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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, 2006

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 a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ̈Accelerated Filer ̈Non-accelerated Filer  x

Indicate by check mark whether the registrant is a shell company (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 1, 2006, the
registrant had 8,733,942 shares of $0.01 par value common stock outstanding.



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##### Table of Contents

OCEAN SHORE 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, 2006 and December 31, 2005                      |  | 1   
|           |  |                                                                                                                               
|           |  | Unaudited Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2006 and 2005         |  | 2   
|           |  |                                                                                                                               
|           |  | Unaudited Condensed Consolidated Statements of Changes in Stockholders Equity for the six months ended June 30, 2006 and 2005 |  | 3   
|           |  |                                                                                                                               
|           |  | Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005                      |  | 4   
|           |  |                                                                                                                               
|           |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                                 |  | 5   
|           |  |                                                                                                                               
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                          |  | 14  
|           |  |                                                                                                                               
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                                     |  | 25  
|           |  |                                                                                                                               
|Item 4.    |  | Controls and Procedures                                                                                                        |  | 25  
|           |  |                                                                                                                               
|PART II.   |  | OTHER INFORMATION                                                                                                              |  |     
|           |  |                                                                                                                               
|Item 1.    |  | Legal Proceedings                                                                                                              |  | 25  
|           |  |                                                                                                                               
|Item 1A.   |  | Risk Factors                                                                                                                   |  | 25  
|           |  |                                                                                                                               
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                    |  | 25  
|           |  |                                                                                                                               
|Item 3.    |  | Defaults upon Senior Securities                                                                                                |  | 26  
|           |  |                                                                                                                               
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                                            |  | 26  
|           |  |                                                                                                                               
|Item 5.    |  | Other Information                                                                                                              |  | 26  
|           |  |                                                                                                                               
|Item 6.    |  | Exhibits                                                                                                                       |  | 26  
|           | 
|SIGNATURES |  | 27                                                                                                                            



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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, 2006 |             |   | December 31, 2005 |  
|ASSETS                                                                                                                                                                       |  |               |             |   |                   |   |             |  
|Cash and amounts due from depository institutions                                                                                                                            |  | $             | 20,043,684  |   |                   | $ | 13,400,085  |  
|Federal funds sold                                                                                                                                                           |  |               | 7,000,000   |   |                   |   |            |  
|                                                                                                                                                                             |  |               |             |   |                   |   |             |  
|                                                                                                                                                                             |  |              
|Cash and cash equivalents                                                                                                                                                    |  |               | 27,043,684  |   |                   |   | 13,400,085  |  
|                                                                                                                                                                             |  |              
|Investment securities held to maturity(estimated fair value June 2006, $788,431; December 2005, $4,293,635)                                                                 |  |               | 788,431     |   |                   |   | 4,292,600   |  
|Investment securities available for sale(amortized cost June 2006, $42,640,511; December 2005, $47,368,441)                                                                 |  |               | 42,525,978  |   |                   |   | 47,285,875  |  
|Mortgage-backed securities held to maturity(estimated fair value June 2006, $5,262,905; December 2005, $5,320,700)                                                          |  |               | 5,519,379   |   |                   |   | 5,435,913   |  
|Mortgage-backed securities available for sale(amortized cost June 2006, $33,354,988; December 2005, $37,710,146)                                                            |  |               | 32,307,557  |   |                   |   | 37,175,682  |  
|Loans receivablenet                                                                                                                                                         |  |               | 429,013,032 |   |                   |   | 412,005,109 |  
|Accrued interest receivable:                                                                                                                                                 |  |               |             |   |                   |   |             |  
|Loans                                                                                                                                                                        |  |               | 1,680,309   |   |                   |   | 1,592,328   |  
|Mortgage-backed securities                                                                                                                                                   |  |               | 160,710     |   |                   |   | 176,217     |  
|Investment securities                                                                                                                                                        |  |               | 402,007     |   |                   |   | 443,789     |  
|Federal Home Loan Bank stockat cost                                                                                                                                         |  |               | 3,030,900   |   |                   |   | 2,622,800   |  
|Office properties and equipmentnet                                                                                                                                          |  |               | 8,321,298   |   |                   |   | 8,399,552   |  
|Prepaid expenses and other assets                                                                                                                                            |  |               | 3,259,922   |   |                   |   | 3,112,147   |  
|Cash surrender value of life insurance                                                                                                                                       |  |               | 7,469,239   |   |                   |   | 7,339,094   |  
|Deferred tax asset                                                                                                                                                           |  |               | 733,714     |   |                   |   | 564,683     |  
|                                                                                                                                                                             |  |               |             |   |                   |   |             |  
|TOTAL ASSETS                                                                                                                                                                 |  | $             | 562,256,160 |   |                   | $ | 543,845,874 |  
|                                                                                                                                                                             |  |               |             |   |                   |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                         |  |               |             |   |                   |   |             |  
|                                                                                                                                                                             |  |              
|LIABILITIES:                                                                                                                                                                 |  |               |             |   |                   |   |             |  
|Non-interest bearing deposits                                                                                                                                                |  | $             | 43,682,122  |   |                   | $ | 34,223,473  |  
|Interest bearing deposits                                                                                                                                                    |  |               | 384,272,703 |   |                   |   | 382,690,429 |  
|Advances from Federal Home Loan Bank                                                                                                                                         |  |               | 44,000,000  |   |                   |   | 27,000,000  |  
|Junior subordinated debenture                                                                                                                                                |  |               | 15,464,000  |   |                   |   | 15,464,000  |  
|Securities sold under agreements to repurchase                                                                                                                               |  |               | 7,220,000   |   |                   |   | 18,460,000  |  
|Advances from borrowers for taxes and insurance                                                                                                                              |  |               | 2,478,617   |   |                   |   | 2,200,325   |  
|Accrued interest payable                                                                                                                                                     |  |               | 863,246     |   |                   |   | 835,122     |  
|Other liabilities                                                                                                                                                            |  |               | 2,539,345   |   |                   |   | 2,404,243   |  
|                                                                                                                                                                             |  |               |             |   |                   |   |             |  
|Total liabilities                                                                                                                                                            |  |               | 500,520,033 |   |                   |   | 483,277,592 |  
|                                                                                                                                                                             |  |               |             |   |                   |   |             |  
|                                                                                                                                                                             |  |              
|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; 8,733,942 and 8,762,742 shares outstanding at June 2006
and December 2005, respectively |  |               | 87,627      |   |                   |   | 87,627      |  
|Additional paid-in capital                                                                                                                                                   |  |               | 36,946,232  |   |                   |   | 38,392,348  |  
|Retained earnings - partially restricted                                                                                                                                     |  |               | 29,036,214  |   |                   |   | 27,633,345  |  
|Treasury stockat cost: 28,800 shares at June 2006                                                                                                                           |  |               | (362,204    | ) |                   |   |            |  
|Common stock acquired by employee benefit plans                                                                                                                              |  |               | (2,862,490  | ) |                   |   | (4,798,480  | )
|Deferred compensation plans trust                                                                                                                                            |  |               | (395,090    | ) |                   |   | (373,607    | )
|Accumulated other comprehensive loss                                                                                                                                         |  |               | (714,162    | ) |                   |   | (372,951    | )
|                                                                                                                                                                             |  |               |             |   |                   |   |             |  
|Total stockholders equity                                                                                                                                                   |  |               | 61,736,127  |   |                   |   | 60,568,282  |  
|                                                                                                                                                                             |  |               |             |   |                   |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                   |  | $             | 562,256,160 |   |                   | $ | 543,845,874 |  
|                                                                                                                                                                             |  |               |             |   |                   |   |             |  

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 INCOME



|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|------------------------------------------------------------------------------------------------------------- |  | --------------------------- | --------- | ------------------------- | - | --------- |  | ---- | ---------- |  | - | ----------
|                                                                                                              |  | Three Months Ended June 30, |           | Six Months Ended June 30,
|                                                                                                              |  | 2006                        |           | 2005                      |   | 2006      |  | 2005
|INTEREST AND DIVIDEND INCOME:                                                                                 |  |                             |           |                           |   |           |  |      |            |  |   |           
|Interest and fees on loans                                                                                    |  | $                           | 6,254,632 |                           | $ | 5,044,414 |  | $    | 12,280,841 |  | $ | 9,796,415 
|Interest on mortgage-backed securities                                                                        |  |                             | 444,976   |                           |   | 582,076   |  |      | 915,507    |  |   | 1,154,341 
|Non-taxable interest on municipal securities                                                                  |  |                             | 46,476    |                           |   | 102,563   |  |      | 157,110    |  |   | 203,014   
|Interest and dividends on investment securities                                                               |  |                             | 600,547   |                           |   | 682,421   |  |      | 1,144,528  |  |   | 1,348,635 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total interest and dividend income                                                                            |  |                             | 7,346,631 |                           |   | 6,411,474 |  |      | 14,497,986 |  |   | 12,502,405
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|INTEREST EXPENSE:                                                                                             |  |                             |           |                           |   |           |  |      |            |  |   |           
|Deposits                                                                                                      |  |                             | 2,654,698 |                           |   | 1,912,486 |  |      | 5,131,788  |  |   | 3,692,804 
|Advances from Federal Home Loan Bank, securities sold under agreements to repurchase and other borrowed money |  |                             | 902,264   |                           |   | 713,529   |  |      | 1,780,854  |  |   | 1,405,086 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total interest expense                                                                                        |  |                             | 3,556,962 |                           |   | 2,626,015 |  |      | 6,912,642  |  |   | 5,097,890 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|NET INTEREST INCOME                                                                                           |  |                             | 3,789,669 |                           |   | 3,785,459 |  |      | 7,585,344  |  |   | 7,404,515 
|                                                                                                              |  |                             |           |                          
|PROVISION FOR LOAN LOSSES                                                                                     |  |                             | 75,000    |                           |   | 75,000    |  |      | 150,000    |  |   | 150,000   
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                                           |  |                             | 3,714,669 |                           |   | 3,710,459 |  |      | 7,435,344  |  |   | 7,254,515 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|OTHER INCOME:                                                                                                 |  |                             |           |                           |   |           |  |      |            |  |   |           
|Service charges                                                                                               |  |                             | 404,270   |                           |   | 383,719   |  |      | 777,821    |  |   | 735,102   
|Cash surrender value of life insurance                                                                        |  |                             | 64,645    |                           |   | 63,000    |  |      | 130,145    |  |   | 136,000   
|Other                                                                                                         |  |                             | 129,983   |                           |   | 124,882   |  |      | 245,899    |  |   | 268,678   
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total other income                                                                                            |  |                             | 598,898   |                           |   | 571,601   |  |      | 1,153,865  |  |   | 1,139,780 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|OTHER EXPENSE:                                                                                                |  |                             |           |                           |   |           |  |      |            |  |   |           
|Salaries and employee benefits                                                                                |  |                             | 1,855,364 |                           |   | 1,718,686 |  |      | 3,749,251  |  |   | 3,458,308 
|Occupancy and equipment                                                                                       |  |                             | 656,519   |                           |   | 582,282   |  |      | 1,321,552  |  |   | 1,165,403 
|Federal insurance premiums                                                                                    |  |                             | 13,112    |                           |   | 14,500    |  |      | 27,621     |  |   | 29,510    
|Advertising                                                                                                   |  |                             | 114,636   |                           |   | 107,361   |  |      | 202,724    |  |   | 200,979   
|Professional services                                                                                         |  |                             | 155,245   |                           |   | 203,945   |  |      | 297,490    |  |   | 362,617   
|Other operating expenses                                                                                      |  |                             | 358,741   |                           |   | 339,708   |  |      | 685,216    |  |   | 661,089   
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total other expenses                                                                                          |  |                             | 3,153,617 |                           |   | 2,966,482 |  |      | 6,283,854  |  |   | 5,877,906 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|INCOME BEFORE INCOME TAXES                                                                                    |  |                             | 1,159,950 |                           |   | 1,315,578 |  |      | 2,305,355  |  |   | 2,516,389 
|                                                                                                              |  |                             |           |                          
|INCOME TAX EXPENSE                                                                                            |  |                             | 459,827   |                           |   | 525,714   |  |      | 902,486    |  |   | 984,228   
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|NET INCOME                                                                                                    |  | $                           | 700,123   |                           | $ | 789,864   |  | $    | 1,402,869  |  | $ | 1,532,161 
|                                                                                                              |  |                             |           |                           |   |           |  |      |            |  |   |           
|Basic earnings per share:                                                                                     |  | $                           | 0.08      |                           | $ | 0.09      |  | $    | 0.17       |  | $ | 0.18      
|Diluted earnings per share:                                                                                   |  | $                           | 0.08      |                           | $ | 0.09      |  | $    | 0.17       |  | $ | 0.18      

