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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended June 30, 2005



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission file number: 0-51000



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OCEAN SHORE HOLDING CO.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|United States                                                  |  | 22-3584037                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                           |  |           
|------------------------------------------ |  | ----------
|1001 Asbury Avenue, Ocean City, New Jersey |  | 08226     
|(Address of principal executive offices)   |  | (Zip Code)



(609) 399-0012

(Registrants telephone number, including area code)



Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).    Yes ̈No  x



Indicate the number of shares outstanding of
each of the Issuers classes of common stock as of the latest practicable date:



At August 5, 2005, the registrant had 8,762,742 shares of $0.01 par value common stock outstanding.



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##### Table of Contents

OCEAN SH
ORE HOLDING CO.



FORM 10-Q



INDEX



|           |  |                                                                                                                                |  |     
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------ |  | ----
|           |  |                                                                                                                                |  | Page
|PART I.    |  | FINANCIAL INFORMATION                                                                                                          |  |     
|           |  |                                                                                                                               
|Item 1.    |  | Financial Statements                                                                                                           |  |     
|           |  |                                                                                                                               
|           |  | Unaudited Condensed Consolidated Statements of Financial Condition at June 30, 2005 and December 31, 2004                      |  | 1   
|           |  |                                                                                                                               
|           |  | Unaudited Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2005 and 2004                |  | 2   
|           |  |                                                                                                                               
|           |  | Unaudited Condensed Consolidated Statements of Changes in Stockholders Equity for the Six Months Ended June 30, 2005 and 2004 |  | 3   
|           |  |                                                                                                                               
|           |  | Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004                      |  | 4   
|           |  |                                                                                                                               
|           |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                                 |  | 5   
|           |  |                                                                                                                               
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                          |  | 13  
|           |  |                                                                                                                               
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                                     |  | 23  
|           |  |                                                                                                                               
|Item 4.    |  | Controls and Procedures                                                                                                        |  | 23  
|           |  |                                                                                                                               
|PART II.   |  | OTHER INFORMATION                                                                                                              |  |     
|           |  |                                                                                                                               
|Item 1.    |  | Legal Proceedings                                                                                                              |  | 24  
|           |  |                                                                                                                               
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                    |  | 24  
|           |  |                                                                                                                               
|Item 3.    |  | Defaults upon Senior Securities                                                                                                |  | 24  
|           |  |                                                                                                                               
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                                            |  | 24  
|           |  |                                                                                                                               
|Item 5.    |  | Other Information                                                                                                              |  | 24  
|           |  |                                                                                                                               
|Item 6.    |  | Exhibits                                                                                                                       |  | 25  
|           | 
|SIGNATURES |  | 26                                                                                                                            



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##### Table of Contents

PART I  FINANCIAL INFORMATION



Item 1. Financial Statements



OCEAN SHORE HOLDING CO. AND SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION



|                                                                                                      |  |               |             |   |                   |   |             |  
|----------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                      |  | June 30, 2005 |             |   | December 31, 2004 |  
|ASSETS                                                                                                |  |               |             |   |                   |   |             |  
|                                                                                                      |  |              
|Cash and amounts due from depository institutions                                                     |  | $             | 14,892,374  |   |                   | $ | 7,895,819   |  
|Federal funds sold                                                                                    |  |               | 21,500,000  |   |                   |   | 39,500,000  |  
|                                                                                                      |  |               |             |   |                   |   |             |  
|Cash and cash equivalents                                                                             |  |               | 36,392,374  |   |                   |   | 47,395,819  |  
|                                                                                                      |  |              
|Investment securities held to maturity(estimated fair value 2005, $9,622,997; 2004, $8,398,135)      |  |               | 9,617,169   |   |                   |   | 8,387,127   |  
|Investment securities available for sale(amortized cost 2005, $52,147,962; 2004, $54,067,590)        |  |               | 52,308,601  |   |                   |   | 54,233,783  |  
|Mortgage-backed securities held to maturity(estimated fair value 2005, $5,957,605; 2004, $2,161,900) |  |               | 5,921,419   |   |                   |   | 2,156,901   |  
|Mortgage-backed securities available for sale(amortized cost 2005, $44,870,610; 2004, $51,732,377)   |  |               | 44,957,084  |   |                   |   | 52,024,635  |  
|Loans receivablenet                                                                                  |  |               | 373,618,668 |   |                   |   | 340,585,224 |  
|Accrued interest receivable:                                                                          |  |               |             |   |                   |   |             |  
|Loans                                                                                                 |  |               | 1,332,526   |   |                   |   | 1,182,138   |  
|Mortgage-backed securities                                                                            |  |               | 207,022     |   |                   |   | 219,992     |  
|Investment securities                                                                                 |  |               | 615,317     |   |                   |   | 627,103     |  
|Federal Home Loan Bank stockat cost                                                                  |  |               | 3,391,100   |   |                   |   | 3,101,600   |  
|Office properties and equipmentnet                                                                   |  |               | 8,458,004   |   |                   |   | 8,075,696   |  
|Prepaid expenses and other assets                                                                     |  |               | 2,915,789   |   |                   |   | 2,734,054   |  
|Cash surrender value of life insurance                                                                |  |               | 7,213,413   |   |                   |   | 6,992,313   |  
|Deferred tax asset                                                                                    |  |               | 719,964     |   |                   |   | 727,727     |  
|                                                                                                      |  |               |             |   |                   |   |             |  
|TOTAL ASSETS                                                                                          |  | $             | 547,668,450 |   |                   | $ | 528,444,112 |  
|                                                                                                      |  |               |             |   |                   |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                  |  |               |             |   |                   |   |             |  
|                                                                                                      |  |              
|LIABILITIES:                                                                                          |  |               |             |   |                   |   |             |  
|Non-interest bearing deposits                                                                         |  | $             | 49,444,707  |   |                   | $ | 35,318,241  |  
|Interest bearing deposits                                                                             |  |               | 381,257,413 |   |                   |   | 380,009,838 |  
|Advances from Federal Home Loan Bank                                                                  |  |               | 10,000,000  |   |                   |   | 10,000,000  |  
|Junior subordinated debenture                                                                         |  |               | 15,464,000  |   |                   |   | 15,464,000  |  
|Securities sold under agreements to repurchase                                                        |  |               | 24,490,000  |   |                   |   | 22,840,000  |  
|Advances from borrowers for taxes and insurance                                                       |  |               | 2,263,234   |   |                   |   | 1,995,772   |  
|Accrued interest payable                                                                              |  |               | 821,782     |   |                   |   | 821,013     |  
|Other liabilities                                                                                     |  |               | 2,631,960   |   |                   |   | 2,200,012   |  
|                                                                                                      |  |               |             |   |                   |   |             |  
|Total liabilities                                                                                     |  |               | 486,373,096 |   |                   |   | 468,648,876 |  
|                                                                                                      |  |               |             |   |                   |   |             |  
|COMMITMENTS AND CONTINGENCIES                                                                         |  |               |             |   |                   |   |             |  
|                                                                                                      |  |              
|STOCKHOLDERS EQUITY:                                                                                 |  |               |             |   |                   |   |             |  
|Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued                             |  |               |            |   |                   |   |            |  
|Common stock, $.01 par value, 25,000,000 shares authorized, 8,762,742 shares issued                   |  |               | 87,627      |   |                   |   | 87,627      |  
|Additional paid in capital                                                                            |  |               | 38,395,538  |   |                   |   | 38,387,523  |  
|Retained earnings - partially restricted                                                              |  |               | 26,089,531  |   |                   |   | 24,557,370  |  
|Deferred compensation plans trust                                                                     |  |               | (346,698    | ) |                   |   | (321,260    | )
|Unallocated ESOP shares                                                                               |  |               | (3,091,490  | ) |                   |   | (3,205,990  | )
|Accumulated other comprehensive income                                                                |  |               | 160,846     |   |                   |   | 289,966     |  
|                                                                                                      |  |               |             |   |                   |   |             |  
|Total stockholders equity                                                                            |  |               | 61,295,354  |   |                   |   | 59,795,236  |  
|                                                                                                      |  |               |             |   |                   |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                            |  | $             | 547,668,450 |   |                   | $ | 528,444,112 |  
|                                                                                                      |  |               |             |   |                   |   |             |  



See
notes to unaudited condensed consolidated financial statements.



1



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##### Table of Contents

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME



|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|------------------------------------------------------------------------------------------------------------- |  | --------------------------- | --------- | ------------------------- | - | --------- |  | ---- | ---------- |  | - | ----------
|                                                                                                              |  | Three Months Ended June 30, |           | Six Months Ended June 30,
|                                                                                                              |  | 2005                        |           | 2004                      |   | 2005      |  | 2004
|INTEREST AND DIVIDEND INCOME:                                                                                 |  |                             |           |                           |   |           |  |      |            |  |   |           
|Taxable interest and fees on loans                                                                            |  | $                           | 5,044,414 |                           | $ | 4,321,378 |  | $    | 9,796,415  |  | $ | 8,634,375 
|Taxable interest on mortgage-backed securities                                                                |  |                             | 582,076   |                           |   | 587,788   |  |      | 1,154,341  |  |   | 1,258,474 
|Non-taxable interest on municipal securities                                                                  |  |                             | 102,563   |                           |   | 76,448    |  |      | 203,014    |  |   | 161,930   
|Taxable interest and dividends on investments securities                                                      |  |                             | 682,421   |                           |   | 558,729   |  |      | 1,348,635  |  |   | 1,100,503 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total interest and dividend income                                                                            |  |                             | 6,411,474 |                           |   | 5,544,343 |  |      | 12,502,405 |  |   | 11,155,282
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|INTEREST EXPENSE:                                                                                             |  |                             |           |                           |   |           |  |      |            |  |   |           
|Deposits                                                                                                      |  |                             | 1,912,486 |                           |   | 1,503,202 |  |      | 3,692,804  |  |   | 3,008,857 
|Advances from Federal Home Loan Bank, securities sold under agreements to repurchase and other borrowed money |  |                             | 713,529   |                           |   | 744,335   |  |      | 1,405,086  |  |   | 1,492,312 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total interest expense                                                                                        |  |                             | 2,626,015 |                           |   | 2,247,537 |  |      | 5,097,890  |  |   | 4,501,169 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|NET INTEREST INCOME                                                                                           |  |                             | 3,785,459 |                           |   | 3,296,806 |  |      | 7,404,515  |  |   | 6,654,113 
|PROVISION FOR LOAN LOSSES                                                                                     |  |                             | 75,000    |                           |   | 90,000    |  |      | 150,000    |  |   | 180,000   
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                                           |  |                             | 3,710,459 |                           |   | 3,206,806 |  |      | 7,254,515  |  |   | 6,474,113 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|OTHER INCOME:                                                                                                 |  |                             |           |                           |   |           |  |      |            |  |   |           
|Service charges                                                                                               |  |                             | 383,719   |                           |   | 381,822   |  |      | 735,102    |  |   | 744,065   
|Cash surrender value of life insurance                                                                        |  |                             | 63,000    |                           |   | 80,232    |  |      | 136,000    |  |   | 149,964   
|Other                                                                                                         |  |                             | 124,882   |                           |   | 117,207   |  |      | 268,678    |  |   | 224,389   
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total other income                                                                                            |  |                             | 571,601   |                           |   | 579,261   |  |      | 1,139,780  |  |   | 1,118,418 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|OTHER EXPENSES:                                                                                               |  |                             |           |                           |   |           |  |      |            |  |   |           
|Salaries and employee benefits                                                                                |  |                             | 1,718,686 |                           |   | 1,550,463 |  |      | 3,458,308  |  |   | 3,148,698 
|Occupancy and equipment                                                                                       |  |                             | 582,282   |                           |   | 538,260   |  |      | 1,165,403  |  |   | 1,079,725 
|Federal insurance premiums                                                                                    |  |                             | 14,500    |                           |   | 14,827    |  |      | 29,510     |  |   | 30,183    
|Advertising                                                                                                   |  |                             | 107,361   |                           |   | 93,951    |  |      | 200,979    |  |   | 174,538   
|Professional services                                                                                         |  |                             | 203,945   |                           |   | 115,703   |  |      | 362,617    |  |   | 215,867   
|Other operating expenses                                                                                      |  |                             | 339,708   |                           |   | 320,087   |  |      | 661,089    |  |   | 636,809   
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total other expenses                                                                                          |  |                             | 2,966,482 |                           |   | 2,633,291 |  |      | 5,877,906  |  |   | 5,285,820 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|INCOME BEFORE INCOME TAXES                                                                                    |  |                             | 1,315,578 |                           |   | 1,152,776 |  |      | 2,516,389  |  |   | 2,306,711 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|INCOME TAX EXPENSE                                                                                            |  |                             | 525,714   |                           |   | 423,712   |  |      | 984,228    |  |   | 887,585   
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|NET INCOME                                                                                                    |  | $                           | 789,864   |                           | $ | 729,064   |  | $    | 1,532,161  |  | $ | 1,419,126 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Basic and diluted earnings per share:                                                                         |  | $                           | 0.09      |                           |   | N/A       |  | $    | 0.18       |  |   | N/A       



See notes to unaudited condensed
consolidated financial statements.



