UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

FORM 10-Q

| |                                                                                   
| | ----------------------------------------------------------------------------------
| | (Mark One)                                                                        
| | xQuarterly report under Section 13 or
15(d) of the Securities Exchange Act of 1934
| |                                                                                   
| | For the quarterly period ended March 31, 2006                                     
| |                                                                                   
| | oTransition report under Section 13 or l5(d) of the Exchange Act                  
| |                                                                                   
| | For the transition period from _______ to _______                                 

Commission file
number 000-27481

Rome Bancorp, Inc.(Exact name of registrant as specified in its charter)

|                                                                   |  |                                       
|------------------------------------------------------------------ |  | --------------------------------------
|Delaware                                                           |  | 16-1573070                            
|(State or other
  jurisdiction of
  incorporation or organization) |  | (I.R.S. Employer
  Identification No.)

100
West Dominick Street, Rome, NY 13440-5810
(Address of Principal Executive Offices)(315) 336-7300
(Registrants telephone number, including area code)

Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
and (2) has been subject to such filing requirements for the past 90 days.  YesxNoo

Indicate
by check mark whether the registrant is a large accelerated file, an
accelerated filer, or a non-accelerated filer.

|                         |  |                    |  |                        | 
|------------------------ |  | ------------------ |  | ---------------------- | 
|Large accelerated filero |  | Accelerated filero |  | Non-accelerated filerx | 

Indicate
by check mark whether the registrant is a shell company (as defined in rule
12b-2 of the Exchange Act.)  YesoNo
x

Indicate
the number of shares outstanding of each class of issuers classes of common
stock as of the last practicable date:

|                             |  |                              
|---------------------------- |  | -----------------------------
|Class                        |  | Outstanding at
  May 10, 2006
|                             |  |                              
|Common Stock, par value $.01 |  | 9,298,864                    

1

---



ROME
BANCORP, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2006

TABLE
OF CONTENTS

|         |                                                                                         |     
|-------- | --------------------------------------------------------------------------------------- | ----
|         |                                                                                         | PAGE
|         |                                                                                         |     
|         |                                                                                         |     
|PART I   | FINANCIAL INFORMATION                                                                   | 3   
|         |                                                                                         |     
|ITEM 1.  | FINANCIAL STATEMENTS (unaudited):                                                       |     
|         | CONDENSED CONSOLIDATED BALANCE
SHEET                                                    | 3   
|         | CONDENSED CONSOLIDATED STATEMENTS OF
INCOME                                             | 4   
|         | CONDENSED CONSOLIDATED STATEMENT OF
SHAREHOLDERS
  EQUITY AND COMPREHENSIVE INCOME     | 5   
|         | CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS                                         | 6   
|         | NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
  STATEMENTS                        | 8   
|         |                                                                                         |     
|ITEM 2.  | MANAGEMENTS
  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 14  
|ITEM 3.  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET
  RISK                            | 21  
|ITEM 4.  | CONTROLS AND PROCEDURES                                                                 | 22  
|         |                                                                                         |     
|PART II  | OTHER INFORMATION                                                                       |     
|         |                                                                                         |     
|ITEM 1.  | LEGAL PROCEEDINGS                                                                       | 22  
|ITEM 1A. | RISK FACTORS                                                                            | 22  
|ITEM 2.  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
  PROCEEDS                           | 22  
|ITEM 3.  | DEFAULTS UPON SENIOR SECURITIES                                                         | 22  
|ITEM 4.  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS                                     | 22  
|ITEM 5.  | OTHER INFORMATION                                                                       | 22  
|ITEM 6.  | EXHIBITS                                                                                | 22  
|         |                                                                                         |     
|         | SIGNATURES                                                                              | 24  

2

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

ROME BANCORP, INC.Condensed Consolidated Balance Sheet
March 31, 2006 and December 31, 2005
(in thousands, except share data)

|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | --------------------- | - | ------- | -
|                                                                                                                                                                       |  | (unaudited)
  March 31,
  2006 |         | December
  31,
  2005 |  
|                                                                                                                                                                       |  |                                |         |                       |  
|Assets                                                                                                                                                                 |  |                                |         |                       |   |         |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Cash and due from banks                                                                                                                                                |  | $                              | 8,408   |                       | $ | 7,457   |  
|Federal funds sold and other short-term
  investments                                                                                                                  |  |                                | 30,664  |                       |   | 26,778  |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Total cash and cash equivalents                                                                                                                                        |  |                                | 39,072  |                       |   | 34,235  |  
|Securities available for sale, at fair
  value                                                                                                                         |  |                                | 8,435   |                       |   | 9,666   |  
|Securities held to maturity (fair value of
  $1,420 and $1,428 at March 31, 2006 and December 31, 2005, respectively)                                                  |  |                                | 1,430   |                       |   | 1,440   |  
|Federal Home Loan Bank Stock                                                                                                                                           |  |                                | 770     |                       |   | 776     |  
|Loans                                                                                                                                                                  |  |                                | 254,759 |                       |   | 253,878 |  
|Less: Allowance for loan loss                                                                                                                                          |  |                                | (1,958  | )                     |   | (1,960  | )
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Net loans                                                                                                                                                              |  |                                | 252,801 |                       |   | 251,918 |  
|Premises and equipment, net                                                                                                                                            |  |                                | 4,573   |                       |   | 4,503   |  
|Accrued interest receivable                                                                                                                                            |  |                                | 1,139   |                       |   | 1,053   |  
|Other assets                                                                                                                                                           |  |                                | 5,051   |                       |   | 5,262   |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Total assets                                                                                                                                                           |  | $                              | 313,271 |                       | $ | 308,853 |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Liabilities & Equity                                                                                                                                                   |  |                                |         |                       |   |         |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Liabilities                                                                                                                                                            |  |                                |         |                       |   |         |  
|Deposits:                                                                                                                                                              |  |                                |         |                       |   |         |  
|Non-interest bearing                                                                                                                                                   |  | $                              | 30,307  |                       | $ | 30,039  |  
|Savings                                                                                                                                                                |  |                                | 91,037  |                       |   | 89,138  |  
|Money market                                                                                                                                                           |  |                                | 4,957   |                       |   | 4,929   |  
|Time                                                                                                                                                                   |  |                                | 66,832  |                       |   | 66,298  |  
|Other interest bearing                                                                                                                                                 |  |                                | 12,709  |                       |   | 11,064  |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Total deposits                                                                                                                                                         |  |                                | 205,842 |                       |   | 201,468 |  
|Borrowings                                                                                                                                                             |  |                                | 9,127   |                       |   | 9,374   |  
|Other liabilities                                                                                                                                                      |  |                                | 4,476   |                       |   | 4,533   |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Total liabilities                                                                                                                                                      |  |                                | 219,445 |                       |   | 215,375 |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Shareholders equity                                                                                                                                                   |  |                                |         |                       |   |         |  
|Common Stock, $.01 par value; authorized:
  30,000,000 shares; issued and outstanding: 9,703,864 shares at March 31, 2006
  and 9,678,128 shares at December 31, 2005: |  |                                | 97      |                       |   | 97      |  
|Additional paid-in capital                                                                                                                                             |  |                                | 60,206  |                       |   | 60,013  |  
|Retained earnings                                                                                                                                                      |  |                                | 36,099  |                       |   | 35,983  |  
|Accumulated other comprehensive income                                                                                                                                 |  |                                | 70      |                       |   | 85      |  
|Unallocated shares of employee stock
  ownership plan (ESOP); 450,644 shares at March 31, 2006 and 462,135 shares at
  December 31, 2005                               |  |                                | (2,646  | )                     |   | (2,700  | )
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Total shareholders equity                                                                                                                                             |  |                                | 93,826  |                       |   | 93,478  |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  
|Total liabilities and shareholders
equity                                                                                                                             |  | $                              | 313,271 |                       | $ | 308,853 |  
|                                                                                                                                                                       |  |                                |         |                       |   |         |  

See
accompanying notes to unaudited condensed consolidated financial statements.