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 CHANGES IN STOCKHOLDERS
EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005



|                                                                                           |  |              |        |                            |   |            |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   |            |  
|------------------------------------------------------------------------------------------ |  | ------------ | ------ | -------------------------- | - | ---------- | ---------------------------------------- |  | -------------- | ---------- |  | ----------------------- | -------- | - | --------------------------------- | - | ---------- | --------------------------------------------- |  | - | ------------ | - |  | - | -------- | - |  | - | ---------- | -
|                                                                                           |  | Common Stock |        | Additional Paid-In Capital |   |            | Retained Earnings - Partially
Restricted |  | Treasury Stock |            |  | Unallocated ESOP Shares |          |   | Deferred Compensation Plans Trust |   |            | Accumulated Other Comprehensive Income (Loss) |  |   | Total Equity |  
|BALANCEJanuary 1, 2006                                                                    |  | $            | 87,627 |                            | $ | 38,392,348 |                                          |  | $              | 27,633,345 |  | $                       |         |   |                                   | $ | (4,798,480 | )                                             |  | $ | (373,607     | ) |  | $ | (372,951 | ) |  | $ | 60,568,282 |  
|Comprehensive income:                                                                      |  |              |        |                            |   |            |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   |            |  
|Net income                                                                                 |  |              |        |                            |   |            |                                          |  |                | 1,402,869  |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   | 1,402,869  |  
|Net change in unrealized loss on securities available for sale, net of taxes of $(109,522) |  |              |        |                            |   |            |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   | (341,211 | ) |  |   | (341,211   | )
|                                                                                           |  |              |        |                            |   |            |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   |            |  
|Comprehensive income                                                                       |  |              |        |                            |   |            |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   | 1,061,658  |  
|Reclassification upon adoption of SFAS 123(R)                                              |  |              |        |                            |   | (1,821,490 | )                                        |  |                |            |  |                         |          |   |                                   |   | 1,821,490  |                                               |  |   |              |   |  |   |          |   |  |   |           |  
|Excess of fair market value above cost of ESOP shares committed to be released             |  |              |        |                            |   | 23,644     |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   | 23,644     |  
|Unallocated ESOP shares committed to employees                                             |  |              |        |                            |   |            |                                          |  |                |            |  |                         |          |   |                                   |   | 114,500    |                                               |  |   |              |   |  |   |          |   |  |   | 114,500    |  
|Purchase of treasury stock                                                                 |  |              |        |                            |   |            |                                          |  |                |            |  |                         | (362,204 | ) |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   | (362,204   | )
|Restricted stock shares                                                                    |  |              |        |                            |   | 198,712    |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   | 198,712    |  
|Stock options                                                                              |  |              |        |                            |   | 153,018    |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   | 153,018    |  
|Purchase of shares by deferred compensation plans trust                                    |  |              |        |                            |   |            |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   | (21,483      | ) |  |   |          |   |  |   | (21,483    | )
|                                                                                           |  |              |        |                            |   |            |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   |            |  
|BALANCEJune 30, 2006                                                                      |  | $            | 87,627 |                            | $ | 36,946,232 |                                          |  | $              | 29,036,214 |  | $                       | (362,204 | ) |                                   | $ | (2,862,490 | )                                             |  | $ | (395,090     | ) |  | $ | (714,162 | ) |  | $ | 61,736,127 |  
|                                                                                           |  |              |        |                            |   |            |                                          |  |                |            |  |                         |          |   |                                   |   |            |                                               |  |   |              |   |  |   |          |   |  |   |            |  
|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.



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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, |            
|                                                                                            |  | 2006                      |             |   | 2005 |  
|OPERATING ACTIVITIES:                                                                       |  |                           |             |   |      |   |             |  
|Net income                                                                                  |  | $                         | 1,402,869   |   |      | $ | 1,532,161   |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                           |             |   |      |   |             |  
|Depreciation and amortization                                                               |  |                           | 577,343     |   |      |   | 676,918     |  
|Provision for loan losses                                                                   |  |                           | 150,000     |   |      |   | 150,000     |  
|Deferred income taxes                                                                       |  |                           | 34,691      |   |      |   | 89,983      |  
|ESOP and restricted stock plans                                                             |  |                           | 313,213     |   |      |   |            |  
|Incentive stock option plan                                                                 |  |                           | 153,018     |   |      |   |            |  
|Loss on sale of office properties and equipment                                             |  |                           | 229         |   |      |   |            |  
|Increase in cash surrender value of life insurance                                          |  |                           | (130,145    | ) |      |   | (136,000    | )
|Excess of fair value above cost of ESOP shares                                              |  |                           | 23,644      |   |      |   | 8,015       |  
|Changes in assets and liabilities which provided (used) cash:                               |  |                           |             |   |      |   |             |  
|Accrued interest receivable                                                                 |  |                           | (30,691     | ) |      |   | (125,632    | )
|Prepaid expenses and other assets                                                           |  |                           | (147,776    | ) |      |   | (181,735    | )
|Accrued interest payable                                                                    |  |                           | 28,125      |   |      |   | 769         |  
|Other liabilities                                                                           |  |                           | 135,101     |   |      |   | 546,448     |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Net cash provided by operating activities                                                   |  |                           | 2,509,621   |   |      |   | 2,560,927   |  
|                                                                                            |  |                           |             |   |      |   |             |  
|INVESTING ACTIVITIES:                                                                       |  |                           |             |   |      |   |             |  
|Principal collected on:                                                                     |  |                           |             |   |      |   |             |  
|Mortgage-backed securities held to maturity                                                 |  |                           | 434,468     |   |      |   | 224,582     |  
|Mortgage-backed securities available for sale                                               |  |                           | 4,312,160   |   |      |   | 6,792,461   |  
|Loans originated, net of repayments                                                         |  |                           | (17,302,998 | ) |      |   | (33,285,126 | )
|Purchases of:                                                                               |  |                           |             |   |      |   |             |  
|Mortgage-backed securities held to maturity                                                 |  |                           | (523,429    | ) |      |   | (3,993,750  | )
|Investment securities held to maturity                                                      |  |                           | (788,431    | ) |      |   | (1,900,000  | )
|Investment securities available for sale                                                    |  |                           |            |   |      |   | (3,998,125  | )
|Federal Home Loan Bank stock                                                                |  |                           | (1,231,600  | ) |      |   | (289,500    | )
|Office properties and equipment                                                             |  |                           | (308,533    | ) |      |   | (742,153    | )
|Proceeds from redemption of:                                                                |  |                           |             |   |      |   |             |  
|Federal Home Loan Bank stock                                                                |  |                           | 823,500     |   |      |   |            |  
|Proceeds from maturities of:                                                                |  |                           |             |   |      |   |             |  
|Investment securities held to maturity                                                      |  |                           | 4,292,600   |   |      |   | 665,000     |  
|Investment securities available for sale                                                    |  |                           | 4,730,713   |   |      |   | 5,781,274   |  
|Purchase of life insurance contracts                                                        |  |                           |            |   |      |   | (85,100     | )
|                                                                                            |  |                           |             |   |      |   |             |  
|Net cash used in investing activities                                                       |  |                           | (5,561,550  | ) |      |   | (30,830,437 | )
|                                                                                            |  |                           |             |   |      |   |             |  
|FINANCING ACTIVITIES:                                                                       |  |                           |             |   |      |   |             |  
|Increase in deposits                                                                        |  |                           | 11,040,923  |   |      |   | 15,374,040  |  
|Increase (decrease) in securities sold under agreements to repurchase                       |  |                           | (11,240,000 | ) |      |   | 1,650,000   |  
|Increase in advances from the Federal Home Loan Bank                                        |  |                           | 17,000,000  |   |      |   |            |  
|Purchase of treasury stock                                                                  |  |                           | (362,204    | ) |      |   |            |  
|Purchase of shares by deferred compensation plans trust                                     |  |                           | (21,483     | ) |      |   | (25,438     | )
|Increase in advances from borrowers for taxes and insurance                                 |  |                           | 278,292     |   |      |   | 267,463     |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Net cash provided by financing activities                                                   |  |                           | 16,695,528  |   |      |   | 17,266,065  |  
|                                                                                            |  |                           |             |   |      |   |             |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        |  |                           | 13,643,599  |   |      |   | (11,003,445 | )
|                                                                                            |  |                          
|CASH AND CASH EQUIVALENTSBeginning of period                                               |  |                           | 13,400,085  |   |      |   | 47,395,819  |  
|                                                                                            |  |                           |             |   |      |   |             |  
|CASH AND CASH EQUIVALENTSEnd of period                                                     |  | $                         | 27,043,684  |   |      | $ | 36,392,374  |  
|                                                                                            |  |                           |             |   |      |   |             |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW                                                       |  |                           |             |   |      |   |             |  
|INFORMATIONCash paid during the period for:                                                |  |                           |             |   |      |   |             |  
|Interest                                                                                    |  | $                         | 6,884,517   |   |      | $ | 5,097,120   |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Income taxes                                                                                |  | $                         | 1,000,000   |   |      | $ | 485,013     |  
|                                                                                            |  |                           |             |   |      |   |             |  

See notes to unaudited condensed consolidated financial statements.



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##### Table of Contents

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 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, 2005. The results for the three and six months ended June 30, 2006 are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 2006 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 most significant estimates relate to the allowance for loan
losses and deferred income taxes. Actual results could differ from those estimates.

New Accounting Pronouncements-In May 2005, the Financial
Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards (SFAS) No. 154  Accounting Changes and Error Corrections. SFAS No. 154, a replacement of Accounting
Principals Board (APB) Opinion No. 20  Accounting Changes and FASB Statement No. 3  Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 requires
retrospective application for voluntary changes in accounting principles unless it is impracticable to do so. SFAS No. 154 is effective for accounting changes and corrections of errors in fiscal years beginning after December 15, 2005.
Early application is permitted for accounting changes and corrections of errors during fiscal years beginning after June 1, 2005. The adoption of SFAS No. 154 did not have a material effect on our financial condition or results of
operations.

On December 19, 2005, the FASB issued FASB Staff Position (FSP) 94-6-1, Terms of Loan Products That May Give Rise to
a Concentration of Credit Risk. FSP 94-6-1 addresses whether, under existing guidance, non-traditional loan products represent a concentration of credit risk and what disclosures are required for entities that originate, hold, guarantee,
service or invest in loan products whose terms may give rise to a concentration of credit risk. Non-traditional loan products expose the originator, holder, investor, guarantor or servicer to higher credit risk than traditional loan products.
Typical features of non-traditional loan products may include high loan-to-value ratios and interest or principal repayments that are less than the repayments for fully amortizing loans of an equivalent term. FSP 94-6-1 was effective upon its
issuance and did not have a material impact on the Companys financial position or disclosures.

In February 2006, the FASB issued SFAS No. 155,
Accounting for Certain Hybrid Financial Instruments. This statement amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement resolves issues addressed in Statement 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interest in
Securitized Financial Assets. This Statement is effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006. The Company does not expect
that the guidance will have a material effect on the Companys financial position or results of operations.



5



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##### Table of Contents

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets 
an amendment of FASB Statement No. 140. This statement addresses the recognition and measurement of separately recognized servicing rights. The statement clarifies when a servicing right should be separately recognized, requires servicing
rights to be initially measured at fair value, and allows an entity to choose to subsequently measure its servicing rights at fair value. The Statement is effective as of the beginning of an entitys first fiscal year that begins after
September 15, 2006. The Company is evaluating the impact of this pronouncement and does not expect that the guidance will have a material effect on the Companys financial position or results of operations.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement
No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income
Taxes. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also
provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently
evaluating the impact of this pronouncement.

