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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



(Mark One)



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



For the quarterly period ended March 31, 2005



OR



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



For the transition period
from to



Commission file number: 0-51000



OCEAN SHORE HOLDING CO.

(Exact name
of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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 |  | 082266    
|(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)



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



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



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



At May 13, 2005, the registrant had
8,447,868 shares of $0.01 par value common stock outstanding.



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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 March 31, 2005 and December 31, 2004               |  | 1   
|           |  |                                                                                                                         
|           |  | Unaudited Condensed Consolidated Statements of Income for the three months ended March 31, 2005 and 2004                 |  | 2   
|           |  |                                                                                                                         
|           |  | Unaudited Condensed Consolidated Statements of Changes in Stockholders Equity for the three months ended March 31, 2005 |  | 3   
|           |  |                                                                                                                         
|           |  | Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004             |  | 4   
|           |  |                                                                                                                         
|           |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                           |  | 5   
|           |  |                                                                                                                         
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                    |  | 13  
|           |  |                                                                                                                         
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                               |  | 18  
|           |  |                                                                                                                         
|Item 4.    |  | Controls and Procedures                                                                                                  |  | 20  
|           |  |                                                                                                                         
|PART II.   |  | OTHER INFORMATION                                                                                                        |  |     
|           |  |                                                                                                                         
|Item 1.    |  | Legal Proceedings                                                                                                        |  | 21  
|           |  |                                                                                                                         
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                              |  | 21  
|           |  |                                                                                                                         
|Item 3.    |  | Defaults upon Senior Securities                                                                                          |  | 21  
|           |  |                                                                                                                         
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                                      |  | 21  
|           |  |                                                                                                                         
|Item 5.    |  | Other Information                                                                                                        |  | 21  
|           |  |                                                                                                                         
|Item 6.    |  | Exhibits                                                                                                                 |  | 21  
|           | 
|SIGNATURES |  | 22                                                                                                                      





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PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------



OCEAN SHORE HOLDING CO. AND SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION



|                                                                                                                    |  |                |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                    |  | March 31, 2005 |             |   | December 31,2004 |  
|ASSETS                                                                                                              |  |                |             |   |                  |   |             |  
|                                                                                                                    |  |               
|Cash and amounts due from depository institutions                                                                   |  | $              | 13,902,841  |   |                  | $ | 7,895,819   |  
|Federal funds sold                                                                                                  |  |                | 30,000,000  |   |                  |   | 39,500,000  |  
|                                                                                                                    |  |                |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                           |  |                | 43,902,841  |   |                  |   | 47,395,819  |  
|                                                                                                                    |  |               
|Investment securities held to maturity (estimated fair value March 2005 $8,390,849; December 2004 $8,398,135)      |  |                | 8,383,981   |   |                  |   | 8,387,127   |  
|Investment securities available for sale (amortized costMarch 2005 $54,816,281; December 2004 $54,067,590)         |  |                | 54,632,369  |   |                  |   | 54,233,783  |  
|Mortgage-backed securities held to maturity (estimated fair value March 2005 $5,934,102; December 2004 $2,161,900) |  |                | 6,001,216   |   |                  |   | 2,156,901   |  
|Mortgage-backed securities available for sale (amortized costMarch 2005 $48,328,685; December 2004 $51,732,377)    |  |                | 48,081,352  |   |                  |   | 52,024,635  |  
|Loans receivablenet                                                                                                |  |                | 347,071,830 |   |                  |   | 340,585,224 |  
|Accrued interest receivable:                                                                                        |  |                |             |   |                  |   |             |  
|Loans                                                                                                               |  |                | 1,209,927   |   |                  |   | 1,182,138   |  
|Mortgage-backed securities                                                                                          |  |                | 221,789     |   |                  |   | 219,992     |  
|Investment securities                                                                                               |  |                | 563,637     |   |                  |   | 627,103     |  
|Federal Home Loan Bank stockat cost                                                                                |  |                | 3,101,600   |   |                  |   | 3,101,600   |  
|Office properties and equipmentnet                                                                                 |  |                | 8,138,222   |   |                  |   | 8,075,696   |  
|Prepaid expenses and other assets                                                                                   |  |                | 2,778,407   |   |                  |   | 2,734,054   |  
|Cash surrender value of life insurance                                                                              |  |                | 7,150,413   |   |                  |   | 6,992,313   |  
|Deferred tax asset                                                                                                  |  |                | 804,559     |   |                  |   | 727,727     |  
|                                                                                                                    |  |                |             |   |                  |   |             |  
|TOTAL ASSETS                                                                                                        |  | $              | 532,042,143 |   |                  | $ | 528,444,112 |  
|                                                                                                                    |  |                |             |   |                  |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                |  |                |             |   |                  |   |             |  
|                                                                                                                    |  |               
|LIABILITIES:                                                                                                        |  |                |             |   |                  |   |             |  
|Non-interest bearing deposits                                                                                       |  | $              | 41,941,842  |   |                  | $ | 35,318,241  |  
|Interest bearing deposits                                                                                           |  |                | 374,342,226 |   |                  |   | 380,009,838 |  
|Advances from Federal Home Loan Bank                                                                                |  |                | 10,000,000  |   |                  |   | 10,000,000  |  
|Junior subordinated debenture                                                                                       |  |                | 15,464,000  |   |                  |   | 15,464,000  |  
|Securities sold under agreements to repurchase                                                                      |  |                | 25,470,000  |   |                  |   | 22,840,000  |  
|Advances from borrowers for taxes and insurance                                                                     |  |                | 2,218,638   |   |                  |   | 1,995,772   |  
|Accrued interest payable                                                                                            |  |                | 488,080     |   |                  |   | 821,013     |  
|Other liabilities                                                                                                   |  |                | 2,140,125   |   |                  |   | 2,200,012   |  
|                                                                                                                    |  |                |             |   |                  |   |             |  
|Total liabilities                                                                                                   |  |                | 472,064,911 |   |                  |   | 468,648,876 |  
|                                                                                                                    |  |                |             |   |                  |   |             |  
|COMMITMENTS AND CONTINGENCIES                                                                                       |  |                |             |   |                  |   |             |  
|                                                                                                                    |  |               
|STOCKHOLDERS EQUITY:                                                                                               |  |                |             |   |                  |   |             |  
|Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued                                           |  |                |            |   |                  |   |            |  
|Common stock, $.01 par value, 25,000,000 shares authorized, 8,762,742 shares issued                                 |  |                | 87,627      |   |                  |   | 87,627      |  
|Additional paid in capital                                                                                          |  |                | 38,387,523  |   |                  |   | 38,387,523  |  
|Retained earnings - partially restricted                                                                            |  |                | 25,299,666  |   |                  |   | 24,557,370  |  
|Deferred compensation plans trust                                                                                   |  |                | (334,817    | ) |                  |   | (321,260    | )
|Unallocated ESOP shares                                                                                             |  |                | (3,205,990  | ) |                  |   | (3,205,990  | )
|Accumulated other comprehensive income (loss)                                                                       |  |                | (256,777    | ) |                  |   | 289,966     |  
|                                                                                                                    |  |                |             |   |                  |   |             |  
|Total stockholders equity                                                                                          |  |                | 59,977,232  |   |                  |   | 59,795,236  |  
|                                                                                                                    |  |                |             |   |                  |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                          |  | $              | 532,042,143 |   |                  | $ | 528,444,112 |  
|                                                                                                                    |  |                |             |   |                  |   |             |  



