##### Table of Contents





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, 2009

OR



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

For the transition period from  to

Commission File Number 0-18014





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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     ̈  Yes     ̈  No

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



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

Indicate 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  4,935,542 shares outstanding as of August 10, 2009









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##### Table of Contents

PAMRAPO BANCORP, INC.

AND SUBSIDIARIES

INDEX



|                             |  |                                                                                                                              |  |   
|---------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | --
|                             |  | PageNumber                                                                                                                  
|PART IFINANCIAL INFORMATION |  |                                                                                                                             
|                             |  |                                                                                                                             
|Item 1.                      |  | Financial Statements                                                                                                         |  |   
|                             |  |                                                                                                                             
|                             |  | Consolidated Statements of Financial Condition at June 30, 2009 and December 31, 2008 (Unaudited)                            |  | 1 
|                             |  |                                                                                                                             
|                             |  | Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 2009 and 2008 (Unaudited)               |  | 2 
|                             |  |                                                                                                                             
|                             |  | Consolidated Statements of Comprehensive Income for the Three Months and Six Months Ended June 30, 2009 and 2008 (Unaudited) |  | 3 
|                             |  |                                                                                                                             
|                             |  | Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008 (Unaudited)                            |  | 4 
|                             |  |                                                                                                                             
|                             |  | Notes to Consolidated Financial Statements                                                                                   |  | 5 
|                             |  |                                                                                                                             
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                        |  | 17
|                             |  |                                                                                                                             
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                                                                   |  | 26
|                             |  |                                                                                                                             
|Item 4.                      |  | Controls and Procedures                                                                                                      |  | 27
|                             | 
|PART IIOTHER INFORMATION    |  |                                                                                                                             
|                             |  |                                                                                                                             
|Item 1.                      |  | Legal Proceedings                                                                                                            |  | 28
|                             |  |                                                                                                                             
|Item 1A.                     |  | Risk Factors                                                                                                                 |  | 29
|                             |  |                                                                                                                             
|Item 2.                      |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                  |  | 29
|                             |  |                                                                                                                             
|Item 3.                      |  | Defaults Upon Senior Securities                                                                                              |  | 30
|                             |  |                                                                                                                             
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                                                          |  | 30
|                             |  |                                                                                                                             
|Item 5.                      |  | Other Information                                                                                                            |  | 30
|                             |  |                                                                                                                             
|Item 6.                      |  | Exhibits                                                                                                                     |  | 31
|                             | 
|SIGNATURES                   |  | 32                                                                                                                          



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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 30,2009 |             |   | December 31,2008 |  
|ASSETS                                                                                                                           |  |              |             |   |                  |   |             |  
|Cash and amounts due from depository institutions                                                                                |  | $            | 3,100,587   |   |                  | $ | 4,116,871   |  
|Interest-bearing deposits in other banks                                                                                         |  |              | 19,868,633  |   |                  |   | 9,470,431   |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                                  |  |              | 22,969,220  |   |                  |   | 13,587,302  |  
|Securities available for sale                                                                                                    |  |              | 713,127     |   |                  |   | 770,752     |  
|Investment securities held to maturity; fair value of $10,809,000 (2009) and $10,831,000 (2008)                                  |  |              | 11,343,291  |   |                  |   | 11,350,165  |  
|Mortgage-backed securities held to maturity; fair value of $104,890,000 (2009) and $119,920,000 (2008)                           |  |              | 101,822,621 |   |                  |   | 117,427,652 |  
|Loans receivable net of allowance for loan losses of $6,012,000 (2009) and $4,661,000 (2008)                                     |  |              | 422,462,611 |   |                  |   | 437,554,169 |  
|Foreclosed real estate                                                                                                           |  |              | 426,353     |   |                  |   | 426,353     |  
|Premises and equipment                                                                                                           |  |              | 2,754,011   |   |                  |   | 2,929,035   |  
|Federal Home Loan Bank of New York stock                                                                                         |  |              | 3,899,700   |   |                  |   | 5,160,100   |  
|Accrued interest receivable                                                                                                      |  |              | 2,812,240   |   |                  |   | 2,884,431   |  
|Deferred tax assets                                                                                                              |  |              | 5,329,482   |   |                  |   | 4,380,878   |  
|Other assets                                                                                                                     |  |              | 971,104     |   |                  |   | 1,541,027   |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total assets                                                                                                                     |  | $            | 575,503,760 |   |                  | $ | 598,011,864 |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|                                                                                                                                 |  |             
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                             |  |              |             |   |                  |   |             |  
|Liabilities:                                                                                                                     |  |              |             |   |                  |   |             |  
|Deposits:                                                                                                                        |  |              |             |   |                  |   |             |  
|Interest bearing                                                                                                                 |  | $            | 410,154,985 |   |                  | $ | 403,317,004 |  
|Non-interest bearing                                                                                                             |  |              | 39,124,279  |   |                  |   | 40,681,753  |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total deposits                                                                                                                   |  |              | 449,279,264 |   |                  |   | 443,998,757 |  
|Advances from Federal Home Loan Bank of New York                                                                                 |  |              | 62,000,000  |   |                  |   | 89,500,000  |  
|Advance payments by borrowers for taxes and insurance                                                                            |  |              | 2,840,368   |   |                  |   | 3,281,968   |  
|Other liabilities                                                                                                                |  |              | 10,987,094  |   |                  |   | 6,552,889   |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total liabilities                                                                                                                |  |              | 525,106,726 |   |                  |   | 543,333,614 |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|                                                                                                                                 |  |             
|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; 4,935,542 shares outstanding, 2009 and
2008 |  |              | 69,000      |   |                  |   | 69,000      |  
|Paid-in capital                                                                                                                  |  |              | 19,339,615  |   |                  |   | 19,339,615  |  
|Retained earnings                                                                                                                |  |              | 57,492,069  |   |                  |   | 61,928,289  |  
|Accumulated other comprehensive loss                                                                                             |  |              | (2,963,845  | ) |                  |   | (3,118,849  | )
|Treasury stock, at cost; 1,964,458 shares, 2009 and 2008                                                                         |  |              | (23,539,805 | ) |                  |   | (23,539,805 | )
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total stockholders equity                                                                                                       |  |              | 50,397,034  |   |                  |   | 54,678,250  |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  
|Total liabilities and stockholders equity                                                                                       |  | $            | 575,503,760 |   |                  | $ | 598,011,864 |  
|                                                                                                                                 |  |              |             |   |                  |   |             |  



|                                                |  |   |  | 
|----------------------------------------------- |  | - |  | 
|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,
|                                                      |  | 2009                       |            |                          | 2008 |   | 2009      |  |   | 2008      
|Interest income:                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Loans                                                 |  | $                          | 6,440,393  |                          |      | $ | 6,839,705 |  | $ | 13,204,364 |   |  | $ | 13,818,539
|Mortgage-backed securities                            |  |                            | 1,209,272  |                          |      |   | 1,440,072 |  |   | 2,514,330  |   |  |   | 2,839,930 
|Investments                                           |  |                            | 233,875    |                          |      |   | 205,210   |  |   | 467,388    |   |  |   | 397,274   
|Other interest-earning assets                         |  |                            | 68,263     |                          |      |   | 279,189   |  |   | 104,239    |   |  |   | 829,839   
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Total interest income                                 |  |                            | 7,951,803  |                          |      |   | 8,764,176 |  |   | 16,290,321 |   |  |   | 17,885,582
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Interest expense:                                     |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Deposits                                              |  |                            | 2,208,675  |                          |      |   | 2,959,089 |  |   | 4,615,203  |   |  |   | 6,358,441 
|Advances from Federal Home Loan Bank                  |  |                            | 820,122    |                          |      |   | 1,057,453 |  |   | 1,711,555  |   |  |   | 2,094,657 
|Overnight borrowings                                  |  |                            | 24,646     |                          |      |   |          |  |   | 24,646     |   |  |   |          
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Total interest expense                                |  |                            | 3,053,443  |                          |      |   | 4,016,542 |  |   | 6,351,404  |   |  |   | 8,453,098 
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Net interest income                                   |  |                            | 4,898,360  |                          |      |   | 4,747,634 |  |   | 9,938,917  |   |  |   | 9,432,484 
|Provision for loan losses                             |  |                            | 850,000    |                          |      |   | 150,500   |  |   | 1,375,000  |   |  |   | 228,000   
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Net interest income after provision for loan losses   |  |                            | 4,048,360  |                          |      |   | 4,597,134 |  |   | 8,563,917  |   |  |   | 9,204,484 
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Non-interest income:                                  |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Fees and service charges                              |  |                            | 282,969    |                          |      |   | 323,300   |  |   | 533,922    |   |  |   | 643,706   
|Gain on sale of branch                                |  |                            |           |                          |      |   |          |  |   | 492,037    |   |  |   |          
|Commissions from sale of financial products           |  |                            | 3,053      |                          |      |   | 125,598   |  |   | 86,373     |   |  |   | 290,348   
|Other                                                 |  |                            | 108,544    |                          |      |   | 106,412   |  |   | 197,201    |   |  |   | 159,337   
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Total non-interest income                             |  |                            | 394,566    |                          |      |   | 555,310   |  |   | 1,309,533  |   |  |   | 1,093,391 
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Non-interest expenses:                                |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Salaries and employee benefits                        |  |                            | 1,878,458  |                          |      |   | 1,864,732 |  |   | 3,938,606  |   |  |   | 3,800,436 
|Net occupancy expense of premises                     |  |                            | 301,627    |                          |      |   | 327,205   |  |   | 631,355    |   |  |   | 661,342   
|Equipment                                             |  |                            | 337,165    |                          |      |   | 329,168   |  |   | 648,446    |   |  |   | 652,026   
|Advertising                                           |  |                            | 49,994     |                          |      |   | 66,000    |  |   | 100,382    |   |  |   | 142,832   
|Professional fees                                     |  |                            | 1,590,428  |                          |      |   | 409,790   |  |   | 2,817,421  |   |  |   | 614,915   
|Loss on foreclosed real estate                        |  |                            | 5,363      |                          |      |   | 1,483     |  |   | 13,015     |   |  |   | 27,432    
|Federal Deposit Insurance Premiums                    |  |                            | 396,018    |                          |      |   | 13,575    |  |   | 494,821    |   |  |   | 28,051    
|Litigation loss reserve                               |  |                            | 3,000,000  |                          |      |   |          |  |   | 3,000,000  |   |  |   |          
|Other                                                 |  |                            | 665,500    |                          |      |   | 613,127   |  |   | 1,311,290  |   |  |   | 1,242,632 
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Total non-interest expenses                           |  |                            | 8,224,553  |                          |      |   | 3,625,080 |  |   | 12,955,336 |   |  |   | 7,169,666 
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|(Loss) income before income tax (benefit) expense     |  |                            | (3,781,627 | )                        |      |   | 1,527,364 |  |   | (3,081,886 | ) |  |   | 3,128,209 
|Income tax (benefit) expense                          |  |                            | (191,047   | )                        |      |   | 564,266   |  |   | 71,094     |   |  |   | 1,155,512 
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Net (loss) income                                     |  | $                          | (3,590,580 | )                        |      | $ | 963,098   |  | $ | (3,152,980 | ) |  | $ | 1,972,697 
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Net (loss) income per common share:                   |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Basic                                                 |  | $                          | (0.73      | )                        |      | $ | 0.20      |  | $ | (0.64      | ) |  | $ | 0.40      
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Diluted                                               |  | $                          | (0.73      | )                        |      | $ | 0.20      |  | $ | (0.64      | ) |  | $ | 0.40      
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Dividends per common share                            |  | $                          | 0.11       |                          |      | $ | 0.23      |  | $ | 0.26       |   |  | $ | 0.46      
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|                                                      |  |                            |            |                         
|Weighted average number of common shares outstanding: |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Basic                                                 |  |                            | 4,935,542  |                          |      |   | 4,975,542 |  |   | 4,935,542  |   |  |   | 4,975,542 
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           
|Diluted                                               |  |                            | 4,935,542  |                          |      |   | 4,975,542 |  |   | 4,935,542  |   |  |   | 4,975,542 
|                                                      |  |                            |            |                          |      |   |           |  |   |            |   |  |   |           



|                                                |  |   |  | 
|----------------------------------------------- |  | - |  | 
|See notes to consolidated financial statements. |  | 2 |  | 