2



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##### Table of Contents

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2005



|                                                                                           |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|------------------------------------------------------------------------------------------ |  | ----------- | ------ | ------------------------ | - | ------------------------------------- |  | ---------------------- | ---------- |  | ------------------------------- | ---------- | - | ------------------------------------------ | - | -------- | ------------ |  | - | -------- | - |  | - | ---------- | -
|                                                                                           |  | CommonStock |        | AdditionalPaid-InCapital |   | RetainedEarnings -PartiallyRestricted |  | UnallocatedESOP Shares |            |  | DeferredCompensationPlans Trust |            |   | AccumulatedOtherComprehensiveIncome (Loss) |   |          | Total Equity | 
|BALANCEJanuary 1, 2005                                                                    |  | $           | 87,627 |                          | $ | 38,387,523                            |  | $                      | 24,557,370 |  | $                               | (3,205,990 | ) |                                            | $ | (321,260 | )            |  | $ | 289,966  |   |  | $ | 59,795,236 |  
|Comprehensive income:                                                                      |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|Net income                                                                                 |  |             |        |                          |   |                                       |  |                        | 1,532,161  |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   | 1,532,161  |  
|Net change in unrealized loss on securities available for sale, net of taxes of $55,012    |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   | (129,120 | ) |  |   | (129,120   | )
|                                                                                           |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|Comprehensive income                                                                       |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   | 1,403,041  |  
|Excess of fair market value above cost of ESOP shares                                      |  |             |        |                          |   | 8,015                                 |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   | 8,015      |  
|ESOP shares committed to be released                                                       |  |             |        |                          |   |                                       |  |                        |            |  |                                 | 114,500    |   |                                            |   |          |              |  |   |          |   |  |   | 114,500    |  
|Purchase of shares by deferred compensation plans trust                                    |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   | (25,438  | )            |  |   |          |   |  |   | (25,438    | )
|                                                                                           |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|BALANCEJune 30, 2005                                                                      |  | $           | 87,627 |                          | $ | 38,395,538                            |  | $                      | 26,089,531 |  | $                               | (3,091,490 | ) |                                            | $ | (346,698 | )            |  | $ | 160,846  |   |  | $ | 61,295,354 |  
|                                                                                           |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|                                                                                          
|See notes to unaudited condensed consolidated financial statements.                        | 
|                                                                                          
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY             | 
|FOR THE SIX MONTHS ENDED JUNE 30, 2004                                                     | 
|                                                                                           |  |             |        |                          |   |                                       | 
|                                                                                           |  | CommonStock |        | AdditionalPaid-InCapital |   | RetainedEarnings -PartiallyRestricted |  | UnallocatedESOP Shares |            |  | DeferredCompensationPlans Trust |            |   | AccumulatedOtherComprehensiveIncome (Loss) |   |          | Total Equity | 
|BALANCEJanuary 1, 2004                                                                    |  |             |       |                          |   |                                      |  | $                      | 23,250,893 |  |                                 |           |   |                                            |   |         |              |  | $ | 723,813  |   |  | $ | 23,974,706 |  
|Comprehensive income:                                                                      |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|Net income                                                                                 |  |             |        |                          |   |                                       |  |                        | 1,419,126  |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   | 1,419,126  |  
|Net change in unrealized loss on securities available for sale, net of taxes of $(506,661) |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   | (791,179 | ) |  |   | (791,179   | )
|                                                                                           |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|Comprehensive income                                                                       |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   | 627,947    |  
|                                                                                           |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|BALANCEJune 30, 2004                                                                      |  |             |       |                          |   |                                      |  | $                      | 24,670,019 |  |                                 |           |   |                                            |   |         |              |  | $ | (67,366  | ) |  | $ | 24,602,653 |  
|                                                                                           |  |             |        |                          |   |                                       |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  



See notes to unaudited condensed
consolidated financial statements.



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##### Table of Contents

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                            |  |                           |             |   |      |   |             |  
|------------------------------------------------------------------------------------------- |  | ------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                                            |  | Six Months Ended June 30, |            
|                                                                                            |  | 2005                      |             |   | 2004 |  
|OPERATING ACTIVITIES:                                                                       |  |                           |             |   |      |   |             |  
|Net income                                                                                  |  | $                         | 1,532,161   |   |      | $ | 1,419,126   |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                           |             |   |      |   |             |  
|Depreciation and amortization                                                               |  |                           | 676,918     |   |      |   | 733,132     |  
|Provision for loan losses                                                                   |  |                           | 150,000     |   |      |   | 180,000     |  
|Deferred income taxes                                                                       |  |                           | 89,983      |   |      |   | 375,707     |  
|Loss on sale of office properties and equipment                                             |  |                           |            |   |      |   | 1,754       |  
|Income on cash surrender value of life insurance                                            |  |                           | (136,000    | ) |      |   | (149,964    | )
|ESOP shares committed to be released                                                        |  |                           | 114,500     |   |      |   |            |  
|Excess of fair market value above cost of ESOP shares                                       |  |                           | 8,015       |   |      |   |            |  
|Changes in assets and liabilities which provided (used) cash:                               |  |                           |             |   |      |   |             |  
|Accrued interest receivable                                                                 |  |                           | (125,632    | ) |      |   | (1,923      | )
|Prepaid expenses and other assets                                                           |  |                           | (181,735    | ) |      |   | 184,240     |  
|Accrued interest payable                                                                    |  |                           | 769         |   |      |   | 559         |  
|Other liabilities                                                                           |  |                           | 431,948     |   |      |   | (1,114,076  | )
|                                                                                            |  |                           |             |   |      |   |             |  
|Net cash provided by operating activities                                                   |  |                           | 2,560,927   |   |      |   | 1,628,555   |  
|                                                                                            |  |                           |             |   |      |   |             |  
|INVESTING ACTIVITIES:                                                                       |  |                           |             |   |      |   |             |  
|Principal collected on:                                                                     |  |                           |             |   |      |   |             |  
|Mortgage-backed securities held to maturity                                                 |  |                           | 224,582     |   |      |   | 173,063     |  
|Mortgage-backed securities available for sale                                               |  |                           | 6,792,461   |   |      |   | 10,873,756  |  
|Loans originated, net of repayments                                                         |  |                           | (33,285,126 | ) |      |   | (12,790,074 | )
|Purchases of:                                                                               |  |                           |             |   |      |   |             |  
|Loans receivable                                                                            |  |                           |            |   |      |   | (464,000    | )
|Mortgage-backed securities held to maturity                                                 |  |                           | (3,993,750  | ) |      |   | (1,070,442  | )
|Mortgage-backed securities available for sale                                               |  |                           |            |   |      |   | (2,532,188  | )
|Investment securities held to maturity                                                      |  |                           | (1,900,000  | ) |      |   | (1,910,010  | )
|Investment securities available for sale                                                    |  |                           | (3,998,125  | ) |      |   | (21,125,136 | )
|Federal Home Loan Bank Stock                                                                |  |                           | (289,500    | ) |      |   | (286,300    | )
|Office properties and equipment                                                             |  |                           | (742,153    | ) |      |   | (864,435    | )
|Proceeds from maturities of:                                                                |  |                           |             |   |      |   |             |  
|Investment securities held to maturity                                                      |  |                           | 665,000     |   |      |   |            |  
|Investment securities available for sale                                                    |  |                           | 5,781,274   |   |      |   | 25,658,716  |  
|Purchase of life insurance contracts                                                        |  |                           | (85,100     | ) |      |   | (293,900    | )
|                                                                                            |  |                           |             |   |      |   |             |  
|Net cash used in investing activities                                                       |  |                           | (30,830,437 | ) |      |   | (4,630,950  | )
|                                                                                            |  |                           |             |   |      |   |             |  
|FINANCING ACTIVITIES:                                                                       |  |                           |             |   |      |   |             |  
|Increase in deposits                                                                        |  |                           | 15,374,040  |   |      |   | 20,335,991  |  
|Increase (decrease) in securities sold under agreements to repurchase                       |  |                           | 1,650,000   |   |      |   | (480,000    | )
|Repayment of other borrowings                                                               |  |                           |            |   |      |   | (365,595    | )
|Purchase of shares by deferred compensation plans trust                                     |  |                           | (25,438     | ) |      |   |            |  
|Increase in advances from borrowers for taxes and insurance                                 |  |                           | 267,463     |   |      |   | 317,339     |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Net cash provided by financing activities                                                   |  |                           | 17,266,065  |   |      |   | 19,807,735  |  
|                                                                                            |  |                           |             |   |      |   |             |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                        |  |                           | (11,003,445 | ) |      |   | 16,805,340  |  
|CASH AND CASH EQUIVALENTSBeginning of period                                               |  |                           | 47,395,819  |   |      |   | 28,758,859  |  
|                                                                                            |  |                           |             |   |      |   |             |  
|CASH AND CASH EQUIVALENTSEnd of period                                                     |  | $                         | 36,392,374  |   |      | $ | 45,564,199  |  
|                                                                                            |  |                           |             |   |      |   |             |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during the period for:          |  |                           |             |   |      |   |             |  
|Interest                                                                                    |  | $                         | 5,097,120   |   |      | $ | 4,500,610   |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Income taxes                                                                                |  | $                         | 485,013     |   |      | $ | 1,447,400   |  
|                                                                                            |  |                           |             |   |      |   |             |  



See notes to unaudited condensed
consolidated financial statements.



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OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1. Summary of Significant Accounting Policies



Basis of Financial Statement Presentation - The unaudited condensed consolidated
financial statements include the accounts of Ocean Shore Holding Co. (the Company) and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed
consolidated financial statements were prepared in accordance with instructions to Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations, changes in
stockholders equity and cash flows in conformity with accounting principles generally accepted in the United States of America. However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation
of the consolidated financial statements have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes thereto included in the Companys Annual Report
on Form 10-K for the period ended December 31, 2004. The results for the three and six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2005 or any other period.



Use of Estimates in the Preparation of Financial Statements - The
preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The significant estimates include the allowance for loan losses and
deferred tax asset. Actual results could differ from those estimates.



Investment and Mortgage-Backed Securities - The Company accounts for debt and equity securities as follows:



a. Held to Maturity - Debt securities that management has the positive intent and ability to hold until maturity are classified as held to maturity and are carried at
their remaining unpaid principal balance, net of unamortized premiums or unaccreted discounts. Premiums are amortized and discounts are accreted using a method which produces results which approximate the interest method over the estimated remaining
term of the underlying security.



b. Available for Sale - Debt and equity
securities that will be held for indefinite periods of time, including securities that may be sold in response to changes in market interest or prepayment rates, needs for liquidity and changes in the availability of and the yield of alternative
investments are classified as available for sale. These securities are carried at estimated fair value, which is based on market value. Market value is determined using published quotes as of the close of business. Unrealized gains and losses are
excluded from earnings and are reported net of tax in other comprehensive income. Upon the sale of securities, any unamortized premium or unaccreted discount is considered in the determination of gain or loss from the sale. Realized gains and losses
on the sale of securities are recognized utilizing the specific identification method. There were no sales of available for sale securities for the three or six months ended June 30, 2005 or 2004.



For all securities that are in an unrealized loss position for an extended period of time and
for all securities whose fair value is significantly below amortized cost, the Company performs an evaluation of the specific events attributable to the market decline of the security. The Company considers the length of time and extent to which the
securitys market value has been below cost, as well as the general market conditions, industry characteristics and the fundamental operating results of the issuer to determine if the decline is other than temporary. The Company also considers
as part of the evaluation its intent and ability to hold the security until its market value has recovered to a level at least equal to the amortized cost. When the Company determines that a securitys unrealized loss is other than temporary, a
realized



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loss is recognized in the period in which the decline in value is determined to be other than temporary. The write-downs
are measured based on public market prices of the security at the time the Company determines the decline in value was other than temporary.