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 March 31,
|                                                                                                              |  | 2005                         |           | 2004
|INTEREST AND DIVIDEND INCOME:                                                                                 |  |                              |           |      |   |          
|Taxable interest and fees on loans                                                                            |  | $                            | 4,752,003 |      | $ | 4,312,997
|Taxable interest on mortgage-backed securities                                                                |  |                              | 572,265   |      |   | 670,686  
|Non-taxable interest on municipal securities                                                                  |  |                              | 100,450   |      |   | 85,483   
|Taxable interest and dividends on investments securities                                                      |  |                              | 666,213   |      |   | 541,773  
|                                                                                                              |  |                              |           |      |   |          
|Total interest and dividend income                                                                            |  |                              | 6,090,931 |      |   | 5,610,940
|                                                                                                              |  |                              |           |      |   |          
|INTEREST EXPENSE:                                                                                             |  |                              |           |      |   |          
|Deposits                                                                                                      |  |                              | 1,780,318 |      |   | 1,505,654
|Advances from Federal Home Loan Bank, securities sold under agreements to repurchase and other borrowed money |  |                              | 691,556   |      |   | 747,977  
|                                                                                                              |  |                              |           |      |   |          
|Total interest expense                                                                                        |  |                              | 2,471,874 |      |   | 2,253,632
|                                                                                                              |  |                              |           |      |   |          
|NET INTEREST INCOME                                                                                           |  |                              | 3,619,057 |      |   | 3,357,308
|                                                                                                              |  |                             
|PROVISION FOR LOAN LOSSES                                                                                     |  |                              | 75,000    |      |   | 90,000   
|                                                                                                              |  |                              |           |      |   |          
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                                           |  |                              | 3,544,057 |      |   | 3,267,308
|                                                                                                              |  |                              |           |      |   |          
|OTHER INCOME:                                                                                                 |  |                              |           |      |   |          
|Service charges                                                                                               |  |                              | 351,384   |      |   | 362,244  
|Cash surrender value of life insurance                                                                        |  |                              | 73,000    |      |   | 69,732   
|Other                                                                                                         |  |                              | 143,795   |      |   | 107,181  
|                                                                                                              |  |                              |           |      |   |          
|Total other income                                                                                            |  |                              | 568,179   |      |   | 539,157  
|                                                                                                              |  |                              |           |      |   |          
|OTHER EXPENSES:                                                                                               |  |                              |           |      |   |          
|Salaries and employee benefits                                                                                |  |                              | 1,739,622 |      |   | 1,598,235
|Occupancy and equipment                                                                                       |  |                              | 583,121   |      |   | 541,465  
|Federal insurance premiums                                                                                    |  |                              | 15,010    |      |   | 15,356   
|Advertising                                                                                                   |  |                              | 93,617    |      |   | 80,587   
|Professional services                                                                                         |  |                              | 158,673   |      |   | 100,164  
|Other operating expenses                                                                                      |  |                              | 321,381   |      |   | 316,723  
|                                                                                                              |  |                              |           |      |   |          
|Total other expenses                                                                                          |  |                              | 2,911,425 |      |   | 2,652,530
|                                                                                                              |  |                              |           |      |   |          
|INCOME BEFORE INCOME TAXES                                                                                    |  |                              | 1,200,810 |      |   | 1,153,935
|                                                                                                              |  |                             
|INCOME TAX EXPENSE                                                                                            |  |                              | 458,514   |      |   | 463,873  
|                                                                                                              |  |                              |           |      |   |          
|NET INCOME                                                                                                    |  | $                            | 742,296   |      | $ | 690,062  
|                                                                                                              |  |                              |           |      |   |          
|Basic earnings per share:                                                                                     |  | $                            | 0.09      |      |   | N/A      
|Diluted earnings per share:                                                                                   |  | $                            | 0.09      |      |   | N/A      



See notes to unaudited condensed
consolidated financial statements.



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OCEAN SHORE HOLDING CO. AND SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2005



|                                                                                         |  |             |        |                          |   |                                     |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|---------------------------------------------------------------------------------------- |  | ----------- | ------ | ------------------------ | - | ----------------------------------- |  | ---------------------- | ---------- |  | ------------------------------- | ---------- | - | ------------------------------------------ | - | -------- | ------------ |  | - | -------- | - |  | - | ---------- | -
|                                                                                         |  | CommonStock |        | AdditionalPaid-InCapital |   | RetainedEarningsPartiallyRestricted |  | UnallocatedESOP Shares |            |  | DeferredCompensationPlans Trust |            |   | AccumulatedOtherComprehensiveIncome (Loss) |   |          | Total Equity | 
|BALANCEJanuary 1, 2005                                                                  |  | $           | 87,627 |                          | $ | 38,387,523                          |  | $                      | 24,557,370 |  | $                               | (3,205,990 | ) |                                            | $ | (321,260 | )            |  | $ | 289,966  |   |  | $ | 59,795,236 |  
|                                                                                         |  |             |        |                          |   |                                     | 
|Comprehensive income:                                                                    |  |             |        |                          |   |                                     |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|Net income                                                                               |  |             |        |                          |   |                                     |  |                        | 742,296    |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   | 742,296    |  
|Net change in unrealized loss on securities available for sale, net of taxes of $342,954 |  |             |        |                          |   |                                     |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   | (546,743 | ) |  |   | (546,743   | )
|                                                                                         |  |             |        |                          |   |                                     |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|Comprehensive income                                                                     |  |             |        |                          |   |                                     |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   | 195,553    |  
|Purchase of shares by deferred compensation plans trust                                  |  |             |        |                          |   |                                     |  |                        |            |  |                                 |            |   |                                            |   | (13,557  | )            |  |   |          |   |  |   | (13,557    | )
|                                                                                         |  |             |        |                          |   |                                     |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  
|BALANCEMarch 31, 2005                                                                   |  | $           | 87,627 |                          | $ | 38,387,523                          |  | $                      | 25,299,666 |  | $                               | (3,205,990 | ) |                                            | $ | (334,817 | )            |  | $ | (256,777 | ) |  | $ | 59,977,232 |  
|                                                                                         |  |             |        |                          |   |                                     |  |                        |            |  |                                 |            |   |                                            |   |          |              |  |   |          |   |  |   |            |  



See notes to unaudited condensed
consolidated financial statements.