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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, |  
|                                                                         |  | 2009                       |            |   | 2008                     |   |         | 2009 |  |   | 2008       |  
|                                                                         |  |                            |            |  
|Net (loss) income                                                        |  | $                          | (3,590,580 | ) |                          | $ | 963,098 |      |  | $ | (3,152,980 | ) |  | $ | 1,972,697 |  
|                                                                         |  |                            |            |   |                          |   |         |      |  |   |            |   |  |   |           |  
|                                                                         |  |                            |            |  
|Other comprehensive income, net of income taxes:                         |  |                            |            |   |                          |   |         |      |  |   |            |   |  |   |           |  
|Gross unrealized holding gains (losses) on securities available for sale |  |                            | 51,827     |   |                          |   | (1,047  | )    |  |   | 25,420     |   |  |   | (6,166    | )
|Benefit plans                                                            |  |                            | 116,482    |   |                          |   | 47,678  |      |  |   | 232,964    |   |  |   | 95,356    |  
|Deferred income tax (benefit)                                            |  |                            | (67,287    | ) |                          |   | (18,671 | )    |  |   | (103,380   | ) |  |   | (35,642   | )
|                                                                         |  |                            |            |   |                          |   |         |      |  |   |            |   |  |   |           |  
|                                                                         |  |                            |            |  
|Other comprehensive income                                               |  |                            | 101,022    |   |                          |   | 27,960  |      |  |   | 155,004    |   |  |   | 53,548    |  
|                                                                         |  |                            |            |   |                          |   |         |      |  |   |            |   |  |   |           |  
|                                                                         |  |                            |            |  
|Comprehensive (loss) income                                              |  | $                          | (3,489,558 | ) |                          | $ | 991,058 |      |  | $ | (2,997,976 | ) |  | $ | 2,026,245 |  
|                                                                         |  |                            |            |   |                          |   |         |      |  |   |            |   |  |   |           |  



|                                                |  |   |  | 
|----------------------------------------------- |  | - |  | 
|See notes to consolidated financial statements. |  | 3 |  | 



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##### Table of Contents

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                         |  |                          |             |   |      |   |             |  
|---------------------------------------------------------------------------------------- |  | ------------------------ | ----------- | - | ---- | - | ----------- | -
|                                                                                         |  | Six Months EndedJune 30, |            
|                                                                                         |  | 2009                     |             |   | 2008 |  
|Cash flows from operating activities:                                                    |  |                          |             |   |      |   |             |  
|Net (loss) income                                                                        |  | $                        | (3,152,980  | ) |      | $ | 1,972,697   |  
|Adjustments to reconcile net (loss) income to net cash provided by operating activities: |  |                          |             |   |      |   |             |  
|Depreciation of premises and equipment                                                   |  |                          | 199,143     |   |      |   | 266,774     |  
|Amortization of premiums and discounts, net                                              |  |                          | 99,634      |   |      |   | 164,029     |  
|Amortization of deferred loan fees, net                                                  |  |                          | 102,229     |   |      |   | 90,098      |  
|Provision for loan losses                                                                |  |                          | 1,375,000   |   |      |   | 228,000     |  
|Provision for loss on foreclosed real estate                                             |  |                          |            |   |      |   | 22,500      |  
|Gain on sale of branch                                                                   |  |                          | (492,037    | ) |      |   |            |  
|Deferred income tax benefit                                                              |  |                          | (958,772    | ) |      |   | (205,712    | )
|Decrease (increase) in accrued interest receivable                                       |  |                          | 72,191      |   |      |   | (11,239     | )
|Decrease (increase) in other assets                                                      |  |                          | 569,923     |   |      |   | (191,765    | )
|Increase in other liabilities                                                            |  |                          | 4,573,957   |   |      |   | 516,452     |  
|                                                                                         |  |                          |             |   |      |   |             |  
|Net cash provided by operating activities                                                |  |                          | 2,388,288   |   |      |   | 2,851,834   |  
|                                                                                         |  |                          |             |   |      |   |             |  
|                                                                                         |  |                         
|Cash flows from investing activities:                                                    |  |                          |             |   |      |   |             |  
|Principal repayments on securities available for sale                                    |  |                          | 83,045      |   |      |   | 77,604      |  
|Principal repayments on mortgage-backed securities held to maturity                      |  |                          | 15,512,271  |   |      |   | 11,554,496  |  
|Purchases of mortgage-backed securities held to maturity                                 |  |                          |            |   |      |   | (14,994,187 | )
|Net decrease in loans receivable                                                         |  |                          | 13,614,329  |   |      |   | 7,362,812   |  
|Capital improvements to foreclosed real estate                                           |  |                          |            |   |      |   | (10,226     | )
|Additions to premises and equipment                                                      |  |                          | (32,081     | ) |      |   | (37,379     | )
|Proceeds from sale of premises and equipment                                             |  |                          | 7,962       |   |      |   |            |  
|Redemption of Federal Home Loan Bank of New York Stock                                   |  |                          | 1,260,400   |   |      |   | 652,000     |  
|                                                                                         |  |                          |             |   |      |   |             |  
|Net cash provided by investing activities                                                |  |                          | 30,445,926  |   |      |   | 4,605,120   |  
|                                                                                         |  |                          |             |   |      |   |             |  
|                                                                                         |  |                         
|Cash flows from financing activities:                                                    |  |                          |             |   |      |   |             |  
|Net increase (decrease) in deposits                                                      |  |                          | 19,726,122  |   |      |   | (41,281,768 | )
|Cash paid upon sale of branch deposits, net of premiums received                         |  |                          | (13,953,578 | ) |      |   |            |  
|Repayment of advances from Federal Home Loan Bank of New York                            |  |                          | (29,600,000 | ) |      |   | (13,000,000 | )
|Advances from Federal Home Loan Bank of New York                                         |  |                          | 2,100,000   |   |      |   |            |  
|Net (decrease) increase in payments by borrowers for taxes and insurance                 |  |                          | (441,600    | ) |      |   | 68,067      |  
|Cash dividends paid                                                                      |  |                          | (1,283,240  | ) |      |   | (2,288,749  | )
|                                                                                         |  |                          |             |   |      |   |             |  
|Net cash used in financing activities                                                    |  |                          | (23,452,296 | ) |      |   | (56,502,450 | )
|                                                                                         |  |                          |             |   |      |   |             |  
|                                                                                         |  |                         
|Net increase (decrease) in cash and cash equivalents                                     |  |                          | 9,381,918   |   |      |   | (49,045,496 | )
|Cash and cash equivalents  beginning                                                    |  |                          | 13,587,302  |   |      |   | 66,896,019  |  
|                                                                                         |  |                          |             |   |      |   |             |  
|Cash and cash equivalents  ending                                                       |  | $                        | 22,969,220  |   |      | $ | 17,850,523  |  
|                                                                                         |  |                          |             |   |      |   |             |  
|                                                                                         |  |                         
|Supplemental information:                                                                |  |                          |             |   |      |   |             |  
|Cash paid during the period for:                                                         |  |                          |             |   |      |   |             |  
|Interest on deposits and borrowings                                                      |  | $                        | 6,391,709   |   |      | $ | 8,510,523   |  
|                                                                                         |  |                          |             |   |      |   |             |  
|Income taxes                                                                             |  | $                        | 844,746     |   |      | $ | 1,330,354   |  
|                                                                                         |  |                          |             |   |      |   |             |  



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##### Table of Contents

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.
PRINCIPLES OF CONSOLIDATION

The consolidated unaudited 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 certain 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, 2009 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 2008 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, 2008.

The Company has evaluated subsequent events through the date of issuance of the financial data included herein, August 10, 2009.

3. NET (LOSS) INCOME PER COMMON SHARE

Basic net (loss) income per
common share is based on the weighted average number of common shares actually outstanding. Diluted net (loss) 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. The company had no dilutive potential common shares outstanding during the three and six month periods ended June 30, 2009 and
2008.

4. BENEFITS PLANSCOMPONENTS OF NET PERIODIC BENEFIT/EXPENSE



|                                             |  |                            |     |   |                                       |   |      |                            |  |   |                          |   |  |      |      |   |      |   |     |      |  |   |      |   |  |   |     |   |  |   |     |  
|-------------------------------------------- |  | -------------------------- | --- | - | ------------------------------------- | - | ---- | -------------------------- |  | - | ------------------------ | - |  | ---- | ---- | - | ---- | - | --- | ---- |  | - | ---- | - |  | - | --- | - |  | - | --- | -
|                                             |  | Pension Plan               |     |   | Supplemental Executive RetirementPlan |  
|                                             |  | Three Months EndedJune 30, |     |   | Six Months EndedJune 30,              |   |      | Three Months EndedJune 30, |  |   | Six Months EndedJune 30, |  
|                                             |  | 2009                       |     |   | 2008                                  |   |      | 2009                       |  |   | 2008                     |   |  | 2009 |      |   | 2008 |   |     | 2009 |  |   | 2008 |  
|                                             |  | (In Thousands)             |    
|Service cost                                 |  | $                          | 66  |   |                                       | $ | 67   |                            |  | $ | 133                      |   |  | $    | 134  |   |      | $ |    |      |  | $ |     |   |  | $ |    |   |  | $ |    |  
|Interest cost                                |  |                            | 131 |   |                                       |   | 128  |                            |  |   | 262                      |   |  |      | 256  |   |      |   | 21  |      |  |   | 27   |   |  |   | 42  |   |  |   | 54  |  
|Expected return on plan assets               |  |                            | (96 | ) |                                       |   | (147 | )                          |  |   | (191                     | ) |  |      | (293 | ) |      |   |    |      |  |   |     |   |  |   |    |   |  |   |    |  
|Amortization of unrecognized net loss (gain) |  |                            | 118 |   |                                       |   | 42   |                            |  |   | 236                      |   |  |      | 84   |   |      |   | (18 | )    |  |   | (11  | ) |  |   | (36 | ) |  |   | (22 | )
|Unrecognized past service liability          |  |                            | 5   |   |                                       |   | 4    |                            |  |   | 9                        |   |  |      | 8    |   |      |   | 12  |      |  |   | 12   |   |  |   | 24  |   |  |   | 24  |  
|                                             |  |                            |     |   |                                       |   |      |                            |  |   |                          |   |  |      |      |   |      |   |     |      |  |   |      |   |  |   |     |   |  |   |     |  
|                                             |  |                            |     |   |                                       |   |      |                           
|Net periodic benefit/expense                 |  | $                          | 224 |   |                                       | $ | 94   |                            |  | $ | 449                      |   |  | $    | 189  |   |      | $ | 15  |      |  | $ | 28   |   |  | $ | 30  |   |  | $ | 56  |  
|                                             |  |                            |     |   |                                       |   |      |                            |  |   |                          |   |  |      |      |   |      |   |     |      |  |   |      |   |  |   |     |   |  |   |     |  



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##### Table of Contents

5. SECURITIES

SECURITIES AVAILABLE FOR SALE



|                                                             |  |               |         |                      |   |                       |  |            |        |  |   |        
|------------------------------------------------------------ |  | ------------- | ------- | -------------------- | - | --------------------- |  | ---------- | ------ |  | - | -------
|                                                             |  | AmortizedCost |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|June 30, 2009                                                |  |               |         |                      |   |                       |  |            |        |  |   |        
|Mortgage-backed securities                                   |  | $             | 335,892 |                      | $ | 1,844                 |  | $          | 609    |  | $ | 337,127
|Trust originated preferred security, maturing after 20 years |  |               | 400,000 |                      |   |                      |  |            | 24,000 |  |   | 376,000
|                                                             |  |               |         |                      |   |                       |  |            |        |  |   |        
|Total                                                        |  | $             | 735,892 |                      | $ | 1,844                 |  | $          | 24,609 |  | $ | 713,127
|                                                             |  |               |         |                      |   |                       |  |            |        |  |   |        

