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             September 30, 1996
                               -----------------------------------------

                                       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 November 8, 1996.

             Class                                       Outstanding
---------------------------                            ----------------
$.10 par value common stock                            2,745,180 shares


<PAGE>



                           LITTLE FALLS BANCORP, INC.
                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1996

                                      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................................    14

SIGNATURES


<PAGE>



                           LITTLE FALLS BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                    September 30,        December 31,
                                                                                        1996                 1995*
                                                                                        ----                 -----

ASSETS

<S>                                                                                   <C>                <C>          
Cash and due from banks......................................................           $2,258,072       $   2,518,055
Interest-bearing deposits in other banks.....................................            5,374,656          11,101,033
Federal funds sold...........................................................            6,000,000          39,800,000
                                                                                       -----------         -----------
     Total cash and cash equivalents.........................................           13,632,728          53,419,088
Investment securities held-to-maturity net
  (estimated fair values $26,065,000 (1996)
  and $29,856,000 (1995))....................................................           26,370,960          29,999,470
Mortgage-backed securities held to maturity, net
  (estimated fair values $115,777,000 (1996)
  and $118,842,000 (1995))...................................................          116,573,220         118,020,300
Loans receivable, net........................................................          111,194,407          96,229,678
Premises and equipment, net..................................................            2,799,232           2,789,468
Investment in real estate, net...............................................              539,181             546,786
Foreclosed real estate, net..................................................            1,006,829           1,500,825
Interest receivable, net.....................................................            1,754,213           1,717,349
Federal Home Loan Bank of New York stock, at cost............................            2,075,700           1,395,200
Excess of cost over assets acquired..........................................            3,307,213           3,577,800
Other assets.................................................................            1,347,852           1,158,999
                                                                                       -----------         -----------
      TOTAL ASSETS...........................................................         $280,601,535        $310,354,963
                                                                                       ===========         ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits...................................................................         $236,935,100        $247,851,373
  Advances by borrowers for taxes............................................                   --             701,773
  Stock subscriptions payable................................................                   --          44,831,296
  Accounts payable and other liabilities.....................................            1,899,281             747,298
                                                                                       -----------         -----------
      Total liabilities......................................................          238,834,381        $294,131,740
                                                                                       -----------         -----------
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 2,889,663............................................              304,175                  --
  Additional paid-in-capital.................................................           28,980,035                  --
  Retained earnings..........................................................           16,505,156          16,327,286
  Unearned ESOP shares.......................................................          (2,311,730)                   -
  Minimum pension liability net of deferred taxes............................            (104,063)           (104,063)
  Treasury stock, at cost; 152,087 shares....................................          (1,606,419)                  --
                                                                                       ----------          -----------
      Total stockholders' equity.............................................           41,767,154          16,223,223
                                                                                       -----------         -----------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.............................         $280,601,535        $310,354,963
                                                                                       ===========         ===========
</TABLE>

--------------------- 

*    The consolidated balance sheet at December 31, 1995 has been taken from the
     audited balance sheet at that date.

See notes to unaudited consolidated financial statements.

                                        1


<PAGE>



                           LITTLE FALLS BANCORP, INC.
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                    For the Three Months             For the Nine Months
                                                    Ended September 30,              Ended September 30,

                                                    1996            1995             1996               1995
                                                   ------          ------       ---------------   ----------
Interest income:
<S>                                                <C>             <C>               <C>                 <C>       
  Loans receivable..........................       $2,108,759      $1,867,215        $6,016,945          $5,635,713
  Mortgage backed securities................        2,014,796       1,108,813         6,073,012           2,766,172

  Investment securities and other interest
    earning assets..........................          490,555         561,367         1,905,197           1,534,005
                                                   ----------       ---------        ----------          ----------

