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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, 2008

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 0-18014





PAMRAPO BANCORP, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|NEW JERSEY                                                     |  | 22-2984813                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



|                                         |  |           
|---------------------------------------- |  | ----------
|611 Avenue C, Bayonne, New Jersey        |  | 07002     
|(Address of principal executive offices) |  | (Zip Code)

Registrants telephone number, including area code 201-339-4600





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

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

Large accelerated filer   ̈    Accelerated filer  x    Non-accelerated filer   ̈    Smaller
reporting company   ̈

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

The number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.

Common stock, $.01 par value per share  4,975,542 shares outstanding as of August 8, 2008









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PAMRAPO BANCORP, INC.

AND SUBSIDIARIES

INDEX



|                             |  |            |  |                                                                                                                              |  |      
|---------------------------- |  | ---------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | -----
|                             |  | PageNumber
|PART IFINANCIAL INFORMATION |  |           
|                             |  |            | 
|                             |  | Item 1.    |  | Financial Statements                                                                                                         |  |      
|                             |  |            | 
|                             |  |            |  | Consolidated Statements of Financial Condition at June 30, 2008 and December 31, 2007 (Unaudited)                            |  | 1    
|                             |  |            | 
|                             |  |            |  | Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 2008 and 2007 (Unaudited)               |  | 2    
|                             |  |            | 
|                             |  |            |  | Consolidated Statements of Comprehensive Income for the Three Months and Six Months Ended June 30, 2008 and 2007 (Unaudited) |  | 3    
|                             |  |            | 
|                             |  |            |  | Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007 (Unaudited)                            |  | 4    
|                             |  |            | 
|                             |  |            |  | Notes to Consolidated Financial Statements                                                                                   |  | 5-9  
|                             |  |            | 
|                             |  | Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                        |  | 9-16 
|                             |  |            | 
|                             |  | Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                                   |  | 16-17
|                             |  |            | 
|                             |  | Item 4.    |  | Controls and Procedures                                                                                                      |  | 18   
|                             | 
|PART IIOTHER INFORMATION    |  |           
|                             |  |            | 
|                             |  | Item 1.    |  | Legal Proceedings                                                                                                            |  | 19   
|                             |  |            | 
|                             |  | Item 1A.   |  | Risk Factors                                                                                                                 |  | 19   
|                             |  |            | 
|                             |  | Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                  |  | 19   
|                             |  |            | 
|                             |  | Item 3.    |  | Defaults Upon Senior Securities                                                                                              |  | 19   
|                             |  |            | 
|                             |  | Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                                          |  | 20   
|                             |  |            | 
|                             |  | Item 5.    |  | Other Information                                                                                                            |  | 20   
|                             |  |            | 
|                             |  | Item 6.    |  | Exhibits                                                                                                                     |  | 21   
|                             | 
|SIGNATURES                   |  | 22        



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##### Table of Contents

PART IFINANCIAL INFORMATION



|ITEM 1. | Financial Statements
|------- | --------------------

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)



|                                                                                                                                 |  |              |             |   |                  |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                 |  | June 30,2008 |             |   | December 31,2007 |  
|ASSETS                                                                                                                           |  |              |             |   |                  |   |             |  
|Cash and amounts due from depository institutions                                                                                |  | $            | 3,047,087   |   |                  | $ | 3,919,627   |  
|Interest-bearing deposits in other banks                                                                                         |  |              | 14,803,436  |   |                  |   | 62,976,392  |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                                  |  |              | 17,850,523  |   |                  |   | 66,896,019  |  
|Securities available for sale                                                                                                    |  |              | 833,277     |   |                  |   | 917,047     |  
|Investment securities held to maturity; estimated fair value of $10,355,000 (2008) and $10,650,000 (2007)                        |  |              | 10,349,494  |   |                  |   | 10,376,920  |  
|Mortgage-backed securities held to maturity; estimated fair value of $124,407,000 (2008) and $121,422,000 (2007)                 |  |              | 127,209,720 |   |                  |   | 123,906,632 |  
|Loans receivable net of allowance for loan losses of $3,383,000 (2008) and $3,155,000 (2007)                                     |  |              | 431,372,180 |   |                  |   | 439,053,090 |  
|Foreclosed real estate                                                                                                           |  |              | 473,726     |   |                  |   | 486,000     |  
|Premises and equipment                                                                                                           |  |              | 3,110,503   |   |                  |   | 3,339,898   |  
|Federal Home Loan Bank of New York stock                                                                                         |  |              | 4,344,000   |   |                  |   | 4,996,000   |  
|Interest receivable                                                                                                              |  |              | 2,749,664   |   |                  |   | 2,738,425   |  
|Other assets                                                                                                                     |  |              | 5,080,065   |   |                  |   | 4,718,230   |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total assets                                                                                                                     |  | $            | 603,373,152 |   |                  | $ | 657,428,261 |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                             |  |              |             |   |                  |   |             |  
|Liabilities:                                                                                                                     |  |              |             |   |                  |   |             |  
|Deposits                                                                                                                         |  | $            | 466,679,409 |   |                  | $ | 507,961,177 |  
|Advances from Federal Home Loan Bank of New York                                                                                 |  |              | 71,000,000  |   |                  |   | 84,000,000  |  
|Advance payments by borrowers for taxes & insurance                                                                              |  |              | 3,625,812   |   |                  |   | 3,557,745   |  
|Other liabilities                                                                                                                |  |              | 3,690,961   |   |                  |   | 3,269,865   |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total liabilities                                                                                                                |  |              | 544,996,182 |   |                  |   | 598,788,787 |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Stockholders equity:                                                                                                            |  |              |             |   |                  |   |             |  
|Preferred stock; authorized 3,000,000 shares; issued and outstanding-none                                                        |  |              |            |   |                  |   |            |  
|Common Stock; par value $.01; authorized 25,000,000 shares; 6,900,000 shares issued; 4,975,542 shares outstanding, 2008 and
2007 |  |              | 69,000      |   |                  |   | 69,000      |  
|Paid-in capital in excess of par value                                                                                           |  |              | 19,339,615  |   |                  |   | 19,339,615  |  
|Retained earnings                                                                                                                |  |              | 63,395,399  |   |                  |   | 63,711,451  |  
|Accumulated other comprehensive loss                                                                                             |  |              | (1,248,340  | ) |                  |   | (1,301,888  | )
|Treasury stock, at cost; 1,924,458 shares, 2008 and 2007                                                                         |  |              | (23,178,704 | ) |                  |   | (23,178,704 | )
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total stockholders equity                                                                                                       |  |              | 58,376,970  |   |                  |   | 58,639,474  |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total liabilities and stockholders equity                                                                                       |  | $            | 603,373,152 |   |                  | $ | 657,428,261 |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  

See notes to consolidated financial statements.