3

---



ROME BANCORP, INC.
AND SUBSIDIARYCondensed Consolidated Statements of Income
For the Three Months Ended March 31, 2006 and 2005
(in thousands, except share data)(unaudited)

|                                                      |  |                                          |       |      |   |       | 
|----------------------------------------------------- |  | ---------------------------------------- | ----- | ---- | - | ----- | 
|                                                      |  | For the
  three months ended
  March 31, |      
|                                                      |  |                                          |      
|                                                      |  | 2006                                     |       | 2005 |  
|                                                      |  |                                          |       |      |  
|Interest
  income:                                    |  |                                          |       |      |   |       | 
|Loans                                                 |  | $                                        | 3,977 |      | $ | 3,572 | 
|Securities                                            |  |                                          | 130   |      |   | 174   | 
|Other short-term investments                          |  |                                          | 300   |      |   | 26    | 
|                                                      |  |                                          |       |      |   |       | 
|Total interest income                                 |  |                                          | 4,407 |      |   | 3,772 | 
|                                                      |  |                                          |       |      |   |       | 
|Interest
  expense:                                   |  |                                          |       |      |   |       | 
|Deposits                                              |  |                                          | 704   |      |   | 632   | 
|Borrowings                                            |  |                                          | 81    |      |   | 138   | 
|                                                      |  |                                          |       |      |   |       | 
|Total interest expense                                |  |                                          | 785   |      |   | 770   | 
|                                                      |  |                                          |       |      |   |       | 
|                                                      |  |                                          |       |      |   |       | 
|Net interest income                                   |  |                                          | 3,622 |      |   | 3,002 | 
|                                                      |  |                                          |       |      |   |       | 
|Provision
  for loan losses                           |  |                                          | 115   |      |   |      | 
|                                                      |  |                                          |       |      |   |       | 
|Net interest income after provision for
  loan losses |  |                                          | 3,507 |      |   | 3,002 | 
|                                                      |  |                                          |       |      |   |       | 
|                                                      |  |                                          |       |      |   |       | 
|Non-interest
  income:                                |  |                                          |       |      |   |       | 
|Net gain on securities                                |  |                                          | 11    |      |   | 29    | 
|Other                                                 |  |                                          | 413   |      |   | 441   | 
|                                                      |  |                                          |       |      |   |       | 
|Total
  non-interest income                           |  |                                          | 424   |      |   | 470   | 
|                                                      |  |                                          |       |      |   |       | 
|                                                      |  |                                          |       |      |   |       | 
|Non-interest
  expense:                               |  |                                          |       |      |   |       | 
|Salaries and employee benefits                        |  |                                          | 1,416 |      |   | 1,392 | 
|Building, occupancy and equipment                     |  |                                          | 453   |      |   | 458   | 
|Other                                                 |  |                                          | 769   |      |   | 632   | 
|                                                      |  |                                          |       |      |   |       | 
|Total non-interest expense                            |  |                                          | 2,638 |      |   | 2,482 | 
|                                                      |  |                                          |       |      |   |       | 
|                                                      |  |                                          |       |      |   |       | 
|Income before income tax expense                      |  |                                          | 1,293 |      |   | 990   | 
|Income tax
  expense                                  |  |                                          | 485   |      |   | 351   | 
|                                                      |  |                                          |       |      |   |       | 
|Net income                                            |  | $                                        | 808   |      | $ | 639   | 
|                                                      |  |                                          |       |      |   |       | 
|                                                      |  |                                          |       |      |   |       | 
|Basic
  earnings per share                            |  | $                                        | 0.09  |      | $ | 0.07  | 
|                                                      |  |                                          |       |      |   |       | 
|Diluted
  earnings per share                          |  | $                                        | 0.09  |      | $ | 0.07  | 
|                                                      |  |                                          |       |      |   |       | 

See
accompanying notes to unaudited condensed consolidated financial statements.

4

---



ROME BANCORP, INC. AND SUBSIDIARYCondensed Consolidated Statement of Shareholders Equity and Comprehensive Income
For Three Months Ended March 31, 2006 and 2005
(in thousands, except share and per share data)(unaudited)

|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|-------------------------------------------------------------------------------------- |  | -------------- | --- | ------------------------------ | - | ------------------- | - | ---------------- | ------ | -------------------------------------------- | - | --------------------------- | - | ----------------------- | ---- | ----- | - | ------ | - | - | --- | - | - | ------ | -
|                                                                                       |  | Common
  stock |     | Additional
  paid-in
  Capital |   | Retained
  earnings |   | Treasury
  Stock |        | Accumulated
  other
  comprehensive
  income |   | Unallocated
  ESOP
  shares |   | Unearned
  compensation |      | Total |  
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |  
|Balances at
  January 1, 2005                                                          |  | $              | 33  |                                | $ | 10,756              |   | $                | 34,627 |                                              | $ | (8,963                      | ) | $                       | 391  |       | $ | (560   | ) | $ | (26 | ) | $ | 36,258 |  
|Comprehensive
  income:                                                                |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|Net Income                                                                             |  |                |     |                                |   |                     |   |                  | 639    |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 639    |  
|Other
  comprehensive loss                                                             |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         | (151 | )     |   |        |   |   |     |   |   | (151   | )
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|Total
  comprehensive income                                                           |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 488    |  
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|Proceeds of
  common stock offering and conversion of existing shares, net of expenses |  |                | 75  |                                |   | 57,760              |   |                  |        |                                              |   |                             |   |                         |      |       |   | (2,360 | ) |   |     |   |   | 55,475 |  
|Retirement of
  1,747,266 treasury shares                                              |  |                | (12 | )                              |   | (8,963              | ) |                  |        |                                              |   | 8,963                       |   |                         |      |       |   |        |   |   |     |   |   | (12    | )
|Amortization of
  unearned compensation                                                |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   | 13  |   |   | 13     |  
|Dividends paid
  ($0.066 per share)                                                    |  |                |     |                                |   |                     |   |                  | (229   | )                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   | (229   | )
|ESOP shares
  released for allocation (7,558 shares)                                   |  |                |     |                                |   | 70                  |   |                  |        |                                              |   |                             |   |                         |      |       |   | 16     |   |   |     |   |   | 86     |  
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|Balances at March
  31, 2005                                                           |  | $              | 96  |                                | $ | 59,623              |   | $                | 35,037 |                                              | $ |                            |   | $                       | 240  |       | $ | (2,904 | ) | $ | (13 | ) | $ | 92,079 |  
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|Balances at
  January 1, 2006                                                          |  | $              | 97  |                                | $ | 60,013              |   | $                | 35,983 |                                              | $ |                            |   | $                       | 85   |       | $ | (2,700 | ) | $ |    |   | $ | 93,478 |  
|Comprehensive
  income:                                                                |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|Net Income                                                                             |  |                |     |                                |   |                     |   |                  | 808    |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 808    |  
|Other comprehensive
  loss                                                             |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         | (15  | )     |   |        |   |   |     |   |   | (15    | )
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|Total
  comprehensive income                                                           |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 793    |  
|Exercise of
  25,736 stock options                                                     |  |                |     |                                |   | 116                 |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 116    |  
|Dividends paid
  ($0.075 per share)                                                    |  |                |     |                                |   |                     |   |                  | (692   | )                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   | (692   | )
|ESOP shares
  released for allocation (11,491 shares)                                  |  |                |     |                                |   | 77                  |   |                  |        |                                              |   |                             |   |                         |      |       |   | 54     |   |   |     |   |   | 131    |  
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  
|Balances at March
  31, 2006                                                           |  | $              | 97  |                                | $ | 60,206              |   | $                | 36,099 |                                              | $ |                            |   | $                       | 70   |       | $ | (2,646 | ) | $ |    |   | $ | 93,826 |  
|                                                                                       |  |                |     |                                |   |                     |   |                  |        |                                              |   |                             |   |                         |      |       |   |        |   |   |     |   |   |        |  

See
accompanying notes to unaudited condensed consolidated financial statements.

5

---



ROME BANCORP, INC.
AND SUBSIDIARYCondensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2006 and 2005
(unaudited) (in thousands)

|                                                                                     |  |      |        |      |   |         |  
|------------------------------------------------------------------------------------ |  | ---- | ------ | ---- | - | ------- | -
|                                                                                     |  | 2006 |        | 2005 |  
|                                                                                     |  |      |        |      |  
|Cash flows from operating activities:                                                |  |      |        |      |   |         |  
|Net income                                                                           |  | $    | 808    |      | $ | 639     |  
|Adjustments to reconcile net income to net
  cash                                    |  |      |        |      |   |         |  
|Provided by operating activities:                                                    |  |      |        |      |   |         |  
|Depreciation and amortization                                                        |  |      | 136    |      |   | 123     |  
|Increase in accrued interest receivable                                              |  |      | (86    | )    |   | (139    | )
|Net gain on securities sold                                                          |  |      | (11    | )    |   | (29     | )
|Provision for loan losses                                                            |  |      | 115    |      |   |        |  
|Net gain on loan sales                                                               |  |      | (1     | )    |   |        |  
|Proceeds of loan sales                                                               |  |      | 65     |      |   |        |  
|Net accretion on securities                                                          |  |      | (5     | )    |   | 1       |  
|(Decrease) increase in other liabilities                                             |  |      | (57    | )    |   | 331     |  
|Decrease in other assets                                                             |  |      | 219    |      |   | 418     |  
|Allocation of ESOP shares                                                            |  |      | 131    |      |   | 86      |  
|Amortization of unearned compensation                                                |  |      |       |      |   | 13      |  
|                                                                                     |  |      |        |      |   |         |  
|Net cash provided by operating activities                                            |  |      | 1,314  |      |   | 1,443   |  
|                                                                                     |  |      |        |      |   |         |  
|                                                                                     |  |      |        |      |   |         |  
|Cash flows from investing activities:                                                |  |      |        |      |   |         |  
|Net increase in loans                                                                |  |      | (1,062 | )    |   | (5,305  | )
|Proceeds from sales of securities available
  for sale                               |  |      | 365    |      |   | 354     |  
|Proceeds from maturities and principal
  reductions of securities available for sale |  |      | 859    |      |   | 1,788   |  
|Purchases of securities available for
sale                                           |  |      |       |      |   | (2      | )
|Redemption of Federal Home Loan Bank
stock                                           |  |      | 6      |      |   |        |  
|Proceeds from maturities and principal
  reductions of securities held to maturity   |  |      | 8      |      |   | 17      |  
|Additions to premises and equipment                                                  |  |      | (204   | )    |   | (128    | )
|                                                                                     |  |      |        |      |   |         |  
|Net cash used in investing activities                                                |  |      | (28    | )    |   | (3,276  | )
|                                                                                     |  |      |        |      |   |         |  
|                                                                                     |  |      |        |      |   |         |  
|Cash flows from financing activities:                                                |  |      |        |      |   |         |  
|Increase (decrease) in time deposits                                                 |  |      | 535    |      |   | (1,280  | )
|Increase (decrease) in other deposits                                                |  |      | 3,839  |      |   | (921    | )
|Net proceeds of stock offering and
  conversion                                      |  |      |       |      |   | 55,463  |  
|Repayments of borrowings                                                             |  |      | (247   | )    |   | (11,739 | )
|Additional borrowings                                                                |  |      |       |      |   | 3,000   |  
|Dividends paid                                                                       |  |      | (692   | )    |   | (229    | )
|Stock option exercises and related tax
  benefits                                    |  |      | 116    |      |   |        |  
|                                                                                     |  |      |        |      |   |         |  
|Net cash provided by financing activities                                            |  |      | 3,551  |      |   | 44,294  |  
|                                                                                     |  |      |        |      |   |         |  
|                                                                                     |  |      |        |      |   |         |  
|Net increase in cash and cash equivalents                                            |  |      | 4,837  |      |   | 42,461  |  
|Cash and cash equivalents at beginning of
  period                                   |  |      | 34,235 |      |   | 6,929   |  
|                                                                                     |  |      |        |      |   |         |  
|                                                                                     |  |      |        |      |   |         |  
|Cash and cash equivalents at end of period                                           |  | $    | 39,072 |      | $ | 49,390  |  
|                                                                                     |  |      |        |      |   |         |  

