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            June 30, 1998
                               ------------------------------------

                                       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             (I.R.S. employer identification no.)
incorporation or organization)

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 x/ 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 August 10, 1998.

             Class                                               Outstanding
---------------------------                                    ----------------
$.10 par value common stock                                    2,477,525 shares


<PAGE>



                           LITTLE FALLS BANCORP, INC.
                                    FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 1998

                                      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.........................6

PART II - OTHER INFORMATION

Item 1.           Legal Proceedings..........................................13
Item 2.           Changes in Securities......................................13
Item 3.           Defaults upon Senior Securities............................13
Item 4.           Submission of Matters to a Vote of Security Holders........13
Item 5.           Other Materially Important Events..........................13
Item 6.           Exhibits and Reports on Form 8-K...........................13

SIGNATURES


<PAGE>
                           LITTLE FALLS BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                     June 30,              December 31,
                                                                                       1998                    1997
                                                                                   -----------             -----------
<S>                                                                                 <C>                     <C>       
ASSETS
Cash and due from banks................................................             $5,989,174              $2,737,709
Interest-bearing deposits in other banks...............................              1,393,467                 550,522
Federal funds sold.....................................................              3,500,000               3,500,000
                                                                                   -----------             -----------
     Total cash and cash equivalents...................................             10,882,641               6,788,231
Investment securities held-to-maturity net
  (estimated fair values $57,938,000
  and $58,129,000).....................................................             57,677,075              57,987,644
Investment securities available for sale...............................             25,350,866                      --
Mortgage-backed securities available for
  sale.................................................................             15,584,096              13,929,048
Mortgage-backed securities held to maturity, net
  (estimated fair values $76,159,000
  and $91,246,000).....................................................             76,016,364              90,957,446
Loans receivable, net..................................................            153,134,871             147,033,259
Premises and equipment, net............................................              2,644,696               2,617,175
Investment in real estate, net.........................................                 81,281                 427,317
Foreclosed real estate.................................................                367,200                 604,219
Interest receivable, net...............................................              2,154,013               2,079,091
Federal Home Loan Bank of New York stock, at cost......................              3,767,600               2,517,600
Excess of cost over assets acquired....................................              2,675,836               2,856,230
Other assets...........................................................              1,010,945                 725,234
                                                                                   -----------             -----------
      TOTAL ASSETS.....................................................           $351,347,484            $328,522,494
                                                                                   ===========             ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits.............................................................           $228,769,299            $230,132,675
  Borrowed money.......................................................             83,877,000              58,719,500
  Accounts payable and other liabilities...............................              1,772,938               1,375,658
                                                                                  ------------             -----------
      Total liabilities................................................            314,419,237             290,227,833
                                                                                   -----------             -----------
Stockholders' Equity:
  Preferred stock; 5,000,000 authorized shares;
    none outstanding...................................................                     --                      --
  Common stock, par value $.10; 10,000,000
     authorized shares; shares issued 3,041,750;
     shares outstanding 2,477,525 and 2,607,921........................                304,175                 304,175
  Additional paid-in-capital...........................................             29,146,962              29,067,633
  Retained earnings - substantially restricted.........................             18,973,755              18,275,517
  Common Stock acquired by ESOP shares.................................             (2,025,319)             (2,106,432)
  Unearned restricted MSBP stock, at cost..............................             (1,177,601)             (1,329,167)
  Treasury stock, at cost; 564,225 and 433,829 shares..................             (8,191,308)             (5,632,286)
  Unrealized gain (loss) on securities available
    for sale net of deferred taxes.....................................                111,300                (71,062)
  Minimum pension liability net of deferred taxes......................               (213,717)               (213,717)
                                                                                   -----------            ------------
      Total stockholders' equity.......................................             36,928,247              38,294,661
                                                                                   -----------             -----------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......................           $351,347,484            $328,522,494
                                                                                   ===========             ===========
</TABLE>