1



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##### Table of Contents

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|---------------------------------------------------------------------------------- |  | -------------------------- | --------- | ------------------------ | - | --------- |  | ---- | ---------- |  | - | ----------
|                                                                                   |  | Three Months EndedJune 30, |           | Six Months EndedJune 30,
|                                                                                   |  | 2008                       |           | 2007                     |   | 2008      |  | 2007
|Interest income:                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Loans                                                                              |  | $                          | 6,839,705 |                          | $ | 7,118,565 |  | $    | 13,818,539 |  | $ | 14,462,099
|Mortgage-backed securities                                                         |  |                            | 1,440,072 |                          |   | 1,520,176 |  |      | 2,839,930  |  |   | 3,101,524 
|Investments                                                                        |  |                            | 205,210   |                          |   | 169,259   |  |      | 397,274    |  |   | 339,079   
|Other interest-earning assets                                                      |  |                            | 279,189   |                          |   | 468,471   |  |      | 829,839    |  |   | 703,606   
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Total interest income                                                              |  |                            | 8,764,176 |                          |   | 9,276,471 |  |      | 17,885,582 |  |   | 18,606,308
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Interest expense:                                                                  |  |                            |           |                          |   |           |  |      |            |  |   |           
|Deposits                                                                           |  |                            | 2,959,089 |                          |   | 3,414,281 |  |      | 6,358,441  |  |   | 6,689,633 
|Advances and other borrowed money                                                  |  |                            | 1,057,453 |                          |   | 1,125,925 |  |      | 2,094,657  |  |   | 2,259,739 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Total interest expense                                                             |  |                            | 4,016,542 |                          |   | 4,540,206 |  |      | 8,453,098  |  |   | 8,949,372 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Net interest income                                                                |  |                            | 4,747,634 |                          |   | 4,736,265 |  |      | 9,432,484  |  |   | 9,656,936 
|Provision for loan losses                                                          |  |                            | 150,500   |                          |   | 175,000   |  |      | 228,000    |  |   | 370,000   
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Net interest income after provision for loan losses                                |  |                            | 4,597,134 |                          |   | 4,561,265 |  |      | 9,204,484  |  |   | 9,286,936 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Non-interest income:                                                               |  |                            |           |                          |   |           |  |      |            |  |   |           
|Fees and service charges                                                           |  |                            | 323,300   |                          |   | 317,730   |  |      | 643,706    |  |   | 618,441   
|Commissions from sale of financial products                                        |  |                            | 125,598   |                          |   | 287,474   |  |      | 290,348    |  |   | 599,373   
|Miscellaneous                                                                      |  |                            | 106,412   |                          |   | 37,916    |  |      | 159,337    |  |   | 89,972    
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Total non-interest income                                                          |  |                            | 555,310   |                          |   | 643,120   |  |      | 1,093,391  |  |   | 1,307,786 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Non-interest expenses:                                                             |  |                            |           |                          |   |           |  |      |            |  |   |           
|Salaries and employee benefits                                                     |  |                            | 1,864,732 |                          |   | 1,818,914 |  |      | 3,800,436  |  |   | 3,754,754 
|Net occupancy expense of premises                                                  |  |                            | 327,205   |                          |   | 296,307   |  |      | 661,342    |  |   | 592,977   
|Equipment                                                                          |  |                            | 329,168   |                          |   | 332,448   |  |      | 652,026    |  |   | 651,809   
|Advertising                                                                        |  |                            | 66,000    |                          |   | 58,820    |  |      | 142,832    |  |   | 115,538   
|Professional fees                                                                  |  |                            | 409,790   |                          |   | 198,547   |  |      | 614,915    |  |   | 337,815   
|Loss on foreclosed real estate                                                     |  |                            | 1,483     |                          |   |          |  |      | 27,432     |  |   |          
|Miscellaneous                                                                      |  |                            | 626,702   |                          |   | 682,808   |  |      | 1,270,683  |  |   | 1,376,270 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Total non-interest expenses                                                        |  |                            | 3,625,080 |                          |   | 3,387,844 |  |      | 7,169,666  |  |   | 6,829,163 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Income before income taxes                                                         |  |                            | 1,527,364 |                          |   | 1,816,541 |  |      | 3,128,209  |  |   | 3,765,559 
|Income taxes                                                                       |  |                            | 564,266   |                          |   | 663,036   |  |      | 1,155,512  |  |   | 1,386,322 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Net income                                                                         |  | $                          | 963,098   |                          | $ | 1,153,505 |  | $    | 1,972,697  |  | $ | 2,379,237 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Net income per common share:                                                       |  |                            |           |                          |   |           |  |      |            |  |   |           
|Basic                                                                              |  | $                          | 0.20      |                          | $ | 0.23      |  | $    | 0.40       |  | $ | 0.48      
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Diluted                                                                            |  | $                          | 0.20      |                          | $ | 0.23      |  | $    | 0.40       |  | $ | 0.48      
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Dividends per common share                                                         |  | $                          | 0.23      |                          | $ | 0.23      |  | $    | 0.46       |  | $ | 0.46      
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Weighted average number of common shares and common stock equivalents outstanding: |  |                            |           |                          |   |           |  |      |            |  |   |           
|Basic                                                                              |  |                            | 4,975,542 |                          |   | 4,975,542 |  |      | 4,975,542  |  |   | 4,975,542 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           
|Diluted                                                                            |  |                            | 4,975,542 |                          |   | 4,979,330 |  |      | 4,975,542  |  |   | 4,980,343 
|                                                                                   |  |                            |           |                          |   |           |  |      |            |  |   |           

See notes to consolidated financial statements.



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##### Table of Contents

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



|                                                                      |  |                            |         |   |                          |   |           |      |  |   |           |   |  |   |           |  
|--------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------ | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                      |  | Three Months EndedJune 30, |         |   | Six Months EndedJune 30, |  
|                                                                      |  | 2008                       |         |   | 2007                     |   |           | 2008 |  |   | 2007      |  
|Net income                                                            |  | $                          | 963,098 |   |                          | $ | 1,153,505 |      |  | $ | 1,972,697 |   |  | $ | 2,379,237 |  
|                                                                      |  |                            |         |   |                          |   |           |      |  |   |           |   |  |   |           |  
|Other comprehensive income (loss), net of income taxes:               |  |                            |         |   |                          |   |           |      |  |   |           |   |  |   |           |  
|Gross unrealized holding gain (loss) on securities available for sale |  |                            | (1,047  | ) |                          |   | 4,174     |      |  |   | (6,166    | ) |  |   | 1,049     |  
|Benefit Plans                                                         |  |                            | 47,678  |   |                          |   | 64,360    |      |  |   | 95,356    |   |  |   | 128,720   |  
|Deferred income taxes                                                 |  |                            | (18,671 | ) |                          |   | (27,444   | )    |  |   | (35,642   | ) |  |   | (51,889   | )
|                                                                      |  |                            |         |   |                          |   |           |      |  |   |           |   |  |   |           |  
|Other comprehensive income                                            |  |                            | 27,960  |   |                          |   | 41,090    |      |  |   | 53,548    |   |  |   | 77,880    |  
|                                                                      |  |                            |         |   |                          |   |           |      |  |   |           |   |  |   |           |  
|Comprehensive income                                                  |  | $                          | 991,058 |   |                          | $ | 1,194,595 |      |  | $ | 2,026,245 |   |  | $ | 2,457,117 |  
|                                                                      |  |                            |         |   |                          |   |           |      |  |   |           |   |  |   |           |  