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OCEAN SHORE HOLDING CO. AND SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                            |  |                              |            |   |      |   |             |  
|------------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ---- | - | ----------- | -
|                                                                                            |  | Three months Ended March 31, |           
|                                                                                            |  | 2005                         |            |   | 2004 |  
|OPERATING ACTIVITIES:                                                                       |  |                              |            |   |      |   |             |  
|Net income                                                                                  |  | $                            | 742,296    |   |      | $ | 690,062     |  
|                                                                                            |  |                              |            |   |      |   |             |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                              |            |   |      |   |             |  
|Depreciation and amortization                                                               |  |                              | 337,229    |   |      |   | 337,636     |  
|Provision for loan losses                                                                   |  |                              | 75,000     |   |      |   | 90,000      |  
|Deferred income taxes                                                                       |  |                              | 266,122    |   |      |   | (203,341    | )
|Loss on sale of office properties and equipment                                             |  |                              |           |   |      |   | 1,754       |  
|Increase in cash surrender value of life insurance                                          |  |                              | (73,000    | ) |      |   | (69,732     | )
|Changes in assets and liabilities which provided (used) cash:                               |  |                              |            |   |      |   |             |  
|Accrued interest receivable                                                                 |  |                              | 33,880     |   |      |   | 107,867     |  
|PREPAID expenses and other assets                                                           |  |                              | (44,354    | ) |      |   | 117,049     |  
|Accrued interest payable                                                                    |  |                              | (332,933   | ) |      |   | (336,748    | )
|Other liabilities                                                                           |  |                              | (59,887    | ) |      |   | 838,851     |  
|                                                                                            |  |                              |            |   |      |   |             |  
|Net cash provided by operating activities                                                   |  |                              | 944,353    |   |      |   | 1,573,398   |  
|                                                                                            |  |                              |            |   |      |   |             |  
|INVESTING ACTIVITIES:                                                                       |  |                              |            |   |      |   |             |  
|Loans originated, net of repayments                                                         |  |                              | (6,608,548 | ) |      |   | (3,376,607  | )
|Purchases of:                                                                               |  |                              |            |   |      |   |             |  
|Mortgage-backed securities held to maturity                                                 |  |                              | (3,993,750 | ) |      |   | (1,070,442  | )
|Mortgage-backed securities available for sale                                               |  |                              |           |   |      |   | (1,524,375  | )
|Investment securities available for sale                                                    |  |                              | (3,998,125 | ) |      |   | (10,614,378 | )
|Office properties and equipment                                                             |  |                              | (240,210   | ) |      |   | (513,477    | )
|Proceeds from maturities of investment securities available for sale                        |  |                              | 3,181,669  |   |      |   | 22,061,036  |  
|Purchase of life insurance contracts                                                        |  |                              | (85,100    | ) |      |   |            |  
|                                                                                            |  |                              |            |   |      |   |             |  
|Net cash (used in) provided by investing activities                                         |  |                              | (8,232,630 | ) |      |   | 9,311,673   |  
|                                                                                            |  |                              |            |   |      |   |             |  
|FINANCING ACTIVITIES:                                                                       |  |                              |            |   |      |   |             |  
|Increase in deposits                                                                        |  |                              | 955,989    |   |      |   | 11,980,871  |  
|Increase in securities sold under agreements to repurchase                                  |  |                              | 2,630,000  |   |      |   | 660,000     |  
|Repayment of other borrowings                                                               |  |                              |           |   |      |   | (181,373    | )
|Purchase of share by deferred compensation plans trust                                      |  |                              | (13,557    | ) |      |   |            |  
|Increase in advances from borrowers for taxes and insurance                                 |  |                              | 222,867    |   |      |   | 209,112     |  
|                                                                                            |  |                              |            |   |      |   |             |  
|Net cash provided by financing activities                                                   |  |                              | 3,795,299  |   |      |   | 12,668,610  |  
|                                                                                            |  |                              |            |   |      |   |             |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                        |  |                              | (3,492,978 | ) |      |   | 23,553,681  |  
|                                                                                            |  |                             
|CASH AND CASH EQUIVALENTSBeginning of period                                               |  |                              | 47,395,819 |   |      |   | 28,607,259  |  
|                                                                                            |  |                              |            |   |      |   |             |  
|CASH AND CASH EQUIVALENTSEnd of period                                                     |  | $                            | 43,902,841 |   |      | $ | 52,160,940  |  
|                                                                                            |  |                              |            |   |      |   |             |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during the period for: Interest |  | $                            | 2,804,806  |   |      | $ | 2,590,380   |  
|                                                                                            |  |                              |            |   |      |   |             |  



See notes to condensed consolidated
financial statements.



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1. Summary of Significant Accounting Policies



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



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



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



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



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



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



5



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##### Table of Contents

In March 2004, the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF)
reached a consensus regarding EITF 03-1, The Meaning of Other-than-Temporary Impairment and its Application to Certain Investments.The consensus provides guidance for evaluating whether an investment is other-than-temporarily
impaired and was effective for other-than-temporary impairment evaluations made in reporting periods beginning after June 15, 2004. However, the guidance related to the recognition of impaired losses has been delayed by FASB Staff Position
(FSP) EITF Issue 03-1-1. The delay of the effective date for this guidance will be superseded concurrent with the final issuance of proposed FSP EITF Issue 03-1-a. The proposed FSP would provide implementation guidance with respect to
debt securities that are impaired solely due to interest rates and/or sector spreads and analyzed for other-than-temporary impairment. The disclosure provisions of EITF 03-1 continue to be effective for the Companys consolidated financial
statements and have been included in its consolidated financial statements for the year ended December 31, 2004.



In December 2004, the FASB revised Statement of Financial Accounting Standards (SFAS) No. 123, Share-Based Payment, to require the recognition of
expenses related to share-based payment transactions, including employee stock option grants, based on the fair value of the equity instruments issued. The Company is required to adopt SFAS No. 123(R) in the first quarter of 2006. Effective with the
first quarter of 2006, the Company will recognize an expense over the required service period for any stock options granted, modified, cancelled, or repurchased after that date and for the portion of grants for which the requisite service has not
yet been rendered, based on the grant-date fair value of those awards. The Company is currently evaluating the impact that the adoption of SFAS No. 123(R) will have to its Consolidated Financial Statements. The Company does not have any share-based
payments in the periods ended March 31, 2005 and 2004.



2. INVESTMENT
SECURITIES



Investment securities are summarized as
follows:



|                                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|------------------------------------ |  | ----------------- | ---------- | ------------------- | - | ------------------- |  | ------------------- | ------- |  | - | ----------
|                                     |  | March 31, 2005   
|                                     |  | AmortizedCost     |            | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | EstimatedFair Value
|Held to Maturity                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Debt securities -                    |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Municipal securities                 |  | $                 | 8,383,981  |                     | $ | 8,924               |  | $                   | 2,056   |  | $ | 8,390,849 
|                                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Available for Sale                   |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Debt securities:                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|U.S. Government and Federal Agencies |  | $                 | 24,335,483 |                     | $ | 14,053              |  | $                   | 363,343 |  | $ | 23,986,193
|Municipal securities                 |  |                   | 4,948,321  |                     |   | 94,544              |  |                     |        |  |   | 5,042,865 
|Corporate                            |  |                   | 17,503,707 |                     |   | 215,064             |  |                     | 152,837 |  |   | 17,565,934
|Equity securities                    |  |                   | 8,028,770  |                     |   | 178,766             |  |                     | 170,159 |  |   | 8,037,377 
|                                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                     |  | $                 | 54,816,281 |                     | $ | 502,427             |  | $                   | 686,339 |  | $ | 54,632,369
|                                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                     | 
|                                     |  | December 31, 2004
|                                     |  | AmortizedCost     |            | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | EstimatedFair Value
|Held to Maturity                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Debt securities -                    |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Municipal securities                 |  | $                 | 8,387,127  |                     | $ | 13,575              |  | $                   | 2,567   |  | $ | 8,398,135 
|                                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Available for Sale                   |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Debt securities:                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|U.S. Government and Federal Agencies |  | $                 | 20,516,995 |                     | $ | 16,955              |  | $                   | 174,214 |  | $ | 20,359,736
|Municipal securities                 |  |                   | 4,947,840  |                     |   | 122,004             |  |                     |        |  |   | 5,069,844 
|Corporate                            |  |                   | 20,573,986 |                     |   | 294,900             |  |                     | 163,346 |  |   | 20,705,540
|Equity securities                    |  |                   | 8,028,769  |                     |   | 206,230             |  |                     | 136,336 |  |   | 8,098,663 
|                                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                     |  | $                 | 54,067,590 |                     | $ | 640,089             |  | $                   | 473,896 |  | $ | 54,233,783
|                                     |  |                   |            |                     |   |                     |  |                     |         |  |   |           