The unrealized losses categorized by the length of time of the continuous loss position, and the fair value of the
related securities available for sale are as follows:



|                                                             |  |                     |         |                     |   |           |  |                  |         |           |   |                  |  |   |         |  |   |       
|------------------------------------------------------------ |  | ------------------- | ------- | ------------------- | - | --------- |  | ---------------- | ------- | --------- | - | ---------------- |  | - | ------- |  | - | ------
|                                                             |  | Less than 12 Months |         | More than 12 months |   | Total    
|                                                             |  | FairValue           |         | UnrealizedLosses    |   | FairValue |  | UnrealizedLosses |         | FairValue |   | UnrealizedLosses
|June 30, 2009                                                |  |                     |         |                     |   |           |  |                  |         |           |   |                  |  |   |         |  |   |       
|Mortgage-backed securities                                   |  | $                   | 133,317 |                     | $ | 609       |  | $                |        |           | $ |                 |  | $ | 133,317 |  | $ | 609   
|Trust originated preferred security, maturing after 20 years |  |                     |        |                     |   |          |  |                  | 376,000 |           |   | 24,000           |  |   | 376,000 |  |   | 24,000
|                                                             |  |                     |         |                     |   |           |  |                  |         |           |   |                  |  |   |         |  |   |       
|Total                                                        |  | $                   | 133,317 |                     | $ | 609       |  | $                | 376,000 |           | $ | 24,000           |  | $ | 509,317 |  | $ | 24,609
|                                                             |  |                     |         |                     |   |           |  |                  |         |           |   |                  |  |   |         |  |   |       

INVESTMENT SECURITIES HELD TO MATURITY



|                                    |  |               |            |                      |   |                       |  |            |         |  |   |           
|----------------------------------- |  | ------------- | ---------- | -------------------- | - | --------------------- |  | ---------- | ------- |  | - | ----------
|                                    |  | AmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|June 30, 2009                       |  |               |            |                      |   |                       |  |            |         |  |   |           
|Subordinated notes:                 |  |               |            |                      |   |                       |  |            |         |  |   |           
|Due within one year                 |  | $             | 4,009,514  |                      | $ |                      |  | $          | 209,514 |  | $ | 3,800,000 
|Due after one within five years     |  |               | 6,000,000  |                      |   |                      |  |            | 300,000 |  |   | 5,700,000 
|Municipal obligations:              |  |               |            |                      |   |                       |  |            |         |  |   |           
|Due after 10 years through 15 years |  |               | 1,333,777  |                      |   | 199                   |  |            | 24,876  |  |   | 1,309,100 
|                                    |  |               |            |                      |   |                       |  |            |         |  |   |           
|Total                               |  | $             | 11,343,291 |                      | $ | 199                   |  | $          | 534,390 |  | $ | 10,809,100
|                                    |  |               |            |                      |   |                       |  |            |         |  |   |           



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##### Table of Contents

5. SECURITIES (Continued)



The unrealized losses, categorized by the length of time of the continuous loss position, and the fair value of the
related securities held to maturity are as follows:



|                                    |  |                     |           |                     |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|----------------------------------- |  | ------------------- | --------- | ------------------- | - | --------- |  | ---------------- | ------- | --------- | - | ---------------- |  | - | ---------- |  | - | -------
|                                    |  | Less than 12 Months |           | More than 12 months |   | Total    
|                                    |  | FairValue           |           | UnrealizedLosses    |   | FairValue |  | UnrealizedLosses |         | FairValue |   | UnrealizedLosses
|June 30, 2009                       |  |                     |           |                     |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Subordinated notes:                 |  |                     |           |                     |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Due within one year                 |  | $                   | 3,800,000 |                     | $ | 209,514   |  | $                |        |           | $ |                 |  | $ | 3,800,000  |  | $ | 209,514
|Due after one within five years     |  |                     | 5,700,000 |                     |   | 300,000   |  |                  |        |           |   |                 |  |   | 5,700,000  |  |   | 300,000
|Municipal obligations:              |  |                     |           |                     |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Due after 10 years through 15 years |  |                     |          |                     |   |          |  |                  | 934,100 |           |   | 24,876           |  |   | 934,100    |  |   | 24,876 
|                                    |  |                     |           |                     |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Total                               |  | $                   | 9,500,000 |                     | $ | 509,514   |  | $                | 934,100 |           | $ | 24,876           |  | $ | 10,434,100 |  | $ | 534,390
|                                    |  |                     |           |                     |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        

MORTGAGE-BACKED SECURITIES HELD TO MATURITY



|                                           |  |                |             |                      |   |                       |  |            |        |  |   |            
|------------------------------------------ |  | -------------- | ----------- | -------------------- | - | --------------------- |  | ---------- | ------ |  | - | -----------
|                                           |  | Amortized Cost |             | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|June 30, 2009                              |  |                |             |                      |   |                       |  |            |        |  |   |            
|Federal Home Loan Mortgage Corporation     |  | $              | 70,404,104  |                      | $ | 2,244,475             |  | $          | 22,070 |  | $ | 72,626,509 
|Federal National Mortgage Association      |  |                | 18,244,951  |                      |   | 551,707               |  |            | 6,980  |  |   | 18,789,678 
|Governmental National Mortgage Corporation |  |                | 98,155      |                      |   | 11,968                |  |            |       |  |   | 110,123    
|Collateralized mortgage obligations        |  |                | 13,075,411  |                      |   | 288,851               |  |            | 226    |  |   | 13,364,036 
|                                           |  |                |             |                      |   |                       |  |            |        |  |   |            
|Total                                      |  | $              | 101,822,621 |                      | $ | 3,097,001             |  | $          | 29,276 |  | $ | 104,890,346
|                                           |  |                |             |                      |   |                       |  |            |        |  |   |            



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##### Table of Contents

5. SECURITIES (Continued)



The unrealized losses, categorized by the length of time of the continuous loss position, and the fair value of the
related mortgage-backed securities held to maturity are as follows:



|                                       |  |                     |   |                     |   |           |  |                  |           |           |   |                  |  |   |           |  |   |       
|-------------------------------------- |  | ------------------- | - | ------------------- | - | --------- |  | ---------------- | --------- | --------- | - | ---------------- |  | - | --------- |  | - | ------
|                                       |  | Less than 12 Months |   | More than 12 months |   | Total    
|                                       |  | FairValue           |   | UnrealizedLosses    |   | FairValue |  | UnrealizedLosses |           | FairValue |   | UnrealizedLosses
|June 30, 2009                          |  |                     |   |                     |   |           |  |                  |           |           |   |                  |  |   |           |  |   |       
|Federal Home Loan Mortgage Corporation |  | $                   |  |                     | $ |          |  | $                | 2,145,869 |           | $ | 22,070           |  | $ | 2,145,869 |  | $ | 22,070
|Federal National Mortgage Association  |  |                     |  |                     |   |          |  |                  | 904,938   |           |   | 6,980            |  |   | 904,938   |  |   | 6,980 
|Collateralized mortgage obligations    |  |                     |  |                     |   |          |  |                  | 727,410   |           |   | 226              |  |   | 727,410   |  |   | 226   
|                                       |  |                     |   |                     |   |           |  |                  |           |           |   |                  |  |   |           |  |   |       
|Total                                  |  | $                   |  |                     | $ |          |  | $                | 3,778,217 |           | $ | 29,276           |  | $ | 3,778,217 |  | $ | 29,276
|                                       |  |                     |   |                     |   |           |  |                  |           |           |   |                  |  |   |           |  |   |       

When the fair value of a security is below its amortized cost, and depending on the length of time the condition
exists and the extent the fair value is below amortized cost, additional analysis is performed to determine whether an other-than-temporary impairment condition exists. Available-for-sale and held-to-maturity securities are analyzed quarterly for
possible other-than-temporary impairment. The analysis considers (i) whether we have the intent to sell our securities prior to recovery and/or maturity and (ii) whether it is more likely than not that we will have to sell our securities
prior to recovery and/or maturity. Often, the information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment. If actual information or conditions are different than estimated,
the extent of the impairment of the security may be different than previously estimated, which could have a material effect on the Companys consolidated results of operations and financial condition.

Management does not believe that any of the unrealized losses at June 30, 2009 represent an other-than-temporary impairment. Unrealized losses on available for sale
securities relate to subordinated notes and municipal securities that earn interest at a fixed rate. Such losses are due to changes in market interest rates while the above investments are at a fixed rate. The unrealized losses on held to maturity
investments relate to subordinated notes and mortgage backed securities that earn interest at a fixed rate. Such losses are due to changes in market interest rates while the above investments are at a fixed rate. The unrealized losses on the held to
maturity mortgage backed securities portfolio are due primarily to increases in market interest rates. The securities with unrealized losses are primarily at fixed interest rates. At June 30, 2009, unrealized losses included three
mortgage-backed securities, one trust-originated preferred security, seven subordinated notes, two municipal obligations, one Federal Home Loan Mortgage Corporation security, one Federal National Mortgage Association security and one collateralized
mortgage obligation.

Federal Home Loan Bank of New York (FHLB) stock, which represents required investment in the common stock of a
correspondent bank, is carried at cost and as of June 30. 2009 and December 31, 2008, consists of the common stock FHLB.



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##### Table of Contents

5. SECURITIES (Continued)



Management evaluates the FHLB stock for impairment in accordance with Statement of Position (SOP) 01-6, Accounting
by Certain Entities (Including Entities With Trade Receivables) That Lend to or Finance the Activities of Others. Managements determination of whether this investment is impaired is based on their assessment of the ultimate recoverability
of its cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) the significance of the decline in net assets of
the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the
operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB.

Management believes no impairment charge is necessary related to the FHLB stock as of June 30, 2009.

6. FAIR
VALUES OF FINANCIAL INSTRUMENTS

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 157, Fair Value Measurements (SFAS 157), which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States of
America (GAAP), and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements.

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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##### Table of Contents

6. FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)



For assets measured at fair value on a recurring and non-recurring basis, the Companys fair value measurements
by level within the fair value hierarchy used at June 30, 2009 and December 31, 2008 are as follows:



|                              |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|----------------------------- |  | ----- | ----- | --------------------------------------------------------- | - | ----------------------------------------- |  | -------------------------------------- | --- |  | - | -----
|Description                   |  | Total |       | (Level 1)Quoted Pricesin ActiveMarkets forIdenticalAssets |   | (Level 2)SignificantOtherObservableInputs |  | (Level 3)SignificantUnobservableInputs
|                              |  |       |       | (In Thousands)                                            |   |                                          
|June 30, 2009                 |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|Recurring:                    |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|Securities available for sale |  | $     | 713   |                                                           | $ |                                          |  | $                                      | 713 |  | $ |     
|Non-recurring:                |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|Impaired loans                |  |       | 2,238 |                                                           |   |                                          |  |                                        |    |  |   | 2,238
|Foreclosed real estate        |  |       | 426   |                                                           |   |                                          |  |                                        |    |  |   | 426  
|                              |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|Total                         |  | $     | 3,377 |                                                           | $ |                                          |  | $                                      | 713 |  | $ | 2,664
|                              |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|                              |  |       |       |                                                          
|December 31, 2008             |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|Recurring:                    |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|Securities available for sale |  | $     | 771   |                                                           | $ |                                          |  | $                                      | 771 |  | $ |     
|Non-recurring:                |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|Impaired loans                |  |       | 1,501 |                                                           |   |                                          |  |                                        |    |  |   | 1,501
|Foreclosed real estate        |  |       | 426   |                                                           |   |                                          |  |                                        |    |  |   | 426  
|                              |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      
|Total                         |  | $     | 2,698 |                                                           | $ |                                          |  | $                                      | 771 |  | $ | 1,927
|                              |  |       |       |                                                           |   |                                           |  |                                        |     |  |   |      

