SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


                                   FORM 10-Q
(Mark One)

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

For the quarterly period ended           September 30, 1997
                               -----------------------------------------

                                      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     0-27010
                                             ------------

                           LITTLE FALLS BANCORP, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           New Jersey                                        22-3402073
--------------------------------------------------------------------------------
(State or other jurisdiction of incorporation              (I.R.S. employer 
 or organization)                                         identification no.)

86 Main Street, Little Falls, New Jersey                          07424
--------------------------------------------------------------------------------
(Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code    (201) 256-6100
                                                    ----------------------------

                                       N/A
--------------------------------------------------------------------------------
              Former name, former address and former fiscal year,
                         if changed since last report.

      Indicate  by check  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
                                                          -------         ------


                     APPLICABLE ONLY TO CORPORATE ISSUERS:

      Indicate the number of shares  outstanding of each of the issuer's classes
of common stock, as of the latest practicable date November 10, 1997.

          Class                                             Outstanding
---------------------------                               ----------------
$.10 par value common stock                               2,607,921 shares


<PAGE>



                           LITTLE FALLS BANCORP, INC.
                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1997

                                      INDEX

                                                                         Page
                                                                        Number

PART I - CONSOLIDATED FINANCIAL INFORMATION OF LITTLE FALLS
          BANCORP, INC.

Item 1. Financial Statements and Notes Thereto...........................   1
Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations..............................   7

PART II - OTHER INFORMATION

Item 1. Legal Proceedings................................................  12
Item 2  Changes in Securities............................................  12
Item 3. Defaults upon Senior Securities..................................  12
Item 4. Submission of Matters to a Vote of Security Holders..............  12
Item 5. Other Materially Important Events................................  12
Item 6. Exhibits and Reports on Form 8-K.................................  12

SIGNATURES


<PAGE>



                           LITTLE FALLS BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   September 30,    December 31,
                                                                       1997             1996
                                                                  --------------   --------------
ASSETS
<S>                                                               <C>              <C>          
Cash and due from banks .......................................   $   2,849,441    $   1,746,743
Interest-bearing deposits in other banks ......................         681,808        3,627,221
Federal funds sold ............................................       4,000,000        5,000,000
                                                                  -------------    -------------
     Total cash and cash equivalents ..........................       7,531,249       10,373,964
Investment securities held-to-maturity net
  (estimated fair values $53,060,000
  and $51,204,000) ............................................      53,012,341       51,370,297
Mortgage-backed securities held to maturity, net
  (estimated fair values $97,158,000
  and $112,426,000) ...........................................      97,042,603      112,473,144
Mortgage-backed securities available for sale, net ............       9,787,691               --
Loans receivable, net .........................................     145,045,770      117,115,784
Premises and equipment, net ...................................       2,630,916        2,659,239
Investment in real estate, net ................................         529,980          683,054
Foreclosed real estate, net ...................................         446,401          857,157
Interest receivable, net ......................................       2,530,586        1,735,291
Federal Home Loan Bank of New York stock, at cost .............       2,222,000        2,075,700
Excess of cost over assets acquired ...........................       2,946,426        3,217,017
Other assets ..................................................         698,898          957,091
                                                                  -------------    -------------
      TOTAL ASSETS ............................................   $ 324,424,861    $ 303,517,738
                                                                  =============    =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits ....................................................   $ 226,268,024    $ 228,311,543
  Securities sold under agreements to repurchase ..............      58,499,500       33,623,500
  Accounts payable and other liabilities ......................       1,754,482        1,134,397
                                                                  -------------    -------------
      Total liabilities .......................................     286,522,006      263,069,440
                                                                  -------------    -------------
Stockholders' Equity:
  Preferred stock; 5,000,000 authorized shares;
    none outstanding ..........................................              --               --
  Common stock, par value $.10; 10,000,000
     authorized shares; 3,041,750 issued;
     2,607,921 and 2,745,180 outstanding ......................         304,175          304,175
  Additional paid-in-capital ..................................      29,030,848       28,974,799
  Retained earnings ...........................................      17,885,543       16,802,056
  Unearned ESOP shares ........................................      (2,149,503)      (2,271,173)
  Unearned restricted MSBP stock at cost ......................      (1,404,950)            --
  Unrealized losses on certain securities
    available for sale ........................................         (46,417)            --
  Minimum pension liability net of deferred taxes .............         (84,555)         (84,555)
  Treasury stock, at cost; 433,829 and 296,570 share...........      (5,632,286)      (3,277,004)
                                                                  -------------    -------------
      Total stockholders' equity ..............................      37,902,855       40,448,298
                                                                  -------------    -------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..............   $ 324,424,861    $ 303,517,738
                                                                  =============    =============
</TABLE>

---------------------
*     The  consolidated  balance  sheet at December 31, 1996 has been taken from
      the audited balance sheet at that date.
See notes to unaudited consolidated financial statements.