2. INVESTMENT SECURITIES

Investment securities are summarized as follows:



|                                     |  |                |            |                       |   |                       |  |                      |         |  |   |           
|------------------------------------ |  | -------------- | ---------- | --------------------- | - | --------------------- |  | -------------------- | ------- |  | - | ----------
|                                     |  | June 30, 2006 
|                                     |  | Amortized Cost |            | Gross Unrealized Gain |   | Gross Unrealized Loss |  | Estimated Fair Value
|Held to Maturity                     |  |                |            |                       |   |                       |  |                      |         |  |   |           
|Debt securities -                    |  |                |            |                       |   |                       |  |                      |         |  |   |           
|Municipal securities                 |  | $              | 788,431    |                       | $ |                      |  | $                    |        |  | $ | 788,431   
|                                     |  |                |            |                       |   |                       |  |                      |         |  |   |           
|                                     |  |                |            |                      
|Available for Sale                   |  |                |            |                       |   |                       |  |                      |         |  |   |           
|Debt securities -                    |  |                |            |                       |   |                       |  |                      |         |  |   |           
|U.S. Government and Federal Agencies |  | $              | 19,705,058 |                       | $ |                      |  | $                    | 161,797 |  | $ | 19,543,261
|Municipal securities                 |  |                | 2,954,117  |                       |   | 41,935                |  |                      |        |  |   | 2,996,052 
|Corporate                            |  |                | 11,969,164 |                       |   | 221,687               |  |                      | 119,850 |  |   | 12,071,001
|Mutual funds                         |  |                | 8,012,172  |                       |   | 165,134               |  |                      | 261,642 |  |   | 7,915,664 
|                                     |  |                |            |                       |   |                       |  |                      |         |  |   |           
|                                     |  | $              | 42,640,511 |                       | $ | 428,756               |  | $                    | 543,289 |  | $ | 42,525,978
|                                     |  |                |            |                       |   |                       |  |                      |         |  |   |           



|                                     |  |                   |            |                       |   |                       |  |                      |         |  |   |           
|------------------------------------ |  | ----------------- | ---------- | --------------------- | - | --------------------- |  | -------------------- | ------- |  | - | ----------
|                                     |  | December 31, 2005
|                                     |  | Amortized Cost    |            | Gross Unrealized Gain |   | Gross Unrealized Loss |  | Estimated Fair Value
|Held to Maturity                     |  |                   |            |                       |   |                       |  |                      |         |  |   |           
|Debt securities -                    |  |                   |            |                       |   |                       |  |                      |         |  |   |           
|Municipal securities                 |  | $                 | 4,292,600  |                       | $ | 1,035                 |  | $                    |        |  | $ | 4,293,635 
|                                     |  |                   |            |                       |   |                       |  |                      |         |  |   |           
|                                     |  |                   |            |                      
|Available for Sale                   |  |                   |            |                       |   |                       |  |                      |         |  |   |           
|Debt securities:                     |  |                   |            |                       |   |                       |  |                      |         |  |   |           
|U.S. Government and Federal Agencies |  | $                 | 22,433,195 |                       | $ | 5,230                 |  | $                    | 303,427 |  | $ | 22,134,998
|Municipal securities                 |  |                   | 4,949,764  |                       |   | 79,699                |  |                      |        |  |   | 5,029,463 
|Corporate                            |  |                   | 11,973,310 |                       |   | 274,114               |  |                      | 93,018  |  |   | 12,154,406
|Mutual Funds                         |  |                   | 8,012,172  |                       |   | 186,931               |  |                      | 232,095 |  |   | 7,967,008 
|                                     |  |                   |            |                       |   |                       |  |                      |         |  |   |           
|                                     |  | $                 | 47,368,441 |                       | $ | 545,974               |  | $                    | 628,540 |  | $ | 47,285,875
|                                     |  |                   |            |                       |   |                       |  |                      |         |  |   |           



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##### Table of Contents

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, 2006 and December 31, 2005:



|                                     |  |                      |           |                       |   |                      |  |                       |            |                      |   |                       |  |   |            |  |   |        
|------------------------------------ |  | -------------------- | --------- | --------------------- | - | -------------------- |  | --------------------- | ---------- | -------------------- | - | --------------------- |  | - | ---------- |  | - | -------
|                                     |  | June 30, 2006       
|                                     |  | Less Than 12 Months  |           | 12 Months or Longer   |   | Total               
|                                     |  | Estimated Fair Value |           | Gross Unrealized Loss |   | Estimated Fair Value |  | Gross Unrealized Loss |            | Estimated Fair Value |   | Gross Unrealized Loss
|Debt securities -                    |  |                      |           |                       |   |                      |  |                       |            |                      |   |                       |  |   |            |  |   |        
|U.S. Government and Federal Agencies |  | $                    |          |                       | $ |                     |  | $                     | 19,543,261 |                      | $ | 161,797               |  | $ | 19,543,261 |  | $ | 161,797
|Corporate                            |  |                      | 3,625,935 |                       |   | 26,804               |  |                       | 1,515,634  |                      |   | 93,046                |  |   | 5,141,569  |  |   | 119,850
|Mutual funds                         |  |                      |          |                       |   |                     |  |                       | 7,747,934  |                      |   | 261,642               |  |   | 7,747,934  |  |   | 261,642
|                                     |  |                      |           |                       |   |                      |  |                       |            |                      |   |                       |  |   |            |  |   |        
|                                     |  | $                    | 3,625,935 |                       | $ | 26,804               |  | $                     | 28,806,829 |                      | $ | 516,485               |  | $ | 32,432,764 |  | $ | 543,289
|                                     |  |                      |           |                       |   |                      |  |                       |            |                      |   |                       |  |   |            |  |   |        



|                                     |  |                      |           |                       |   |                      |  |                       |            |                      |   |                       |  |   |            |  |   |        
|------------------------------------ |  | -------------------- | --------- | --------------------- | - | -------------------- |  | --------------------- | ---------- | -------------------- | - | --------------------- |  | - | ---------- |  | - | -------
|                                     |  | December 31, 2005   
|                                     |  | Less Than 12 Months  |           | 12 Months or Longer   |   | Total               
|                                     |  | Estimated Fair Value |           | Gross Unrealized Loss |   | Estimated Fair Value |  | Gross Unrealized Loss |            | Estimated Fair Value |   | Gross Unrealized Loss
|Debt securities -                    |  |                      |           |                       |   |                      |  |                       |            |                      |   |                       |  |   |            |  |   |        
|U.S. Government and Federal Agencies |  | $                    | 3,531,734 |                       | $ | 42,653               |  | $                     | 17,982,383 |                      | $ | 260,774               |  | $ | 21,514,117 |  | $ | 303,427
|Corporate                            |  |                      | 1,490,405 |                       |   | 20,648               |  |                       | 1,537,204  |                      |   | 72,370                |  |   | 3,027,609  |  |   | 93,018 
|Mutual funds                         |  |                      |          |                       |   |                     |  |                       | 7,777,482  |                      |   | 232,095               |  |   | 7,777,482  |  |   | 232,095
|                                     |  |                      |           |                       |   |                      |  |                       |            |                      |   |                       |  |   |            |  |   |        
|                                     |  | $                    | 5,022,139 |                       | $ | 63,301               |  | $                     | 27,297,069 |                      | $ | 565,239               |  | $ | 32,319,208 |  | $ | 628,540
|                                     |  |                      |           |                       |   |                      |  |                       |            |                      |   |                       |  |   |            |  |   |        

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, 2006, 13 debt securities and 2 mutual fund holdings had aggregate depreciation of 1.76% from the Companys amortized cost basis for 12 months or longer. The unrealized loss on debt
securities relates principally to the changes in market interest rates. U.S. Government and federal agencies securities represent U.S. treasury and federal agency issues and are currently rated AAA by at least one bond credit rating
agency. The corporate securities have no identified credit issues and have a current average credit rating of A. As management has the ability and intent to hold these debt securities until a forecasted recovery, which may be maturity, no
decline is deemed to be other than temporary.

Although the mutual fund holdings have unrealized losses, no credit issues have been identified that cause
management to believe that declines in market value are other than temporary as the securities in the portfolios of the mutual fund holdings are AAA rated government or agencies bonds. Although the fair value of the mutual fund holdings will
fluctuate as the market interest rates move, management believes that the fair value will recover as the securities held in the mutual fund portfolios mature and are reinvested at market rate yielding investments. Management has the ability and
intent to hold these mutual funds until such time that the values recover.



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The amortized cost and estimated fair value of debt securities available for sale at June 30, 2006 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, 2006              
|                                   |  | Held to Maturity Securities |         | Available for Sale Securities
|                                   |  | AmortizedCost               |         | Estimated Fair Value          |   | Amortized Cost |  | Estimated Fair Value
|Due within 1 year                  |  | $                           | 788,431 |                               | $ | 788,431        |  | $                    | 18,853,190 |  | $ | 18,712,274
|Due after 1 year through 5 years   |  |                             |        |                               |   |               |  |                      | 1,460,547  |  |   | 1,432,861 
|Due after 5 years through 10 years |  |                             |        |                               |   |               |  |                      | 1,000,000  |  |   | 913,760   
|Due after 10 years                 |  |                             |        |                               |   |               |  |                      | 13,314,602 |  |   | 13,551,419
|                                   |  |                             |         |                               |   |                |  |                      |            |  |   |           
|Total                              |  | $                           | 788,431 |                               | $ | 788,431        |  | $                    | 34,628,339 |  | $ | 34,610,314
|                                   |  |                             |         |                               |   |                |  |                      |            |  |   |           

3. MORTGAGE-BACKED SECURITIES

Mortgage-backed securities are summarized as follows:



|                                           |  |                |            |                       |   |                       |  |                     |           |  |   |           
|------------------------------------------ |  | -------------- | ---------- | --------------------- | - | --------------------- |  | ------------------- | --------- |  | - | ----------
|                                           |  | June 30, 2006 
|                                           |  | Amortized Cost |            | Gross Unrealized Gain |   | Gross Unrealized Loss |  | EstimatedFair Value
|Held to Maturity                           |  |                |            |                       |   |                       |  |                     |           |  |   |           
|                                           |  |                |            |                      
|GNMA pass-through certificates             |  | $              | 133,778    |                       | $ | 3,414                 |  | $                   |          |  | $ | 137,192   
|FHLMC pass-through certificates            |  |                | 527,080    |                       |   | 268                   |  |                     | 6,301     |  |   | 521,047   
|FNMA pass-through certificates             |  |                | 4,858,521  |                       |   |                      |  |                     | 253,855   |  |   | 4,604,666 
|                                           |  |                |            |                       |   |                       |  |                     |           |  |   |           
|Total                                      |  | $              | 5,519,379  |                       | $ | 3,682                 |  | $                   | 260,156   |  | $ | 5,262,905 
|                                           |  |                |            |                       |   |                       |  |                     |           |  |   |           
|Available for Sale                         |  |                |            |                       |   |                       |  |                     |           |  |   |           
|                                           |  |                |            |                      
|FHLMC pass-through certificates            |  | $              | 10,831,272 |                       | $ | 7,181                 |  | $                   | 431,195   |  | $ | 10,407,258
|GNMA pass-through certificates             |  |                | 4,047,381  |                       |   | 15,666                |  |                     | 22,880    |  |   | 4,040,167 
|FNMA pass-through certificates             |  |                | 18,458,147 |                       |   | 7,506                 |  |                     | 623,581   |  |   | 17,842,072
|Small Business Administration certificates |  |                | 18,188     |                       |   |                      |  |                     | 128       |  |   | 18,060    
|                                           |  |                |            |                       |   |                       |  |                     |           |  |   |           
|Total                                      |  | $              | 33,354,988 |                       | $ | 30,353                |  | $                   | 1,077,784 |  | $ | 32,307,557
|                                           |  |                |            |                       |   |                       |  |                     |           |  |   |           



|                                           |  |                   |            |                       |   |                       |  |                     |         |  |   |           
|------------------------------------------ |  | ----------------- | ---------- | --------------------- | - | --------------------- |  | ------------------- | ------- |  | - | ----------
|                                           |  | December 31, 2005
|                                           |  | Amortized Cost    |            | Gross Unrealized Gain |   | Gross Unrealized Loss |  | EstimatedFair Value
|Held to Maturity                           |  |                   |            |                       |   |                       |  |                     |         |  |   |           
|                                           |  |                   |            |                      
|GNMA pass-through certificates             |  | $                 | 153,602    |                       | $ | 5,225                 |  | $                   |        |  | $ | 158,827   
|FHLMC pass-through certificates            |  |                   | 4,013      |                       |   | 347                   |  |                     |        |  |   | 4,360     
|FNMA pass-through certificates             |  |                   | 5,278,298  |                       |   | 2,050                 |  |                     | 122,835 |  |   | 5,157,513 
|                                           |  |                   |            |                       |   |                       |  |                     |         |  |   |           
|Total                                      |  | $                 | 5,435,913  |                       | $ | 7,622                 |  | $                   | 122,835 |  | $ | 5,320,700 
|                                           |  |                   |            |                       |   |                       |  |                     |         |  |   |           
|Available for Sale                         |  |                   |            |                       |   |                       |  |                     |         |  |   |           
|                                           |  |                   |            |                      
|FHLMC pass-through certificates            |  | $                 | 11,789,191 |                       | $ | 17,544                |  | $                   | 275,214 |  | $ | 11,531,521
|GNMA pass-through certificates             |  |                   | 4,602,712  |                       |   | 72,341                |  |                     | 19,678  |  |   | 4,655,375 
|FNMA pass-through certificates             |  |                   | 21,288,309 |                       |   | 55,204                |  |                     | 384,493 |  |   | 20,959,020
|Small Business Administration certificates |  |                   | 29,934     |                       |   |                      |  |                     | 168     |  |   | 29,766    
|                                           |  |                   |            |                       |   |                       |  |                     |         |  |   |           
|Total                                      |  | $                 | 37,710,146 |                       | $ | 145,089               |  | $                   | 679,553 |  | $ | 37,175,682
|                                           |  |                   |            |                       |   |                       |  |                     |         |  |   |           