The following summarizes activity related to impaired loans and foreclosed real estate for the three and six month
periods ended June 30, 2009:



|                           |  |                            |       |   |           |   |       |  
|-------------------------- |  | -------------------------- | ----- | - | --------- | - | ----- | -
|                           |  | Periods endedJune 30, 2009 |      
|Impaired Loans             |  | Threemonths                |       |   | Sixmonths |  
|                           |  | (In Thousands)             |      
|Beginning balance          |  | $                          | 2,223 |   |           | $ | 1,501 |  
|Additions                  |  |                            | 618   |   |           |   | 1,487 |  
|Payments and other credits |  |                            | (2    | ) |           |   | (2    | )
|Provision for loan losses  |  |                            | (601  | ) |           |   | (748  | )
|                           |  |                            |       |   |           |   |       |  
|Ending balance             |  | $                          | 2,238 |   |           | $ | 2,238 |  
|                           |  |                            |       |   |           |   |       |  
|                           | 
|                           |  | Periods endedJune 30, 2009 |      
|Foreclosed Real Estate     |  | Threemonths                |       |   | Sixmonths |  
|                           |  | (In Thousands)             |      
|Beginning balance          |  | $                          | 426   |   |           | $ | 426   |  
|Additions                  |  |                            |      |   |           |   |      |  
|Payments and other credits |  |                            |      |   |           |   |      |  
|Reserve for loss           |  |                            |      |   |           |   |      |  
|                           |  |                            |       |   |           |   |       |  
|Ending balance             |  | $                          | 426   |   |           | $ | 426   |  
|                           |  |                            |       |   |           |   |       |  



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##### Table of Contents

6. FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)



The following valuation techniques were used to measure the fair value of assets in the tables above for additional
information on the fair values of the Companys financial instruments and the related methods and assumptions, see the tabular information and narrative below.

Impaired Loans:Loans included in the above tables are those that are accounted for under SFAS No. 114, Accounting by Creditors for Impairment of a Loan (SFAS 114), 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 loan balances of $2,238,000, net of valuation allowances of $1,814,000 at
June 30, 2009, and loan balances of $1,501,000, net of valuation allowances of $1,086,000 at December 31, 2008.

Foreclosed Real Estate:Fair value of foreclosed real estate 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.

The following is a summary of fair value versus the carrying value of financial instruments. For the Company and the Bank, as for most financial institutions, the
bulk of its assets and liabilities are considered financial instruments. Many of the financial instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange
transaction. Therefore, significant estimations and present value calculations were used for the purpose of this note. Changes in assumptions could significantly affect these estimates.



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6. FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)



The carrying amounts and fair value of the Companys financial instruments are as follows:



|                                            |  |                |         |                    |   |               |  |                     |         |  |   |        
|------------------------------------------- |  | -------------- | ------- | ------------------ | - | ------------- |  | ------------------- | ------- |  | - | -------
|                                            |  | June 30, 2009  |         | December 31, 2008 
|                                            |  | CarryingValue  |         | EstimatedFairValue |   | CarryingValue |  | EstimatedFair Value
|                                            |  | (In Thousands)
|Financial assets:                           |  |                |         |                    |   |               |  |                     |         |  |   |        
|Cash and cash equivalents                   |  | $              | 22,969  |                    | $ | 22,969        |  | $                   | 13,587  |  | $ | 13,587 
|Securities available for sale               |  |                | 713     |                    |   | 713           |  |                     | 771     |  |   | 771    
|Investment securities held to maturity      |  |                | 11,343  |                    |   | 10,809        |  |                     | 11,350  |  |   | 10,831 
|Mortgage-backed securities held to maturity |  |                | 101,823 |                    |   | 104,890       |  |                     | 117,428 |  |   | 119,920
|FHLB stock                                  |  |                | 3,900   |                    |   | 3,900         |  |                     | 5,160   |  |   | 5,160  
|Loans receivable                            |  |                | 422,463 |                    |   | 438,050       |  |                     | 437,554 |  |   | 454,149
|Interest receivable                         |  |                | 2,812   |                    |   | 2,812         |  |                     | 2,884   |  |   | 2,884  
|                                            |  |                |         |                   
|Financial liabilities:                      |  |                |         |                    |   |               |  |                     |         |  |   |        
|Deposits                                    |  | $              | 449,279 |                    | $ | 451,816       |  | $                   | 443,999 |  | $ | 447,734
|Advances from FHLB                          |  |                | 62,000  |                    |   | 63,786        |  |                     | 89,500  |  |   | 94,830 
|Interest payable                            |  |                | 318     |                    |   | 318           |  |                     | 359     |  |   | 359    
|                                            |  |                |         |                   
|Commitments to extend credit                |  |                |        |                    |   |              |  |                     |        |  |   |       

The following methods and assumptions were used in estimating the fair value of financial instruments in the table
above:

Cash and cash equivalents and interest receivable and payable: The carrying amounts reported in the consolidated financial statements for cash and
cash equivalents and interest receivable and payable approximate their fair values.

Securities: The fair value of securities available for sale (carried
at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in
the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities relationship to other benchmark quoted prices. For certain securities which are not
traded in active markets are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). In the absence of such
evidence, managements best estimate is used. Managements best estimate consists of both internal and external support on certain Level 3 investments. Internal cash flow models using a present value formula that includes assumptions
market participants would use along with indicative exit pricing obtained from broker/dealers (where available) were used to support fair values of certain Level 3 investments.

FHLB stock: Due to its restricted nature, the estimated fair value of the Banks investment in FHLB stock is deemed equal to its carrying value, which represents the price at which it may be redeemed.

Loans receivable: The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and
interest rate-risk inherent in the loans. Projected future



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6. FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)



cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate
loans that reprice frequently and with no significant change to credit risk, fair values are based on carrying values.

Deposit liabilities: The fair
values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values
for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Advances from Federal Home Loan Bank of New York: Fair value is estimated using rates currently offered for liabilities of similar remaining maturities,
or when available, quoted market prices.

Commitments to extend credit: The fair value of commitments is estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of
interest rates and the committed rates.

7. CRITICAL ACCOUNTING POLICIES

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 are
considered to be critical accounting policies.

Material estimates that are particularly susceptible to significant changes relate to the determination of
the allowance for loan losses, amounts related to the Companys defined benefit pension plan and other-than-temporary impairment of investment and mortgage-backed securities. 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 the composition of
the 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. CRITICAL ACCOUNTING POLICIES (Continued)



Our pension plan costs are calculated using actuarial concepts, as discussed within the requirements of Statement of
Financial Accounting Standards (SFAS) No. 87, Employers Accounting for Pensions, SFAS No. 132 (R) Employers Disclosures about Pensions and Other Postretirement Benefitsan amendment of FASB
Statements No. 87, 88, and 106, and as amended by SFAS No. 158, Employers Accounting for Deferred Benefit Pension and Other Post Retirement Plans. Pension expense and the determination of our projected pension
liability are based upon two critical assumptions: the discount rate and the expected return on plan assets. We evaluate each of these critical assumptions annually.

Other assumptions impact the determination of pension expense and the projected liability, including the primary employee demographics such as retirement patterns, employee turnover, mortality rates, and estimated
employer compensation increases. These factors, along with the critical assumptions, are carefully reviewed by management each year in consultation with our pension plan consultants and actuaries.

Further information about our pension plan assumptions, the plans funded status, and other plan information is included in Note 11 to the Consolidated Financial
Statements in the Companys 2008 Annual Report to Shareholders, which is filed as Exhibit 13 and incorporated by reference to the Companys Annual Report on Form 10-K for fiscal 2008.

When the fair value of a security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair value is below amortized
cost, additional analysis is performed to determine whether an other-than-temporary impairment condition exists. Available-for-sale and held-to-maturity securities are analyzed quarterly for possible other-than-temporary impairment. The analysis
considers (i) whether we have the intent to sell our securities prior to recovery and/or maturity and (ii) whether it is more likely than not that we will have to sell our securities prior to recovery and/or maturity. Often, the
information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment. If actual information or conditions are different than estimated, the extent of the impairment of the security
may be different than previously estimated, which could have a material effect on the Companys consolidated results of operations and financial condition.

8. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162.SFAS 168 replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles,to establish the FASB
Accounting Standards Codificationas the source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in preparation of financial statements in conformity with GAAP. SFAS 168 is effective
for interim and annual periods ending after September 15, 2009. We do not expect the adoption of this standard to have an impact on our consolidated financial position or results of operations.



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8. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)



In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R).This
statement amends FASB Interpretation No. 46, Consolidation of Variable Interest Entities (revised December 2003)  an interpretation of ARB No. 51, or FIN 46(R), to require an enterprise to determine whether its
variable interest or interests give it a controlling financial interest in a variable interest entity. The primary beneficiary of a variable interest entity is the enterprise that has both (1) the power to direct the activities of a variable
interest entity that most significantly impact the entitys economic performance and (2) the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits
from the entity that could potentially be significant to the variable interest entity. SFAS 167 also amends FIN 46(R) to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.
SFAS 167 is effective for fiscal years beginning after November 15, 2009. We have not determined the effect that the adoption of SFAS 167 will have on our consolidated financial position or results of operations.

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140.This statement
prescribes the information that a reporting entity must provide in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance and cash flows; and a transferors
continuing involvement in transferred financial assets. Specifically, among other aspects, SFAS 166 amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, or
SFAS 140, by removing the concept of a qualifying special-purpose entity from SFAS 140 as well as the exception from applying FIN 46(R) to variable interest entities that are qualifying special-purpose entities. It also modifies the
financial-components approach used in SFAS 140. SFAS 166 is effective for fiscal years beginning after November 15, 2009. We have not determined the effect that the adoption of SFAS 166 will have on our consolidated financial
position or results of operations.

Effective April 1, 2009, the Company adopted SFAS No. 165, Subsequent Events. Statement
No. 165 establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued. Statement No. 165 sets forth the period after the balance sheet date
during which management of the reporting entity, should evaluate events or transactions that may occur for potential recognition in the financial statements, identifies the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, and the disclosure that should be made about events or transactions that occur after the balance sheet date. The adoption of SFAS No. 165 did not have an effect on the amounts
reported in the Companys consolidated financial statements.

In April 2009, the FASB issued FASB Staff Position
(FSP) No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly(FSP FAS 157-4).
FASB Statement 157, Fair Value Measurements, defines fair value as the price that would be received to sell the asset or transfer the liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market
participants at the measurement date under current market conditions. FSP FAS 157-4 provides additional guidance on determining when the volume and level of activity for the asset or liability has significantly decreased. The FSP also includes
guidance on identifying circumstances when a transaction may not be considered orderly.

FSP FAS 157-4 provides a list of factors that a reporting entity
should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. When the reporting entity concludes there has
been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in
accordance with Statement 157.



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8. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)



This FSP clarifies that when there has been a significant decrease in the volume and level of activity for the asset
or liability, some transactions may not be orderly. In those situations, the entity must evaluate the weight of the evidence to determine whether the transaction is orderly. The FSP provides a list of circumstances that may indicate that a
transaction is not orderly. A transaction price that is not associated with an orderly transaction is given little, if any, weight when estimating fair value.

This FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of this FSP effective June 30, 2009 did not have
an effect on the amounts reported in the Companys consolidated financial statements.

In April 2009, the FASB issued FSP No. FAS 115-2 and
FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments(FSP FAS 115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 clarify the interaction of the factors that should be considered when determining whether a
debt security is other-than-temporarily impaired. For debt securities, management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that management will be required to sell the security prior
to its anticipated recovery. These steps are done before assessing whether the entity will recover the cost basis of the investment. Previously, this assessment required management to assert it has both the intent and the ability to hold a security
for a period of time sufficient to allow for an anticipated recovery in fair value to avoid recognizing another-than-temporary impairment. This change does not affect the need to forecast recovery of the value of the security through either cash
flows or market price.