---------------------
*    The consolidated balance sheet at December 31, 1997 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 AND COMPREHENSIVE INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                            For the Three Months                For the Six Months
                                                                               Ended June 30,                     Ended June 30,
                                                                        --------------------------------   -------------------------
                                                                           1998               1997              1998         1997
                                                                        -------------   ----------------   -------------- ----------
<S>                                                                        <C>             <C>              <C>           <C>       
Interest income:
  Loans receivable.....................................................    $2,853,201      $2,289,973       $5,642,743    $4,495,497
  Mortgage backed securities...........................................     1,535,510       1,744,190        3,154,910     3,558,358
  Investment securities and other interest earning assets..............     1,509,525         937,017        2,708,355     1,898,440
                                                                            ---------        --------        ---------     ---------
      Total interest income............................................     5,898,236       4,971,180       11,506,008     9,952,295
                                                                            ---------       ---------       ----------     ---------
Interest expense:
  Deposits.............................................................     2,590,216       2,546,884        5,189,956     5,068,671
  Borrowings...........................................................     1,177,788         487,199        2,096,231       960,895
                                                                            ---------       ---------        ---------     ---------
Total interest expense.................................................     3,768,004       3,034,083        7,286,187     6,029,566
                                                                            ---------       ---------        ---------     ---------
Net interest income before provision for loan losses...................     2,130,232       1,937,097        4,219,821     3,922,729
Provision for loan losses..............................................        60,000          60,000          120,000       120,000
                                                                            ---------       ---------        ---------     ---------
     Net interest income after provision for loan losses...............     2,070,232       1,877,097        4,099,821     3,802,729
                                                                            ---------       ---------        ---------     ---------
Non-interest income:
Total non-interest income..............................................       102,106         215,315          164,625       296,657
                                                                            ---------       ---------        ---------     ---------
Non-interest expense:
  Compensation and employee benefits...................................       716,075         618,040        1,440,296     1,253,640
  Occupancy, net.......................................................        63,187          72,961          157,728       150,951
  Equipment............................................................       122,450         108,514          223,710       221,735
  Deposit insurance premiums...........................................        29,925          35,041           59,982        66,014
  Loss on foreclosed real estate.......................................        10,016          26,664           16,892        39,103
  Amortization of deposit premium......................................        90,197          90,196          180,394       180,393
  Miscellaneous expense................................................       400,177         356,042          739,885       687,243
                                                                            ---------       ---------        ---------     ---------
     Total non-interest expense........................................     1,432,027       1,307,458        2,818,887     2,599,079
                                                                            ---------       ---------        ---------     ---------
     Income before provision for income taxes..........................       740,311         784,954        1,445,559     1,500,307
Provision for income taxes.............................................       246,350         316,000          493,050       586,000
                                                                            ---------       ---------        ---------     ---------
      Net income.......................................................       493,961         468,954          952,509       914,307
Other comprehensive income - unrealized holding gains on securities
  available for sale, net of income taxes of $93,100 and $112,647 in 1998     147,584          --              182,362            --
                                                                           ----------      ----------        ---------    ----------
                                                                          $   641,545     $   468,954       $1,134,871   $   914,307
                                                                           ==========      ==========        =========    ==========

Weighted average number of common shares outstanding:
                           basic                                            2,179,319       2,402,476        2,219,343     2,457,225
                                                                           ==========       =========        =========     =========
                           diluted                                          2,297,377       2,450,347        2,337,134     2,505,510
                                                                           ==========       =========        =========     =========

  Earnings per share:
                           basic                                                $0.23           $0.20            $0.43         $0.37
                                                                                =====           =====            =====         =====
                           diluted                                              $0.22           $0.19            $0.41         $0.36
                                                                                =====           =====            =====         =====

</TABLE>

See notes to unaudited consolidated financial statements.