In March 2004, the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) reached a consensus regarding EITF 03-1,
The Meaning of Other-than-Temporary Impairment and its Application to Certain Investments. The consensus provides guidance for evaluating whether an investment is other-than-temporarily impaired and was effective for
other-than-temporary impairment evaluations made in reporting periods beginning after June 15, 2004. However, the guidance related to the recognition of impaired losses has been delayed by FASB Staff Position (FSP) EITF Issue 03-1-1. The
delay of the effective date for this guidance will be superseded concurrent with the final issuance of proposed FSP EITF Issue 03-1-a. The proposed FSP would provide implementation guidance with respect to debt securities that are impaired solely
due to interest rates and/or sector spreads and analyzed for other-than-temporary impairment. On June 29, 2005, the FASB decided to keep the accounting for certain debt securities as is and not to make the changes suggested in the proposed FSP. The
FASBs proposed FSP would have established new rules for determining when permanent write-downs should be made through earnings for certain available for sale securities under EITF 03-1. The FASB will issue a final FSP, but it will codify
existing accounting guidance rather than change the accounting. Under existing accounting rules, such securities are currently marked to market, but the market changes are reflected in the other comprehensive income (loss) component of
stockholders equity rather than earnings. The revised FSP will apply to evaluations made after September 15, 2005. The disclosure provisions of EITF 03-1 continue to be effective for the Companys consolidated financial statements and
have been included in its consolidated financial statements for the year ended December 31, 2004. The Company does not anticipate the changes in accounting guidance to have a material impact on its financial position.



In December 2004, the FASB revised Statement of Financial Accounting Standards
(SFAS) No. 123, Share-Based Payment, to require the recognition of expenses related to share-based payment transactions, including employee stock option grants, based on the fair value of the equity instruments issued.
The Company is required to adopt SFAS No. 123(R) in the first quarter of 2006. Effective with the first quarter of 2006, the Company will recognize an expense over the required service period for any stock options granted, modified, cancelled or
repurchased after that date and for the portion of grants for which the requisite service has not yet been rendered, based on the grant-date fair value of those awards. The Company is currently evaluating the impact that the adoption of SFAS No.
123(R) will have to its consolidated financial statements. The Company has not granted any share-based payments to date, but anticipates such grants will be made under the option plan approved by stockholders on July 13, 2005.



In July 2005, the FASB issued an exposure draft on a proposed interpretation of SFAS No. 109,
Accounting for Income Taxes. This exposure draft is designed to end the diverse accounting methods used for accounting for uncertain tax positions. The proposed model is a benefit recognition model and stipulates that a benefit from a
tax position should only be recorded when it is probable. The benefit should be recorded at managements best estimate. The proposed interpretation would be effective as of the end of the first annual period after December 15, 2005. Any changes
to net assets as a result of applying the proposed interpretation would be recorded as a cumulative effect of a change in accounting principle. Management is in the process of assessing the impact this interpretation will have on its financial
statements.



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2. INVESTMENT SECURITIES



Investment securities are summarized as follows:



|                                     |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|------------------------------------ |  | ----------------- | ---------- | ------------------- | - | ------------------- |  | -------------------- | ------- |  | - | ----------
|                                     |  | June 30, 2005    
|                                     |  | AmortizedCost     |            | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | Estimated Fair Value
|Held to Maturity                     |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Debt securities -                    |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Municipal securities                 |  | $                 | 9,617,169  |                     | $ | 6,278               |  | $                    | 450     |  | $ | 9,622,997 
|                                     |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Available for Sale                   |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Debt securities -                    |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|U.S. Government and Federal Agencies |  | $                 | 24,016,792 |                     | $ | 11,230              |  | $                    | 260,616 |  | $ | 23,767,406
|Municipal securities                 |  |                   | 4,948,802  |                     |   | 109,394             |  |                      |        |  |   | 5,058,196 
|Corporate                            |  |                   | 15,153,598 |                     |   | 347,518             |  |                      | 36,212  |  |   | 15,464,904
|Equity securities                    |  |                   | 8,028,770  |                     |   | 182,812             |  |                      | 193,487 |  |   | 8,018,095 
|                                     |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Total available for sale securities  |  | $                 | 52,147,962 |                     | $ | 650,954             |  | $                    | 490,315 |  | $ | 52,308,601
|                                     |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|                                     | 
|                                     |  | December 31, 2004
|                                     |  | AmortizedCost     |            | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | Estimated Fair Value
|Held to Maturity                     |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Debt securities -                    |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Municipal securities                 |  | $                 | 8,387,127  |                     | $ | 13,575              |  | $                    | 2,567   |  | $ | 8,398,135 
|                                     |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Available for Sale                   |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Debt securities -                    |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|U.S. Government and Federal Agencies |  | $                 | 20,516,995 |                     | $ | 16,955              |  | $                    | 174,214 |  | $ | 20,359,736
|Municipal securities                 |  |                   | 4,947,840  |                     |   | 122,004             |  |                      |        |  |   | 5,069,844 
|Corporate                            |  |                   | 20,573,986 |                     |   | 294,900             |  |                      | 163,346 |  |   | 20,705,540
|Equity securities                    |  |                   | 8,028,769  |                     |   | 206,230             |  |                      | 136,336 |  |   | 8,098,663 
|                                     |  |                   |            |                     |   |                     |  |                      |         |  |   |           
|Total available for sale securities  |  | $                 | 54,067,590 |                     | $ | 640,089             |  | $                    | 473,896 |  | $ | 54,233,783
|                                     |  |                   |            |                     |   |                     |  |                      |         |  |   |           





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The following table provides the gross unrealized losses and fair value, aggregated by investment category and length of
time the individual securities have been in a continuous unrealized loss position at June 30, 2005 and December 31, 2004:



|                                     |  |                     |            |                     |   |                      |  |                       |            |                     |   |                     |  |   |            |  |   |        
|------------------------------------ |  | ------------------- | ---------- | ------------------- | - | -------------------- |  | --------------------- | ---------- | ------------------- | - | ------------------- |  | - | ---------- |  | - | -------
|                                     |  | June 30, 2005      
|                                     |  | Less Than 12 Months |            | 12 Months or Longer |   | Total               
|                                     |  | EstimatedFair Value |            | GrossUnrealizedLoss |   | EstimatedFair Value  |  | Gross Unrealized Loss |            | EstimatedFair Value |   | GrossUnrealizedLoss
|Debt securities -                    |  |                     |            |                     |   |                      |  |                       |            |                     |   |                     |  |   |            |  |   |        
|Municipal securities                 |  | $                   |           |                     | $ |                     |  | $                     | 459,869    |                     | $ | 450                 |  | $ | 459,869    |  | $ | 450    
|U.S. Government and Federal Agencies |  |                     | 11,716,893 |                     |   | 85,457               |  |                       | 11,067,530 |                     |   | 175,159             |  |   | 22,784,423 |  |   | 260,616
|Corporate                            |  |                     | 3,558,566  |                     |   | 16,885               |  |                       | 2,703,083  |                     |   | 19,327              |  |   | 6,261,649  |  |   | 36,212 
|Equity securities                    |  |                     |           |                     |   |                     |  |                       | 7,832,687  |                     |   | 193,487             |  |   | 7,832,687  |  |   | 193,487
|                                     |  |                     |            |                     |   |                      |  |                       |            |                     |   |                     |  |   |            |  |   |        
|Total                                |  | $                   | 15,275,459 |                     | $ | 102,342              |  | $                     | 22,063,169 |                     | $ | 388,423             |  | $ | 37,338,628 |  | $ | 490,765
|                                     |  |                     |            |                     |   |                      |  |                       |            |                     |   |                     |  |   |            |  |   |        
|                                     | 
|                                     |  | December 31, 2004  
|                                     |  | Less Than 12 Months |            | 12 Months or Longer |   | Total               
|                                     |  | EstimatedFair Value |            | GrossUnrealizedLoss |   | Estimated Fair Value |  | GrossUnrealizedLoss   |            | EstimatedFair Value |   | GrossUnrealizedLoss
|Debt securities -                    |  |                     |            |                     |   |                      |  |                       |            |                     |   |                     |  |   |            |  |   |        
|Municipal securities                 |  | $                   | 1,127,709  |                     | $ | 2,567                |  | $                     |           |                     | $ |                    |  | $ | 1,127,709  |  | $ | 2,567  
|U.S. Government and Federal Agencies |  |                     | 19,063,571 |                     |   | 174,214              |  |                       |           |                     |   |                    |  |   | 19,063,571 |  |   | 174,214
|Corporate                            |  |                     | 9,133,328  |                     |   | 126,344              |  |                       | 2,102,622  |                     |   | 37,002              |  |   | 11,235,950 |  |   | 163,346
|Equity securities                    |  |                     |           |                     |   |                     |  |                       | 7,889,837  |                     |   | 136,336             |  |   | 7,889,837  |  |   | 136,336
|                                     |  |                     |            |                     |   |                      |  |                       |            |                     |   |                     |  |   |            |  |   |        
|Total                                |  | $                   | 29,324,608 |                     | $ | 303,125              |  | $                     | 9,992,459  |                     | $ | 173,338             |  | $ | 39,317,067 |  | $ | 476,463
|                                     |  |                     |            |                     |   |                      |  |                       |            |                     |   |                     |  |   |            |  |   |        



Management believes that the estimated
fair value of the securities is dependent upon the movement in market interest rates and that the unrealized losses are temporary. The determination of whether a decline in market value is other than temporary is necessarily a matter of subjective
judgment. The timing and amount of any realized losses reported in the Companys financial statements could vary if conclusions other than those made by management were to determine whether an other than temporary impairment exists.



At June 30, 2005, fourteen debt and equity securities had aggregate depreciation of 1.73%
from the Companys amortized cost basis for 12 months or longer. The unrealized loss relates principally to the changes in market interest rates. As management has the ability and intent to hold these debt securities until maturity, or for the
foreseeable future, no decline is deemed to be other than temporary. Unrealized losses on marketable equity securities that are in excess of cost, and that have been sustained for 12 months, are generally recognized by management as being other than
temporary and charged to earnings, unless evidence exists to support a realizable value equal to or greater than the Companys carrying value of the investment. Although these equity securities have unrealized losses sustained for more than 12
months, no credit issues have been identified that cause management to believe that declines in market value are other than temporary.



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The amortized cost and estimated fair value of debt securities available for sale at June 30, 2005 by contractual
maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



|                                   |  |                             |           |                               |   |               |  |                      |            |  |   |           
|---------------------------------- |  | --------------------------- | --------- | ----------------------------- | - | ------------- |  | -------------------- | ---------- |  | - | ----------
|                                   |  | June 30, 2005              
|                                   |  | Held to Maturity Securities |           | Available for Sale Securities
|                                   |  | AmortizedCost               |           | EstimatedFair Value           |   | AmortizedCost |  | Estimated Fair Value
|Due within 1 year                  |  | $                           | 9,617,169 |                               | $ | 9,622,997     |  | $                    | 7,685,543  |  | $ | 7,649,438 
|Due after 1 year through 5 years   |  |                             |          |                               |   |              |  |                      | 20,657,357 |  |   | 20,406,004
|Due after 5 years through 10 years |  |                             |          |                               |   |              |  |                      | 2,971,754  |  |   | 2,986,734 
|Due after 10 years                 |  |                             |          |                               |   |              |  |                      | 12,804,538 |  |   | 13,248,330
|                                   |  |                             |           |                               |   |               |  |                      |            |  |   |           
|Total                              |  | $                           | 9,617,169 |                               | $ | 9,622,997     |  | $                    | 44,119,192 |  | $ | 44,290,506
|                                   |  |                             |           |                               |   |               |  |                      |            |  |   |           