      Total interest income.................        4,614,110       3,537,395        13,995,154           9,935,890
Interest expense:
  Deposits..................................        2,721,029       2,383,449         8,384,704           6,648,365
                                                   ----------       ---------        ----------          ----------
Net interest income ........................        1,893,081       1,153,946         5,610,450           3,287,525
Provision for loan losses...................          152,900         106,839           182,900             391,564
                                                   ----------       ---------        ----------          ----------
     Net interest income after provision for
       loan losses..........................        1,740,181       1,047,107         5,427,550           2,895,961
Non-interest income
  Income (expense) on foreclosed real estate         (26,976)       (187,337)           (6,317)           (192,103)
  Other.....................................           66,531         112,917           201,370             184,637
                                                   ----------      ----------        ----------           ---------
     Total non-interest income..............           39,555       ( 74,420)           195,053            ( 7,466)
                                                   ----------      ----------        ----------           ---------
Non-interest expense:
  Compensation and employee benefits........          633,518         369,916         1,843,683           1,151,295
  Occupancy, net............................           92,380          36,216           302,213             120,940
  Equipment.................................           96,359          44,623           290,301             164,558
  Deposit insurance premiums................        1,303,927         106,500         1,549,366             319,500
  Amortization of intangibles...............           90,197              --           270,586                  --
  Other.....................................          320,473         152,694           934,566             668,017
                                                    ---------      ----------        ----------          ----------
     Total non-interest expense.............        2,536,854         709,949         5,190,715           2,424,310
                                                   ----------      ----------        ----------          ----------
     Income (loss) before provision for
      income taxes..........................        (757,118)         262,738           431,888             464,185
Provision (benefit) for income taxes........        (275,526)         138,242           177,974             198,320
                                                    ---------      ----------        ----------           ---------
      Net income (loss).....................        (481,592)         124,496           253,914             265,865
                                                    =========      ==========        ==========           =========

Weighted average number of common
  shares outstanding........................        2,732,507             N/A         2,766,472                 N/A


Earnings (loss) per share...................          $(0.18)             N/A             $0.09                 N/A
</TABLE>


See notes to unaudited consolidated financial statements.

                                        2


<PAGE>





                           LITTLE FALLS BANCORP, INC.
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                       For the Nine Months
                                                                                       Ended September 30,
                                                                                   1996                 1995
                                                                                   ----                 ----

Cash flows from operating activities:
<S>                                                                             <C>                   <C>      
  Net income..............................................................         $ 253,914             $ 265,865
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation..........................................................           110,745                72,266
    Provision for loan losses.............................................           182,900               391,564
    Amortization of intangibles...........................................           270,586                    --
    Amortization (accretion) of deferred fees, premiums and discounts, net            45,680               (1,451)
    Amortization of unearned ESOP shares..................................           128,321                    --
    Gain on sale of foreclosed real estate................................            (4,455)                   --
    Increase in other assets..............................................          (611,483)             (676,734)
    Increase in interest receivable, net..................................           (36,864)             (113,817)
    Increase in interest payable..........................................           157,977                 8,981
    Increase in accounts payable and other liabilities....................         1,194,147               242,814
                                                                                ------------          ------------
      Net cash provided by operating activities...........................         1,691,468               189,488
                                                                                ------------          ------------
Cash flows from investing activities:
    Purchase of mortgage-backed securities held to maturity...............       (16,073,205)          (20,530,434)
    Principal collections on mortgage-backed securities held to maturity..        17,407,442             4,474,146
    Net (increase) decrease in loans receivable...........................       (15,418,684)            2,625,474
    Maturity of investments held to maturity..............................         9,000,000             9,000,000
    Purchase of investments held to maturity..............................        (5,342,000)           (8,000,000)
    Purchases of premises and equipment...................................          (112,904)             (329,995)
    Proceeds from sale of foreclosed real estate..........................           807,179               284,764
    Redemption (purchases) of Federal Home Loan Bank of New York stock....          (680,500)              116,100
                                                                                ------------               -------
      Net cash used in investing activities...............................       (10,412,672)          (12,359,945)
                                                                                ------------          ------------
 Cash flows from financing activities:
   Net increase (decrease) in deposits....................................        (8,214,792)           14,924,394
   Decrease in advances from borrowers....................................          (743,937)              (80,324)
   Refund of oversubscribed stock subscription............................       (19,706,653)                   --
   Costs of issuance of common stock......................................          (717,311)                   --
   Repurchase of common stock.............................................        (1,606,419)                   --
   Cash dividends paid....................................................           (76,044)                   --
                                                                                ------------          ------------
     Net cash provided by (used in) financing activities..................       (31,065,156)           14,844,070
                                                                                ------------          ------------
     Increase (decrease) in cash and cash equivalents.....................       (39,786,360)            2,673,613
Cash and cash equivalents:

  Beginning of period.....................................................        53,419,088             4,065,128
                                                                                  ----------          ------------
  End of period...........................................................       $13,632,725            $6,738,741
                                                                                ============          ============
Supplemental disclosures:
Cash paid during the year for:
  Interest................................................................        $8,226,727           $ 6,639,384
  Income taxes............................................................           403,000               375,339
Loans receivable transferred to foreclosed real estate....................           308,728               607,655
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 month and
         nine month  periods  ended  September  30, 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, 1996 are not necessarily
         indicative  of the results  which may be expected for the entire fiscal
         year or any other period.

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 - EARNINGS PER SHARE

         Earnings per share for the three and nine month periods ended September
         30, 1996 are  calculated  by dividing the net loss and net earnings for
         the periods from July 1, 1996 and January 1, 1996 (the beginning of the
         Company's  fiscal  year)  to  September  30,  1996  of  $(481,592)  and
         $253,914,  respectively,  by the  weighted  average  number  of  shares
         outstanding  during these same periods (as if the  Conversion had taken
         place  on  January  1,  1996)  of  2,732,507  and   2,766,472   shares,
         respectively.  The weighted average number of common shares outstanding
         is adjusted for the

                                        4


<PAGE>



         unallocated  portion of shares held by the ESOP.  Earnings per share is
         not presented for the 1995 period as the Bank was a mutual savings bank
         at that time and no common stock was outstanding.

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS

         Effective  January 1, 1995,  the Bank adopted FASB  Statement Nos. 114,
         "Accounting by Creditors for Impairment of a Loan" and 118, "Accounting
         by  Creditors  for  Impairment  of a  Loan  -  Income  Recognition  and
         Disclosures."  The provision of these  statements are applicable to all
         loans,  uncollateralized  as well as  collateralized,  except for large
         groups  of  smaller-balance  homogeneous  loans  that are  collectively
         evaluated for  impairment  and loans that are measured at fair value or
         at the lower of cost or fair value. Additionally, such provisions apply
         to all loans that are  renegotiated  in  troubled  debt  restructurings
         involving a modification of terms.

         Statement No. 114 requires that impaired loans be measured based on the
         present  value of expected  future cash flows  discounted at the loan's
         effective  interest  rate or, as a practical  expedient,  at the loan's
         observable market price or the fair value of the collateral if the loan
         is collateral  dependent,  except that loans  renegotiated as part of a
         troubled  debt  restructuring  subsequent  to the adoption of Statement
         Nos. 114 and 118 must be measured for  impairment  by  discounting  the
         total  expected cash flow under the  renegotiated  terms at each loan's
         original effective interest rate.

         A loan evaluated for impairment pursuant to Statement No. 114 is deemed
         to be impaired when,  based on current  information  and events,  it is
         probable  that the Bank will be  unable  to  collect  all  amounts  due
         according  to  the  contractual   terms  of  the  loan  agreement.   An
         insignificant  payment  delay,  which is  defined  by the Bank as up to
         ninety days, will not cause a loan to be classified as impaired. A loan
         is not  impaired  during  the  period of delay in  payment  if the Bank
         expects to collect all amounts due,  including  interest accrued at the
         contractual  interest rate for the period of delay. Thus, a demand loan
         or other  loan  with no stated  maturity  is not  impaired  if the Bank
         expects to collect all amounts due,  including  interest accrued at the
         contractual  interest rate,  during the period the loan is outstanding.
         All loans identified as impaired are evaluated independently.  The Bank
         does not aggregate such loans for evaluation purposes.

