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|UNITED STATES                                                                     
|SECURITIES AND EXCHANGE COMMISSION                                                
|WASHINGTON,
 DC 20549                                                             
|                                                                                  
|FORM 10-Q                                                                         
|                                                                                  
|Quarterly
 report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|                                                                                  
|For the quarterly period ended September 30, 2010                                 
|                                                                                  
|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 |  | (I.R.S. Employer    | 
|incorporation or organization)  |  | 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. Yes x No o

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

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

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

Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.)
          Yes o No 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 
 November 10, 2010
|                               |                                   
|Common
 Stock, par value $0.01 | 6,777,551                         

---



ROME BANCORP, INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2010

TABLE OF CONTENTS

|          |  |                                                                                        |  |     
|--------- |  | -------------------------------------------------------------------------------------- |  | ----
|          |  |                                                                                        |  | PAGE
|          |  |                                                                                        |  |     
|          |  |                                                                                        |  |     
|PART I    |  | FINANCIAL INFORMATION                                                                  |  |     
|          |  |                                                                                        |  |     
|ITEM
 1.  |  | FINANCIAL
 STATEMENTS (unaudited):                                                     |  |     
|          |  | CONDENSED
 CONSOLIDATED BALANCE SHEETS                                                 |  | 3   
|          |  | CONDENSED
 CONSOLIDATED STATEMENTS OF INCOME                                           |  | 4   
|          |  | CONDENSED
 CONSOLIDATED STATEMENTS 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 |  | 18  
|ITEM
 3.  |  | QUANTITATIVE
 AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 27  
|ITEM
 4.  |  | CONTROLS
 AND PROCEDURES                                                               |  | 27  
|          |  |                                                                                        |  |     
|PART II   |  | OTHER
 INFORMATION                                                                     |  |     
|          |  |                                                                                        |  |     
|ITEM
 1.  |  | LEGAL
 PROCEEDINGS                                                                     |  | 28  
|ITEM
 1A. |  | RISK
 FACTORS                                                                          |  | 28  
|ITEM
 2.  |  | UNREGISTERED
 SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                           |  | 29  
|ITEM
 3.  |  | DEFAULTS
 UPON SENIOR SECURITIES                                                       |  | 29  
|ITEM
 4.  |  | SUBMISSION
 OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  | 29  
|ITEM
 5.  |  | OTHER
 INFORMATION                                                                     |  | 30  
|ITEM
 6.  |  | EXHIBITS                                                                               |  | 30  
|          |  |                                                                                        |  |     
|          |  | SIGNATURES                                                                             |  | 31  

2

---



PART I FINANCIAL
INFORMATION

Item 1. Financial
Statements

ROME BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
September 30, 2010 and December 31, 2009
(in thousands, except share data)
(Unaudited)

