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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(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, 2006

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



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PAMRAPO BANCORP, INC.

(Exact name of registrant as specified in its charter)



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



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

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

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

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

Common stock, $.01 par value per share - 4,975,542 shares outstanding as of August 9, 2006



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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, 2006 (Unaudited) and December 31, 2005                            |  | 1         
|                             |  |                                                                                                                             
|                             |  | Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 2006 and 2005 (Unaudited)               |  | 2         
|                             |  |                                                                                                                             
|                             |  | Consolidated Statements of Comprehensive Income for the Three Months and Six Months Ended June 30, 2006 and 2005 (Unaudited) |  | 3         
|                             |  |                                                                                                                             
|                             |  | Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2005 (Unaudited)                            |  | 4         
|                             |  |                                                                                                                             
|                             |  | Notes to Consolidated Financial Statements                                                                                   |  | 5-8       
|                             |  |                                                                                                                             
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                        |  | 8-15      
|                             |  |                                                                                                                             
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                                                                   |  | 15-16     
|                             |  |                                                                                                                             
|Item 4.                      |  | Controls and Procedures                                                                                                      |  | 16        
|                             | 
|PART IIOTHER INFORMATION    |  |                                                                                                                             
|                             |  |                                                                                                                             
|Item 1.                      |  | Legal Proceedings                                                                                                            |  | 17        
|                             |  |                                                                                                                             
|Item 1A.                     |  | Risk Factors                                                                                                                 |  | 17        
|                             |  |                                                                                                                             
|Item 2.                      |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                  |  | 17        
|                             |  |                                                                                                                             
|Item 3.                      |  | Defaults Upon Senior Securities                                                                                              |  | 17        
|                             |  |                                                                                                                             
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                                                          |  | 17-18     
|                             |  |                                                                                                                             
|Item 5.                      |  | Other Information                                                                                                            |  | 18        
|                             |  |                                                                                                                             
|Item 6.                      |  | Exhibits                                                                                                                     |  | 18        
|                             | 
|SIGNATURES                   |  | 19                                                                                                                          



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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, 2006 |             |   | December 31,2005 |  
|ASSETS                                                                                                            |  |                           |             |   |                  |   |             |  
|Cash and amounts due from depository institutions                                                                 |  | $                         | 3,656,287   |   |                  | $ | 4,408,982   |  
|Interest-bearing deposits in other banks                                                                          |  |                           | 6,221,438   |   |                  |   | 4,161,099   |  
|                                                                                                                  |  |                           |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                   |  |                           | 9,877,725   |   |                  |   | 8,570,081   |  
|                                                                                                                  |  |                          
|Securities available for sale                                                                                     |  |                           | 1,661,363   |   |                  |   | 3,320,974   |  
|Investment securities held to maturity; estimated fair value of $10,343,600 (2006) and $10,794,500 (2005)         |  |                           | 10,227,861  |   |                  |   | 10,286,578  |  
|Mortgage-backed securities held to maturity; estimated fair value of $145,239,000 (2006) and $163,123,000 (2005)  |  |                           | 153,603,174 |   |                  |   | 167,009,237 |  
|Loans receivable                                                                                                  |  |                           | 450,043,665 |   |                  |   | 438,250,023 |  
|Premises and equipment                                                                                            |  |                           | 3,824,379   |   |                  |   | 3,855,907   |  
|Federal Home Loan Bank stock, at cost                                                                             |  |                           | 5,631,100   |   |                  |   | 5,954,200   |  
|Interest receivable                                                                                               |  |                           | 2,835,002   |   |                  |   | 2,809,337   |  
|Other assets                                                                                                      |  |                           | 6,324,371   |   |                  |   | 6,030,134   |  
|                                                                                                                  |  |                           |             |   |                  |   |             |  
|Total assets                                                                                                      |  | $                         | 644,028,640 |   |                  | $ | 646,086,471 |  
|                                                                                                                  |  |                           |             |   |                  |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                              |  |                           |             |   |                  |   |             |  
|Liabilities:                                                                                                      |  |                           |             |   |                  |   |             |  
|Deposits                                                                                                          |  | $                         | 477,479,618 |   |                  | $ | 474,003,280 |  
|Advances from Federal Home Loan Bank of New York                                                                  |  |                           | 99,000,000  |   |                  |   | 106,400,000 |  
|Other borrowed money                                                                                              |  |                           | 27,316      |   |                  |   | 46,872      |  
|Advance payments by borrowers for taxes & insurance                                                               |  |                           | 3,880,178   |   |                  |   | 3,688,029   |  
|Other liabilities                                                                                                 |  |                           | 4,021,227   |   |                  |   | 3,332,302   |  
|                                                                                                                  |  |                           |             |   |                  |   |             |  
|Total liabilities                                                                                                 |  |                           | 584,408,339 |   |                  |   | 587,470,483 |  
|                                                                                                                  |  |                           |             |   |                  |   |             |  
|Stockholders equity:                                                                                             |  |                           |             |   |                  |   |             |  
|Preferred stock; authorized 3,000,000 shares; issued and outstanding-none                                         |  |                           |            |   |                  |   |            |  
|Common Stock; par value $.01; authorized 25,000,000 shares; 6,900,000 shares issued; 4,975,542 shares outstanding |  |                           | 69,000      |   |                  |   | 69,000      |  
|Paid-in capital in excess of par value                                                                            |  |                           | 19,197,505  |   |                  |   | 19,158,343  |  
|Retained earnings-substantially restricted                                                                        |  |                           | 63,015,039  |   |                  |   | 61,972,334  |  
|Accumulated other comprehensive income - unrealized gain on securities available for sale                         |  |                           | 267,751     |   |                  |   | 284,603     |  
|Treasury stock, at cost; 1,924,458 shares outstanding                                                             |  |                           | (22,928,994 | ) |                  |   | (22,868,292 | )
|                                                                                                                  |  |                           |             |   |                  |   |             |  
|Total stockholders equity                                                                                        |  |                           | 59,620,301  |   |                  |   | 58,615,988  |  
|                                                                                                                  |  |                           |             |   |                  |   |             |  
|Total liabilities and stockholders equity                                                                        |  | $                         | 644,028,640 |   |                  | $ | 646,086,471 |  
|                                                                                                                  |  |                           |             |   |                  |   |             |  

See notes to consolidated financial statements.



