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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, 2009

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                     |  | 08226                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(609) 399-0012

(Registrants telephone number, including area code)

Not Applicable

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





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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

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



|                                              |  |                             
|--------------------------------------------- |  | ----------------------------
|Large Accelerated Filer   ̈                    |  | Accelerated Filer   ̈        
|                                              | 
|Non-accelerated Filer   ̈                      |  | Smaller Reporting Company  x
|(Do not check if a smaller reporting company) |  |                             

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

Indicate the number of shares outstanding of each of the Issuers classes of common stock as of the latest practicable date: At May 1, 2009, the registrant had 8,323,374 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, 2009 and December 31, 2008   |  | 1   
|           |  |                                                                                                             
|           |  | Unaudited Condensed Consolidated Statements of Income for the three months ended March 31, 2009 and 2008     |  | 2   
|           |  |                                                                                                             
|           |  | Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008 |  | 3   
|           |  |                                                                                                             
|           |  | Notes to Unaudited Condensed Consolidated Financial Statements                                               |  | 4   
|           |  |                                                                                                             
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 16  
|           |  |                                                                                                             
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 25  
|           |  |                                                                                                             
|Item 4T.   |  | Controls and Procedures                                                                                      |  | 25  
|           |  |                                                                                                             
|PART II.   |  | OTHER INFORMATION                                                                                            |  |     
|           |  |                                                                                                             
|Item 1.    |  | Legal Proceedings                                                                                            |  | 26  
|           |  |                                                                                                             
|Item 1A.   |  | Risk Factors                                                                                                 |  | 26  
|           |  |                                                                                                             
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                  |  | 26  
|           |  |                                                                                                             
|Item 3.    |  | Defaults upon Senior Securities                                                                              |  | 27  
|           |  |                                                                                                             
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                          |  | 27  
|           |  |                                                                                                             
|Item 5.    |  | Other Information                                                                                            |  | 27  
|           |  |                                                                                                             
|Item 6.    |  | Exhibits                                                                                                     |  | 27  
|           | 
|SIGNATURES |  |                                                                                                             



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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 31,2009 |             |   | December 31,2008 |  
|ASSETS                                                                                                                                                    |  |               |             |   |                  |   |             |  
|Cash and amounts due from depository institutions                                                                                                         |  | $             | 9,485,544   |   |                  | $ | 8,530,159   |  
|Federal funds sold                                                                                                                                        |  |               |            |   |                  |   |            |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                                                                 |  |               | 9,485,544   |   |                  |   | 8,530,159   |  
|Investment securities held to maturity (estimated fair value$4,073,797 at March 31, 2009; $4,202,057 at December 31, 2008)                               |  |               | 3,937,848   |   |                  |   | 4,114,469   |  
|Investment securities available for sale (amortized cost $33,272,448 at March 31, 2009; $35,873,706 at December 31,
2008)                                |  |               | 29,554,008  |   |                  |   | 33,290,674  |  
|Loansnet of allowance for loan losses of $2,837,308 at March 31, 2009 and $2,683,956 at December 31, 2008                                                |  |               | 617,599,013 |   |                  |   | 594,452,171 |  
|Accrued interest receivable:                                                                                                                              |  |               |             |   |                  |   |             |  
|Loans                                                                                                                                                     |  |               | 2,249,837   |   |                  |   | 2,165,345   |  
|Investment securities                                                                                                                                     |  |               | 183,565     |   |                  |   | 327,534     |  
|Federal Home Loan Bank stockat cost                                                                                                                      |  |               | 7,063,600   |   |                  |   | 7,095,100   |  
|Office properties and equipmentnet                                                                                                                       |  |               | 11,643,183  |   |                  |   | 11,785,068  |  
|Prepaid expenses and other assets                                                                                                                         |  |               | 4,093,410   |   |                  |   | 3,512,638   |  
|Real estate owned                                                                                                                                         |  |               | 442,405     |   |                  |   |            |  
|Cash surrender value of life insurance                                                                                                                    |  |               | 10,963,504  |   |                  |   | 10,859,714  |  
|Deferred tax asset                                                                                                                                        |  |               | 2,764,556   |   |                  |   | 2,340,860   |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|TOTAL ASSETS                                                                                                                                              |  | $             | 699,980,473 |   |                  | $ | 678,473,732 |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|                                                                                                                                                          |  |              
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                      |  |               |             |   |                  |   |             |  
|                                                                                                                                                          |  |              
|LIABILITIES:                                                                                                                                              |  |               |             |   |                  |   |             |  
|Non-interest bearing deposits                                                                                                                             |  | $             | 51,720,178  |   |                  | $ | 49,827,698  |  
|Interest bearing deposits                                                                                                                                 |  |               | 425,742,731 |   |                  |   | 406,127,306 |  
|Advances from Federal Home Loan Bank                                                                                                                      |  |               | 133,100,000 |   |                  |   | 133,800,000 |  
|Junior subordinated debenture                                                                                                                             |  |               | 15,464,000  |   |                  |   | 15,464,000  |  
|Securities sold under agreements to repurchase                                                                                                            |  |               |            |   |                  |   |            |  
|Advances from borrowers for taxes and insurance                                                                                                           |  |               | 3,427,166   |   |                  |   | 3,148,335   |  
|Accrued interest payable                                                                                                                                  |  |               | 792,644     |   |                  |   | 1,150,421   |  
|Other liabilities                                                                                                                                         |  |               | 5,156,010   |   |                  |   | 4,569,113   |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|Total liabilities                                                                                                                                         |  |               | 635,402,729 |   |                  |   | 614,086,873 |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                             |  |               |             |   |                  |   |             |  
|                                                                                                                                                          |  |              
|STOCKHOLDERS EQUITY:                                                                                                                                     |  |               |             |   |                  |   |             |  
|Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued                                                                                 |  |               |            |   |                  |   |            |  
|Common stock, $.01 par value, 25,000,000 shares authorized, 8,762,742 shares issued; 8,323,374 shares outstanding at March 31, 2009 and
December 31, 2008 |  |               | 87,627      |   |                  |   | 87,627      |  
|Additional paid-in capital                                                                                                                                |  |               | 38,629,538  |   |                  |   | 38,516,037  |  
|Retained earningspartially restricted                                                                                                                    |  |               | 36,252,350  |   |                  |   | 35,517,684  |  
|Treasury stock  at cost: 439,368 shares at March 31, 2009 and December 31, 2008                                                                          |  |               | (5,332,015  | ) |                  |   | (5,332,015  | )
|Common stock acquired by employee benefits plans                                                                                                          |  |               | (2,232,740  | ) |                  |   | (2,289,990  | )
|Deferred compensation plans trust                                                                                                                         |  |               | (487,858    | ) |                  |   | (485,037    | )
|Accumulated other comprehensive loss                                                                                                                      |  |               | (2,339,158  | ) |                  |   | (1,627,447  | )
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|Total stockholders equity                                                                                                                                |  |               | 64,577,744  |   |                  |   | 64,386,859  |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                |  | $             | 699,980,473 |   |                  | $ | 678,473,732 |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  

See notes to unaudited condensed consolidated financial statements.



1



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OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME





|                                                                                                              |  |                             |           |   |      |   |           |  
|------------------------------------------------------------------------------------------------------------- |  | --------------------------- | --------- | - | ---- | - | --------- | -
|                                                                                                              |  | Three Months EndedMarch 31, |          
|                                                                                                              |  | 2009                        |           |   | 2008 |  
|INTEREST AND DIVIDEND INCOME:                                                                                 |  |                             |           |   |      |   |           |  
|Taxable interest and fees on loans                                                                            |  | $                           | 8,461,675 |   |      | $ | 7,935,144 |  
|Taxable interest on mortgage-backed securities                                                                |  |                             | 339,518   |   |      |   | 446,352   |  
|Non-taxable interest on municipal securities                                                                  |  |                             | 23,146    |   |      |   | 23,388    |  
|Taxable interest and dividends on other investment securities                                                 |  |                             | 167,261   |   |      |   | 471,998   |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|Total interest and dividend income                                                                            |  |                             | 8,991,600 |   |      |   | 8,876,882 |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|INTEREST EXPENSE:                                                                                             |  |                             |           |   |      |   |           |  
|Deposits                                                                                                      |  |                             | 2,312,376 |   |      |   | 2,863,912 |  
|Advances from Federal Home Loan Bank, securities sold under agreements to repurchase and other borrowed money |  |                             | 1,528,139 |   |      |   | 1,687,248 |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|Total interest expense                                                                                        |  |                             | 3,840,515 |   |      |   | 4,551,160 |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|NET INTEREST INCOME                                                                                           |  |                             | 5,151,085 |   |      |   | 4,325,722 |  
|                                                                                                              |  |                            
|PROVISION FOR LOAN LOSSES                                                                                     |  |                             | 152,200   |   |      |   | 69,000    |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                                           |  |                             | 4,998,885 |   |      |   | 4,256,722 |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|OTHER INCOME:                                                                                                 |  |                             |           |   |      |   |           |  
|Service charges                                                                                               |  |                             | 407,041   |   |      |   | 366,143   |  
|Cash surrender value of life insurance                                                                        |  |                             | 103,790   |   |      |   | 103,431   |  
|Gain on call of AFS security                                                                                  |  |                             | 6,133     |   |      |   | 3,790     |  
|Impairment charge on AFS securities                                                                           |  |                             | (485,600  | ) |      |   | (312,965  | )
|Gain on sale of REO                                                                                           |  |                             | 6,550     |   |      |   |          |  
|Other                                                                                                         |  |                             | 169,487   |   |      |   | 150,177   |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|Total other income                                                                                            |  |                             | 207,401   |   |      |   | 310,576   |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|OTHER EXPENSE:                                                                                                |  |                             |           |   |      |   |           |  
|Salaries and employee benefits                                                                                |  |                             | 2,140,792 |   |      |   | 1,931,356 |  
|Occupancy and equipment                                                                                       |  |                             | 867,233   |   |      |   | 762,395   |  
|Federal insurance premiums                                                                                    |  |                             | 71,293    |   |      |   | 12,313    |  
|Advertising                                                                                                   |  |                             | 96,871    |   |      |   | 98,062    |  
|Professional services                                                                                         |  |                             | 154,869   |   |      |   | 211,011   |  
|Charitable contributions                                                                                      |  |                             | 30,000    |   |      |   | 30,000    |  
|Other operating expenses                                                                                      |  |                             | 386,277   |   |      |   | 329,780   |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|Total other expenses                                                                                          |  |                             | 3,747,335 |   |      |   | 3,374,917 |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|INCOME BEFORE INCOME TAXES                                                                                    |  |                             | 1,458,951 |   |      |   | 1,192,381 |  
|                                                                                                              |  |                            
|INCOME TAX EXPENSE                                                                                            |  |                             | 546,166   |   |      |   | 462,120   |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|NET INCOME                                                                                                    |  | $                           | 912,785   |   |      | $ | 730,261   |  
|                                                                                                              |  |                             |           |   |      |   |           |  
|Earnings per share basic:                                                                                     |  | $                           | 0.11      |   |      | $ | 0.09      |  
|Earnings per share diluted:                                                                                   |  | $                           | 0.11      |   |      | $ | 0.09      |  