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##### Table of Contents

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, 2006 and December 31, 2005:



|                                                 |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |          
|------------------------------------------------ |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | - | ---------- |  | - | ---------
|                                                 |  | June 30, 2006      
|                                                 |  | Less Than 12 Months |            | 12 Months or Longer |   | Total              
|                                                 |  | EstimatedFair Value |            | GrossUnrealizedLoss |   | EstimatedFair Value |  | GrossUnrealizedLoss |            | EstimatedFair Value |   | GrossUnrealizedLoss
|FHLMC pass-through certificates-held-to-maturity |  | $                   | 517,128    |                     | $ | 6,301               |  | $                   |           |                     | $ |                    |  | $ | 517,128    |  | $ | 6,301    
|FNMA pass-through certificates-held-to-maturity  |  |                     | 3,478,530  |                     |   | 182,277             |  |                     | 1,126,136  |                     |   | 71,578              |  |   | 4,604,666  |  |   | 253,855  
|SBA pass-through certificates                    |  |                     |           |                     |   |                    |  |                     | 18,060     |                     |   | 128                 |  |   | 18,060     |  |   | 128      
|FHLMC pass-through certificates                  |  |                     | 4,967,643  |                     |   | 226,787             |  |                     | 5,186,150  |                     |   | 204,408             |  |   | 10,153,793 |  |   | 431,195  
|GNMA pass-through certificates                   |  |                     | 772,786    |                     |   | 1,667               |  |                     | 1,100,551  |                     |   | 21,213              |  |   | 1,873,337  |  |   | 22,880   
|FNMA pass-through certificates                   |  |                     | 3,418,724  |                     |   | 77,462              |  |                     | 13,507,974 |                     |   | 546,119             |  |   | 16,926,698 |  |   | 623,581  
|                                                 |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |          
|Total                                            |  | $                   | 13,154,811 |                     | $ | 494,494             |  | $                   | 20,938,871 |                     | $ | 843,446             |  | $ | 34,093,682 |  | $ | 1,337,940
|                                                 |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |          



|                                                |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|----------------------------------------------- |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | - | ---------- |  | - | -------
|                                                |  | December 31, 2005  
|                                                |  | Less Than 12 Months |            | 12 Months or Longer |   | Total              
|                                                |  | EstimatedFair Value |            | GrossUnrealizedLoss |   | EstimatedFair Value |  | GrossUnrealizedLoss |            | EstimatedFair Value |   | GrossUnrealizedLoss
|FNMA pass-through certificates-held-to-maturity |  | $                   | 3,651,184  |                     | $ | 77,532              |  | $                   | 1,339,509  |                     | $ | 45,303              |  | $ | 4,990,693  |  | $ | 122,835
|SBA pass-through certificates                   |  |                     |           |                     |   |                    |  |                     | 29,766     |                     |   | 168                 |  |   | 29,766     |  |   | 168    
|FHLMC pass-through certificates                 |  |                     | 4,763,766  |                     |   | 99,930              |  |                     | 5,718,543  |                     |   | 175,284             |  |   | 10,482,309 |  |   | 275,214
|GNMA pass-through certificates                  |  |                     | 206,343    |                     |   | 195                 |  |                     | 1,111,778  |                     |   | 19,483              |  |   | 1,318,121  |  |   | 19,678 
|FNMA pass-through certificates                  |  |                     | 8,492,438  |                     |   | 169,824             |  |                     | 9,938,447  |                     |   | 214,669             |  |   | 18,430,885 |  |   | 384,493
|                                                |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|Total                                           |  | $                   | 17,113,731 |                     | $ | 347,481             |  | $                   | 18,138,043 |                     | $ | 454,907             |  | $ | 35,251,774 |  | $ | 802,388
|                                                |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        

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. At June 30, 2006, 21 mortgage-backed securities had aggregate depreciation of 3.87% from the Companys amortized cost basis for 12 months or longer. The unrealized
losses relate principally to the changes in market interest rates. These securities represent asset backed federal agency issues and are currently rated AAA by at least one bond credit rating agency. As management has the ability and
intent to hold these debt securities until a forecasted recovery, which may be maturity, no declines are deemed to be other than temporary.



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4. LOANS RECEIVABLE  NET

Loans receivable consist of the following:



|                                 |  |               |             |   |                  |   |             |  
|-------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                 |  | June 30, 2006 |             |   | December 31,2005 |  
|Real estate - mortgage:          |  |               |             |   |                  |   |             |  
|One-to four-family residential   |  | $             | 305,408,718 |   |                  | $ | 294,295,873 |  
|Commercial and multi-family      |  |               | 29,999,923  |   |                  |   | 28,725,017  |  
|                                 |  |               |             |   |                  |   |             |  
|Total real estate-mortgage       |  |               | 335,408,640 |   |                  |   | 323,020,890 |  
|                                 |  |               |             |   |                  |   |             |  
|Real estate - construction:      |  |               |             |   |                  |   |             |  
|Residential                      |  |               | 12,996,902  |   |                  |   | 12,230,271  |  
|Commercial                       |  |               | 9,329,929   |   |                  |   | 11,018,586  |  
|                                 |  |               |             |   |                  |   |             |  
|Total real estate - construction |  |               | 22,326,831  |   |                  |   | 23,248,857  |  
|                                 |  |               |             |   |                  |   |             |  
|Commercial                       |  |               | 18,395,852  |   |                  |   | 16,582,359  |  
|                                 |  |               |             |   |                  |   |             |  
|Consumer                         |  |               |             |   |                  |   |             |  
|Home equity                      |  |               | 52,470,341  |   |                  |   | 48,536,606  |  
|Other consumer loans             |  |               | 956,418     |   |                  |   | 1,135,459   |  
|                                 |  |               |             |   |                  |   |             |  
|Total consumer loans             |  |               | 53,426,759  |   |                  |   | 49,672,065  |  
|                                 |  |               |             |   |                  |   |             |  
|Total loans                      |  |               | 429,558,083 |   |                  |   | 412,524,170 |  
|                                 |  |              
|Net deferred loan cost           |  |               | 1,351,803   |   |                  |   | 1,233,606   |  
|Allowance for loan losses        |  |               | (1,896,854  | ) |                  |   | (1,752,667  | )
|                                 |  |               |             |   |                  |   |             |  
|Net total loans                  |  | $             | 429,013,032 |   |                  | $ | 412,005,109 |  
|                                 |  |               |             |   |                  |   |             |  

Changes in the allowance for loan losses are as follows:



|                        |  |                           |           |   |      |   |           |  
|----------------------- |  | ------------------------- | --------- | - | ---- | - | --------- | -
|                        |  | Six Months Ended June 30, |          
|                        |  | 2006                      |           |   | 2005 |  
|Balance at January 1    |  | $                         | 1,752,667 |   |      | $ | 1,466,295 |  
|Provision for loan loss |  |                           | 150,000   |   |      |   | 150,000   |  
|Charge-offs             |  |                           | (7,105    | ) |      |   | (4,466    | )
|Recoveries              |  |                           | 1,292     |   |      |   | 2,189     |  
|                        |  |                           |           |   |      |   |           |  
|Balance at June 30      |  | $                         | 1,896,854 |   |      | $ | 1,614,018 |  
|                        |  |                           |           |   |      |   |           |  



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5. DEPOSITS

Deposits
consist of the following major classifications:



|                                       |  |               |             |                               |                   |   |        |   |                              |  |      |  
|-------------------------------------- |  | ------------- | ----------- | ----------------------------- | ----------------- | - | ------ | - | ---------------------------- |  | ---- | -
|                                       |  | June 30, 2006 |             |                               | December 31, 2005 |  
|                                       |  | Amount        |             | WeightedAverage Interest Rate |                   |   | Amount |   | WeightedAverageInterest Rate | 
|NOW and other demand deposit accounts  |  | $             | 213,659,643 |                               | 1.83              | % |        | $ | 207,015,598                  |  | 1.56 | %
|Passbook savings and club accounts     |  |               | 67,871,502  |                               | 1.13              | % |        |   | 79,437,866                   |  | 1.16 | %
|                                       |  |               |             |                               |                   |   |        |   |                              |  |      |  
|Subtotal                               |  |               | 281,531,145 |                               |                   |   |        |   | 286,453,464                  |  |      |  
|                                       |  |               |             |                               |                   |   |        |   |                              |  |      |  
|Certificates with original maturities: |  |               |             |                               |                   |   |        |   |                              |  |      |  
|Within one year                        |  |               | 68,597,275  |                               | 4.15              | % |        |   | 46,783,779                   |  | 3.32 | %
|One to three years                     |  |               | 36,441,690  |                               | 3.85              | % |        |   | 41,164,569                   |  | 3.41 | %
|Three years and beyond                 |  |               | 41,384,715  |                               | 4.86              | % |        |   | 42,512,090                   |  | 4.81 | %
|                                       |  |               |             |                               |                   |   |        |   |                              |  |      |  
|Total certificates                     |  |               | 146,423,680 |                               |                   |   |        |   | 130,460,438                  |  |      |  
|                                       |  |               |             |                               |                   |   |        |   |                              |  |      |  
|Total                                  |  | $             | 427,954,825 |                               |                   |   |        | $ | 416,913,902                  |  |      |  
|                                       |  |               |             |                               |                   |   |        |   |                              |  |      |  

The aggregate amount of certificate accounts in denominations of $100,000 or more at June 30, 2006 and
December 31, 2005 amounted to $48,831,213 and $42,241,555, respectively.

Municipal demand deposit accounts in denominations of $100,000 or more at
June 30, 2006 and December 31, 2005 amounted to $58,915,806 and $60,129,245, 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 (EPS), is a result of the unallocated ESOP shares and treasury stock purchases.

The calculated basic and diluted EPS are as follows:



|                             |  |                             |           |                           |   |           |  |      |           |  |   |          
|---------------------------- |  | --------------------------- | --------- | ------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                             |  | Three Months Ended June 30, |           | Six Months Ended June 30,
|                             |  | 2006                        |           | 2005                      |   | 2006      |  | 2005
|Numerator                    |  | $                           | 700,123   |                           | $ | 789,864   |  | $    | 1,402,869 |  | $ | 1,532,160
|Denominators:                |  |                             |           |                           |   |           |  |      |           |  |   |          
|Basic shares outstanding     |  |                             | 8,290,981 |                           |   | 8,450,731 |  |      | 8,293,774 |  |   | 8,447,868
|Effect of diluted securities |  |                             | 171,300   |                           |   |          |  |      | 171,300   |  |   |         
|                             |  |                             |           |                           |   |           |  |      |           |  |   |          
|Dilutive shares outstanding  |  |                             | 8,462,281 |                           |   | 8,450,731 |  |      | 8,465,074 |  |   | 8,447,868
|                             |  |                             |           |                          
|Earnings per share:          |  |                             |           |                           |   |           |  |      |           |  |   |          
|Basic                        |  | $                           | 0.08      |                           | $ | 0.09      |  | $    | 0.17      |  | $ | 0.18     
|Diluted                      |  | $                           | 0.08      |                           | $ | 0.09      |  | $    | 0.17      |  | $ | 0.18     

At June 30, 2006, there were 381,000 outstanding options that were anti-dilutive.