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



|                                     |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|------------------------------------ |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | - | ---------- |  | - | -------
|                                     |  | March 31, 2005     
|                                     |  | Less Than 12 Months |            | 12 Months or Longer |   | Total              
|                                     |  | EstimatedFair Value |            | GrossUnrealizedLoss |   | EstimatedFair Value |  | GrossUnrealizedLoss |            | EstimatedFair Value |   | GrossUnrealizedLoss
|Debt securities -                    |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|Municipal Securities                 |  | $                   | 665,338    |                     | $ | 558                 |  | $                   | 459,737    |                     | $ | 1,498               |  | $ | 1,125,075  |  | $ | 2,056  
|U.S. Government and Federal Agencies |  |                     | 19,666,753 |                     |   | 291,493             |  |                     | 3,172,791  |                     |   | 71,851              |  |   | 22,839,544 |  |   | 363,344
|Corporate                            |  |                     | 6,074,111  |                     |   | 39,123              |  |                     | 5,101,120  |                     |   | 113,714             |  |   | 11,175,231 |  |   | 152,837
|Equity securities                    |  |                     |           |                     |   |                    |  |                     | 7,856,015  |                     |   | 170,158             |  |   | 7,856,015  |  |   | 170,158
|                                     |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|                                     |  | $                   | 26,406,202 |                     | $ | 331,174             |  | $                   | 16,589,663 |                     | $ | 357,221             |  | $ | 42,995,865 |  | $ | 688,395
|                                     |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|                                     | 
|                                     |  | December 31, 2004  
|                                     |  | Less Than 12 Months |            | 12 Months or Longer |   | Total              
|                                     |  | EstimatedFair Value |            | GrossUnrealizedLoss |   | EstimatedFair Value |  | GrossUnrealizedLoss |            | EstimatedFair Value |   | GrossUnrealizedLoss
|Debt securities -                    |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|Municipal Securities                 |  | $                   | 1,127,709  |                     | $ | 2,567               |  | $                   |           |                     | $ |                    |  | $ | 1,127,709  |  | $ | 2,567  
|U.S. Government and Federal Agencies |  |                     | 19,063,571 |                     |   | 174,214             |  |                     |           |                     |   |                    |  |   | 19,063,571 |  |   | 174,214
|Corporate                            |  |                     | 9,133,328  |                     |   | 126,344             |  |                     | 2,102,622  |                     |   | 37,002              |  |   | 11,235,950 |  |   | 163,346
|Equity securities                    |  |                     |           |                     |   |                    |  |                     | 7,889,837  |                     |   | 136,336             |  |   | 7,889,837  |  |   | 136,336
|                                     |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|                                     |  | $                   | 29,324,608 |                     | $ | 303,125             |  | $                   | 9,992,459  |                     | $ | 173,338             |  | $ | 39,317,067 |  | $ | 476,463
|                                     |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        



Management believes that the estimated
fair value of the securities is dependent upon the movement in market interest rate 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 March 31, 2005, ten debt and equity securities have aggregate depreciation of 2.11%
from the Companys amortized cost basis for 12 months or longer. The unrealized loss relates principally to the decline in market interest rates. As management has the ability and intent to hold these debt securities until maturity, or for the
foreseeable future, no decline is deemed to be other than temporary. Although these equity securities have unrealized losses, no credit issues have been identified that cause management to believe that declines in market value are other that
temporary. Unrealized losses on marketable equity securities that are in excess of cost, and that have been sustained for 12 months, are generally recognized by management as being other than temporary and charged to earnings, unless evidence exists
to support a realizable value equal to or greater than the Companys carrying value of the investment.



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The amortized cost and estimated fair value of debt securities available for sale at March 31, 2005 by contractual
maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



|                                   |  |                             |           |                               |   |               |  |                     |            |  |   |           
|---------------------------------- |  | --------------------------- | --------- | ----------------------------- | - | ------------- |  | ------------------- | ---------- |  | - | ----------
|                                   |  | March 31, 2005             
|                                   |  | Held to Maturity Securities |           | Available for Sale Securities
|                                   |  | AmortizedCost               |           | EstimatedFair Value           |   | AmortizedCost |  | EstimatedFair Value
|Due within 1 year                  |  | $                           | 8,383,981 |                               | $ | 8,390,849     |  | $                   | 10,032,853 |  | $ | 9,974,789 
|Due after 1 year through 5 years   |  |                             |          |                               |   |              |  |                     | 20,816,479 |  |   | 20,468,863
|Due after 5 years through 10 years |  |                             |          |                               |   |              |  |                     | 2,132,595  |  |   | 2,127,169 
|Due after 10 years                 |  |                             |          |                               |   |              |  |                     | 13,805,584 |  |   | 14,024,171
|                                   |  |                             |           |                               |   |               |  |                     |            |  |   |           
|Total                              |  | $                           | 8,383,981 |                               | $ | 8,390,849     |  | $                   | 46,787,511 |  | $ | 46,594,992
|                                   |  |                             |           |                               |   |               |  |                     |            |  |   |           



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3. MORTGAGE BACKED SECURITIES



Mortgage-backed securities are summarized as follows:



|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|------------------------------------------ |  | ----------------- | ---------- | ------------------- | - | ------------------- |  | ------------------- | ------- |  | - | ----------
|                                           |  | March 31, 2005   
|                                           |  | AmortizedCost     |            | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | EstimatedFair Value
|Held to Maturity                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|GNMA pass-through certificates             |  | $                 | 213,769    |                     | $ | 8,854               |  | $                   |        |  | $ | 222,623   
|FHLMC pass-through certificates            |  |                   | 4,699      |                     |   | 438                 |  |                     |        |  |   | 5,137     
|FNMA pass-through certificates             |  |                   | 5,782,748  |                     |   | 4,744               |  |                     | 81,150  |  |   | 5,706,342 
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           |  | $                 | 6,001,216  |                     | $ | 14,036              |  | $                   | 81,150  |  | $ | 5,934,102 
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Available for Sale                         |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|FHLMC pass-through certificates            |  | $                 | 14,601,048 |                     | $ | 45,266              |  | $                   | 195,517 |  | $ | 14,450,797
|GNMA pass-through certificates             |  |                   | 6,605,001  |                     |   | 149,418             |  |                     | 13,438  |  |   | 6,740,981 
|FNMA pass-through certificates             |  |                   | 27,074,305 |                     |   | 115,814             |  |                     | 348,740 |  |   | 26,841,379
|Small Business Administration certificates |  |                   | 48,331     |                     |   |                    |  |                     | 136     |  |   | 48,195    
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           |  | $                 | 48,328,685 |                     | $ | 310,498             |  | $                   | 557,831 |  | $ | 48,081,352
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           | 
|                                           |  | December 31, 2004
|                                           |  | AmortizedCost     |            | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | EstimatedFair Value
|Held to Maturity                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|GNMA pass-through certificates             |  | $                 | 242,569    |                     | $ | 11,567              |  | $                   |        |  | $ | 254,136   
|FHLMC pass-through certificates            |  |                   | 4,926      |                     |   | 571                 |  |                     |        |  |   | 5,497     
|FNMA pass-through certificates             |  |                   | 1,909,406  |                     |   | 7,586               |  |                     | 14,725  |  |   | 1,902,267 
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           |  | $                 | 2,156,901  |                     | $ | 19,724              |  | $                   | 14,725  |  | $ | 2,161,900 
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|Available for Sale                         |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|FHLMC pass-through certificates            |  | $                 | 15,281,497 |                     | $ | 95,144              |  | $                   | 94,633  |  | $ | 15,282,008
|GNMA pass-through certificates             |  |                   | 7,448,140  |                     |   | 193,516             |  |                     | 8,023   |  |   | 7,633,633 
|FNMA pass-through certificates             |  |                   | 28,924,246 |                     |   | 226,983             |  |                     | 120,560 |  |   | 29,030,669
|Small Business Administration certificates |  |                   | 78,494     |                     |   |                    |  |                     | 169     |  |   | 78,325    
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           
|                                           |  | $                 | 51,732,377 |                     | $ | 15,643              |  | $                   | 223,385 |  | $ | 52,024,635
|                                           |  |                   |            |                     |   |                     |  |                     |         |  |   |           