Condensed
Consolidated Statements of Cash Flows continued on next page.

6

---



ROME BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2006 and 2005
(unaudited) (in thousands)

|                                                    |  |      |     |      |   |     | 
|--------------------------------------------------- |  | ---- | --- | ---- | - | --- | 
|                                                    |  | 2006 |     | 2005 |  
|                                                    |  |      |     |      |  
|Supplemental
  disclosure of cash flow information: |  |      |     |      |   |     | 
|Cash paid during the period for:                    |  |      |     |      |   |     | 
|Interest                                            |  | $    | 736 |      | $ | 787 | 
|                                                    |  |      |     |      |   |     | 
|Income taxes                                        |  |      | 55  |      |   | 251 | 

See
accompanying notes to unaudited condensed consolidated financial statements.

7

---



ROME BANCORP, INC.Notes to Unaudited Condensed Consolidated
Financial Statements

|    |                        
|--- | -----------------------
|(1) | Basis of
  Presentation

The
accompanying unaudited condensed consolidated financial statements include the
accounts of Rome Bancorp, Inc. (Rome Bancorp or the Company) and The Rome
Savings Bank (the Bank), a wholly-owned subsidiary of the Company, as of
March 31, 2006 and December 31, 2005 and for the three month periods ended
March 31, 2006 and 2005. All inter-company accounts and transactions have been eliminated
in consolidation. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial
statements. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. In the opinion of management, the unaudited condensed
consolidated financial statements include all necessary adjustments, consisting
of normal recurring accruals, necessary for a fair presentation for the periods
presented.

The
Company believes that the disclosures are adequate to make the information
presented not misleading; however, the results of operations and other data
presented for the periods presented are not necessarily indicative of results
to be expected for the entire fiscal year.

The
data in the condensed consolidated balance sheet for December 31, 2005 was
derived from the Companys 2005 Annual Report on Form 10-K. That data, along
with the interim financial information presented in the condensed consolidated
balance sheet, statements of income, statement of shareholders equity and
comprehensive income and statements of cash flows should be read in conjunction
with the 2005 consolidated financial statements, including the notes thereto
included in the Companys Annual Report on Form 10- K.

Amounts
in the prior periods consolidated financial statements are reclassified when
necessary to conform with the current periods presentation.

|    |                                
|--- | -------------------------------
|(2) | Stock
  Offering and Conversion

On
March 30, 2005, the second step conversion of Rome MHC into a stock holding
company structure and the related stock offering of this new stock holding
company were completed. As a result of the second-step conversion, New Rome
Bancorp, Inc. became the holding company for the Bank and was immediately
renamed Rome Bancorp, Inc. Rome Bancorp issued 5,900,000 shares of common
stock at a price of $10.00 per share in the related stock offering and
exchanged 1,650,254 shares of common stock of the now predecessor Rome Bancorp,
Inc. into 3,742,246 shares of common stock of the newly formed Rome Bancorp,
Inc. pursuant to an exchange ratio of 2.26784, cashing out fractional shares.
The reorganization was accounted for as a change in corporate form with no
resulting change in the historical basis of the Companys assets, liabilities
and equity. Direct offering costs totaling $3.1 million were deducted from the
proceeds of the shares sold in the offering. As a result of the exchange and
stock offering, as of March 30, 2005, the Company had 9,642,246 shares of
common stock issued and outstanding. Net proceeds of $53.5 million were raised
in the stock offering, excluding $2.36 million which was loaned by the company
to a trust for the Employee

8

---



Stock
Ownership Plan (ESOP) enabling it to purchase 236,000 shares of common stock in
the stock offering for allocation under such plan. In addition, as part of the
conversion and dissolution of Rome, MHC, the Bank received $1.9 million of cash
previously held by Rome, MHC.

As
a result of the second-step conversion, all share and per share amounts have
been restated giving retroactive recognition to the second-step conversion
ratio of 2.26784. Options granted under the Companys 2000 Stock Option Plan
and common shares held by the Companys ESOP and Recognition and Retention Plan
prior to the conversion were also exchanged using the conversion ratio of
2.26784.

|    |                     
|--- | --------------------
|(3) | Earnings Per
  Share

The following
summarizes the computation of earnings per share for the three month periods
ended March 31, 2006 and 2005.

| |                                               |                                                 |                    |       |      |   |       | 
| | --------------------------------------------- | ----------------------------------------------- | ------------------ | ----- | ---- | - | ----- | 
| |                                               |                                                 | Three months ended |      
| |                                               |                                                 | March 31           |      
| |                                               |                                                 |                    |      
| |                                               | (in thousands, except share and per share data)
| |                                               |                                                 |                    |      
| |                                               |                                                 | 2006               |       | 2005 |  
| |                                               |                                                 |                    |       |      |  
| | Basic earnings per share:                     |                                                 |                    |       |      |   |       | 
| | Net Income                                    |                                                 | $                  | 808   |      | $ | 639   | 
| | Weighted average basic shares
  outstanding   |                                                 |                    | 9,228 |      |   | 9,346 | 
| |                                               |                                                 |                    |       |      |   |       | 
| |                                               |                                                 |                    |       |      |   |       | 
| | Basic earnings per share                      |                                                 | $                  | 0.09  |      | $ | 0.07  | 
| |                                               |                                                 |                    |       |      |   |       | 
| |                                               |                                                 |                    |       |      |   |       | 
| | Diluted earnings per share:                   |                                                 |                    |       |      |   |       | 
| | Net Income                                    |                                                 | $                  | 808   |      | $ | 639   | 
| | Weighted average basic shares
  outstanding   |                                                 |                    | 9,228 |      |   | 9,346 | 
| | Effect of dilutive securities:                |                                                 |                    |       |      |   |       | 
| | Stock options                                 |                                                 |                    | 168   |      |   | 207   | 
| | Unearned compensation                         |                                                 |                    |      |      |   | 12    | 
| |                                               |                                                 |                    |       |      |   |       | 
| | Weighted average diluted shares
  outstanding |                                                 |                    | 9,396 |      |   | 9,565 | 
| |                                               |                                                 |                    |       |      |   |       | 
| |                                               |                                                 |                    |       |      |   |       | 
| | Diluted earnings per share                    |                                                 | $                  | 0.09  |      | $ | 0.07  | 
| |                                               |                                                 |                    |       |      |   |       | 

|    |                           
|--- | --------------------------
|(4) | Other
  Comprehensive Loss

| |                                                                                            |  |                    |     |      |   |      |  
| | ------------------------------------------------------------------------------------------ |  | ------------------ | --- | ---- | - | ---- | -
| |                                                                                            |  | Three months ended |    
| |                                                                                            |  | March 31,          |    
| |                                                                                            |  |                    |    
| |                                                                                            |  | 2006               |     | 2005 |  
| |                                                                                            |  |                    |     |      |  
| |                                                                                            |  |                    |     |      |   |      |  
| | Net change in unrealized loss
  on available-for-sale securities arising during the period |  | $                  | (36 | )    | $ | (281 | )
| | Reclassification adjustment for
  net realized gain included in net income                 |  |                    | (11 | )    |   | (29  | )
| |                                                                                            |  |                    |     |      |   |      |  
| | Other comprehensive loss,
  before tax                                                     |  |                    | (25 | )    |   | (252 | )
| | Deferred tax benefit                                                                       |  |                    | (10 | )    |   | (101 | )
| |                                                                                            |  |                    |     |      |   |      |  
| |                                                                                            |  |                    |     |      |   |      |  
| | Other comprehensive loss                                                                   |  | $                  | (15 | )    | $ | (151 | )
| |                                                                                            |  |                    |     |      |   |      |  