                                        1

<PAGE>



                           LITTLE FALLS BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                        For the Three Months          For the Nine Months
                                                         Ended September 30,           Ended September 30,
                                                         1997           1996          1997          1996
                                                        ------         ------        ------        ------
Interest income:
<S>                                                  <C>            <C>            <C>           <C>        
  Loans receivable ...............................   $ 2,616,791    $ 2,108,759    $ 7,112,288   $ 6,016,945
  Mortgage-backed securities .....................     1,799,175      2,014,796      5,357,533     6,073,012
  Investment securities and other interest earning
    assets .......................................       932,442        490,555      2,830,882     1,905,197
                                                     -----------    -----------    -----------   -----------
    Total interest income ........................     5,348,408      4,614,110     15,300,703    13,995,154
                                                     -----------    -----------    -----------   -----------
Interest expense:
  Deposits .......................................     2,570,720      2,721,029      7,639,391     8,384,704
  Borrowings .....................................       751,279             --      1,712,174            --
                                                     -----------    -----------    -----------   -----------
    Total interest expense .......................     3,321,999      2,721,029      9,351,565     8,384,704
                                                     -----------    -----------    -----------   -----------
Net interest income before provision for loan
losses ...........................................     2,026,409      1,893,081      5,949,138     5,610,450
Provision for loan losses ........................        60,000        152,900        180,000       182,900
                                                     -----------    -----------    -----------   -----------
  Net interest income after provisions for loan
  losses .........................................     1,966,409      1,740,181      5,769,138     5,427,550
                                                     -----------    -----------    -----------   -----------
Total non-interest income ........................        40,697         39,555        298,251       195,053
                                                     -----------    -----------    -----------   -----------

Non-interest expense:
  Compensation and employee benefit...............       661,711        633,518      1,915,351     1,843,683
  Occupancy, net .................................        67,471         92,380        218,422       302,213
  Equipment ......................................       101,510         96,359        323,245       290,301
  Deposit insurance premiums .....................        29,786      1,303,927         95,800     1,549,366
  Amortization of deposit premium ................        90,197         90,197        270,590       270,586
  Miscellaneous expense ..........................       370,789        320,473      1,058,032       934,566
                                                     -----------    -----------    -----------   -----------
    Total non-interest expenses ..................     1,321,464      2,536,854      3,881,440     5,190,715
                                                     -----------    -----------    -----------   -----------

Income before provision for income taxes..........       685,642       (757,118)     2,185,949       431,888
Provision for income taxes .......................       229,000       (275,526)       815,000       177,974
                                                     -----------    -----------    -----------   -----------
    Net income ...................................   $   456,642    $  (481,592)   $1,370,949    $   253,914
                                                     ===========    ===========    ===========   ===========

Weighted average number of
  common shares and common
  stock equivalents outstanding ..................     2,538,873      2,732,507      2,559,657     2,766,472
                                                     ===========    ===========    ===========   ===========

Primary earnings (loss) per share ................   $      0.18    $     (0.18)   $      0.54   $      0.09
                                                     ===========    ===========    ===========   ===========
</TABLE>

See notes to unaudited consolidated financial statements.