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, |            
|                                                                                   |  | 2009                         |             |   | 2008 |  
|OPERATING ACTIVITIES:                                                              |  |                              |             |   |      |   |             |  
|Net income                                                                         |  | $                            | 912,785     |   |      | $ | 730,261     |  
|Adjustments to reconcile net income to net cash provided by operating activities:  |  |                              |             |   |      |   |             |  
|Depreciation and amortization                                                      |  |                              | 231,725     |   |      |   | 430,225     |  
|Provision for loan losses                                                          |  |                              | 152,200     |   |      |   | 69,000      |  
|Impairment charge on AFS securities                                                |  |                              | 485,600     |   |      |   | 312,965     |  
|Stock based compensation expense                                                   |  |                              | 170,751     |   |      |   | 205,604     |  
|Gain on call of AFS securities                                                     |  |                              | (6,133      | ) |      |   | (3,790      | )
|Gain on sale real estate owned                                                     |  |                              | (6,550      | ) |      |   |            |  
|Cash surrender value of life insurance                                             |  |                              | (103,790    | ) |      |   | (103,431    | )
|Changes in assets and liabilities which provided (used) cash:                      |  |                              |             |   |      |   |             |  
|Accrued interest receivable                                                        |  |                              | 59,478      |   |      |   | 168,785     |  
|Prepaid expenses and other assets                                                  |  |                              | (580,772    | ) |      |   | 86,059      |  
|Accrued interest payable                                                           |  |                              | (357,778    | ) |      |   | (309,895    | )
|Other liabilities                                                                  |  |                              | 586,897     |   |      |   | 535,175     |  
|                                                                                   |  |                              |             |   |      |   |             |  
|Net cash provided by operating activities                                          |  |                              | 1,544,413   |   |      |   | 2,120,958   |  
|                                                                                   |  |                              |             |   |      |   |             |  
|INVESTING ACTIVITIES:                                                              |  |                              |             |   |      |   |             |  
|Principal collected on:                                                            |  |                              |             |   |      |   |             |  
|Mortgage-backed securities available for sale                                      |  |                              | 1,569,924   |   |      |   | 1,989,834   |  
|Mortgage-backed securities held to maturity                                        |  |                              | 175,517     |   |      |   | 106,375     |  
|Investment securities available for sale                                           |  |                              | 45,419      |   |      |   |            |  
|Loans originated, net of repayments                                                |  |                              | (24,131,387 | ) |      |   | (23,127,520 | )
|Purchases of:                                                                      |  |                              |             |   |      |   |             |  
|Loan receivable                                                                    |  |                              |            |   |      |   | (2,194,878  | )
|Federal Home Loan Bank stock                                                       |  |                              | (4,701,200  | ) |      |   | (1,914,000  | )
|Office properties and equipment                                                    |  |                              | (77,724     | ) |      |   | (898,844    | )
|Proceeds from sales of Federal Home Loan Bank stock                                |  |                              | 4,732,700   |   |      |   | 1,114,400   |  
|Proceeds from sale of real estate owned                                            |  |                              | 391,926     |   |      |   |            |  
|Proceeds from maturities/ calls of:                                                |  |                              |             |   |      |   |             |  
|Investment securities available for sale                                           |  |                              | 500,000     |   |      |   | 1,091,919   |  
|                                                                                   |  |                              |             |   |      |   |             |  
|Net cash (used in) investing activities                                            |  |                              | (21,494,825 | ) |      |   | (23,832,714 | )
|                                                                                   |  |                              |             |   |      |   |             |  
|FINANCING ACTIVITIES:                                                              |  |                              |             |   |      |   |             |  
|Increase in deposits                                                               |  |                              | 21,507,905  |   |      |   | 13,549,147  |  
|(Decrease) increase in advances from the Federal Home Loan Bank                    |  |                              | (700,000    | ) |      |   | 17,770,000  |  
|Dividends paid                                                                     |  |                              | (178,119    | ) |      |   |            |  
|Purchase of shares by deferred compensation plans trust                            |  |                              | (2,820      | ) |      |   | (10,663     | )
|Purchase of treasury stock                                                         |  |                              |            |   |      |   | (264,526    | )
|Increase in advances from borrowers for taxes and insurance                        |  |                              | 278,831     |   |      |   | 366,226     |  
|                                                                                   |  |                              |             |   |      |   |             |  
|Net cash provided by financing activities                                          |  |                              | 20,905,797  |   |      |   | 31,410,184  |  
|                                                                                   |  |                              |             |   |      |   |             |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               |  |                              | 955,385     |   |      |   | 9,698,428   |  
|CASH AND CASH EQUIVALENTSBeginning of period                                      |  |                              | 8,530,159   |   |      |   | 9,540,392   |  
|                                                                                   |  |                              |             |   |      |   |             |  
|CASH AND CASH EQUIVALENTSEnd of period                                            |  | $                            | 9,485,544   |   |      | $ | 19,238,820  |  
|                                                                                   |  |                              |             |   |      |   |             |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during the period for: |  |                              |             |   |      |   |             |  
|Interest                                                                           |  | $                            | 4,198,293   |   |      | $ | 4,861,055   |  
|                                                                                   |  |                              |             |   |      |   |             |  
|Income Taxes                                                                       |  | $                            | 135,000     |   |      | $ | 216,000     |  
|                                                                                   |  |                              |             |   |      |   |             |  

See notes to unaudited 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, pursuant to the rules and regulations of the United States Securities and Exchange
Commission (SEC) for interim information, and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations, changes in stockholders equity and cash flows in conformity
with accounting principles generally accepted in the United States of America (GAAP). However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the condensed 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, 2008. The results for the three months ended March 31, 2009 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2009 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 condensed
consolidated financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates and assumptions relate to the allowance for loan losses, deferred income taxes and the fair value
measurement for investment securities available for sale. Actual results could differ from those estimates.

In April 2009, the FASB issued FASB Staff
Position (FSP) SFAS No. 107-1 and Accounting Principles Board (APB) 28-1, Interim Disclosures about Fair Value of Financial Instruments.FSP SFAS No. 107-1 and APB 28-1 require a public entity to provide
disclosures about fair value of financial instruments in interim financial information. FSP SFAS No. 107-1 and APB 28-1 are effective for interim and annual financial periods ending after June 15, 2009, with early adoption permitted
for periods ending after March 15, 2009. An entity adopting this FSP early must also adopt FSP SFAS No. 157-4, FSP SFAS No. 115-2 and SFAS No. 124-2. The Company intends to adopt FSP SFAS No. 107-1 on June 30,
2009. As FSP SFAS No. 107-1 amends only the disclosure requirements of financial instruments, the adoption of FSP SFAS No. 107-1 will not impact the Companys financial condition or results of operations.

In April 2009, the FASB issued FSP SFAS No. 115-2 and SFAS No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. FSP SFAS
No. 115-2 and SFAS No. 124-2 amend existing guidance for determining whether an impairment of debt securities is other than temporary and replaces the existing requirement that the entitys management assert it has both the intent and
ability to hold an impaired security until recovery with a requirement that management assert: (a) it does not have the intent to sell the security; and (b) it is more likely than not it will not have to sell the security before recovery
of its cost basis. Under FSP SFAS No. 115-2 and SFAS No. 124-2, declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as
realized losses to the extent the impairment is related to credit losses. The amount of impairment related to other factors is recognized in other comprehensive income. FSP SFAS No. 115-2 and SFAS No. 124-2 will be effective for
interim and annual periods



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ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. An entity adopting FSP SFAS No. 115-2
and SFAS No. 124-2 early must also adopt FSP FAS 157-4. The Company is currently evaluating the requirements of FSP Nos. 115-2 and SFAS No. 124-2 and does not anticipate a material impact, if any, on the Companys financial
condition or results of operations.

In April 2009, the FASB issued FSP SFAS No. 157-4, Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.FSP SFAS No. 157-4includes additional factors for determining whether there has been a significant
decrease in market activity, affirms the objective of fair value when a market is not active, eliminates the presumption that all transactions in an inactive market are distressed unless proven otherwise, and requires an entity to disclose inputs
and valuation techniques, and changes therein, used to measure fair value. FSP SFAS No. 157-4 will be effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009. An entity adopting FSP SFAS No. 157-4 early must also adopt FSP SFAS No. 115-2 and SFAS No. 124-2. The Company is currently evaluating the requirements of FSP No. 157-4 and does not anticipate a
material impact, if any, on the Companys financial condition or results of operations.

In January 2009, the FASB issued final FSP No. EITF
99-20-1, Amendments to the Impairment Guidance of EITF Issue No. 99-20. The FSP amends the impairment guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and
Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets, to achieve more consistent determination of whether an other-than-temporary impairment (OTTI) has occurred. The FSP retains and emphasizes the OTTI
guidance and required disclosures in Statement 115, FSP FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, SEC Staff Accounting Bulletin (SAB) Topic 5M, Other Than Temporary Impairment
of Certain Investments in Debt and Equity Securities, and other related literature. The FSP is effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively. Retrospective application to a
prior interim or annual reporting period is not permitted. Consistent with paragraph 15 of FSP FAS 115-1 and FAS 124-1, any other-than temporary impairment resulting from the application of Statement 115 or Issue 99-20 shall be recognized in
earnings equal to the entire difference between the investments cost and its fair value at the balance sheet date of the reporting period for which the assessment is made (for example, December 31, 2008, for a calendar year-end entity).
The Company adopted the provisions of the statement as of December 31, 2008 and it did not have an impact on its financial condition or results of operations.

In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (FSP FAS 157-3). The purpose of FSP FAS 157-3 was to clarify
the application of Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), for a market that is not active. It also allows for the use of managements internal
assumptions about future cash flows with appropriately risk-adjusted discount rates when relevant observable market data does not exist. FSP FAS 157-3 did not change the objective of SFAS 157 which is the determination of the price that would
be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date. FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The
Companys adoption of FSP FAS 157-3 for the period ended September 30, 2008 did not have a material effect on its financial position, results of operations, cash flows or disclosures.

In June 2008, the FASB issued FASB Staff Position (FSP) No. EITF 03-6-1 Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities. This FASB Staff Position (FSP) addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in



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computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings per Share.
The FSP is effective for fiscal years beginning after December 15, 2008 and is to be applied retrospectively. The Company is currently evaluating the requirements of FSP Nos. EITF 03-6-1 and has not yet determined the impact, if any, on
the Companys financial condition or results of operations. The Company adopted the provisions of the statement on January 1, 2009 and it did not have an impact on its financial condition or results of operations as it did not change its
current practice.

In May 2008, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 162, The Hierarchy of Generally
Accepted Accounting Principles. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP. SFAS No. 162 is effective sixty days following the Securities & Exchange Commission (SEC) approval of the Public Company Accounting Oversight Board (PCAOB) amendments to
AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The provisions of the statement are effective as of December 31, 2008. The Company adopted the provisions of the statement and it
did not have an impact on its financial condition or results of operations as it did not change its current practice.