9

---



|    |                                                     
|--- | ----------------------------------------------------
|(5) | Securities                                          
|    |                                                     
|    | Securities are summarized as follows (in thousands):

|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|---------------------------------- |  | ---------------- | ----- | ----------------- | - | ---------------- |  | ------------ | ----- |  | - | ----- | 
|                                   |  | March 31, 2006   |       | December 31, 2005 |  
|                                   |  |                  |       |                   |  
|                                   |  |                  |       |                   |  
|                                   |  | Amortized
  Cost |       | Fair
  value      |   | Amortized
  cost |  | Fair
  value |      
|                                   |  |                  |       |                   |   |                  |  |              |      
|                                  
|Available-for-sale:                |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|U.S. Government agencies           |  | $                | 816   |                   | $ | 846              |  | $            | 949   |  | $ | 985   | 
|State and Municipal obligations    |  |                  | 3,831 |                   |   | 3,893            |  |              | 4,506 |  |   | 4,595 | 
|Mortgage-backed securities
  FHLMC |  |                  | 529   |                   |   | 535              |  |              | 570   |  |   | 583   | 
|Corporate bonds                    |  |                  | 2,005 |                   |   | 2,006            |  |              | 2,008 |  |   | 2,017 | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|Total debt securities              |  |                  | 7,181 |                   |   | 7,280            |  |              | 8,033 |  |   | 8,180 | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|Equity and other securities        |  |                  | 1,137 |                   |   | 1,155            |  |              | 1,491 |  |   | 1,486 | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|Total available for sale           |  | $                | 8,318 |                   | $ | 8,435            |  | $            | 9,524 |  | $ | 9,666 | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|Held-to-maturity:                  |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|U.S. Government securities         |  | $                | 1,204 |                   | $ | 1,191            |  | $            | 1,208 |  | $ | 1,193 | 
|Mortgage-backed securities         |  |                  |      |                   |   |                 |  |              |      |  |   |       | 
|GNMA                               |  |                  | 44    |                   |   | 46               |  |              | 48    |  |   | 51    | 
|FHLMC                              |  |                  | 3     |                   |   | 4                |  |              | 3     |  |   | 3     | 
|Other bonds                        |  |                  | 179   |                   |   | 179              |  |              | 181   |  |   | 181   | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|Total held to maturity             |  | $                | 1,430 |                   | $ | 1,420            |  | $            | 1,440 |  | $ | 1,428 | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 
|FHLB
  Stock                       |  | $                | 770   |                   | $ | 770              |  | $            | 776   |  | $ | 776   | 
|                                   |  |                  |       |                   |   |                  |  |              |       |  |   |       | 

FHLB stock is
carried at cost since fair values are not readily determinable.

Securities
pledged at both March 31, 2006 and December 31, 2005 had a carrying amount of
$1.1 million. These securities collateralize state and Treasury department
programs. As of these dates, there were no holdings of securities of any one
issuer, other than the U.S. Government and its agencies, in an amount greater
than 10% of shareholders equity.

10

---



|    |                                                  
|--- | -------------------------------------------------
|(6) | Loans                                            
|    |                                                  
|    | Loans are
  summarized as follows (in thousands):

| |                                      |  |           |         |              |   |         | 
| | ------------------------------------ |  | --------- | ------- | ------------ | - | ------- | 
| |                                      |  | March 31, |         | December 31, |  
| |                                      |  | 2006      |         | 2005         |  
| |                                      |  |           |         |              |  
| | Mortgage loans:                      |  |           |         |              |   |         | 
| | Residential (1-4 family)             |  | $         | 126,220 |              | $ | 126,422 | 
| | Commercial                           |  |           | 52,527  |              |   | 52,748  | 
| | Construction and land                |  |           | 4,853   |              |   | 3,317   | 
| |                                      |  |           |         |              |   |         | 
| |                                      |  |           |         |              |   |         | 
| | Total Mortgage loans                 |  |           | 183,600 |              |   | 182,487 | 
| |                                      |  |           |         |              |   |         | 
| | Other loans:                         |  |           |         |              |   |         | 
| | Commercial                           |  |           | 24,283  |              |   | 23,832  | 
| | Automobile loans                     |  |           | 18,316  |              |   | 18,321  | 
| | Property improvement and
  equipment |  |           | 15,465  |              |   | 15,434  | 
| | Other consumer                       |  |           | 13,095  |              |   | 13,804  | 
| |                                      |  |           |         |              |   |         | 
| |                                      |  |           |         |              |   |         | 
| | Total Other loans                    |  |           | 71,159  |              |   | 71,391  | 
| |                                      |  |           |         |              |   |         | 
| |                                      |  |           |         |              |   |         | 
| | Total Loans                          |  | $         | 254,759 |              | $ | 253,878 | 
| |                                      |  |           |         |              |   |         | 

Changes in the
allowance for loan losses are summarized as follows (in thousands):

| |                                 |  |                    |       |      |   |       |  
| | ------------------------------- |  | ------------------ | ----- | ---- | - | ----- | -
| |                                 |  | Three months ended |      
| |                                 |  | March 31,          |      
| |                                 |  |                    |      
| |                                 |  | 2006               |       | 2005 |  
| |                                 |  |                    |       |      |  
| |                                 |  |                    |       |      |  
| | Balance at beginning of period  |  | $                  | 1,960 |      | $ | 2,000 |  
| | Provision charged to operations |  |                    | 115   |      |   |      |  
| | Loans charged off               |  |                    | (161  | )    |   | (36   | )
| | Recoveries                      |  |                    | 44    |      |   | 57    |  
| |                                 |  |                    |       |      |   |       |  
| |                                 |  |                    |       |      |   |       |  
| | Balance at end of period        |  | $                  | 1,958 |      | $ | 2,021 |  
| |                                 |  |                    |       |      |   |       |  

The
Companys recorded investment in loans that are considered impaired totaled
$204,000 and $211,000 at March 31, 2006 and December 31, 2005, respectively.
These impaired loans carried allowances of $123,000 at March 31, 2006 and
$127,000 as of year-end 2005. The average recorded investment in impaired loans
was $207,000 and $258,000 in the first quarters of 2006 and 2005, respectively.
The Company recognized no interest on impaired loans during the three months
ended March 31, 2006 and 2005.

11

---



The
principal balances of loans not accruing interest amounted to $1.0 million and
$871,000 at March 31, 2006 and December 31, 2005, respectively. Loans 90 days
past due and accruing interest amounted to $178,000 and $75,000 at March 31,
2006 and December 31, 2005, respectively. The differences between the amount of
interest income that would have been recorded if non-accrual loans had been
paid in accordance with their original terms and the amount of interest income
that was recorded during the three months ended March 31, 2006 and 2005 was
$30,800 and $23,700, respectively. There are no commitments to extend further
credit on non-accruing loans.

A
substantial portion of the Companys loans are mortgage and consumer loans in
Oneida County. Accordingly, the ultimate collectibility of a substantial
portion of the Companys loan portfolio is susceptible to changes in market
conditions in this area. A majority of the Companys loan portfolio is secured
by real estate. Other than general economic risks, management is not aware of
any material concentrations of credit risk to any industry or individual
borrower.

|    |                           
|--- | --------------------------
|(7) | Stock-Based
  Compensation

Effective
January 1, 2006, the Company adopted the fair value method of accounting for
share-based compensation arrangements in accordance with Statement of Financial
Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS
123(R)), using the modified prospective method of transition. Under the
provisions of FAS 123(R), the estimated fair value of share-based awards
granted is recognized as compensation expense over the service period. Using
the modified prospective method, compensation expense is recognized beginning
with the effective date of adoption of FAS 123(R) for all share-based payments
(i) granted after the effective date of adoption and (ii) granted prior to the
effective date of adoption and that remain unvested on the date of adoption.
The Company had no unvested stock options outstanding at the date of adoption.

Prior to
January 1, 2006, the Company accounted for share-based employee compensation
plans using the intrinsic value method of accounting in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25), and its related interpretations. Under the provisions of
APB 25, no compensation expense was recognized when stock options were granted
with exercise prices equal to or greater than market value on the date of
grant.

Prior to the
adoption of FAS 123(R), the Company presented all tax benefits resulting from
share-based compensation as cash flows from operating activities in the
condensed consolidated statements of cash flows. FAS 123(R) requires cash flows
resulting from tax deductions in excess of the grant-date fair value of
share-based awards to be included in cash flows from financing activities. This
tax benefit of $59,000 related to share-based compensation in the first quarter
of 2006 has been included in cash flows from financing activities.