                                       2

<PAGE>
                           LITTLE FALLS BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          For the Nine Months
                                                                                           Ended September 30,
                                                                                           -------------------
                                                                                           1997           1996
                                                                                          ------         ------
Cash flows from operating activities:
<S>                                                                                   <C>             <C>         
  Net income ......................................................................   $  1,370,949    $    253,914
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation ..................................................................         99,460         110,745
    Provision for loan losses .....................................................        180,000         182,900
    Provision for losses on foreclosed properties .................................         27,356              --
    Amortization of intangibles ...................................................        270,591         270,586
    Amortization (accretion) of deferred fees, premiums and discounts, net.........        120,508          45,680
    Amortization of unearned ESOP shares ..........................................        177,719         128,321
    Amortization of unearned restricted MSBP stock, at cost........................        283,221              --
    Loss (gain) on sale of foreclosed real estate .................................         39,067          (4,455)
    Gain on sale of real estate held for investment ...............................       (106,318)             --
    Decrease (increase) in other assets ...........................................        258,193        (611,483)
    Increase in interest receivable, net ..........................................       (795,295)        (36,864)
    Increase in interest payable ..................................................        471,595         157,977
    Increase in accounts payable and other liabilities ............................        199,426       1,194,147
                                                                                      ------------    ------------
      Net cash provided by operating activities ...................................      2,596,472       1,691,468
                                                                                      ------------    ------------
Cash flows from investing activities:
    Purchase of mortgage-backed securities held to maturity .......................             --     (16,073,205)
    Principal collections on mortgage-backed securities held to maturity...........     15,365,831      17,407,442
    Purchase of mortgage-backed securities available for sale......................     (9,865,157)             --
    Purchase of loans .............................................................    (15,096,510)             --
    Net (increase) decrease in loans receivable ...................................    (13,049,530)    (15,418,684)
    Maturity of investments held to maturity ......................................      6,342,000       9,000,000
    Purchase of investments held to maturity ......................................     (8,000,000)     (5,342,000)
    Purchases of premises and equipment ...........................................        (60,123)       (112,904)
    Proceeds from sale of real estate held for investment .........................        248,378              --
    Proceeds from sale of foreclosed real estate ..................................        344,333         807,179
    Purchases of Federal Home Loan Bank of New York stock..........................        [46,300]       (680,500)
                                                                                      ------------    ------------
      Net cash used in investing activities .......................................    (23,917,078)    (10,412,672)
                                                                                      ------------    ------------
 Cash flows from financing activities:
   Net decrease in deposits .......................................................     (2,096,778)     (8,214,792)
   Net decrease in borrowed funds .................................................     24,876,000              --
   Increase (decrease) in advances from borrowers .................................         29,584        (743,937)
   Repurchase of common stock .....................................................     (2,355,282)     (1,606,419)
   Purchase of MSBP stock .........................................................     (1,688,171)             --
   Refund of oversubscribed stock subscription ....................................             --     (19,706,653)
   Costs of issuance of common stock ..............................................             --        (717,311)
   Cash dividends paid ............................................................       (287,462)        (76,044)
                                                                                      ------------    ------------
     Net cash provided by (used in) financing activities...........................     18,477,891     (31,065,156)
                                                                                      ------------    ------------
     Decrease in cash and cash equivalents ........................................     (2,842,715)    (39,786,360)
Cash and cash equivalents:
  Beginning of period .............................................................     10,373,964      53,419,088
                                                                                      ------------    ------------
  End of period ...................................................................      7,531,249    $ 13,632,728
                                                                                      ============    ============
Supplemental disclosures:
Cash paid during the year for:
  Interest ........................................................................   $  8,877,270    $  8,226,727
  Income taxes ....................................................................        668,000         403,000
Loans receivable transferred to foreclosed real estate ............................             --         308,728
Unrealized losses on certain securities available for sale.........................        (46,417)             --
Issuance of common stock:
  Deposits used for stock purchase ................................................             --       2,859,458
  Stock subscriptions used for stock purchase .....................................             --      25,124,642
  Deferred costs ..................................................................             --        (422,630)
</TABLE>
             See notes to unaudited consolidated financial statements.

                                        3

<PAGE>



                           LITTLE FALLS BANCORP, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - PRINCIPLES OF CONSOLIDATION

      The  consolidated  financial  statements  as of and for the three and nine
      month  periods  ended  September 30, 1997 and 1996 include the accounts of
      Little Falls  Bancorp,  Inc. (the  "Company") and its  subsidiary,  Little
      Falls Bank (the "Bank")  which,  as discussed in Note 3, became the wholly
      owned subsidiary of the Company on January 5, 1996. The Company's business
      is conducted  principally  through the Bank. All significant  intercompany
      accounts and transactions have been eliminated in consolidation.

NOTE 2 - BASIS OF PRESENTATION

      The  accompanying  consolidated  financial  statements  were  prepared  in
      accordance with instructions for Form 10-Q and, therefore,  do not include
      all  information  necessary for a complete  presentation  of  consolidated
      financial condition,  results of operations,  and cash flows in conformity
      with generally accepted accounting  principles.  However, all adjustments,
      consisting  of  normal  recurring  accruals,  which,  in  the  opinion  of
      management,  are necessary  for a fair  presentation  of the  consolidated
      financial statements have been included. The results of operations for the
      periods ended September 30, 1997 and 1996 are not  necessarily  indicative
      of the  results  which may be expected  for the entire  fiscal year or any
      other period.

      These  statements  should  be read in  conjunction  with the  consolidated
      financial statements and related notes which are incorporated by reference
      in the Company's  Annual  Report on Form 10-K for the year ended  December
      31, 1996.

NOTE 3 - CONVERSION FROM MUTUAL SAVINGS BANK TO STOCK SAVINGS BANK AND
         FORMATION OF SAVINGS AND LOAN HOLDING COMPANY

      On January 5, 1996, the Bank  consummated  its conversion from a federally
      chartered  mutual  savings bank to a stock savings bank pursuant to a Plan
      of Conversion  (the  "Conversion")  via the issuance of common  stock.  In
      connection  with the  Conversion,  the Company  sold  3,041,750  shares of
      common  stock  which,  after  giving  effect to offering  expenses of $1.1
      million and 243,340 shares issued to the Bank's  Employee Stock  Ownership
      Plan ("ESOP"),  resulted in net proceeds of $26.8 million. Pursuant to the
      Conversion,  the Bank transferred all of its outstanding shares to a newly
      organized holding company, Little Falls Bancorp, Inc., in exchange for 50%
      of the net proceeds.