See notes to consolidated financial statements.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                              |  |                          |             |   |      |   |             |  
|----------------------------------------------------------------------------- |  | ------------------------ | ----------- | - | ---- | - | ----------- | -
|                                                                              |  | Six Months EndedJune 30, |            
|                                                                              |  | 2008                     |             |   | 2007 |  
|Cash flow from operating activities:                                          |  |                          |             |   |      |   |             |  
|Net income                                                                    |  | $                        | 1,972,697   |   |      | $ | 2,379,237   |  
|Adjustments to reconcile net income to cash provided by operating activities: |  |                          |             |   |      |   |             |  
|Depreciation of premises and equipment                                        |  |                          | 266,774     |   |      |   | 301,488     |  
|Amortization of premiums and discounts, net                                   |  |                          | 164,029     |   |      |   | 178,802     |  
|Amortization of deferred fees, net                                            |  |                          | 90,098      |   |      |   | 95,737      |  
|Provision for loan losses                                                     |  |                          | 228,000     |   |      |   | 370,000     |  
|Provision for loss on foreclosed real estate                                  |  |                          | 22,500      |   |      |   |            |  
|(Increase) in interest receivable                                             |  |                          | (11,239     | ) |      |   | (21,544     | )
|(Increase) in other assets                                                    |  |                          | (397,477    | ) |      |   | (509,522    | )
|Increase in other liabilities                                                 |  |                          | 516,452     |   |      |   | 397,935     |  
|                                                                              |  |                          |             |   |      |   |             |  
|Net cash provided by operating activities                                     |  |                          | 2,851,834   |   |      |   | 3,192,133   |  
|                                                                              |  |                          |             |   |      |   |             |  
|Cash flow from investing activities:                                          |  |                          |             |   |      |   |             |  
|Principal repayments on securities available for sale                         |  |                          | 77,604      |   |      |   | 116,514     |  
|Principal repayments on mortgage-backed securities held to maturity           |  |                          | 11,554,496  |   |      |   | 10,896,876  |  
|Purchases of mortgage-backed securities held to maturity                      |  |                          | (14,994,187 | ) |      |   | (3,909,245  | )
|Net decrease in loans receivable                                              |  |                          | 7,362,812   |   |      |   | 10,713,726  |  
|Capital improvements to foreclosed real estate                                |  |                          | (10,226     | ) |      |   |            |  
|Additions to premises and equipment                                           |  |                          | (37,379     | ) |      |   | (171,034    | )
|Redemption of Federal Home Loan Bank of New York Stock                        |  |                          | 652,000     |   |      |   | 499,600     |  
|                                                                              |  |                          |             |   |      |   |             |  
|Net cash provided by investing activities                                     |  |                          | 4,605,120   |   |      |   | 18,146,437  |  
|                                                                              |  |                          |             |   |      |   |             |  
|Cash flow from financing activities:                                          |  |                          |             |   |      |   |             |  
|Net (decrease) increase in deposits                                           |  |                          | (41,281,768 | ) |      |   | 11,661,896  |  
|Repayment of advances from Federal Home Loan Bank of New York                 |  |                          | (13,000,000 | ) |      |   | (12,000,000 | )
|Net increase (decrease) in payments by borrowers for taxes and insurance      |  |                          | 68,067      |   |      |   | (419,016    | )
|Cash dividends paid                                                           |  |                          | (2,288,749  | ) |      |   | (2,288,749  | )
|                                                                              |  |                          |             |   |      |   |             |  
|Net cash (Used in) financing activities                                       |  |                          | (56,502,450 | ) |      |   | (3,045,869  | )
|                                                                              |  |                          |             |   |      |   |             |  
|Net (Decrease) increase in cash and cash equivalents                          |  |                          | (49,045,496 | ) |      |   | 18,292,701  |  
|Cash and cash equivalents - beginning                                         |  |                          | 66,896,019  |   |      |   | 13,346,939  |  
|                                                                              |  |                          |             |   |      |   |             |  
|Cash and cash equivalents - ending                                            |  | $                        | 17,850,523  |   |      | $ | 31,639,640  |  
|                                                                              |  |                          |             |   |      |   |             |  
|Supplemental information:                                                     |  |                          |             |   |      |   |             |  
|Cash paid during the period for:                                              |  |                          |             |   |      |   |             |  
|Interest on deposits and borrowings                                           |  | $                        | 8,510,523   |   |      | $ | 8,983,726   |  
|                                                                              |  |                          |             |   |      |   |             |  
|Income taxes                                                                  |  | $                        | 1,330,354   |   |      | $ | 1,309,040   |  
|                                                                              |  |                          |             |   |      |   |             |  

See notes to consolidated financial statements.



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##### Table of Contents

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.
PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Pamrapo Bancorp, Inc. (the Company) and its
wholly-owned subsidiaries, Pamrapo Savings Bank, S.L.A. (the Bank), Pamrapo Service Corporation, Inc. and Pamrapo Investment Company, Inc. The Companys business is conducted principally through the Bank. All significant
intercompany accounts and transactions have been eliminated in consolidation.

2. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for
interim financial information and with the instructions for Form 10-Q and Regulation S-X. Accordingly, they do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows.
In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial statements have been included. The results of operations for the three and six months ended
June 30, 2008 are not necessarily indicative of the results which may be expected for the entire fiscal year. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes
thereto included in the Companys 2007 Annual Report to Shareholders and incorporated by reference into the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

3. NET INCOME PER COMMON SHARE

Basic net income per common share is
based on the weighted average number of common shares actually outstanding. Diluted net income per share is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of contracts or securities
exercisable or convertible into common stock, if dilutive, using the treasury stock method.



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4. BENEFITS PLANS-COMPONENTS OF NET PERIODIC PENSION/SERP COST



|                                             |  |                          |      |   |                                     |   |      |      |  |   |      |   |  |   |    |  
|-------------------------------------------- |  | ------------------------ | ---- | - | ----------------------------------- | - | ---- | ---- |  | - | ---- | - |  | - | -- | -
|                                             |  | Pension Plan             |      |   | SupplementalExecutiveRetirementPlan |  
|                                             |  | Six MonthsEnded June 30, |      |   | Six MonthsEnded June 30,            |  
|                                             |  | 2008                     |      |   | 2007                                |   |      | 2008 |  |   | 2007 |  
|                                             |  | (In Thousands)           |      |   | (In Thousands)                      |  
|Service cost                                 |  | $                        | 134  |   |                                     | $ | 128  |      |  | $ |     |   |  | $ |   |  
|Interest cost                                |  |                          | 256  |   |                                     |   | 244  |      |  |   | 54   |   |  |   | 59 |  
|Expected return on plan assets               |  |                          | (293 | ) |                                     |   | (297 | )    |  |   |     |   |  |   |   |  
|Amortization of unrecognized net loss/(gain) |  |                          | 84   |   |                                     |   | 94   |      |  |   | (22  | ) |  |   | (1 | )
|Unrecognized past service liability          |  |                          | 8    |   |                                     |   | 9    |      |  |   | 24   |   |  |   | 26 |  
|                                             |  |                          |      |   |                                     |   |      |      |  |   |      |   |  |   |    |  
|Net periodic benefit expense                 |  | $                        | 189  |   |                                     | $ | 178  |      |  | $ | 56   |   |  | $ | 84 |  
|                                             |  |                          |      |   |                                     |   |      |      |  |   |      |   |  |   |    |  

5. FAIR VALUES OF FINANCIAL INSTRUMENTS

In September 2006, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 157, Fair Value Measurements(SFAS 157), which defines fair value, establishes a
framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements. The primary effect of SFAS 157 on the Company
was to expand the required disclosures pertaining to the methods used to determine fair values upon adoption on January 1, 2008.

SFAS 157 establishes
a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under SFAS 157 are as follows:

Level 1:Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2:Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3:Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e.
supported with little or no market activity).

An asset or liabilitys level within the fair value hierarchy is based on the lowest level of input
that is significant to the fair value measurement.