In instances when a determination is made that another-than-temporary impairment exists, but the investor does not intend to sell
the debt security and it is not more likely than not that the investor will be required to sell the debt security prior to its anticipated recovery, FSP FAS 115-2 and FAS 124-2 changes the presentation and amount of the other-than-temporary
impairment recognized in the income statement.

The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary
impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total
other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income. This FSP is effective for interim
and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of this FSP effective June 30, 2009 did not have an effect on the amounts reported in the
Companys consolidated financial statements.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair
Value of Financial Instruments(FSP FAS 107-1 and APB 28-1). FSP FAS 107-1 and APB 28-1 amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized
financial information at interim reporting periods. This FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of this FSP
effective June 30, 2009 did not have an effect on the amounts reported in the Companys consolidated financial statements.



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9. MERGER AGREEMENT

On June 29, 2009, the Company and BCB Bancorp, Inc., a New Jersey corporation (BCB), entered into an Agreement and Plan of Merger (the Merger Agreement), pursuant to which Pamrapo will merge with and into BCB,
with BCB as the surviving corporation. The Bank and BCB Community Bank, a New Jersey-chartered bank and a wholly-owned subsidiary of BCB (BCB Bank), will also enter into a subsidiary agreement and plan of merger that provides for the
merger of the Bank with and into BCB Bank, with BCB Bank as the surviving institution. Pursuant to the terms of the Merger Agreement, shareholders of Pamrapo will receive 1.0 share of BCB common stock for each share of the Companys common
stock. In addition, all outstanding unexercised options to purchase the Companys common stock will be converted into options to purchase BCB common stock. The transaction is expected to close by year end, pending regulatory approvals, approval
of the Merger Agreement by shareholders of both Pamrapo and BCB, and the satisfaction of other customary closing conditions.

10. SUBSEQUENT EVENT



The Banks largest non-accruing commercial loan of $1.9 million is to a local
hospital. In October 2006, $1.0 million of the total $3.0 million due on the loan was paid and the remaining contractual balance of approximately $1.9 million was secured by a mortgage on real estate. The $1.9 million was due on June 1, 2007.
As of June 30, 2009, the $1.9 million loan balance had not been paid. The repayment of the loan is subject to bankruptcy proceedings. In September 2008, the creditors committee for the hospital filed a complaint against the Bank seeking to
recover the $1.0 million previously paid on the loan and to set aside the mortgage securing the $1.9 million still owed to the Bank, charging that the payment and the mortgage were avoidable preferences.

On June 9, 2009, the Liquidating Trustee for the hospital filed a motion providing for an auction sale of the two mortgaged properties to be sold free and clear of all
liens, with liens to attach to the proceeds of sale. The Bank did not oppose the motion and the auction sale was held at a hearing on July 20, 2009. The U.S. Bankruptcy Court for the District of New Jersey, by orders dated July 23, 2009, approved
separate bids to acquire the properties for a total of $1.6 million. The closings took place on August 5, 2009 and August 6, 2009, respectively. Net proceeds of the sale, after deducting taxes, real estate commissions and other closing costs, were
approximately $1.5million.

The litigation with respect to the hospital loan is currently in the discovery phase. The successful party in the
preference litigation will be entitled to some or all of the net proceeds of the sale of the properties. At this point, management believes, based on discussions with its litigation counsel, the Bank will likely prevail in its defense. However, due
to the normal uncertainties of any litigation, the loan has been deemed impaired and is included in the recorded investments in impaired loans, net of its related allowance, at June 30, 2009. Based upon the net carrying value of the hospital loan as
of June 30, 2009, if the Bank is successful in the preference litigation and, as a result, receives all or a certain portion of the net proceeds of the sale of the properties, the Bank may recover the current net carrying value of the hospital loan
plus a portion of amounts previously reserved for. The Bank will continue to monitor this loan and evaluate its collectability as necessary.



|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.

Recent
Developments

On June 29, 2009, the Company and BCB Bancorp, Inc., a New Jersey corporation (BCB), entered into an Agreement and Plan
of Merger (the Merger Agreement), pursuant to which Pamrapo will merge with and into BCB, with BCB as the surviving corporation. The Bank and BCB Community Bank, a New Jersey-chartered bank and a wholly-owned subsidiary of BCB (BCB
Bank), will also enter into a subsidiary agreement and plan of merger that provides for the merger of the Bank with and into BCB Bank, with BCB Bank as the surviving institution. Pursuant to the terms of the Merger Agreement, shareholders of
Pamrapo will receive 1.0 share of BCB common stock for each share of the Companys common stock. In addition, all outstanding unexercised options to purchase the Companys common stock will be converted into options to purchase BCB common
stock. The transaction is expected to close by year end, pending regulatory approvals, approval of the Merger Agreement by shareholders of both Pamrapo and BCB, and the satisfaction of other customary closing conditions.

On June 9, 2009, the Liquidating Trustee for the hospital, which is the debtor of the Banks largest non-accruing commercial loan the repayment of which is subject
to bankruptcy proceedings, filed a motion providing for an auction sale of the two mortgaged properties securing the $1.9 million still owed to the Bank to be sold free and clear of all liens, with liens to attach to the proceeds of sale. The Bank
did not oppose the motion and the auction sale was held at a hearing on July 20, 2009. The U.S. Bankruptcy Court for the District of New Jersey, by orders dated July 23, 2009, approved separate bids to acquire the properties for a total of $1.6
million. The closings took place on August 5, 2009 and August 6, 2009, respectively. Net proceeds of the sale, after deducting taxes, real estate commissions and other closing costs, were approximately $1.5million. Please see
Managements Discussion and Analysis of Financial Condition and Results of OperationsComparison of Operating Results for the Three Months Ended June 30, 2009 and 2008 for further information regarding the hospital loan.

Report of Independent Forensic Accountants

As
previously disclosed in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and its 2008 Annual Report to Shareholders, in August 2008, management became aware that certain commission payments from a
third-party broker, which were payable to Pamrapo Service Corporation, Inc. (the Corporation), a wholly-owned subsidiary of the Bank, as required by its policies and procedures, were being paid directly to the manager of the



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Corporation (the Manager). The direct payments to the Manager were made pursuant to a letter between a third-party broker and the president of
the Corporation. These direct payments constituted a change in commission structure, which was made without the approval of the Board of Directors of the Corporation, as required by its policies and procedures. Following an internal inquiry into
this matter, the Bank determined, based upon the knowledge and understanding at the time of the individuals who conducted the inquiries, that $270,357 was owed by the Manager to the Corporation for commissions paid directly to the Manager for the
period from August 2007 to December 2008. The $270,357 was repaid by or on behalf of the Manager to the Corporation, and the Company and the Bank recognized the amount of $270,357 in earnings during the fourth quarter of 2008. For further
information, please see Note 22 to the Consolidated Financial Statements in the Companys 2008 Annual Report to Shareholders, which is filed as Exhibit 13 and incorporated by reference to its Annual Report on Form 10-K for fiscal 2008.

On February 24, 2009, the Audit Committee of the Company engaged independent forensic accountants to assist with an internal investigation of the
business and financial records of the Corporation. On May 5, 2009, the independent forensic accountants issued a report to the Companys Audit Committee with respect to the results of their internal investigation (the Report).
The Report indicates that, based upon the information presented to the forensic accountants on or before April 24, 2009 and the procedures that they performed, the forensic accountants determined that the Manager received funds in the form of
commission income directly from broker-dealers and insurance carriers beginning in the year 2005 through his termination on February 12, 2009. According to the Report, the independent forensic accountants determined that, as of May 5,
2009, excluding the $270,357 previously paid to the Corporation, an additional $224,559 in commission revenue for the fiscal years 2005 through 2008 is due to the Corporation by the Manager and certain other individuals previously affiliated with
the Corporation. Recovery of any of these amounts is subject to several contingencies, including any claims or defenses put forth by any person or entity that the Company would choose to seek recovery from, including, but not limited to, the former
Manager of the Corporation. The amounts are subject to change based on the receipt of further information. Management has determined that the item is a gain contingency and in accordance with Financial Accounting Standard No. 5,
Accounting for Contingencies (As Amended), has not reflected any amounts in its consolidated financial statements as of June 30, 2009 and December 31, 2008 and for the three and six month periods ended June 30, 2009 and
2008. If it is determined that the Corporation is in fact entitled to any of these amounts and they are in fact recovered, the amounts could be material to the Companys current and previously issued consolidated financial statements, and
restatements of certain consolidated financial statements may be necessary.

The Report reflects the determinations of the independent forensic accountants
based upon information received and procedures performed through the date of the Report. The Companys management, Board of Directors and Audit Committee are still in the process of evaluating the Report and other information as it becomes
available to determine additional amounts due, if any.

Changes in Financial Condition

The Companys assets at June 30, 2009 totaled $575.5 million, which represents a decrease of $22.5 million or 3.8% as compared with $598.0 million at December 31, 2008.

Total cash and cash equivalents of $23.0 million at June 30, 2009 increased $9.4 million or 69.1% when compared with $13.6 million at December 31, 2008. The
increase during the six months ended June 30, 2009 resulted primarily from an increase in interest-bearing deposits in other banks, which more than offset a decrease in cash and amounts due from depository institutions.

Securities available for sale at June 30, 2009 decreased $58,000 or 7.5% to $713,000 when compared with $771,000 at December 31, 2008. The decrease during the
six months ended June 30, 2009 resulted primarily from repayments on securities available for sale of $83,000 and a decrease in net unrealized losses of $25,000.



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Investment securities held to maturity at June 30, 2009 totaled $11.3 million as compared with $11.4 million at
December 31, 2008. Mortgage-backed securities held to maturity at June 30, 2009 decreased $15.6 million or 13.3% to $101.8 million when compared with $117.4 million at December 31, 2008. The decrease during the six months ended
June 30, 2009 resulted primarily from principal repayments totaling $15.5 million.

Net loans receivable amounted to $422.5 million at June 30,
2009, as compared to $437.6 million at December 31, 2008, which represents a decrease of $15.1 million or 3.5%. The decrease during the six months ended June 30, 2009 resulted primarily from principal repayments exceeding loan
originations.

Foreclosed real estate consists of two single-family residences.

Deferred tax assets totaled $5.3 million at June 30, 2009 as compared to $4.4 million at December 31, 2008 representing an increase of $900,000. This increase was primarily due to an increase in the
provision for loan losses, the reserve for uncollectable interest and the accrual for pension and other post-retirement plans.

Deposits at June 30,
2009 totaled $449.3 million as compared with $444.0 million at December 31, 2008 representing an increase of $5.3 million or 1.2%. The increase during the six months ended June 30, 2009 resulted primarily from an increase in interest
bearing deposits, which more than offset the loss of deposits as a result of the sale of the Banks Fort Lee, New Jersey branch in March 2009 with deposits, as of the date of sale, approximating $14.5 million.

Advances from the Federal Home Loan Bank of New York (FHLB) amounted to $62.0 million at June 30, 2009 as compared with $89.5 million at
December 31, 2008 representing a decrease of $27.5 million or 30.7% due to repayments on the advances.

Stockholders equity totaled $50.4
million and $54.7 million at June 30, 2009 and December 31, 2008, respectively. The decrease of $4.3 million for the six months ended June 30, 2009 resulted primarily from a net loss of $3.2 million and from cash dividends paid of
$1.3 million.

Comparison of Operating Results for the Three Months Ended June 30, 2009 and 2008

The net loss for the three months ended June 30, 2009 totaled $3.6 million as compared to net income of $963,000 for the three months ended June 30, 2008,
representing a decrease of $4.6 million or 473.8%. The net loss during the three months ended June 30, 2009, as compared to the same 2008 period, resulted primarily from a $4.6 million increase in total non-interest expenses and a higher
provision for loan losses, as well as decreases in total interest income and total non-interest income, which were partially offset by decreases in total interest expense and a benefit for income taxes. The $4.6 million increase in total
non-interest expenses was primarily driven by a $3.0 million litigation loss reserve accrued during the second quarter of 2009 and a $1.2 million increase in professional fees from the quarter ended June 30, 2008 to the quarter ended
June 30, 2009, as well as a $382,000 increase in Federal Deposit Insurance Corporation (FDIC) premiums from the 2008 to the 2009 period.