         The  adoption of  Statement  Nos.  114 and 118 did not have a material
         adverse impact on financial condition or operations.

         Payments  received  on  impaired  loans are  applied  first to interest
         receivable and then to principal.

                                        5


<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  decreased by $29.8 million to $280.6 million at September
30, 1996 from $310.3 million at December 31, 1995. Net loans  increased by $15.0
million  primarily  due to loan  originations  of $23.5  million  offset by loan
repayments.   Mortgage-backed  securities  decreased  by  $1.4  million  due  to
repayments being greater than the $16.0 million of purchases.  Of the securities
purchased,  $10.1 million were adjustable rate  securities.  Total cash and cash
equivalents  decreased  by  $39.8  million  due to the  $23.5  million  of loans
originated, the $16.0 million mortgage-backed securities purchased, the purchase
of $5.3 million of investment  securities,  the $8.1 million outflow of deposits
and the refund of $19.7 million of over-subscribed stock subscriptions partially
offset by amortization and repayments on loans and  mortgage-backed  securities,
and maturities of investment securities.

                                        6


<PAGE>



         Total deposits decreased by $10.9 million,  due in part to $2.8 million
being  used for the  purchase  of  stock in the  Conversion.  In  addition,  the
decrease  was  also the  result  of the  Bank's  strategy  to lower  its cost of
deposits.  This strategy  resulted in a decrease of the weighted average rate on
total deposits from 4.73% on December 31, 1996 to 4.55% on September 30, 1996.

         Total stockholders' equity increased by $25.5 million, primarily due to
the  completion  of the  mutual  to stock  conversion,  partially  offset by the
repurchase  of  152,077  shares of  Common  Stock at an  aggregate  cost of $1.6
million. Earnings for the nine months ended September 30, 1996, also contributed
to the increase, although to a much smaller extent.

         On October 28,  1996,  the Company  completed  a 5%  repurchase  of its
common stock. A total of 144,483  shares of common stock were  repurchased at an
average net price of $11.5625 per share.  The total price  for  all  shares  was
approximately $1.67 million.

Non-performing Assets

         The following  table sets forth  information  regarding  non-performing
loans and real  estate  owned.  During the  periods  indicated,  the Bank had no
restructured loans within the meaning of SFAS No. 15.
<TABLE>
<CAPTION>

                                                            At                         At
                                                       September 30,             December 31,
                                                       -------------             ------------
                                                            1996                      1995
                                                            ----                      ----

                                                                (Dollars in Thousands)

<S>                                                       <C>                        <C>   
Total non-performing loans...................             $ 2,314                    $2,447
Real estate owned............................               1,007                     1,501
                                                            -----                     -----
Total non-performing assets..................             $ 3,321                    $3,948
                                                            =====                     =====
Total non-performing loans to net loans......                2.08%                     2.54% 
                                                            =====                     =====

Total non-performing loans to total assets...                0.82%                     0.79%
                                                            =====                     =====

Total non-performing assets to total assets..                1.18%                     1.26%
                                                            =====                     =====
</TABLE>

         Non-performing   assets  decreased  by  $627,000  to  $3.3  million  at
September  30,  1996.  The  decrease  was  due in most  part to the  sale of six
properties previously classified as real estate owned. Of these sales, four were
completed in the third quarter.