|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | ------------------ | - | ------- | -
|                                                                                                                                                                                       |  | September 30,
 2010 |         | December 31,
 2009 |  
|                                                                                                                                                                                       |  |                     |         |                    |  
|Assets                                                                                                                                                                                 |  |                     |         |                    |   |         |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Cash and due from banks                                                                                                                                                                |  | $                   | 6,966   |                    | $ | 6,547   |  
|Federal funds sold and other
 short-term investments                                                                                                                                   |  |                     | 9,032   |                    |   | 1,027   |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Total cash and cash equivalents                                                                                                                                                        |  |                     | 15,998  |                    |   | 7,574   |  
|Securities available for sale,
 at fair value                                                                                                                                          |  |                     | 13,336  |                    |   | 10,024  |  
|Securities held to maturity
 (fair value of $1,475 and $1,502 at September 30, 2010 and December 31, 2009,
 respectively)                                                              |  |                     | 1,419   |                    |   | 1,431   |  
|Federal Home Loan Bank Stock                                                                                                                                                           |  |                     | 3,310   |                    |   | 3,222   |  
|Loans                                                                                                                                                                                  |  |                     | 277,833 |                    |   | 287,749 |  
|Less: Allowance for loan loss                                                                                                                                                          |  |                     | (2,595  | )                  |   | (2,132  | )
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Net loans                                                                                                                                                                              |  |                     | 275,238 |                    |   | 285,617 |  
|Premises and equipment, net                                                                                                                                                            |  |                     | 5,925   |                    |   | 6,041   |  
|Accrued interest receivable                                                                                                                                                            |  |                     | 1,122   |                    |   | 1,117   |  
|Bank-owned life insurance                                                                                                                                                              |  |                     | 9,709   |                    |   | 9,415   |  
|Other assets                                                                                                                                                                           |  |                     | 5,550   |                    |   | 5,481   |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Total assets                                                                                                                                                                           |  | $                   | 331,607 |                    | $ | 329,922 |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Liabilities
 & Equity                                                                                                                                                                  |  |                     |         |                    |   |         |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Liabilities                                                                                                                                                                            |  |                     |         |                    |   |         |  
|Deposits:                                                                                                                                                                              |  |                     |         |                    |   |         |  
|Non-interest bearing                                                                                                                                                                   |  | $                   | 36,485  |                    | $ | 31,790  |  
|Savings                                                                                                                                                                                |  |                     | 85,405  |                    |   | 82,031  |  
|Money market                                                                                                                                                                           |  |                     | 19,938  |                    |   | 15,726  |  
|Time                                                                                                                                                                                   |  |                     | 69,651  |                    |   | 71,903  |  
|Other interest bearing                                                                                                                                                                 |  |                     | 15,398  |                    |   | 15,189  |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Total deposits                                                                                                                                                                         |  |                     | 226,877 |                    |   | 216,639 |  
|Borrowings                                                                                                                                                                             |  |                     | 37,873  |                    |   | 47,869  |  
|Other liabilities                                                                                                                                                                      |  |                     | 5,038   |                    |   | 5,049   |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Total liabilities                                                                                                                                                                      |  |                     | 269,788 |                    |   | 269,557 |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Shareholders equity                                                                                                                                                                   |  |                     |         |                    |   |         |  
|Common Stock, $.01 par value;
 authorized: 30,000,000 shares; issued: 9,895,757; outstanding 6,777,551 and
 6,800,119 shares at September 30, 2010 and December 31, 2009, respectively |  |                     | 99      |                    |   | 99      |  
|Additional paid-in capital                                                                                                                                                             |  |                     | 63,065  |                    |   | 62,794  |  
|Retained earnings                                                                                                                                                                      |  |                     | 38,509  |                    |   | 37,588  |  
|Accumulated other comprehensive
 loss                                                                                                                                                  |  |                     | (1,275  | )                  |   | (1,574  | )
|Treasury stock; 3,118,206
 shares at September 30, 2010 and 3,095,638 shares at December 31, 2009                                                                                      |  |                     | (36,921 | )                  |   | (36,720 | )
|Unallocated shares of employee
 stock ownership plan (ESOP): 243,802 and 278,275 shares at September 30, 2010
 and December 31, 2009                                                   |  |                     | (1,658  | )                  |   | (1,822  | )
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Total shareholders equity                                                                                                                                                             |  |                     | 61,819  |                    |   | 60,365  |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  
|Total liabilities and
 shareholders equity                                                                                                                                            |  | $                   | 331,607 |                    | $ | 329,922 |  
|                                                                                                                                                                                       |  |                     |         |                    |   |         |  

See
accompanying notes to unaudited condensed consolidated financial statements.