3. MORTGAGE-BACKED SECURITIES



Mortgage-backed securities are summarized as follows:



|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|------------------------------------------ |  | ----------------- | ---------- | ------------------- | - | ------------------- |  | ------------------- | ------- |  | - | ----------
|                                           |  | June 30, 2005    
|                                           |  | AmortizedCost     |            | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | EstimatedFair Value
|Held to Maturity                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           |  |                   |            |                    
|GNMA pass-through certificates             |  | $                 | 203,845    |                     | $ | 8,967               |  | $                   |        |  | $ | 212,812   
|FHLMC pass-through certificates            |  |                   | 4,463      |                     |   | 411                 |  |                     |        |  |   | 4,874     
|FNMA pass-through certificates             |  |                   | 5,713,111  |                     |   | 42,483              |  |                     | 15,675  |  |   | 5,739,919 
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Total                                      |  | $                 | 5,921,419  |                     | $ | 51,861              |  | $                   | 15,675  |  | $ | 5,957,605 
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Available for Sale                         |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           |  |                   |            |                    
|FHLMC pass-through certificates            |  | $                 | 13,876,408 |                     | $ | 90,293              |  | $                   | 113,660 |  | $ | 13,853,041
|GNMA pass-through certificates             |  |                   | 5,741,783  |                     |   | 130,716             |  |                     | 12,471  |  |   | 5,860,028 
|FNMA pass-through certificates             |  |                   | 25,210,935 |                     |   | 127,063             |  |                     | 135,297 |  |   | 25,202,701
|Small Business Administration certificates |  |                   | 41,484     |                     |   |                    |  |                     | 170     |  |   | 41,314    
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Total                                      |  | $                 | 44,870,610 |                     | $ | 348,072             |  | $                   | 261,598 |  | $ | 44,957,084
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           | 
|                                           |  | December 31, 2004
|                                           |  | AmortizedCost     |            | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | EstimatedFair Value
|Held to Maturity                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           |  |                   |            |                    
|GNMA pass-through certificates             |  | $                 | 242,569    |                     | $ | 11,567              |  | $                   |        |  | $ | 254,136   
|FHLMC pass-through certificates            |  |                   | 4,926      |                     |   | 571                 |  |                     |        |  |   | 5,497     
|FNMA pass-through certificates             |  |                   | 1,909,406  |                     |   | 7,586               |  |                     | 14,725  |  |   | 1,902,267 
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Total                                      |  | $                 | 2,156,901  |                     | $ | 19,724              |  | $                   | 14,725  |  | $ | 2,161,900 
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Available for Sale                         |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           |  |                   |            |                    
|FHLMC pass-through certificates            |  | $                 | 15,281,497 |                     | $ | 95,144              |  | $                   | 94,633  |  | $ | 15,282,008
|GNMA pass-through certificates             |  |                   | 7,448,140  |                     |   | 193,516             |  |                     | 8,023   |  |   | 7,633,633 
|FNMA pass-through certificates             |  |                   | 28,924,246 |                     |   | 226,983             |  |                     | 120,560 |  |   | 29,030,669
|Small Business Administration certificates |  |                   | 78,494     |                     |   |                    |  |                     | 169     |  |   | 78,325    
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Total                                      |  | $                 | 51,732,377 |                     | $ | 15,643              |  | $                   | 223,385 |  | $ | 52,024,635
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           





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The following table provides the gross unrealized losses and fair value, aggregated by investment category and length of
time the individual securities have been in a continuous unrealized loss position at June 30, 2005 and December 31, 2004:



|                                                |  |                     |            |                     |   |                     |  |                       |            |                     |   |                     |  |   |            |  |   |        
|----------------------------------------------- |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | --------------------- | ---------- | ------------------- | - | ------------------- |  | - | ---------- |  | - | -------
|                                                |  | June 30, 2005      
|                                                |  | Less Than 12 Months |            | 12 Months or Longer |   | Total              
|                                                |  | EstimatedFair Value |            | GrossUnrealizedLoss |   | EstimatedFair Value |  | Gross Unrealized Loss |            | EstimatedFair Value |   | GrossUnrealizedLoss
|FNMA pass-through certificates-held-to-maturity |  | $                   | 625,738    |                     | $ | 4,202               |  | $                     | 938,954    |                     | $ | 11,474              |  | $ | 1,564,692  |  | $ | 15,676 
|SBA pass-through certificates                   |  |                     | 41,314     |                     |   | 170                 |  |                       |           |                     |   |                    |  |   | 41,314     |  |   | 170    
|FHLMC pass-through certificates                 |  |                     | 1,186,838  |                     |   | 13,866              |  |                       | 5,972,575  |                     |   | 99,793              |  |   | 7,159,413  |  |   | 113,659
|GNMA pass-through certificates                  |  |                     | 1,384,301  |                     |   | 12,471              |  |                       |           |                     |   |                    |  |   | 1,384,301  |  |   | 12,471 
|FNMA pass-through certificates                  |  |                     | 9,895,735  |                     |   | 35,165              |  |                       | 8,327,057  |                     |   | 100,132             |  |   | 18,222,792 |  |   | 135,297
|                                                |  |                     |            |                     |   |                     |  |                       |            |                     |   |                     |  |   |            |  |   |        
|Total                                           |  | $                   | 13,133,926 |                     | $ | 65,874              |  | $                     | 15,238,586 |                     | $ | 211,399             |  | $ | 28,372,512 |  | $ | 277,273
|                                                |  |                     |            |                     |   |                     |  |                       |            |                     |   |                     |  |   |            |  |   |        
|                                                | 
|                                                |  | December 31, 2004  
|                                                |  | Less Than 12 Months |            | 12 Months or Longer |   | Total              
|                                                |  | EstimatedFair Value |            | GrossUnrealizedLoss |   | EstimatedFair Value |  | Gross Unrealized Loss |            | EstimatedFair Value |   | GrossUnrealizedLoss
|FNMA pass-through certificates-held-to-maturity |  | $                   | 1,678,170  |                     | $ | 14,725              |  | $                     |           |                     | $ |                    |  | $ | 1,678,170  |  | $ | 14,725 
|SBA pass-through certificates                   |  |                     | 78,325     |                     |   | 169                 |  |                       |           |                     |   |                    |  |   | 78,325     |  |   | 169    
|FHLMC pass-through certificates                 |  |                     | 5,061,891  |                     |   | 55,189              |  |                       | 2,897,612  |                     |   | 39,444              |  |   | 7,959,503  |  |   | 94,633 
|GNMA pass-through certificates                  |  |                     | 1,976,340  |                     |   | 8,023               |  |                       |           |                     |   |                    |  |   | 1,976,340  |  |   | 8,023  
|FNMA pass-through certificates                  |  |                     | 13,285,743 |                     |   | 101,173             |  |                       | 2,072,330  |                     |   | 19,387              |  |   | 15,358,073 |  |   | 120,560
|                                                |  |                     |            |                     |   |                     |  |                       |            |                     |   |                     |  |   |            |  |   |        
|Total                                           |  | $                   | 22,080,469 |                     | $ | 179,279             |  | $                     | 4,969,942  |                     | $ | 58,831              |  | $ | 27,050,411 |  | $ | 238,110
|                                                |  |                     |            |                     |   |                     |  |                       |            |                     |   |                     |  |   |            |  |   |        



Management believes that the estimated
fair value of the securities is dependent upon the movement in market interest rates and that the unrealized losses are temporary. The determination of whether a decline in market value is other than temporary is necessarily a matter of subjective
judgment. The timing and amount of any realized losses reported in the Companys financial statements could vary if conclusions other than those made by management were to determine whether an other than temporary impairment exists.



At June 30, 2005, ten mortgage-backed securities had aggregate depreciation of 1.37% from
the Companys amortized cost basis for 12 months or longer. The unrealized losses relate principally to the changes in market interest rates. As management has the ability and intent to hold these debt securities until maturity, or for the
foreseeable future, no declines are deemed to be other than temporary.



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4. LOANS RECEIVABLE



Loans receivable consist of the following:



|                                 |  |               |             |   |                  |   |             |  
|-------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                 |  | June 30, 2005 |             |   | December 31,2004 |  
|Real estate - mortgage:          |  |               |             |   |                  |   |             |  
|One-to four-family residential   |  | $             | 271,771,042 |   |                  | $ | 247,610,013 |  
|Commercial and multi-family      |  |               | 27,059,682  |   |                  |   | 26,482,515  |  
|                                 |  |               |             |   |                  |   |             |  
|Total real estate-mortgage       |  |               | 298,830,724 |   |                  |   | 274,092,528 |  
|                                 |  |               |             |   |                  |   |             |  
|Real estate - construction:      |  |               |             |   |                  |   |             |  
|Residential                      |  |               | 8,364,450   |   |                  |   | 5,034,900   |  
|Commercial                       |  |               | 8,382,105   |   |                  |   | 7,719,097   |  
|                                 |  |               |             |   |                  |   |             |  
|Total real estate - construction |  |               | 16,746,555  |   |                  |   | 12,753,997  |  
|                                 |  |               |             |   |                  |   |             |  
|Commercial                       |  |               | 12,329,806  |   |                  |   | 14,110,846  |  
|                                 |  |               |             |   |                  |   |             |  
|Consumer                         |  |               |             |   |                  |   |             |  
|Home equity                      |  |               | 45,022,652  |   |                  |   | 39,264,550  |  
|Other consumer loans             |  |               | 1,403,044   |   |                  |   | 1,244,022   |  
|                                 |  |               |             |   |                  |   |             |  
|Total consumer loans             |  |               | 46,425,695  |   |                  |   | 40,508,572  |  
|                                 |  |               |             |   |                  |   |             |  
|Total loans                      |  |               | 374,332,780 |   |                  |   | 341,465,943 |  
|                                 |  |              
|Net deferred loan cost           |  |               | 899,906     |   |                  |   | 585,576     |  
|Allowance for loan losses        |  |               | (1,614,018  | ) |                  |   | (1,466,295  | )
|                                 |  |               |             |   |                  |   |             |  
|Net total loans                  |  | $             | 373,618,668 |   |                  | $ | 340,585,224 |  
|                                 |  |               |             |   |                  |   |             |  



Changes in the allowance for loan
losses are as follows:



|                        |  |                           |           |   |      |   |           |  
|----------------------- |  | ------------------------- | --------- | - | ---- | - | --------- | -
|                        |  | Six Months Ended June 30, |          
|                        |  | 2005                      |           |   | 2004 |  
|Balance at January 1    |  | $                         | 1,466,295 |   |      | $ | 1,116,156 |  
|Provision for loan loss |  |                           | 150,000   |   |      |   | 180,000   |  
|Charge-offs             |  |                           | (4,466    | ) |      |   | (7,947    | )
|Recoveries              |  |                           | 2,189     |   |      |   | 3,792     |  
|                        |  |                           |           |   |      |   |           |  
|Balance at June 30      |  | $                         | 1,614,018 |   |      | $ | 1,292,001 |  
|                        |  |                           |           |   |      |   |           |  



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##### Table of Contents

5. DEPOSITS



Deposits consist of the following major classifications:



|                                       |  |               |             |                                |                   |   |        |   |                              |  |      |  
|-------------------------------------- |  | ------------- | ----------- | ------------------------------ | ----------------- | - | ------ | - | ---------------------------- |  | ---- | -
|                                       |  | June 30, 2005 |             |                                | December 31, 2004 |  
|                                       |  | Amount        |             | Weighted Average Interest Rate |                   |   | Amount |   | WeightedAverageInterest Rate | 
|NOW and other demand deposit accounts  |  | $             | 217,019,935 |                                | 1.19              | % |        | $ | 204,817,923                  |  | 1.08 | %
|                                       |  |               |             |                               
|Passbook savings and club accounts     |  |               | 93,252,120  |                                | 1.17              | % |        |   | 94,915,239                   |  | 1.14 | %
|                                       |  |               |             |                                |                   |   |        |   |                              |  |      |  
|Subtotal                               |  |               | 310,272,055 |                                |                   |   |        |   | 299,733,162                  |  |      |  
|                                       |  |               |             |                                |                   |   |        |   |                              |  |      |  
|Certificates with original maturities: |  |               |             |                                |                   |   |        |   |                              |  |      |  
|Within one year                        |  |               | 36,950,477  |                                | 2.47              | % |        |   | 34,989,278                   |  | 1.84 | %
|One to three years                     |  |               | 41,128,993  |                                | 2.96              | % |        |   | 39,920,944                   |  | 2.73 | %
|Three years and beyond                 |  |               | 42,350,595  |                                | 4.78              | % |        |   | 40,684,695                   |  | 4.80 | %
|                                       |  |               |             |                                |                   |   |        |   |                              |  |      |  
|Total certificates                     |  |               | 120,430,065 |                                |                   |   |        |   | 115,594,917                  |  |      |  
|                                       |  |               |             |                                |                   |   |        |   |                              |  |      |  
|Total                                  |  | $             | 430,702,120 |                                |                   |   |        | $ | 415,328,079                  |  |      |  
|                                       |  |               |             |                                |                   |   |        |   |                              |  |      |  



The aggregate amount of certificate
accounts in denominations of $100,000 or more at June 30, 2005 and December 31, 2004 amounted to $36,863,250 and $32,603,182, respectively.