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For assets measured at fair value on a recurring basis, the Companys fair value measurements by level within the
fair value hierarchy used at June 30, 2008 are as follows:



|                              |  |                |       |                                                            |   |                                           |  |                                        |   |  |   |      
|----------------------------- |  | -------------- | ----- | ---------------------------------------------------------- | - | ----------------------------------------- |  | -------------------------------------- | - |  | - | -----
|Description                   |  | June 30,2008   |       | (Level 1)Quoted Prices inActive Marketsfor IdenticalAssets |   | (Level 2)SignificantOtherObservableInputs |  | (Level 3)SignificantUnobservableInputs
|                              |  | (In Thousands)
|Securities available for sale |  | $              | 833   |                                                            | $ | 833                                       |  | $                                      |  |  | $ |     
|Loans                         |  |                | 4,830 |                                                            |   |                                          |  |                                        |  |  |   | 4,830
|Foreclosed assets             |  |                | 474   |                                                            |   |                                          |  |                                        |  |  |   | 474  
|                              |  |                |       |                                                            |   |                                           |  |                                        |   |  |   |      
|Total                         |  | $              | 6,137 |                                                            | $ | 833                                       |  | $                                      |  |  | $ | 5,304
|                              |  |                |       |                                                            |   |                                           |  |                                        |   |  |   |      

The following summarizes activity related to loans and foreclosed assets for the three and six month periods ended
June 30, 2008 (in thousands):



|                           |  |                             |       |   |            |   |       |  
|-------------------------- |  | --------------------------- | ----- | - | ---------- | - | ----- | -
|                           |  | Periods ended June 30, 2008 |      
|                           |  | Three months                |       |   | Six months |  
|Loans                      |  |                             |       |   |            |   |       |  
|Beginning Balance          |  | $                           | 3,816 |   |            | $ | 3,608 |  
|Additions                  |  |                             | 1,120 |   |            |   | 1,591 |  
|Payments and other credits |  |                             | (117  | ) |            |   | (368  | )
|Reserve for loss           |  |                             | 11    |   |            |   | (1    | )
|                           |  |                             |       |   |            |   |       |  
|Ending balance             |  | $                           | 4,830 |   |            | $ | 4,830 |  
|                           |  |                             |       |   |            |   |       |  



|                           |  |                             |     |            |   |     |  
|-------------------------- |  | --------------------------- | --- | ---------- | - | --- | -
|                           |  | Periods ended June 30, 2008 |    
|                           |  | Three months                |     | Six months |  
|Foreclosed Assets          |  |                             |     |            |   |     |  
|Beginning Balance          |  | $                           | 474 |            | $ | 486 |  
|Additions                  |  |                             |    |            |   | 10  |  
|Payments and other credits |  |                             |    |            |   |    |  
|Reserve for loss           |  |                             |    |            |   | (22 | )
|                           |  |                             |     |            |   |     |  
|Ending balance             |  | $                           | 474 |            | $ | 474 |  
|                           |  |                             |     |            |   |     |  

The following valuation techniques were used to measure fair value of assets in the table above on a recurring
basis effective January 1, 2008.



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Available for sale securities Fair value on available for sale securities was based upon a market approach.
Prices for securities that are fixed income instruments that are not quoted on an exchange, but are traded in active markets, are obtained through third-party data service providers or dealer market participants with whom the Company has
historically transacted both purchases and sales of investment securities. As of June 30, 2008, all fair values on available for sale securities were based on prices obtained from these sources and were based on actual market quotations for
each specific security.

Loans Loans included in the above table are those that are accounted for under SFAS 114, Accounting by
Creditors for Impairment of a Loan,in which the Company has measured impairment generally based on the fair value of the loans collateral. Fair value is generally determined based upon independent third-party appraisals of the
properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value consists of the loan
balances less valuation allowance as determined under SFAS 114.

Foreclosed assets Fair value of foreclosed assets was based on independent
third party appraisals of the properties. These values were identified based on the sales prices of similar properties in the proximate vicinity.

6.
CRITICAL ACCOUNTING POLICIES

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a
material impact on the carrying value of certain assets and liabilities or on income or expense to be critical accounting policies. Material estimates that are particularly susceptible to significant changes relate to the determination of the
allowance for loan losses. Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Management reviews the level of the allowance on a quarterly basis, at a minimum, and establishes the provision for
loan losses based on the composition of the loan portfolio, delinquency levels, loss experience, economic conditions, and other factors related to the collectability of the loan portfolio. Since there has been no material shift in loan portfolio,
the level of the allowance for loan losses has changed primarily due to changes in the size of the loan portfolio and the level of nonperforming loans. We have allocated the allowance among categories of loan types as well as classification status
at each period-end date. Assumptions and allocation percentages based on loan types and classification status have been consistently applied. Management regularly evaluates various risk factors related to the loan portfolio, such as type of loan,
underlying collateral and payment status, and the corresponding allowance allocation percentages.

Although we believe that we use the best information
available to establish the allowance for loan losses, future additions to the allowance may be necessary based on estimates that are susceptible to change as a result of changes in economic conditions and other factors. In addition, the regulatory
authorities, as an integral part of their examinations process, periodically review our allowance for loan losses. Such agencies may require us to recognize adjustments to the allowance based on their judgment about information available to them at
the time of their examinations.



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7. RECENT ACCOUNTING PRONOUNCEMENTS

In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133 (Statement 161). Statement 161
requires entities that utilize derivative instruments to provide qualitative disclosures about their objectives and strategies for using such instruments, as well as any details of credit-risk-related contingent features contained within
derivatives. Statement 161 also requires entities to disclose additional information about the amounts and location of derivatives located within the financial statements, how the provisions of SFAS 133 have been applied, and the impact that
hedges have on an entitys financial position, financial performance, and cash flows. Statement 161 is effective for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The
Company is currently evaluating the potential impact the new pronouncement will have on its consolidated financial statements.

In February 2008, the FASB
issued a FASB Staff Position (FSP) FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions. This FSP addresses the issue of whether or not these transactions should be viewed as two separate
transactions or as one linked transaction. The FSP includes a rebuttable presumption that presumes linkage of the two transactions unless the presumption can be overcome by meeting certain criteria. The FSP will be effective
for fiscal years beginning after November 15, 2008 and will apply only to original transfers made after that date; early adoption will not be allowed. The Company is currently evaluating the potential impact the new pronouncement will have on
its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting
Principles. This Statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. This Statement is effective 60 days following the Securities and
Exchange Commissions approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company is currently
evaluating the potential impact the new pronouncement will have on its consolidated financial statements.



|ITEM 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Forward-Looking Statements

This Form 10-Q may include certain forward-looking statements based on current management
expectations. The actual results of the Company could differ materially from those management expectations. Factors that could cause future results to vary from current management expectations include, but are not limited to, general economic
conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of
funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of loan and investment portfolios of the Bank, changes in accounting principles, policies or guidelines, and other economic,
competitive, governmental and technological factors affecting the Companys operations, markets, products, services and prices.

Changes in
Financial Condition

The Companys assets at June 30, 2008 totaled $603.4 million, which represents a decrease of $54.0 million or 8.2% as
compared with $657.4 million at December 31, 2007.



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Total cash and cash equivalents of $17.9 million at June 30, 2008 decreased $49.0 million or 73.2% when compared
with $66.9 million at December 31, 2007. The decrease during the six months ended June 30, 2008 resulted primarily from a decrease in interest-bearing deposits in other banks, attributable to a decrease in deposits in the Federal Home Loan
Bank of New York.

Securities available for sale at June 30, 2008 decreased $84,000 or 9.2% to $833,000 when compared with $917,000 at
December 31, 2007. The decrease during the six months ended June 30, 2008 resulted primarily from repayments on securities available for sale of $78,000 and an increase in net unrealized loss of $6,000.