FSP SFAS No. 157-2,
Effective Date of FASB Statement No. 157, issued in February 2008, delays the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an
entitys financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. The Company adopted the provisions of the FSP SFAS No. 157-2, and it did not have an impact on the
Companys financial condition, results of operation or financial statement presentation disclosures.



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2. INVESTMENT SECURITIES

Investment securities are summarized as follows:



|                                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|---------------------------------------------------------------------- |  | ----------------- | ---------- | ---------- | - | ---------- |  | - | ---------- | - |  | - | ----------
|                                                                       |  | March 31, 2009   
|                                                                       |  |                   |            | Gross      |   | Gross      |  |   | Estimated 
|                                                                       |  | Amortized         |            | Unrealized |   | Unrealized |  |   | Fair      
|                                                                       |  | Cost              |            | Gain       |   | Loss       |  |   | Value     
|Held to Maturity                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Debt securitiesMunicipal                                              |  | $                 | 12,580     |            | $ |           |  | $ |           |   |  | $ | 12,580    
|US treasury and government sponsored entity mortgage-backed securities |  |                   | 3,925,268  |            |   | 135,949    |  |   |           |   |  |   | 4,061,217 
|                                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Totals                                                                 |  | $                 | 3,937,848  |            | $ | 135,949    |  | $ |           |   |  | $ | 4,073,797 
|                                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Available for Sale                                                     |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Debt securities:                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|U.S. Government and Federal Agencies                                   |  | $                 | 1,012,709  |            | $ | 10,336     |  | $ |           |   |  | $ | 1,023,045 
|Municipal securities                                                   |  |                   | 1,418,325  |            |   | 13,226     |  |   |           |   |  |   | 1,431,551 
|Corporate                                                              |  |                   | 8,787,921  |            |   |           |  |   | (4,424,316 | ) |  |   | 4,363,605 
|Equity securities                                                      |  |                   | 2,596      |            |   | 8,417      |  |   | (1,032     | ) |  |   | 9,981     
|US treasury and government sponsored entity mortgage-backed securities |  |                   | 22,050,897 |            |   | 700,792    |  |   | (25,863    | ) |  |   | 22,725,826
|                                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Totals                                                                 |  | $                 | 33,272,448 |            | $ | 732,771    |  | $ | (4,451,211 | ) |  | $ | 29,554,008
|                                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|                                                                       | 
|                                                                       |  | December 31, 2008
|                                                                       |  |                   |            | Gross      |   | Gross      |  |   | Estimated 
|                                                                       |  | Amortized         |            | Unrealized |   | Unrealized |  |   | Fair      
|                                                                       |  | Cost              |            | Gain       |   | Loss       |  |   | Value     
|Held to Maturity                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Debt securitiesMunicipal                                              |  | $                 | 12,580     |            | $ |           |  | $ |           |   |  | $ | 12,580    
|US treasury and government sponsored entity mortgage-backed securities |  |                   | 4,101,889  |            |   | 87,588     |  |   |           |   |  |   | 4,189,477 
|                                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Totals                                                                 |  | $                 | 4,114,469  |            | $ | 87,588     |  | $ |           |   |  | $ | 4,202,057 
|                                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Available for Sale                                                     |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Debt securities:                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|U.S. Federal Agencies                                                  |  | $                 | 1,058,060  |            | $ |           |  | $ | (66,198    | ) |  | $ | 991,862   
|Municipal                                                              |  |                   | 1,911,854  |            |   | 17,173     |  |   |           |   |  |   | 1,929,027 
|Corporate                                                              |  |                   | 9,273,120  |            |   |           |  |   | (2,920,884 | ) |  |   | 6,352,236 
|Equity securities                                                      |  |                   | 2,596      |            |   | 11,391     |  |   |           |   |  |   | 13,987    
|US treasury and government sponsored entity mortgage-backed securities |  |                   | 23,628,076 |            |   | 497,061    |  |   | (121,575   | ) |  |   | 24,003,562
|                                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           
|Totals                                                                 |  | $                 | 35,873,706 |            | $ | 525,625    |  | $ | (3,108,657 | ) |  | $ | 33,290,674
|                                                                       |  |                   |            |            |   |            |  |   |            |   |  |   |           

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, 2009 and December 31, 2008:



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|                                                                       |  |                     |           |            |                     |            |            |       |            |           |  |            |            |            |  |   |           |  |   |            |  
|---------------------------------------------------------------------- |  | ------------------- | --------- | ---------- | ------------------- | ---------- | ---------- | ----- | ---------- | --------- |  | ---------- | ---------- | ---------- |  | - | --------- |  | - | ---------- | -
|                                                                       |  | March 31, 2009      |          
|                                                                       |  | Less Than 12 Months |           |            | 12 Months or Longer |            |            | Total |           
|                                                                       |  |                     |           | Gross      |                     |            |            |       | Gross      |           |  |            |            | Gross      | 
|                                                                       |  | Estimated           |           | Unrealized |                     |            | Estimated  |       | Unrealized |           |  | Estimated  |            | Unrealized | 
|                                                                       |  | Fair Value          |           | Loss       |                     |            | Fair Value |       | Loss       |           |  | Fair Value |            | Loss       | 
|Debt securities -                                                      |  |                     |           |            |                     |            |            |       |            |           |  |            |            |            |  |   |           |  |   |            |  
|U.S. Federal Agencies                                                  |  | $                   |          |            | $                   |           |            |       | $          |          |  | $          |           |            |  | $ |          |  | $ |           |  
|Corporate                                                              |  |                     | 2,546,570 |            |                     | (1,359,069 | )          |       |            | 1,599,436 |  |            | (3,065,247 | )          |  |   | 4,146,006 |  |   | (4,424,316 | )
|Equity securities                                                      |  |                     | 1,564     |            |                     | (1,032     | )          |       |            |          |  |            |           |            |  |   | 1,564     |  |   | (1,032     | )
|US treasury and government sponsored entity mortgage-backed securities |  |                     | 1,417,900 |            |                     | (17,483    | )          |       |            | 1,022,667 |  |            | (8,380     | )          |  |   | 2,440,567 |  |   | (25,863    | )
|                                                                       |  |                     |           |            |                     |            |            |       |            |           |  |            |            |            |  |   |           |  |   |            |  
|Totals                                                                 |  | $                   | 3,966,034 |            | $                   | (1,377,584 | )          |       | $          | 2,622,103 |  | $          | (3,073,627 | )          |  | $ | 6,588,137 |  | $ | (4,451,211 | )
|                                                                       |  |                     |           |            |                     |            |            |       |            |           |  |            |            |            |  |   |           |  |   |            |  



|                                                                       |  |                     |           |            |                     |          |            |       |            |           |  |            |            |            |  |   |            |  |   |            |  
|---------------------------------------------------------------------- |  | ------------------- | --------- | ---------- | ------------------- | -------- | ---------- | ----- | ---------- | --------- |  | ---------- | ---------- | ---------- |  | - | ---------- |  | - | ---------- | -
|                                                                       |  | December 31, 2008   |          
|                                                                       |  | Less Than 12 Months |           |            | 12 Months or Longer |          |            | Total |           
|                                                                       |  |                     |           | Gross      |                     |          |            |       | Gross      |           |  |            |            | Gross      | 
|                                                                       |  | Estimated           |           | Unrealized |                     |          | Estimated  |       | Unrealized |           |  | Estimated  |            | Unrealized | 
|                                                                       |  | Fair Value          |           | Loss       |                     |          | Fair Value |       | Loss       |           |  | Fair Value |            | Loss       | 
|Debt securities -                                                      |  |                     |           |            |                     |          |            |       |            |           |  |            |            |            |  |   |            |  |   |            |  
|US Federal Agencies                                                    |  | $                   | 991,862   |            | $                   | (66,198  | )          |       | $          |          |  | $          |           |            |  | $ | 991,862    |  | $ | (66,198    | )
|Corporate                                                              |  |                     | 3,525,038 |            |                     | (709,813 | )          |       |            | 2,452,798 |  |            | (2,211,071 | )          |  |   | 5,977,836  |  |   | (2,920,884 | )
|US treasury and government sponsored entity mortgage-backed securities |  |                     | 4,454,378 |            |                     | (87,356  | )          |       |            | 1,176,737 |  |            | (34,219    | )          |  |   | 5,631,115  |  |   | (121,575   | )
|                                                                       |  |                     |           |            |                     |          |            |       |            |           |  |            |            |            |  |   |            |  |   |            |  
|Totals                                                                 |  | $                   | 8,971,278 |            | $                   | (863,367 | )          |       | $          | 3,629,535 |  | $          | (2,245,290 | )          |  | $ | 12,600,813 |  | $ | (3,108,657 | )
|                                                                       |  |                     |           |            |                     |          |            |       |            |           |  |            |            |            |  |   |            |  |   |            |  

Management has reviewed its investment securities at March 31, 2009 and has determined that unrealized loss
of $486 thousand on a pooled trust preferred security classified as available for sale was deemed other than temporary. The Company determines whether the unrealized losses are temporary in accordance with Emerging Issues Task Force
(EITF) No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Asset, as amended by FSP EITF 99-20-1, Amendments to the Impairment Guidance of
EITF Issue No. 99-20, when applicable, and FSP SFAS No. 115-1 and SFAS No. 124-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.The evaluation is based upon factors
such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities. Management also evaluates other facts and circumstances that may be indicative of an OTTI
condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost, and near-term prospects of the issuer.

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 of the
securities are measured based on public market prices, dealer quotes, and prices obtained from independent pricing services that may be derivable from observable and unobservable market inputs at the time the Company determines the decline in value
was other-than-temporary.



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Corporate Debt Securities  The Companys investments in the preceding table in corporate debt securities
consist of corporate debt securities issued by large financial institutions and single issuer and pooled trust preferred/collateralized debt obligations (CDOs) backed by bank trust preferred capital securities.

At March 31, 2009, three debt securities had been in a continuous unrealized loss position for 12 months or longer. Those securities had aggregate depreciation of
65.7% from the Companys amortized cost basis. There has been limited secondary market trading for these types of securities, as a declining domestic economy and increasing credit losses in the banking industry have led to illiquidity in the
market for these types of securities. The unrealized loss on these debt securities relates principally to the changes in market interest rates and a lack of liquidity currently in the financial markets. These securities were performing in
accordance with their contractual terms as of March 31, 2009, and had paid all contractual cash flows since the Companys initial investment. Management believes these unrealized losses are not other-than-temporary based upon the
Companys analysis that the securities will perform in accordance with their terms and the Companys ability and intent to hold these investments for a period of time sufficient to allow for the anticipated recovery of fair value, which
may be maturity. The Company expects recovery of fair value when market conditions have stabilized and that the Company will receive all contractual principal and interest payments related to those investments.