12

---



Under the
modified prospective method of transition, the Company is not required to
restate its prior period financial statements to reflect disclosures of its net
income and earnings per share for the prior year period. The following table
illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of FAS 123 to stock-based employee
compensation for the three months ended March 31, 2005:

|                                                                                                                  |  |   |      |  
|----------------------------------------------------------------------------------------------------------------- |  | - | ---- | -
|Three months ended
  March 31, 2005                                                                               |  |   |      |  
|                                                                                                                  | 
|(in thousands, except per share data)                                                                             |  |   |      |  
|                                                                                                                  |  |   |      |  
|Net income:                                                                                                       |  |   |      |  
|As reported                                                                                                       |  | $ | 639  |  
|Add: Stock based compensation
  expense included in net income, net of related tax expense                        |  |   | 8    |  
|Deduct: Total stock based
  compensation expense determined under fair value method, net of related tax
  expense |  |   | (17  | )
|                                                                                                                  |  |   |      |  
|Pro forma                                                                                                         |  | $ | 630  |  
|                                                                                                                  |  |   |      |  
|                                                                                                                  |  |   |      |  
|Basic earnings per share:                                                                                         |  | $ | 0.07 |  
|As reported                                                                                                       |  | $ | 0.07 |  
|Pro forma                                                                                                         |  |   |      |  
|                                                                                                                  |  |   |      |  
|Diluted earnings per share:                                                                                       |  | $ | 0.07 |  
|As reported                                                                                                       |  | $ | 0.07 |  
|Pro forma                                                                                                         |  |   |      |  

Following is a
summary of the Companys 2006 year to date stock option activity:

|                                                    |  |                                   |         |                                     |   |                                   |  |   |      | 
|--------------------------------------------------- |  | --------------------------------- | ------- | ----------------------------------- | - | --------------------------------- |  | - | ---- | 
|                                                    |  | Three Months ended March 31, 2006 |        
|                                                    |  |                                   |        
|                                                    |  | (Dollars in Thousands)            |        
|                                                    |  |                                   |        
|                                                    |  | Shares                            |         | Weighted
  Average
  Exercise Price |   | Weighted
  Average
  Fair
  Value | 
|                                                    |  |                                   |         |                                     |   |                                   | 
|Options
  outstanding, beginning of period          |  |                                   | 219,798 |                                     | $ | 2.19                              |  | $ | 0.94 | 
|Exercised                                           |  |                                   | (25,736 | )                                   |   | 2.19                              |  |   | 0.94 | 
|Granted                                             |  |                                   |        |                                     |   |                                  |  |   |     | 
|                                                    |  |                                   |         |                                     |   |                                   |  |   |      | 
|Options
  outstanding and exercisable end of period |  |                                   | 194,062 |                                     | $ | 2.19                              |  | $ | 0.94 | 
|                                                    |  |                                   |         |                                     |   |                                   |  |   |      | 

The aggregate
intrinsic value of all options outstanding and exercisable at March 31, 2006
was $1875,000. The intrinsic value of options exercised during the quarter
ended March 31, 2006 was $241,000.

13

---



|    |                                                    
|--- | ---------------------------------------------------
|(8) | Pension and Postretirement Medical Benefit Expenses

The
components of net periodic pension and postretirement benefit cost consisted of
the following:

| |                                    |  |                                |      |                         |   |     
| | ---------------------------------- |  | ------------------------------ | ---- | ----------------------- | - | ----
| |                                    |  | Three
  months ended March 31, |      |                        
| |                                    |  |                                |      |                        
| |                                    |  | (in
  thousands)               |      |                        
| |                                    |  | Pension
  benefits             |      | Postretirement benefits |   |     
| |                                    |  |                                |      |                         |   |     
| |                                    |  | 2006                           |      | 2005                    |   | 2006
| |                                    |  |                                |      |                         |   |     
| | Components of net periodic
  cost: |  |                                |      |                         |   |     
| | Service cost                       |  | $                              |     |                         | $ |    
| | Interest cost                      |  |                                | 106  |                         |   | 104 
| | Expected return on plan assets     |  |                                | (177 | )                       |   | (164
| | Curtailment charge                 |  |                                |     |                         |   |    
| | Amortization                       |  |                                | 17   |                         |   | 17  
| |                                    |  |                                |      |                         |   |     
| |                                    |  |                                |      |                         |   |     
| | Net periodic
  (benefit) cost      |  | $                              | (54  | )                       | $ | (43 
| |                                    |  |                                |      |                         |   |     

In
December of 2002, the Companys Board of Directors amended the defined benefit
pension plan to cease the accrual of further benefits. For the fiscal year
ended December 31, 2006 the Company expects to make no contributions to the
defined benefit pension plan.

Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations

Forward-Looking Statements

Statements included in this
discussion and in future filings by Rome Bancorp, Inc. with the Securities and
Exchange Commission, in Rome Bancorp, Inc. press releases, and in oral
statements made with the approval of an authorized executive officer, which are
not historical or current facts, are forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995, and are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those
presently anticipated or projected. Rome Bancorp, Inc. wishes to caution
readers not to place undue reliance on such forward-looking statements, which
speak only as of the date made. The following important factors, among others,
in some cases have affected and in the future could affect Rome Bancorp, Inc.
actual results, and could cause Rome Bancorp, Inc. actual financial performance
to differ materially from that expressed in any forward-looking statement: (1)
changes in the real estate market or local economy, (2) changes in interest
rates, (3) changes in laws and regulations to which we are subject, and (4)
competition in our primary market area. Rome Bancorp, Inc. disclaims any obligation to subsequently revise any
forward-looking statements to reflect events or circumstances after the date of
such statements, or to reflect the occurrence of anticipated or unanticipated events.

General

The Company is a Delaware corporation regulated by the
Office of Thrift Supervision (OTS) as a savings and loan holding company,
whose sole business is conducted by its wholly owned subsidiary, the Bank. The
Banks principal business is accepting deposits from the general public and
using those deposits to make residential and commercial real estate loans, as
well as commercial and consumer loans to individuals and small businesses
primarily in Oneida County and also elsewhere in New York State. The Bank also
invests in long and short-term marketable securities and other liquid
investments. Following its conversion to a federal charter on April 27, 2004,
the Bank has been regulated by the OTS as a federal savings bank.

14

---



Overview

The Banks results of
operations depend primarily on its net interest income, which is the difference
between the interest income it earns on its loans and investments and the
interest it pays on its deposits and other interest-bearing liabilities. Net
interest income is affected by the relative amounts of interest-bearing assets
and interest-bearing liabilities and the interest rates earned or paid on these
balances. The Banks operations are also affected by non-interest income, such
as service fees and gains and losses on sales of securities, the provision for
loan losses and non-interest expense such as salaries and employee benefits,
occupancy costs, and other general and administrative expenses. Financial
institutions in general, including the Bank, are significantly affected by
economic conditions, competition and the monetary and fiscal policies of the
federal government. Lending activities are influenced by the demand for and
supply of housing, competition among lenders, interest rate conditions and
funds availability. The Banks operations and lending are principally
concentrated in the Central New York area, therefore its operations and
earnings are influenced by the economics of the area it operates in. Deposit
balances and cost of funds are influenced by prevailing market rates on
competing investments, customer preferences and levels of personal income and
savings in the Banks primary market area.

Net income for the first quarter of 2006 was $808,000,
an increase of 26.4% over the prior years first quarter net income of
$639,000. The significant factors and trends impacting the first quarter of
2006, which are discussed in greater depth below, were as follows:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net interest income increased by $620,000 or 20.7%
  from the same quarter last year as a result of increases in both net interest
  margin and the level of earning assets. The Companys net interest margin
  increased from 4.81% in the first quarter of 2005 to 5.07% in the same
  quarter of 2006. Over the same period, the Company had growth of $34.9
  million, or 13.6%, in average earning assets as a result of the Companys
  March 2005 second step stock conversion and offering.
| |  | Non-interest expense increased to $2.6 million in
  the first quarter of 2006 from $2.5 million in the same quarter of the prior
  year primarily due to higher professional fees.                                                                                                                                                                                                                                                                                                                  
| |  | Non-interest income decreased by $46,000 from first
  quarter 2005 levels primarily due to a decrease in securities gains and
  non-operating revenues.                                                                                                                                                                                                                                                                                                                                             
| |  | The Companys recorded a provision for loan losses
  of $115,000 in the quarter ended March 2006, as compared to no provision in
  the same quarter of the prior year. The provision was necessitated to restore
  the reserve for net charge-offs incurred in the first quarter of 2006.                                                                                                                                                                                                           

Critical
Accounting Policies

The preparation of consolidated financial statements
requires management to make estimates and assumptions. Changes in these
estimates and assumptions affect the reported amounts of certain assets,
liabilities, revenue and expenses. Different amounts could be reported under
different conditions, or if different assumptions were used in the application
of these accounting policies.

It is managements opinion that accounting estimates
covering certain aspects of the business have more significance than others due
to the relative importance of those areas to overall performance, or the level
of subjectivity required in making these estimates. Management of the Company
considers the accounting policy relating to the allowance for loan losses to be
a critical accounting policy given the uncertainty in evaluating the level of
the allowance required for probable credit losses and the material effect that
such judgments can have on the results of operations. Managements quarterly
evaluation of the adequacy of the allowance considers the Companys historical
loan loss experience, review of specific loans, current economic conditions and
such other factors considered appropriate to estimate losses. Management uses
presently available information to estimate probable losses on

15

---



loans; however, future additions to the allowance may
be necessary based on changes in estimates, assumptions or economic conditions.
Significant factors that could give rise to changes in these estimates include,
but are not limited to, changes in economic conditions in the local area,
concentrations of risk and declines of local property values.

The Companys critical
policies and their application are reviewed periodically by the Audit Committee
and the Board of Directors. All accounting policies are important, and as such,
we encourage the reader to review each of the policies included in Note 2 to
the consolidated financial statements reported on the Companys 2005 Form 10-K
to obtain a better understanding of how our financial performance is reported.

Analysis of Net Interest Income.