      Upon consummation of the Conversion, the preexisting liquidation rights of
      the depositors of the Bank were unchanged.  Specifically, such rights were
      retained  and will be  accounted  for by the Bank for the  benefit of such
      depositors  in  proportion  to  their  liquidation  interests  as  of  the
      eligibility  and  supplemental  eligibility  record  dates as  required by
      Office of Thrift Supervision ("OTS") regulations.

NOTE 4 - MANAGEMENT STOCK BONUS PLAN ("MSBP")

      On July 9, 1996, the Bank established a MSBP to provide both key employees
      and  outside  directors  with a  proprietary  interest in the Company in a
      manner  designed to encourage  such  persons to remain with the Bank.  The
      Bank, effective March 26, 1997, committed to contribute

                                        4

<PAGE>



      $1,688,171 to the MSBP to purchase  121,670  shares of common stock of the
      Company in the open market.  The common  stock  purchase  transaction  was
      effected on March 26, 1997 and funded on April 1, 1997.

NOTE 5 - EARNINGS PER SHARE

      Earnings  per  share  for the  three and nine  month  periods  herein  are
      calculated  by  dividing  net  earnings  (loss)  for the  periods,  by the
      weighted  average number of shares  outstanding  during these same periods
      (as if the  Conversion  had taken place on January 1, 1996).  The weighted
      average   number  of  common  shares   outstanding  is  adjusted  for  the
      unallocated  portion  of  shares  held by the  ESOP and for  common  stock
      equivalents.  The  Company's  common  stock  equivalents  are based on the
      exercise  of  outstanding  stock  options  that are  determined  to have a
      dilutive effect. See Exhibit 11.

NOTE 6 - PENDING ACCOUNTING STANDARDS

          Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
      Extinguishments of Liabilities.  The FASB issued SFAS No. 125,  Accounting
      for  Transfers and Servicing of Financial  Assets and  Extinguishments  of
      Liabilities  (SFAS No.  125) and SFAS No. 127,  Deferral of the  Effective
      Date of Certain  Provisions  of FASB  Statement  No. 125 (SFAS No. 127) in
      June and December 1996, respectively. SFAS No. 125 provides accounting and
      reporting  standards for  transfers and servicing of financial  assets and
      extinguishments   of  liabilities.   It  requires  entities  to  recognize
      servicing  assets and liabilities  for all contracts to service  financial
      assets,  unless the assets are  securitized and all servicing is retained.
      The servicing assets will be measured initially at fair value, and will be
      amortized  over the  estimated  useful lives of the servicing  assets.  In
      addition,  the impairment of servicing assets will be recognized through a
      valuation  allowance.  SFAS No.  125 also  addresses  the  accounting  and
      reporting  standards  for  securities  lending,  dollar-rolls,  repurchase
      agreements and similar transactions. The Company has prospectively adopted
      SFAS No. 125 on January 1, 1997. However, in accordance with SFAS No. 127,
      the  Company  will  defer  adoption  of  the  standard  as it  relates  to
      securities  lending,  dollar-rolls,   repurchase  agreements  and  similar
      transactions  until  January  1,  1998.  The  Company  does not expect the
      adoption  of SFAS No.  125 to have a material  impact on its  consolidated
      financial statements.

          Earnings  per Share.  On March 3, 1997,  the FASB issued SFAS No. 128,
      Earnings  per Share  (SFAS  No.  128)  which is  effective  for  financial
      statements issued for periods ending after December 15, 1997. SFAS No. 128
      replaces  APB  Opinion  15,   Earnings  per  Share,   and  simplifies  the
      computation of earnings per share (EPS) by replacing the  presentation  of
      primary EPS with a presentation  of basic EPS. In addition,  the Statement
      requires  dual  presentation  of basic and diluted  EPS by  entities  with
      complex capital structures. Basic EPS includes no dilution and is computed
      by   dividing   income   available   to   common   stockholders   by   the
      weighted-average  number  of common  shares  outstanding  for the  period.
      Diluted EPS reflects the potential dilution of securities that could share
      in  the  earnings  of  an  entity,  similar  to  fully  diluted  EPS.  The
      computation of EPS will be compatible with international standards, as the
      International  Accounting Standards Committee recently issued a comparable
      standard.