7. STOCK-BASED COMPENSATION

In August 2005, the shareholders of the
Company approved the adoption of the 2005 Equity Based Incentive Plan (the Equity Plan). The Equity Plan provides for the grant of shares of common stock of



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##### Table of Contents

the Company to certain officers, directors and employees of the Company. In order to fund the grant of shares under the
Equity Plan, the Equity Plan Trust (the Trust) purchased 171,300 shares of the Companys common stock in the open market for approximately $2.0 million, at an average price of $11.70 per share. The Company made sufficient
contributions to the Trust to fund these purchases. No additional purchases are expected to be made by the Trust under this plan. Pursuant to the terms of the plan, all 171,300 shares acquired by the Trust were granted to certain officers and
directors of the Company in August 2005. The Equity Plan shares will generally vest at the rate of 20% per year over five years. As of June 30, 2006, no shares were fully vested or forfeited.

Compensation expense related to the shares granted is recognized ratably over the five-year vesting period in an amount which totals the market price of the
Companys stock at the date of grant. During the three months and six months ended June 30, 2006, approximately $99,000 and $199,000 was recognized in compensation expense for the plan, respectively.

The Equity Plan also authorizes the grant of stock options to officers, employees and directors of the Company to acquire shares of common stock with an exercise price
equal to the fair market value of the common stock on the grant date. Options will generally become vested and exercisable at the rate of 20% per year over five years. A total of 429,374 shares of common stock have been reserved for future
issuance pursuant to the Equity Plan, of which 396,000 were awarded on August 10, 2005. As of June 30, 2006, 381,000 options were outstanding. During the three and six months ended June 30, 2006, approximately $77,000 and $153,000,
respectively, was recognized in compensation expense for the plan.

On January 1, 2006, the Company adopted Statement of Financial Accounting
Standards (SFAS) 123(R) using a modified prospective application. Accordingly, prior period amounts have not been restated. The adoption required a reclassification to additional paid-in capital of $(1,821,000) from common stock acquired
by employee benefit plan trusts. In the second quarter of 2006, the adoption of SFAS 123(R) resulted in incremental stock-based compensation expense of $77,000. The incremental stock-based compensation expense caused income before taxes to decrease
by $77,000, net income to decrease by $62,000 and diluted earnings per share to decrease by $0.01 per share. In the first six months of 2006, the adoption of SFAS 123(R) resulted in incremental stock-based compensation expense of $153,000. The
incremental stock-based compensation expense caused income before taxes to decrease by $153,000, net income to decrease by $124,000 and diluted earnings per share to decrease by $0.01 per share. As of June 30, 2006, expenses totaling $550,000
remain to be recognized over the next 4.1 years.

Share-based compensation costs prior to January 1, 2006 were recognized using the intrinsic value
method in accordance with Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees. For disclosure purposes, pro forma net income and net income per share data were provided in
accordance with SFAS No. 123, Accounting for Stock-Based Compensation, as if the fair value method had been applied. Under SFAS No. 123, compensation cost related to stock options granted to employees was computed based
on the fair value of the stock option at the date of grant using the Black-Scholes option pricing model. Prior to the adoption of SFAS 123(R), had compensation costs been determined based on the fair market value of the stock options consistent with
the provisions of SFAS No. 123, the Companys net income and earnings per share would have been unchanged for the three months ended June 30, 2005, as the Company had not entered into any share-based compensation arrangements at that
time.

The estimated fair value of options granted during 2005 was $2.31 per share. The fair value was estimated on the date of grant using the
Black-Scholes Single Option Pricing Model with the following weighted average assumptions used:



|                         |  |                              |  
|------------------------ |  | ---------------------------- | -
|                         |  | Year Ended December 31, 2005 |  
|Dividend yield           |  | 0.00                         | %
|Expected volatility      |  | 21.54                        | %
|Risk-free interest rate  |  | 4.07                         | %
|Expected life of options |  | 5.0                          |  



12



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##### Table of Contents

A summary of the status of the Companys stock options under the Equity Plan as of June 30, 2006 and changes
during the six months ended June 30, 2006 are presented below:



|                                           |  |                               |  |                                |      
|------------------------------------------ |  | ----------------------------- |  | ------------------------------ | -----
|                                           |  | Six Months EndedJune 30, 2006
|                                           |  | Number of Shares              |  | Weighted averageExercise price
|Outstanding at the beginning of the period |  | 388,500                       |  | $                              | 11.60
|Granted                                    |  |                              |  |                                |     
|Exercised                                  |  |                              |  |                                |     
|Forfeited                                  |  | 7,500                         |  | $                              | 11.60
|                                           |  |                               |  |                                |      
|Outstanding at the end of the period       |  | 381,000                       |  | $                              | 11.60
|                                           |  |                               |  |                                |      
|Exercisable at the end of the period       |  |                              |  | $                              |     

The following table summarizes all stock options outstanding under the Equity Plan as of June 30, 2006:



|               |  |                     |  |                                 |       |                                             |    
|-------------- |  | ------------------- |  | ------------------------------- | ----- | ------------------------------------------- | ---
|               |  | Options Outstanding
|Exercise Price |  | Number of Shares    |  | Weighted Average Exercise Price |       | Weighted Average Remaining Contractual Life
|               |  |                     |  |                                 |       | (in Years)                                 
|$11.60         |  | 381,000             |  | $                               | 11.60 |                                             | 9.1

8. STOCK REPURCHASE PLAN

On March 29, 2006, the Companys Board of Directors approved the repurchase of 200,087 shares of the Companys common stock in the open market. As of June 30, 2006, 28,800 shares had been
purchased. The Company is still purchasing shares in the open market to complete the remaining 171,287 shares approved for purchase.



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##### Table of Contents

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 Co.s (Ocean Shore Holding or the Company) 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, 2005 under Item 1A. 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 unless required to do so under federal securities laws.

GENERAL

Ocean Shore Holding Co. 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 the 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, 2006 AND DECEMBER 31, 2005

Total assets of the Company increased by $18.5 million to $562.3
million at June 30, 2006, from $543.8 million at December 31, 2005. Total loans receivable and cash and cash equivalents increased $17.0 million and $13.6 million, respectively, offset by decreases of $8.3 million in investments and $4.8
million in mortgage-backed securities.

Investments

Investments decreased $8.3 million to $43.3 million at June 30, 2006 from $51.6 million at December 31, 2005. Maturities of municipal securities totaling $9.1 million were partially offset by purchases of $800,000. Mortgage-backed
securities decreased by $4.8 million to $37.8 million as payments received and fluctuations in market value of investments totaling $5.3 million were partially offset by purchases of $500,000. The decrease in investments and mortgage-backed
securities was attributable to managements decision to use the proceeds from maturities and repayments to fund loan demand.



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Loans

Loans
receivable increased $17.0 million to $429.0 million at June 30, 2006 from $412.0 million at December 31, 2005. Loan originations totaled $58.0 million for the six months ended June 30, 2006 including real estate mortgage loan
originations of $26.2 million, real estate construction originations of $10.1 million, consumer loan originations of $16.2 million and commercial loan originations of $5.5 million. Originations were offset by $41.0 million in normal loan payments
and payoffs.

The following table summarizes changes in the loan portfolio in the six months ended June 30, 2006.



|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|-------------------------------- |  | ---------------------- | ------- | - | ---------------- | - | ------- | -------- |  | - | -------- | - |  | ------ | --
|                                 |  | June 30,2006           |         |   | December 31,2005 |   |         | $ change |  |   | % change |  
|                                 |  | (Dollars in thousands) |        
|Real estate - mortgage:          |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|One-to four-family residential   |  | $                      | 305,409 |   |                  | $ | 294,296 |          |  | $ | 11,113   |   |  | 3.78   | % 
|Commercial and multi-family      |  |                        | 30,000  |   |                  |   | 28,725  |          |  |   | 1,275    |   |  | 4.44   | % 
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|Total real estate-mortgage       |  |                        | 335,409 |   |                  |   | 323,021 |          |  |   | 12,388   |   |  | 3.83   | % 
|                                 |  |                        |         |  
|Real estate - construction:      |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|Residential                      |  |                        | 12,997  |   |                  |   | 12,230  |          |  |   | 767      |   |  | 6.27   | % 
|Commercial                       |  |                        | 9,330   |   |                  |   | 11,019  |          |  |   | (1,689   | ) |  | (15.33 | )%
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|Total real estate - construction |  |                        | 22,327  |   |                  |   | 23,249  |          |  |   | (922     | ) |  | (3.97  | )%
|                                 |  |                        |         |  
|Commercial                       |  |                        | 18,396  |   |                  |   | 16,582  |          |  |   | 1,813    |   |  | 10.94  | % 
|                                 |  |                        |         |  
|Consumer                         |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|Home equity                      |  |                        | 52,470  |   |                  |   | 48,537  |          |  |   | 3,934    |   |  | 8.10   | % 
|Other consumer loans             |  |                        | 957     |   |                  |   | 1,135   |          |  |   | (179     | ) |  | (15.77 | )%
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|Total consumer loans             |  |                        | 53,427  |   |                  |   | 49,672  |          |  |   | 3,755    |   |  | 7.56   | % 
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|Total loans                      |  |                        | 429,558 |   |                  |   | 412,524 |          |  |   | 17,034   |   |  | 4.13   | % 
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|Net deferred loan cost           |  |                        | 1,352   |   |                  |   | 1,234   |          |  |   | 118      |   |  | 9.58   | % 
|Allowance for loan losses        |  |                        | (1,897  | ) |                  |   | (1,753  | )        |  |   | (144     | ) |  | 8.23   | % 
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   
|Net total loans                  |  | $                      | 429,013 |   |                  | $ | 412,005 |          |  | $ | 17,008   |   |  | 4.13   | % 
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |        |   

Non-Performing Assets

Non-performing assets totaled $61,000 at June 30, 2006. Net charge-offs were $6,000 in the six months ended June 30, 2006, compared to $2,000 in the same period last year. The allowance for loan losses was 0.44% of total loans at
June 30, 2006 compared to 0.39% of total loans at June 30, 2005.



|                                                              |  |                          |       |   |      |   |       |  
|------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | -
|                                                              |  | Six Months EndedJune 30, |      
|                                                              |  | 2006                     |       |   | 2005 |  
|                                                              |  | (Dollars in thousands)   |      
|Allowance for loan losses:                                    |  |                          |       |   |      |   |       |  
|Allowance at beginning of period                              |  | $                        | 1,753 |   |      | $ | 1,466 |  
|Provision for loan losses                                     |  |                          | 150   |   |      |   | 150   |  
|Recoveries                                                    |  |                          | 1     |   |      |   | 2     |  
|Charge-offs                                                   |  |                          | 7     |   |      |   | 4     |  
|                                                              |  |                          |       |   |      |   |       |  
|Net charge-offs                                               |  |                          | 6     |   |      |   | 2     |  
|                                                              |  |                          |       |   |      |   |       |  
|Allowance at end of period                                    |  | $                        | 1,897 |   |      | $ | 1,614 |  
|                                                              |  |                          |       |   |      |   |       |  
|Allowance for loan losses as a percent of total loans         |  |                          | 0.44  | % |      |   | 0.43  | %
|Allowance for loan losses as a percent of nonperforming loans |  |                          | N/M   |   |      |   | N/M   |  



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##### Table of Contents

|                                                  |  |                        |      |   |                   |   |      |  
|------------------------------------------------- |  | ---------------------- | ---- | - | ----------------- | - | ---- | -
|                                                  |  | June 30, 2006          |      |   | December 31, 2005 |  
|                                                  |  | (Dollars in thousands) |     
|Nonperforming assets                              |  |                        |      |   |                   |   |      |  
|Nonaccrual loans:                                 |  |                        |      |   |                   |   |      |  
|Mortgage loans                                    |  | $                      | 59   |   |                   | $ | 91   |  
|Consumer loans                                    |  |                        | 2    |   |                   |   | 7    |  
|                                                  |  |                        |      |   |                   |   |      |  
|Total nonperforming assets                        |  | $                      | 61   |   |                   | $ | 98   |  
|                                                  |  |                        |      |   |                   |   |      |  
|Nonperforming loans as a percent of total loans   |  |                        | 0.01 | % |                   |   | 0.02 | %
|                                                  |  |                       
|Nonperforming assets as a percent of total assets |  |                        | 0.01 | % |                   |   | 0.02 | %

Deposits

Deposits increased by $11.1 million, or 2.6%, to $428.0 million at June 30, 2006 from $416.9 million at December 31, 2005. An increase in commercial checking of $6.5 million and consumer checking of $1.3 million was offset by a
decrease in municipal checking of $1.2 million. An increase in certificates of deposit of $16.0 million was offset by a decrease in savings accounts of $11.6 million.