United States Treasury and Government Sponsored Enterprise Mortgage-backed SecuritiesThe Companys investments in the preceding table in United States
government sponsored enterprise notes consist of debt obligations of the Federal Home Loan Bank (FHLB), Federal Home Loan Mortgage Corporation (FHLMC), and Federal National Mortgage Association (FNMA). At
March 31, 2009, two agency mortgage-backed securities had been in a continuous unrealized loss position for 12 months or longer. Those securities had aggregate depreciation of 0.8% from the Companys amortized cost basis. The
unrealized losses relate principally to the changes in market interest rates since the time of purchase and the widening of credit spreads of mortgage backed securities markets. These securities represent asset-backed issues that are issued or
guaranteed by a U.S. Government sponsored agency or carrying the full faith and credit of the United States through a government agency and are currently rated AAA by at least one bond credit rating agency. As management has the ability and intent
to hold these debt securities until a forecasted recovery, which may be maturity, no declines are deemed to be other than temporary.

The amortized cost
and estimated fair value of debt securities available for sale at March 31, 2009 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, 2009  
|                                   |  | Held to Maturity |           | Available for Sale Securities
|                                   |  | Amortized        |           | Estimated                     |   | Amortized |  | Estimated 
|                                   |  | Cost             |           | Fair Value                    |   | Cost      |  | Fair Value
|Due within 1 year                  |  | $                | 12,580    |                               | $ | 12,580    |  | $          |           |  | $ |          
|Due after 1 year through 5 years   |  |                  |          |                               |   |          |  |            | 1,553,754  |  |   | 1,575,486 
|Due after 5 years through 10 years |  |                  |          |                               |   |          |  |            | 3,052,539  |  |   | 2,512,163 
|Due after 10 years                 |  |                  | 3,925,268 |                               |   | 4,061,217 |  |            | 28,666,155 |  |   | 25,466,359
|                                   |  |                  |           |                               |   |           |  |            |            |  |   |           
|Total                              |  | $                | 3,937,848 |                               | $ | 4,073,797 |  | $          | 33,272,448 |  | $ | 29,554,008
|                                   |  |                  |           |                               |   |           |  |            |            |  |   |           

Equity securities had a cost of $2,596 and a fair value of $9,981 as of March 31, 2009.



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3. LOANS RECEIVABLE  NET

Loans receivable consist of the following:



|                                                         |  |                              |             |   |                   |   |             |  
|-------------------------------------------------------- |  | ---------------------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                         |  | March 31, 2009               |             |   | December 31, 2008 |  
|Real estatemortgage:                                    |  |                              |             |   |                   |   |             |  
|One-to-four family residential                           |  | $                            | 482,603,582 |   |                   | $ | 464,730,789 |  
|Commercial and multi-family                              |  |                              | 43,636,430  |   |                   |   | 42,611,805  |  
|                                                         |  |                              |             |   |                   |   |             |  
|Total real estate-mortgage                               |  |                              | 526,240,012 |   |                   |   | 507,342,594 |  
|                                                         |  |                              |             |   |                   |   |             |  
|Real estateconstruction:                                |  |                              |             |   |                   |   |             |  
|Residential                                              |  |                              | 9,287,059   |   |                   |   | 7,858,248   |  
|Commercial                                               |  |                              | 1,733,992   |   |                   |   | 1,020,978   |  
|                                                         |  |                              |             |   |                   |   |             |  
|Total real estateconstruction                           |  |                              | 11,021,051  |   |                   |   | 8,879,226   |  
|                                                         |  |                              |             |   |                   |   |             |  
|Commercial                                               |  |                              | 18,530,805  |   |                   |   | 17,111,799  |  
|                                                         |  |                              |             |   |                   |   |             |  
|Consumer:                                                |  |                              |             |   |                   |   |             |  
|Home equity                                              |  |                              | 61,059,200  |   |                   |   | 60,019,783  |  
|Other consumer loans                                     |  |                              | 764,050     |   |                   |   | 956,958     |  
|                                                         |  |                              |             |   |                   |   |             |  
|Total consumer loans                                     |  |                              | 61,823,250  |   |                   |   | 60,976,741  |  
|                                                         |  |                              |             |   |                   |   |             |  
|Total loans                                              |  |                              | 617,615,118 |   |                   |   | 594,310,360 |  
|Net deferred loan cost                                   |  |                              | 2,821,203   |   |                   |   | 2,825,767   |  
|Allowance for loan losses                                |  |                              | (2,837,308  | ) |                   |   | (2,683,956  | )
|                                                         |  |                              |             |   |                   |   |             |  
|Net total loans                                          |  | $                            | 617,599,013 |   |                   | $ | 594,452,171 |  
|                                                         |  |                              |             |   |                   |   |             |  
|                                                         | 
|Changes in the allowance for loan losses are as follows: |  |                              |             |  
|                                                         |  | Three Months Ended March 31, |            
|                                                         |  | 2009                         |             |   | 2008              |  
|Balance, beginning of period                             |  | $                            | 2,683,956   |   |                   | $ | 2,307,225   |  
|Provision for loan loss                                  |  |                              | 152,200     |   |                   |   | 69,000      |  
|Charge-offs                                              |  |                              |            |   |                   |   |            |  
|Recoveries                                               |  |                              | 1,152       |   |                   |   | 1,392       |  
|                                                         |  |                              |             |   |                   |   |             |  
|Balance, end of period                                   |  | $                            | 2,837,308   |   |                   | $ | 2,377,617   |  
|                                                         |  |                              |             |   |                   |   |             |  
|                                                        
|Non-performing loans:                                    | 
|                                                         |  | March 31, 2009               |             |   | December 31, 2008 |  
|Real estate mortgage loans                               |  | $                            | 943,065     |   |                   | $ | 1,860,560   |  
|Construction loans                                       |  |                              |            |   |                   |   |            |  
|Commercial loans                                         |  |                              |            |   |                   |   |            |  
|Consumer loans                                           |  |                              | 59,676      |   |                   |   | 111,945     |  
|                                                         |  |                              |             |   |                   |   |             |  
|Total non-accrual and 90 days or more past due           |  |                              | 1,002,741   |   |                   |   | 1,972,505   |  
|Real estate owned                                        |  |                              | 442,405     |   |                   |   |            |  
|Total non-performing loans                               |  | $                            | 1,445,146   |   |                   | $ | 1,972,505   |  
|                                                         |  |                              |             |   |                   |   |             |  



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4. DEPOSITS

Deposits
consist of the following major classifications:



|                                       |  |           |             |                              |       |        |   |                              |  |      
|-------------------------------------- |  | --------- | ----------- | ---------------------------- | ----- | ------ | - | ---------------------------- |  | -----
|                                       |  | March 31, |             | December 31,                
|                                       |  | 2009      |             | 2008                        
|                                       |  | Amount    |             | WeightedAverageInterest Rate |       | Amount |   | WeightedAverageInterest Rate
|NOW and other demand deposit accounts  |  | $         | 207,934,383 |                              | 0.98% |        | $ | 198,221,817                  |  | 0.87%
|Passbook savings and club accounts     |  |           | 59,674,667  |                              | 1.11% |        |   | 55,402,098                   |  | 1.11%
|                                       |  |           |             |                              |       |        |   |                              |  |      
|Subtotal                               |  |           | 267,609,050 |                              |       |        |   | 253,623,915                  |  |      
|                                       |  |           |             |                              |       |        |   |                              |  |      
|Certificates with original maturities: |  |           |             |                              |       |        |   |                              |  |      
|Within one year                        |  |           | 113,570,230 |                              | 2.45% |        |   | 106,673,971                  |  | 2.68%
|One to three years                     |  |           | 70,522,250  |                              | 3.87% |        |   | 69,603,329                   |  | 4.24%
|Three years and beyond                 |  |           | 25,761,380  |                              | 4.32% |        |   | 26,053,789                   |  | 4.17%
|                                       |  |           |             |                              |       |        |   |                              |  |      
|Total certificates                     |  |           | 209,853,860 |                              |       |        |   | 202,331,089                  |  |      
|                                       |  |           |             |                              |       |        |   |                              |  |      
|Total                                  |  | $         | 477,462,910 |                              |       |        | $ | 455,955,004                  |  |      
|                                       |  |           |             |                              |       |        |   |                              |  |      

The aggregate amount of certificate accounts in denominations of $100,000 or more at March 31, 2009 and
December 31, 2008 amounted to $92,030,993 and $88,838,098, respectively.

Municipal demand deposit accounts in denominations of $100,000 or more at
March 31, 2009 and December 31, 2008 amounted to $70,938,113 and $66,886,193, respectively.

5. EARNINGS PER SHARE

Basic net income per share is based upon the weighted average number of common shares outstanding, net of any treasury shares, while diluted net income per share is based
upon the weighted average number of common shares outstanding, net of any treasury shares, after consideration of the potential dilutive effect of common stock equivalents, based upon the treasury stock method using an average market price for the
period, and impact of unallocated ESOP shares.

The calculated basic and dilutive EPS are as follows:



|                                                |  |                             |           |      |   |          
|----------------------------------------------- |  | --------------------------- | --------- | ---- | - | ---------
|                                                |  | Three Months EndedMarch 31,
|                                                |  | 2009                        |           | 2008
|Numerator  Net Income                          |  | $                           | 912,785   |      | $ | 730,261  
|Denominators:                                   |  |                             |           |      |   |          
|Basic shares outstanding                        |  |                             | 8,028,710 |      |   | 8,000,059
|Net effect of dilutive common stock equivalents |  |                             | 68,520    |      |   | 98,022   
|                                                |  |                             |           |      |   |          
|Dilutive shares outstanding                     |  |                             | 8,097,230 |      |   | 8,098,081
|Earnings per share:                             |  |                             |           |      |   |          
|Basic                                           |  | $                           | 0.11      |      | $ | 0.09     
|Dilutive                                        |  | $                           | 0.11      |      | $ | 0.09     

At March 31, 2009 and 2008, there were 424,874 and 427,374 outstanding options that were anti-dilutive,
respectively.

6. STOCK BASED COMPENSATION

Stock-based
compensation is accounted for in accordance with SFAS No. 123 (revised 2004) (SFAS No. 123(R)),Share-Based Payment. The Company establishes fair value for its equity awards to determine



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their cost. The Company recognizes the related expense for employees over the appropriate vesting period, or when applicable, service period, using the
straight-line method. However, consistent with SFAS No. 123(R), the amount of stock-based compensation recognized at any date must at least equal the portion of the grant date value of the award that is vested at that date and as a result it
may be necessary to recognize the expense using a ratable method. In accordance with Emerging Issues Task Force (EITF) No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees, the compensation
expense for non-employees is recognized on the grant date, or when applicable, the service period using the straight-line method.

The Companys 2005
Equity-Based Incentive Plan (the Equity Plan) authorizes the issuance of shares of common stock pursuant to awards that may be granted in the form of stock options to purchase common stock (options) and awards of shares of
common stock (stock awards). The purpose of the Equity Plan is to attract and retain personnel for positions of substantial responsibility and to provide additional incentive to certain officers, directors, advisory directors, employees
and other persons to promote the success of the Company. Under the Equity Plan, options expire ten years after the date of grant, unless terminated earlier under the option terms. A committee of non-employee directors has the authority to determine
the conditions upon which the options granted will vest. Options are granted at the then fair market value of the Companys stock.