Comparison  of Earnings for the Three and Nine Months Ended  September  30, 1996
and 1995

         Net Income.  Net income for the three and nine months  ended  September
30, 1996 decreased $606,000 and $12,000, respectively, to a net loss of $482,000
and net income of  $254,000,  respectively,  when  compared to the same  periods
ended  September 30, 1995.  The decreases  were  primarily due to a $1.2 million
charge connected with a one time special assessment from the Savings Association
Insurance Fund ("SAIF").  This one time assessment was the result of legislation
that was signed into law on September 30, 1996 for the purpose of recapitalizing
the SAIF.  This was  partially  offset by the  increase in net  interest  income
before the  provision for loan losses of $739,000 and $2.3 million for the three
and nine months ended September 30, 1996, respectively,  as compared to the same
periods in 1995. In addition,  the Company  recorded a  nonrecurring  expense of
$195,000 in the second quarter of 1995

                                        7


<PAGE>



in connection with the implementation of a directors' medical plan. Non-interest
expenses,  excluding the  non-recurring  directors'  medical expense and the one
time SAIF assessment, increased $659,000 and $1.8 million for the three and nine
months ended September 30, 1996,  respectively,  as compared to the same periods
in 1995.

         Total Interest  Income.  Interest income  increased by $1.1 million and
$4.1  million for the three and nine months  ended  September  30,  1996.  These
increases were primarily due to the increase of the average balances of interest
earning  assets of $65.5 million and $74.8 million for the three months and nine
months ended  September 30, 1996,  as compared to the same periods in 1995.  The
primary reasons for the increased  average  balances of interest  earning assets
were the receipt of $50.8 million from the purchase of three  branches and their
deposits in December  1995 and the receipt of $26.8 million of net proceeds from
the Bank's Conversion on January 5, 1996.

         Total Interest Expense.  Interest expense increased $338,000,  or 14.2%
and $1.7 million or 26.1% for the three and nine month periods  ended  September
30, 1996,  respectively,  as compared to the same periods  ended  September  30,
1995. These increases were primarily due to the increase in the average balances
of deposits of $41.1 million and $56.2 million, respectively. Deposits increased
due to the  purchase of three  branches and their  deposits of $54.1  million in
December  1995.  The average rate paid on deposits  decreased to 4.61% and 4.68%
from  4.97%  and  4.85%,  respectively,  for the  three  and nine  months  ended
September 30, 1996, as compared to the same periods ended September 30, 1995.

         Net Interest Income.  Net interest income  increased  $739,000 or 64.1%
and $2.3 million or 70.1% for the three and nine month periods  ended  September
30, 1996,  respectively,  as compared to the same periods  ended  September  30,
1995.  These  increases were due in most part to the investment of $26.8 million
received  from  the  Conversion  in  loans,   investment   and   mortgage-backed
securities,  as well as a  decrease  in the  average  rate paid on  savings,  as
described earlier.

         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 increased $46,000 and
decreased  $209,000 during the three and nine month periods,  respectively.  The
primary cause for the increase for the three month period was the write off of a
loan which was a performing loan in the previous  quarter.  The decrease for the
nine month period was due in most part to the decision by the Bank's  management
during 1995,  to establish an increased  general  reserve for  portfolio  losses
based on an assessment of the risks inherent in the loan portfolio and trends in
the local and national economies.

         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:
<TABLE>
<CAPTION>

                                                         Quarter Ended September 30,
                                                         ---------------------------
                                                        1996                   1995
                                                        ----                   ----
                                                               (In thousands)

<S>                                                     <C>                     <C>    
Balance - beginning                                     $ 931                   $ 1,015
Provisions charged to operations...............          153                        107
Loans charged off, net of recoveries...........          (146)                     (107)
                                                        -----                     -----
Balance-ending.................................         $ 938                   $ 1,015
                                                         ====                    ======

</TABLE>

         Impaired loans and related  amounts  recorded in the allowance for loan
losses at September 30, 1996 are summarized as follows (in thousands):
<TABLE>
<CAPTION>

<S>                                                                            <C>    
         With recorded allowances............................                  $ 1,479
         Without recorded allowances.........................                       --
                                                                                 -----
        Total impaired loans.................................                    1,479
        Related allowance for loan losses....................                      205
                                                                                 -----
        Net impaired loans...................................                   $1,274
                                                                                 =====
</TABLE>


         Non-interest   Income.   Non-interest  income  increased  $114,000  and
$203,000 for the three and nine month  periods  ended  September  30,  1996,  as
compared  to the same  periods  ended  September  30,  1995 due  primarily  to a
decrease in expenses on  foreclosed  properties of $160,000 and $186,000 for the
three and nine month periods, and to an increase in service fees charged, due in
most part to the  increase  in  deposits  resulting  from the  purchase of three
branches and their deposits in December, 1995.