                                        2
<PAGE>
                           LITTLE FALLS BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                              For the Six Months
                                                                                                Ended June 30,
                                                                                    --------------------------------------
                                                                                          1998                     1997
                                                                                    -------------             ------------
<S>                                                                                  <C>                       <C>       
Cash flows from operating activities:
  Net income..............................................................           $   952,509               $  914,307
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation..........................................................                66,624                   67,701
    Provision for loan losses.............................................               120,000                  120,000
    Amortization of intangibles...........................................               180,394                  180,394
    Amortization of deferred fees, premiums and discounts, net............               104,556                   70,578
    Amortization of unearned ESOP shares..................................               160,442                  108,935
    Amortization of MSBP cost.............................................               151,566                  109,587
    Loss on sale of foreclosed real estate................................                 8,162                   39,067
    Gain on sale of real estate held for investment.......................              (37,911)                (106,318)
    Decrease (increase) in other assets...................................             (398,358)                   32,708
    Decrease (increase) in interest receivable, net.......................              (74,922)                   24,629
    Increase in interest payable..........................................               198,375                  166,943
    Increase in accounts payable and other liabilities....................               171,738                  133,089
                                                                                       ---------                ---------
      Net cash provided by operating activities...........................             1,603,175                1,861,620
                                                                                       ---------                ---------
Cash flows from investing activities:
    Principal collections on mortgage-backed securities available for sale             3,313,201                       --
    Principal collections on mortgage-backed securities held to maturity..            14,902,486                9,998,843
    Maturity of investments held to maturity..............................            12,000,000                6,342,000
    Net increase in loans receivable......................................           (6,195,393)             (11,150,897)
    Purchase of mortgage-backed securities available for sale.............           (4,961,068)                       --
    Purchase of investments held to maturity..............................          (11,694,185)              (2,000,000)
    Purchase of investments available for sale............................          (25,131,597)                       --
    Purchases of premises and equipment...................................              (90,725)                 (27,221)
    Proceeds from sale of foreclosed real estate..........................               209,990                  364,333
    Proceeds from sale of real estate held for investment.................               380,528                  248,378
    Purchases of Federal Home Loan Bank of New York stock.................           (1,250,000)                (146,300)
                                                                                    -----------               ----------
      Net cash provided by (used in) investing activities.................          (18,516,763)                3,629,136
                                                                                    -----------                ----------
 Cash flows from financing activities:
   Net increase (decrease) in deposits....................................           (1,336,209)              (2,998,735)
   Treasury stock acquired................................................           (2,559,022)                       --
   Increase (decrease) in borrowed money..................................           25,157,500                (124,000)
   Purchase of MSBP stock.................................................                   --              (1,688,171)
   Cash dividends paid....................................................            (254,271)                (150,985)
                                                                                    ----------               ----------
     Net cash provided by (used in) financing activities..................          21,007,998               (4,961,891)
                                                                                    ----------               ----------
     Increase in cash and cash equivalents................................           4,094,410                  528,865
Cash and cash equivalents:
  Beginning of period.....................................................           6,788,231               10,373,964
                                                                                    ----------               ----------
  End of period...........................................................          10,882,641              $10,902,829
                                                                                    ==========               ==========
Supplemental disclosures:
Cash paid during the year for:
  Interest................................................................        $  7,087,812              $ 5,862,623
                                                                                   ===========              ===========
  Income Taxes............................................................             746,114                  595,000
                                                                                   ===========              ===========
Unrealized gain on securities available for sale, net of                          $    182,362                       --
                                                                                   ===========              ===========
  income taxes........................................................

</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 six
         month  periods  ended June 30, 1998 and 1997  include  the  accounts of
         Little Falls Bancorp,  Inc. (the "Company") and its subsidiary,  Little
         Falls  Bank  (the  "Bank").   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  June  30,  1998  and  1997 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, 1997.

NOTE 3 - EARNINGS PER SHARE

         During the quarter ended March 31, 1998, the Company adopted  Statement
         of Financial Accounting Standards  ("Statement") No. 128, "Earnings Per
         Share" and has restated  previously  reported per share amounts.  Under
         the new  standard,  basic  earnings  per share is  computed by dividing
         income  applicable to common shares by the weighted  average  number of
         common shares  outstanding  for the period  (excluding  any  dilution).
         Diluted  earnings  per  share  includes  the  effect  of  all  dilutive
         potential  common  shares  outstanding  during the  period.  Sources of
         potential common shares include  unearned shares and outstanding  stock
         options.

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

          Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
          Extinguishments  of Liabilities.  The Financial  Accounting  Standards
          Board  ("FASB")  issued  Statement  of Financial  Accounting  Standard
          ("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,

                                        4

<PAGE>



          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  deferred
          adoption  of  the  standard  as  it  relates  to  securities  lending,
          dollar-rolls,  repurchase  agreements and similar  transactions  until
          January 1, 1998.  The adoption of SFAS No. 125 did not have a material
          impact on its consolidated financial statements.

