |                                                                    |     |                                                   |  
|Assets:                        |  |                                                                    |     |                                                   |   |       | 
|Available for sale
 securities |  | $                                                                  | 568 |                                                   | $ | 9,456 | 

|                               |  |                                                                    |     |                                                  |   |       | 
|------------------------------ |  | ------------------------------------------------------------------ | --- | ------------------------------------------------ | - | ----- | 
|                               |  | Fair Value Measurements
 at December 31, 2008 Using                |    
|                               |  |                                                                    |    
|                               |  | Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1) |     | Significant
 Other
 Observable
 Inputs
 (Level2) |  
|                               |  |                                                                    |     |                                                  |  
|Assets:                        |  |                                                                    |     |                                                  |   |       | 
|Available for sale
 securities |  | $                                                                  | 500 |                                                  | $ | 3,063 | 

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2009, 2008 and 2007

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

|               |  |                                                                    |   |                                                   |   |                                              |  |   |     | 
|-------------- |  | ------------------------------------------------------------------ | - | ------------------------------------------------- | - | -------------------------------------------- |  | - | --- | 
|               |  | 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 |  | $                                                                  |  |                                                   | $ |                                             |  | $ | 456 | 

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

|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The
 following represent impairment charges recognized during the period:
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                          | Impaired
 loans, which are measured for impairment using the fair value of the
 collateral for collateral dependent loans, had a carrying amount of $698,000,
 with a valuation allowance of $242,000, resulting in no additional provision
 for loan losses for the year ended December 31, 2009. At December 31, 2008,
 impaired loans had a carrying amount of $710,000, with a valuation allowance
 of $246,000, resulting in an additional provision for loan losses of
 $234,000.
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                          | 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, 2009 and 2008.

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2009, 2008 and 2007

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

|                              |  |                  |         |             |   |                  |  |             |         |  |   |         | 
|----------------------------- |  | ---------------- | ------- | ----------- | - | ---------------- |  | ----------- | ------- |  | - | ------- | 
|                              |  | 2009             |         | 2008        |  
|                              |  |                  |         |             |  
|                              |  | Carrying
 amount |         | Fair
 value |   | Carrying
 amount |  | Fair
 value |        
|                              |  |                  |         |             |   |                  |  |             |        
|Financial assets:             |  |                  |         |             |   |                  |  |             |         |  |   |         | 
|Cash and cash equivalents     |  | $                | 7,574   |             | $ | 7,574            |  | $           | 9,579   |  | $ | 9,579   | 
|Securities available for sale |  |                  | 10,024  |             |   | 10,024           |  |             | 3,563   |  |   | 3,563   | 
|Securities held to maturity   |  |                  | 1,431   |             |   | 1,502            |  |             | 1,447   |  |   | 1,561   | 
|Loans, net                    |  |                  | 285,617 |             |   | 288,524          |  |             | 298,453 |  |   | 302,424 | 
|Federal Home Loan Bank Stock  |  |                  | 3,222   |             |   | n/a              |  |             | 3,578   |  |   | n/a     | 
|Accrued interest receivable   |  |                  | 1,117   |             |   | 1,117            |  |             | 1,085   |  |   | 1,085   | 
|Financial liabilities:        |  |                  |         |             |   |                  |  |             |         |  |   |         | 
|Non-interest bearing deposits |  |                  | 31,790  |             |   | 31,790           |  |             | 28,373  |  |   | 28,373  | 
|Interest bearing deposits     |  |                  | 184,849 |             |   | 185,320          |  |             | 177,559 |  |   | 178,007 | 
|FHLB advances                 |  |                  | 47,869  |             |   | 48,342           |  |             | 66,324  |  |   | 67,273  | 
|Accrued interest payable      |  |                  | 127     |             |   | 127              |  |             | 121     |  |   | 121     | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | It is not
 practicable to determine the fair value of FHLB stock due to restrictions
 placed on its transferability. Fair value estimates are made at a specific
 point in time, based on relevant market information and information about the
 financial instrument. These estimates are subjective in nature and involve
 uncertainties and matters of significant judgment and, therefore, cannot be
 determined with precision. Changes in assumptions could significantly affect
 the estimates.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements 
Years ended December 31, 2009, 2008 and 2007

|     |                                                                                                                                                                                                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(18) | Parent Company Only Financial Statements                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                  
|     | Presented
 below is the condensed balance sheet of the Parent Company as of December 31,
 2009 and 2008 and statement of income and statement of cash flows for the
 years ended December 31, 2009, 2008 and 2007 (in thousands):