Investment securities held to maturity at June 30, 2008 totaled $10.3 million as compared with $10.4 million at December 31, 2007. Mortgage-backed securities
held to maturity at June 30, 2008 increased $3.3 million or 2.7% to $127.2 million when compared with $123.9 million at December 31, 2007. During the six months ended June 30, 2008, purchases of mortgage-backed securities totaled
$15.0 million and repayments totaled $11.6 million.

Net loans amounted to $431.4 million at June 30, 2008, as compared to $439.1 million at
December 31, 2007, which represents a decrease of $7.7 million or 1.8%. The decrease during the six months ended June 30, 2008 resulted primarily from principal repayments exceeding loan originations.

Foreclosed real estate consists of two single-family residences.

Deposits
at June 30, 2008 totaled $466.7 million as compared with $508.0 million at December 31, 2007 representing a decrease of $41.3 million or 8.1%. The decrease was primarily impacted by the reduction of an interest-bearing account balance from
$40.3 million at December 31, 2007 to $866,000 at June 30, 2008.

Advances from the Federal Home Loan Bank of New York (FHLB)
amounted to $71.0 million at June 30, 2008 as compared with $84.0 million at December 31, 2007 representing a decrease of $13.0 million or 15.5% due to repayments on the advances.

Stockholders equity totaled $58.4 million and $58.6 million at June 30, 2008, and December 31, 2007, respectively. The decrease of $262,000 for the six
months ended June 30, 2008 resulted primarily from the net income of $2.0 million, which was more than offset by cash dividends paid of $2.3 million.

Comparison of Operating Results for the Three months ended June 30, 2008 and 2007

Net income for the three months ended June 30,
2008 totaled $963,000 as compared with $1.2 million for the three months ended June 30, 2007. The decrease in net income during the 2008 period resulted from decreases in total interest income and total non-interest income and an increase in
total-non-interest expenses, which were partially offset by decreases in total interest expense, provision for loan losses and income taxes.

Interest
income on loans decreased by $279,000 or 3.9% to $6.8 million during the three months ended June 30, 2008, when compared with $7.1 million for the same 2007 period. The decrease during the 2008 period resulted from a decrease of $15.7 million
or 3.5% in the average balance of loans outstanding, along with a decrease of three basis points in the yield earned on loans. Interest on mortgage-backed securities decreased $80,000 or 5.3% to $1.4 million during the three months ended



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June 30, 2008, when compared with $1.5 million for the same 2007 period. The decrease during the 2008 period resulted from a decrease of $8.2 million or
6.1% in the average balance of mortgage-backed securities outstanding, which was partially offset by a four basis point increase in the yield earned on the mortgage-backed securities. Interest earned on investments increased by $36,000 or 21.3% to
$205,000 during the three months ended June 30, 2008, when compared to $169,000 during the same 2007 period primarily due to an increase of $1.1 million or 11.7% in the average balance of such assets outstanding, along with an increase of
sixty-one basis points in the yield on the portfolio. Interest income earned on other interest-earning assets decreased by $189,000 or 40.4% to $279,000 during the three months ended June 30, 2008, when compared to $468,000 during the same 2007
period primarily due to a decrease of two-hundred seventy-one basis points in the yield on the portfolio, which more than offset an increase of $10.5 million or 28.5% in the average balance of such assets outstanding.

Interest expense on deposits decreased $455,000 or 13.3% to $3.0 million during the three months ended June 30, 2008, when compared to $3.4 million during the same
2007 period. Such decrease was primarily attributable to a decrease of forty-seven basis points in the cost of interest-bearing deposits, which more than offset an increase of $8.6 million or 2.0% in the average balance of interest-bearing deposits.
Interest expense on advances and other borrowed money decreased by $68,000 or 6.1% to $1.06 million during the three months ended June 30, 2008, when compared with $1.13 million during the same 2007 period, primarily due to a decrease of $20.8
million or 21.8% in the average balance of advances and other borrowed money outstanding which more than offset a ninety-five basis point increase in the cost of advances and other borrowed money.

Net interest income increased $11,000 or 0.2% during the three months ended June 30, 2008 when compared with the same 2007 period. Such increase was due to a
decrease in total interest expense of $524,000, which more than offset a decrease in total interest income of $512,000. The Banks net interest rate spread was 2.63% in 2008 and 2.52% in 2007. There was a decrease in the cost of
interest-bearing liabilities of thirty-three basis points which more than offset a decrease of twenty-one basis points in the yield on interest-earning assets.

During the three months ended June 30, 2008 and 2007, the Bank provided $150,500 and $175,000, respectively, as a provision for loan losses. The allowance for loan losses is based on managements evaluation of the risk inherent in
its loan portfolio and gives due consideration to the changes in general market conditions and in the nature and volume of the Banks loan activity. The Bank intends to continue to provide for loan losses based on its periodic review of the
loan portfolio and general market conditions. At June 30, 2008 and 2007, the Banks non-performing loans, which were delinquent ninety days or more, totaled $8.0 million or 1.32% of total assets and $4.8 million or 0.75% of total assets,
respectively. At June 30, 2008, $3.8 million of non-performing loans were accruing interest and $4.2 million were on nonaccrual status. Included in the non-performing loans were $2.6 million in one-to-four family mortgage loans, $2.0 million in
commercial loans, and $2.1 million in construction loans. The largest commercial loan ($1.9 million) to a local hospital matured on June 1, 2007 and was not paid. The hospital is presently in bankruptcy, and the repayment of the loan is subject
to the bankruptcy proceedings. During the three months ended June 30, 2008 and 2007, the Bank had no loan charge-offs. The allowance for loan losses amounted to $3.4 million at June 30, 2008, representing 0.78% of total loans and 42.40% of
loans delinquent ninety days or more, and $3.0 million at June 30, 2007, representing 0.68% of total loans and 62.78% of loans delinquent ninety days or more.

Non-interest income decreased $88,000 or 13.7% to $555,000 during the three months ended June 30, 2008, from $643,000 during the same 2007 period, which resulted from a decrease in commissions from sale of financial products of
$162,000 as there has been continued stress on borrowers from difficult economic conditions, rising energy costs, and negative commercial and residential real estate market issues pervading into many related businesses, which more than offset
increases in fees and service charges of $6,000 and miscellaneous income of $68,000.



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Non-interest expenses increased $237,000 or 7.0% to $3.6 million during the three months ended June 30, 2008, when
compared with $3.4 million during the same 2007 period. Salaries and employee benefits, net occupancy expense of premises, advertising, professional fees, and loss on foreclosed real estate increased $46,000, $31,000, $7,000, $211,000 and $1,000,
respectively, which was sufficient to offset a decrease in equipment expense and miscellaneous expense of $3,000 and $56,000, respectively, during the 2008 period when compared with the same 2007 period. The increase in professional fees was due to
fees related to compliance, corporate and litigation matters.

Income taxes totaled $564,000 and $663,000 during the three months ended June 30, 2008
and 2007, respectively. The decrease during the 2008 period resulted from a decrease in pre-tax income of $289,000. The effective income tax rate was 36.9% and 36.5% for the three months ended June 30, 2008 and 2007, respectively.

Comparison of Operating Results for the Six Months Ended June 30, 2008 and 2007

Net income decreased $407,000 or 17.1% to $2.0 million for the six months ended June 30, 2008 compared with $2.4 million for the same 2007 period. The decrease in net income during the 2008 period resulted from
decreases in total interest income and total non-interest income and an increase in total non-interest expenses, which were partially offset by decreases in total interest expense, the provision for loan losses and income taxes.