A summary of the
status of the Companys stock options under the Equity Plan as of March 31, 2009 and changes during the three months ended March 31, 2009 are presented below:



|                                           |  |                                   |  |                                |      
|------------------------------------------ |  | --------------------------------- |  | ------------------------------ | -----
|                                           |  | Three Months Ended March 31, 2009
|                                           |  | Number of Shares                  |  | Weighted AverageExercise Price
|Outstanding at the beginning of the period |  | 424,874                           |  | $                              | 11.52
|Granted                                    |  |                                  |  |                                |     
|Exercised                                  |  |                                  |  |                                |     
|Forfeited                                  |  |                                  |  |                                |     
|                                           |  |                                   |  |                                |      
|Outstanding at the end of the period       |  | 424,874                           |  | $                              | 11.52
|                                           |  |                                   |  |                                |      
|Exercisable at the end of the period       |  | 234,875                           |  | $                              | 11.60

The following table summarizes all stock options outstanding under the Equity Plan as of March 31, 2009:



|                  |  |                     |  |                              |       |                                         |          
|----------------- |  | ------------------- |  | ---------------------------- | ----- | --------------------------------------- | ---------
|                  |  | Options Outstanding
|Date Issued       |  | NumberofShares      |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractualLife
|August 10, 2005   |  | 363,500             |  | $                            | 11.60 |                                         | 6.4 years
|November 21, 2006 |  | 22,500              |  | $                            | 13.00 |                                         | 7.6 years
|November 20, 2007 |  | 38,874              |  | $                            | 9.95  |                                         | 8.6 years

Summary of Non-vested Stock Award Activity:



|                               |  |                                   |  |                                     
|------------------------------ |  | --------------------------------- |  | ------------------------------------
|                               |  | Three Months Ended March 31, 2009
|                               |  | Number of Shares                  |  | Weighted AverageGrant DateFair Value
|Outstanding at January 1, 2009 |  | 68,520                            |  | $11.60                              
|Issued                         |  |                                  |  |                                    
|Vested                         |  |                                  |  |                                    
|                               |  |                                   |  |                                     
|Outstanding at March 31, 2009  |  | 68,520                            |  | $11.60                              
|                               |  |                                   |  |                                     



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The compensation expense recognized for the three months ended March 31, 2009 was approximately $130,800 as compared
to $148,500 for the three months ended March 31, 2008.

As of March 31, 2009, there was approximately $135,300 and $529,900 of total unrecognized
compensation cost related to options and nonvested stock awards, respectively, granted under the Equity Plan. The cost of the options and stock awards is expected to be recognized over a weighted average period of 1.3 years and 3.7 years,
respectively.

7. INCOME TAXES

Income taxes increased
$84,000 to $546,000 for an effective tax rate of 37.4% for the three months ended March 31, 2009 compared to $462,000 for an effective tax rate of 38.8% for the same period in 2008.

The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated income statement. As of January 1, 2009, the tax years
ended December 31, 2005, 2006, 2007 and 2008 were subject to examination by all tax jurisdictions. As of March 31, 2009, no audits were in process by a major tax jurisdiction that, if completed during the next twelve months, would be
expected to result in a material change to the Companys unrecognized tax benefits, as none exist.

8. DECLARATION OF DIVIDEND

During the first quarter of 2009, the Board of Directors of the Company declared a cash dividend of $0.05 per share, which was paid on or about February 24, 2009 to
stockholders of record as of the close of business on February 17, 2009.

9. FAIR VALUE MEASUREMENT

The Company accounts for fair value measurement in accordance with SFAS No. 157 Fair Value Measurements, and FSP SFAS No. 157-3, Determining the Fair
Value of a Financial Asset When the Market for That Asset is Not Active. SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157
does not require any new fair value measurements. The definition of fair value retains the exchange price notion in earlier definitions of fair value. SFAS No. 157 clarifies that the exchange price is the price in an orderly transaction between
market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability. The definition focuses on the price that would be received to sell the asset or paid to transfer
the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price). SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific
measurement. FSP SFAS No. 157-3 clarifies the application of SFAS No. 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for
that financial asset is not active.

SFAS No. 157 describes three levels of inputs that may be used to measure fair value:

Level 1Quoted prices in active markets for identical assets or liabilities.

Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market
data for substantially the full term of the assets or liabilities.



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Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the
determination of fair value requires significant management judgment or estimation.

In addition, SFAS No. 157 requires the Company to disclose the
fair value for financial assets on both a recurring and non-recurring basis. The Company currently measures restricted equity investments on a non-recurring basis.

Those assets which will continue to be measured at fair value on a recurring basis are as follows:



|                                                        |  |                                         |  |         |            |         |   |        
|------------------------------------------------------- |  | --------------------------------------- |  | ------- | ---------- | ------- | - | -------
|                                                        |  | Category Used forFair Value Measurement
|                                                        |  | Level 1                                 |  | Level 2 |            | Level 3
|Assets:                                                 |  |                                         |  |         |            |         |   |        
|Securities available for sale:                          |  |                                         |  |         |            |         |   |        
|U.S. Government agencies and mortgage-backed securities |  |                                        |  | $       | 23,748,871 |         |   |       
|State and municipal obligations                         |  |                                        |  |         | 1,431,551  |         |   |       
|Corporate securities                                    |  |                                        |  |         | 4,054,005  |         | $ | 309,600
|Equity securities                                       |  |                                        |  |         | 9,981      |         |   |       
|                                                        |  |                                         |  |         |            |         |   |        
|Totals                                                  |  |                                        |  | $       | 29,244,408 |         | $ | 309,600
|                                                        |  |                                         |  |         |            |         |   |        

As a result of general market conditions and the illiquidity in the market for both single issuer and pooled trust
preferred securities, management deemed it necessary perform its market value measurement of each of the trust preferred securities based upon an internally developed discounted cash flow model (Level 3). In arriving at the discount rate
used in the model for each issue, the Company determined a trading group of similar securities quoted on the New York Stock Exchange or the NASDAQ over the counter market, based upon its review of market data points, such as Moodys or
comparable credit ratings, maturity, price, and yield. The Company indexed the individual securities within the trading group to a comparable interest rate swap (to maturity) in determining the spread. The average spread on the trading
group was matched with the individual trust preferred issues based on their comparable credit rating which was then used in arriving at the discount rate input to the model. The Company did not measure any assets or liabilities using a Level 3
measurement prior to September 2008.

The following provides details of the fair value measurement activity for Level 3 for the year ended March 31,
2009:

Fair Value Measurement Activity  Level 3 (only)



|                                                 |  |                                                                      |           |   |       |   |           |  
|------------------------------------------------ |  | -------------------------------------------------------------------- | --------- | - | ----- | - | --------- | -
|                                                 |  | Fair Value Measurement UsingSignificant
UnobservableInputs (Level 3) |          
|                                                 |  | Trust PreferredSecurities                                            |           |   | Total |  
|Balance, January 1, 2009                         |  | $                                                                    | 1,014,180 |   |       | $ | 1,014,180 |  
|Total gains (losses), realized/unrealized:       |  |                                                                      |          |   |       |   |          |  
|Included in earnings(1)                          |  |                                                                      | (485,600  | ) |       |   | (485,600  | )
|Included in accumulated other comprehensive loss |  |                                                                      | (218,980  | ) |       |   | (218,980  | )
|Purchases, maturities, prepayments and call, net |  |                                                                      |          |   |       |   |          |  
|Transfers into Level 3(2)                        |  |                                                                      |          |   |       |   |          |  
|                                                 |  |                                                                      |           |   |       |   |           |  
|Outstanding at the end of the period             |  | $                                                                    | 309,600   |   |       | $ | 309,600   |  
|                                                 |  |                                                                      |           |   |       |   |           |  

| | 
| | 

| | (1) | Amount included in impairment charge on available for sale securities on Consolidated Statement of Income.
| | --- | ----------------------------------------------------------------------------------------------------------

| | (2) | Transfers into Level 3 are assumed to occur at the end of the quarter in which the transfer occurred.
| | --- | -----------------------------------------------------------------------------------------------------



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Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair
value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company measures impaired loans, restricted equity investments and loans or bank properties
transferred into other real estate owned at fair value on a non-recurring basis.

Impaired Loans

The Company considers loans to be impaired when it becomes probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of
the loan agreement. Under SFAS No. 114, collateral dependent impaired loans are valued based on the fair value of the collateral which is based on appraisals. In some cases, adjustments are made to the appraised values for various factors
including age of the appraisal, age of the comparables included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon unobservable inputs, and therefore, the fair value measurement has been
categorized as a Level 3 measurement. At March 31, 2009, the Company did not have any impaired loans; accordingly no fair value disclosures under the provisions of SFAS No. 157 were provided.

Federal Home Loan Bank Stock

The Company holds required
equity investments in the stock of Federal Home Loan Bank. Investment in the FHLB stock is evaluated for impairment in accordance with AICPA Statement of Position No. 01-6, Accounting by Certain Entities (Including Entities With Trade
Receivables) That Lend to or Finance the Activities of Others. These investments may be measured based upon a discounted cash flow model reliant on observable and unobservable inputs, and therefore, the fair value measurement has been categorized as
a Level 2 or 3, depending on such inputs used. At March 31, 2009 the Company determined that there was no impairment and therefore fair value disclosure under the provision of SFAS No. 157 is not applicable.

Real Estate Owned

Once an asset is determined to be
uncollectible, the underlying collateral is repossessed and reclassified to foreclosed real estate and repossessed assets. These assets are carried at lower of cost or fair value of the collateral, less cost to sell. In some cases, adjustments are
made to the appraised values for various factors including age of the appraisal, age of the comparables included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon unobservable inputs, and
therefore, the fair value measurement has been categorized as a Level 3 measurement. At March 31, 2009, the Company determined that there was no impairment and therefore fair value disclosure under the provision of SFAS No. 157 is not
applicable.

10. REAL ESTATE OWNED

Summary of Real
Estate Owned Activity:



|                                   |  |                       |          |   |       |   |          |  
|---------------------------------- |  | --------------------- | -------- | - | ----- | - | -------- | -
|                                   |  | ResidentialProperties |          |   | Total |  
|Beginning balance, January 1, 2009 |  | $                     |         |   |       | $ |         |  
|Transfers into real estate owned   |  |                       | 827,781  |   |       |   | 827,781  |  
|Sales of real estate owned         |  |                       | (385,376 | ) |       |   | (385,376 | )
|                                   |  |                       |          |   |       |   |          |  
|Ending balance, March 31, 2009     |  | $                     | 442,405  |   |       | $ | 442,405  |  
|                                   |  |                       |          |   |       |   |          |  



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|11. | SECOND STEP CONVERSION
|--- | ----------------------

On August 20, 2008, the Boards of
Directors of the Company, OC Financial MHC and the Bank adopted a Plan of Conversion and Reorganization (the Plan) pursuant to which the Bank will reorganize from the mutual holding company structure to the stock holding company
structure. Pursuant to the terms of the Plan, shares of the Companys common stock held by persons other than OC Financial MHC will be converted into shares of a new New Jersey corporation pursuant to an exchange ratio designed to preserve
their aggregate percentage ownership interest. The new New Jersey holding company will offer shares of its common stock for sale to the Banks eligible account holders, to the Banks tax-qualified employee benefit plans and to members of
the general public in a subscription and community offering in the manner, and subject to the priorities, set forth in the Plan. The transactions contemplated by the Plan of Conversion were conditionally approved by the Office of Thrift Supervision
on November 12, 2008 and were approved by the shareholders of the Company and members of OC Financial MHC on January 8, 2009. If the conversion and offering are completed, conversion costs will be netted against the offering
proceeds. If the conversion and offering are terminated, such costs will be expensed. As of March 31, 2009, the Company had incurred approximately $1,343,000 of conversion costs.



|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, 2008 under Item 1A. Risk Factors. These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. Ocean Shore Holding assumes no
obligation to update any forward-looking statements.