Interest income on loans decreased by $400,000 or 5.9% to $6.4 million during the three months ended June 30, 2009, when compared with $6.8 million for the same 2008 period. The decrease during the 2009 period resulted from a decrease
of $2.0 million or 0.5% in the average balance of loans outstanding, along with a decrease of thirty-four basis points in the yield earned on loans. Interest on mortgage-backed securities decreased $231,000 or 16.5% to $1.2 million during the three
months ended June 30, 2009, when compared with $1.4 million for the same 2008 period. The decrease during the 2009 period resulted from a decrease of $19.3 million or 15.3% in the average balance of mortgage-backed securities outstanding, along
with a four basis point decrease in the yield earned on the mortgage-backed securities. Interest earned on investments increased by $29,000 or 14.1% to $234,000 during the three months ended June 30, 2009, when compared to $205,000 during the
same 2008 period, primarily due to an increase of $921,000 or 8.6% in the average balance of such assets outstanding, along with an increase of thirty-nine basis points in the yield on the portfolio.



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Interest income earned on other interest-earning assets decreased by $211,000 or 75.6% to $68,000 during the three months
ended June 30, 2009, when compared to $279,000 during the same 2008 period, primarily due to a decrease of one hundred forty-six basis points in the yield on the portfolio in addition to a decrease of $17.0 million or 35.7% in the average
balance of such assets outstanding.

Interest expense on deposits decreased $750,000 or 25.0% to $2.2 million during the three months ended June 30,
2009, when compared to $3.0 million during the same 2008 period. Such decrease was primarily attributable to a decrease of fifty-three basis points in the cost of interest-bearing deposits, in addition to a decrease of $30.3 million or 6.8% in the
average balance of interest-bearing deposits.

Interest expense on advances from the FHLB and overnight borrowing decreased by $213,000 or 20.1% to
$845,000 million during the three months ended June 30, 2009, when compared with $1.06 million during the same 2008 period, primarily due to a decrease of $3.2 million or 4.2% in the average balance of advances and overnight borrowings
outstanding, along with a ninety-four basis point decrease in the cost of advances and overnight borrowings.

Net interest income increased $151,000 or
3.2% during the three months ended June 30, 2009 when compared with the same 2008 period. Such increase was due to a decrease in total interest expense of $963,000, which more than offset a decrease in total interest income of $812,000. The
Banks net interest rate spread was 3.01% in 2009 and 2.63% in 2008. There was a decrease in the cost of interest-bearing liabilities of fifty-seven basis points, which more than offset a decrease of nineteen basis points in the yield on
interest-earning assets.

During the three months ended June 30, 2009 and 2008, the Bank provided $850,000 and $151,000, respectively, as a provision
for loan losses. The $700,000 increase in the provision for loan losses, from the 2008 to the 2009 period, was primarily due to an increase in the Banks non-performing loans, which were $19.7 million at June 30, 2009 compared to $8.0
million at June 30, 2008. 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, 2009 and 2008, the Banks non-performing loans, which were delinquent ninety days or more, totaled $19.7 million or 3.43% of total assets and $8.0 million or 1.32% of total assets, respectively.
At June 30, 2009, $7.4 million of non-performing loans were accruing interest and $12.3 million were on nonaccrual status.

Included in the
non-performing loans were $9.9 million in one-to-four family mortgage loans, $2.6 million in multi-family mortgage loans, $2.4 million in non-residential mortgage loans, $2.5 million in construction loans, and $2.3 million in commercial loans. The
Banks largest non-accruing commercial loan of $1.9 million is to a local hospital. In October 2006, $1.0 million of the total $3.0 million due on the loan was paid and the remaining contractual balance of approximately $1.9 million was secured
by a mortgage on real estate. The $1.9 million was due on June 1, 2007. As of June 30, 2009, the $1.9 million loan balance had not been paid. The repayment of the loan is subject to bankruptcy proceedings. In September 2008, the creditors
committee for the hospital filed a complaint against the Bank seeking to recover the $1.0 million previously paid on the loan and to set aside the mortgage securing the $1.9 million still owed to the Bank, charging that the payment and the mortgage
were avoidable preferences. In August 2009, the two mortgaged properties were sold through a bankruptcy auction free and clear of all liens, with liens attaching to the proceeds of the sale for a total of $1.6 million. Net proceeds of
the sale, after deducting taxes, real estate commissions and other closing costs, were approximately $1.5 million. For further information, please see Recent Developments in this Managements Discussion and Analysis of
Financial Condition and Results of Operations.

The litigation with respect to the hospital loan is currently in the discovery phase. The successful party
in the preference litigation will be entitled to some or all of the net proceeds of the sale of the properties. At this point, management believes, based on discussions with its litigation counsel, the Bank will likely prevail in its defense.
However, due to the normal uncertainties of any litigation, the loan has been deemed impaired and is included in the recorded investments in impaired loans, net of its related allowance, at June 30, 2009. Based upon the net carrying value of the
hospital loan as of June 30, 2009, if the Bank is successful in the preference litigation and, as a result, receives all or a certain portion of the net proceeds of the sale of the properties, the Bank may recover the current net carrying value of
the hospital loan plus a portion of amounts previously reserved for. The Bank will continue to monitor this loan and evaluate its collectability as necessary.



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During the three months ended June 30, 2009, the Bank charged off loans totaling $24,000. There were no charge offs
for the 3 months ended June 30, 2008. There were also no recoveries during either period. The allowance for loan losses amounted to $6.0 million at June 30, 2009, representing 1.34% of total loans and 30.49% of loans delinquent ninety days
or more, and $3.4 million at June 30, 2008, representing 0.78% of total loans and 42.40% of loans delinquent ninety days or more.

Non-interest income
decreased $160,000 or 28.8% to $395,000 during the three months ended June 30, 2009, from $555,000 during the same 2008 period, which resulted primarily from a decrease in commissions from the sale of financial products of $123,000, in addition
to a decrease in fees and service charges of $40,000 and an increase in other non-interest income of $3,000. The decrease in commissions from the sale of financial products was primarily due to managements decision to eliminate the sale of
financial products to the general public in April of 2009.

Non-interest expenses increased $4.6 million or 127.8% to $8.2 million during the three months
ended June 30, 2009, when compared with $3.6 million during the same 2008 period.

Salaries and employee benefits, equipment expense, professional
fees, provision for loss on foreclosed real estate, federal deposit insurance premium, litigation loss reserve and other non-interest expense increased $14,000, $8,000, $1,181,000, $4,000, $382,000, $3,000,000 and $52,000, respectively, which was
sufficient to offset a decrease both in net occupancy expense of premises and advertising in the amounts of $26,000 and $16,000, respectively, during the 2009 period when compared with the same 2008 period.

As previously reported, the Bank received federal grand jury subpoenas from the U.S. Attorneys Office for the District of New Jersey (U.S. Attorneys
Office). The subpoenas were issued to the Bank in connection with an ongoing investigation regarding the Banks anti-money laundering and Bank Secrecy Act compliance. Certain individuals, including the Banks senior officers and
directors, have received grand jury testimony subpoenas in connection with this investigation. In addition, the Bank and its wholly-owned subsidiary, Pamrapo Service Corporation, have also received federal grand jury subpoenas from the U.S.
Attorneys Office relating to certain commissions paid to the Manager of Pamrapo Service Corporation. The Bank has, and continues to, fully cooperate with the investigation. It is anticipated that the investigation will continue for at least
the next several months.

No penalties, either criminal or civil, have been imposed on the Bank to date as a result of the investigation. However, pursuant
to Statement of Financial Accounting Standards No. 5, a company must accrue funds for a possible litigation loss if a loss is probable and the amount of the expected loss is reasonably estimable. It is probable that the Bank will incur monetary
penalties in the form of fines and forfeitures as a result of these matters. As reported in a Form 8-K filed with the Securities and Exchange Commission on June 23, 2009, the Bank was able to reasonably estimate certain losses, based on new
information that had come to light. As a result, the Bank accrued a $3.0 million litigation loss reserve to reflect a potential criminal forfeiture, and related costs and expenses in the quarter ended June 30, 2009.

The Bank is only able to reasonably estimate certain losses at this time. It is probable that the Bank will incur material losses in addition to the $3.0 million
litigation loss reserve described above; however it is not able to reasonably estimate additional losses at this time. These additional losses relate to potential further criminal forfeitures and potential criminal



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fines that may be imposed separately by a court, and civil money penalties that may be imposed by the Office of Thrift Supervision (OTS), the
Banks primary federal regulator, and Financial Crimes Enforcement Network, a part of the United States Treasury Department (FinCEN). Depending on the end result of the investigation, the total amount of penalties and related costs and expenses
incurred by the Bank may be significantly higher than $3.0 million, and could have a material impact on the Companys consolidated financial position, results of operations, and regulatory capital ratios.

The increase in professional fees during the three months ended June 30, 2009, as compared to the same 2008 period, was predominately due to expenses incurred for
legal, accounting and other professional services as a result of the federal grand jury investigation by the U.S. Attorneys Office discussed above and fees paid to consultants that the Bank engaged as a result of a cease and desist order
issued by the OTS, effective September 26, 2008.

FDIC premiums increased as a result of an increase in premium rates, the depletion of assessment
credits previously in effect and a special assessment during the quarter ended June 30, 2009 of $270,000.

Income tax benefit for the three months
ended June 30, 2009 totaled $191,000 as compared to income tax expense of $564,000 for the three months ended June 30, 2008. The decrease during the 2009 period resulted from a decrease in pre-tax income of $5.3 million. The effective
income tax rate was (5.1%) and 36.9% for the three months ended June 30, 2009 and 2008, respectively. The effective tax rate for the three months ended June 30, 2009 reflects a non-deductible $3.0 million litigation loss reserve.

Comparison of Operating Results for the Six Months Ended June 30, 2009 and 2008

The net loss for the six months ended June 30, 2009 totaled $3.2 million as compared to net income of $2.0 million for the six months ended June 30, 2008, representing a decrease of $5.2 million or 260.0%.
The net loss during the six months ended June 30, 2009, as compared to the same 2008 period, resulted primarily from a $5.8 million increase in total non-interest expenses and a higher provision for loan losses, as well as a decrease in total
interest income, which were partially offset by decreases in total interest expense, reduction of income taxes and an increase in total non-interest income. The $5.8 million increase in total non-interest expenses was primarily driven by a $3.0
million litigation loss reserve accrued during the second quarter of 2009 and a $2.2 million increase in professional fees from the six months ended June 30, 2008 to the six months ended June 30, 2009, as well as a $467,000 increase in
FDIC premiums, including a special assessment of $270,000, from the 2008 to the 2009 period.

Interest income on loans decreased by $614,000 or 4.4% to
$13.2 million during the six months ended June 30, 2009, when compared with $13.8 million for the same 2008 period. The decrease during the 2009 period resulted from a decrease of $1.6 million or 0.4% in the average balance of loans
outstanding, along with a decrease of twenty-seven basis points in the yield earned on loans. Interest on mortgage-backed securities decreased $326,000 or 11.6% to $2.5 million during the six months ended June 30, 2009, when compared with $2.8
million for the same 2008 period. The decrease during the 2009 period resulted from a decrease of $14.3 million or 11.4% in the average balance of mortgage-backed securities outstanding. Interest earned on investments increased by $70,000 or 17.6%
to $467,000 during the six months ended June 30, 2009, when compared to $397,000 during the same 2008 period, primarily due to an increase of $927,000 or 8.6% 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 $726,000 or 87.5% to $104,000
during the six months ended June 30, 2009, when compared to $830,000 during the same 2008 period, primarily due to a decrease of $32.3 million or 57.1% in the average balance of such assets, in addition to a decrease of two hundred and seven
basis points in the yield on the portfolio.