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



|                                                |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|----------------------------------------------- |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | - | ---------- |  | - | -------
|                                                |  | March 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 |  | $                   | 4,567,520  |                     | $ | 58,280              |  | $                   | 931,161    |                     | $ | 22,870              |  | $ | 5,498,681  |  | $ | 81,150 
|SBA pass-through certificates                   |  |                     | 48,195     |                     |   | 136                 |  |                     |           |                     |   |                    |  |   | 48,195     |  |   | 136    
|FHLMC pass-through certificates                 |  |                     | 6,729,379  |                     |   | 73,793              |  |                     | 6,279,006  |                     |   | 121,724             |  |   | 13,008,385 |  |   | 195,517
|GNMA pass-through certificates                  |  |                     | 1,698,067  |                     |   | 13,438              |  |                     |           |                     |   |                    |  |   | 1,698,067  |  |   | 13,438 
|FNMA pass-through certificates                  |  |                     | 15,891,977 |                     |   | 239,803             |  |                     | 6,051,448  |                     |   | 108,937             |  |   | 21,943,425 |  |   | 348,740
|                                                |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|                                                |  | $                   | 28,935,138 |                     | $ | 385,450             |  | $                   | 13,261,615 |                     | $ | 253,531             |  | $ | 42,196,753 |  | $ | 638,981
|                                                |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|                                                | 
|                                                |  | December 31, 2004  
|                                                |  | 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 |  | $                   | 1,678,170  |                     | $ | 14,725              |  | $                   |           |                     | $ |                    |  | $ | 1,678,170  |  | $ | 14,725 
|SBA pass-through certificates                   |  |                     | 78,325     |                     |   | 169                 |  |                     |           |                     |   |                    |  |   | 78,325     |  |   | 169    
|FHLMC pass-through certificates                 |  |                     | 5,061,891  |                     |   | 55,189              |  |                     | 2,897,612  |                     |   | 39,444              |  |   | 7,959,503  |  |   | 94,633 
|GNMA pass-through certificates                  |  |                     | 1,976,340  |                     |   | 8,023               |  |                     |           |                     |   |                    |  |   | 1,976,340  |  |   | 8,023  
|FNMA pass-through certificates                  |  |                     | 13,285,743 |                     |   | 101,173             |  |                     | 2,072,330  |                     |   | 19,387              |  |   | 15,358,073 |  |   | 120,560
|                                                |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        
|                                                |  | $                   | 22,080,469 |                     | $ | 179,279             |  | $                   | 4,969,942  |                     | $ | 58,831              |  | $ | 27,050,411 |  | $ | 238,110
|                                                |  |                     |            |                     |   |                     |  |                     |            |                     |   |                     |  |   |            |  |   |        



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



At March 31, 2005, eight mortgage-backed securities have aggregate depreciation of 1.88%
from the Companys amortized cost basis for 12 months or longer. The unrealized losses relate principally to the decline in market interest rates. As management has the ability and intent to hold these debt securities until maturity, or for the
foreseeable future, no declines are deemed to be other than temporary.



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4. LOANS RECEIVABLE



Loans receivable consist of the following:



|                                 |  |                |             |   |                   |   |             |  
|-------------------------------- |  | -------------- | ----------- | - | ----------------- | - | ----------- | -
|                                 |  | March 31, 2005 |             |   | December 31, 2004 |  
|Real estate - mortgage:          |  |                |             |   |                   |   |             |  
|One-to-four family residential   |  | $              | 254,237,098 |   |                   | $ | 247,610,013 |  
|Commercial and multi-family      |  |                | 25,845,268  |   |                   |   | 26,482,515  |  
|Other                            |  |                |            |   |                   |   |            |  
|                                 |  |                |             |   |                   |   |             |  
|Total real estate mortgages      |  |                | 280,082,366 |   |                   |   | 274,092,528 |  
|                                 |  |                |             |   |                   |   |             |  
|Real estate - construction:      |  |                |             |   |                   |   |             |  
|Residential                      |  |                | 5,356,037   |   |                   |   | 5,034,900   |  
|Commercial                       |  |                | 8,733,184   |   |                   |   | 7,719,097   |  
|                                 |  |                |             |   |                   |   |             |  
|Total real estate - construction |  |                | 14,089,221  |   |                   |   | 12,753,997  |  
|                                 |  |                |             |   |                   |   |             |  
|Commercial                       |  |                | 11,593,105  |   |                   |   | 14,110,846  |  
|                                 |  |                |             |   |                   |   |             |  
|Consumer                         |  |                |             |   |                   |   |             |  
|Home equity                      |  |                | 40,798,197  |   |                   |   | 39,264,550  |  
|Other consumer loans             |  |                | 1,357,902   |   |                   |   | 1,244,022   |  
|                                 |  |                |             |   |                   |   |             |  
|Total consumer loans             |  |                | 42,156,099  |   |                   |   | 40,508,572  |  
|                                 |  |                |             |   |                   |   |             |  
|Total loans                      |  |                | 347,920,790 |   |                   |   | 341,465,943 |  
|Net deferred loan cost           |  |                | 688,767     |   |                   |   | 585,576     |  
|Allowance for loan losses        |  |                | (1,537,728  | ) |                   |   | (1,466,295  | )
|                                 |  |                |             |   |                   |   |             |  
|Net total loans                  |  | $              | 347,071,830 |   |                   | $ | 340,585,224 |  
|                                 |  |                |             |   |                   |   |             |  



Changes in the
allowance for loan losses are as follows:



|                           |  |                             |           |   |      |   |           |  
|-------------------------- |  | --------------------------- | --------- | - | ---- | - | --------- | -
|                           |  | Three Months Ended March 31 |          
|                           |  | 2005                        |           |   | 2004 |  
|Balance, beginning of year |  | $                           | 1,466,295 |   |      | $ | 1,116,156 |  
|Provision for loan loss    |  |                             | 75,000    |   |      |   | 90,000    |  
|Charge-offs                |  |                             | (4,466    | ) |      |   | (7,947    | )
|Recoveries                 |  |                             | 898       |   |      |   | 756       |  
|                           |  |                             |           |   |      |   |           |  
|Balance, end of year       |  | $                           | 1,537,728 |   |      | $ | 1,198,965 |  
|                           |  |                             |           |   |      |   |           |  