Municipal demand deposit accounts in denominations of $100,000 or more at June 30, 2005 and December 31, 2004 amounted to $55,709,465 and $61,146,314, respectively.



6. EARNINGS PER SHARE



Basic net income per share is based upon the weighted average number of common shares
outstanding, while diluted net income per share is based upon the weighted average number of common shares outstanding and common share equivalents that would arise from the exercise of dilutive securities.



The difference between the common shares issued and the common shares outstanding, for the
purposes of calculating basic earnings per share, is a result of the unallocated ESOP shares.



The calculated basic and diluted earnings per share (EPS) are as follows:



|                             |  |                             |           |                           |   |         |  |      |           |  |   |          
|---------------------------- |  | --------------------------- | --------- | ------------------------- | - | ------- |  | ---- | --------- |  | - | ---------
|                             |  | Three Months Ended June 30, |           | Six Months Ended June 30,
|                             |  | 2005                        |           | 2004                      |   | 2005    |  | 2004
|Numerator                    |  | $                           | 789,864   |                           | $ | 729,064 |  | $    | 1,532,160 |  | $ | 1,419,126
|Denominators:                |  |                             |           |                           |   |         |  |      |           |  |   |          
|Basic shares outstanding     |  |                             | 8,450,731 |                           |   | N/A     |  |      | 8,447,868 |  |   | N/A      
|Effect of diluted securities |  |                             | None      |                           |   | N/A     |  |      | None      |  |   | N/A      
|                             |  |                             |           |                          
|Earnings per share:          |  |                             |           |                           |   |         |  |      |           |  |   |          
|Basic and diluted            |  | $                           | 0.09      |                           |   | N/A     |  | $    | 0.18      |  |   | N/A      





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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT



This Quarterly Report may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, but rather are
statements based on Ocean Shore Holdings current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as expects,
believes, anticipates, intends and similar expressions.



Managements ability to predict results or the effect of future plans or strategies is inherently uncertain. These factors include, but are not limited to, general economic conditions, changes in the interest
rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets and changes
in the quality or composition of the Companys loan or investment portfolios. Additional factors that may affect our results are discussed in our Annual Report on Form 10-K for the year ended December 31, 2004 under Item 1. Business
 Risk Factors. These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. Ocean Shore Holding assumes no obligation to update any forward-looking
statements.



GENERAL



Ocean Shore Holding Co. (Ocean Shore Holding or the Company) is a
federally chartered savings and loan holding company established in 1998 to be the holding company for Ocean City Home Bank (the Bank). Ocean Shore Holdings business activity is the ownership of the outstanding capital stock of
Ocean City Home Bank. Accordingly, the information set forth in this report, including the consolidated financial statements and related financial data, relates primarily to the Bank.



The Bank is a federally chartered savings bank. We operate as a community-oriented financial institution offering a wide range of financial
services to consumers and businesses in our market area. We attract deposits from the general public, small businesses and municipalities and use those funds to originate real estate loans, small commercial loans and consumer loans, which we hold
primarily for investment.



On December 21, 2004, the Company completed its
initial public offering, issuing a total of 8,762,742 shares of the Companys common stock, of which 4,761,000 shares, or 54.3%, were issued to OC Financial MHC, 343,499 shares, or 3.9%, were issued to the Banks Employee Stock Ownership
Plan, 166,492 shares, or 1.9%, were issued to the Ocean City Home Charitable Foundation, and 3,491,751 shares, or 39.8%, were issued to eligible depositors. Net proceeds of the offering were $36.8 million.



COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2005 AND DECEMBER 31, 2004



Total assets of the Company increased by $19.2 million to $547.7 million at June 30,
2005, from $528.4 million at December 31, 2004. Total loans receivable increased $33.0 million offset by decreases of $11.0 million of cash and cash equivalents and $3.3 million of mortgage backed securities.



Investments



Investments decreased $695,000 to $61.9 million at June 30, 2005 from $62.6 million at December 31, 2004. Purchases of $5.9 million of
agency notes and municipals were offset by maturities totaling $6.7 million. Mortgage-backed securities decreased by $3.3 million to $50.9 million as purchases of $4.0 million were offset by payments received and fluctuations in market value of
investments totaling $7.3 million.



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##### Table of Contents

Loans



Loans receivable increased $33.0 million to $373.6 million at June 30, 2005 from $340.6 million at December 31, 2004. Loan originations totaled $76.2 million for the six
months ended June 30, 2005 including mortgage loan originations of $49.4 million, consumer loan originations of $16.2 million and $10.6 million in commercial loan originations. Originations were offset by $43.2 million in normal loan payments and
payoffs.



The following table summarizes changes in the loan portfolio in the
six months ended June 30, 2005.



|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|-------------------------------- |  | ---------------------- | ------- | - | ---------------- | - | ------- | -------- |  | - | -------- | - |  | ----- | -
|                                 |  | June 30,2005           |         |   | December 31,2004 |   |         | $ change |  |   | % change |  
|                                 |  | (Dollars in thousands) |        
|Real estate - mortgage:          |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|One-to four-family residential   |  | $                      | 271,771 |   |                  | $ | 247,610 |          |  | $ | 24,161   |   |  | 9.8   | %
|Commercial and multi-family      |  |                        | 27,060  |   |                  |   | 26,483  |          |  |   | 577      |   |  | 2.2   |  
|Other                            |  |                        |        |   |                  |   |        |          |  |   |         |   |  |       |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Total real estate-mortgage       |  |                        | 298,831 |   |                  |   | 274,093 |          |  |   | 24,738   |   |  | 9.0   |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Real estate - construction:      |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Residential                      |  |                        | 8,364   |   |                  |   | 5,035   |          |  |   | 3,329    |   |  | 66.1  |  
|Commercial                       |  |                        | 8,382   |   |                  |   | 7,719   |          |  |   | 663      |   |  | 8.6   |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Total real estate - construction |  |                        | 16,746  |   |                  |   | 12,754  |          |  |   | 3,992    |   |  | 31.3  |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Commercial                       |  |                        | 12,330  |   |                  |   | 14,111  |          |  |   | (1,781   | ) |  | -12.6 |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Consumer                         |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Home equity                      |  |                        | 45,023  |   |                  |   | 39,264  |          |  |   | 5,759    |   |  | 14.7  |  
|Other consumer loans             |  |                        | 1,403   |   |                  |   | 1,244   |          |  |   | 159      |   |  | 12.8  |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Total consumer loans             |  |                        | 46,426  |   |                  |   | 40,508  |          |  |   | 5,918    |   |  | 14.6  |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Total loans                      |  |                        | 374,333 |   |                  |   | 341,466 |          |  |   | 32,867   |   |  | 9.6   |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Net deferred loan cost           |  |                        | 900     |   |                  |   | 585     |          |  |   | 315      |   |  | 53.7  |  
|                                 |  |                        |         |  
|Allowance for loan losses        |  |                        | (1,614  | ) |                  |   | (1,466  | )        |  |   | (148     | ) |  | 10.1  |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Net total loans                  |  | $                      | 373,619 |   |                  | $ | 340,585 |          |  | $ | 33,034   |   |  | 9.7   |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  



Non-Performing Assets



Non-performing assets totaled $68,000 at June 30, 2005. Net charge-offs
were $2,000 in the six months ended June 30, 2005, compared to $4,000 in the same period last year. The allowance for loan losses was 0.43% of total loans at June 30, 2005 compared to 0.41% of total loans at June 30, 2004.



|                                                              |  |                          |       |   |      |   |       |  
|------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | -
|                                                              |  | Six Months EndedJune 30, |      
|                                                              |  | 2005                     |       |   | 2004 |  
|                                                              |  | (In thousands)           |      
|Allowance for Loan Losses:                                    |  |                          |       |   |      |   |       |  
|Allowance at beginning of period                              |  | $                        | 1,466 |   |      | $ | 1,116 |  
|Provision for loan losses                                     |  |                          | 150   |   |      |   | 180   |  
|Recoveries                                                    |  |                          | 2     |   |      |   | 4     |  
|Charge-offs                                                   |  |                          | 4     |   |      |   | 8     |  
|                                                              |  |                          |       |   |      |   |       |  
|Net charge-offs                                               |  |                          | 2     |   |      |   | 4     |  
|                                                              |  |                          |       |   |      |   |       |  
|Allowance at end of period                                    |  | $                        | 1,614 |   |      | $ | 1,292 |  
|                                                              |  |                          |       |   |      |   |       |  
|Allowance for loan losses as a percent of total loans         |  |                          | 0.43  | % |      |   | 0.41  | %
|Allowance for loan losses as a percent of nonperforming loans |  |                          | N/M   |   |      |   | N/M   |  



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|                                                  |  |                |      |   |                  |   |    
|------------------------------------------------- |  | -------------- | ---- | - | ---------------- | - | ---
|                                                  |  | June 30, 2005  |      |   | December 31,2004
|                                                  |  | (In thousands)
|Nonperforming Assets                              |  |                |      |   |                  |   |    
|Nonaccrual loans:                                 |  |                |      |   |                  |   |    
|Mortgage loans                                    |  | $              | 60   |   |                  | $ |   
|Commercial business loans                         |  |                |     |   |                  |   |   
|Consumer loans                                    |  |                | 8    |   |                  |   | 4  
|                                                  |  |                |      |   |                  |   |    
|Total                                             |  |                | 68   |   |                  |   | 4  
|Real estate owned                                 |  |                |     |   |                  |   |   
|Other nonperforming assets                        |  |                |     |   |                  |   |   
|                                                  |  |                |      |   |                  |   |    
|Total nonperforming assets                        |  | $              | 68   |   |                  | $ | 4  
|                                                  |  |                |      |   |                  |   |    
|Nonperforming loans as a percent of total loans   |  |                | 0.02 | % |                  |   | N/M
|                                                  |  |               
|Nonperforming assets as a percent of total assets |  |                | 0.01 | % |                  |   | N/M



Deposits



Deposits increased by $15.4 million, or 3.7% to $430.7 million at June 30, 2005 from $415.3
million at December 31, 2004. An increase in commercial checking of $13.0 million and consumer checking of $4.6 million was offset by a decrease in municipal checking of $5.4 million. An increase in certificates of deposit of $4.8 million was offset
by a decrease in savings accounts of $1.6 million.



The following table
summarizes changes in deposits in the six months ended June 30, 2005.



|                                       |  |                        |         |                   |   |          |  |   |          |   |  |      |  
|-------------------------------------- |  | ---------------------- | ------- | ----------------- | - | -------- |  | - | -------- | - |  | ---- | -
|                                       |  | June 30, 2005          |         | December 31, 2004 |   | $ Change |  |   | % Change |  
|                                       |  | (Dollars in thousands) |        
|NOW and other demand deposit accounts  |  | $                      | 217,020 |                   | $ | 204,818  |  | $ | 12,202   |   |  | 6.0  | %
|                                       |  |                        |         |                  
|Passbook savings and club accounts     |  |                        | 93,252  |                   |   | 94,915   |  |   | (1,663   | ) |  | (1.8 | )
|                                       |  |                        |         |                   |   |          |  |   |          |   |  |      |  
|Subtotal                               |  |                        | 310,272 |                   |   | 299,733  |  |   | 10,539   |   |  | 3.5  |  
|                                       |  |                        |         |                   |   |          |  |   |          |   |  |      |  
|Certificates with original maturities: |  |                        |         |                   |   |          |  |   |          |   |  |      |  
|Within one year                        |  |                        | 36,950  |                   |   | 34,989   |  |   | 1,961    |   |  | 5.6  |  
|One to three years                     |  |                        | 41,129  |                   |   | 39,921   |  |   | 1,208    |   |  | 3.0  |  
|Three years and beyond                 |  |                        | 42,351  |                   |   | 40,685   |  |   | 1,666    |   |  | 4.1  |  
|                                       |  |                        |         |                   |   |          |  |   |          |   |  |      |  
|Total certificates                     |  |                        | 120,430 |                   |   | 115,595  |  |   | 4,835    |   |  | 4.2  |  
|                                       |  |                        |         |                   |   |          |  |   |          |   |  |      |  
|Total                                  |  | $                      | 430,702 |                   | $ | 415,328  |  | $ | 15,374   |   |  | 3.7  |  
|                                       |  |                        |         |                   |   |          |  |   |          |   |  |      |  



Borrowings



Federal Home Loan Bank advances were unchanged at June 30, 2005 from December 31, 2004.
Other borrowings increased $1.7 million from $22.8 million at December 31, 2004 to $24.5 million June 30, 2005. The additional borrowings of $4.0 million were used for the purchase of MBS securities offset by repayments and pay downs of $2.3
million.