Interest income on loans decreased by $644,000 or 4.4% to $13.8 million during the six months ended June 30, 2008, when compared with $14.5 million for the same
2007 period. The decrease during the 2008 period resulted from a decrease of $16.6 million or 3.7% in the average balance of loans outstanding, along with a decrease of four basis points in the yield earned on loans. Interest on mortgage-backed
securities decreased $262,000 or 8.4% to $2.8 million during the six months ended June 30, 2008, when compared with $3.1 million for the same 2007 period. The decrease during the 2008 period resulted from a decrease of $11.5 million or 8.4% in
the average balance of mortgage-backed securities outstanding. Interest earned on investments increased by $58,000 or 17.2% to $397,000 during the six months ended June 30, 2008, when compared to $339,000 during the same 2007 period primarily
due to an increase of $1.1 million or 11.3% in the average balance of such assets outstanding, along with an increase of thirty-six basis points in the yield on the portfolio. Interest income earned on other interest-earning assets increased by
$126,000 or 17.9% to $830,000 during the six months ended June 30, 2008 when compared to $704,000 during the same 2007 period primarily due to an increase of $29.1 million or 105.5% in the average balance of such assets, which more than offset
a decrease of two-hundred eight-teen basis points in the yield on the portfolio.

Interest expense on deposits decreased $331,000 or 5.0% to $6.4 million
during the six months ended June 30, 2008, when compared to $6.7 million during the same 2007 period. Such decrease was primarily attributable to a decrease of thirty basis points in the cost of interest-bearing deposits, which was sufficient
to offset an increase of $23.2 million or 5.4% in the average balance of interest-bearing deposits. Interest expense on advances and other borrowed money decreased by $165,000 or 7.3% to $2.1 million during the six months ended June 30, 2008,
when compared with $2.3 million during the same 2007 period, primarily due to a decrease of $17.8 million or 18.4% in the average balance of advances and other borrowed money outstanding, which more than offset an increase of sixty-three basis
points in the cost of advances and other borrowed money.



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Net interest income decreased $224,000 or 2.3% during the six months ended June 30, 2008 when compared with the same
2007 period. Such decrease was due to a decrease in total interest income of $721,000, which was partially offset by a decrease in total interest expense of $496,000. The Banks net interest rate spread was 2.56% in 2008 when compared with
2.59% during the same 2007 period. A decrease of twenty-five basis points in the yield on interest-earning assets was more than offset by a twenty-two basis points decrease in the cost of interest-bearing liabilities.

During the six months ended June 30, 2008 and 2007, the Bank provided $228,000 and $370,000, respectively, as a provision for loan losses. The allowance for loan
losses is based on managements evaluation of the risk inherent in its loan portfolio and gives due consideration to the changes in general market conditions and in the nature and volume of the Banks loan activity. The Bank intends to
continue to provide for loan losses based on its periodic review of the loan portfolio and general market conditions. During the six months ended June 30, 2008 and 2007, the Bank charged off loans aggregating $0 and $20,000, respectively.

Non-interest income decreased $215,000 or 16.4% to $1.1 million during the six months ended June 30, 2008, from $1.3 million during the same 2007
period, which resulted from a decrease in commissions from sale of financial products of $309,000 as there has been continued stress on borrowers from difficult economic conditions, rising energy costs, and negative commercial and residential real
estate market issues pervading into many related businesses, which was partially offset by increases in fees and service charges and miscellaneous income of $25,000 and $69,000, respectively.

Non-interest expenses increased by $341,000 or 5.0% to $7.2 million during the six months ended June 30, 2008, when compared with $6.8 million during the same 2007
period. Salaries and employee benefits, net occupancy expense of premises, advertising, professional fees and loss on foreclosed real estate increased $46,000, $68,000, $27,000, $277,000 and $27,000, respectively, which was sufficient to offset a
decrease in miscellaneous expense of $106,000 during the 2008 period when compared with the same 2007 period. The increase in professional fees was due to fees related to compliance, corporate and litigation matters.

Income taxes totaled $1.2 million and $1.4 million during the six months ended June 30, 2008 and 2007, respectively. The decrease during the 2008 period resulted
from a decrease in pre-tax income of $637,000. The effective income tax rate was 36.9% and 36.8% for the six months ended June 30, 2008 and 2007, respectively.

Liquidity and Capital Resources

The Bank is required by Office of Thrift Supervision (the OTS)
regulations to maintain sufficient liquidity to ensure the Banks safe and sound operation. The Banks liquidity averaged 5.11% during the month of June 2008. The Bank adjusts its liquidity levels in order to meet funding needs for deposit
outflows, payment of real estate taxes from escrow accounts on mortgage loans, repayment of borrowings, when applicable, and loan funding commitments. The Bank also adjusts its liquidity levels as appropriate to meet its asset/liability objectives.

The Banks primary sources of funds are deposits, amortization and prepayments of loans and mortgage-backed securities, FHLB advances, maturities of
investment securities and funds provided from operations. While scheduled loan and mortgage-backed securities amortization and maturing investment securities are a relatively predictable source of funds, deposit flow and loan and mortgage-backed
securities prepayments are greatly influenced by market interest rates, economic conditions and competition.



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The Banks liquidity, represented by cash and cash equivalents, is a product of its operating, investing and
financing activities.

Cash was generated by operating activities during the six months ended June 30, 2008 and 2007. The primary source of cash was
net income. Cash dividends of $2.3 million were paid during each of the six months ended June 30, 2008 and 2007.

The primary sources of investing
activities are lending and mortgage-backed securities. Loans receivable amounted to $431.4 million and $439.1 million at June 30, 2008 and December 31, 2007, respectively. Securities available for sale totaled $833,000 and $917,000 at
June 30, 2008 and December 31, 2007, respectively. Mortgage-backed securities held to maturity totaled $127.2 million and $123.9 million at June 30, 2008 and December 31, 2007, respectively. In addition to funding new loan
production and mortgage-backed securities purchases through operating and financing activities, such activities were funded by principal repayments on existing loans and mortgage-backed securities.

Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such as federal
funds and interest-bearing deposits. If the Bank requires funds beyond its ability to generate them internally, borrowing agreements exist with the FHLB which provide an additional source of funds. At June 30, 2008, advances from the FHLB
amounted to $71.0 million.

The Bank anticipates that it will have sufficient funds available to meet its current loan commitments. At June 30, 2008,
the Bank had outstanding commitments to originate loans of $9.3 million. Certificates of deposit scheduled to mature in one year or less at June 30, 2008, totaled $212.8 million. Management believes that, based upon its experience and the
Banks deposit flow history, a significant portion of such deposits will remain with the Bank.

Under OTS regulations, three separate measurements of
capital adequacy (the Capital Rule) are required. The Capital Rule requires each savings institution to maintain tangible capital equal to at least 1.5% and core capital equal to at least 4.0% of its adjusted total assets. The Capital
Rule further requires each savings institution to maintain total capital equal to at least 8% of its risk-weighted assets.