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5. DEPOSITS



Deposits consist of the following major classifications:



|                                       |  |                |             |                              |                   |   |        |   |                              |  |      |  
|-------------------------------------- |  | -------------- | ----------- | ---------------------------- | ----------------- | - | ------ | - | ---------------------------- |  | ---- | -
|                                       |  | March 31, 2005 |             |                              | December 31, 2004 |  
|                                       |  | Amount         |             | WeightedAverageInterest Rate |                   |   | Amount |   | WeightedAverageInterest Rate | 
|NOW and other demand deposit accounts  |  | $              | 205,890,739 |                              | 1.20              | % |        | $ | 204,817,923                  |  | 1.08 | %
|Passbook savings and club accounts     |  |                | 94,392,428  |                              | 1.17              | % |        |   | 94,915,239                   |  | 1.14 | %
|                                       |  |                |             |                              |                   |   |        |   |                              |  |      |  
|Subtotal                               |  |                | 300,283,167 |                              |                   |   |        |   | 299,733,162                  |  |      |  
|                                       |  |                |             |                              |                   |   |        |   |                              |  |      |  
|Certificates with original maturities: |  |                |             |                              |                   |   |        |   |                              |  |      |  
|Within one year                        |  |                | 34,881,319  |                              | 2.14              | % |        |   | 34,989,278                   |  | 1.84 | %
|One to three years                     |  |                | 39,910,587  |                              | 2.77              | % |        |   | 39,920,944                   |  | 2.73 | %
|Three years and beyond                 |  |                | 41,208,995  |                              | 4.77              | % |        |   | 40,684,695                   |  | 4.80 | %
|                                       |  |                |             |                              |                   |   |        |   |                              |  |      |  
|Total certificates                     |  |                | 116,000,901 |                              |                   |   |        |   | 115,594,917                  |  |      |  
|                                       |  |                |             |                              |                   |   |        |   |                              |  |      |  
|Total                                  |  | $              | 416,284,068 |                              |                   |   |        | $ | 415,328,079                  |  |      |  
|                                       |  |                |             |                              |                   |   |        |   |                              |  |      |  



The aggregate amount of certificate
accounts in denominations of $100,000 or more at March 31, 2005 and December 31, 2004 amounted to $33,536,517 and $32,603,182, respectively.



Municipal demand deposit accounts in denominations of $100,000 or more at March 31, 2005 and December 31, 2004 amounted to $58,995,220 and $61,146,314, respectively.



6. EARNINGS PER SHARE



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



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



The calculated basic and dilutive earnings per share (EPS) are as follows:



|                              |  |                             |           |      |   |        
|----------------------------- |  | --------------------------- | --------- | ---- | - | -------
|                              |  | Three Months EndedMarch 31,
|                              |  | 2005                        |           | 2004
|Numerator                     |  | $                           | 742,296   |      | $ | 690,062
|Denominators:                 |  |                             |           |      |   |        
|Basic shares outstanding      |  |                             | 8,447,868 |      |   | N/A    
|Effect of dilutive securities |  |                             | None      |      |   | N/A    
|                              |  |                            
|Earnings per share:           |  |                             |           |      |   |        
|Basic                         |  | $                           | 0.09      |      |   | N/A    
|Dilutive                      |  | $                           | 0.09      |      |   | N/A    



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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s current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as
expects, believes, anticipates, intends and similar expressions.



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



GENERAL



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



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



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



COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2005 AND DECEMBER 31, 2004



Total assets of the Company increased by $3.6 million to $532.0 million at March 31, 2005, from $528.4 million at December 31, 2004. Cash and cash equivalents decreased
by $3.5 million to $43.9 million at March 31, 2005 from $47.4 million at December 31, 2004. A decrease of $9.5 million of overnight fed funds was offset by increases of $6.0 million of cash on hand and reserve balances held at the Federal Reserve
Bank.



Investments increased $400,000 to $63.0 million at March 31, 2005 from
$62.6 million at December 31, 2004. Purchases of $4.0 million of agency notes were offset by maturities and market value adjustments totaling $3.6 million. Mortgage-backed securities decreased by $100,000 to $54.1 million as purchases of $4.0
million were offset by payments received and valuation adjustments totaling $4.1 million.



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##### Table of Contents

Loans receivable increased $6.5 million to $347.1 million at March 31, 2005 from $340.6 million at December 31, 2004.
Loan originations totaled $25.2 million for the three months ended March 31, 2005 including mortgage loan originations of $15.6 million, consumer loan originations of $5.9 million and $3.7 million in commercial loan originations. Originations were
offset by $18.7 million in normal loan payments and payoffs.



Deposits
increased by $1.0 million, or 0.2% to $416.3 million at March 31, 2005 from $415.3 million at December 31, 2004. Noninterest bearing deposits increased $6.6 million, time deposits increased by $400,000, savings accounts decreased by $500,000 and
interest bearing checking decreased by $5.5 million. Other borrowings increased $2.6 million from $22.8 million at December 31, 2004 to $25.5 million March 31, 2005.



Stockholders equity increased by $200,000 to $60.0 million at March 31, 2005 from $59.8 million at December 31, 2004. Current period
earnings of $742,000 were offset by a decrease in unrealized market valuations of $547,000.



COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004



Net income was $742,000 for the three months ended March 31, 2005 as compared to $690,000 for the three months ended March 31, 2004. The $52,000 or 7.6% increase in 2005
from 2004 was due primarily to an increase in net interest income of $262,000 and an increase in other income of $29,000 offset by an increase in other expenses of $259,000.



Net Interest Income



Net interest income increased $262,000 to $3.6 million for the three months ended March 31, 2005 as compared to the same period in 2004.



Interest income increased by $480,000 including a $143,000 increase in mortgage loan income,
a $132,000 increase in commercial loan income and a $164,000 increase in consumer loan income. The increase in loan income resulted from an increase in the average balance of loans of $38 million offset by a decline in the average yield of 12 basis
points. Investment income increased $17,000, income in fed funds sold increased $122,000 and income in mortgage backed securities decreased by $98,000.



Interest expense increased by $218,000 including an increase in municipal deposit expense of $192,000, an increase in time deposit expense of $64,000 and a decrease in
interest expense on borrowings of $56,000. Municipal deposit expense increased as a result of rising interest rates, while time deposit expense increased as a result of deposit growth and an increase in the average rate paid. Borrowing expense
decreased as a result of lower average balance of borrowings. In December 2004 we used proceeds from our recently completed stock offering to reduce securities sold under agreements to repurchase.



The interest rate spread and net interest margin of the Company was 2.72% and 2.98%
respectively, for the three months ended March 31, 2005 compared to 2.98% and 3.03% for the same period in 2004. Due to continued repayments during the year and reinvestment in lower yielding investments and loans due to generally lower market
interest rates at the medium at the long term end of the yield curve, the yield on interest earning assets decreased. The continued rise in short-term interest rates increased the cost of interest expense on deposits and borrowings.



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.



14



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##### Table of Contents

For purposes of this table, average balances have been calculated using the average daily balances and nonaccrual loans are included in average balances
only. Loan fees are included in interest income on loans and are insignificant. Interest income on loans and investment securities has not been calculated on a tax equivalent basis because the impact would be insignificant.