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##### Table of Contents

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|---------------------------------------------------------------------------------- |  | --------------------------- | --------- | ------------------------- | - | --------- |  | ---- | ---------- |  | - | ----------
|                                                                                   |  | Three Months Ended June 30, |           | Six Months Ended June 30,
|                                                                                   |  | 2006                        |           | 2005                      |   | 2006      |  | 2005
|Interest income:                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Loans                                                                              |  | $                           | 7,205,321 |                           | $ | 6,624,401 |  | $    | 14,148,360 |  | $ | 13,005,213
|Mortgage-backed securities                                                         |  |                             | 1,844,286 |                           |   | 2,221,396 |  |      | 3,788,065  |  |   | 4,550,672 
|Investments                                                                        |  |                             | 285,500   |                           |   | 256,550   |  |      | 565,840    |  |   | 509,363   
|Other interest-earning assets                                                      |  |                             | 77,804    |                           |   | 37,913    |  |      | 139,139    |  |   | 89,835    
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total interest income                                                              |  |                             | 9,412,911 |                           |   | 9,140,260 |  |      | 18,641,404 |  |   | 18,155,083
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Interest expense:                                                                  |  |                             |           |                           |   |           |  |      |            |  |   |           
|Deposits                                                                           |  |                             | 2,749,602 |                           |   | 2,120,090 |  |      | 5,192,801  |  |   | 4,188,782 
|Advances and other borrowed money                                                  |  |                             | 1,147,995 |                           |   | 852,178   |  |      | 2,229,765  |  |   | 1,670,200 
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total interest expense                                                             |  |                             | 3,897,597 |                           |   | 2,972,268 |  |      | 7,422,566  |  |   | 5,858,982 
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Net interest income                                                                |  |                             | 5,515,314 |                           |   | 6,167,992 |  |      | 11,218,838 |  |   | 12,296,101
|Provision for loan losses                                                          |  |                             |          |                           |   | 40,000    |  |      |           |  |   | 100,000   
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Net interest income after provision for loan losses                                |  |                             | 5,515,314 |                           |   | 6,127,992 |  |      | 11,218,838 |  |   | 12,196,101
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Non-interest income:                                                               |  |                             |           |                           |   |           |  |      |            |  |   |           
|Fees and service charges                                                           |  |                             | 302,019   |                           |   | 326,505   |  |      | 616,839    |  |   | 640,106   
|Miscellaneous                                                                      |  |                             | 281,868   |                           |   | 362,638   |  |      | 528,089    |  |   | 672,352   
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total non-interest income                                                          |  |                             | 583,887   |                           |   | 689,143   |  |      | 1,144,928  |  |   | 1,312,458 
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Non-interest expenses:                                                             |  |                             |           |                           |   |           |  |      |            |  |   |           
|Salaries and employee benefits                                                     |  |                             | 2,086,890 |                           |   | 2,107,090 |  |      | 3,898,578  |  |   | 4,090,767 
|Net occupancy expense of premises                                                  |  |                             | 307,772   |                           |   | 286,082   |  |      | 608,205    |  |   | 552,164   
|Equipment                                                                          |  |                             | 298,662   |                           |   | 322,400   |  |      | 640,347    |  |   | 643,891   
|Advertising                                                                        |  |                             | 59,140    |                           |   | 52,474    |  |      | 122,329    |  |   | 104,627   
|Professional fees                                                                  |  |                             | 183,720   |                           |   | 169,637   |  |      | 334,526    |  |   | 244,263   
|Miscellaneous                                                                      |  |                             | 747,353   |                           |   | 692,028   |  |      | 1,433,723  |  |   | 1,361,561 
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Total non-interest expenses                                                        |  |                             | 3,683,537 |                           |   | 3,629,711 |  |      | 7,037,708  |  |   | 6,997,273 
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Income before income taxes                                                         |  |                             | 2,415,664 |                           |   | 3,187,424 |  |      | 5,326,058  |  |   | 6,511,286 
|Income taxes                                                                       |  |                             | 896,009   |                           |   | 1,221,775 |  |      | 1,994,604  |  |   | 2,562,535 
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Net income                                                                         |  | $                           | 1,519,655 |                           | $ | 1,965,649 |  | $    | 3,331,454  |  | $ | 3,948,751 
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Net income per common share:                                                       |  |                             |           |                           |   |           |  |      |            |  |   |           
|Basic                                                                              |  | $                           | 0.31      |                           | $ | 0.40      |  | $    | 0.67       |  | $ | 0.79      
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Diluted                                                                            |  | $                           | 0.31      |                           | $ | 0.39      |  | $    | 0.67       |  | $ | 0.79      
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Dividends per common share                                                         |  | $                           | 0.23      |                           | $ | 0.22      |  | $    | 0.46       |  | $ | 0.44      
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Weighted average number of common shares and common stock equivalents outstanding: |  |                             |           |                           |   |           |  |      |            |  |   |           
|Basic                                                                              |  |                             | 4,975,542 |                           |   | 4,975,542 |  |      | 4,975,542  |  |   | 4,975,396 
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           
|Diluted                                                                            |  |                             | 4,979,193 |                           |   | 4,987,476 |  |      | 4,980,081  |  |   | 4,988,274 
|                                                                                   |  |                             |           |                           |   |           |  |      |            |  |   |           

See notes to consolidated financial statements.