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.



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MARKET OVERVIEW

The
continued turbulence in the economy and the current financial crisis, including the housing-related credit decline and the capital markets liquidity crisis that has affected the liquidity and valuation of many investment vehicles, remains a concern
for the Company. Economic conditions deteriorated into a recession during 2008 which has continued into the beginning of 2009. One of the primary concerns for the Company is the slump in the housing market. While the South Jersey area has not
suffered wholesale declines in the value of residential real estate as have other areas of the country, this downturn has rippled through many parts of the economy, including construction lending and lending to contractors. Such conditions
increase our exposure to the risk of non-performance in our construction and commercial loan portfolios. The Company continues to focus on the credit quality of its customers  closely monitoring the financial status of borrowers throughout the
Companys markets, gathering information, working on early detection of potential problems, taking pre-emptive steps where necessary and doing the analysis required to maintain adequate reserves. This decline in real estate market values
has also led to increases in our allowance for loan losses and loan loss provision.

The decline in real estate market values has caused illiquidity in the
financial markets, which has led to the devaluation of certain corporate securities. The Company continues to be impacted by continued pressure in the capital markets with respect to the value of our corporate securities and collateralized debt
obligations. Deterioration in the fair value of certain securities due to underlying credit problems has resulted in the occurrence of other-than-temporary impairment charges.

Despite the current market conditions, the Company continues to maintain a strong capital position and increase its earnings. The Company is also pursuing a second step offering as discussed in the footnotes.

The following discussion provides further details on the financial condition and results of operations of the Company at and for the period ended
March 31, 2009.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2009 AND DECEMBER 31, 2008

Total assets of the Company increased by $21.5 million to $700.0 million at March 31, 2009 from $678.5 million at December 31, 2008. Loans receivable, net,
increased $23.1 million, investment and mortgage-backed securities decreased $3.9 million and cash and cash equivalents increased by $1.0 million. Asset growth was funded by an increase in deposits of $21.5 million offset by a decrease in borrowings
of $700,000.

Investments

Investments decreased $3.9
million to $33.5 million at March 31, 2009 from $37.4 million at December 31, 2008. The decrease was the result of a $500,000 call of a municipal investment, an increase in the unrealized losses on AFS securities of $1.5 million and a
decrease of $486,000 in corporate securities for an impairment charge. In addition, mortgage-backed securities decreased by $1.4 million to $26.7 million from $28.1 million at December 31, 2008 due to normal repayments of principal of $1.8
million.

Loans

Loans receivable, net, increased $23.1
million to $617.6 million at March 31, 2009 from $594.5 million at December 31, 2008. Loan originations totaled $50.2 million for the three months ended March 31, 2009 compared to $51.5 million originated in three months ended
March 31, 2008. Real estate mortgage loan originations totaled $35.9 million, real estate construction loan originations totaled $3.6 million, consumer loan originations totaled $7.5 million and commercial loan originations totaled $3.2 million
for the first quarter of 2009. Origination activity was offset by $26.1 million of normal loan payments and payoffs.



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The following table summarizes changes in the loan portfolio in the three months ended March 31, 2009.



|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|-------------------------------- |  | ---------------------- | ------- | - | ---------------- | - | ------- | -------- |  | - | -------- | - |  | ----- | -
|                                 |  | March 31,2009          |         |   | December 31,2008 |   |         | $ change |  |   | % change |  
|                                 |  | (Dollars in thousands) |        
|Real estate  mortgage:          |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|One-to-four-family residential   |  | $                      | 482,604 |   |                  | $ | 464,731 |          |  | $ | 17,873   |   |  | 3.8   | %
|Commercial and multi-family      |  |                        | 43,636  |   |                  |   | 42,612  |          |  |   | 1,024    |   |  | 2.4   |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Total real estate  mortgage     |  |                        | 526,240 |   |                  |   | 507,343 |          |  |   | 18,897   |   |  | 3.7   |  
|Real estate  construction:      |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Residential                      |  |                        | 9,287   |   |                  |   | 7,858   |          |  |   | 1,429    |   |  | 18.2  |  
|Commercial                       |  |                        | 1,734   |   |                  |   | 1,021   |          |  |   | 713      |   |  | 69.8  |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Total real estate  construction |  |                        | 11,021  |   |                  |   | 8,879   |          |  |   | 2,142    |   |  | 24.1  |  
|Commercial                       |  |                        | 18,531  |   |                  |   | 17,111  |          |  |   | 1,419    |   |  | 8.3   |  
|                                 |  |                        |         |  
|Consumer:                        |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Home equity                      |  |                        | 61,059  |   |                  |   | 60,020  |          |  |   | 1,039    |   |  | 1.7   |  
|Other consumer loans             |  |                        | 764     |   |                  |   | 957     |          |  |   | (193     | ) |  | (20.2 | )
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Total consumer loans             |  |                        | 61,823  |   |                  |   | 60,977  |          |  |   | 846      |   |  | 1.4   |  
|Total loans                      |  |                        | 617,615 |   |                  |   | 594,310 |          |  |   | 23,305   |   |  | 3.9   |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Net deferred loan cost           |  |                        | 2,821   |   |                  |   | 2,826   |          |  |   | (5       | ) |  | (0.2  | )
|Allowance for loan losses        |  |                        | (2,837  | ) |                  |   | (2,684  | )        |  |   | (153     | ) |  | 5.7   |  
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  
|Net total loans                  |  | $                      | 617,599 |   |                  | $ | 594,452 |          |  | $ | 23,147   |   |  | 3.9   | %
|                                 |  |                        |         |   |                  |   |         |          |  |   |          |   |  |       |  

Non-Performing Assets

Non-performing assets totaled $1.4 million at March 31, 2009 compared to $2.0 million at December 31, 2008 and $396,000 at March 31, 2008. The decrease from December 31, 2008 was the result of decreases in non-accrual
mortgage loans of $919,000 and nonaccrual consumer loans of $52,000 offset by an increase in real estate owned of $442,000. Real estate owned added for the quarter of $827,000 was offset by sale of REO of $385,000. There were no charge-offs in
the first quarter of 2009 or 2008. The allowance for loan losses was 0.46% of total loans at March 31, 2009 versus 0.43% at March 31, 2008.



|                                                               |  |                             |       |   |      |   |        |  
|-------------------------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ------ | -
|                                                               |  | Three Months EndedMarch 31, |      
|                                                               |  | 2009                        |       |   | 2008 |  
|                                                               |  | (In thousands)              |      
|Allowance for loan losses:                                     |  |                             |       |   |      |   |        |  
|Allowance at beginning of period                               |  | $                           | 2,684 |   |      | $ | 2,307  |  
|Provision for loan losses                                      |  |                             | 152   |   |      |   | 69     |  
|Recoveries                                                     |  |                             | 1     |   |      |   | 2      |  
|Charge-offs                                                    |  |                             |      |   |      |   |       |  
|                                                               |  |                             |       |   |      |   |        |  
|Net recoveries                                                 |  |                             | 1     |   |      |   | 2      |  
|                                                               |  |                             |       |   |      |   |        |  
|Allowance at end of period                                     |  | $                           | 2,837 |   |      | $ | 2,378  |  
|                                                               |  |                             |       |   |      |   |        |  
|Allowance for loan losses as a percent of total loans          |  |                             | 0.46  | % |      |   | 0.43   | %
|Allowance for loan losses as a percent of non-performing loans |  |                             | 196.3 | % |      |   | 600.29 | %



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|                                                                             |  |                |       |   |                  |   |       |  
|---------------------------------------------------------------------------- |  | -------------- | ----- | - | ---------------- | - | ----- | -
|                                                                             |  | March 31,2009  |       |   | December 31,2008 |  
|                                                                             |  | (In thousands) |      
|Nonaccrual loans:                                                            |  |                |       |   |                  |   |       |  
|Real estate mortgage loans                                                   |  | $              | 943   |   |                  | $ | 1,861 |  
|Construction                                                                 |  |                |      |   |                  |   |      |  
|Commercial                                                                   |  |                |      |   |                  |   |      |  
|Consumer loans                                                               |  |                | 60    |   |                  |   | 112   |  
|                                                                             |  |                |       |   |                  |   |       |  
|Total of non-accrual and 90 days or more past due loans                      |  |                | 1,003 |   |                  |   | 1,973 |  
|Real estate owned                                                            |  |                | 442   |   |                  |   |      |  
|                                                                             |  |                |       |   |                  |   |       |  
|Total non-performing assets                                                  |  | $              | 1,445 |   |                  | $ | 1,973 |  
|                                                                             |  |                |       |   |                  |   |       |  
|Total non-performing loans to total loans                                    |  |                | 0.23  | % |                  |   | 0.33  | %
|Total non-performing loans to total assets                                   |  |                | 0.21  | % |                  |   | 0.29  | %
|Total non-performing assets and troubled debt restructurings to total assets |  |                | 0.21  | % |                  |   | 0.29  | %

Deposits

Deposits increased by $21.5 million, or 4.7%, to $477.5 million at March 31, 2009 from $456.0 million at December 31, 2008. Interest bearing demand deposits increased $7.8 million, certificates of deposit increased by $7.5
million, savings accounts increased by $4.3 million and non-interest bearing checking increased $1.9 million. The Company continued its focus on attracting core deposits, which increased $14.0 million, and accounted for 65.0% of the $21.5 million
increase in deposits.

The following table summarizes changes in deposits in the three months ended March 31, 2009.



|                                     |  |                        |         |                  |   |          |  |          |        |  |     |  
|------------------------------------ |  | ---------------------- | ------- | ---------------- | - | -------- |  | -------- | ------ |  | --- | -
|                                     |  | March 31,2009          |         | December 31,2008 |   | $ change |  | % change |       
|                                     |  | (Dollars in thousands) |        
|Non-interest-bearing demand deposits |  | $                      | 51,720  |                  | $ | 49,828   |  | $        | 1,892  |  | 3.8 | %
|Interest-bearing demand deposits     |  |                        | 156,214 |                  |   | 148,394  |  |          | 7,820  |  | 5.3 |  
|Savings accounts                     |  |                        | 59,675  |                  |   | 55,402   |  |          | 4,273  |  | 7.7 |  
|Time deposits                        |  |                        | 209,854 |                  |   | 202,331  |  |          | 7,523  |  | 3.7 |  
|                                     |  |                        |         |                  |   |          |  |          |        |  |     |  
|Total                                |  | $                      | 477,463 |                  | $ | 455,955  |  | $        | 21,508 |  | 4.7 | %
|                                     |  |                        |         |                  |   |          |  |          |        |  |     |  

Borrowings

Federal Home Loan Bank advances decreased $700,000 to $133.1 million at March 31, 2009 from $133.8 million at December 31, 2008. Other borrowings were unchanged at $15.5 million at March 31, 2009 compared to December 31,
2008.