Stockholders Equity



Stockholders equity increased by $1.5 million to $61.3 million at June 30, 2005 from
$59.8 million at December 31, 2005 as a result from current period earnings of $1.5 million.



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##### Table of Contents

COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004



Net income was $790,000 for the three months ended June 30, 2005 as compared to $729,000 for
the three months ended June 30, 2004. The $61,000, or 8.3% increase in 2005 from 2004, was due to an increase in net interest income of $488,000 and decrease in provision for loan losses of $15,000 offset by a decrease in other income of $7,000, an
increase in other expenses of $333,000 and an increase in income tax expense of $102,000. The decrease of return on average equity resulted from the proceeds of the December 2004 stock offering being added to stockholders equity.



Net income was $1,532,000 for the six months ended June 30, 2005 as compared to $1,419,000
for the six months ended June 30, 2004. The $113,000, or 8.0% increase in 2005 from 2004, was due to an increase in net interest income of $750,000, a decrease in provision for loan losses of $30,000 and an increase in other income of $21,000 offset
by an increase in other expenses of $592,000 and an increase in income tax expense of $96,000. The decrease of return on average equity resulted from the proceeds of the December 2004 stock offering being added to stockholders equity.



|                                      |  |                                               |      |   |                           |   |       |      |  |   |       |   |  |   |       |  
|------------------------------------- |  | --------------------------------------------- | ---- | - | ------------------------- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                      |  | Three Months Ended June 30,                   |      |   | Six Months Ended June 30, |  
|                                      |  | 2005                                          |      |   | 2004                      |   |       | 2005 |  |   | 2004  |  
|                                      |  | (Dollars in thousands, except per share data) |     
|Net income                            |  | $                                             | 790  |   |                           | $ | 729   |      |  | $ | 1,532 |   |  | $ | 1,419 |  
|Basic and diluted earnings per share  |  | $                                             | 0.09 |   |                           |   | N/A   |      |  | $ | 0.18  |   |  |   | N/A   |  
|Return on average assets (annualized) |  |                                               | 0.58 | % |                           |   | 0.59  | %    |  |   | 0.57  | % |  |   | 0.58  | %
|Return on average equity (annualized) |  |                                               | 5.23 | % |                           |   | 11.42 | %    |  |   | 5.08  | % |  |   | 11.36 | %



Net Interest Income



The following table summarizes changes in interest income and interest expense for the
three-month periods ended June 30, 2005 and 2004.



|                              |  |                            |       |          |   |       |          |   |     |   |  |       |  
|----------------------------- |  | -------------------------- | ----- | -------- | - | ----- | -------- | - | --- | - |  | ----- | -
|                              |  | Three Months EndedJune 30, |       | $ Change |   |       | % Change |  
|                              |  | 2005                       |       | 2004     |   |      
|                              |  | (Dollars in thousands)     |       |          |   |       |          |  
|INTEREST INCOME:              |  |                            |       |          |   |       |          |   |     |   |  |       |  
|Loans                         |  | $                          | 5,044 |          | $ | 4,321 |          | $ | 723 |   |  | 16.7  |  
|Investment securities         |  |                            | 1,212 |          |   | 1,159 |          |   | 53  |   |  | 4.6   |  
|Other interest-earning assets |  |                            | 155   |          |   | 64    |          |   | 91  |   |  | 142.2 |  
|                              |  |                            |       |          |   |       |          |   |     |   |  |       |  
|Total interest income         |  |                            | 6,411 |          |   | 5,544 |          |   | 867 |   |  | 15.6  |  
|                              |  |                            |       |          |   |       |          |   |     |   |  |       |  
|INTEREST EXPENSE:             |  |                            |       |          |   |       |          |   |     |   |  |       |  
|Deposits                      |  |                            | 1,912 |          |   | 1,503 |          |   | 409 |   |  | 27.2  |  
|Borrowings                    |  |                            | 714   |          |   | 744   |          |   | (30 | ) |  | (4.0  | )
|                              |  |                            |       |          |   |       |          |   |     |   |  |       |  
|Total interest expense        |  |                            | 2,626 |          |   | 2,247 |          |   | 379 |   |  | 16.8  |  
|                              |  |                            |       |          |   |       |          |   |     |   |  |       |  
|Net interest income           |  | $                          | 3,785 |          | $ | 3,297 |          | $ | 488 |   |  | 14.8  |  
|                              |  |                            |       |          |   |       |          |   |     |   |  |       |  



Interest income increased by $867,000
in the second quarter of 2005 compared to the second quarter of 2004, reflecting an increase in loan income of $723,000 and an increase in investment income of $144,000. The increase in loan income resulted from an increase in the average balance of
loans of $50.0 million and an increase in yield of 3 basis points. The increase in investment income resulted from an increase in yield of 23 basis points offset by a decrease in the average balance of $1.5 million. Other interest earning assets
income increase resulted from an increase in the average yield in fed funds sold of 190 basis points offset by a lower average balance of $3.7 million.



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##### Table of Contents

Interest expense increased by $378,000, reflecting an increase in municipal deposit expense of $243,000, an increase in
time deposit expense of $143,000, an increase in all other deposits of $23,000 and a decrease in interest expense on borrowings of $31,000. Municipal deposit expense increased as a result of rising interest rates, while time deposit expense
increased as a result of deposit growth and an increase in the average rate paid. Other deposit expense increased as a result of deposit growth. Borrowing expense decreased as a result of lower average balance of borrowings. In December 2004,
proceeds were used from the recently completed stock offering to reduce securities sold under agreements to repurchase and other borrowings.



The interest rate spread and net interest margin were 2.75% and 3.05% respectively, for the three months ended June 30, 2005 compared to 2.83% and 2.92% for the same
period in 2004. The yield on interest earning assets increased as the yield on loans increased slightly and short-term investments were reinvested in higher yielding investments due to generally higher market interest rates in the short term end of
the yield curve. The continued rise in short-term interest rates increased the cost of interest expense on deposits and borrowings.



The following table summarizes changes in interest income and interest expense for the six-month periods ended June 30, 2005 and 2004.



|                              |  |                           |        |          |   |        |          |   |       |   |  |       |  
|----------------------------- |  | ------------------------- | ------ | -------- | - | ------ | -------- | - | ----- | - |  | ----- | -
|                              |  | Six Months Ended June 30, |        | $ Change |   |        | % Change |  
|                              |  | 2005                      |        | 2004     |   |       
|                              |  | (Dollars in thousands)    |        |          |   |        |          |  
|INTEREST INCOME:              |  |                           |        |          |   |        |          |   |       |   |  |       |  
|Loans                         |  | $                         | 9,796  |          | $ | 8,634  |          | $ | 1,162 |   |  | 13.5  |  
|Investment securities         |  |                           | 2,380  |          |   | 2,408  |          |   | (28   | ) |  | (1.2  | )
|Other interest-earning assets |  |                           | 326    |          |   | 113    |          |   | 213   |   |  | 188.5 |  
|                              |  |                           |        |          |   |        |          |   |       |   |  |       |  
|Total interest income         |  |                           | 12,502 |          |   | 11,155 |          |   | 1,347 |   |  | 12.1  |  
|                              |  |                           |        |          |   |        |          |   |       |   |  |       |  
|INTEREST EXPENSE:             |  |                           |        |          |   |        |          |   |       |   |  |       |  
|Deposits                      |  |                           | 3,693  |          |   | 3,009  |          |   | 684   |   |  | 22.7  |  
|Borrowings                    |  |                           | 1,405  |          |   | 1,492  |          |   | (87   | ) |  | (5.8  | )
|                              |  |                           |        |          |   |        |          |   |       |   |  |       |  
|Total interest expense        |  |                           | 5,098  |          |   | 4,501  |          |   | 597   |   |  | 13.3  |  
|                              |  |                           |        |          |   |        |          |   |       |   |  |       |  
|Net interest income           |  | $                         | 7,404  |          | $ | 6,654  |          | $ | 750   |   |  | 11.3  |  
|                              |  |                           |        |          |   |        |          |   |       |   |  |       |  



Interest income increased by $1.3
million in the six months ended June 30, 2005 compared to the same period in 2004, reflecting increases in loan income and other interest-earning assets income offset by a decrease in investment income. The increase in loan income resulted from an
increase in the average balance of loans of $44.2 million offset by a decline in the average yield of 5 basis points. Investment income increased $76,000, income in Fed funds sold increased $213,000 and income in mortgage-backed securities decreased
by $104,000.



Interest expense increased by $597,000, reflecting an increase in
municipal deposit expense of $435,000, an increase in time deposit expense of $204,000, and an increase in other checking and savings deposit expense of $45,000 and a decrease in interest expense on borrowings of $87,000. Municipal deposit expense
increased as a result of rising interest rates, while time deposit expense increased as a result of deposit growth and an increase in the average rate paid. Other checking and savings deposit expense increased as a result of higher deposit balances.
Borrowing expense decreased as a result of lower average balance of borrowings. In December 2004, proceeds were used from the recently completed stock offering to reduce securities sold under agreements to repurchase and other borrowings.



The interest rate spread and net interest margin of the Company were 2.73% and
3.02% respectively, for the six months ended June 30, 2005 compared to 2.89% and 2.98% for the same period in 2004. The yield on interest earning assets increased as short-term investments were reinvested in higher yielding investments due to
generally higher market interest rates in the short-term end of the yield curve offset by a 5 basis point lower yield on loans. The continued rise in short-term interest rates increased the cost of interest expense on deposits and borrowings.



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##### Table of Contents

The following table presents information regarding average balances of assets and liabilities, the total dollar amounts
of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. The yields and costs for the periods indicated
are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. The balances of yields and costs are annualized for presentation purposes. For purposes of this table, average
balances have been calculated using the average daily balances and nonaccrual loans are included in average balances only. Loan fees are included in interest income on loans and are insignificant. Interest income on loans and investment securities
has not been calculated on a tax equivalent basis because the impact would be insignificant.