3

---



ROME BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income
For the Three and Nine Months Ended September 30, 2010 and 2009
(in thousands, except share data)
(unaudited)

|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|---------------------------------------------------- |  | ------------------------------------------- | ----- | ------------------------------------------ | - | ----- |  | ---- | ------ |  | - | ------ | 
|                                                     |  | For the three
 months ended 
 September 30, |       | For the nine months
 ended 
 September 30, |  
|                                                     |  |                                             |       |                                            |  
|                                                     |  | 2010                                        |       | 2009                                       |   | 2010  |  | 2009 |       
|                                                     |  |                                             |       |                                            |   |       |  |      |       
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Interest income:                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Loans                                                |  | $                                           | 4,007 |                                            | $ | 4,148 |  | $    | 12,125 |  | $ | 12,626 | 
|Securities                                           |  |                                             | 179   |                                            |   | 157   |  |      | 509    |  |   | 362    | 
|Other short-term investments                         |  |                                             | 3     |                                            |   | 4     |  |      | 3      |  |   | 8      | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Total interest income                                |  |                                             | 4,189 |                                            |   | 4,309 |  |      | 12,637 |  |   | 12,996 | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Interest expense:                                    |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Deposits                                             |  |                                             | 454   |                                            |   | 586   |  |      | 1,398  |  |   | 1,900  | 
|Borrowings                                           |  |                                             | 299   |                                            |   | 466   |  |      | 902    |  |   | 1,359  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Total interest expense                               |  |                                             | 753   |                                            |   | 1,052 |  |      | 2,300  |  |   | 3,259  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Net interest income                                  |  |                                             | 3,436 |                                            |   | 3,257 |  |      | 10,337 |  |   | 9,737  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Provision for loan losses                            |  |                                             | 75    |                                            |   |      |  |      | 540    |  |   | 200    | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Net interest income after
 provision for loan losses |  |                                             | 3,361 |                                            |   | 3,257 |  |      | 9,797  |  |   | 9,537  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Non-interest income:                                 |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Gain on sales of securities                          |  |                                             | 35    |                                            |   | 26    |  |      | 156    |  |   | 26     | 
|Gain on sale of real estate                          |  |                                             |      |                                            |   |      |  |      | 418    |  |   |       | 
|Other                                                |  |                                             | 773   |                                            |   | 639   |  |      | 1,997  |  |   | 1,806  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Total non-interest income                            |  |                                             | 808   |                                            |   | 665   |  |      | 2,571  |  |   | 1,832  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Non-interest expense:                                |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Salaries and employee benefits                       |  |                                             | 1,567 |                                            |   | 1,497 |  |      | 4,645  |  |   | 4,594  | 
|Building, occupancy and
 equipment                   |  |                                             | 487   |                                            |   | 465   |  |      | 1,453  |  |   | 1,434  | 
|Other                                                |  |                                             | 953   |                                            |   | 592   |  |      | 2,319  |  |   | 1,982  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Total non-interest expense                           |  |                                             | 3,007 |                                            |   | 2,554 |  |      | 8,417  |  |   | 8,010  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Income before income tax
 expense                    |  |                                             | 1,162 |                                            |   | 1,368 |  |      | 3,951  |  |   | 3,359  | 
|Income tax expense                                   |  |                                             | 324   |                                            |   | 460   |  |      | 1,272  |  |   | 1,096  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Net income                                           |  | $                                           | 838   |                                            | $ | 908   |  | $    | 2,679  |  | $ | 2,263  | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Basic earnings per share                             |  | $                                           | 0.13  |                                            | $ | 0.14  |  | $    | 0.41   |  | $ | 0.34   | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 
|Diluted earnings per share                           |  | $                                           | 0.13  |                                            | $ | 0.14  |  | $    | 0.41   |  | $ | 0.34   | 
|                                                     |  |                                             |       |                                            |   |       |  |      |        |  |   |        | 

See
accompanying notes to unaudited condensed consolidated financial statements.