Stockholders Equity

Stockholders
equity increased $200,000 to $64.6 million at March 31, 2009, from December 31, 2008, primarily as a result of an increase from current period earnings of $913,000 offset by dividends paid and increased unrealized loss in marketable
securities.



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COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008

Net income was $913,000 for the three months ended March 31, 2009 as compared to $730,000 for the three months ended March 31, 2008. The $183,000, or 25.0%,
increase in 2009 from 2008 was due primarily to increases in net interest income offset by increased provision for loan losses and operating expenses and decreased other income.



|                                      |  |                              |      |   |      |   |      |  
|------------------------------------- |  | ---------------------------- | ---- | - | ---- | - | ---- | -
|                                      |  | Three Months Ended March 31, |     
|                                      |  | 2009                         |      |   | 2008 |  
|Net income (in thousands)             |  | $                            | 913  |   |      | $ | 730  |  
|Basic and diluted earnings per share  |  | $                            | 0.11 |   |      | $ | 0.09 |  
|Return on average assets (annualized) |  |                              | 0.53 | % |      |   | 0.46 | %
|Return on average equity (annualized) |  |                              | 5.57 | % |      |   | 4.58 | %

Net Interest Income

The following table summarizes changes in interest income and interest expense for the three-month periods ended March 31, 2009 and 2008.



|                              |  |                             |       |      |   |          |  |   |          |   |  |       |  
|----------------------------- |  | --------------------------- | ----- | ---- | - | -------- |  | - | -------- | - |  | ----- | -
|                              |  | Three Months EndedMarch 31, |       |      |   |          |  |  
|                              |  | 2009                        |       | 2008 |   | $ change |  |   | % change |  
|                              |  | (Dollars in thousands)      |      
|INTEREST INCOME:              |  |                             |       |      |   |          |  |   |          |   |  |       |  
|Loans                         |  | $                           | 8,462 |      | $ | 7,935    |  | $ | 527      |   |  | 6.6   | %
|Investment securities         |  |                             | 530   |      |   | 919      |  |   | (389     | ) |  | (42.3 | )
|Other interest-earning assets |  |                             |      |      |   | 23       |  |   | (23      | ) |  | N/M   |  
|                              |  |                             |       |      |   |          |  |   |          |   |  |       |  
|Total interest income         |  |                             | 8,992 |      |   | 8,877    |  |   | 115      |   |  | 1.3   |  
|INTEREST EXPENSE:             |  |                             |       |      |   |          |  |   |          |   |  |       |  
|Deposits                      |  |                             | 2,312 |      |   | 2,864    |  |   | (552     | ) |  | (19.3 | )
|Borrowings                    |  |                             | 1,529 |      |   | 1,687    |  |   | (158     | ) |  | (9.4  | )
|                              |  |                             |       |      |   |          |  |   |          |   |  |       |  
|Total interest expense        |  |                             | 3,841 |      |   | 4,551    |  |   | (710     | ) |  | (15.6 | )
|                              |  |                             |       |      |   |          |  |   |          |   |  |       |  
|Net interest income           |  | $                           | 5,151 |      | $ | 4,326    |  | $ | 825      |   |  | 19.1  |  
|                              |  |                             |       |      |   |          |  |   |          |   |  |       |  

Interest income increased by $115,000 for the quarter ended March 31, 2009 compared to March 31, 2008.
The increase was driven by an increase in interest income on loans of $527,000 offset by a decrease in income on investment securities of $389,000 and other interest-earning assets of $23,000. The increase in loan income resulted from an increase in
the average balance of loans of $68.9 million offset by a decrease in yield of 33 basis points. Investment securities income decreased due to decreases in the average balance of $20.3 million and the yield of 67 basis points.

Interest expense decreased by $710,000 over the same period last year due to a decrease in interest-bearing deposit expense of $552,000 and borrowing expense of
$158,000. Interest-bearing deposit expense decreased as a result of a decrease in the cost of deposits of 68 basis points offset by an increase in the average balance of $21.8 million. Borrowing expense decrease resulted from a decrease in the
average cost of 52 basis points offset by an increase in the average balance of $2.9 million.

The interest rate spread and net interest margin of the
Company were 2.89% and 3.21% respectively, for the three months ended March 31, 2009, compared to 2.59% and 2.90% for the same period in 2008. The improvement in the interest rate spread occurred as changes in market interest rates resulted in
a 65 basis



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point decrease in the average cost of interest-bearing liabilities while the average yield on interest-earning assets declined just 35 basis points. The
improvement in the net interest margin was the result of the wider interest rate spread combined with the increase in the ratio of average earning assets to average interest-bearing liabilities.

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 yields and costs are annualized for presentation purposes. For purposes of this table, average balances have been calculated using the average daily balances
and nonaccrual loans are only included in average balances. 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 EndedMarch 31, 2009 |         |   | Three Months EndedMarch 31, 2008 |  
|                                                                        |  | AverageBalance                   |         |   | InterestandDividends             |   | Yield/Cost |  |      | AverageBalance |  |   | InterestandDividends |   | Yield/Cost |  
|Assets:                                                                 |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |  
|Interest-earning assets:                                                |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Loans                                                                   |  | $                                | 605,251 |   |                                  | $ | 8,462      |  | 5.59 | %              |  | $ | 536,350              |   |            | $ | 7,935 |  | 5.92 | %
|Investment securities                                                   |  |                                  | 36,741  |   |                                  |   | 530        |  | 5.77 | %              |  |   | 57,075               |   |            |   | 919   |  | 6.44 | %
|Other interest-earning assets                                           |  |                                  |        |   |                                  |   |           |  |     |                |  |   | 3,351                |   |            |   | 23    |  | 2.75 | %
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total interest-earning assets                                           |  |                                  | 641,992 |   |                                  |   | 8,992      |  | 5.60 | %              |  |   | 596,776              |   |            |   | 8,877 |  | 5.95 | %
|Noninterest-earning assets                                              |  |                                  | 48,838  |   |                                  |   |            |  |      |                |  |   | 43,408               |   |            |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total assets                                                            |  | $                                | 690,830 |   |                                  |   |            |  |      |                |  | $ | 640,184              |   |            |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |  
|Liabilities and equity:                                                 |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |  
|Interest-bearing liabilities:                                           |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Interest-bearing demand deposits                                        |  |                                  | 157,604 |   |                                  |   | 494        |  | 1.25 | %              |  |   | 170,951              |   |            |   | 715   |  | 1.67 | %
|Savings accounts                                                        |  |                                  | 56,363  |   |                                  |   | 154        |  | 1.09 | %              |  |   | 52,003               |   |            |   | 143   |  | 1.10 | %
|Certificates of deposit                                                 |  |                                  | 204,890 |   |                                  |   | 1,664      |  | 3.25 | %              |  |   | 174,115              |   |            |   | 2,006 |  | 4.61 | %
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total interest-bearing deposits                                         |  |                                  | 418,857 |   |                                  |   | 2,312      |  | 2.21 | %              |  |   | 397,069              |   |            |   | 2,864 |  | 2.89 | %
|FHLB advances                                                           |  |                                  | 132,517 |   |                                  |   | 1,194      |  | 3.60 | %              |  |   | 121,589              |   |            |   | 1,256 |  | 4.13 | %
|Securities sold under agreements to repurchase                          |  |                                  |        |   |                                  |   |           |  |     |                |  |   | 8,000                |   |            |   | 96    |  | 4.80 | %
|Subordinated debt                                                       |  |                                  | 15,464  |   |                                  |   | 335        |  | 8.67 | %              |  |   | 15,464               |   |            |   | 335   |  | 8.67 | %
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total borrowings                                                        |  |                                  | 147,981 |   |                                  |   | 1,529      |  | 4.13 | %              |  |   | 145,053              |   |            |   | 1,687 |  | 4.65 | %
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total interest-bearing liabilities                                      |  |                                  | 566,838 |   |                                  |   | 3,841      |  | 2.71 | %              |  |   | 542,122              |   |            |   | 4,551 |  | 3.36 | %
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Noninterest-bearing liabilities                                         |  |                                  | 58,460  |   |                                  |   |            |  |      |                |  |   | 34,278               |   |            |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total liabilities                                                       |  |                                  | 625,298 |   |                                  |   |            |  |      |                |  |   | 576,400              |   |            |   |       |  |      |  
|Retained earnings                                                       |  |                                  | 65,532  |   |                                  |   |            |  |      |                |  |   | 63,784               |   |            |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total liabilities and retained earnings                                 |  | $                                | 690,830 |   |                                  |   |            |  |      |                |  | $ | 640,184              |   |            |   |       |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Net interest income                                                     |  |                                  |         |   |                                  | $ | 5,151      |  |      |                |  |   |                      |   |            | $ | 4,326 |  |      |  
|                                                                        |  |                                  |         |   |                                  |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Interest rate spread                                                    |  |                                  |         |   |                                  |   |            |  | 2.89 | %              |  |   |                      |   |            |   |       |  | 2.59 | %
|Net interest margin                                                     |  |                                  |         |   |                                  |   |            |  | 3.21 | %              |  |   |                      |   |            |   |       |  | 2.90 | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                  | 113.26  | % |                                  |   |            |  |      |                |  |   | 110.08               | % |            |   |       |  |      |  



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Provision for Loan Losses

We review the level of the allowance for loan losses on a monthly basis and establish the provision for loan losses based on the volume and types of lending, delinquency levels, loss experience, the amount of classified loans, economic
conditions and other factors related to the collectibility of the loan portfolio. The provision for loan losses was $152,000 in the three months ended March 31, 2009 compared to $69,000 in the three months ended March 31, 2008. The
provision was primarily to maintain a reserve level deemed appropriate by management in light of factors such as the level of non-performing loans, growth in the loan portfolio and the current economic environment.