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The following table sets forth the Banks capital position at June 30, 2008, as compared to the minimum
regulatory capital requirements (dollars in thousands):



|                                                 |  |        |        |       |                             |   |        |                                                               |        |  |      |        |  |       |        |  |       |  
|------------------------------------------------ |  | ------ | ------ | ----- | --------------------------- | - | ------ | ------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                                 |  | Actual |        |       | Minimum CapitalRequirements |   |        | To Be WellCapitalizedUnder PromptCorrectiveActions Provisions |       
|                                                 |  | Amount |        | Ratio |                             |   | Amount |                                                               | Ratio  |  |      | Amount |  | Ratio |       
|Total Capital (to risk-weighted assets)          |  | $      | 60,341 |       | 17.19                       | % |        | $                                                             | 28,087 |  | 8.00 | %      |  | $     | 35,108 |  | 10.00 | %
|                                                 |  |        |        |       |                             |  
|Tier 1 Capital (to risk-weighted assets)         |  |        | 57,662 |       | 16.42                       | % |        |                                                               |       |  |     |        |  |       | 21,065 |  | 6.00  | %
|                                                 |  |        |        |       |                             |  
|Core (Tier 1) Capital (to adjusted total assets) |  |        | 57,662 |       | 9.54                        | % |        |                                                               | 24,185 |  | 4.00 | %      |  |       | 30,231 |  | 5.00  | %
|                                                 |  |        |        |       |                             |  
|Tangible Capital (to adjusted total assets)      |  |        | 57,662 |       | 9.54                        | % |        |                                                               | 9,069  |  | 1.50 | %      |  |       |       |  |      |  



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##### Table of Contents

Contractual Obligations and Off-Balance Sheet Arrangements

The following table sets forth the Banks contractual obligations and commercial commitments at June 30, 2008:



|                        |  |                |                 |                       |                                      |         |                                       |   |                     |  |   |       |  |   |       
|----------------------- |  | -------------- | --------------- | --------------------- | ------------------------------------ | ------- | ------------------------------------- | - | ------------------- |  | - | ----- |  | - | ------
|                        |  | Total          |                 | Payment Due By Period
|Contractual Obligations |  |                | One Yearor Less |                       | More Than OneYear ThroughThree Years |         | More ThanThree YearsThrough FiveYears |   | More ThanFive Years
|                        |  | (In Thousands)
|FHLB-NY advances        |  | $              | 71,000          |                       | $                                    | 9,000   |                                       | $ | 38,000              |  | $ | 6,000 |  | $ | 18,000
|Certificates of deposit |  |                | 231,641         |                       |                                      | 212,766 |                                       |   | 17,024              |  |   | 1,595 |  |   | 256   
|Lease obligations       |  |                | 2,634           |                       |                                      | 457     |                                       |   | 855                 |  |   | 786   |  |   | 536   
|Benefit plans           |  |                | 6,781           |                       |                                      | 685     |                                       |   | 1,390               |  |   | 1,380 |  |   | 3,326 
|                        |  |                |                 |                       |                                      |         |                                       |   |                     |  |   |       |  |   |       
|Total                   |  | $              | 312,056         |                       | $                                    | 222,908 |                                       | $ | 57,269              |  | $ | 9,761 |  | $ | 22,118
|                        |  |                |                 |                       |                                      |         |                                       |   |                     |  |   |       |  |   |       

In the normal course of business, the Bank enters into off-balance sheet arrangements consisting of commitments to
fund mortgage loans and lines of credit secured by real estate. The following table presents these off-balance sheet arrangements at June 30, 2008.



|                               |  |                |                 |                                 |                                      |        |                                       |   |                     |  |   |   |  |   |  
|------------------------------ |  | -------------- | --------------- | ------------------------------- | ------------------------------------ | ------ | ------------------------------------- | - | ------------------- |  | - | - |  | - | -
|                               |  | Total          |                 | Commitment Expiration By Period
|Off-Balance Sheet Arrangements |  |                | One Yearor Less |                                 | More Than OneYear ThroughThree Years |        | More ThanThree YearsThrough FiveYears |   | More ThanFive Years
|                               |  | (In Thousands)
|To originate loans             |  | $              | 9,311           |                                 | $                                    | 9,311  |                                       | $ |                    |  | $ |  |  | $ | 
|Unused lines of credit         |  |                | 12,803          |                                 |                                      | 12,803 |                                       | $ |                    |  | $ |  |  | $ | 
|Letters of credit              |  |                | 559             |                                 |                                      | 549    |                                       | $ | 10                  |  | $ |  |  | $ | 
|                               |  |                |                 |                                 |                                      |        |                                       |   |                     |  |   |   |  |   |  
|Total                          |  | $              | 22,673          |                                 | $                                    | 22,663 |                                       | $ | 10                  |  | $ |  |  | $ | 
|                               |  |                |                 |                                 |                                      |        |                                       |   |                     |  |   |   |  |   |  



|ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Management of Interest Rate Risk. The ability to maximize net interest income is largely dependent upon the achievement of a positive interest rate spread that can be sustained during fluctuations in prevailing interest rates.
Interest rate sensitivity is a measure of the difference between amounts of interest-earning assets and interest-bearing liabilities that either reprice or mature within a given period of time. The difference, or the interest rate repricing
gap, provides an indication of the extent to which an institutions interest rate spread will be affected by changes in interest rates. A gap is considered positive when the amount of interest-rate sensitive assets exceeds the
amount of interest-rate sensitive liabilities, and is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest-rate sensitive assets. Generally, during a period of rising interest rates, a negative
gap within shorter maturities would adversely affect net interest income, while a positive gap within shorter maturities would result in an increase in net interest income, and during a period of falling interest rates, a negative gap within shorter
maturities would result in an increase in net interest income while a positive gap within shorter maturities would result in a decrease in net interest income.



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Because the Banks interest-bearing liabilities that mature or reprice within short periods exceed its
interest-earning assets with similar characteristics, material and prolonged increases in interest rates generally would adversely affect net interest income, while material and prolonged decreases in interest rates generally would have a positive
effect on net interest income.

The Banks current investment strategy is to maintain an overall securities portfolio that provides a source of
liquidity and that contributes to the Banks overall profitability and asset mix within given quality and maturity considerations established and maintained by the Banks Investment and Interest Rate Risk Committees. Securities classified
as available for sale provide management with the flexibility to make adjustments to the portfolio given changes in the economic or interest rate environment, to fulfill unanticipated liquidity needs, or to take advantage of alternative investment
opportunities.

Net Portfolio Value. The Banks interest rate sensitivity is monitored by management through the use of the OTS model that
estimates the change in the Banks net portfolio value (NPV) over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets, liabilities, and off-balance sheet contracts. The NPV ratio, under
any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The OTS produces its analysis based upon data submitted on the Banks quarterly Thrift Financial Reports. The
following table sets forth the Banks NPV as of March 31, 2008, the most recent date the Banks NPV was calculated by the OTS.



|                                                      |        |                        |              |  |                                           |               |   |  |          |    |  |                       |   |  |      |  
|----------------------------------------------------- | ------ | ---------------------- | ------------ |  | ----------------------------------------- | ------------- | - |  | -------- | -- |  | --------------------- | - |  | ---- | -
|Change in Interest Rates In Basis Points (Rate Shock) |        | Net Portfolio Value    |              |  | NPV asPercent of PortfolioValue of
Assets |              
|                                                      | Amount |                        | DollarChange |  |                                           | PercentChange |   |  | NPVRatio |    |  | Change InBasis Points |  
|                                                      |        | (Dollars in Thousands) |             
|+300                                                  |        | $                      | 51,458       |  | $                                         | (39,361       | ) |  | (43      | )% |  | 7.92                  | % |  | (513 | )
|+200                                                  |        |                        | 65,721       |  |                                           | (25,098       | ) |  | (28      | )% |  | 9.87                  | % |  | (318 | )
|+100                                                  |        |                        | 79,056       |  |                                           | (11,762       | ) |  | (13      | )% |  | 11.60                 | % |  | (145 | )
|+  50                                                 |        |                        | 85,141       |  |                                           | (5,678        | ) |  | (6       | )% |  | 12.36                 | % |  | (69  | )
|0                                                     |        |                        | 90,819       |  |                                           |              |   |  |         |    |  | 13.05                 | % |  |     |  
|-   50                                                |        |                        | 94,974       |  |                                           | 4,155         |   |  | 5        | %  |  | 13.54                 | % |  | 49   |  
|- 100                                                 |        |                        | 98,971       |  |                                           | 8,152         |   |  | 9        | %  |  | 14.00                 | % |  | 95   |  

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling
changes in NPV require the making of certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the NPV model presented assumes that the composition of the
Banks interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve
regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the NPV measurements and net interest income models provide an indication of the Banks interest rate risk exposure at a particular
point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on the Banks net interest income and will differ from actual results.