                Comprehensive  Income.  Effective January 1, 1998,  the  Company
          adopted Statement No. 130, "Reporting Comprehensive Income." Statement
          No. 130 requires the reporting of comprehensive  income in addition to
          net income from  operations.  Comprehensive  income is more  inclusive
          financial  reporting  methodology that includes  disclosure of certain
          financial information that historically has not been recognized in the
          calculation  of net income.  As required,  the provisions of Statement
          No.  130  have  been  retroactively  applied  to  previously  reported
          periods.  The application of Statement No. 130 had no material adverse
          effect  on  the   Company's   consolidated   financial   condition  or
          operations.

                Employers'   Disclosures  about  Pensions  and  Other   Postre-
          tirement  Benefits.  In February  1998,  the FASB issued SFAS No. 132,
          "Employers'   Disclosures  about  Pensions  and  Other  Postretirement
          Benefits."  This statement  supersedes the disclosure  requirements in
          FASB statements No. 87, "Employers'  Accounting for Pensions," No. 88,
          "Employers'  accounting for  Settlements  and  Curtailments of Defined
          Benefit  Pension  Plans and for  Termination  Benefits,"  and No. 106,
          "Employers'   Accounting  for   Postretirement   Benefits  Other  Than
          Pensions."  This  statement  addresses  disclosures  only. It does not
          address  measurement  or recognition  and, as such,  will not have any
          impact  on  consolidated   financial  condition  or  operations.   The
          disclosure requirements of SFAS No. 132 are effective for fiscal years
          beginning after December 15, 1997.

                Accounting for Derivative  Instruments and Hedging Activities.In
          June 1998,  the FASB issued SFAS No. 133,  "Accounting  for Derivative
          Instruments  and  Hedging  Activities."  This  Statement   establishes
          accounting and reporting standards for derivative  instruments and for
          hedging   activities.   It  requires  that  an  entity  recognize  all
          derivatives  as  either  assets or  liabilities  in the  statement  of
          financial  position and measure those  instruments  at fair value.  In
          addition,  certain  provisions of this statement  will permit,  at the
          date of  initial  adoption  of this  Statement,  the  transfer  of any
          held-to-maturity  security  into  either  the  available  for  sale or
          trading  category and the transfer of any  available for sale security
          into  the  trading  category.   Transfers  from  the  held-to-maturity
          portfolio at the date of initial  adoption will not call into question
          the entity's  intent to hold other debt  securities to maturity in the
          future.  This Statement is effective for all fiscal quarters of fiscal
          years  beginning  after June 15,  1999 and is not  expected  to have a
          material  impact on the  Company.  The  Company  at this time does not
          intent to adopt SFAS No. 133 earlier than required.

                                        5

<PAGE>



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

General

         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  $22.8 million at June 30, 1998, as compared to
December 31, 1997.  This increase was  primarily due to a $25.0 million  Federal
Home Loan Bank  ("FHLB")  advance  taken by the Bank in March  1998.  Investment
securities  available for sale  increased by $25.4 million as the Company used a
portion  of the $25.0  million  borrowings  to fund these  purchases.  Net loans
increased  by $6.1  million due in most part to mortgage  originations  of $14.5
million  offset  somewhat  by  loan   repayments.   Mortgage-backed   securities
(including  those  available  for  sale)  decreased  by  $13.3  million  due  to
repayments offset somewhat by purchases of $5.0 million.

         Total deposits decreased, excluding interest credited, by $6.6 million.
This  decrease  was due in most  part to the  Bank  reducing  the  rate  paid on
certificates of deposit. As a result, the weighted average rate paid on deposits
decreased  from 4.60% at December 31, 1997 to 4.45% at June 30, 1998, a decrease
of 15 basis points.

         Total stockholders' equity decreased by $1.4 million,  primarily due to
the purchase of 130,396 shares of stock at an average price of $19.625 per share
offset somewhat by earnings of $953,000 for

                                        6

<PAGE>



the six months  ended June 30, 1998.  Equity was also reduced  $254,000 due to a
dividends paid during the period.