Average
Balances, Interest and Average Yields - The following table sets forth certain information relating to the
Companys average balance sheets and reflects the average yield on
interest-earnings assets and average cost of interest-bearing liabilities,
interest earned and interest paid for the periods indicated. Such yields and
costs are derived by dividing income or expense by the average balance of
interest-earning assets or interest-bearing liabilities, respectively, for the
periods presented. Average balances are derived from daily balances over the
periods indicated. The average balances for loans are net of allowance for loan
losses, but include non-accrual loans. Interest income on securities includes a
tax equivalent adjustment for bank qualified municipals.

|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|------------------------------------------------------------------ |  | --------------------------------------------- | ------- | ------------------------------------------- | - | ----------------------- | - | ----------------- | ---- | ---------------------------- | - | ----------------------- |  | - | ----- | - |  | ---- | -
|                                                                   |  | Average Balances, Interest and Average Yields |        
|                                                                   |  |                                               |        
|                                                                   |  | For the three months ended March 31, 2006     |         | For the three months ended March 31,
  2005 |  
|                                                                   |  |                                               |         |                                             |  
|                                                                   |  | Average
  Balance                             |         | Interest
  Income/                          |   | Average
  Yield/
  Cost |   | Average
  Balance |      | Interest
  Income/
  Expense |   | Average
  Yield/
  Cost | 
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         | 
|                                                                   |  | (Dollars in thousands)                        |        
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Assets:                                                            |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Interest-earning assets:                                           |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Loans                                                              |  | $                                             | 252,306 |                                             | $ | 3,977                   |   |                   | 6.39 | %                            | $ | 233,595                 |  | $ | 3,572 |   |  | 6.20 | %
|Securities (1)                                                     |  |                                               | 11,125  |                                             |   | 155                     |   |                   | 5.66 |                              |   | 17,840                  |  |   | 215   |   |  | 4.89 |  
|Federal funds sold & other
interest bearing
  deposits             |  |                                               | 28,141  |                                             |   | 300                     |   |                   | 4.32 |                              |   | 5,251                   |  |   | 26    |   |  | 2.01 |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Total interest-earnings
assets                                     |  |                                               | 291,572 |                                             |   | 4,432                   |   |                   | 6.16 |                              |   | 256,686                 |  |   | 3,813 |   |  | 6.02 |  
|Noninterest-earning assets                                         |  |                                               | 16,630  |                                             |   |                         |   |                   |      |                              |   | 17,716                  |  |   |       |   |  |      |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Total assets                                                       |  | $                                             | 308,202 |                                             |   |                         |   |                   |      |                              | $ | 274,402                 |  |   |       |   |  |      |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Liabilities and Shareholders
Equity:                              |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Interest-bearing liabilities:                                      |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Savings accounts                                                   |  | $                                             | 89,773  |                                             | $ | 166                     |   |                   | 0.75 |                              | $ | 102,283                 |  | $ | 178   |   |  | 0.71 |  
|Time deposits                                                      |  |                                               | 66,385  |                                             |   | 508                     |   |                   | 3.10 |                              |   | 68,515                  |  |   | 421   |   |  | 2.49 |  
|Money market accounts                                              |  |                                               | 5,377   |                                             |   | 13                      |   |                   | 1.03 |                              |   | 7,786                   |  |   | 19    |   |  | 0.98 |  
|Other interest bearing
deposits                                    |  |                                               | 11,249  |                                             |   | 17                      |   |                   | 0.61 |                              |   | 9,371                   |  |   | 14    |   |  | 0.61 |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Total interest-bearing
deposits                                    |  |                                               | 172,784 |                                             |   | 704                     |   |                   | 1.65 |                              |   | 187,955                 |  |   | 632   |   |  | 1.36 |  
|Borrowings                                                         |  |                                               | 9,214   |                                             |   | 81                      |   |                   | 3.55 |                              |   | 17,766                  |  |   | 138   |   |  | 3.15 |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Total interest-bearing
liabilities                                 |  |                                               | 181,998 |                                             |   | 785                     |   |                   | 1.75 |                              |   | 205,721                 |  |   | 770   |   |  | 1.52 |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Noninterest-bearing deposits                                       |  |                                               | 27,822  |                                             |   |                         |   |                   |      |                              |   | 27,192                  |  |   |       |   |  |      |  
|Other liabilities                                                  |  |                                               | 4,715   |                                             |   |                         |   |                   |      |                              |   | 4,308                   |  |   |       |   |  |      |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Total liabilities                                                  |  |                                               | 214,535 |                                             |   |                         |   |                   |      |                              |   | 237,221                 |  |   |       |   |  |      |  
|Shareholders equity                                               |  |                                               | 93,667  |                                             |   |                         |   |                   |      |                              |   | 37,181                  |  |   |       |   |  |      |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Total liabilities and
shareholders equity                         |  | $                                             | 308,202 |                                             |   |                         |   |                   |      |                              | $ | 274,402                 |  |   |       |   |  |      |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Net interest income                                                |  |                                               |         |                                             |   | 3,647                   |   |                   |      |                              |   |                         |  |   | 3,043 |   |  |      |  
|Tax equivalent adjustment on
securities                            |  |                                               |         |                                             |   | (25                     | ) |                   |      |                              |   |                         |  |   | (41   | ) |  |      |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Net interest income per consolidated financial statements          |  |                                               |         |                                             | $ | 3,622                   |   |                   |      |                              |   |                         |  | $ | 3,002 |   |  |      |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|                                                                   |  |                                               |         |                                             |   |                         |   |                   |      |                              |   |                         |  |   |       |   |  |      |  
|Net interest rate spread                                           |  |                                               |         |                                             |   |                         |   |                   | 4.42 | %                            |   |                         |  |   |       |   |  | 4.51 | %
|Net interest margin                                                |  |                                               |         |                                             |   |                         |   |                   | 5.07 | %                            |   |                         |  |   |       |   |  | 4.81 | %
|Ratio of interest-earning assets to
  interest-bearing liabilities |  |                                               |         |                                             |   |                         |   |                   | 1.60 | x                            |   |                         |  |   |       |   |  | 1.25 | x

(1) Includes tax equivalent
adjustment for the Companys
tax-exempt municipal securities.

16

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Rate
Volume Analysis  The
following table analyzes the dollar amount of changes in interest income and
interest expense for major components of interest-earning assets and
interest-bearing liabilities. It shows the amount of the change in interest
income or expense caused by either changes in outstanding balances (volume) or
changes in interest rates. The effect of a change in volume is measured by
applying the average rate during the first period to the volume change between
the two periods. The effect of changes in rate is measured by applying the
change in rate between the two periods to the average volume during the first
period. Changes attributable to both rate and volume, which cannot be
segregated, have been allocated proportionately to the absolute value of the
change due to volume and the change due to rate.

Rate Volume
AnalysisThree months ended March 31, 2006Compared to Three months ended March 31, 2005

|                                   |  |                                |     |        |   |      |   |   |     |  
|---------------------------------- |  | ------------------------------ | --- | ------ | - | ---- | - | - | --- | -
|                                   |  | Increases
  (decreases) due to |    
|                                   |  | Rate                           |     | Volume |   | Net  |  
|                                   |  |                                |     |        |   |      |  
|                                   |  | (thousands)                    |    
|Assets:                            |  |                                |     |        |   |      |   |   |     |  
|Interest-earning assets:           |  |                                |     |        |   |      |   |   |     |  
|Loans                              |  | $                              | 122 |        | $ | 283  |   | $ | 405 |  
|Securities                         |  |                                | 21  |        |   | (81  | ) |   | (60 | )
|Federal funds sold & other         |  |                                |     |        |   |      |   |   |     |  
|Interest bearing deposits          |  |                                | 161 |        |   | 113  |   |   | 274 |  
|                                   |  |                                |     |        |   |      |   |   |     |  
|Total interest-earnings assets     |  |                                | 304 |        |   | 315  |   |   | 619 |  
|                                   |  |                                |     |        |   |      |   |   |     |  
|Interest-bearing liabilities:      |  |                                |     |        |   |      |   |   |     |  
|Savings accounts                   |  |                                | 10  |        |   | (22  | ) |   | (12 | )
|Time deposits                      |  |                                | 100 |        |   | (13  | ) |   | 87  |  
|Money market accounts              |  |                                | 1   |        |   | (6   | ) |   | (5  | )
|Other interest bearing deposits    |  |                                |    |        |   | 2    |   |   | 3   |  
|                                   |  |                                |     |        |   |      |   |   |     |  
|Total interest-bearing deposits    |  |                                | 111 |        |   | (39  | ) |   | 73  |  
|Borrowings                         |  |                                | 9   |        |   | (66  | ) |   | (57 | )
|                                   |  |                                |     |        |   |      |   |   |     |  
|Total interest-bearing liabilities |  |                                | 120 |        |   | (105 | ) |   | 15  |  
|                                   |  |                                |     |        |   |      |   |   |     |  
|Net change in interest income      |  | $                              | 184 |        | $ | 420  |   | $ | 604 |  
|                                   |  |                                |     |        |   |      |   |   |     |  

Comparison of Financial Condition at March 31, 2006 and
December 31, 2005:

The
Companys total assets at March 31, 2006 were $313.3 million, an increase of
$4.4 million from $308.9 million at December 31, 2005. Cash and federal funds
increased by $4.8 million in the first quarter of 2005 from $34.2 million at
December 31, 2005 to $39.1 million at March 31, 2006 due to increased deposit
balances. Securities decreased by $1.3 million from $11.9 million to $10.6
million over the same period. The decrease in securities was attributable to
the sale of one security, as well as maturities in the investment portfolio.