The following table summarizes changes in deposits in the six months ended June 30, 2006.



|                                       |  |                        |         |                  |   |          |  |   |          |   |  |        |   
|-------------------------------------- |  | ---------------------- | ------- | ---------------- | - | -------- |  | - | -------- | - |  | ------ | --
|                                       |  | June 30,2006           |         | December 31,2005 |   | $ Change |  |   | % Change |  
|                                       |  | (Dollars in thousands) |         |                  |   |         
|NOW and other demand deposit accounts  |  | $                      | 213,660 |                  | $ | 207,016  |  | $ | 6,644    |   |  | 3.21   | % 
|Passbook savings and club accounts     |  |                        | 67,871  |                  |   | 79,438   |  |   | (11,566  | ) |  | (14.56 | )%
|                                       |  |                        |         |                  |   |          |  |   |          |   |  |        |   
|Subtotal                               |  |                        | 281,531 |                  |   | 286,454  |  |   | (4,922   | ) |  | (1.72  | )%
|                                       |  |                        |         |                  |   |          |  |   |          |   |  |        |   
|Certificates with original maturities: |  |                        |         |                  |   |          |  |   |          |   |  |        |   
|Within one year                        |  |                        | 68,597  |                  |   | 46,784   |  |   | 21,814   |   |  | 46.63  | % 
|One to three years                     |  |                        | 36,442  |                  |   | 41,165   |  |   | (4,723   | ) |  | (11.47 | )%
|Three years and beyond                 |  |                        | 41,385  |                  |   | 42,512   |  |   | (1,127   | ) |  | (2.64  | )%
|                                       |  |                        |         |                  |   |          |  |   |          |   |  |        |   
|Total certificates                     |  |                        | 146,424 |                  |   | 130,461  |  |   | 15,963   |   |  | 12.24  | % 
|                                       |  |                        |         |                  |   |          |  |   |          |   |  |        |   
|Total                                  |  | $                      | 427,955 |                  | $ | 416,914  |  | $ | 11,041   |   |  | 2.65   | % 
|                                       |  |                        |         |                  |   |          |  |   |          |   |  |        |   

Borrowings

Federal Home Loan Bank advances increased $17.0 million to $44.0 million at June 30, 2006 from $27.0 million December 31, 2005. Other borrowings decreased $11.2 million from $18.5 million at December 31, 2005 to $7.2 million
at June 30, 2006. The additional net borrowings of $5.8 million were used to fund loan demand.

Stockholders Equity

Stockholders equity increased by $1.1 million to $61.7 million at June 30, 2006 from $60.6 million at December 31, 2005 primarily as a result from current
period earnings of $1.4 million offset by an increase of treasury stock of $360,000.



16



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##### Table of Contents

COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005

Net income was $700,000 for the three months ended June 30, 2006 as compared to $790,000 for the three months ended June 30, 2005. The $90,000, or 11.4%,
decrease in 2006 from 2005 was due to an increase in other expenses of $187,000 offset by an increase in net interest income of $4,000, an increase in other income of $27,000 and a decrease in income tax expense of $66,000.

Net income was $1,403,000 for the six months ended June 30, 2006 as compared to $1,532,000 for the six months ended June 30, 2005. The $129,000, or 8.4%,
decrease in 2006 from 2005 was due to an increase in other expenses of $406,000 offset by an increase in net interest income of $181,000, an increase in other income of $14,000 and a decrease in income tax expense of $82,000.



|                                      |  |                                              |      |   |                                              |   |      |      |  |   |       |   |  |   |       |  
|------------------------------------- |  | -------------------------------------------- | ---- | - | -------------------------------------------- | - | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|                                      |  | Three Months EndedJune 30,                   |      |   | Six Months EndedJune 30,                     |  
|                                      |  | 2006                                         |      |   | 2005                                         |   |      | 2006 |  |   | 2005  |  
|                                      |  | (Dollars in thousands,except per share data) |      |   | (Dollars in thousands,except per share data) |  
|Net income                            |  | $                                            | 700  |   |                                              | $ | 790  |      |  | $ | 1,403 |   |  | $ | 1,532 |  
|Basic and diluted earnings per share  |  | $                                            | 0.08 |   |                                              | $ | 0.09 |      |  | $ | 0.17  |   |  | $ | 0.18  |  
|Return on average assets (annualized) |  |                                              | 0.50 | % |                                              |   | 0.58 | %    |  |   | 0.51  | % |  |   | 0.57  | %
|Return on average equity (annualized) |  |                                              | 4.53 | % |                                              |   | 5.23 | %    |  |   | 4.56  | % |  |   | 5.07  | %

Net Interest Income

The following table summarizes changes in interest income and interest expense for the three-month periods ended June 30, 2006 and 2005.



|                              |  |                            |       |      |   |          |  |   |          |   |  |       |   
|----------------------------- |  | -------------------------- | ----- | ---- | - | -------- |  | - | -------- | - |  | ----- | --
|                              |  | Three Months EndedJune 30, |       |      |   |          |  |  
|                              |  | 2006                       |       | 2005 |   | $ Change |  |   | % Change |  
|                              |  | (Dollars in thousands)     |       |      |   |          |  |  
|INTEREST INCOME:              |  |                            |       |      |   |          |  |   |          |   |  |       |   
|Loans                         |  | $                          | 6,255 |      | $ | 5,044    |  | $ | 1,211    |   |  | 24.0  | % 
|Investment securities         |  |                            | 1,001 |      |   | 1,212    |  |   | (211     | ) |  | (17.4 | )%
|Other interest-earning assets |  |                            | 91    |      |   | 155      |  |   | (64      | ) |  | (41.2 | )%
|                              |  |                            |       |      |   |          |  |   |          |   |  |       |   
|Total interest income         |  | $                          | 7,347 |      | $ | 6,411    |  | $ | 936      |   |  | 14.6  | % 
|                              |  |                            |       |      |   |          |  |   |          |   |  |       |   
|INTEREST EXPENSE:             |  |                            |       |      |   |          |  |   |          |   |  |       |   
|Deposits                      |  | $                          | 2,655 |      | $ | 1,912    |  | $ | 743      |   |  | 38.8  | % 
|Borrowings                    |  |                            | 902   |      |   | 714      |  |   | 188      |   |  | 26.4  | % 
|                              |  |                            |       |      |   |          |  |   |          |   |  |       |   
|Total interest expense        |  |                            | 3,557 |      |   | 2,626    |  |   | 931      |   |  | 35.5  | % 
|                              |  |                            |       |      |   |          |  |   |          |   |  |       |   
|Net interest income           |  | $                          | 3,790 |      | $ | 3,785    |  | $ | 5        |   |  | 0.1   | % 
|                              |  |                            |       |      |   |          |  |   |          |   |  |       |   

Interest income increased by $936,000 in the second quarter of 2006 compared to the second quarter of 2005,
reflecting an increase in loan income of $1.2 million, a decrease in investment income of $211,000 and a decrease of income on other interest-earning assets of $64,000. The increase in loan income resulted from an increase in the average balance of
loans of $62.9 million and an increase in the average yield of 31 basis points. The decrease in investment income resulted from decrease in the average balance of $32.6 million offset by an increase in the average yield of 65 basis points. The
decrease in income from other interest-earning assets resulted from a decrease in the average balance of $13.8 million offset by an increase in the average yield in federal funds sold of 202 basis points.

Interest expense increased by $931,000, reflecting an increase in municipal deposit expense of $318,000, an increase in time deposit expense of $485,000, a decrease in
all other deposits of $60,000 and an increase in interest expense on borrowings of $188,000. Municipal deposit expense is tied to the 90-day treasury bill and increased as a result of a rise in the rate on 90-day treasury bills, while time deposit
expense increased



17



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##### Table of Contents

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 increased as a result of higher average balances of borrowings.

The interest rate spread and net interest margin were
2.59% and 2.96%, respectively, for the three months ended June 30, 2006 compared to 2.75% and 3.05% for the same period in 2005. The yield on interest earning assets increased as the average balance and yield on loans increased 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, 2006 and 2005.



|                              |  |                           |        |      |   |          |  |   |          |   |  |       |   
|----------------------------- |  | ------------------------- | ------ | ---- | - | -------- |  | - | -------- | - |  | ----- | --
|                              |  | Six Months Ended June 30, |        |      |   |          |  |   |          |  
|                              |  | 2006                      |        | 2005 |   | $ Change |  |   | % Change |  
|                              |  | (Dollars in thousands)    |        |      |   |         
|INTEREST INCOME:              |  |                           |        |      |   |          |  |   |          |   |  |       |   
|Loans                         |  | $                         | 12,281 |      | $ | 9,796    |  | $ | 2,485    |   |  | 25.4  | % 
|Investment securities         |  |                           | 2,060  |      |   | 2,380    |  |   | (320     | ) |  | (13.5 | )%
|Other interest-earning assets |  |                           | 157    |      |   | 326      |  |   | (169     | ) |  | (51.8 | )%
|                              |  |                           |        |      |   |          |  |   |          |   |  |       |   
|Total interest income         |  | $                         | 14,498 |      | $ | 12,502   |  | $ | 1,996    |   |  | 16.0  | % 
|                              |  |                           |        |      |   |          |  |   |          |   |  |       |   
|INTEREST EXPENSE:             |  |                           |        |      |   |          |  |   |          |   |  |       |   
|Deposits                      |  | $                         | 5,132  |      | $ | 3,693    |  | $ | 1,439    |   |  | 39.0  | % 
|Borrowings                    |  |                           | 1,781  |      |   | 1,405    |  |   | 376      |   |  | 26.8  | % 
|                              |  |                           |        |      |   |          |  |   |          |   |  |       |   
|Total interest expense        |  |                           | 6,913  |      |   | 5,098    |  |   | 1,815    |   |  | 35.6  | % 
|                              |  |                           |        |      |   |          |  |   |          |   |  |       |   
|Net interest income           |  | $                         | 7,585  |      | $ | 7,404    |  | $ | 181      |   |  | 2.4   | % 
|                              |  |                           |        |      |   |          |  |   |          |   |  |       |   

Interest income increased by $2.0 million in the six months ended June 30, 2006 compared to the same period
in 2005, reflecting increases in loan income offset by decreases in other interest-earning assets income and investment income. The increase in loan income resulted from an increase in the average balance of loans of $67.4 million and an increase in
the average yield of 29 basis points. The increase in the average balance of loans was a direct result of new loan originations while the higher yield was the result of both new loans that were originated at higher yields and existing loans
repricing at higher rates. Investment income decreased $320,000 as the decrease of the average balance of $29.0 million was offset by an increase in the average yield of 65 basis points. Income in federal funds sold decreased $169,000 as the
decrease in the average balance of $17.9 million was offset by an increase in the average yield of 205 basis points. The decreases in the average balances of investments and federal funds were the result of maturities and repayments, while the
higher yield was the result of higher short-term interest rates.

Interest expense increased by $1.8 million, reflecting an increase in municipal deposit
expense of $648,000, an increase in time deposit expense of $662,000, an increase in other checking and savings deposit expense of $129,000 and an increase in interest expense on borrowings of $377,000. Municipal deposit expense is tied to the
90-day treasury bill and increased as a result of a rise in the rate on 90-day treasury bills, 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 increased as a result of higher average balance of borrowings.

The interest rate
spread and net interest margin of the Company were 2.61% and 2.97%, respectively, for the six months ended June 30, 2006 compared to 2.73% and 3.02% for the same period in 2005. The yield on interest earning assets increased as short-term
investments were reinvested in higher yielding investments due to higher, short-term interest rates, loans repricing at higher interest rates and new loans originated at higher interest rates. The continued rise in short-term interest rates
increased the cost of interest expense on deposits and borrowings.