Non-performing Assets

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

<TABLE>
<CAPTION>
                                                                    At                  At                At
                                                                  June 30,          December 31,       June 30,
                                                                   1998                1997              1997
                                                                                  (In thousands)
<S>                                                             <C>                   <C>               <C>   
Total non-performing loans...........................              $801                $1,284            $2,671
Real estate owned....................................               367                   604               454
                                                                    ---                 -----             -----
Total non-performing assets..........................            $1,168                $1,888            $3,125
                                                                  =====                 =====             =====
Total non-performing loans to net loans..............             0.52%                 0.87%             2.08%
                                                                                        ====
Total non-performing loans to total assets...........             0.23%                 0.39%             0.89%
                                                                                        ====
Total non-performing assets to total assets..........             0.33%                 0.57%             1.04%
                                                                                        ====
</TABLE>


Comparison of Earnings for the Three and Six Months Ended June 30, 1998 and 1997

         Net Income. Net income for the three and six months ended June 30, 1998
increased  $25,000 to $494,000 and $38,000 to $953,000,  respectively,  over the
same periods in 1997.  These  increases  were due  primarily to increases in net
interest  income,  offset  somewhat by  increases in  compensation  and employee
benefits.

         Total Interest  Income.  Interest income increased by $927,000 or 18.6%
and $1.6  million or 15.6% for the three and six months  ended June 30,  1998 as
compared to the three and six months ended June 30, 1997.  These  increases were
due in most part to increases of $53.0  million and $42.3 million in the average
balance of interest  earning  assets for the three and six month  periods  ended
June 30,  1998 as compared to the same  periods one year ago. In  addition,  the
average rate earned on interest earning assets increased to 6.94% from 6.93% and
to 6.95% from 6.89% during the three and six month periods,  respectively.  This
increase was due in part to the change in the  composition  of average  interest
earning  assets.  For the three and six months ended June 30, 1998,  the average
balance of loans made up 44.2% and 44.9% of all the average of interest  earning
assets,  up from  44.0% and 42.2% for the three and six  months  ended  June 30,
1997,  respectively.  The average  balance of investment  securities  (including
available  for  sale)  increased  to 23.5%  and  21.2%  from  17.8%  and  17.7%.
Conversely,  mortgage-backed  securities  made up 28.1% and 29.7% of the average
interest earning assets for the periods ended June 30, 1998, down from 36.3% and
37.1% for the same periods of 1997.  The average  balance of federal  funds sold
and  interest  bearing  deposits  in  banks  increased  to 3.1%  and 3.1% of all
interest  earning assets for the periods ended June 30, 1998, from 1.2% and 2.2%
for the same periods ended June 30, 1997. In general, mortgage-backed securities
have a lower yield than loans  because they are  guaranteed  as to principal and
interest.  Federal  funds and  interest  bearing  deposits in banks have a lower
yield than  investment  securities,  generally,  due to their  relatively  short
terms.

         Total Interest Expense. Interest expense increased by $734,000 or 24.2%
for the quarter ended June 30, 1998 and $1.3 million or 20.8% for the six months
ended June 30,  1998 as compared to the same  periods of 1997.  These  increases
were  primarily due to the increase in the average  balance of interest  bearing
liabilities  of $53.6  million and $44.8 and an increase in the average  cost of
funds of 10

                                        7

<PAGE>



basis points to 4.81% for the quarter ended June 30, 1998 and 14 basis points to
4.82% for the six months  ended June 30, 1998 as  compared  to the same  periods
ended June 30, 1997.  The increases in the average  balance of interest  bearing
liabilities was due to the increase in the average balance of borrowed money. At
June 30, 1998,  the Bank had $83.9  million of  borrowings  with the FHLB.  They
consist of the following:

         (a)     $9.0 million repurchase agreement with rate of 5.82%,  maturing
                 December  1999 with a one time call  feature  at  December  20,
                 1998.

         (b)     Two repurchase  agreements of approximately  $8.2 million each.
                 Both mature in November 1998, at rates of 5.62% and 5.61%.