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##### Table of Contents

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



|                                                                      |  |                             |           |   |                           |   |           |      |  |   |           |   |  |   |           |  
|--------------------------------------------------------------------- |  | --------------------------- | --------- | - | ------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                      |  | Three Months Ended June 30, |           |   | Six Months Ended June 30, |  
|                                                                      |  | 2006                        |           |   | 2005                      |   |           | 2006 |  |   | 2005      |  
|Net income                                                            |  | $                           | 1,519,655 |   |                           | $ | 1,965,649 |      |  | $ | 3,331,454 |   |  | $ | 3,948,751 |  
|                                                                      |  |                             |           |   |                           |   |           |      |  |   |           |   |  |   |           |  
|Other comprehensive income (loss), net of income taxes:               |  |                             |           |   |                           |   |           |      |  |   |           |   |  |   |           |  
|Gross unrealized holding gain (loss) on securities available for sale |  |                             | 2,415     |   |                           |   | 19,417    |      |  |   | (28,452   | ) |  |   | (53,929   | )
|Deferred income taxes                                                 |  |                             | (1,000    | ) |                           |   | (11,800   | )    |  |   | 11,600    |   |  |   | 17,300    |  
|                                                                      |  |                             |           |   |                           |   |           |      |  |   |           |   |  |   |           |  
|Other comprehensive income (loss)                                     |  |                             | 1,415     |   |                           |   | 7,617     |      |  |   | (16,852   | ) |  |   | (36,629   | )
|                                                                      |  |                             |           |   |                           |   |           |      |  |   |           |   |  |   |           |  
|Comprehensive income                                                  |  | $                           | 1,521,070 |   |                           | $ | 1,973,266 |      |  | $ | 3,314,602 |   |  | $ | 3,912,122 |  
|                                                                      |  |                             |           |   |                           |   |           |      |  |   |           |   |  |   |           |  

See notes to consolidated financial statements.



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##### Table of Contents

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                              |  |                           |             |   |      |   |             |  
|----------------------------------------------------------------------------- |  | ------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                              |  | Six Months Ended June 30, |            
|                                                                              |  | 2006                      |             |   | 2005 |  
|Cash flow from operating activities:                                          |  |                           |             |   |      |   |             |  
|Net income                                                                    |  | $                         | 3,331,454   |   |      | $ | 3,948,751   |  
|Adjustments to reconcile net income to cash provided by operating activities: |  |                           |             |   |      |   |             |  
|Depreciation of premises and equipment                                        |  |                           | 276,965     |   |      |   | 277,453     |  
|Amortization of premiums and discounts, net                                   |  |                           | 77,394      |   |      |   | 71,270      |  
|Amortization of deferred fees, net                                            |  |                           | 53,266      |   |      |   | 117,823     |  
|Provision for loan losses                                                     |  |                           |            |   |      |   | 100,000     |  
|(Increase) decrease in interest receivable                                    |  |                           | (25,665     | ) |      |   | 1,139       |  
|(Increase) in other assets                                                    |  |                           | (282,637    | ) |      |   | (784,125    | )
|Increase in other liabilities                                                 |  |                           | 688,925     |   |      |   | 751,749     |  
|Award of treasury stock                                                       |  |                           |            |   |      |   | 15,159      |  
|                                                                              |  |                           |             |   |      |   |             |  
|Net cash provided by operating activities                                     |  |                           | 4,119,702   |   |      |   | 4,499,219   |  
|                                                                              |  |                           |             |   |      |   |             |  
|Cash flow from investing activities:                                          |  |                           |             |   |      |   |             |  
|Principal repayments on securities available for sale                         |  |                           | 69,880      |   |      |   | 189,064     |  
|Purchases of securities available for sale                                    |  |                           | (27,483     | ) |      |   | (23,276     | )
|Proceeds from sale of securities available for sale                           |  |                           | 1,588,761   |   |      |   |            |  
|Principal repayments on mortgage-backed securities held to maturity           |  |                           | 13,387,387  |   |      |   | 19,442,498  |  
|Net change in loans receivable                                                |  |                           | (11,846,908 | ) |      |   | (25,486,013 | )
|Additions to premises and equipment                                           |  |                           | (245,437    | ) |      |   | (148,486    | )
|Redemption of Federal Home Loan Bank of New York Stock                        |  |                           | 323,100     |   |      |   | 177,400     |  
|                                                                              |  |                           |             |   |      |   |             |  
|Net cash provided by (used in) investing activities                           |  |                           | 3,249,300   |   |      |   | (5,848,813  | )
|                                                                              |  |                           |             |   |      |   |             |  
|Cash flow from financing activities:                                          |  |                           |             |   |      |   |             |  
|Net Increase (decrease) in deposits                                           |  |                           | 3,476,338   |   |      |   | (7,419,147  | )
|Net Proceeds from advances from Federal Home Loan Bank of New York            |  |                           | 1,000,000   |   |      |   | 4,000,000   |  
|Net (decrease) in Federal Home Loan Bank overnight borrowing                  |  |                           | (8,400,000  | ) |      |   |            |  
|Net (decrease) in other borrowed money                                        |  |                           | (19,556     | ) |      |   | (18,058     | )
|Net increase (decrease) in payments by borrowers for taxes and insurance      |  |                           | 192,149     |   |      |   | (35,544     | )
|Cash dividends paid                                                           |  |                           | (2,288,749  | ) |      |   | (2,189,238  | )
|Purchase of treasury stock                                                    |  |                           | (132,000    | ) |      |   | (154,362    | )
|Sale of treasury stock                                                        |  |                           | 110,460     |   |      |   | 120,935     |  
|                                                                              |  |                           |             |   |      |   |             |  
|Net cash (used in) financing activities                                       |  |                           | (6,061,358  | ) |      |   | (5,695,414  | )
|                                                                              |  |                           |             |   |      |   |             |  
|Net increase (decrease) in cash and cash equivalents                          |  |                           | 1,307,644   |   |      |   | (7,045,008  | )
|Cash and cash equivalents - beginning                                         |  |                           | 8,570,081   |   |      |   | 14,598,711  |  
|                                                                              |  |                           |             |   |      |   |             |  
|Cash and cash equivalents - ending                                            |  | $                         | 9,877,725   |   |      | $ | 7,553,703   |  
|                                                                              |  |                           |             |   |      |   |             |  
|Supplemental information:                                                     |  |                           |             |   |      |   |             |  
|Cash paid during the period for:                                              |  |                           |             |   |      |   |             |  
|Interest on deposits and borrowings                                           |  | $                         | 7,380,586   |   |      | $ | 5,871,399   |  
|                                                                              |  |                           |             |   |      |   |             |  
|Income taxes                                                                  |  | $                         | 1,759,899   |   |      | $ | 2,509,083   |  
|                                                                              |  |                           |             |   |      |   |             |  

See notes to consolidated financial statements.