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##### Table of Contents

|ITEM 4. | Controls and Procedures
|------- | -----------------------

As of the end of the period covered by
this report, based on an evaluation of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), each of the Chief Executive
Officer and the Chief Financial Officer of the Company has concluded that the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act reports is recorded,
processed, summarized and reported within the applicable time periods specified by the Securities and Exchange Commissions rules and forms.

There
were no changes in the Companys internal control over financial reporting that occurred during the Companys most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys
internal control over financial reporting.



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##### Table of Contents

PART IIOTHER INFORMATION



|ITEM 1. | Legal Proceedings
|------- | -----------------

Neither the Company nor the Bank
is involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed by management to be immaterial to the financial condition of the Company
and the Bank.



|ITEM 1A. | Risk Factors
|-------- | ------------

There have not been any material
changes from the risk factors previously disclosed in Part I, Item 1A of the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2007.



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

On August 22, 2000, the Company announced a share repurchase program authorizing the Company to repurchase up to 256,000 shares of the Companys common stock. There were no repurchases of common stock during the quarter ended
June 30, 2008. There are 41,465 shares remaining that may be repurchased under the program as of June 30, 2008.



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

Not applicable.



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##### Table of Contents

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

The Annual Stockholders Meeting was held on April 23, 2008. The following matters were submitted to the stockholders:



| | 1. | Election of two directors.
| | -- | --------------------------

The following directors were
elected at the meeting for terms to expire at the 2011 Annual Meeting, except for Mr. Brockman whose term will end pursuant to the terms of the Pamrapo Savings Bank S.L.A. Directors Constitution and Retirement Plan when he turns the
mandatory retirement age of 75 on December 23, 2008.



|                     |  |                 |  |         
|-------------------- |  | --------------- |  | --------
|                     |  | Number of Votes
|                     |  | For             |  | Withheld
|Herman L. Brockman   |  | 4,237,785       |  | 514,161 
|Daniel J. Massarelli |  | 4,151,692       |  | 600,254 



| | 2. | The ratification of Beard Miller Company LLP as independent auditors of the Company for the fiscal year ending December 31, 2008.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------



|                |  |         |  |        
|--------------- |  | ------- |  | -------
|Number of Votes
|For             |  | Against |  | Abstain
|4,554,634       |  | 192,510 |  | 4,802  



|ITEM 5. | Other Information
|------- | -----------------

On June 16, 2008, Pamrapo
Savings Bank, S.L.A. entered into a Purchase and Assumption Agreement with NewBank, a New York-chartered commercial bank located in Flushing, New York, for the sale of the Banks Fort Lee, New Jersey banking office. The contract price is
$500,000 and the deposit base at June 30, 2008 was approximately $15.8 million.



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##### Table of Contents

|ITEM 6. | Exhibits
|------- | --------

The following Exhibits are filed as part
of this report.



|      |  |                                                                                                                                                                    
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1.1 |  | Certificate of Incorporation of Pamrapo Bancorp, Inc.1                                                                                                             
|      | 
|3.1.2 |  | Certificate of Amendment to Certificate of Incorporation of Pamrapo Bancorp, Inc.2                                                                                 
|      | 
|3.2   |  | Bylaws of Pamrapo Bancorp, Inc.3                                                                                                                                   
|      | 
|4     |  | Stock Certificate of Pamrapo Bancorp, Inc.4                                                                                                                        
|      | 
|10.1  |  | Restated Bank Employment Agreement by and between Pamrapo Savings Bank, S.L.A. and William J. Campbell.5*                                                          
|      | 
|10.2  |  | Restated Holding Company Employment Agreement by and between Pamrapo Bancorp, Inc. and William J. Campbell.5*                                                      
|      | 
|10.3  |  | Change in Control Agreement by and between Pamrapo Bancorp, Inc. and Margaret Russo.6*                                                                             
|      | 
|10.4  |  | Restated Pamrapo Bancorp, Inc. Change in Control Agreement by and between Pamrapo Bancorp, Inc. and Kenneth D. Walter.5*                                           
|      | 
|10.5  |  | Pamrapo Savings Bank, S.L.A. Directors Consultation and Retirement Plan.7                                                                                         
|      | 
|10.6  |  | Pamrapo Bancorp, Inc. 2003 Stock-Based Incentive Plan.8                                                                                                            
|      | 
|11    |  | Computation of earnings per share (filed herewith).                                                                                                                
|      | 
|31.1  |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                               
|      | 
|31.2  |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                               
|      | 
|32.1  |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|      | 
|32.2  |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).



|1 | Incorporated herein by reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 2000,
filed on March 30, 2001.
|- | ----------------------------------------------------------------------------------------------------------------------------------------

|2 | Incorporated herein by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2003,
filed on November 12, 2003.
|- | -------------------------------------------------------------------------------------------------------------------------------------------

|3 | Incorporated herein by reference to the Current Report on Form 8-K, filed on November 27, 2007.
|- | -----------------------------------------------------------------------------------------------

|4 | Incorporated herein by reference to the Registration Statement on Form S-1 (Registration No. 33-30370), as amended,
filed on August 8, 1989.
|- | --------------------------------------------------------------------------------------------------------------------------------------------

|5 | Incorporated herein by reference to the Current Report on Form 8-K, filed on October 29, 2007.
|- | ----------------------------------------------------------------------------------------------

|6 | Incorporated herein by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2007,
filed on November 9, 2007.
|- | ------------------------------------------------------------------------------------------------------------------------------------------

|7 | Incorporated herein by reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 2005,
filed on March 16, 2006.
|- | ----------------------------------------------------------------------------------------------------------------------------------------

|8 | Incorporated herein by reference to the 2003 Annual Meeting Proxy Statement, filed on March 31, 2003.
|- | -----------------------------------------------------------------------------------------------------

|* | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |                       |  |                                           
|-------------------- |  | --------------------- |  | ------------------------------------------
|                     |  | PAMRAPO BANCORP, INC.
|                     |  |                      
|Date: August 8, 2008 |  | By                    |  | /s/ WILLIAM J. CAMPBELL                   
|                     |  |                       |  | William J. Campbell                       
|                     |  |                       |  | President and Chief Executive Officer     
|                     |  |                      
|Date: August 8, 2008 |  | By:                   |  | /s/ KENNETH D. WALTER                     
|                     |  |                       |  | Kenneth D. Walter                         
|                     |  |                       |  | Vice President and Chief Financial Officer



22