         (c)     $10.0  million  repurchase  agreement  with  a rate  of  5.60%,
                 maturing   July  2,  1998.   This   repurchase   agreement  was
                 subsequently  rolled over at a rate of 5.63% and matured August
                 1998.  At that time it was rolled over again at a rate of 5.65%
                 and will mature in September 1998.

         (d)     $15.0 million advance with a rate of 5.80%,  maturing in August
                 1998.  This advance was  subsequently  rolled over at a rate of
                 5.76% and will mature in September 1998.

         (e)     $25.0 million advance at a rate of 5.35%, with a final maturity
                 of March 2011, but it is callable by the Federal Home Loan Bank
                 after March 2001.

         In addition,  the Bank has an $8.5 million repurchase agreement with an
independent third party, which matures in August, 1998 and has a rate of 5.62%.

         Net Interest Income. Net interest income increased  $193,000,  or 9.97%
and $297,000, or 7.57% during the three and six month periods due to the reasons
discussed in the two previous sections.

         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 was $60,000 in the
quarters  ended June 30, 1998 and 1997 and  $120,000  for each of the six months
ended June 30, 1998 and 1997.

         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.


                                        8

<PAGE>



         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.

         An analysis of the allowance for loan losses follows:

                                                         Six Months
                                                       Ended June 30,
                                                   ------------------------
                                                     1998             1997
                                                     ----             ----
                                                        (In thousands)
Balance - beginning......................          $1,168           $1,090
Provisions charged to operations.........             120              120
Loans charged off, net of recoveries.....            (19)            (150)
                                                     ----            -----
Balance-ending...........................          $1,269           $1,060
                                                    =====            =====


         Impaired loans and related  amounts  recorded in the allowance for loan
losses at June 30, 1998 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                At              At             At
                                             June 30,      December 31,      June 30,
                                               1998            1997            1997
                                          --------------  -----------------   ---------
<S>                                           <C>              <C>            <C>   
      With recorded allowances...........     $614             $744           $1,509

      Without recorded allowances........        -                -                -
                                             -----            -----           ------
      Total impaired loans...............      614              744
                                                                               1,509
      Related allowance for loan losses..       92              111              208
                                              ----              ---            -----
      Net impaired loans.................     $522             $633           $1,301
                                               ===              ===            =====
</TABLE>


         Non-interest  Income.  Non-interest  income  decreased  by $113,000 and
$132,000  for the three and six months  ended June 30,  1998 as  compared to the
three and six months ended June 30, 1997.  These decreases were primarily due to
a $125,000 gain recorded on the sale of the Bank's Frenchtown office building in
June, 1997.

         Non-interest  Expense.  Non-interest  expense increased by $125,000 and
$220,000  for the three and six months  ended June 30,  1998 as  compared to the
same periods in 1997. These increases were primarily due to increases of $98,000
and $187,000 in compensation and employee benefits.  These increases were mainly
due to an  increase  in the  expense  related to the  Company's  Employee  Stock
Ownership  Plan  resulting  from the  increase in the market price of the common
stock of Little Falls Bancorp,  Inc., an increase in the expense  connected with
the Management Stock Bonus Plan and normal annual merit increases. Miscellaneous
expense  increased  by $44,000 and $52,000  primarily  due to an increase in the
expense connected with the 1997 Director's Stock Compensation Plan.

         Income Tax Expense.  Income tax expense  decreased $70,000 and $93,000,
due to a decrease  in  pre-tax  income and the Bank  increasing  investments  in
assets that are taxed at a reduced Federal tax rate.


                                        9

<PAGE>



Liquidity and Capital Resources

         On June 30, 1998, the Bank was in compliance with its three  regulatory
capital requirements as follows:

                                                  Amount                Percent
                                                  ------                -------
                                                     (Dollars in thousands)
Tangible capital..............................    $27,798                 8.05%
Tangible capital requirement..................      5,181                 1.50%
                                                  -------                -----
Excess over requirement.......................   $ 22,617                 6.55%
                                                  =======                =====

Core capital..................................    $27,798                 8.05%
Core capital requirement......................     13,816                 4.00%
                                                   ------                -----
Excess over requirement.......................    $13,982                 4.05%
                                                   ======                =====

Risk based capital............................    $21,000                15.33%
Risk based capital requirement................     10,959                 8.00%
                                                   ------                -----
Excess over requirement.......................    $10,041                 7.33%
                                                   ======                 ====


         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 minimum capital requirements.