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##### Table of Contents

PAMRAPO BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. PRINCIPLES OF CONSOLIDATION

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

2. BASIS OF PRESENTATION

The
accompanying unaudited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and
Regulation S-X. Accordingly, they do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the consolidated financial statements have been included. The results of operations for the three and six months ended June 30, 2006, 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 2005 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, 2005.

3. NET INCOME PER COMMON SHARE

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



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4. RETIREMENT PLANS- COMPONENTS OF NET PERIODIC PENSION COST



|                                      |  |                          |      |   |                                      |   |      |      |  |      |     |  |   |    
|------------------------------------- |  | ------------------------ | ---- | - | ------------------------------------ | - | ---- | ---- |  | ---- | --- |  | - | ---
|                                      |  | Pension Plan             |      |   | SupplementalExecutiveRetirement Plan
|                                      |  | Six MonthsEnded June 30, |      |   | Six MonthsEnded June 30,            
|                                      |  | 2006                     |      |   | 2005                                 |   |      | 2006 |  | 2005
|                                      |  | (In Thousands)           |      |   | (In Thousands)                      
|Service cost                          |  | $                        | 129  |   |                                      | $ | 119  |      |  | $    |    |  | $ |   
|Interest cost                         |  |                          | 216  |   |                                      |   | 212  |      |  |      | 65  |  |   | 79 
|Expected return on plan assets        |  |                          | (275 | ) |                                      |   | (262 | )    |  |      |    |  |   |   
|Amortization of unrecognized net loss |  |                          | 107  |   |                                      |   | 82   |      |  |      |    |  |   | 14 
|Unrecognized past service liability   |  |                          | 9    |   |                                      |   | 9    |      |  |      | 46  |  |   | 48 
|                                      |  |                          |      |   |                                      |   |      |      |  |      |     |  |   |    
|Net periodic benefit expense          |  | $                        | 186  |   |                                      | $ | 160  |      |  | $    | 111 |  | $ | 141
|                                      |  |                          |      |   |                                      |   |      |      |  |      |     |  |   |    

5. STOCK BASED COMPENSATION PLAN

Stock options are granted under a stockholder approved stock option plan. Options are vested immediately or over a nominal vesting period and may be exercised up to ten
years from the date of the grant or within one year after retirement. All options are exercisable in the event the optionee terminated his or her employment, or due to death or disability.

The Company adopted Statement of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment, using the modified-prospective
transition method, beginning January 1, 2006, and therefore, is required to expense the fair value of all outstanding options over their remaining vesting periods to the extent the options were not fully vested as of the date of adoption and
instituted a procedure to expense the fair value of all options granted subsequent to December 31, 2005 over their requisite vesting periods. Since all outstanding options were fully vested by December 31, 2005, no expenses were recorded
for stock-based compensation during the six months ended June 30, 2006.

SFAS No. 123R also requires that the benefits of realized tax deductions
in excess of previously recognized tax benefits on compensation expense be reported as financing cash flow rather than operating cash flow, as previously required. No such tax benefit was recognized during the six months ended June 30, 2006.



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##### Table of Contents

A summary of the Companys stock option activity and the related information for its option plan for the six months
ended June 30, 2006 is as follows:



|                             |  |         |   |  |                              |       |                                          |           |                         |   |       
|---------------------------- |  | ------- | - |  | ---------------------------- | ----- | ---------------------------------------- | --------- | ----------------------- | - | ------
|                             |  | Options |   |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractual Term |           | AggregateIntrinsicValue
|Balance at December 31, 2005 |  | 101,000 |   |  | $                            | 23.24 |                                          |           |                         |   |       
|Granted                      |  |        |   |  |                              |      |                                          |           |                         |   |       
|Exercised                    |  | (6,000  | ) |  |                              | 18.41 |                                          |           |                         |   |       
|Forfeited or cancelled       |  | (3,000  | ) |  |                              | 29.25 |                                          |           |                         |   |       
|                             |  |         |   |  |                              |       |                                          |           |                         |   |       
|Outstanding at June 30, 2006 |  | 92,000  |   |  | $                            | 23.36 |                                          | 7.6 years |                         | $ | 72,000
|                             |  |         |   |  |                              |       |                                          |           |                         |   |       
|Exercisable at June 30, 2006 |  | 92,000  |   |  | $                            | 23.36 |                                          | 7.6 years |                         | $ | 72,000
|                             |  |         |   |  |                              |       |                                          |           |                         |   |       

There were no stock options granted during the six months ended June, 2006 and 2005. The Company has no unvested
options outstanding as of June 30, 2006 and during the six months then ended.

6. RECENT ACCOUNTING PRONOUNCEMENTS

FAS 155

In
February 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments. SFAS No. 155 amends FASB Statement No. 133 and FASB Statement
No. 140, and improves the financial reporting of certain hybrid financial instruments by requiring more consistent accounting that eliminates exemptions and provides a means to simplify the accounting for these instruments. Specifically, SFAS
No. 155 allows financial instruments that have embedded derivatives to be accounted for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account for the whole instrument on a fair value basis.
SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006. The Company is required to adopt the provisions of SFAS
No. 155, as applicable, beginning in fiscal year 2007. Management does not believe the adoption of SFAS No. 155 will have a material impact on the Companys financial position and results of operations.