4

---



ROME BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Shareholders Equity and
Comprehensive Income
For the Nine Months Ended September 30, 2010 and 2009
(in thousands, except share and per share data)(unaudited)

|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|-------------------------------------------------------- |  | ------------- | -- | ---------------------------- | - | ------------------ |  | --------------- | ------ | ------------------------------------------------ | - | ------------------------- | - | ----- | ------ | - | - | ------ | - | - | ------ | -
|                                                         |  | Common
 stock |    | Additional
 Paid-in
 Capital |   | Retained
 earnings |  | Treasury
 Stock |        | Accumulated
 other
 comprehensive
 Income (loss) |   | Unallocated
 ESOP
 shares |   | Total |       
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |       
|Balances at January 1, 2009                              |  | $             | 99 |                              | $ | 62,440             |  | $               | 36,721 |                                                  | $ | (34,662                   | ) | $     | (2,212 | ) | $ | (2,042 | ) | $ | 60,344 |  
|Comprehensive income:                                    |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|Net Income                                               |  |               |   |                              |   |                   |  |                 | 2,263  |                                                  |   |                          |   |       |       |   |   |       |   |   | 2,263  |  
|Other comprehensive income                               |  |               |   |                              |   |                   |  |                 |        |                                                  |   |                          |   |       | 300    |   |   |       |   |   | 300    |  
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|Total comprehensive income                               |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   | 2,563  |  
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|Purchase of 181,588 treasury shares                      |  |               |   |                              |   |                   |  |                 |       |                                                  |   | (1,408                    | ) |       |       |   |   |       |   |   | (1,408 | )
|Stock-based compensation                                 |  |               |   |                              |   | 120                |  |                 |       |                                                  |   |                          |   |       |       |   |   |       |   |   | 120    |  
|Dividends ($0.255 per share)                             |  |               |   |                              |   |                   |  |                 | (1,688 | )                                                |   |                          |   |       |       |   |   |       |   |   | (1,688 | )
|ESOP shares released for allocation (34,473
 shares)     |  |               |   |                              |   | 124                |  |                 |       |                                                  |   |                          |   |       |       |   |   | 165    |   |   | 289    |  
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|Balances at September 30, 2009                           |  | $             | 99 |                              | $ | 62,684             |  | $               | 37,296 |                                                  | $ | (36,070                   | ) | $     | (1,912 | ) | $ | (1,877 | ) | $ | 60,220 |  
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|Balances at January 1, 2010                              |  | $             | 99 |                              | $ | 62,794             |  | $               | 37,588 |                                                  | $ | (36,720                   | ) | $     | (1,574 | ) | $ | (1,822 | ) | $ | 60,365 |  
|Comprehensive income:                                    |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|Net Income                                               |  |               |   |                              |   |                   |  |                 | 2,679  |                                                  |   |                          |   |       |       |   |   |       |   |   | 2,679  |  
|Other comprehensive income                               |  |               |   |                              |   |                   |  |                 |       |                                                  |   |                          |   |       | 299    |   |   |       |   |   | 299    |  
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|Total comprehensive income                               |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   | 2,978  |  
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|Purchase of 22,568 treasury shares                       |  |               |   |                              |   |                   |  |                 |       |                                                  |   | (201                      | ) |       |       |   |   |       |   |   | (201   | )
|Amortization and tax effect of Stock-based
 compensation |  |               |   |                              |   | 130                |  |                 |       |                                                  |   |                          |   |       |       |   |   |       |   |   | 130    |  
|Dividends ($0.27 per share)                              |  |               |   |                              |   |                   |  |                 | (1,758 | )                                                |   |                          |   |       |       |   |   |       |   |   | (1,758 | )
|ESOP shares released for allocation (34,473
 shares)     |  |               |   |                              |   | 141                |  |                 |       |                                                  |   |                          |   |       |       |   |   | 164    |   |   | 305    |  
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  
|Balances at September 30, 2010                           |  | $             | 99 |                              | $ | 63,065             |  | $               | 38,509 |                                                  | $ | (36,921                   | ) | $     | (1,275 | ) | $ | (1,658 | ) | $ | 61,819 |  
|                                                         |  |               |    |                              |   |                    |  |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |        |  

See accompanying notes to
unaudited condensed consolidated financial statements.