|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|-------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ | - | - | ------ | 
|Condensed
 Balance Sheets                                                                                                  |  |      |        | 2009 |   | 2008   |  
|                                                                                                                           |  |      |        |      |   |        |  
|Assets:                                                                                                                    |  |      |        |      |   |        |   |   |        | 
|Cash and due from banks                                                                                                    |  |      |        |      | $ | 4,106  |   | $ | 421    | 
|Investment in subsidiary bank                                                                                              |  |      |        |      |   | 52,470 |   |   | 55,982 | 
|Loan receivable from ESOP                                                                                                  |  |      |        |      |   | 2,075  |   |   | 2,277  | 
|Other assets                                                                                                               |  |      |        |      |   | 1,756  |   |   | 1,749  | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|Total assets                                                                                                               |  |      |        |      | $ | 60,407 |   | $ | 60,429 | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|Total liabilities                                                                                                          |  |      |        |      | $ | 42     |   | $ | 85     | 
|Total shareholders equity                                                                                                 |  |      |        |      |   | 60,365 |   |   | 60,344 | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|Total liabilities and shareholders equity                                                                                 |  |      |        |      | $ | 60,407 |   | $ | 60,429 | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|Condensed
 Statements of Income                                                                                            |  | 2009 |        | 2008 |   | 2007   |  
|                                                                                                                           |  |      |        |      |   |        |  
|Interest and investment
 income                                                                                            |  | $    | 182    |      | $ | 172    |   | $ | 301    | 
|Dividends from subsidiary
 bank                                                                                            |  |      | 8,000  |      |   | 10,300 |   |   | 3,000  | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|Total operating income                                                                                                     |  |      | 8,182  |      |   | 10,472 |   |   | 3,301  | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|                                                                                                                          
|Net loss on securities                                                                                                     |  |      |       |      |   | 265    |   |   |       | 
|Other operating expenses                                                                                                   |  |      | 507    |      |   | 574    |   |   | 680    | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|Income (loss) before income taxes and dividends in excess of net
 income/equity in undistributed income of subsidiary bank |  |      | 7,675  |      |   | 9,633  |   |   | 2,621  | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|Equity in undistributed income (dividends in excess of net income) of
 subsidiary bank                                     |  |      | (4,588 | )    |   | (6,728 | ) |   | 433    | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 
|Net income                                                                                                                 |  | $    | 3,087  |      | $ | 2,905  |   | $ | 3,054  | 
|                                                                                                                           |  |      |        |      |   |        |   |   |        | 

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2009, 2008 and 2007

|                                                                                            |  |      |        |      |   |         |   |   |         |  
|------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------- | - | - | ------- | -
|Condensed Statements of Cash Flows                                                          |  | 2009 |        | 2008 |   | 2007    |  
|                                                                                            |  |      |        |      |   |         |  
|Operating activities:                                                                       |  |      |        |      |   |         |   |   |         |  
|Net income                                                                                  |  | $    | 3,087  |      | $ | 2,905   |   | $ | 3,054   |  
|Adjustments to reconcile net income to cash provided by operating
 activities:              |  |      |        |      |   |         |   |   |         |  
|(Equity in undistributed earnings of)/dividends in excess of net
 income of subsidiary bank |  |      | 4,588  |      |   | 6,728   |   |   | (433    | )
|Amortization of stock-based compensation                                                    |  |      | 228    |      |   | 280     |   |   | 313     |  
|Net loss on securities other than temporarily impaired                                      |  |      |       |      |   | 265     |   |   |        |  
|Increase in other assets                                                                    |  |      | (99    | )    |   | (139    | ) |   | (213    | )
|(Decrease) increase in other liabilities                                                    |  |      | (43    | )    |   | 29      |   |   | (86     | )
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|Net
 cash provided by operating activities                                                  |  |      | 7,761  |      |   | 10,068  |   |   | 2,635   |  
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|Investing activities:                                                                       |  |      |        |      |   |         |   |   |         |  
|Decrease in loan to ESOP                                                                    |  |      | 202    |      |   | 190     |   |   | 179     |  
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|Net
 cash provided by investing activities                                                  |  |      | 202    |      |   | 190     |   |   | 179     |  
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|Financing activities:                                                                       |  |      |        |      |   |         |   |   |         |  
|Purchase of treasury stock                                                                  |  |      | (2,058 | )    |   | (8,174  | ) |   | (10,181 | )
|Dividends                                                                                   |  |      | (2,220 | )    |   | (2,387  | ) |   | (2,518  | )
|Exercise of stock options and related tax benefits                                          |  |      |       |      |   |        |   |   | 512     |  
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|Net
 cash used in financing activities                                                      |  |      | (4,278 | )    |   | (10,561 | ) |   | (12,187 | )
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|Net increase (decrease) in cash and cash equivalents                                        |  |      | 3,685  |      |   | (303    | ) |   | (9,373  | )
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|Cash and cash equivalents at beginning of year                                              |  |      | 421    |      |   | 724     |   |   | 10,097  |  
|                                                                                            |  |      |        |      |   |         |   |   |         |  
|Cash and cash equivalents at end of year                                                    |  | $    | 4,106  |      | $ | 421     |   | $ | 724     |  
|                                                                                            |  |      |        |      |   |         |   |   |         |  

19) Selected Quarterly Financial Data
(Unaudited)

Selected quarterly financial data for 2009
and 2008 are as follows:

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

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

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