FAS 156

In March 2006, the FASB
issued SFAS No. 156, Accounting for Servicing of Financial Assets  An Amendment of FASB Statement No. 140. SFAS 156 requires that all separately recognized servicing assets and servicing liabilities be initially measured
at fair value, if practicable. The statement permits,



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but does not require the subsequent measurement of servicing assets and servicing liabilities at fair value. SFAS 156 is
effective as of the beginning of an entitys first fiscal year that begins after September 15, 2006, which for the Company will be as of the beginning of fiscal 2007. The Company does not believe that the adoption of SFAS 156 will have a
significant effect on its consolidated financial statements.

FIN 48

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes. The interpretation clarifies the accounting for
uncertainty in income taxes recognized in a companys financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. Specifically, the pronouncement prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on related de-recognition, classification, interest and penalties,
accounting for interim periods, disclosure and transition of uncertain tax positions. The interpretation is effective for fiscal years beginning after December 15, 2006. Management does not believe that the adoption of this standard will have a
material impact on the Companys financial position and results of operations.

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.

Critical Accounting Policies

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain
assets or on income to be critical accounting policies. Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for loan losses. Determining the amount of the allowance for loan losses
necessarily involves a high degree of judgment. Management reviews the level of the allowance on a quarterly basis, at a minimum, and establishes the provision for loan losses based on the composition of the loan portfolio, delinquency levels, loss
experience, economic conditions, and other factors related to the collectibility of the loan portfolio. Since there has been no material shift in 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.



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##### Table of Contents

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.

Changes in Financial Condition

The Companys assets at
June 30, 2006 totaled $644.0 million, which represents a decrease of $2.1 million as compared with $646.1 million at December 31, 2005.

Securities available for sale at June 30, 2006 decreased $1.6 million or 48.48% to $1.7 million when compared with $3.3 million at December 31, 2005. The decrease during the six months ended June 30, 2006
resulted primarily from sales of securities available for sale with carrying values of $1.6 million. Gains of $43,850 and losses of $43,825 were realized and are reflected in miscellaneous non-interest income.

Investment securities held to maturity at June 30, 2006 totaled $10.2 million as compared with $10.3 million at December 31, 2005. Mortgage-backed securities
held to maturity at June 30, 2006 decreased$13.4 million or 8.02% to $153.6 million when compared with $167.0 million at December 31, 2005. During the six months ended June 30, 2006, there were no purchases of mortgage-backed
securities and repayments totaled $13.4 million.

Loans receivable amounted to $450.0 million at June 30, 2006, as compared with $438.3 million at
December 31, 2005, which represents an increaseof $11.7 million or 2.67%. The increaseduring the six months ended June 30, 2006 resulted primarily from loan originations exceeding principal repayments.

Deposits at June 30, 2006 totaled $477.5 million as compared with $474.0 million at December 31, 2005 representing an increaseof $3.5 million or 0.74%.

Advances from the Federal Home Loan Bank of New York (FHLB) amounted to $99.0 million at June 30, 2006 as compared with $106.4 million at
December 31, 2005.

Stockholders equity totaled $59.6 million and $58.6 million at June 30, 2006, and December 31, 2005, respectively.
The increaseof $1.0 million for the six months ended June 30, 2006 resulted primarily from the net income of $3.3 million, partially offset by cash dividends paid of $2.3 million.

Comparison of Operating Results for the Three Months Ended June 30, 2006 and 2005

Net income for the three months ended June 30, 2006 totaled $1.5 million as compared with $2.0 million for the three months ended June 30, 2005. The decreasein net income during the 2006 period
resulted from increases in total interest expense and total non-interest expenses, a decrease in total non-interest income, which more than offset increases in total interest income, and decreases in the provision for loan losses and income taxes.

Interest income on loans increasedby $581,000 or 8.77% to $7.2 million during the three months ended June 30, 2006, when compared with $6.6
million for the same 2005 period. The increaseduring the



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2006 period resulted from an increaseof $31.7 million or 7.63% in the average balance of loans outstanding, along
with an increaseof seven basis points in the yield earned on loans. Interest on mortgage-backed securities decreased$377,000 or 16.97% to $1.8 million during the three months ended June 30, 2006, when compared with $2.2 million
for the same 2005 period. The decreaseduring the 2006 period resulted from a decreaseof $29.3 million or 15.69% in the average balance of mortgage-backed securities outstanding, along with an eight basis point decreasein the
yield earned on the mortgage-backed securities. Interest earned on investments increasedby $29,000 or 11.28% to $286,000 during the three months ended June 30, 2006, when compared to $257,000 during the same 2005 period primarily due to
an increaseof fifteen basis points in the yield on the portfolio, along with an increaseof $1.5 million or 8.93% in the average balance of such assets outstanding. Interest income earned on other interest-earning assets
increased by $40,000 or 105.26% to $78,000 during the three months ended June 30, 2006, when compared to $38,000 during the same 2005 period primarily due to an increase of one-hundred forty-seven basis points in the yield on the
portfolio along with an increase of $1.6 million or 23.19% in the average balance of such assets outstanding.

Interest expense on deposits
increased$630,000 or 29.72% to $2.8 million during the three months ended June 30, 2006, when compared to $2.1 million during the same 2005 period. Such increasewas primarily attributable to an increaseof sixty-two basis
points in the cost of interest-bearing deposits, which was sufficient to offset a decreaseof $9.6 million or 2.15% in the average balance of interest-bearing deposits. Interest expense on advances and other borrowed money increasedby
$296,000 or 34.74% to $1.2 million during the three months ended June 30, 2006, when compared with $852,000 during the same 2005 period, primarily due to a seventy-one basis point increasein the cost of advances and other borrowed
money, as well as an increaseof $12.0 million or 13.04% in the average balance of advances and other borrowed money outstanding.