Other Income

The following table summarizes other income for the
three months ended March 31, 2009 and 2008 and the changes between the periods.



|                                       |  |                              |      |   |      |   |      |          |  |       |   
|-------------------------------------- |  | ---------------------------- | ---- | - | ---- | - | ---- | -------- |  | ----- | --
|                                       |  | Three Months Ended March 31, |      |   |      |  
|                                       |  | 2009                         |      |   | 2008 |   |      | % Change | 
|                                       |  | (Dollars in thousands)       |      |   |      |  
|OTHER INCOME:                          |  |                              |      |   |      |   |      |          |  |       |   
|                                       |  |                              |     
|Service charges                        |  | $                            | 407  |   |      | $ | 366  |          |  | 11.2  | % 
|Cash surrender value of life insurance |  |                              | 104  |   |      |   | 103  |          |  | 1.0   |   
|Gain on call of AFS securities         |  |                              | 6    |   |      |   | 4    |          |  | 50.0  |   
|Impairment charge on AFS securities    |  |                              | (486 | ) |      |   | (313 | )        |  | 55.3  |   
|Gain on sale of real estate owned      |  |                              | 6    |   |      |   |     |          |  | N/M   |   
|Other                                  |  |                              | 170  |   |      |   | 151  |          |  | 12.6  |   
|                                       |  |                              |      |   |      |   |      |          |  |       |   
|Total other income                     |  | $                            | 207  |   |      | $ | 311  |          |  | (33.4 | )%
|                                       |  |                              |      |   |      |   |      |          |  |       |   

N/M  Not measurable

Other income decreased $104,000 to $207,000, or 33.4%, for the three-month period ended March 31, 2009 from the same period in 2008. Decreases in income resulted from an increase in impairment charge on AFS securities of $173,000
offset by increases of $41,000 in services charges and $19,000 in other income.

Other Expense

The following table summarizes other expense for the three months ended March 31, 2009 and 2008 and the changes between periods.



|                               |  |                              |       |      |   |          |  |       |  
|------------------------------ |  | ---------------------------- | ----- | ---- | - | -------- |  | ----- | -
|                               |  | Three Months Ended March 31, |       |      |  
|                               |  | 2009                         |       | 2008 |   | % Change | 
|                               |  | (Dollars in thousands)       |       |      |  
|OTHER EXPENSE:                 |  |                              |       |      |   |          |  |       |  
|                               |  |                              |      
|Salaries and employee benefits |  | $                            | 2,141 |      | $ | 1,931    |  | 10.8  | %
|Occupancy and equipment        |  |                              | 867   |      |   | 762      |  | 13.8  |  
|Federal insurance premiums     |  |                              | 71    |      |   | 12       |  | 491.7 |  
|Advertising                    |  |                              | 97    |      |   | 98       |  | (1.0  | )
|Professional services          |  |                              | 155   |      |   | 211      |  | (26.5 | )
|Other operating expense        |  |                              | 416   |      |   | 361      |  | 15.2  |  
|                               |  |                              |       |      |   |          |  |       |  
|Total other expense            |  | $                            | 3,747 |      | $ | 3,375    |  | 11.0  | %
|                               |  |                              |       |      |   |          |  |       |  

Other expenses increased $372,000 or 11.0%, to $3.7 million for the three-month period ended March 31, 2009
from the same period in 2008. Other expenses increased as a result of expenses of $115,000



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##### Table of Contents

associated with the opening of a new branch office in the fourth quarter of 2008. Additionally, salaries and benefits increased $149,000 from normal salary
and benefit increases, occupancy and equipment increased $64,000 from increases in computer related expenses, FDIC insurance increased $55,000 due to additional pass through insurance expense and the absence of the premium credit received in 2008,
and other expense increased $47,000. These increases were offset by a decrease in professional services of $56,000.

Income Taxes

Income taxes increased $84,000 to $546,000 for an effective tax rate of 37.4% for the three months ended March 31, 2009, compared to $462,000 for an effective tax
rate of 38.8% from the same period in 2008. The increase was a result of higher taxable income.

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, 2009, cash and cash equivalents totaled $9.5 million. Securities classified as available-for-sale whose market value exceeds our cost, which provide additional sources of liquidity, totaled $22.7
million at March 31, 2009. In addition, at March 31, 2009, we had the ability to borrow a total of approximately $214.2 million from the Federal Home Loan Bank of New York, which included available overnight lines of credit of $25.8
million. On that date, we had $8.1 million in overnight advances outstanding.

At March 31, 2009, we had $56.0 million in loan commitments
outstanding, which included $19.9 million in undisbursed loans, $26.6 million in unused home equity lines of credit and $9.5 million in commercial lines of credit. Certificates of deposit due within one year of March 31, 2009 totaled $161.1
million, or 76.8% of certificates of deposit. We believe, however, based on past experience that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest
rates offered.

At March 31, 2009, the Bank exceeded all of its regulatory capital requirements with tangible capital of $66.0 million, or 9.55% of
total adjusted assets, which is above the required level of $10.4 million or 1.5%; core capital of $66.0 million, or 9.55% of total adjusted assets which is above the required level of $27.7 million or 4.0%; and risk-based capital of $68.9 million,
or 16.6% of risk-weighted assets, which is above the required level of $33.1 million or 8.0%. The Bank is considered a well-capitalized institution under the Office of Thrift Supervisions prompt corrective action regulations.



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MARKET RISK MANAGEMENT

Net Interest Income Simulation Analysis

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

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

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



|                                  |  |                                                                            |    |  |           |  
|--------------------------------- |  | -------------------------------------------------------------------------- | -- |  | --------- | -
|                                  |  | At December 31, 2008Percentage Change in EstimatedNet Interest Income Over |   
|                                  |  | 12 Months                                                                  |    |  | 24 Months |  
|200 basis point increase in rates |  | (1.59                                                                      | )% |  | 0.27      | %
|100 basis point decrease in rates |  | (22.41                                                                     | )  |  | (13.21    | )

The 200 and 100 basis point change in rates in the above table is assumed to occur evenly over the following 12
months. Based on the scenario above, net interest income would be adversely affected (within our internal guidelines) in the 12-month if rates rose by 200 basis points. In addition, if rates declined by 100 basis points net interest income would be
adversely affected (within our internal guidelines) in both the 12- and 24-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 50 to 300 basis point increase or a sustained 50 to 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. 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 December 31, 2008 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                             |  | $                                         | 47,036 |          | $                                                    | (24,176 | )        |  | (34 | )%        |  | 7.16  | %      |  | (309 | )bp
|200                                |  |                                           | 63,954 |          |                                                      | (7,258  | )        |  | (10 | )         |  | 9.48  |        |  | (77  | )  
|100                                |  |                                           | 71,502 |          |                                                      | 291     |          |  | 0   |           |  | 10.40 |        |  | 15   |    
|50                                 |  |                                           | 71,810 |          |                                                      | 598     |          |  | 1   |           |  | 10.38 |        |  | 13   |    
|0                                  |  |                                           | 71,212 |          |                                                      |         |          |  |     |           |  | 10.25 |        |  |      |    
|(50)                               |  |                                           | 68,787 |          |                                                      | (2,425  | )        |  | (3  | )         |  | 9.88  |        |  | (37  | )  
|(100)                              |  |                                           | 64,472 |          |                                                      | (6,740  | )        |  | (9  | )         |  | 9.26  |        |  | (99  | )  



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

OFF-BALANCE SHEET ARRANGEMENTS

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

For the three months ended March 31, 2009, we engaged in no off-balance sheet transactions reasonably likely to
have a material effect on our financial condition, results of operations or cash flows.



|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

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



|Item 4T. | 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 officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There have been
no changes in the Companys internal control over financial reporting during the quarter ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial
reporting.



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##### Table of Contents

PART II  OTHER INFORMATION



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

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



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes
in the risk factors previously disclosed in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.



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



|                                                    |  |                                                |  |                                           |  |                                                                                                    |  |                                                                                                                        
|--------------------------------------------------- |  | ---------------------------------------------- |  | ----------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------
|Period                                              |  | (a) Total number ofShares (or Units) Purchased |  | (b) Average Price Paidper Share (or Unit) |  | (c) Total Number ofShares (or units)Purchased as Part ofPublicly AnnouncedPlans or Programs (1)(2) |  | (d) Maximum Number (orAppropriate Dollar Value) ofShares (or units) that MayYet Be Purchased Under thePlans or Programs
|Month #1 January 1, 2009 through January 31, 2009   |  | None                                           |  | None                                      |  | None                                                                                               |  | 449                                                                                                                    
|Month #2 February 1, 2009 through February 28, 2009 |  | None                                           |  | None                                      |  | None                                                                                               |  | 449                                                                                                                    
|Month #3 March 1, 2009 through March 31, 2009       |  | None                                           |  | None                                      |  | None                                                                                               |  | 449                                                                                                                    
|Total                                               |  |                                                |  |                                           |  |                                                                                                    |  | 449                                                                                                                    

_______________

|(1) | On August 10, 2005, the Companys Board of Directors approved the formation and funding of a trust that will purchase 171,749 shares of the Companys common stock in
the open market with funds contributed by the Company. As of March 31, 2009, 171,300 shares were purchased. The remaining 449 shares have not been awarded and may be purchased from time to time at the discretion of the independent trustee of
the trust and the shares will be used to fund restricted stock awards under the Companys 2005 Equity Incentive Plan.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|     |  |                                                                                                                                                                                                                                                                                                                                               
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|3.1  |  | Charter of Ocean Shore Holding Co. (incorporated by reference to Exhibit 3.1 to the Ocean Shore Holding Co. Registration Statement on Form S-1 (File No. 333-118597), as amended, initially filed
on August 27, 2004)                                                                                                                         
|     | 
|3.2  |  | Certificate of Amendment of Charter of Ocean Shore Holding Co. (incorporated by reference to Exhibit 3.2 to the Ocean Shore Holding Co. Registration Statement on Form S-1 (File No. 333-118597),
as amended, initially filed on August 27, 2004)                                                                                             
|     | 
|3.3  |  | Amended and Restated Bylaws of Ocean Shore Holding Co. (incorporated by reference to Exhibit 3.2 to the Ocean Shore Holding Co. Annual Report on Form 10-K for the year ended December 31, 2004
(File No. 000-51000))                                                                                                                         
|     | 
|4.1  |  | Specimen Stock Certificate of Ocean Shore Holding Co. (incorporated by reference to Exhibit 4.0 the Ocean Shore Holding Co. Registration Statement on Form S-1 (File No. 333-118597), as amended,
initially filed on August 27, 2004)                                                                                                         
|     | 
|4.2  |  | No long-term debt instrument issued by Ocean Shore Holding Co. exceeds 10% of consolidated assets or is registered. In accordance with paragraph 4(iii) of Item 601(b) of Regulation S-K, Ocean
Shore Holding Co. will furnish the Securities and Exchange Commission copies of long-term debt instruments and related agreements upon request
|     | 
|14.0 |  | Code of Ethics and Business Conduct (incorporated by reference to Exhibit 14.0 to the 51000) Annual Report on Form 10-K for the Ocean Shore Holding Co. (File No. 000- year ended December 31,
2004)                                                                                                                                          
|     | 
|21.0 |  | List of Subsidiaries (incorporated by reference to Exhibit 21.0 to the Ocean Shore Holding Co. (File No. 000-51000) Annual Report on Form 10-K for the year ended December 31,
2008)                                                                                                                                                          
|     | 
|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 7, 2009 |  |  |  | /s/ Steven E. Brady     
|                  |  |  |  |                          |  | Steven E. Brady                                  
|                  |  |  |  |                          |  | President and Chief Executive Officer            
|                  |  | 
|Date: May 7, 2009 |  |  |  | /s/ Donald F. Morgenweck
|                  |  |  |  |                          |  | Donald F. Morgenweck                             
|                  |  |  |  |                          |  | Chief Financial Officer and Senior Vice President



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