         The Bank'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  Bank's  primary  sources  of  funds  are  deposits  and  scheduled
amortization and prepayment of loan and  mortgage-backed  principal.  During the
past several years, the Bank has used such funds primarily to fund maturing time
deposits,  pay savings  withdrawals,  fund  lending  commitments,  purchase  new
investments,  and increase  liquidity.  The Bank is  currently  able to fund its
operations  internally.  Additionally,  sources of funds  include the ability to
utilize  Federal  Home Loan Bank of New York  advances and the ability to borrow
against mortgage-backed and investment securities. As of June 30, 1998, the Bank
had $83.9 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 Bank  anticipates  that it will have sufficient  funds available to
meet its  current  commitments.  As of June  30,  1998,  the  Bank had  mortgage
commitments  to fund loans of $3.6 million.  Also, at June 30, 1998,  there were
commitments  on unused  lines of credit  relating to home  equity  loans of $4.3
million. Certificates of deposit scheduled to mature in one year or less at June
30, 1998 totaled $109.8  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 Bank.
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 4% of its net
withdrawable  accounts plus short term  borrowings.  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.


                                       10

<PAGE>



Risk Management

         In an effort  to reduce  interest  rate  risk and  protect  it from the
negative effect of rapid increases and decreases in interest rates, the Bank has
instituted certain asset and liability management measures including emphasizing
the origination of three, five and ten year  adjustable-rate  mortgage loans and
investing excess funds in short- and medium-term  mortgage-backed and investment
securities.  The Bank retains an asset/liability  consultant,  FinPro,  Inc., to
assist it in  analyzing  its asset  liability  position.  With the  consultant's
assistance,  the Bank undertakes a quarterly  extensive study of various trends,
conducts   separate   deposit   and  asset   analyses   and   prepares   various
asset/liability  tables including  contractual  interest rate gap, interest rate
gap with prepayment  assumptions,  margin/spread  and duration tables.  Interest
rate gap analysis  measures the difference  between amounts of  interest-earning
assets and interest-bearing  liabilities which either reprice or mature within a
given period of times and their sensitivity to changing interest rates.

         The Bank, like many other thrift  institutions,  is exposed to interest
rate risk as a result of the  difference  in the  maturity  of  interest-bearing
liabilities  and  interest-earning  assets and the volatility of interest rates.
Most deposit  accounts react more quickly to market interest rate movements than
do the existing mortgage loans because of the deposit accounts' shorter terms to
maturity;  sharp decreases in interest rates would typically increase the Bank's
earnings.  Conversely,  this same mismatch will generally  adversely  affect the
Bank's  earnings  during  periods of increasing  interest  rates.  The extent of
movement of interest rates is an uncertainty  that could have a negative  impact
on the earnings of the Bank.

         Volatility  in  interest  rates can also  result in  disintermediation,
which is the flow of funds away from savings institutions (such as the Bank) and
into other  investments,  such as U.S.  Government and corporate  securities and
other investment vehicles.  Because of the absence of federal insurance premiums
and reserve  requirements,  such investments may pay higher rates of return than
investment vehicles offered by savings institutions.

Year 2000

         A great  deal of  information  has been  disseminated  about the global
computer year 2000. Many computer  programs that can only  distinguish the final
two digits of the year entered (a common programming  practice in earlier years)
are  expected  to read  entries  for the year 2000 as the year 1900 and  compute
payment,  interest or delinquency  based on the wrong date or are expected to be
unable to compute  payment,  interest or  delinquency.  Rapid and accurate  data
processing is essential to the operation of the Company. Data processing is also
essential to most other financial institutions and many other companies.  All of
the  material  data  processing  of the  Company  that could be affected by this
problem is provided by a third party service  bureau.  The service bureau of the
Company has advised the Company that it expects to be year 2000 complaint  prior
to December 31, 1999.  However,  if the service bureau is unable to resolve this
potential problem in time, the Company would likely experience  significant data
processing  delays,  mistakes or failures.  These  delays,  mistakes or failures
could have a significant  adverse impact on the financial  condition and results
of operation of the Company.