         Non-interest  Expense.  Non-interest expense increased $1.8 million and
$2.8 million for the three and nine months ended September 30, 1996, as compared
to the three and nine months ended  September  30, 1995 for a number of reasons.
Compensation  and  employee   benefits   increased  by  $264,000  and  $692,000,
respectively, due in part to additional employees resulting from the purchase of
three  branch  offices in December,  1995 and the adoption of an employee  stock
ownership  plan  ("ESOP")  in  connection   with  the  Bank's  mutual  to  stock
conversion.  The ESOP  expense was $42,000 and  $128,000  for the three and nine
months ended  September 30, 1996,  respectively.  The  acquisition of the branch
offices also caused  increases in  occupancy,  equipment  and deposit  insurance
premium expenses,  as well as the amortization of goodwill during these periods.
In  addition,  for the nine months  ended  September  30, 1996, a portion of the
increase was due to one time costs  associated with new services  offered by the
Bank. The 1996 increases were partially offset by a nonrecurring 1995 expense of
$195,000 for the implementation of a directors' medical plan, which was recorded
during the three months ended June 30, 1995. On August 30, 1996, the Bank closed
its  Frenchtown   office.  The  decision  to  close  the  branch  was  based  on
management's  evaluation  of the  purchase of three  branch  offices in the same
county from an unaffiliated  commercial bank in December 1995 and the ability of
the Bank to decrease expenses and improve efficiencies through consolidation. On
October 18 the Bank  announced that it plans to close its Mount Holly branch and
sell the  deposits to another  depository  institution  in the area.  The branch
closing and related sale of deposits is expected to result in reduced  operating
expenses  and lower  cost of funds.  The  closing  of the office and sale of the
related  deposits  is  anticipated  to occur no later than  December  31,  1996,
subject to regulatory approval or non-objection, if any.

                                        9


<PAGE>




         Pursuant to the Economic  Growth and  Paperwork  Reduction  Act of 1996
(the "Act"), the FDIC imposed a special assessment on SAIF members to capitalize
the SAIF at the designated  reserve level of 1.25% as of October 1, 1996.  Based
on the Bank's  deposits as of March 31, 1995,  the date for measuring the amount
of the  special  assessment  pursuant  to the Act,  the Bank  will pay a special
assessment  of $1.2 million on or about  November 27, 1996 to  recapitalize  the
SAIF. The FDIC is expected to lower the premium for deposit insurance to a level
necessary to maintain the SAIF at its required reserve level; however, the range
of premiums has not been determined at this time.

         Pursuant  to the Act,  the Bank will pay,  in  addition  to its  normal
deposit  insurance  premium  as a  member  of  the  SAIF,  an  amount  equal  to
approximately   6.4  basis  points  toward  the   retirement  of  the  Financing
Corporation  bonds ("Fico Bonds") issued in the 1980's to assist in the recovery
of the savings and loan industry.  Member of the Bank Insurance Fund ("BIF"), by
contrast,  will pay, in  addition to their  normal  deposit  insurance  premium,
approximately  1.3 basis  points.  Based on total  deposits as of September  30,
1996,  had the Act been in effect,  the Bank's Fico Bond premium would have been
approximately  $37,900 in  addition  to its normal  deposit  insurance  premium.
Beginning no later than January 1, 2000,  the rate paid to retire the Fico Bonds
will be equal for members of the BIF and the SAIF. The Act also provides for the
merging  of the BIF and the  SAIF by  January  1,  1999  provided  there  are no
financial  institutions  still  chartered as savings  associations at that time.
Should the insurance  funds be merged before  January 1, 2000,  the rate paid by
all members of this new fund to retire the Fico Bonds would be equal.