Net interest
income decreased$653,000 or 10.59% during the three months ended June 30, 2006 when compared with the same 2005 period. Such increase was due to an increasein total interest expense of $926,000, sufficient to offset an
increasein total interest income of $273,000. The Banks net interest rate spread was 3.08% in 2006 and 3.63% in 2005. An increaseof twelve basis points in the yield on interest-earning assets was more than offset by a
sixty-seven basis point increasein the cost of interest-bearing liabilities.

During the three months ended June 30, 2006 and 2005, the Bank
provided $0 and $40,000, respectively, as a provision for loan losses. The allowance for loan losses is based on managements evaluation of the risk inherent in its loan portfolio and gives due consideration to the changes in general market
conditions and in the nature and volume of the Banks loan activity. The Bank intends to continue to provide for loan losses based on its periodic review of the loan portfolio and general market conditions. At June 30, 2006 and 2005, the
Banks non-performing loans, which were delinquent ninety days or more, totaled $1.0 million or 0.16% of total assets and $1.5 million or 0.24% of total assets, respectively. At June 30, 2006, $177,000 of non-performing loans were accruing
interest and $858,000 million were on nonaccrual status. The non-performing loans primarily consist of one-to-four family mortgage loans. During the three months ended June 30, 2006 and 2005, the Bank charged off loans aggregating $0 and
$3,000, respectively. The allowance for loan losses amounted to $2.7 million at June 30, 2006, representing 0.60% of total loans and 258.55% of loans delinquent ninety days or more, and $2.6 million at June 30, 2005, representing 0.62% of
total loans and 171.45% of loans delinquent ninety days or more.



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Non-interest income decreased$105,000 or 15.24% to $584,000 during the three months ended June 30, 2006,
from $689,000 during the same 2005 period, which resulted from a decreasein miscellaneous income of $81,000 and a decreasein fees and service charges of $24,000.

Non-interest expenses increased$54,000 or 1.49% to $3.684 million during the three months ended June 30, 2006, when compared with $3.630 million during the same 2005 period. Net occupancy, advertising,
professional fees and miscellaneous expenses increased$22,000, $6,000, $14,000 and $55,000, respectively, which was sufficient to offset a decreasein salaries and employee benefits and equipment expense of $20,000 and $23,000,
respectively, during the 2006 period when compared with the same 2005 period.

Income taxes totaled $896,000 and $1.2 million during the three months ended
June 30, 2006 and 2005, respectively.

Comparison of Operating Results for the Six Months Ended June 30, 2006 and 2005

Net income decreased$617,000 or 15.62% to $3.3 million for the six months ended June 30, 2006 compared with $3.9 million for the same 2005 period. The
decreasein net income during the 2006 period resulted from increasesin total interest expense and total non-interest expenses and a decreasein total non-interest income, which more than offset increases in total interest
income and decreases in the provision for loan losses and income taxes.

Interest income on loans increasedby $1.1 million or 8.79% to $14.1
million during the six months ended June 30, 2006, when compared with $13.0 million for the same 2005 period. The increaseduring the 2006 period resulted from an increaseof $33.0 million or 8.07% in the average balance of loans
outstanding, along with an increaseof four basis points in the yield earned on loans. Interest on mortgage-backed securities decreased$763,000 or 16.77% to $3.8 million during the six months ended June 30, 2006, when compared
with $4.6 million for the same 2005 period. The decreaseduring the 2006 period resulted from a decreaseof $30.6 million or 15.97% in the average balance of mortgage-backed securities outstanding, along with a five basis point
decreasein the yield earned on the mortgage-backed securities. Interest earned on investments increasedby $57,000 or 11.20% to $566,000 during the six months ended June 30, 2006, when compared to $509,000 during the same 2005
period primarily due to an increaseof nine basis points in the yield on the portfolio, along with an increaseof $1.6 million or 9.47% in the average balance of such assets outstanding. Interest income earned on other interest-earning
assets increased by $49,000 or 54.44% to $139,000 during the six months ended June 30, 2006 when compared to $90,000 during the same 2005 period primarily due to an increase of one-hundred twenty-nine basis points in the yield on
the portfolio, sufficient to offset a decrease of $274,000 or 3.30% in the average balance of such assets outstanding.

Interest expense on deposits
increased$1.0 million or 23.97% to $5.2 million during the six months ended June 30, 2006, when compared to $4.2 million during the same 2005 period. Such increasewas primarily attributable to an increaseof fifty-two
basis points in the cost of interest-bearing deposits, which was sufficient to offset a decreaseof $13.3 million or 2.96% in the average balance of interest-bearing deposits. Interest expense on advances and other borrowed money increasedby $560,000 or 33.53% to $2.2 million during the six months ended June 30, 2006, when compared with $1.7 million during the same 2005 period, primarily due to a fifty-seven basis point increase in the cost of advances and other borrowed
money, as well as an increaseof $14.3 million or 15.77% in the average balance of advances and other borrowed money outstanding.



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Net interest income decreased$1.1 million or 8.76% during the six months ended June 30, 2006 when compared
with the same 2005 period. Such decreasewas due to an increasein total interest expense of $1.6 million, which was sufficient to offset an increasein total interest income of $486,000. The Banks net interest rate spread
was 3.17% in 2006 and 3.63% in 2005. An increaseof twelve basis points in the yield on interest-earning assets was more than offset by a fifty-eight basis point increasein the cost of interest-bearing liabilities.

During the six months ended June 30, 2006 and 2005, the Bank provided $0 and $100,000, respectively, as a provision for loan losses. The allowance for loan losses
is based on managements evaluation of the risk inherent in its loan portfolio and gives due consideration to the changes in general market conditions and in the nature and volume of the Banks loan activity. The Bank intends to continue
to provide for loan losses based on its periodic review of the loan portfolio and general market conditions. During the six months ended June 30, 2006 and 2005, the Bank charged off loans aggregating $87,000 and $10,000, respectively.

Non-interest income decreased$167,000 or 12.72% to $1.1 million during the six months ended June 30, 2006, from $1.3 million during the same
2005 period, which resulted from a decreasein miscellaneous income of $144,000 and a decreasein fees and service charges of $23,000.