Average Balance Tables



|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|----------------------------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ----------- |  | ---- | -------------- |  | - | --------------------- | - | ----------- | - | ----- |  | ---- | -
|                                                                        |  | Three Months Ended June 30, 2005 |         |   | Three Months Ended June 30, 2004 |  
|                                                                        |  | AverageBalance                   |         |   | Interest andDividends            |   | Yield/ Cost |  |      | AverageBalance |  |   | Interest andDividends |   | Yield/ Cost |  
|                                                                        |  | (Dollars in thousands)           |        
|Assets:                                                                 |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Interest-earning assets:                                                |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Loans                                                                   |  | $                                | 359,845 |   |                                  | $ | 5,044       |  | 5.61 | %              |  | $ | 309,876               |   |             | $ | 4,321 |  | 5.58 | %
|Investment securities                                                   |  |                                  | 114,750 |   |                                  |   | 1,212       |  | 4.22 | %              |  |   | 116,253               |   |             |   | 1,159 |  | 3.99 | %
|Other interest-earning assets                                           |  |                                  | 21,208  |   |                                  |   | 155         |  | 2.93 | %              |  |   | 24,904                |   |             |   | 64    |  | 1.03 | %
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total interest-earning assets                                           |  |                                  | 495,803 |   |                                  |   | 6,411       |  | 5.17 | %              |  |   | 451,033               |   |             |   | 5,544 |  | 4.92 | %
|                                                                        |  |                                  |         |   |                                  |  
|Noninterest-earning assets                                              |  |                                  | 46,166  |   |                                  |   |             |  |      |                |  |   | 42,530                |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total assets                                                            |  | $                                | 541,969 |   |                                  |   |             |  |      |                |  | $ | 493,563               |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |  
|Liabilities and equity:                                                 |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Interest-bearing liabilities:                                           |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Interest-bearing demand deposits                                        |  | $                                | 170,947 |   |                                  |   | 644         |  | 1.51 | %              |  | $ | 161,130               |   |             |   | 383   |  | 0.95 | %
|Savings accounts                                                        |  |                                  | 93,556  |   |                                  |   | 273         |  | 1.17 | %              |  |   | 94,621                |   |             |   | 267   |  | 1.13 | %
|Certificates of deposit                                                 |  |                                  | 118,765 |   |                                  |   | 995         |  | 3.35 | %              |  |   | 113,120               |   |             |   | 853   |  | 3.02 | %
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total interest-bearing deposits                                         |  |                                  | 383,268 |   |                                  |   | 1,912       |  | 2.00 | %              |  |   | 368,871               |   |             |   | 1,503 |  | 1.63 | %
|                                                                        |  |                                  |         |   |                                  |  
|FHLB advances                                                           |  |                                  | 10,000  |   |                                  |   | 78          |  | 3.10 | %              |  |   | 10,000                |   |             |   | 78    |  | 3.10 | %
|Securities sold under agreements to repurchase                          |  |                                  | 24,892  |   |                                  |   | 301         |  | 4.83 | %              |  |   | 33,742                |   |             |   | 304   |  | 3.61 | %
|Subordinated debt                                                       |  |                                  | 15,464  |   |                                  |   | 335         |  | 8.67 | %              |  |   | 15,464                |   |             |   | 335   |  | 8.67 | %
|Other borrowings                                                        |  |                                  | 0       |   |                                  |   | 0           |  | 0.00 | %              |  |   | 1,728                 |   |             |   | 27    |  | 6.26 | %
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total borrowings                                                        |  |                                  | 50,356  |   |                                  |   | 714         |  | 5.67 | %              |  |   | 60,934                |   |             |   | 744   |  | 4.89 | %
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total interest-bearing liabilities                                      |  |                                  | 433,624 |   |                                  |   | 2,626       |  | 2.42 | %              |  |   | 429,805               |   |             |   | 2,247 |  | 2.09 | %
|                                                                        |  |                                  |         |   |                                  |  
|Noninterest-bearing liabilities                                         |  |                                  | 47,941  |   |                                  |   |             |  |      |                |  |   | 38,233                |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total liabilities                                                       |  |                                  | 481,565 |   |                                  |   |             |  |      |                |  |   | 468,038               |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |  
|Retained earnings                                                       |  |                                  | 60,404  |   |                                  |   |             |  |      |                |  |   | 25,525                |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total liabilities and retained earnings                                 |  | $                                | 541,969 |   |                                  |   |             |  |      |                |  | $ | 493,563               |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |  
|Net interest income                                                     |  |                                  |         |   |                                  | $ | 3,785       |  |      |                |  |   |                       |   |             | $ | 3,297 |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |             |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Interest rate spread                                                    |  |                                  |         |   |                                  |   |             |  | 2.75 | %              |  |   |                       |   |             |   |       |  | 2.83 | %
|Net interest margin                                                     |  |                                  |         |   |                                  |   |             |  | 3.05 | %              |  |   |                       |   |             |   |       |  | 2.92 | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                  | 114.34  | % |                                  |   |             |  |      |                |  |   | 104.94                | % |             |   |       |  |      |  



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##### Table of Contents

Average Balance Tables



|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|----------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ------------------------------ | - | ----------- |  | ---- | -------------- |  | - | -------------------- | - | ----------- | - | ------ |  | ---- | -
|                                                                        |  | Six Months Ended June 30, 2005 |         |   | Six Months Ended June 30, 2004 |  
|                                                                        |  | AverageBalance                 |         |   | InterestandDividends           |   | Yield/ Cost |  |      | AverageBalance |  |   | InterestandDividends |   | Yield/ Cost |  
|                                                                        |  | (Dollars in thousands)         |        
|Assets:                                                                 |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Interest-earning assets:                                                |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Loans                                                                   |  | $                              | 351,047 |   |                                | $ | 9,796       |  | 5.58 | %              |  | $ | 306,827              |   |             | $ | 8,634  |  | 5.63 | %
|Investment securities                                                   |  |                                | 114,826 |   |                                |   | 2,380       |  | 4.15 | %              |  |   | 117,932              |   |             |   | 2,408  |  | 4.08 | %
|Other interest-earning assets                                           |  |                                | 24,584  |   |                                |   | 326         |  | 2.65 | %              |  |   | 22,424               |   |             |   | 113    |  | 1.01 | %
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total interest-earning assets                                           |  |                                | 490,456 |   |                                |   | 12,502      |  | 5.10 | %              |  |   | 447,183              |   |             |   | 11,155 |  | 4.99 | %
|                                                                        |  |                                |         |   |                                |  
|Noninterest-earning assets                                              |  |                                | 44,848  |   |                                |   |             |  |      |                |  |   | 40,959               |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total assets                                                            |  | $                              | 535,304 |   |                                |   |             |  |      |                |  | $ | 488,142              |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Liabilities and equity:                                                 |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Interest-bearing liabilities:                                           |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Interest-bearing demand deposits                                        |  | $                              | 170,361 |   |                                |   | 1,235       |  | 1.45 | %              |  | $ | 161,242              |   |             |   | 771    |  | 0.96 | %
|Savings accounts                                                        |  |                                | 94,224  |   |                                |   | 542         |  | 1.15 | %              |  |   | 93,151               |   |             |   | 526    |  | 1.13 | %
|Certificates of deposit                                                 |  |                                | 117,120 |   |                                |   | 1,916       |  | 3.27 | %              |  |   | 112,945              |   |             |   | 1,712  |  | 3.03 | %
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total interest-bearing deposits                                         |  |                                | 381,705 |   |                                |   | 3,693       |  | 1.93 | %              |  |   | 367,338              |   |             |   | 3,009  |  | 1.64 | %
|                                                                        |  |                                |         |   |                                |  
|FHLB advances                                                           |  |                                | 10,000  |   |                                |   | 154         |  | 3.08 | %              |  |   | 10,000               |   |             |   | 155    |  | 3.09 | %
|Securities sold under agreements to repurchase                          |  |                                | 23,924  |   |                                |   | 580         |  | 4.85 | %              |  |   | 33,870               |   |             |   | 610    |  | 3.60 | %
|Subordinated debt                                                       |  |                                | 15,464  |   |                                |   | 670         |  | 8.67 | %              |  |   | 15,464               |   |             |   | 670    |  | 8.67 | %
|Other borrowings                                                        |  |                                | 0       |   |                                |   | 0           |  | 0.00 | %              |  |   | 1,820                |   |             |   | 57     |  | 6.25 | %
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total borrowings                                                        |  |                                | 49,388  |   |                                |   | 1,404       |  | 5.69 | %              |  |   | 61,154               |   |             |   | 1,492  |  | 4.88 | %
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total interest-bearing liabilities                                      |  |                                | 431,093 |   |                                |   | 5,097       |  | 2.36 | %              |  |   | 428,492              |   |             |   | 4,501  |  | 2.10 | %
|                                                                        |  |                                |         |   |                                |  
|Noninterest-bearing liabilities                                         |  |                                | 43,847  |   |                                |   |             |  |      |                |  |   | 34,665               |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total liabilities                                                       |  |                                | 474,940 |   |                                |   |             |  |      |                |  |   | 463,157              |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |  
|Retained earnings                                                       |  |                                | 60,364  |   |                                |   |             |  |      |                |  |   | 24,985               |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total liabilities and retained earnings                                 |  | $                              | 535,304 |   |                                |   |             |  |      |                |  | $ | 488,142              |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |  
|Net interest income                                                     |  |                                |         |   |                                | $ | 7,405       |  |      |                |  |   |                      |   |             | $ | 6,654  |  |      |  
|                                                                        |  |                                |         |   |                                |   |             |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Interest rate spread                                                    |  |                                |         |   |                                |   |             |  | 2.73 | %              |  |   |                      |   |             |   |        |  | 2.89 | %
|Net interest margin                                                     |  |                                |         |   |                                |   |             |  | 3.02 | %              |  |   |                      |   |             |   |        |  | 2.98 | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                | 113.77  | % |                                |   |             |  |      |                |  |   | 104.36               | % |             |   |        |  |      |  



Provision for Loan Losses



We review the level of the allowance for loan losses on a monthly basis
and establish the provision for loan losses based on the volume and types of lending, delinquency levels, loss experience, the amount of classified loans, economic conditions and other factors related to the collectibility of the loan portfolio. The
provision for loan losses was $75,000 and $150,000 for the three and six months ended June 30, 2005 respectively, compared to $90,000 and $180,000 for the three and six months ended June 30, 2004. Net charge-offs (recoveries) were $(1,000) and
$2,000 for the three and six months ended June 30, 2005, respectively, compared to $(3,000) and $4,000 for the three and six months ended June 30, 2004. The change in the level of provision for loan loses was due to growth in the loan portfolio,
however based on the factors used in the determination of the level of allowance the Company deemed it reasonable to reduce the quarterly provision.



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Other Income



The following table summarizes other income for three months ended June 30, 2005 and 2004 and the changes between the periods.



|                                       |  |                            |     |          |   |     |  |       |  
|-------------------------------------- |  | -------------------------- | --- | -------- | - | --- |  | ----- | -
|                                       |  | Three Months EndedJune 30, |     | % Change |  
|                                       |  | 2005                       |     | 2004     |  
|                                       |  | (Dollars in thousands)     |     |          |  
|OTHER INCOME:                          |  |                            |     |          |   |     |  |       |  
|                                       |  |                            |    
|Service charges                        |  | $                          | 384 |          | $ | 382 |  | 0.5   | %
|Cash surrender value of life insurance |  |                            | 63  |          |   | 80  |  | (21.5 | )
|Other                                  |  |                            | 125 |          |   | 117 |  | 6.5   |  
|                                       |  |                            |     |          |   |     |  |       |  
|Total other income                     |  | $                          | 572 |          | $ | 579 |  | (1.3  | )
|                                       |  |                            |     |          |   |     |  |       |  



Other income decreased $8,000, or
(1.3%), to $572,000 for the three-month period ended June 30, 2005 from the same period in 2004. An increase in service charges and fees was offset by a decrease in the income on the surrender value of bank-owned life insurance.



The following table summarizes other income for six months ended June 30, 2005 and 2004 and
the changes between the periods.



|                                       |  |                          |       |          |   |       |  |      |   
|-------------------------------------- |  | ------------------------ | ----- | -------- | - | ----- |  | ---- | --
|                                       |  | Six Months EndedJune 30, |       | % Change |  
|                                       |  | 2005                     |       | 2004     |  
|                                       |  | (Dollars in thousands)   |       |          |  
|OTHER INCOME:                          |  |                          |       |          |   |       |  |      |   
|                                       |  |                          |      
|Service charges                        |  | $                        | 735   |          | $ | 744   |  | (1.2 | )%
|Cash surrender value of life insurance |  |                          | 136   |          |   | 150   |  | (9.3 | ) 
|Other                                  |  |                          | 269   |          |   | 224   |  | 19.7 |   
|                                       |  |                          |       |          |   |       |  |      |   
|Total other income                     |  | $                        | 1,140 |          | $ | 1,118 |  | 1.9  |   
|                                       |  |                          |       |          |   |       |  |      |   



Other income increased $21,000, or
1.9%, to $1.14 million for the six-month period ended June 30, 2005 from the same period in 2004. The increase occurred in service charges, fees and loan servicing fees offset by a decrease in the income on the surrender value of bank-owned life
insurance.



Other Expense



The following table summarizes other expense for three months ended June 30, 2005 and 2004
and the changes between the periods.



|                               |  |                             |       |          |   |       |  |      |  
|------------------------------ |  | --------------------------- | ----- | -------- | - | ----- |  | ---- | -
|                               |  | Three Months Ended June 30, |       | % Change |  
|                               |  | 2005                        |       | 2004     |  
|                               |  | (Dollars in thousands)      |       |          |  
|OTHER EXPENSE:                 |  |                             |       |          |   |       |  |      |  
|                               |  |                             |      
|Salaries and employee benefits |  | $                           | 1,719 |          | $ | 1,550 |  | 10.9 | %
|Occupancy and equipment        |  |                             | 582   |          |   | 538   |  | 8.2  |  
|Federal insurance premiums     |  |                             | 14    |          |   | 15    |  | (2.2 | )
|Advertising                    |  |                             | 107   |          |   | 94    |  | 14.3 |  
|Professional services          |  |                             | 204   |          |   | 114   |  | 78.9 |  
|Other operating expense        |  |                             | 340   |          |   | 320   |  | 6.2  |  
|                               |  |                             |       |          |   |       |  |      |  
|Total other expense            |  | $                           | 2,966 |          | $ | 2,633 |  | 12.7 |  
|                               |  |                             |       |          |   |       |  |      |  



Other expenses increased $333,000 to
$3.0 million for the three-month period ended June 30, 2005 from the same period in 2004. Salaries and benefits increased due to regular salary increases. Occupancy and equipment increased due primarily to increases in data processing expenses
related to improvements to network security. Other operating expenses increased as accounting and legal services increased due to additional compliance requirements associated with being a public company.