                                        5

<PAGE>



          Comprehensive  Income. In July 1997 the Financial Accounting Standards
      Board  issued  Statement  of  Financial   Accounting  Standards  No.  130,
      "Reporting  Comprehensive  Income".  Statement  No. 130 is  effective  for
      fiscal years beginning after December 15, 1997. This statement establishes
      standards for reporting and presentation of  comprehensive  income and its
      components (revenues, expenses, gains and losses) in a full set of general
      purpose financial statements. It requires that all items that are required
      to be recognized under accounting standards as components of comprehensive
      income be reported in a financial  statement  that is  presented  with the
      same prominence as other financial statements.  Statement No. 130 requires
      that companies (i) classify items of other  comprehensive  income by their
      nature in a financial  statement and (ii) display the accumulated  balance
      of other  comprehensive  income  separately  from  retained  earnings  and
      additional  paid-in  capital in the equity  section  of the  statement  of
      financial condition.  Reclassification of financial statements for earlier
      periods provided for comprehensive purposes is required.

                                      6

<PAGE>



                           LITTLE FALLS BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

General

      The Company is a New Jersey  corporation  organized  in August 1995 at the
direction  of the Board of  Directors  of the Bank to acquire all of the capital
stock of the Bank issued in the Conversion. The Company is a unitary savings and
loan holding company which, under existing laws,  generally is not restricted in
the types of business  activities in which it may engage  provided that the Bank
retains a specified amount of its assets in housing-related investments.

      The Bank is a federally  chartered  stock  savings bank  headquartered  in
Little  Falls,  New Jersey.  The Bank was founded in 1887 and its  deposits  are
federally  insured by the Savings  Association  Insurance  Fund ("SAIF") and the
Bank is a member of the Federal Home Loan Bank  ("FHLB")  System.  The Bank is a
community oriented, full service retail savings institution offering traditional
mortgage  loan  products.  It is the  Bank's  intent to  remain  an  independent
community savings bank serving the local banking needs of its community.

      The Bank attracts  deposits from the general  public and has  historically
used such deposits  primarily to originate  loans secured by first  mortgages on
owner-occupied one- to four-family residences in its market area and to purchase
mortgage-backed  securities.  The Bank  also  originates  a  limited  number  of
commercial real estate,  residential  construction,  and consumer  loans,  which
mainly consist of home equity lines of credit.

      The largest  components of the Bank's net income are net interest  income,
which is the  difference  between  interest  income and  interest  expense,  and
noninterest  income  derived  primarily  from  fees.  Consequently,  the  Bank's
earnings are dependent on its ability to originate  loans,  net interest income,
and  the  relative  amounts  of  interest-earning  assets  and  interest-bearing
liabilities.  The Bank's net income is also  affected by its  provision for loan
losses  and  foreclosed  real  estate  as well  as the  amount  of  non-interest
expenses,  such as  compensation  and benefit  expense,  occupancy and equipment
expense and deposit insurance  premium  expenses.  Earnings of the Bank also are
affected   significantly  by  general   economic  and  competitive   conditions,
particularly  changes in market interest rates,  government policies and actions
of regulatory authorities.

Comparison of Financial Condition

      Total assets  increased by $20.9 million at September 30, 1997 as compared
to December 31, 1996. Net loans  increased by $27.9 million due to  originations
of  $22.3  million  and  purchases  of $15.1  million  offset  somewhat  by loan
repayments. The loans purchased were loan participations on apartment buildings.
Mortgage-backed  securities  held to maturity  decreased by $15.4 million due to
repayments  of  principal.  $9.8  million  of  adjustable  rate  mortgage-backed
securities were purchased  during the quarter,  and were classified as available
for sale.  Investment  securities  increased  by $1.6 million  primarily  due to
purchases exceeding maturities. Foreclosed properties decreased by $411,000, due
in most part to the sale of three properties.

      Total  deposits  decreased,  after  interest  credited,  by $2.0  million.
Securities sold under agreements to repurchase increased by $24.9 million. These
borrowed funds were used to fund the loan  participations  and  adjustable  rate
mortgage-backed securities purchases noted above.


                                        7

<PAGE>



      Total stockholders' equity decreased by $2.5 million, primarily due to the
purchase of shares of Company stock pursuant to the Company's  stock  repurchase
program (137,259 shares at a total price of  approximately  $2.4 million) and by
the Bank  Management  Stock  Bonus  Plan  (121,670  shares  at a total  price of
approximately  $1.7 million) and to dividends paid,  offset somewhat by earnings
during the period.

Non-performing Assets

      The following table sets forth information regarding  non-performing loans
and real estate owned.