         On July 9, 1996, the  stockholders of the Company approved the MSBP and
a Stock  Option  Plan.  The MSBP  will,  subject  to  regulatory  non-objection,
purchase up to 121,670 shares of Common Stock to be awarded to key employees and
directors of the Bank.  Such shares will be expensed at fair market value at 20%
per  year  beginning  July  1997.  The  Company  expects  the  MSBP to  increase
compensation expense over such periods.

         Income Tax Expense.  Income tax expense decreased $414,000 and $20,000,
respectively  for the three and nine month periods ended  September 30, 1996, as
compared to the same periods one year ago due to the decrease of pre-tax  income
for the same periods.

Liquidity and Capital Resources

         On  September  30,  1996,  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................................................               $25,235                         9.10%
Tangible capital requirement....................................                 4,161                         1.50%
                                                                                ------                       ------
Excess over requirement.........................................               $21,074                         7.60%
                                                                                ======                       ======

Core capital....................................................               $25,235                         9.10%
Core capital requirement........................................                 8,321                         3.00%
                                                                                ------                       ------
Excess over requirement.........................................               $16,914                         6.10%
                                                                                ======                       ======

Risk based capital..............................................               $25,634                        29.26%
Risk based capital requirement..................................                 7,007                         8.00%
                                                                                ------                      -------
Excess over requirement.........................................               $18,627                        21.26%
                                                                                ======                      =======
</TABLE>



                                       10


<PAGE>



         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 September 30, 1996, the
Bank  had no such  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 September 30, 1996,  the Bank had mortgage
commitments  to fund loans of $4.6 million.  Also, at September 30, 1996,  there
were commitments on unused lines of credit relating to home equity loans of $2.7
million.  Certificates  of  deposit  scheduled  to mature in one year or less at
September  30,  1996  totaled  $105.7  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.  Note,
however,  that  purchases  of  common  stock  of  the  Company  pursuant  to the
repurchase  plan and MSBP  will  require  additional  liquidity.  Management  is
currently evaluating its options on these matters.

         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.

                                       11


<PAGE>



Additional Key Operating Ratios

<TABLE>
<CAPTION>

                                                                For the                                 For the
                                                           Three Months Ended                      Nine Months Ended
                                                             September 30,                           September 30,
                                                             -------------                           -------------

                                                       1996(1)            1995(1)            1996(1)             1995(1)
                                                       -------            -------            -------             -------
<S>                                                       <C>                  <C>                <C>                  <C>     
Earnings (loss) per common share                          $(0.18)                N/A              $0.09                  N/A
(2)(3).........................................
Return on average assets.......................            (0.68)%             0.24%              0.12%                0.18%
Return on average equity.......................            (4.52)%             3.12%              0.78%                2.21%
Interest rate spread...........................             2.32%              2.10%              2.27%                2.00%
Net interest margin............................             2.84%              2.39%              2.78%                2.33%
Noninterest expense to average assets..........             3.61%              1.36%              2.48%                1.61%
Noninterest expense, excluding one-
  time SAIF special assessment, to
  average assets...............................             1.97%              1.36%              1.89%                1.61%
Net charge-offs to average outstanding
  loans........................................             0.54%              0.12%              0.22%                0.78%

</TABLE>

<TABLE>
<CAPTION>

                                                                          At September 30,           At December 31,
                                                                                1996                      1995
                                                                                ----                      ----

<S>                                                                                   <C>                      <C>
Tangible book value per share......................................                   $13.31                   N/A (2)
</TABLE>

----------------
(1)      The ratios for the three- and nine-month periods are annualized.
(2)      There  were  no  shares  outstanding  prior  to the  completion  of the
         Company's initial public offering on January 5, 1996.
(3)      The  average  number of shares  outstanding  during  the three and nine
         months  ended   September  30,  1996  was   2,732,507  and   2,766,472,
         respectively.
(4)      The number of shares issued and outstanding as of September 30, 1996, 
         was 2,889,663.