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##### Table of Contents

The following table summarizes other expense for six months ended June 30, 2005 and 2004 and the changes between the
periods.



|                               |  |                          |       |          |   |       |  |      |  
|------------------------------ |  | ------------------------ | ----- | -------- | - | ----- |  | ---- | -
|                               |  | Six Months EndedJune 30, |       | % Change |  
|                               |  | 2005                     |       | 2004     |  
|                               |  | (Dollars in thousands)   |       |          |  
|OTHER EXPENSE:                 |  |                          |       |          |   |       |  |      |  
|                               |  |                          |      
|Salaries and employee benefits |  | $                        | 3,458 |          | $ | 3,149 |  | 9.9  | %
|Occupancy and equipment        |  |                          | 1,165 |          |   | 1,080 |  | 7.9  |  
|Federal insurance premiums     |  |                          | 30    |          |   | 30    |  | 0.0  |  
|Advertising                    |  |                          | 201   |          |   | 175   |  | 15.1 |  
|Professional services          |  |                          | 363   |          |   | 216   |  | 68.0 |  
|Other operating expense        |  |                          | 661   |          |   | 637   |  | 3.8  |  
|                               |  |                          |       |          |   |       |  |      |  
|Total other expense            |  | $                        | 5,878 |          | $ | 5,287 |  | 11.2 |  
|                               |  |                          |       |          |   |       |  |      |  



Other expenses increased $592,000 to
$5.9 million for the six-month period ended June 30, 2005 from the same period in 2004. Salaries and benefits increased due to regular salary increases. Occupancy and equipment increased due primarily to increases in data processing expenses related
to improvements to network security. Other operating expenses increased as accounting and legal services increased due to additional compliance requirements associated with being a public company.



Income Taxes



Income taxes increased $102,000 to $526,000 for an effective tax rate of 40.0% for the three months ended June 30, 2005 compared to $424,000
for an effective tax rate of 36.8% from the same period in 2004. The increase was a result of higher net income. The increase in the tax provision resulted from higher levels of pretax income of $1.3 million for the three months ended June 30, 2005
as compared to pretax income of $1.1 million for the comparable 2004 period. Additionally, increased statutory tax rates contributed to increased effective tax rate.



Income taxes increased $97,000 to $984,000 for an effective tax rate of 39.1% for the six months ended June 30, 2005 compared to $888,000
for an effective tax rate of 38.5% from the same period in 2004. The increase in the tax provision resulted from higher levels of pretax income of $2.5 million for the six months ended June 30, 2005 as compared to pretax income of $2.3 million for
the comparable 2004 period. Additionally, increased statutory tax rates contributed to increased effective tax rate.



LIQUIDITY AND CAPITAL RESOURCES



Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan
repayments, maturities and sales of investment securities and borrowings from the Federal Home Loan Bank of New York. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates, economic conditions and competition.



We regularly adjust our investments in liquid assets based upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities and (4) the
objectives of our asset/liability management policy.



Our most liquid assets
are cash and cash equivalents and interest-bearing deposits. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At June 30, 2005, cash and cash equivalents totaled $36.4 million.
Securities classified as available-for-sale whose market value exceeds our cost, which provide additional sources of liquidity, totaled $33.6 million at June 30, 2005. In addition, at June 30, 2005, we had the ability to borrow a total of
approximately $180.6 million from the Federal Home Loan Bank of New York, which included available overnight lines of credit of $47.2 million. On that date, we had no overnight advances outstanding.



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At June 30, 2005, we had $56.1 million in loan commitments outstanding, which included $29.8 million in undisbursed
loans, $20.5 million in unused home equity lines of credit and $5.6 million in commercial lines of credit. Certificates of deposit due within one year of June 30, 2005 totaled $55.8 million, or 46.3% of certificates of deposit. We believe, however,
based on past experience that a significant portion of our certificates of deposit will remain with us. We also have the ability to attract and retain deposits by adjusting the interest rates offered.



At June 30, 2005, the Bank exceeded all of its regulatory capital requirements with tangible
capital of $55.0 million, or 10.5% of total adjusted assets, which is above the required level of $7.9 million or 1.5%; core capital of $55 million, or 10.5% of total adjusted assets which is above the required level of $21 million or 4%; and
risk-based capital of $56.6 million, or 19.9% of risk-weighted assets, which is above the required level of $22.7 million or 8%. The Bank is considered a well-capitalized institution under the Office of Thrift Supervisions prompt
corrective action regulations.



MARKET RISK MANAGEMENT



Net Interest Income Simulation Analysis



We analyze our interest rate sensitivity position to manage the risk associated with
interest rate movements through the use of interest income simulation. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are interest sensitive. An asset or liability is
said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period.



Simulation analysis is only an estimate of our interest rate risk exposure at a particular point in time. We continually review the potential effect changes in interest
rates could have on the repayment of rate sensitive assets and funding requirements of rate sensitive liabilities.



The following table reflects changes in estimated net interest income only for Ocean Shore Holding.



|                                  |  |                                                                          |    |  |           |   
|--------------------------------- |  | ------------------------------------------------------------------------ | -- |  | --------- | --
|                                  |  | At June 30, 2005 Percentage Change in Estimated Net Interest Income Over |   
|                                  |  | 12 Months                                                                |    |  | 24 Months |   
|200 basis point increase in rates |  | (0.21                                                                    | )% |  | 2.80      | % 
|100 basis point decrease in rates |  | 0.45                                                                     | %  |  | (3.93     | )%



The 200 and 100 basis point change in
rates in the above table is assumed to occur evenly over the following twelve months. Based on the scenario above, net interest income would be adversely affected (within our internal guidelines) in the twelve-month period if rates rose by 200 basis
points, but would be positively affected in the twenty-four month period. The reason for the increase in the twenty-four month period is that maturing short-term securities could be reinvested at the higher prevailing rates assumed by the analysis.
In addition, if rates declined by 100 basis points net interest income would be adversely affected (within our internal guidelines) in both the twelve- and 24-month periods.



Net Portfolio Value Analysis



In addition to a net interest income simulation analysis, an interest rate sensitivity analysis prepared by the Office of Thrift Supervision is used to review our level
of interest rate risk. This analysis measures interest rate risk by computing changes in the net portfolio value of cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates.
Net portfolio value represents the market value of portfolio equity and is equal to the market value of assets minus the market value of liabilities, with adjustments made for off-balance sheet items. This analysis assesses the risk of



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loss in market risk sensitive instruments in the event of a sudden and sustained 100 to 300 basis point increase or 100
basis point decreases in market interest rates with no effect given to any steps that we might take to counter the effect of that interest rate movement. Because of the low level of market interest rates, this analysis is not performed for decreases
of more than 100 basis points. We measure interest rate risk by modeling the changes in net portfolio value over a variety of interest rate scenarios. The following table, which is based on information that we provide to the Office of Thrift
Supervision, presents the change in our net portfolio value at June 30, 2005 that would occur in the event of an immediate change in interest rates based on Office of Thrift Supervision assumptions, with no effect given to any steps that we might
take to counteract that change.



|                                   |  |                                            |        |          |                                                       |         |          |  |     |           |  |       |        |  |      |    
|---------------------------------- |  | ------------------------------------------ | ------ | -------- | ----------------------------------------------------- | ------- | -------- |  | --- | --------- |  | ----- | ------ |  | ---- | ---
|                                   |  | Net Portfolio Value (Dollars in Thousands) |        |          | Net Portfolio Value as % of Portfolio Value of Assets |        
|Basis Point (bp) Change in Rates |  | $ Amount                                   |        | $ Change |                                                       |         | % Change |  |     | NPV Ratio |  |       | Change | 
|300 bp                             |  | $                                          | 67,027 |          | $                                                     | (24,303 | )        |  | (27 | )%        |  | 12.29 | %      |  | (344 | )bp
|200                                |  |                                            | 77,369 |          |                                                       | (13,961 | )        |  | (15 | )%        |  | 13.84 | %      |  | (189 | )  
|100                                |  |                                            | 89,322 |          |                                                       | (2,008  | )        |  | (2  | )%        |  | 15.55 | %      |  | (18  | )  
|0                                  |  |                                            | 91,330 |          |                                                       |        |          |  |    |           |  | 15.73 | %      |  |     |    
|(100)                              |  |                                            | 87,902 |          |                                                       | (3,428  | )        |  | (4  | )%        |  | 15.12 | %      |  | (61  | )  
|(200)                              |  |                                            | 81,493 |          |                                                       | (9,834  | )        |  | (11 | )%        |  | 14.08 | %      |  | (165 | )  
|(300)                              |  |                                            | 74,757 |          |                                                       | (16,573 | )        |  | (18 | )%        |  | 12.97 | %      |  | (276 | )  



The Office of Thrift Supervision uses
certain assumptions in assessing the interest rate risk of savings associations. These assumptions relate to interest rates, loan prepayment rates, deposit decay rates, and the market values of certain assets under differing interest rate scenarios,
among others. As with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on
other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. Further, in the
event of a change in interest rates, expected rates of prepayments on loans and early withdrawals from certificates could deviate significantly from those assumed in calculating the table.



OFF-BALANCE SHEET ARRANGEMENTS



In the normal course of operations, we engage in a variety of financial transactions that,
in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to
manage customers requests for funding and take the form of loan commitments and lines of credit.



For the three and six months ended June 30, 2005, we engaged in no off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.



Item 3. Quantitative and Qualitative Disclosures about Market Risk



The information required by this item is included in Item 2 of this report under Market Risk Management.



Item 4. Controls and Procedures



The
Companys management, including the Companys principal executive officer and principal financial officer, have evaluated the effectiveness of the Companys disclosure controls and procedures, as such term is defined in
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the



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Exchange Act). Based upon their evaluation, the principal executive officer and principal financial officer
concluded that, as of the end of the period covered by this report, the Companys disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files
or submits under the Exchange Act with the Securities and Exchange Commission (the SEC) (1) is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and (2) is accumulated and
communicated to the Companys management, including its principal executive and principal financial offers, as appropriate to allow timely decisions regarding required disclosure. In addition, based on that evaluation, no change in the
Companys internal control over financial reporting occurred during the quarter ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



PART II  OTHER INFORMATION



Item 1. Legal Proceedings



Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property
loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



Ocean Shore Holding did not repurchase any of its securities in the quarter ended June 30, 2005.



Item 3. Defaults Upon Senior Securities



Not applicable.



Item 4. Submission of Matters to a Vote of Security Holders



The Annual Meeting of Stockholders of the Company was held on May 18, 2005. The results of the vote on the matters presented at the meeting are as follows:



| | 1. | The following individuals were elected as directors, each for a three-year term:
| | -- | --------------------------------------------------------------------------------



|                    |  |           |  |               
|------------------- |  | --------- |  | --------------
|                    |  | Votes for |  | Votes Withheld
|Sylva A. Bertini    |  | 8,578,893 |  | 47,046        
|John L. Van Duyne   |  | 8,564,113 |  | 61,826        
|Christopher J. Ford |  | 8,551,718 |  | 74,221        



| | 2. | The appointment of Deloitte & Touche LLP as auditors for the Company for the fiscal year ending December 31, 2005 was ratified by stockholders by the following vote:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

For 8,398,597;
            Against 48,129



| |  | Broker non-votes totaled none.
| |  | ------------------------------



Item 5. Other Information



None.



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Item 6. Exhibits



31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer



31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer



32.0 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer



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SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                      |  |                                                  
|--------------------- |  | -------------------------------------------------
|                      |  | OCEAN SHORE HOLDING CO.                          
|                      |  | (Registrant)                                     
|                      | 
|Date: August 11, 2005 |  | /s/ Steven E. Brady                              
|                      |  | Steven E. Brady                                  
|                      |  | President and Chief Executive Officer            
|                      | 
|Date: August 11, 2005 |  | /s/ Donald F. Morgenweck                         
|                      |  | Donald F. Morgenweck                             
|                      |  | Chief Financial Officer and Senior Vice President



26