<TABLE>
<CAPTION>
                                     At and For the      At and For the
                                   Nine Months Ended       Year Ended
                                   September 30,1997    December 31, 1996
                                   -----------------    -----------------
                                           (Dollars in Thousands)

<S>                                      <C>                 <C>      
Total non-performing loans               $2,461              $   1,901
Real estate owned                           446                    857
                                         ------              ---------
Total non-performing assets              $2,907              $   2,758
                                         ======              =========
Total non-performing loans to
  net loans                                1.70%                  1.62%
                                         ======              =========
Total non-performing loans to
  total assets                             0.76%                  0.63%
                                         ======              =========
Total non-performing assets to
  total assets                             0.90%                  0.91%
                                         ======              =========
Net loan charge-offs to average
  outstanding loans (annualized)           0.01%                  0.05%
                                         ======              =========
</TABLE>


Comparison  of Earnings for the Three and Nine Months Ended  September  30, 1997
and 1996

      Net Income.  Net income for the three and nine months ended  September 30,
1997 increased $938,000 and $1.1 million, respectively, over the same periods in
1996.  These  increases  were due  primarily to a one time $1.2 million  pre-tax
assessment from the SAIF. This one time assessment was the result of legislation
effective on September 30, 1996, for the purpose of recapitalizing the SAIF. Net
income was also  affected by increases in net interest and  non-interest  income
and decreases in deposit  insurance  premiums and the provision for loan losses,
offset  somewhat by increases  in  miscellaneous  other  expenses and income tax
expenses.

      Total Interest Income.  Interest income increased by $734,000 or 15.9% and
$1.3  million or 9.3% for the three and nine months  ended  September  30, 1997,
respectively, as compared to the three and nine months ended September 30, 1996.
These  increases  were due in most part to increases of $40.4  million and $25.6
million in the average  balances of  interest  earning  assets for the three and
nine month periods  ended  September 30, 1997 as compared to the same periods in
1996.

      Total Interest Expense.  Interest expense increased  $601,000 or 22.1% and
$967,000  or 11.5% for the quarter and nine months  ended  September  30,  1997,
respectively,  as compared to the quarter and nine months  ended  September  30,
1996.  These  increases were primarily due to the increases of $41.2 million and
$26.2 million in the average  balance of interest  bearing  liabilities  for the
three and nine months ended  September  30, 1997 as compared to the same periods
in 1996, and to increases of 18 and

                                        8

<PAGE>



three basis points in the average cost of interest  bearing  liabilities for the
three and nine months ended  September 30, 1997, as compared to the same periods
in 1996.

      Net Interest Income.  Net interest income  increased  $133,000 or 7.0% and
$339,000 or 11.5%, due to the reasons discussed in the two previous sections. In
addition,  the net  interest  spread,  the  difference  between the average rate
earned and the average  rate paid,  decreased by eight basis points to 2.24% for
the quarter ended September 30, 1997 and five basis points to 2.22% for the nine
months ended September 30, 1997.

      Provisions  for Loan  Losses.  A  provision  for loan losses is charged to
operations based on management's  evaluation of the potential losses that may be
incurred in the Bank's loan portfolio. Such evaluation,  which includes a review
of certain loans of which full  collectibility of interest and principal may not
be reasonably assured, considers the Bank's past loan loss experience, known and
inherent  risks  in the  portfolio,  adverse  situations  that  may  affect  the
borrower's  ability to repay,  estimated value of any underlying  collateral and
current economic conditions. The provision for loan losses decreased $93,000 and
$3,000 in the quarter and nine months ended September 30, 1997, respectively, as
compared to the same  periods in 1996.  The primary  cause for the  decrease for
three month period was the  write-off of a loan in the 1996  three-month  period
which had been a performing loan in the previous quarter.

      As a result of the declines in regional  real estate market values and the
significant losses experienced by many financial institutions,  there has been a
greater level of scrutiny by regulatory  authorities  of the loan  portfolios of
financial institutions  undertaken as part of the examination of the institution
by the  FDIC,  OTS or other  federal  or state  regulators.  Results  of  recent
examinations  indicate that these  regulators may be applying more  conservative
criteria  in  evaluating  real estate  market  values,  requiring  significantly
increased  provisions for potential loan losses.  While the Bank believes it has
established  an adequate  allowance  for loan losses,  there can be no assurance
that  regulators,  in reviewing the Bank's loan portfolio,  will not request the
Bank to significantly increase its allowance for loan losses, thereby negatively
affecting the Bank's  financial  condition and earnings or that the Bank may not
have to increase its level of loan loss allowance in the future.

      Management  will  continue to review its loan  portfolio to determine  the
extent,  if any,  to which  further  additional  loss  provisions  may be deemed
necessary.  There can be no  assurance  that the  allowance  for losses  will be
adequate  to cover  losses  which may in fact be realized in the future and that
additional provisions for losses will not be required.