Average Balance Tables



|                                                                        |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|----------------------------------------------------------------------- |  | --------------------------------- | ------- | - | --------------------------------- | - | ---------- |  | ---- | -------------- |  | - | --------------------- | - | ---------- | - | ----- |  | ---- | -
|                                                                        |  | Three Months Ended March 31, 2005 |         |   | Three Months Ended March 31, 2004 |  
|                                                                        |  | AverageBalance                    |         |   | Interest andDividends             |   | Yield/Cost |  |      | AverageBalance |  |   | Interest andDividends |   | Yield/Cost |  
|Assets:                                                                 |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Interest-earning assets:                                                |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Loans                                                                   |  | $                                 | 342,152 |   |                                   | $ | 4,752      |  | 5.56 | %              |  | $ | 303,779               |   |            | $ | 4,313 |  | 5.68 | %
|Investment securities                                                   |  |                                   | 114,869 |   |                                   |   | 1,169      |  | 4.07 | %              |  |   | 119,610               |   |            |   | 1,249 |  | 4.18 | %
|Other interest-earning assets                                           |  |                                   | 27,996  |   |                                   |   | 170        |  | 2.43 | %              |  |   | 19,944                |   |            |   | 49    |  | 0.97 | %
|                                                                        |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Total interest-earning assets                                           |  |                                   | 485,017 |   |                                   |   | 6,091      |  | 5.02 | %              |  |   | 443,333               |   |            |   | 5,611 |  | 5.06 | %
|                                                                        |  |                                   |         |   |                                   |  
|Noninterest-earning assets                                              |  |                                   | 43,549  |   |                                   |   |            |  |      |                |  |   | 39,387                |   |            |   |       |  |      |  
|                                                                        |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Total assets                                                            |  |                                   | 528,566 |   |                                   |   | 6,091      |  |      |                |  |   | 482,720               |   |            |   | 5,611 |  |      |  
|                                                                        |  |                                   |         |   |                                   |  
|Liabilities and equity:                                                 |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Interest-bearing liabilities:                                           |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Interest-bearing demand deposits                                        |  |                                   | 169,768 |   |                                   |   | 591        |  | 1.39 | %              |  |   | 161,355               |   |            |   | 388   |  | 0.96 | %
|Savings accounts                                                        |  |                                   | 94,900  |   |                                   |   | 269        |  | 1.13 | %              |  |   | 91,681                |   |            |   | 259   |  | 1.13 | %
|Certificates of deposit                                                 |  |                                   | 115,457 |   |                                   |   | 920        |  | 3.19 | %              |  |   | 112,771               |   |            |   | 858   |  | 3.04 | %
|                                                                        |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Total interest-bearing deposits                                         |  |                                   | 380,124 |   |                                   |   | 1,780      |  | 1.87 | %              |  |   | 365,806               |   |            |   | 1,506 |  | 1.65 | %
|                                                                        |  |                                   |         |   |                                   |  
|FHLB advances                                                           |  |                                   | 10,000  |   |                                   |   | 77         |  | 3.07 | %              |  |   | 10,000                |   |            |   | 78    |  | 3.10 | %
|Securities sold under agreements to repurchase                          |  |                                   | 22,946  |   |                                   |   | 280        |  | 4.88 | %              |  |   | 33,998                |   |            |   | 305   |  | 3.59 | %
|Subordinated debt                                                       |  |                                   | 15,464  |   |                                   |   | 335        |  | 8.67 | %              |  |   | 15,464                |   |            |   | 335   |  | 8.67 | %
|Other borrowings                                                        |  |                                   | 0       |   |                                   |   | 0          |  | 0.00 | %              |  |   | 1,911                 |   |            |   | 30    |  | 0.00 | %
|                                                                        |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Total Borrowings                                                        |  |                                   | 48,410  |   |                                   |   | 692        |  | 5.71 | %              |  |   | 61,373                |   |            |   | 748   |  | 4.87 | %
|                                                                        |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Total interest-bearing liabilities                                      |  |                                   | 428,534 |   |                                   |   | 2,472      |  | 2.31 | %              |  |   | 427,179               |   |            |   | 2,254 |  | 2.11 | %
|                                                                        |  |                                   |         |   |                                   |  
|Noninterest-bearing liabilities                                         |  |                                   | 39,709  |   |                                   |   |            |  |      |                |  |   | 31,097                |   |            |   |       |  |      |  
|                                                                        |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Total liabilities                                                       |  |                                   | 468,243 |   |                                   |   |            |  |      |                |  |   | 458,276               |   |            |   |       |  |      |  
|                                                                        |  |                                   |         |   |                                   |  
|Retained earnings                                                       |  |                                   | 60,323  |   |                                   |   |            |  |      |                |  |   | 24,444                |   |            |   |       |  |      |  
|                                                                        |  |                                   |         |   |                                   |   |            |  |      |                |  |   |                       |   |            |   |       |  |      |  
|Total liabilities and retained earnings                                 |  | $                                 | 528,566 |   |                                   |   |            |  |      |                |  | $ | 482,720               |   |            |   |       |  |      |  
|                                                                        |  |                                   |         |   |                                   |  
|Net interest income                                                     |  |                                   |         |   |                                   | $ | 3,619      |  |      |                |  |   |                       |   |            | $ | 3,357 |  |      |  
|Interest rate spread                                                    |  |                                   |         |   |                                   |   |            |  | 2.72 | %              |  |   |                       |   |            |   |       |  | 2.95 | %
|Net interest margin                                                     |  |                                   |         |   |                                   |   |            |  | 2.98 | %              |  |   |                       |   |            |   |       |  | 3.03 | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                   | 113.18  | % |                                   |   |            |  |      |                |  |   | 103.78                | % |            |   |       |  |      |  



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Provision For Loan Losses



The provision for loan losses decreased to $75,000 in the three months ended March 31, 2005 from $90,000 for the same period in 2004
reflecting the low balance of nonperforming loans.



Other Income



Other income increased $29,000 to $568,000 or 5.4% for the three month
period ended March 31, 2005 from the same period in 2004. The increase occurred in service charges and fees, loan servicing fees and increases in the surrender value of bank-owned life insurance.



Other Expense



Other expenses increased $259,000 to $2.9 million for the three month period ended March 31, 2005 from the same period in 2004. Salaries and
benefits increased $141,000 due to regular salary increases, occupancy and equipment increased $42,000 due primarily to increases in data processing expenses related to improvements to network security and other operating expenses increased $76,000
as accounting and legal services increased due to additional compliance requirements associated with becoming a public company.



Income Taxes



Income taxes declined $4,000 to $459,000 for an effective tax rate of 38.2% for the three months ended March 31, 2005 compared to $464,000 for an effective tax rate of 40.2% from the same period in 2004. The decline
was a result of the tax effect of market value adjustments of investments available for sale.



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 March 31, 2005, cash and cash equivalents totaled $43.9 million. Securities classified as available-for-sale whose market value
exceeds our cost, which provide additional sources of liquidity, totaled $24.1 million at March 31, 2005. In addition, at March 31, 2005, we had the ability to borrow a total of approximately $172.9 million from the Federal Home Loan Bank of New
York, which included available overnight lines of credit of $47.2 million. On that date, we had no overnight advances outstanding.



At March 31, 2005, we had $49.8 million in loan commitments outstanding, which included $10 million in undisbursed loans, $17.8 million in unused home equity lines of
credit and $5.1 million in commercial lines of credit. Certificates of deposit due within one year of March 31, 2005 totaled $34.9 million, or 30% of certificates of deposit. We believe, however, based on past experience that a significant portion



16



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##### Table of Contents

of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.



At March 31, 2005, the Bank exceeded all of its regulatory capital requirements with
tangible capital of $54.4 million, or 10.7% of total adjusted assets, which is above the required level of $7.6 million or 1.5%; core capital of $54.4 million, or 10.7% of total adjusted assets which is above the required level of $20.4 million or
4.0%; and risk-based capital of $56.0 million, or 20.6% of risk-weighted assets, which is above the required level of $21.7 million or 8.0%. The Bank is considered a well-capitalized institution under the Office of Thrift
Supervisions prompt corrective action regulations.