         Furthermore, the Company is requiring its computer systems and software
vendors  to  represent  that  the  products  provided  are or will be Year  2000
compliant  and has planned a program of testing for  compliance.  The Company is
obtaining  representations  from its primary  third party vendors that they will
have resolved any Year 2000 problems and anticipates  that its vendors also will
have resolved any Year 2000 problems. There can be no assurances,  however, that
the Company's plan or the performance by the Company's vendors will be effective
to remedy all potential problems. To the extent the

                                       11

<PAGE>



Company's  systems are not fully Year 2000 compliant,  there can be no assurance
that potential  systems  interruptions  or the cost necessary to update software
would not have a materially adverse effect on the Company's business,  financial
condition,  results of operations, cash flows, and business prospects.  Further,
any Year 2000  failure on the part of the  Company's  customers  could result in
additional  expense or loss to the  Company.  The Company  expects to be in year
2000 compliance by the end of 1998.

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                   Six Months Ended
                                                                  June 30,                            June 30,
                                                    ------------------------------------  ------------------------------
                                                        1998(1)             1997(1)          1998(1)          1997(1)
                                                        -------             -------          -------          -------
<S>                                                     <C>                 <C>              <C>               <C>  
Diluted earnings per common share (2)............       $0.22               $0.19            $0.41             $0.36
Return on average assets.........................        0.56%               0.63%            0.55%             0.61%
Return on average equity.........................        5.39%               4.75%            5.09%             4.59%
Interest rate spread.............................        2.14%               2.22%            2.12%             2.21%
Net interest margin..............................        2.51%               2.70%            2.55%             2.71%
Noninterest expense to average assets............        1.61%               1.71%            1.63%             1.70%
Net charge-offs to average outstanding
  loans..........................................        0.01%               0.01%            0.01%             0.12%
</TABLE>



                                                At June 30,      At December 31,
                                                    1998               1997
                                                    ----               ----

Tangible book value per share...............       $13.83            $13.59

----------------
(1)      The ratios for the three and six month periods are annualized.
(2)      The average number of shares and share equivalents  outstanding  during
         the three and six months  ended June 30,  1998 and 1997 was  2,297,377,
         2,337,134, 2,450,347, and 2,505,510, respectively.

                                       12

<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 June 30, 1998. 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 June 30,
          1998 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

          3.1   Articles of Incorporation of Little Falls Bancorp, Inc.*
          3.2   Bylaws of Little Falls Bancorp, Inc.*
          4.0   Form of Stock Certificate of Little Falls Bancorp, Inc.*
         10.1   Employment Agreement between the Bank and John P. Pullara**
         10.2   Employment Agreement between the Bank and Leonard G. Romaine**
         10.4   Form of Employment Agreement with Eight Employees of the Bank***
         10.6   1996 Management Stock Bonus Plan***
         10.7   1996 Stock Option Plan***
         11.0   Earnings Per Share Calculation
         27.0   Financial Data Schedule****

                (b)     Reports on Form 8-K.

                None.

-----------------
*        Incorporated  herein by reference  into this document from the Exhibits
         to  Form  S-1,  Registration   Statement,   initially  filed  with  the
         Securities and Exchange  Commission on September 25, 1995 (Registration
         No. 33-97316).
**       Incorporated by reference into  this  document  from  the  Exhibits  to
         Registrant's Annual Report on Form 10-K for the Year Ended December 31,
         1995 (File No. 0-27010).
***      Incorporated  by  reference  into this  document  from the  Exhibits to
         Registrant's Annual Report on Form 10-K for the year ended December 31,
         1996 (File No. 0-27010).
****     In electronic filing only.


                                       13

<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: August 14, 1998                  By: /s/ Leonard G. Romaine
                                           -------------------------------------
                                           Leonard G. Romaine
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)



Date: August 14, 1998                 By:  /s/ Richard Capone
                                           -------------------------------------
                                           Richard Capone
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Officer)