      Impaired  loans and related  amounts  recorded in the  allowance  for loan
losses at September 30, 1997 are summarized as follows (in thousands):

<TABLE>
<CAPTION>

<S>                                                <C>   
      With recorded allowances............         $1,507
      Without recorded allowances.........             --
                                                    -----
      Total impaired loans................          1,507
      Related allowance for loan losses...            208
                                                    -----
      Net impaired loans..................         $1,299
                                                    =====
</TABLE>

      Non-interest Income.  Non-interest income increased by $1,000 and $103,000
for the three and nine  months  ended  September  30,  1997,  respectively.  The
increase  during the nine  month  period was  primarily  due to a $125,000  gain
recorded on the sale of the Bank's  Frenchtown,  NJ branch  office in June 1997.
The office had been closed  during the third  quarter of 1996 and deposits  were
transferred to other Bank's offices.


                                        9

<PAGE>



      Non-interest  Expense.  Non-interest  expense,  excluding the $1.2 million
one-time SAIF assessment included in the 1996 quarter, decreased $48,000 or 3.5%
and  $142,000 or 3.5% for the three and nine  months  ended  September  30, 1997
compared to the prior  periods,  primarily  due to a decrease  of  $107,000  and
$286,000,   respectively,   in   deposit   insurance   premiums   due   to   the
recapitalization  of the SAIF in September 1996, offset somewhat by increases of
$50,000 and $123,000,  respectively,  in miscellaneous expenses due to a loss on
the sale of an office  building of a previously  closed  branch office and stock
compensation  expenses due to the  implementation of stock benefit plans adopted
by stockholders in July 1996.  Further,  occupancy expense decreased $25,000 and
$84,000  respectively  due in most part to the closing of two branch  offices in
the second half of 1996. Compensation and employee benefits increased by $28,000
and $72,000,  respectively  due in most part to the  adoption of the  Management
Stock Bonus Plan  ("MSBP") in the second half of 1996.  The MSBP expense for the
three  and nine  months  ended  September  30,  1997  was  $28,000  and  $90,000
respectively.  Normal  recurring  wage increases were offset with a reduction in
personnel  costs  associated  with the closing of two branch offices  previously
discussed.  Miscellaneous expense increased $50,000 and $123,000,  primarily due
to the MSBP  expense for the  directors of $48,000 and $96,000 for the three and
nine months ended  September  30, 1997,  and a loss of $19,000 on the sale of an
office building of a previously closed branch in June, 1997.

      Income Tax Expense.  Income tax expense  increased  due to the increase of
pre-tax income for the same periods.

Liquidity and Capital Resources

      On  September  30,  1997,  the  Bank  was in  compliance  with  its  three
regulatory capital requirements as follows:

<TABLE>
<CAPTION>

                                 Amount      Percent
                                 ------      -------
                                (Dollars in thousands)

<S>                              <C>          <C>  
Tangible capital .............   $25,865       8.04%
Tangible capital requirement .     4,826       1.50
                                 -------      -----
Excess over requirement ......   $21,039       6.54%
                                 =======      =====

Core capital .................   $25,865       8.04%
Core capital requirement .....     9,652       3.00%
                                 -------      -----
Excess over requirement ......   $16,213       5.04%
                                 =======      =====

Risk based capital ...........   $26,435      22.13%
Risk based capital requirement     9,557       8.00%
                                 -------      -----
Excess over requirement ......   $16,878      14.13%
                                 =======      =====
</TABLE>

      Management believes that under current regulations, the Bank will continue
to meet its minimum  capital  requirements  in the  foreseeable  future.  Events
beyond the control of the Bank,  such as increased  interest rates or a downturn
in the economy in areas in which the Bank operates could adversely affect future
earnings and as a result,  the ability of the Bank to meet its future  Company's
requirements.

      The  Company's  liquidity  is a measure of its ability to fund loans,  pay
withdrawals of deposits, and other cash outflows in an efficient, cost effective
manner.  The  Company's  primary  sources of funds are  deposits  and  scheduled
amortization and prepayment of loan and  mortgage-backed  principal.  During the
past several years,  the Company has used such funds  primarily to fund maturing
time deposits, pay savings withdrawals,  fund lending commitments,  purchase new
investments,  and increase liquidity.  The Company is currently able to fund its
operations internally. Additionally, sources of funds include the

                                       10

<PAGE>



ability to utilize  Federal Home Loan Bank of New York  advances and the ability
to borrow against mortgage-backed and investment securities. As of September 30,
1997, the Company had $58.5 million of borrowed funds.  Loan payments,  maturing
investments and mortgage-backed  security  prepayments are greatly influenced by
general interest rates, economic conditions and competition.