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Interest expense on deposits decreased $1.7 million or 26.6% to $4.6 million during the six months ended June 30,
2009, when compared to $6.4 million during the same 2008 period. Such decrease was primarily attributable to a decrease of fifty-four basis points in the cost of interest-bearing deposits, in addition to a decrease of $46 million or 10.1% in the
average balance of interest-bearing deposits. Interest expense on advances from the FHLB and overnight borrowings decreased by $358,000 or 17.0% to $1.7 million during the six months ended June 30, 2009, when compared with $2.1 million during
the same 2008 period, primarily due to a decrease of $911,000 or 1.2% in the average balance of advances and overnight borrowings outstanding, in addition to a decrease of eighty-five basis points in the cost of advances and overnight borrowings.

Net interest income increased $506,000 or 5.4% during the six months ended June 30, 2009 when compared with the same 2008 period. Such increase was
due to a decrease in total interest expense of $2.1 million, which was partially offset by a decrease in total interest income of $1.6 million. The Banks net interest rate spread was 3.04% in 2009 when compared with 2.56% during the same 2008
period. There was a decrease of fifty-six basis points in the cost of interest-bearing liabilities, which was offset by a decrease of eight basis points in the yield on interest-earning assets.

During the six months ended June 30, 2009 and 2008, the Bank provided $1,375,000 and $228,000, respectively, as a provision for loan losses. The $1,147,000 increase
in the provision for loan losses, from the 2008 to the 2009 period, was primarily due to an increase in the Banks non-performing loans, which were $19.7 million at June 30, 2009 compared to $8.0 million at June 30, 2008. 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, 2009 and 2008, the Bank charged off $24,000 and $0, respectively. There
were also no recoveries during either period.

Non-interest income increased $216,000 or 19.6% to $1.3 million during the six months ended June 30,
2009, from $1.1 million during the same 2008 period, which resulted from a gain on sale of branch in the amount of $492,000, an increase in other non-interest income in the amount of $38,000, which were offset by decreases in commissions from sale
of financial products of $204,000 and fees and service charges in the amount of $110,000. The decrease in commissions from sale of financial products was primarily due to managements decision to eliminate the sale of financial products to the
general public in April of 2009.

Non-interest expenses increased by $5.8 million or 80.6% to $13.0 million during the six months ended June 30, 2009,
when compared with $7.2 million during the same 2008 period. Salaries and employee benefits, professional fees, federal deposit insurance premiums, litigation loss reserve and other non-interest expense increased $138,000, $2.2 million, $467,000,
$3.0 million and $69,000, respectively, which was sufficient to offset decreases in net occupancy expense of premises, equipment, advertising and provision for loss on foreclosed real estate of $30,000, $3,600, $42,000 and $14,000, respectively,
during the 2009 period when compared with the same 2008 period. As discussed in Comparison of Operating Results for the Three Months Ended June 30, 2009 and 2008, the Bank accrued a $3.0 million litigation loss reserve to reflect a
potential criminal forfeiture, and related costs and expenses in the quarter ended June 30, 2009 as a result of the federal grand jury investigation by the U.S. Attorneys Office discussed above. It is probable that the Bank will incur
material losses in addition to the $3.0 million litigation loss reserve; however no reasonable estimate of additional losses can be made at this time. Depending on the end result of the investigation, the total amount of penalties and related costs
and expenses incurred by the Bank may be significantly higher than $3.0 million, and could have a material impact on the Companys consolidated financial position, results of operations, and regulatory capital ratios. The increase in
professional fees during the six months ended June 30, 2009, as compared to the same 2008 period, was predominately due to expenses incurred for legal, accounting and other professional services as a result of the federal grand jury
investigation by the U.S. Attorneys Office discussed above and fees paid to consultants that the Bank engaged as a result of a cease and desist order issued by the OTS. FDIC premiums increased as a result of an increase in premium rates, the
depletion of assessment credits previously in effect and a special assessment during the quarter ended June 30, 2009 of $270,000.



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Income tax expense totaled $71,000 and $1.2 million during the six months ended June 30, 2009 and 2008,
respectively. The decrease during the 2009 period resulted from a decrease in pre-tax income of $6.2 million. The effective income tax rate was 2.3% and 36.9% for the six months ended June 30, 2009 and 2008, respectively. The effective tax rate
for the six months ended June 30, 2009 reflects a non-deductible $3.0 million litigation loss reserve.

Liquidity and Capital Resources

The Bank is required by OTS regulations to maintain sufficient liquidity to ensure the Banks safe and sound operation. The Banks liquidity
averaged 5.74% during the month of June 2009. 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.

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, 2009 and 2008.

The primary sources of investing activities are lending and
mortgage-backed securities. Loans receivable amounted to $422.5 million and $437.6 million at June 30, 2009 and December 31, 2008, respectively. Securities available for sale totaled $713,000 and $771,000 at June 30, 2009 and
December 31, 2008, respectively. Mortgage-backed securities held to maturity totaled $101.8 million and $117.4 million at June 30, 2009 and December 31, 2008, 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.

The main sources of financing activities are deposits, advances and dividends. Deposits were $449.3 million and $444.0 million at June 30, 2009 and December 31, 2008, respectively. Advances from the FHLB
totaled $62.0 million and $89.5 million at June 30, 2009 and December 31, 2008, respectively. Cash dividends of $1.3 million and $2.3 million were paid during the six months ended June 30, 2009 and 2008, respectively.

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.

The Bank anticipates that it will have sufficient funds available to meet its current loan commitments. At June 30, 2009, the Bank had outstanding commitments to
originate loans of $3.8 million. Certificates of deposit scheduled to mature in one year or less at June 30, 2009, totaled $197.0 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 8.0% of its risk-weighted assets.



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The following table sets forth the Banks capital position at June 30, 2009, as compared to the minimum
regulatory capital requirements:



|                                                |  |                        |        |       |                            |   |        |                                                                |        |  |      |        |  |       |        |  |       |  
|----------------------------------------------- |  | ---------------------- | ------ | ----- | -------------------------- | - | ------ | -------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                                |  | Actual                 |        |       | MinimumCapitalRequirements |   |        | To Be WellCapitalized UnderPrompt CorrectiveActions Provisions |       
|                                                |  | Amount                 |        | Ratio |                            |   | Amount |                                                                | Ratio  |  |      | Amount |  | Ratio |       
|                                                |  | (Dollars in Thousands) |       
|                                                |  |                        |        |       |                            |  
|Total Capital(to risk-weighted assets)          |  | $                      | 56,059 |       | 14.95                      | % |        | $                                                              | 30,007 |  | 8.00 | %      |  | $     | 37,509 |  | 10.00 | %
|                                                |  |                        |        |       |                            |  
|Tier 1 Capital(to risk-weighted assets)         |  |                        | 51,861 |       | 13.83                      | % |        |                                                                |       |  |     |        |  |       | 22,505 |  | 6.00  | %
|                                                |  |                        |        |       |                            |  
|Core (Tier 1) Capital(to adjusted total assets) |  |                        | 51,861 |       | 9.02                       | % |        |                                                                | 23,008 |  | 4.00 | %      |  |       | 28,760 |  | 5.00  | %
|                                                |  |                        |        |       |                            |  
|Tangible Capital(to adjusted total assets)      |  |                        | 51,861 |       | 9.02                       | % |        |                                                                | 8,628  |  | 1.50 | %      |  |       |       |  |      |  

Contractual Obligations and Off-Balance Sheet Arrangements

The following table sets forth the Banks contractual obligations and commercial commitments at June 30, 2009:



|                        |  |                |         |                       |   |                                     |  |                                       |        |                     |   |       |  |   |       
|----------------------- |  | -------------- | ------- | --------------------- | - | ----------------------------------- |  | ------------------------------------- | ------ | ------------------- | - | ----- |  | - | ------
|                        |  |                |         | Payment Due By Period
|Contractual Obligations |  | Total          |         | One Yearor Less       |   | More ThanOne YearThroughThree Years |  | More ThanThree YearsThroughFive Years |        | More ThanFive Years
|                        |  | (In Thousands)
|                        |  |                |         |                       |  
|FHLB advances           |  | $              | 62,000  |                       | $ | 21,000                              |  | $                                     | 23,000 |                     | $ |      |  | $ | 18,000
|Certificates of deposit |  |                | 212,625 |                       |   | 196,911                             |  |                                       | 13,834 |                     |   | 1,880 |  |   |      
|Lease obligations       |  |                | 2,542   |                       |   | 481                                 |  |                                       | 958    |                     |   | 735   |  |   | 368   
|Benefit plans           |  |                | 6,885   |                       |   | 695                                 |  |                                       | 1,381  |                     |   | 1,403 |  |   | 3,406 
|                        |  |                |         |                       |   |                                     |  |                                       |        |                     |   |       |  |   |       
|Total                   |  | $              | 284,052 |                       | $ | 219,087                             |  | $                                     | 39,173 |                     | $ | 4,018 |  | $ | 21,774
|                        |  |                |         |                       |   |                                     |  |                                       |        |                     |   |       |  |   |       



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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, 2009.



|                               |  |                |        |                                 |   |                                     |  |                                       |    |                     |   |   |  |   |  
|------------------------------ |  | -------------- | ------ | ------------------------------- | - | ----------------------------------- |  | ------------------------------------- | -- | ------------------- | - | - |  | - | -
|                               |  |                |        | Commitment Expiration By Period
|Off-Balance Sheet Arrangements |  | Total          |        | One Yearor Less                 |   | More ThanOne YearThroughThree Years |  | More ThanThree YearsThroughFive Years |    | More ThanFive Years
|                               |  | (In Thousands)
|To originate loans             |  | $              | 3,838  |                                 | $ | 3,838                               |  | $                                     |   |                     | $ |  |  | $ | 
|Unused lines of credit         |  |                | 1,722  |                                 |   | 1,712                               |  |                                       | 10 |                     |   |  |  |   | 
|Letters of credit              |  |                | 13,279 |                                 |   | 13,279                              |  |                                       |   |                     |   |  |  |   | 
|                               |  |                |        |                                 |   |                                     |  |                                       |    |                     |   |   |  |   |  
|Total                          |  | $              | 18,839 |                                 | $ | 18,829                              |  | $                                     | 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 re-price or mature within a given period of time. The difference, or the interest rate re-pricing
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. Because the Banks interest-bearing liabilities that mature or re-price 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 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.

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, 2009, the most recent date the Banks NPV was calculated by the OTS.



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|                                                   |        |                        |              |  |                                           |               |   |  |          |    |  |                       |   |  |      |    
|-------------------------------------------------- | ------ | ---------------------- | ------------ |  | ----------------------------------------- | ------------- | - |  | -------- | -- |  | --------------------- | - |  | ---- | ---
|Change inInterest RatesIn Basis Points(Rate Shock) |        | Net Portfolio Value    |              |  | NPV asPercent of Portfolio Value ofAssets |              
|                                                   | Amount |                        | DollarChange |  |                                           | PercentChange |   |  | NPVRatio |    |  | Change InBasis Points |  
|                                                   |        |                        |              | 
|                                                   |        | (Dollars in Thousands) |             
|                                                   |        |                        |              |  |                                          
|+300                                               |        | $                      | 50,251       |  | $                                         | (34,606       | ) |  | (41      | )% |  | 8.48                  | % |  | (493 | )bp
|+200                                               |        |                        | 64,054       |  |                                           | (20,803       | ) |  | (25      | )% |  | 10.54                 | % |  | (287 | )bp
|+100                                               |        |                        | 76,088       |  |                                           | (8,769        | ) |  | (10      | )% |  | 12.23                 | % |  | (117 | )bp
|+50                                                |        |                        | 80,410       |  |                                           | (4,447        | ) |  | (5       | )% |  | 12.82                 | % |  | (59  | )bp
|0                                                  |        |                        | 84,857       |  |                                           |              |   |  |         |    |  | 13.41                 | % |  |     |    
|50                                                |        |                        | 87,798       |  |                                           | 2,941         |   |  | 3        | %  |  | 13.78                 | % |  | 37   | bp 
|100                                               |        |                        | 90,741       |  |                                           | 5,884         |   |  | 7        | %  |  | 14.16                 | % |  | 75   | bp 

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 re-pricing 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.