Non-interest expenses increasedby $40,000 or 0.57% to $7.038 million during the six months ended June 30, 2006, when compared with $6.997 million during the same 2005 period. Net occupancy, advertising, professional fees and
miscellaneous expenses increased$56,000, $18,000, $90,000 and $72,000, respectively, which was sufficient to offset decreasesin salaries and employee benefits and equipment expenses of $192,000 and $4,000, respectively, during the
2006 period when compared with the same 2005 period.

Income taxes totaled $2.0 million and $2.6 million during the six months ended June 30, 2006 and
2005, respectively.

Liquidity and Capital Resources

The Bank is required by Office of Thrift Supervision (the OTS) regulations to maintain sufficient liquidity to ensure the Banks safe and sound operation. The Banks liquidity averaged 1.72% during the month of June
2006. The Bank adjusts its liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes from escrow accounts on mortgage loans, repayment of borrowings, when applicable, and loan funding commitments. The Bank
also adjusts its liquidity levels as appropriate to meet its asset/liability objectives.

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



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

Cash was generated by operating activities during the six months ended June 30, 2006 and 2005. The primary source of cash was
net income. Cash dividends paid during the six months ended June 30, 2006 and 2005, amounted to $2.3 million and $2.2 million, respectively.

The
primary sources of investing activity are lending and the purchase of mortgage-backed securities. Loans receivable amounted to $450.0 million and $438.3 million at June 30, 2006 and December 31, 2005, respectively. Securities available for
sale totaled $1.7 million and $3.3 million at June 30, 2006 and December 31, 2005, respectively. Mortgage-backed securities held to maturity totaled $153.6 million and $167.0 million at June 30, 2006 and December 31, 2005,
respectively. In addition to funding new loan production and mortgage-backed securities purchases through operating and financing activities, such activities were funded by principal repayments on existing loans and mortgage-backed securities.

Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such
as federal funds and interest-bearing deposits. If the Bank requires funds beyond its ability to generate them internally, borrowing agreements exist with the FHLB which provide an additional source of funds. At June 30, 2006, advances from the
FHLB amounted to $99.0 million. An unused overnight line of credit of $64.1 million is available for additional borrowing.

The Bank anticipates that it
will have sufficient funds available to meet its current loan commitments. At June 30, 2006, the Bank had outstanding commitments to originate loans of $17.7 million. Certificates of deposit scheduled to mature in one year or less at
June 30, 2006, totaled $194.2 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, 2006, as compared to the minimum
regulatory capital requirements (dollars in thousands):



|                                                |  |        |        |       |                              |   |        |                                                                 |        |  |      |        |  |       |        |  |       |  
|----------------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | --------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                                |  | Actual |        |       | Minimum Capital Requirements |   |        | To Be WellCapitalized Under PromptCorrective Actions
Provisions |       
|                                                |  | Amount |        | Ratio |                              |   | Amount |                                                                 | Ratio  |  |      | Amount |  | Ratio |       
|Total Capital(to risk-weighted assets)          |  | $      | 58,978 |       | 16.07                        | % |        | $                                                               | 29,368 |  | 8.00 | %      |  | $     | 36,711 |  | 10.00 | %
|Tier 1 Capital(to risk-weighted assets)         |  |        | 56,321 |       | 15.34                        | % |        |                                                                 |       |  |     |        |  |       | 22,026 |  | 6.00  | %
|Core (Tier 1) Capital(to adjusted total assets) |  |        | 56,321 |       | 8.71                         | % |        |                                                                 | 25,858 |  | 4.00 | %      |  |       | 32,322 |  | 5.00  | %
|Tangible Capital(to adjusted total assets)      |  |        | 56,321 |       | 8.71                         | % |        |                                                                 | 9,697  |  | 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, 2006:



|                        |  |       |         |                       |   |                                      |  |                                       |        |                      |   |        |  |   |      
|----------------------- |  | ----- | ------- | --------------------- | - | ------------------------------------ |  | ------------------------------------- | ------ | -------------------- | - | ------ |  | - | -----
|                        |  |       |         | Payment Due By Period
|Contractual Obligations |  | Total |         | One Yearor Less       |   | More Than OneYear ThroughThree Years |  | More ThanThree YearsThrough FiveYears |        | More Than Five Years
|                        |  |       |         |                       |   | (In Thousands)                       |  |                                       |        |                     
|FHLB-NY advances        |  | $     | 99,000  |                       | $ | 27,000                               |  | $                                     | 34,000 |                      | $ | 32,000 |  | $ | 6,000
|Other borrowings        |  |       | 27      |                       |   | 27                                   |  |                                       |       |                      |   |       |  |   |     
|Certificates of deposit |  |       | 222,081 |                       |   | 194,185                              |  |                                       | 22,633 |                      |   | 4,716  |  |   | 547  
|Lease obligations       |  |       | 2,600   |                       |   | 419                                  |  |                                       | 621    |                      |   | 498    |  |   | 1,062
|                        |  |       |         |                       |   |                                      |  |                                       |        |                      |   |        |  |   |      
|Total                   |  | $     | 323,708 |                       | $ | 221,631                              |  | $                                     | 57,254 |                      | $ | 37,214 |  | $ | 7,609
|                        |  |       |         |                       |   |                                      |  |                                       |        |                      |   |        |  |   |      



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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, 2006.