18



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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.



|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|----------------------------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ---------------------- |  | ---- | -------------- |  | - | --------------------- | - | ----------- | - | ----- |  | ---- | -
|                                                                        |  | Three Months Ended June 30, 2006 |         |   | Three Months Ended June 30, 2005 |  
|Average Balance Tables                                                  |  | AverageBalance                   |         |   | Interest andDividends            |   | Yield/ Cost            |  |      | AverageBalance |  |   | Interest andDividends |   | Yield/ Cost |  
|                                                                        |  | (Dollars in thousands)           |         |   |                                  |   | (Dollars in thousands) |  |      |               
|Assets:                                                                 |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Interest-earning assets:                                                |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Loans                                                                   |  | $                                | 422,708 |   |                                  | $ | 6,255                  |  | 5.92 | %              |  | $ | 359,845               |   |             | $ | 5,044 |  | 5.61 | %
|Investment securities                                                   |  |                                  | 82,182  |   |                                  |   | 1,001                  |  | 4.87 | %              |  |   | 114,750               |   |             |   | 1,212 |  | 4.22 | %
|Other interest-earning assets                                           |  |                                  | 7,390   |   |                                  |   | 91                     |  | 4.95 | %              |  |   | 21,208                |   |             |   | 155   |  | 2.93 | %
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total interest-earning assets                                           |  |                                  | 512,280 |   |                                  |   | 7,347                  |  | 5.74 | %              |  |   | 495,803               |   |             |   | 6,411 |  | 5.17 | %
|                                                                        |  |                                  |         |   |                                  |  
|Noninterest-earning assets                                              |  |                                  | 42,738  |   |                                  |   |                        |  |      |                |  |   | 46,166                |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total assets                                                            |  | $                                | 555,018 |   |                                  |   |                        |  |      |                |  | $ | 541,969               |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Liabilities and equity:                                                 |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Interest-bearing liabilities:                                           |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Interest-bearing demand deposits                                        |  | $                                | 170,086 |   |                                  | $ | 972                    |  | 2.29 | %              |  | $ | 170,947               |   |             | $ | 644   |  | 1.51 | %
|Savings accounts                                                        |  |                                  | 71,611  |   |                                  |   | 203                    |  | 1.13 | %              |  |   | 93,556                |   |             |   | 273   |  | 1.17 | %
|Certificates of deposit                                                 |  |                                  | 142,692 |   |                                  |   | 1,480                  |  | 4.15 | %              |  |   | 118,765               |   |             |   | 995   |  | 3.35 | %
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total interest-bearing deposits                                         |  |                                  | 384,389 |   |                                  |   | 2,655                  |  | 2.76 | %              |  |   | 383,268               |   |             |   | 1,912 |  | 2.00 | %
|                                                                        |  |                                  |         |   |                                  |  
|FHLB advances                                                           |  |                                  | 43,011  |   |                                  |   | 451                    |  | 4.19 | %              |  |   | 10,000                |   |             |   | 78    |  | 3.10 | %
|Securities sold under agreements to repurchase                          |  |                                  | 8,788   |   |                                  |   | 116                    |  | 5.29 | %              |  |   | 24,892                |   |             |   | 301   |  | 4.83 | %
|Subordinated debt                                                       |  |                                  | 15,464  |   |                                  |   | 335                    |  | 8.67 | %              |  |   | 15,464                |   |             |   | 335   |  | 8.67 | %
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total borrowings                                                        |  |                                  | 67,263  |   |                                  |   | 902                    |  | 5.37 | %              |  |   | 50,356                |   |             |   | 714   |  | 5.67 | %
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total interest-bearing liabilities                                      |  |                                  | 451,652 |   |                                  |   | 3,557                  |  | 3.15 | %              |  |   | 433,624               |   |             |   | 2,626 |  | 2.42 | %
|                                                                        |  |                                  |         |   |                                  |  
|Noninterest-bearing liabilities                                         |  |                                  | 41,489  |   |                                  |   |                        |  |      |                |  |   | 47,941                |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total liabilities                                                       |  |                                  | 493,141 |   |                                  |   |                        |  |      |                |  |   | 481,565               |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |  
|Stockholders equity                                                    |  |                                  | 61,877  |   |                                  |   |                        |  |      |                |  |   | 60,404                |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Total liabilities and stockholders equity                              |  | $                                | 555,018 |   |                                  |   |                        |  |      |                |  | $ | 541,969               |   |             |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Net interest income                                                     |  |                                  |         |   |                                  | $ | 3,790                  |  |      |                |  |   |                       |   |             | $ | 3,785 |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |                        |  |      |                |  |   |                       |   |             |   |       |  |      |  
|Interest rate spread                                                    |  |                                  |         |   |                                  |   |                        |  | 2.59 | %              |  |   |                       |   |             |   |       |  | 2.75 | %
|Net interest margin                                                     |  |                                  |         |   |                                  |   |                        |  | 2.96 | %              |  |   |                       |   |             |   |       |  | 3.05 | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                  | 113.42  | % |                                  |   |                        |  |      |                |  |   | 114.34                | % |             |   |       |  |      |  



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##### Table of Contents

|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|----------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ------------------------------ | - | ---------------------- |  | ---- | -------------- |  | - | -------------------- | - | ----------- | - | ------ |  | ---- | -
|                                                                        |  | Six Months Ended June 30, 2006 |         |   | Six Months Ended June 30, 2005 |  
|Average Balance Tables                                                  |  | AverageBalance                 |         |   | InterestandDividends           |   | Yield/ Cost            |  |      | AverageBalance |  |   | InterestandDividends |   | Yield/ Cost |  
|                                                                        |  | (Dollars in thousands)         |         |   |                                |   | (Dollars in thousands) |  |      |               
|Assets:                                                                 |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Interest-earning assets:                                                |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Loans                                                                   |  | $                              | 418,429 |   |                                | $ | 12,281                 |  | 5.87 | %              |  | $ | 351,047              |   |             | $ | 9,796  |  | 5.58 | %
|Investment securities                                                   |  |                                | 85,873  |   |                                |   | 2,060                  |  | 4.80 | %              |  |   | 114,826              |   |             |   | 2,380  |  | 4.15 | %
|Other interest-earning assets                                           |  |                                | 6,692   |   |                                |   | 157                    |  | 4.70 | %              |  |   | 24,584               |   |             |   | 326    |  | 2.65 | %
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total interest-earning assets                                           |  |                                | 510,994 |   |                                |   | 14,498                 |  | 5.67 | %              |  |   | 490,456              |   |             |   | 12,502 |  | 5.10 | %
|                                                                        |  |                                |         |   |                                |  
|Noninterest-earning assets                                              |  |                                | 42,922  |   |                                |   |                        |  |      |                |  |   | 44,848               |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total assets                                                            |  | $                              | 553,916 |   |                                |   |                        |  |      |                |  | $ | 535,304              |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Liabilities and equity:                                                 |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Interest-bearing liabilities:                                           |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Interest-bearing demand deposits                                        |  | $                              | 171,914 |   |                                | $ | 1,898                  |  | 2.21 | %              |  | $ | 170,361              |   |             | $ | 1,235  |  | 1.45 | %
|Savings accounts                                                        |  |                                | 73,954  |   |                                |   | 419                    |  | 1.13 | %              |  |   | 94,224               |   |             |   | 542    |  | 1.15 | %
|Certificates of deposit                                                 |  |                                | 139,935 |   |                                |   | 2,815                  |  | 4.02 | %              |  |   | 117,120              |   |             |   | 1,916  |  | 3.27 | %
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total interest-bearing deposits                                         |  |                                | 385,803 |   |                                |   | 5,132                  |  | 2.66 | %              |  |   | 381,705              |   |             |   | 3,693  |  | 1.93 | %
|                                                                        |  |                                |         |   |                                |  
|FHLB advances                                                           |  |                                | 36,952  |   |                                |   | 762                    |  | 4.12 | %              |  |   | 10,000               |   |             |   | 154    |  | 3.08 | %
|Securities sold under agreements to repurchase                          |  |                                | 13,610  |   |                                |   | 349                    |  | 5.12 | %              |  |   | 23,924               |   |             |   | 580    |  | 4.85 | %
|Subordinated debt                                                       |  |                                | 15,464  |   |                                |   | 670                    |  | 8.67 | %              |  |   | 15,464               |   |             |   | 670    |  | 8.67 | %
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total borrowings                                                        |  |                                | 66,026  |   |                                |   | 1,781                  |  | 5.39 | %              |  |   | 49,388               |   |             |   | 1,404  |  | 5.69 | %
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total interest-bearing liabilities                                      |  |                                | 451,829 |   |                                |   | 6,913                  |  | 3.06 | %              |  |   | 431,093              |   |             |   | 5,097  |  | 2.36 | %
|                                                                        |  |                                |         |   |                                |  
|Noninterest-bearing liabilities                                         |  |                                | 40,508  |   |                                |   |                        |  |      |                |  |   | 43,847               |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total liabilities                                                       |  |                                | 492,337 |   |                                |   |                        |  |      |                |  |   | 474,940              |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |  
|Stockholders equity                                                    |  |                                | 61,579  |   |                                |   |                        |  |      |                |  |   | 60,364               |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Total liabilities and stockholders equity                              |  | $                              | 553,916 |   |                                |   |                        |  |      |                |  | $ | 535,304              |   |             |   |        |  |      |  
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Net interest income                                                     |  |                                |         |   |                                | $ | 7,585                  |  |      |                |  |   |                      |   |             | $ | 7,405  |  |      |  
|                                                                        |  |                                |         |   |                                |   |                        |  |      |                |  |   |                      |   |             |   |        |  |      |  
|Interest rate spread                                                    |  |                                |         |   |                                |   |                        |  | 2.61 | %              |  |   |                      |   |             |   |        |  | 2.73 | %
|Net interest margin                                                     |  |                                |         |   |                                |   |                        |  | 2.97 | %              |  |   |                      |   |             |   |        |  | 3.02 | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                | 113.09  | % |                                |   |                        |  |      |                |  |   | 113.77               | % |             |   |        |  |      |  

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, 2006, respectively, compared to
$75,000 and $150,000 for the three and six months ended June 30, 2005, respectively. The provision for loan loses was primarily to maintain an allowance level deemed appropriate by management in light of factors such as the level of
non-performing loans and the current market conditions.



20



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##### Table of Contents

Other Income

The
following table summarizes other income for the three months ended June 30, 2006 and 2005 and the changes between the periods.



|                                       |  |                             |     |      |   |          |  |     |  
|-------------------------------------- |  | --------------------------- | --- | ---- | - | -------- |  | --- | -
|                                       |  | Three Months Ended June 30, |     |      |  
|                                       |  | 2006                        |     | 2005 |   | % Change | 
|                                       |  | (Dollars in thousands)      |     |      |  
|OTHER INCOME:                          |  |                             |     |      |   |          |  |     |  
|                                       |  |                             |    
|Service charges                        |  | $                           | 404 |      | $ | 384      |  | 5.4 | %
|Cash surrender value of life insurance |  |                             | 65  |      |   | 63       |  | 2.6 | %
|Other                                  |  |                             | 130 |      |   | 125      |  | 4.1 | %
|                                       |  |                             |     |      |   |          |  |     |  
|Total other income                     |  | $                           | 599 |      | $ | 572      |  | 4.8 | %
|                                       |  |                             |     |      |   |          |  |     |  

Other income increased $27,000, or 4.8%, to $599,000 for the three-month period ended June 30, 2006 from the
same period in 2005. The increases in service charges were the result of higher fees collected as a result of a growing deposit base.