Non-Performing
Assets



Non-performing assets totaled only $28,000 at March 31, 2005. Net
charge-offs were $4,000 in the first quarter, compared to $8,000 in the same period last year. The allowance for loan losses was .44% of total loans at March 31, 2005 compared to .39% of total loans at March 31, 2004.



|                                                              |  |                             |       |   |                  |   |       |  
|------------------------------------------------------------- |  | --------------------------- | ----- | - | ---------------- | - | ----- | -
|                                                              |  | Three Months EndedMarch 31, |      
|                                                              |  | 2005                        |       |   | 2004             |  
|                                                              |  | (In thousands)              |      
|Allowance for Loan Losses:                                    |  |                             |       |   |                  |   |       |  
|Allowance at beginning of period                              |  | $                           | 1,466 |   |                  | $ | 1,116 |  
|Provision for loan losses                                     |  |                             | 75    |   |                  |   | 90    |  
|Recoveries                                                    |  |                             | 1     |   |                  |   | 1     |  
|Charge-offs                                                   |  |                             | 4     |   |                  |   | 8     |  
|                                                              |  |                            
|Net charge-offs                                               |  |                             | 4     |   |                  |   | 7     |  
|                                                              |  |                             |       |   |                  |   |       |  
|Allowance at end of period                                    |  | $                           | 1,538 |   |                  | $ | 1,199 |  
|Allowance for loan losses as a percent of total loans         |  |                             | 0.44  | % |                  |   | 0.39  | %
|Allowance for loan losses as a percent of nonperforming loans |  |                             | N/M   |   |                  |   | N/M   |  
|                                                              |  |                            
|                                                              |  | March 31,2005               |       |   | December 31,2004 |  
|                                                              |  | (In thousands)              |      
|Nonperforming Assets:                                         |  |                             |       |   |                  |   |       |  
|Nonaccrual loans:                                             |  |                             |       |   |                  |   |       |  
|Mortgage loans                                                |  |                             |      |   |                  |   |      |  
|Commercial business loans                                     |  |                             |      |   |                  |   |      |  
|Consumer loans                                                |  | $                           | 28    |   |                  | $ | 4     |  
|                                                              |  |                             |       |   |                  |   |       |  
|Total                                                         |  |                             | 28    |   |                  |   | 4     |  
|                                                              |  |                            
|Real estate owned                                             |  |                             |      |   |                  |   |      |  
|Other nonperforming assets                                    |  |                             |      |   |                  |   |      |  
|                                                              |  |                             |       |   |                  |   |       |  
|Total nonperforming assets                                    |  | $                           | 28    |   |                  | $ | 4     |  
|Nonperforming loans as a percent of total loans               |  |                             | N/M   |   |                  |   | N/M   |  
|Nonperforming assets as a percent of total assets             |  |                             | N/M   |   |                  |   | N/M   |  



17



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Recent Developments



The Bank has recently signed agreements for its seventh and eighth full service offices. The Bank has entered into a lease for a facility in the Northfield area of Egg
Harbor Township. This lease will provide the Bank with approximately 2,500 square feet and three drive through lanes. The Northfield office is expected to open in the third quarter. The Bank has also entered into a contract to purchase an office in
Margate. The Banks office will be on the first floor of a condominium project currently in development. The Margate office is expected to open in the 2nd or 3rd quarter of 2006.



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 months ended March 31, 2005, we
engaged in no off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.



|I
tem 3. | Quantitative and Qualitative Disclosures about Market Risk
|-------- | ----------------------------------------------------------



For a discussion of the Companys asset and liability management policies, as well as the potential impact of interest rate changes upon the market value of the
Companys portfolio equity, see Item 7A in the Companys Annual Report on Form 10-K for the year ended December 31, 2004. Management, as part of its regular practices, performs periodic reviews of the impact of interest rate changes upon
net interest income and the market value of the Companys portfolio equity. Based on, among other factors, such reviews, management believes that there have been no material changes in the market risk of the Companys asset and liability
position since December 31, 2004.



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.



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##### Table of Contents

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



|                                  |  |                                                                         |   |  |           |  
|--------------------------------- |  | ----------------------------------------------------------------------- | - |  | --------- | -
|                                  |  | At March 31, 2005Percentage Change in EstimatedNet Interest Income Over |  
|                                  |  | 12 Months                                                               |   |  | 24 Months |  
|200 basis point increase in rates |  | -0.40                                                                   | % |  | 1.78      | %
|100 basis point decrease in rates |  | 0.35                                                                    | % |  | -3.86     | %



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



Net Portfolio Value Analysis



In addition to a net interest income simulation analysis, we use an interest rate sensitivity analysis prepared by the Office of Thrift Supervision to review our level of
interest rate risk. This analysis measures interest rate risk by computing changes in net portfolio value of our cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates. Net
portfolio value represents the market value of portfolio equity and is equal to the market value of assets minus the market value of liabilities, with adjustments made for off-balance sheet items. This analysis assesses the risk of loss in market
risk sensitive instruments in the event of a sudden and sustained 100 to 300 basis point increase or 100 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. Because of the low level of market interest rates, this analysis is not performed for decreases of more than 100 basis points. We measure interest rate risk by modeling the changes in net portfolio value over a variety of interest rate
scenarios. The following table, which is based on information that we provide to the Office of Thrift Supervision, presents the change in our net portfolio value at March 31, 2005 that would occur in the event of an immediate change in interest
rates based on Office of Thrift Supervision assumptions, with no effect given to any steps that we might take to counteract that change.



|                                   |  |                                            |        |          |                                                      |         |          |  |     |           |  |       |        |  |      |     
|---------------------------------- |  | ------------------------------------------ | ------ | -------- | ---------------------------------------------------- | ------- | -------- |  | --- | --------- |  | ----- | ------ |  | ---- | ----
|                                   |  | Net Portfolio Value (Dollars in Thousands) |        |          | Net Portfolio Value as % ofPortfolio Value of Assets |        
|Basis Point (bp) Change in
Rates |  | $ Amount                                   |        | $ Change |                                                      |         | % Change |  |     | NPV Ratio |  |       | Change | 
|300 bp                             |  | $                                          | 73,546 |          | $                                                    | (15,535 | )        |  | (17 | )%        |  | 13.67 | %      |  | (210 | ) bp
|200                                |  |                                            | 79,975 |          |                                                      | (9,106  | )        |  | (10 | )         |  | 14.60 |        |  | (117 | )   
|100                                |  |                                            | 86,670 |          |                                                      | (2,411  | )        |  | (3  | )         |  | 15.52 |        |  | (25  | )   
|0                                  |  |                                            | 89,081 |          |                                                      |        |          |  |    |           |  | 15.77 |        |  |     |     
|(100)                              |  |                                            | 85,181 |          |                                                      | (3,900  | )        |  | (4  | )         |  | 15.07 |        |  | (70  | )   



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



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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.



|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 March 31, 2005 that has materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting.



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PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------



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



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



Ocean Shore Holding did not repurchase any of its securities in the quarter ended March 31, 2005.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------



Not applicable.



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



Not applicable.



|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: May 13, 2005 |  |  |  | /s/ Steven E. Brady                              
|                   |  |  |  | Steven E. Brady                                  
|                   |  |  |  | President and Chief Executive Officer            
|                   |  | 
|Date: May 13, 2005 |  |  |  | /s/ Donald F. Morgenweck                         
|                   |  |  |  | Donald F. Morgenweck                             
|                   |  |  |  | Chief Financial Officer and Senior Vice President



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