|                               |  |       |        |                                 |   |                                      |  |                                       |   |                      |   |   |  |   |  
|------------------------------ |  | ----- | ------ | ------------------------------- | - | ------------------------------------ |  | ------------------------------------- | - | -------------------- | - | - |  | - | -
|                               |  |       |        | Commitment Expiration By Period
|Off-Balance Sheet Arrangements |  | Total |        | One Yearor Less                 |   | More Than OneYear ThroughThree Years |  | More ThanThree YearsThrough FiveYears |   | More Than Five Years
|                               |  |       |        |                                 |   | (In Thousands)                       |  |                                       |   |                     
|To originate loans             |  | $     | 17,698 |                                 | $ | 17,698                               |  | $                                     |  |                      | $ |  |  | $ | 
|Unused lines of credit         |  |       | 9,303  |                                 |   | 9,303                                |  |                                       |  |                      |   |  |  |   | 
|                               |  |       |        |                                 |   |                                      |  |                                       |   |                      |   |   |  |   |  
|Total                          |  | $     | 27,001 |                                 | $ | 27,001                               |  | $                                     |  |                      | $ |  |  | $ | 
|                               |  |       |        |                                 |   |                                      |  |                                       |   |                      |   |   |  |   |  

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

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

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

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

Net Portfolio Value. The Banks interest rate sensitivity is
monitored by management through the use of the OTS model that estimates the change in the Banks net portfolio value (NPV) over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets,
liabilities, and off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is defined as the NPV in that



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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, 2006, the most recent date the Banks NPV was calculated by the OTS.



|                                                      |  |                        |         |              |                                             |         |               |  |     |          |  |       |                       |  |      |  
|----------------------------------------------------- |  | ---------------------- | ------- | ------------ | ------------------------------------------- | ------- | ------------- |  | --- | -------- |  | ----- | --------------------- |  | ---- | -
|                                                      |  | Net Portfolio Value    |         |              | NPV as Percent of Portfolio Value
of Assets |        
|Change in Interest Rates In Basis Points (Rate Shock) |  | Amount                 |         | DollarChange |                                             |         | PercentChange |  |     | NPVRatio |  |       | Change InBasis Points | 
|                                                      |  | (Dollars in Thousands) |        
|+300                                                  |  | $                      | 26,468  |              | $                                           | (58,074 | )             |  | (69 | )%       |  | 4.34  | %                     |  | (820 | )
|+200                                                  |  |                        | 45,113  |              |                                             | (39,430 | )             |  | (47 | )%       |  | 7.16  | %                     |  | (538 | )
|+100                                                  |  |                        | 64,791  |              |                                             | (19,752 | )             |  | (23 | )%       |  | 9.94  | %                     |  | (260 | )
|0                                                     |  |                        | 84,542  |              |                                             |        |               |  |    | %        |  | 12.54 | %                     |  |     |  
|- 100                                                 |  |                        | 101,213 |              |                                             | 16,671  |               |  | 20  | %        |  | 14.59 | %                     |  | 205  |  
|- 200                                                 |  |                        | 111,177 |              |                                             | 26,634  |               |  | 32  | %        |  | 15.73 | %                     |  | 318  |  

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

ITEM 4. Controls and Procedures

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

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



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##### Table of Contents

PART IIOTHER INFORMATION

ITEM 1. Legal Proceedings

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

ITEM 1A. Risk Factors

There have not been any material changes from the risk factors previously
disclosed in Part I, Item 1A of the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2005.

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

Not applicable.

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 26, 2006. The following matters were submitted to the stockholders:



| | 1. | Election of six directors.
| | -- | --------------------------

The following directors were
elected at the meeting, each to serve until the Annual Meeting for the year indicated next to his name or until his successor is elected and qualified.



|                           |  |                 |  |         
|-------------------------- |  | --------------- |  | --------
|                           |  | Number of Votes
|                           |  | For             |  | Withheld
|William J. Campbell  2009 |  | 4,502,623       |  | 328,169 
|John A. Morecraft  2009   |  | 4,512,030       |  | 318,762 
|Patrick D. Conaghan  2009 |  | 4,597,839       |  | 232,953 
|Herman L. Brockman  2008  |  | 4,588,489       |  | 242,303 
|Kenneth R. Poesl  2007    |  | 4,600,289       |  | 230,503 
|Robert G. Doria  2007     |  | 4,597,679       |  | 242,303 



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##### Table of Contents

|   |  |                                                                                                                                   |  |                 |  |         |  |        
|-- |  | --------------------------------------------------------------------------------------------------------------------------------- |  | --------------- |  | ------- |  | -------
|   |  |                                                                                                                                   |  | Number of Votes
|   |  |                                                                                                                                   |  | For             |  | Against |  | Abstain
|2. |  | The ratification of Beard Miller Company LLP as independent auditors of the Company for the fiscal year ending December 31, 2006. |  | 4,537,146       |  | 246,741 |  | 46,905 

ITEM 5. Other Information

None

ITEM 6. Exhibits

The following Exhibits are filed as part of this report.



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

---

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

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

|3 | Incorporated herein by reference to the Registration Statement on Form S-1 (Registration
No. 33-30370), as amended, filed on August 8, 1989.
|- | --------------------------------------------------------------------------------------------------------------------------------------------

|4 | Incorporated herein by reference to the Annual Report on Form 10-K for the fiscal year ended
December 31, 2001, filed on March 27, 2002.
|- | ----------------------------------------------------------------------------------------------------------------------------------------

|5 | Incorporated herein by reference to the Annual Report on Form 10-K for the fiscal year ended
December 31, 2005, filed on March 16, 2006.
|- | ----------------------------------------------------------------------------------------------------------------------------------------

|6 | Incorporated herein by reference to the 2003 Annual Meeting Proxy Statement, filed on
March 31, 2003.
|- | -----------------------------------------------------------------------------------------------------

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



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SIGNATURES

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



|                     |  |                       |  |                                           
|-------------------- |  | --------------------- |  | ------------------------------------------
|                     |  | PAMRAPO BANCORP, INC.
|                     |  |                      
|Date: August 9, 2006 |  | By                    |  | /s/ WILLIAM J. CAMPBELL                   
|                     |  |                       |  | William J. Campbell                       
|                     |  |                       |  | President and Chief Executive Officer     
|                     |  |                      
|Date: August 9, 2006 |  | By:                   |  | /s/ KENNETH D. WALTER                     
|                     |  |                       |  | Kenneth D. Walter                         
|                     |  |                       |  | Vice President and Chief Financial Officer



19