                                       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 September  30, 1996.  From time to time,  the
          Company  is a party to legal  proceedings  in the  ordinary  course of
          business wherein it enforces its security interest in loans.

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

         The Company  held a special  meeting of  stockholders  on July 9, 1996
         (the  "Special  Meeting").  The purpose of the Special  Meeting was to
         seek  stockholder  approval of the  Company's  stock  option plan (the
         "Option  Plan")  and the  Association's  management  stock  bonus plan
         ("MSBP").  The  following  table  indicates  the voting on each matter
         considered.
<TABLE>
<CAPTION>

                                     For                  Against                 Abstain
                                     ---                  -------                 -------

<S>                             <C>                        <C>                     <C>   
Option Plan                     2,164,539                  292,628                 11,475
MSBP                            1,827,552                  627,208                 16,091
</TABLE>



ITEM 5.  OTHER MATERIALLY IMPORTANT EVENTS

         Recent  Developments.  In an effort to  increase  earnings,  reduce the
Company's  interest  rate  sensitivity,  and to better match its  interest  rate
position, on November 13, 1996, the Company entered into a financial transaction
whereby it  purchased  a $25.0  million  fixed-rate  Federal  National  Mortgage
Association  ("FNMA")  note and  simultaneously  borrowed  $25.0 million from an
independent  third  party,  using the FNMA note as  collateral.  The note has an
initial  term of ten years at an annual rate of 7.20% and is callable  after two
years and continuously thereafter. The borrowings are comprised of a combination
of repurchase  agreements with terms of one year, six months and overnight.  The
annual rates  payable on the one year and six month  repurchase  agreements  are
5.68% and 5.50%, respectively.  The effective rate on the  overnight  repurchase
agreement adjusts daily.

         Change in Tax Code. Savings  associations are subject to the provisions
of the Internal  Revenue  Code of 1986,  as amended  (the  "Code"),  in the same
general manner as other  corporations.  However,  prior to August 1996,  savings
associations  such as the Bank, which met certain  definitional  tests and other
conditions   prescribed  by  the  Code  could  benefit  from  certain  favorable
provisions  regarding their  deductions from taxable income for annual additions
to  their  bad  debt  reserve.  The  amount  of the bad  debt  deduction  that a
qualifying  savings  institution  could claim with  respect to  additions to its
reserve for

                                       13


<PAGE>



bad debts  was  subject  to  certain  limitations.  The Bank  reviewed  the most
favorable way to calculate the deduction  attributable to an addition to its bad
debt reserve on an annual basis.

         In August  1996,  the Code was  revised to  equalize  the  taxation  of
thrifts and banks.  Thrifts,  such as the Bank, no longer have a choice  between
the percentage of taxable income method and the experience method in determining
additions to bad debt reserves.  Thrifts with $500 million of assets or less may
still use the  experience  method,  which is generally  available to small banks
currently.  Larger  thrifts  such as the Bank must use the  specific  charge off
method  regarding bad debts.  Any reserve amounts added after 1987 will be taxed
over a six year period beginning in 1996;  however,  bad debt reserves set aside
through 1987 are generally not taxed. An institution may delay  recapturing into
income its post-1987 bad debt reserves for an additional two years if it meets a
residential-lending  test. This law is not expected to have a material impact on
the Bank. At September 30, 1996, the Bank had approximately $1.5 million of post
1987 bad-debt reserves.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

                  (a)     Exhibits

                          None.

                  (b)     Reports on Form 8-K

                          None.

                                       14


<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 14, 1996       By:   /s/Leonard G Romaine
                                    --------------------------------------------
                                    Leonard G. Romaine
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)




Date: November 14, 1996       By:   /s/Richard Capone
                                    --------------------------------------------
                                    Richard Capone
                                    Senior Vice President and
                                    Chief Financial Officer
                                    (Principal Officer)