The
Companys loan portfolio increased by $900,000 during the first quarter of
2006, growing to $254.8 million at March 31, 2006 from $253.9 million at
December 31, 2005. During the first three months of 2006, the Company
originated approximately $9.6 million of loans, compared to approximately $12.3
million of loans originated in the same period of 2005. The majority of the
decrease in loan originations is in the residential mortgage portfolio,
partially as a result of increases in prevailing rates. Asset quality continues
to be strong, as non-performing loans as a percentage of total loans grew
slightly to 0.48% at March 31, 2006 as compared to 0.37% at December 31, 2005.
The allowance for loan losses as a percentage of total loans was 0.77% at both
March 31, 2006 and December 31, 2005. The allowance for loan losses as a
percent of non-performing loans was 161.5% at March 31, 2006, as compared to
207.0% at December 31, 2005.

17

---



Total
deposits increased to $205.8 million at March 31, 2006 from $201.5 million at
year-end. Although growth was achieved in all deposit segments, the increase is
primarily attributable to deposit gains in savings and other interest bearing
deposit accounts. Savings deposit balances increased by $1.9 million, or 2.1%,
in the first quarter of 2006. Other-interest bearing deposits grew by $1.6
million or 14.9% during the same period. During the current quarter, money market
account balances, time deposits and non-interest bearing deposits increased by
$28,000, $534,000 and $268,000, respectively.

Comparison of Operating Results for the Three-Month Periods
Ended March 31, 2006 and 2005

General

During
the three months ended March 31, 2006, the Company recorded net income of
$808,000 as compared to $639,000 for the first quarter of 2005. The increase in
net income is comprised of a $620,000 increase in net interest income before
loan loss provision, which was partially offset by an increase in loan loss
provision of $115,000, a decrease of $46,000 in non-interest income, an
increase in non-interest expense of $156,000 and a $134,000 increase in income
tax expense.

Diluted
earnings per share were $0.09 per diluted share for the three months ended
March 31, 2006 in comparison to $0.07 per diluted share for the same quarter of
2005. The increase in earnings per share is directly attributed to the above
referenced increase in first quarter net income.

Net Interest Income

Net
interest income before loan loss provision for the quarter ended March 31, 2006
increased by $620,000 or 20.7% compared to the same quarter of 2005. This
increase is attributable to growth in the Companys earning asset portfolio and
an increase in net interest margin.

Interest Income

Interest
income increased to $4.4 million for the quarter ended March 31, 2006 from $3.8
million for the same quarter of 2005. The increase in interest income was
attributable to the growth in the Companys loan portfolio, partially offset by
a decrease in average securities balances, which in the present environment,
generate lower yields than loans. Average loan balances for the first quarter
of 2006 were $252.3 million, an increase of $18.6 million over the average
outstanding loans for the first quarter of 2005. The yield on the Companys
loan portfolio for the quarter ended March 31, 2006 was 6.39% in comparison to
a yield of 6.20% for the same period last year. Interest income on securities
declined $44,000 from $174,000 for the quarter ended March 31, 2005 to $130,000
for the quarter ended March 31, 2006. Comparatively, the average balance of
securities declined by $6.7 million, or 37.6% from the first quarter of 2005 to
$11.1 million for the current quarter and the yield on the Companys securities
increased from 4.89% to 5.66% for the same periods, respectively. Finally,
interest income on federal funds sold and other interest bearing deposits
increased by $274,000 to $300,000 for the quarter ended March 31, 2006 from the
same quarter in 2005 due to increases in both average outstanding balances and
yields. The yields on these assets increased to 4.32% in the first quarter of
2006 from 2.01% in the first quarter of the previous year, consistent with
increases in market short term interest rates. The average balances of these
deposits increased to $28.1 million in the quarter ended March 31, 2006 from
$5.3 million in the same period last year due to the receipt of proceeds from
the March 30, 2005 stock conversion and offering.

18

---



Interest Expense

Interest
expense increased to $785,000 in the quarter ended March 31, 2006 from $770,000
for the same quarter of 2005. Interest expense on deposits increased to
$704,000 for the quarter ended March 31, 2006 from $632,000 for the quarter
ended March 31, 2006, reflecting an increase in the average cost of interest
bearing deposits to 1.65% from 1.36% for the first quarters of 2006 and 2005,
respectively. The increase in the average cost of deposits was consistent with
the current short term market rates. Outstanding average interest bearing
deposits for the quarter ended March 31, 2006 decreased by $15.2 million, or
8.1%, from the same period a year earlier. A portion of this decrease is attributed
to depositors utilizing funds on deposit to purchase the Companys stock as
part of the second step stock conversion and offering that was completed on
March 30, 2005. Other decreases are attributable to the intense rate
competition for deposits, as short term rates continue to increase. Interest
expense on borrowed funds decreased to $81,000 for the quarter ended March 31,
2006 from $138,000 for the comparative quarter of 2005 primarily due to a
decrease in the average outstanding borrowings of $8.6 million, or 48.1%.
Proceeds received in the March 2005 stock offering were utilized to pay-down
maturing and overnight FHLB advances.

Provision for Loan Losses

The
Company recorded a provision for loan losses in the first quarter of 2006 of
$115,000 as compared to no provision in the same quarter of 2005. This
provision was necessitated to replenish the reserve for net loan charge-offs
totaling $117,000 during the quarter. By contrast, during the first quarter of
2005, the Company received the proceeds of net loan recoveries of $21,000.
Asset quality has remained strong with non-performing loans as a percent of
loans of 0.48% and the allowance for loan losses as a percent of non-performing
loans of 161.5 at March 31, 2006, as compared to 0.43% and 198.7%, respectively
at March 31, 2005.

In
determining the appropriate provision for loan losses, management considers the
level of and trend in non-performing loans, the level of and trend in net loan
charge-offs, the dollar amount and mix of the loan portfolio, as well as
general economic conditions and real estate trends in the Companys market
area, which can impact the inherent risk of loss in the Companys loan
portfolio. In light of these factors, a provision of $115,000 was determined appropriate
at March 31, 2006.

Non-Interest Income and Non-Interest Expense

Non-interest
income declined by $46,000 to $424,000 in the current quarter from $470,000 in
the first quarter of 2005. This decrease is primarily due to a decline in net securities
gains of $18,000 and a reduction in non-operating revenues of $28,000.

Non-interest
expense increased by $156,000 to $2.6 million in the current quarter compared
to $2.5 million in the same period of 2005, primarily due to higher expenditures
in the areas of professional fees related to strategic planning initiatives and
continued Sarbanes Oxley compliance work.

Income
tax expense for the first quarter of 2006 increased to $485,000 from $351,000
in the same period of 2005, directly due to the increase in pre-tax income.

19

---



Liquidity and Capital Resources

The
Companys primary sources of funds consist of deposits, scheduled amortization
and prepayments of loans and mortgage-backed securities, maturities of
investments, interest bearing deposits at other financial institutions and
funds provided from operations. The Bank also has a written agreement with the
Federal Home Loan Bank of New York that allows it to borrow up to $31.6
million. At March 31, 2006, the Bank had no outstanding borrowings on this line
of credit, but did have outstanding advances and amortizing notes totaling $9.1
million.

Loan
repayments and maturing investment securities are a relatively predictable
source of funds. However, deposit flows, calls of investment securities, and
prepayments of loans and mortgage-backed securities are strongly influenced by
interest rates, general and local economic conditions, and competition in the
marketplace. These factors reduce the predictability of the timing of these
sources of funds.

The
Companys primary investing activities include the origination of loans and to
a lesser extent the purchase of investment securities. For the quarter ended
March 31, 2006, the Company originated loans of approximately $9.6 million, as
compared to $12.3 of loans originated in the first quarter of 2005.

At
March 31, 2006, the Company had loan commitments to borrowers of approximately
$6.3 million, and available letters and lines of credit of approximately $13.0
million.

Time
deposit accounts scheduled to mature within one year were $42.8 million at
March 31, 2006. Based on our deposit retention experience and current pricing
strategy, we anticipate that a significant portion of these time deposits will
remain with the Company. We are committed to maintaining a strong liquidity
position; therefore, the Company monitors its liquidity position on a daily
basis. The Company anticipates that it will have sufficient funds to meet its
current funding commitments. The marginal cost of new funding however, whether
from deposits or borrowings from the Federal Home Loan Bank, will be carefully
considered as the Company monitors its liquidity needs. Therefore, in order to
minimize its cost of funds, the Company may consider additional borrowings from
the Federal Home Loan Bank in the future.

At
March 31, 2006, the Bank exceeded each of the applicable regulatory capital
requirements. The Banks leverage (Tier 1) capital at March 31, 2006 was $59.6
million, or 19.03% of adjusted assets. In order to be classified as
well-capitalized by the FDIC, the Bank is required to have leverage (Tier 1)
capital of $15.7 million, or 5.0% of adjusted assets. To be classified as a
well-capitalized bank by the FDIC, the Bank must also have a total risk-based
capital ratio of 10.0%. At March 31, 2006, the Bank had a total risk-based
capital ratio of 28.80%.

The
Company paid cash dividends of $0.075 per share during the three-month period
ended March 31, 2006 totaling $692,000.