The following table
summarizes other income for the six months ended June 30, 2006 and 2005 and the changes between the periods.



|                                       |  |                           |       |      |   |          |  |      |   
|-------------------------------------- |  | ------------------------- | ----- | ---- | - | -------- |  | ---- | --
|                                       |  | Six Months Ended June 30, |       |      |  
|                                       |  | 2006                      |       | 2005 |   | % Change | 
|                                       |  | (Dollars in thousands)    |       |      |  
|OTHER INCOME:                          |  |                           |       |      |   |          |  |      |   
|                                       |  |                           |      
|Service charges                        |  | $                         | 778   |      | $ | 735      |  | 5.8  | % 
|Cash surrender value of life insurance |  |                           | 130   |      |   | 136      |  | (4.3 | )%
|Other                                  |  |                           | 246   |      |   | 269      |  | (8.5 | )%
|                                       |  |                           |       |      |   |          |  |      |   
|Total other income                     |  | $                         | 1,154 |      | $ | 1,140    |  | 1.2  | % 
|                                       |  |                           |       |      |   |          |  |      |   

Other income increased $14,000, or 1.2%, to $1.2 million for the six-month period ended June 30, 2006 from
the same period in 2005. The increase occurred in service charge fees collected offset by a decrease in commissions and the income on the surrender value of bank-owned life insurance.

Other Expense

The following table summarizes other expense for the three months ended June 30, 2006 and 2005
and the changes between the periods.



|                               |  |                             |       |      |   |          |  |       |   
|------------------------------ |  | --------------------------- | ----- | ---- | - | -------- |  | ----- | --
|                               |  | Three Months Ended June 30, |       |      |  
|                               |  | 2006                        |       | 2005 |   | % Change | 
|                               |  | (Dollars in thousands)      |       |      |  
|OTHER EXPENSE:                 |  |                             |       |      |   |          |  |       |   
|                               |  |                             |      
|Salaries and employee benefits |  | $                           | 1,855 |      | $ | 1,719    |  | 8.0   | % 
|Occupancy and equipment        |  |                             | 657   |      |   | 582      |  | 12.7  | % 
|Federal insurance premiums     |  |                             | 13    |      |   | 14       |  | (9.6  | )%
|Advertising                    |  |                             | 115   |      |   | 107      |  | 6.8   | % 
|Professional services          |  |                             | 155   |      |   | 204      |  | (23.9 | )%
|Other operating expense        |  |                             | 359   |      |   | 340      |  | 5.6   | % 
|                               |  |                             |       |      |   |          |  |       |   
|Total other expense            |  | $                           | 3,154 |      | $ | 2,966    |  | 6.3   | % 
|                               |  |                             |       |      |   |          |  |       |   

Other expenses increased $188,000 to $3.2 million for the three-month period ended June 30, 2006 from the
same period in 2005. Salaries and employee benefits increased $136,000 due to regular salary increases and the cost of share-based compensation. Occupancy and equipment increased $75,000 due primarily to increases in costs associated with the
opening of a new branch office in the third quarter of 2005. These increases were offset by decreases of $49,000 in professional services, including decreases in legal and accounting services.



21



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##### Table of Contents

The following table summarizes other expense for the six months ended June 30, 2006 and 2005 and the changes between
the periods.



|                               |  |                           |       |      |   |          |  |       |   
|------------------------------ |  | ------------------------- | ----- | ---- | - | -------- |  | ----- | --
|                               |  | Six Months Ended June 30, |       |      |  
|                               |  | 2006                      |       | 2005 |   | % Change | 
|                               |  | (Dollars in thousands)    |       |      |  
|OTHER EXPENSE:                 |  |                           |       |      |   |          |  |       |   
|                               |  |                           |      
|Salaries and employee benefits |  | $                         | 3,749 |      | $ | 3,458    |  | 8.4   | % 
|Occupancy and equipment        |  |                           | 1,322 |      |   | 1,165    |  | 13.4  | % 
|Federal insurance premiums     |  |                           | 28    |      |   | 30       |  | (6.4  | )%
|Advertising                    |  |                           | 203   |      |   | 201      |  | 0.9   | % 
|Professional services          |  |                           | 297   |      |   | 363      |  | (18.0 | )%
|Other operating expense        |  |                           | 685   |      |   | 661      |  | 3.6   | % 
|                               |  |                           |       |      |   |          |  |       |   
|Total other expense            |  | $                         | 6,284 |      | $ | 5,878    |  | 6.9   | % 
|                               |  |                           |       |      |   |          |  |       |   

Other expenses increased $406,000 to $6.3 million for the six-month period ended June 30, 2006 from the same
period in 2005. Salaries and employee benefits increased $291,000 due to regular salary increases and the cost of share-based compensation. Occupancy and equipment increased $157,000 due primarily to increases in costs associated with the opening of
a new branch office in the third quarter of 2005. These increases were offset by decreases of $66,000 in professional services, including decreases in legal and accounting services.

Income Taxes

Income taxes decreased $66,000 to $460,000 for an effective tax rate of 39.6% for the three months
ended June 30, 2006 compared to $526,000 for an effective tax rate of 40.0% from the same period in 2005. The decrease was a result of lower net income before taxes.

Income taxes decreased $82,000 to $902,000 for an effective tax rate of 39.1% for the six months ended June 30, 2006 compared to $984,000 for an effective tax rate of 39.1% from the same period in 2005. The
decrease was a result of lower net income before taxes.

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, 2006, cash and cash equivalents totaled $27.0 million. Securities classified as available-for-sale whose market value exceeds our cost, which provide additional sources of liquidity, totaled $13.4
million at June 30, 2006. In addition, at June 30, 2006, we had the ability to borrow a total of approximately $151.2 million from the Federal Home Loan Bank of New York, which included available overnight lines of credit of $101.8
million. On that date, we had no overnight advances outstanding.

At June 30, 2006, we had $41.8 million in loan commitments outstanding, which
included $13.2 million in undisbursed loans, $23.2 million in unused home equity lines of credit and $5.4 million in commercial lines of credit. Certificates of deposit due within one year of June 30, 2006 totaled $91.7 million, or 62.6% of our
total 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.



22



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##### Table of Contents

At June 30, 2006, the Bank exceeded all of its regulatory capital requirements with tangible capital of $56.2
million, or 10.37% of total adjusted assets, which is above the required level of $8.1 million or 1.5%; core capital of $56.2 million, or 10.37% of total adjusted assets which is above the required level of $21.7 million or 4%; and risk-based
capital of $58.1 million, or 18.81% of risk-weighted assets, which is above the required level of $24.7 million or 8%. The Bank is considered a well-capitalized institution under the Office of Thrift Supervisions prompt corrective
action regulations.

On March 29, 2006, the Company announced that its board of directors approved the repurchase of up to 200,087 shares of the
Companys outstanding common stock, which is 5% of our outstanding shares (excluding those held by OC Financial MHC). The program began on May 1, 2006. Repurchases, which will be conducted through open market purchases or privately
negotiated transactions, will be made from time to time depending on market conditions and other factors. Repurchased shares will be held in treasury. As of June 30, 2006, the Company had repurchased 28,800 shares under this plan at a cost of
$362,204.

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, 2006Percentage Change in EstimatedNet Interest Income Over |   
|                                  |  | 12 Months                                                              |    |  | 24 Months |   
|200 basis point increase in rates |  | (1.53                                                                  | )% |  | (4.99     | )%
|100 basis point decrease in rates |  | 2.16                                                                   | %  |  | 3.59      | % 

The 200 and 100 basis point change in rates in the above table is assumed to occur evenly over the following
twelve and twenty-four months. Based on the scenario above, net interest income would be adversely affected (within our internal guidelines) in the twelve and twenty-four month periods if rates rose by 200 basis points. The reason for the net
interest income decrease in both categories is that short-term liabilities repricing at higher interest rates are greater than short-term assets reinvested or repriced at the higher interest rates assumed by the analysis. In addition, if rates
declined by 100 basis points, net interest income would be positively affected (within our internal guidelines) in both the twelve- and twenty-four- month periods. The reason for the net interest income increase in both categories is that the
balance of short-term liabilities repricing at lower interest rates is greater than the balance of short-term assets reinvested or repriced at the lower interest rates assumed by the analysis.

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



23



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##### Table of Contents

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 loss in market risk sensitive
instruments in the event of a sudden and sustained 100 to 300 basis point increase or 100 to 300 basis point decrease in market interest rates with no effect given to any steps that we might take to counter the effect of that interest rate movement.
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, 2006 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 % ofPortfolio Value of Assets |        
|Basis Point (bp) Change in Rates |  | $ Amount                                   |        | $ Change |                                                      |         | % Change |  |     | NPV Ratio |  |       | Change | 
|300 bp                             |  | $                                          | 50,273 |          | $                                                    | (28,626 | )        |  | (36 | )%        |  | 9.27  | %      |  | (429 | )bp
|200                                |  |                                            | 59,010 |          |                                                      | (19,889 | )        |  | (25 | )         |  | 10.65 |        |  | (291 | )  
|100                                |  |                                            | 69,102 |          |                                                      | (9,797  | )        |  | (12 | )         |  | 12.16 |        |  | (140 | )  
|0                                  |  |                                            | 78,899 |          |                                                      |        |          |  |    |           |  | 13.56 |        |  |     |    
|(100)                              |  |                                            | 83,231 |          |                                                      | 4,332   |          |  | 5   | %         |  | 14.09 |        |  | 53   |    
|(200)                              |  |                                            | 80,058 |          |                                                      | 1,159   |          |  | 1   | %         |  | 13.49 |        |  | (7   | )  
|(300)                              |  |                                            | 72,413 |          |                                                      | (6,485  | )        |  | (8  | )         |  | 12.20 |        |  | (136 | )  

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, 2006, 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.



24



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##### Table of Contents

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
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, 2006 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 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the
factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2005, which could materially affect our business, financial condition or future results. The risks described in our
Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or
operating results.

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



|                                              |  |                                               |  |                                           |       |                                                                                             |        |                                                                                                                         |        
|--------------------------------------------- |  | --------------------------------------------- |  | ----------------------------------------- | ----- | ------------------------------------------------------------------------------------------- | ------ | ----------------------------------------------------------------------------------------------------------------------- | -------
|Period                                        |  | (a) Total number ofShares (or Units)Purchased |  | (b) Average Price Paidper Share (or Unit) |       | (c) Total Number ofShares (or units)Purchased as Part ofPublicly AnnouncedPlans or Programs |        | (d) Maximum Number (orAppropriate Dollar Value) ofShares (or units) that MayYet Be Purchased Under thePlans or Programs
|Month #1 April 1, 2006 through April 30, 2006 |  | None                                          |  |                                           | None  |                                                                                             | None   |                                                                                                                         | 200,536
|                                              |  |                                               |  |                                          
|Month #2 May 1, 2006 through May 31, 2006     |  | 21,300                                        |  | $                                         | 12.54 |                                                                                             | 21,300 |                                                                                                                         | 179,236
|                                              |  |                                               |  |                                          
|Month #3 June 1, 2006 through June 30, 2006   |  | 7,500                                         |  | $                                         | 12.67 |                                                                                             | 7,500  |                                                                                                                         | 171,736
|                                              |  |                                               |  |                                          
|Total                                         |  | 28,800                                        |  | $                                         | 12.58 |                                                                                             | 28,800 |                                                                                                                         |        

---

|(1) | On August 10, 2005, the Companys Board of Directors approved the formation and funding of a trust that will purchase 171,749 shares of the Companys common stock in
the open market with funds contributed by the Company. As of September 23, 2005, 171,300 shares were purchased. The remaining 449 shares have not been awarded and may be purchased from time to time at the discretion of the independent trustee
of the trust and the shares will be used to fund restricted stock awards under the Companys 2005 Equity Incentive Plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | On March 29, 2006, the Companys Board of Directors approved the repurchase of 200,087 shares of the Companys common stock in the open market. As of June 30,
2006, 28,800 shares were purchased. The Company is still purchasing shares in the open market to complete the remaining 171,287 shares approved for purchase.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 17, 2006. 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
|Frederick G. Dalzell, M.D. |  | 8,024,769 |  | 90,886        
|Robert A. Previti, Ed. D.  |  | 8,030,469 |  | 85,186        



| | 2. | The appointment of Deloitte & Touche LLP as auditors for the Company for the fiscal year ending December 31, 2006 was ratified by stockholders by the following vote:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                |  |                
|--------------- |  | ---------------
|For: 8,100,075; |  | Against: 10,259

Broker non-votes totaled none.

Item 5. Other Information

None.

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 10, 2006 |  | /s/ Steven E. Brady                              
|                      |  | Steven E. Brady                                  
|                      |  | President and Chief Executive Officer            
|                      | 
|Date: August 10, 2006 |  | /s/ Donald F. Morgenweck                         
|                      |  | Donald F. Morgenweck                             
|                      |  | Chief Financial Officer and Senior Vice President



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