      The Company  anticipates  that it will have sufficient  funds available to
meet its current commitments. As of September 30, 1997, the Company had mortgage
commitments  to fund loans of $4.0 million.  Also, at September 30, 1997,  there
were commitments on unused lines of credit relating to home equity loans of $3.6
million.  Certificates  of  deposit  scheduled  to mature in one year or less at
September  30,  1997  totaled  $124.3  million.   Based  on  historical  deposit
withdrawals and outflows,  and on internal monthly deposit reports  monitored by
management,  management  believes  that a majority of such  deposits will remain
with the Company. As a result, no adverse liquidity effects are expected.

      The  Bank is  required  under  federal  regulations  to  maintain  certain
specified  levels of "liquid  investments,"  which include certain United States
government  obligations  and other  approved  investments.  Current  regulations
require  the Bank to  maintain  liquid  assets  of not  less  than 5% of its net
withdrawable accounts plus short term borrowings.  Short term liquid assets must
consist of not less than 1% of such  accounts  and  borrowings,  which amount is
also included within the 5%  requirement.  Those levels may be changed from time
to time by the regulators to reflect current economic  conditions.  The Bank has
maintained liquidity in excess of regulatory requirements.

Impact of Inflation and Changing Prices

      The  consolidated  financial  statements of the Company and notes thereto,
presented  elsewhere  herein,  have been prepared in accordance with GAAP, which
require the measurement of financial  position and operating results in terms of
historical  dollars without  considering  the change in the relative  purchasing
power of money over time due to inflation.  The impact of inflation is reflected
in the  increased  cost of the  Company's  operations.  Unlike  most  industrial
companies,  nearly all the assets and  liabilities of the Company are financial.
As a result,  interest rates have a greater impact on the Company's  performance
than do the  effects  of  general  levels of  inflation.  Interest  rates do not
necessarily  move in the same  direction  or to the same extent as the prices of
goods and services.

Additional Key Operating Ratios

<TABLE>
<CAPTION>
                                                 For the                For the
                                           Three Months Ended      Nine Months Ended
                                              September 30,          September 30,
                                           -------------------     ------------------
                                            1997(1)    1996(1)     1997(1)    1996(1)
                                            -------    -------     -------    -------
<S>                                          <C>        <C>         <C>        <C>  
Return (loss) on average assets.........     0.57%      (0.68%)     0.60%      0.12%
Return (loss) on average equity.........     4.75%      (4.52%)     4.63%      0.78%
Interest rate spread....................     2.24%        2.32%     2.22%      2.27%
Net interest margin.....................     2.64%        2.84%     2.70%      2.78%
Noninterest expense, excluding one-time
 SAIF special assessment, to average 
 assets.................................     1.66%        1.97%     1.69%      1.89%
</TABLE>

<TABLE>
<CAPTION>
                                                At September 30,  At December 31,
                                                      1997              1996
                                                ----------------  ---------------

<S>                                                  <C>               <C>   
Tangible book value per share.........               $13.40            $13.56
</TABLE>

----------------
(1) The ratios for the three and nine month periods are annualized.

                                       11

<PAGE>



                   LITTLE FALLS BANCORP, INC. AND SUBSIDIARY

                                    PART II

ITEM 1. LEGAL PROCEEDINGS

            Neither the Company nor the Bank was engaged in any legal proceeding
            of a material  nature at September 30, 1997.  From time to time, the
            Company  is a party to routine  legal  proceedings  in the  ordinary
            course of business,  such as claims to enforce  liens,  condemnation
            proceedings  on  properties  in which  the  Company  holds  security
            interests,  claims  involving  the  making  and  servicing  of  real
            property  loans,  and other  issues  incident to the business of the
            Company.  There were no lawsuits pending or known to be contemplated
            against the Company at September 30, 1997 that would have a material
            effect on the operations or income of the Company or the Bank, taken
            as a whole.

ITEM 2.  CHANGES IN SECURITIES

            Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

            Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

            Not applicable.

ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS

            Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

            (a)   Exhibits:
                  Exhibit 11 - Earnings Per Share Calculation
                  Exhibit 27 Financial Data Schedule (in electronic filing only)
            (b)   Reports on Form 8-K - None.


                                       12

<PAGE>



                    LITTLE FALLS BANCORP, INC. AND SUBSIDIARY

                                   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.


                              LITTLE FALLS BANCORP, INC.




Date: November 12, 1997       By:  /s/ Leonard G. Romaine
                                   -----------------------------------------
                                   Leonard G. Romaine
                                   President and Chief Executive Officer
                                   (Principal Executive Officer)



Date: November 12, 1997       By:  /s/ Richard Capone
                                   -----------------------------------------
                                   Richard Capone
                                   Senior Vice President and
                                   Chief Financial Officer
                                   (Principal Officer)