On
April 26, 2006, the Companys Board of Directors authorized the repurchase of
485,000 (approximately 5.0%) of the Companys outstanding common shares over
the following twelve month period. Since that date and as of the filing of this
report, $5.2 million has been expended to repurchase shares.

The
Company does not anticipate any material capital expenditures, nor does it have
any balloon or other payments due on any long-term obligations or any
off-balance sheet items other than the commitments and unused lines of credit
noted above.

20

---



Off-Balance Sheet Arrangements

The
Company does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on the companys financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.

Recent Accounting Pronouncements

FASB
Staff Position on FAS No. 115-1 and FAS No. 124-1 (the FSP), The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments, was issued in November 2005 and addresses the determination of
when an investment is considered impaired; whether the impairment is
other-than-temporary; and how to measure an impairment loss. The FSP also
addresses accounting considerations subsequent to the recognition of an
other-than-temporary impairment on a debt security, and requires certain
disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. The FSP replaces the impairment guidance on
Emerging issues Task Force (EITF) Issue No. 03-1 with references to
existing authoritative literature concerning other-than-temporary determinations.
Under the FSP, losses arising from impairment deemed to be
other-than-temporary, must be recognized in earnings at an amount equal to the
entire difference between the securities cost and its fair value at the
financial statement date, without considering partial recoveries subsequent to
that date. The FSP also required that an investor recognize an
other-than-temporary impairment loss when a decision to sell a security has
been made and the investor does not expect the fair value of the security to
fully recover prior to the expected time of sale. The FSP became effective for
reporting periods beginning after December 15, 2005 and its initial
adoption of this statement had no material impact on the Companys consolidated
financial statements.

|                                                                       | 
|---------------------------------------------------------------------- | 
|Item
  3. Quantitative
  and Qualitative Disclosures about Market Risk

There
has been no material change in the Companys interest rate risk profile since
December 31, 2005. For a more complete discussion of the Companys asset and
liability management policies see Managements Discussion and Analysis of
Financial Condition and Results of Operations in the Companys 2005 Form 10-K.

As
a result of receipt of the proceeds of the Companys reorganization and stock
offering on March 30, 2005, the Company had deposit balances with two financial
institutions in the amounts of $14.9 million and $15.2 million. This asset
concentration is temporary in nature and continues to diminish as the stock
offering proceeds are deployed into other earning assets.

|                                    | 
|----------------------------------- | 
|Item
  4. Controls
  and Procedures

Management,
including the Companys President and Chief Executive Officer and the Chief
Financial Officer, has evaluated the effectiveness of the Companys disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) as of the end of the period covered by this report. Based upon that
evaluation, the President and Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures were effective to
ensure that information required to be disclosed in the reports the Company
files and submits under the Exchange Act is (i) recorded, processed, summarized
and reported as and when required and (ii) accumulated and communicated to the
Companys management, including the Companys President and Chief Executive
Officer and the Executive Vice President and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure.

21

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There
have been no significant changes in the Companys internal controls over
financial reporting identified in connection with the evaluation that occurred
during the Companys last fiscal quarter that has materially affected, or that
is reasonably likely to materially affect, the Companys internal control over
financial reporting.

Part II - OTHER INFORMATION

|           |                                                                                                                                                         
|---------- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|Item
  1.  | Legal
  Proceedings                                                                                                                                     
|           |                                                                                                                                                         
|           | None.                                                                                                                                                   
|           |                                                                                                                                                         
|Item
  1A. | Risk
  Factors                                                                                                                                          
|           |                                                                                                                                                         
|           | There have been no significant changes in the
  Companys risk factors as outlined in the Companys Form 10-K for the period
  ending December 31, 2005.
|           |                                                                                                                                                         
|Item
  2.  | Unregistered
  Sales of Equity Securities and Use of Proceeds                                                                                           
|           |                                                                                                                                                         
|           | None.                                                                                                                                                   
|           |                                                                                                                                                         
|Item
  3.  | Defaults
  Upon Senior Securities                                                                                                                       
|           |                                                                                                                                                         
|           | None.                                                                                                                                                   
|           |                                                                                                                                                         
|Item
  4.  | Submission
  of Matters to a Vote of Security Holders                                                                                                   
|           |                                                                                                                                                         
|           | None.                                                                                                                                                   
|           |                                                                                                                                                         
|Item
  5.  | Other
  Information                                                                                                                                     
|           |                                                                                                                                                         
|           | None.                                                                                                                                                   
|           |                                                                                                                                                         
|Item
  6.  | Exhibits                                                                                                                                                

|     |                                                                                                                                     
|---- | ------------------------------------------------------------------------------------------------------------------------------------
|2.1  | Amended and Restated Plan
  of Conversion and Agreement and Plan of Reorganization. (1)                                             
|     |                                                                                                                                     
|3.1  | Certificate of
  Incorporation of New Rome Bancorp, Inc. (1)                                                                        
|     |                                                                                                                                     
|3.2  | Bylaws of New Rome
  Bancorp, Inc. (1)                                                                                              
|     |                                                                                                                                     
|4.1  | Form of Stock Certificate
  of New Rome Bancorp, Inc. (1)                                                                           
|     |                                                                                                                                     
|10.1 | Form of Employee Stock
  Ownership Plan of Rome Bancorp, Inc. (2)                                                                   
|     |                                                                                                                                     
|10.2 | Amendment No. 1 to
  Employee Stock Ownership Plan of Rome Bancorp, Inc. (1)                                                        
|     |                                                                                                                                     
|10.3 | Amendment No. 2 to
  Employee Stock Ownership Plan of Rome Bancorp, Inc. (1)                                                        
|     |                                                                                                                                     
|10.4 | Form of Executive
  Employment Agreement by and between Charles M. Sprock and Rome Bancorp, Inc.
  (2)                              
|     |                                                                                                                                     
|10.5 | Form of One Year Change in
  Control Agreement by and among certain officers and Rome Bancorp, Inc. and
  The Rome Savings Bank. (1)
|     |                                                                                                                                     
|10.6 | Form of Employment
  Agreement between New Rome Bancorp, Inc. and Charles M. Sprock. (1)                                            
|     |                                                                                                                                     
|10.7 | Form of Employment
  Agreement between The Rome Savings Bank and Charles M. Sprock. (1)                                             

22

---



|      |                                                                                                                           
|----- | --------------------------------------------------------------------------------------------------------------------------
|10.8  | Rome Bancorp, Inc. 2000
  Stock Option Plan. (3)                                                                          
|      |                                                                                                                           
|10.9  | Rome Bancorp, Inc. 2000
  Recognition and Retention Plan. (3)                                                             
|      |                                                                                                                           
|10.10 | Amended and Restated
  Benefit Restoration Plan of Rome Bancorp, Inc. (4)                                                 
|      |                                                                                                                           
|10.11 | Amended and Restated
  Directors Deferred Compensation Plan of Rome Bancorp, Inc. (4)                                    
|      |                                                                                                                           
|10.12 | Loan Agreement by and
  between the Employee Stock Ownership Plan Trust of Rome Bancorp, Inc. and
  Rome Bancorp, Inc. (5)
|      |                                                                                                                           
|10.13 | Amendment No. 3 to the
  Employee Stock Ownership Plan of Rome Bancorp, Inc. (6)                                          
|      |                                                                                                                           
|31.1  | Rule 13a-14a/15d-14a
  Certification.                                                                                     
|      |                                                                                                                           
|31.2  | Rule 13a-14a/15d-14a
  Certification.                                                                                     
|      |                                                                                                                           
|32.1  | Section 1350
  Certification.                                                                                             
|      |                                                                                                                           
|32.2  | Section 1350
  Certification.                                                                                             

---

|    |                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to Rome Bancorp, Inc.s
  Form S-1 (Registration No. 333-121245), filed with the Commission on December
  14, 2004, as amended.     
|    |                                                                                                                                                               
|(2) | Incorporated by reference to Rome Bancorp, Inc.s
  Form SB-2 (Registration No. 333-80487), filed with the Commission on June 11,
  1999, as amended.         
|    |                                                                                                                                                               
|(3) | Incorporated by reference to Rome Bancorp, Incs
  Proxy Statement on Schedule 14A, filed with the Commission on April 5, 2000
  and amended on April 2, 2001.
|    |                                                                                                                                                               
|(4) | Incorporated by reference to Rome Bancorp, Inc.s
  Form 8-K filed with the Commission on December 27, 2005.                                                  
|    |                                                                                                                                                               
|(5) | Incorporated by reference to Rome Bancorp, Inc.s
  Form 8-K filed with the Commission on March 29, 2005.                                                     
|    |                                                                                                                                                               
|(6) | Incorporated by reference to Rome Bancorp, Inc.s
  Form 8-K filed with the Commission on August 29, 2005.                                                    

23

---



SIGNATURES

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

ROME BANCORP, INC.

|                      |                                                   |             
|--------------------- | ------------------------------------------------- | ------------
|Name                  | Title                                             | Date        
|                      |                                                   |             
|/s/ Charles M. Sprock | Chairman of the Board,                            | May 11, 2006
|                      | President and Chief                               |             
|Charles M. Sprock     | Executive
  Officer (Principal Executive Officer) |             
|                      |                                                   |             
|/s/ David C. Nolan    | Executive Vice President                          | May 11, 2006
|                      | and Chief Financial Officer                       |             
|David C. Nolan        | (Principal Financial Officer)                     |             

24

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