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

Evaluation of Disclosure Controls and
Procedures

Management, with the participation of the Companys Chief Financial Officer and Interim Chief Executive Officer, evaluated the
effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. The purpose of these controls and procedures is 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 SECs rules and forms. Based on the evaluation, the
Companys Chief Financial Officer and Interim Chief Executive Officer concluded that, because of a material weakness in the Companys internal control over financial reporting as identified during managements assessment of internal
control over financial reporting as of December 31, 2008, the Companys disclosure controls and procedures were not effective as of June 30, 2009.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Companys annual or interim financial
statements will not be prevented or detected on a timely basis. In connection with its assessment of internal control over financial reporting as of the end of fiscal 2008, management identified the following material weakness in the Companys
internal control over financial reporting as of December 31, 2008, which also existed as of June 30, 2009:

Pamrapo Service Corporation
 The controls relating to fees and commissions from sale of financial products payable to the Corporation, a wholly-owned subsidiary of the Bank, were inadequate. In August 2008, management became aware that certain commission payments from a
third-party broker, which were payable to the Corporation, as required by its policies and procedures, were being paid directly to the Manager of the Corporation. The direct payments to the Manager



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were made pursuant to a letter between a third-party broker and the president of the Corporation. These direct payments constituted a change in commission
structure, which was made without the approval of the Board of Directors of the Corporation, as required by its policies and procedures.

Changes in
Internal Control Over Financial Reporting

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. The Company has taken and is continuing to take actions to
remediate its material weakness in internal control over financial reporting.

For a summary of the results of the internal investigation of the business
and financial records of the Corporation conducted by independent forensic accountants engaged by the Companys Audit Committee, please see Part I, Item 2, Managements Discussion and Analysis of Financial Condition and Results of
OperationsPamrapo Service Corporation of this Form 10-Q.

PART IIOTHER INFORMATION



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

As announced on February 3,
2009, the Bank previously received federal grand jury subpoenas from the U.S. Attorneys Office for the District of New Jersey. The subpoenas were issued to the Bank in connection with an ongoing investigation regarding the Banks
anti-money laundering and Bank Secrecy Act compliance. Certain individuals, including the Banks senior officers and directors, have received grand jury testimony subpoenas in connection with this matter. In addition, the Bank and its
wholly-owned subsidiary, the Corporation, have also received federal grand jury subpoenas from the U.S. Attorneys Office relating to certain commissions paid to the Manager of the Corporation. The Bank has, and continues to, fully cooperate
with the investigations. It is anticipated that the investigations will continue for at least the next several months.

No penalties, either
criminal or civil, have been imposed on the Bank to date as a result of the investigation. However, pursuant to Statement of Financial Accounting Standards No. 5, a company must accrue funds for a possible litigation loss if a loss is probable
and the amount of the expected loss is reasonably estimable. It is probable that the Bank will incur monetary penalties in the form of fines and forfeitures as a result of these matters. As reported in a Form 8-K filed with the Securities and
Exchange Commission on June 23, 2009, the Bank was able to reasonably estimate certain losses, based on new information that had come to light. As a result, the Bank accrued a $3.0 million litigation loss reserve to reflect a potential criminal
forfeiture, and related costs and expenses in the quarter ended June 30, 2009.

The Bank is only able to reasonably estimate certain
losses at this time. It is probable that the Bank will incur material losses in addition to the $3.0 million litigation loss reserve described above; however it is not able to reasonably estimate additional losses at this time. These additional
losses relate to potential further criminal forfeitures and potential criminal fines that may be imposed separately by a court, and civil money penalties that may be imposed by the OTS, the Banks primary federal regulator, and Financial Crimes
Enforcement Network, a part of the United States Treasury Department (FinCEN). Depending on the end result of the investigation, the total amount of penalties and related costs and expenses incurred by the Bank may be significantly higher than $3.0
million, and could have a material impact on the Companys consolidated financial position, results of operations, and regulatory capital ratios.



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On July 9, 2009, a complaint was filed in the Superior Court of New Jersey in Hudson County against
the Company, each of its directors and BCB Bancorp, Inc. (BCB). The action, which seeks class certification, was brought by Keith Kube, a purported shareholder of the Company, on behalf of himself and all others similarly situated. The
complaint alleges, among other things, that the directors of the Company are in breach of their fiduciary duties to shareholders in connection with the Companys entry into an agreement and plan of merger, dated as of June 29, 2009, with
BCB (the Agreement), pursuant to which the Company will merge with and into BCB, with BCB as the surviving corporation. The complaint seeks, among other things, for the Court to enjoin the defendants from consummating the transactions
contemplated by the Agreement and to award the plaintiff attorneys fees and expenses incurred in bringing the lawsuit. The Company and its directors believe that the allegations in the complaint are without merit and intend to vigorously
defend against the claims and causes of action asserted in this legal matter.



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

The following is an additional update
to the first risk factor disclosed under Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as previously updated by Part II, Item 1A, Risk Factors in our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2009.

Government investigations could materially impact our financial statements and
continue to reduce our earnings.

As previously disclosed and described in Part II, Item 1, Legal Proceedings of this Form
10-Q, the Bank has received federal grand jury subpoenas from the U.S. Attorneys Office. The subpoenas were issued to the Bank in connection with an ongoing investigation regarding the Banks anti-money laundering and Bank Secrecy Act
compliance. Certain individuals, including the Banks senior officers and directors, have received grand jury testimony subpoenas in connection with this investigation. In addition, the Bank and its wholly-owned subsidiary, the Corporation,
have also received federal grand jury subpoenas from the U.S. Attorneys Office relating to certain commissions paid to the Manager of the Corporation. The Bank has, and continues to, fully cooperate with the investigation. It is anticipated
that the investigation will continue for at least the next several months.

Although no penalties, either criminal or civil, have been
imposed on the Bank to date as a result of the investigation, it is probable that the Bank will incur monetary penalties in the form of fines and forfeitures as a result of these matters. Pursuant to Statement of Financial Accounting Standards
No. 5, a company must accrue funds for a possible litigation loss if a loss is probable and the amount of the expected loss is reasonably estimable. As reported in a Form 8-K filed with the Securities and Exchange Commission on June 23,
2009, the Bank was able to reasonably estimate certain losses, based on new information that had come to light. As a result, the Bank accrued a $3.0 million litigation loss reserve to reflect a potential criminal forfeiture, and related costs and
expenses in the quarter ended June 30, 2009. It is probable that the Bank will incur material losses in addition to the $3.0 million litigation loss reserve described above; however it is not able to reasonably estimate additional losses at
this time. Depending on the end result of the investigation, the total amount of penalties and related costs and expenses incurred by the Bank may be significantly higher than $3.0 million, and could have a material impact on our consolidated
financial position, results of operations, and regulatory capital ratios. In addition, regardless of the outcome of the investigation, we may continue to incur substantial costs in dealing with these matters, which could continue to reduce our
earnings.



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

There were no repurchases by the Company of its common stock during the quarter ended June 30, 2009. As of June 30, 2009, there were 248,165 shares remaining that may be repurchased under the Companys stock repurchase
programs, which were announced on August 22, 2000 and February 3, 2009. Unless modified or revoked by the Companys Board of Directors, the repurchase authorizations do not expire.



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

Not applicable.



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

The Annual Stockholders Meeting was held on April 29, 2009. The following matters were submitted to the stockholders:



| | 1. | Election of three directors.
| | -- | ----------------------------

The following directors
were elected for terms to expire at the Annual Meeting of Stockholders for the year indicated next to each directors name or until his successor is elected and qualified:



|                    |  |      |  |                 |  |         
|------------------- |  | ---- |  | --------------- |  | --------
|                    |  |      |  | Number of Votes
|                    |  | Year |  | For             |  | Withheld
|Patrick D. Conaghan |  | 2012 |  | 3,805,615       |  | 734,537 
|John A. Morecraft   |  | 2012 |  | 3,792,768       |  | 747,384 
|Herman L. Brockman  |  | 2011 |  | 3,569,223       |  | 970,929 



| | 2. | The ratification of Beard Miller Company LLP as independent auditors of the Company for the fiscal year ending December 31, 2009.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------



|                |  |         |  |        
|--------------- |  | ------- |  | -------
|Number of Votes
|For             |  | Against |  | Abstain
|4,300,595       |  | 227,117 |  | 12,440 



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

None.



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

The following exhibits are filed as part
of this report:



|      |  |                                                                                                                                                                                                        
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2     |  | Agreement and Plan of Merger, dated as of June 29, 2009, between BCB Bancorp, Inc. and Pamrapo Bancorp, Inc.1                                                                                          
|      | 
|3.1.1 |  | Certificate of Incorporation of Pamrapo Bancorp, Inc.2                                                                                                                                                 
|      | 
|3.1.2 |  | Certificate of Amendment to Certificate of Incorporation of Pamrapo Bancorp, Inc.3                                                                                                                     
|      | 
|3.2   |  | Pamrapo Bancorp, Inc. By-laws4                                                                                                                                                                         
|      | 
|4     |  | Stock Certificate of Pamrapo Bancorp, Inc.5                                                                                                                                                            
|      | 
|10.1  |  | Change in Control Agreement by and between Pamrapo Bancorp, Inc. and Margaret Russo.6                                                                                                                  
|      | 
|10.2  |  | Restated Pamrapo Bancorp, Inc. Change in Control Agreement by and between Pamrapo Bancorp, Inc. and Kenneth D. Walter.7                                                                                
|      | 
|10.3  |  | Amended and Restated Pamrapo Savings Bank, S.L.A. Directors Consultation and Retirement Plan.8                                                                                                        
|      | 
|10.4  |  | Pamrapo Bancorp, Inc. 2003 Stock-Based Incentive Plan.9                                                                                                                                                
|      | 
|10.5  |  | Order to Cease and Desist, Order No. NE-08-12, effective September 26, 2008.10                                                                                                                         
|      | 
|10.6  |  | Stipulation and Consent to Issuance of Order to Cease and Desist.10                                                                                                                                    
|      | 
|11    |  | Computation of earnings per share (filed herewith).                                                                                                                                                    
|      | 
|31    |  | Certification of Chief Financial Officer and Interim Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                               
|      | 
|32    |  | Certification of Chief Financial Officer and Interim 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).
|     
|     

| | 1 | Incorporated herein by reference to the Current Report on Form 8-K, filed on June 30, 2009.
| | - | -------------------------------------------------------------------------------------------

| | 2 | 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.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | 3 | Incorporated herein by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, filed on November 12, 2003.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

| | 4 | Incorporated herein by reference to the Current Report on Form 8-K, filed on November 27, 2007.
| | - | -----------------------------------------------------------------------------------------------

| | 5 | Incorporated herein by reference to the Registration Statement on Form S-1 (Registration No. 33-30370), as amended, filed on August 8, 1989.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------

| | 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 Current Report on Form 8-K, filed on October 29, 2007.
| | - | ----------------------------------------------------------------------------------------------

| | 8 | Incorporated herein by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, filed on May 11, 2009.
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | 9 | Incorporated herein by reference to the 2003 Annual Meeting Proxy Statement, filed on March 31, 2003.
| | - | -----------------------------------------------------------------------------------------------------

| | 10 | Incorporated herein by reference to the Current Report on Form 8-K, filed on September 26, 2008.
| | -- | ------------------------------------------------------------------------------------------------

| | * | 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 10, 2009 |  | By                    |  | /s/ Kenneth D. Walter                                                                                  
|                      |  |                       |  | Kenneth D. Walter                                                                                      
|                      |  |                       |  | Vice President, Treasurer and Chief Financial Officer and Interim President and Chief Executive Officer



32