5

---



ROME BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2010 and 2009
(unaudited) (in thousands)

|                                                                                    |  |      |         |      |   |         |  
|----------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|                                                                                    |  | 2010 |         | 2009 |  
|                                                                                    |  |      |         |      |  
|Cash flows from operating activities:                                               |  |      |         |      |   |         |  
|Net income                                                                          |  | $    | 2,679   |      | $ | 2,263   |  
|Adjustments to reconcile net income to net cash                                     |  |      |         |      |   |         |  
|Provided by operating activities:                                                   |  |      |         |      |   |         |  
|Depreciation and amortization                                                       |  |      | 364     |      |   | 385     |  
|Increase in accrued interest receivable                                             |  |      | (5      | )    |   | (1      | )
|Provision for loan losses                                                           |  |      | 540     |      |   | 200     |  
|Net amortization on securities                                                      |  |      | 87      |      |   | (2      | )
|Proceeds from sales of loans                                                        |  |      | 14,345  |      |   | 7,325   |  
|Net gain on loans sold                                                              |  |      | (291    | )    |   | (119    | )
|Originations of loans held for sale                                                 |  |      | (14,054 | )    |   | (7,206  | )
|Gain on sale of real estate owned                                                   |  |      | (410    | )    |   | (2      | )
|Gain on securities transactions                                                     |  |      | (156    | )    |   | (26     | )
|(Decrease) increase in other liabilities                                            |  |      | (11     | )    |   | 468     |  
|Increase in cash surrender value of life insurance                                  |  |      | (294    | )    |   | (306    | )
|Increase (decrease) in other assets                                                 |  |      | 192     |      |   | (145    | )
|Allocation of ESOP shares                                                           |  |      | 305     |      |   | 289     |  
|Amortization of unearned stock-based compensation                                   |  |      | 171     |      |   | 171     |  
|                                                                                    |  |      |         |      |   |         |  
|Net
 cash provided by operating activities                                          |  |      | 3,462   |      |   | 3,294   |  
|                                                                                    |  |      |         |      |   |         |  
|                                                                                    |  |      |         |      |   |         |  
|Cash flows from investing activities:                                               |  |      |         |      |   |         |  
|Net decrease in loans                                                               |  |      | 9,774   |      |   | 12,572  |  
|Proceeds from maturities and principal reductions of securities
 available for sale |  |      | 1,198   |      |   | 1,149   |  
|Purchases of securities available for sale                                          |  |      | (5,390  | )    |   | (7,177  | )
|Proceeds from sale of securities available for sale                                 |  |      | 1,221   |      |   | 470     |  
|(Purchase) redemption of Federal Home Loan Bank stock                               |  |      | (88     | )    |   | 123     |  
|Proceeds from maturities and principal reductions of securities held
 to maturity   |  |      | 7       |      |   | 7       |  
|Proceeds from sale of real estate owned                                             |  |      | 205     |      |   | 525     |  
|Additions to premises and equipment                                                 |  |      | (248    | )    |   | (129    | )
|                                                                                    |  |      |         |      |   |         |  
|Net
 cash provided by investing activities                                          |  |      | 6,679   |      |   | 7,540   |  
|                                                                                    |  |      |         |      |   |         |  
|                                                                                    |  |      |         |      |   |         |  
|Cash flows from financing activities:                                               |  |      |         |      |   |         |  
|(Decrease) increase in time deposits                                                |  |      | (2,252  | )    |   | 207     |  
|Increase in other deposits                                                          |  |      | 12,490  |      |   | 10,283  |  
|Repayments of borrowings                                                            |  |      | (24,871 | )    |   | (24,304 | )
|Additional borrowings                                                               |  |      | 14,875  |      |   | 13,619  |  
|Purchase of treasury stock                                                          |  |      | (201    | )    |   | (1,408  | )
|Dividends paid                                                                      |  |      | (1,758  | )    |   | (1,688  | )
|                                                                                    |  |      |         |      |   |         |  
|Net
 cash used in financing activities                                              |  |      | (1,717  | )    |   | (3,291  | )
|                                                                                    |  |      |         |      |   |         |  
|                                                                                    |  |      |         |      |   |         |  
|Net increase in cash and cash equivalents                                           |  |      | 8,424   |      |   | 7,543   |  
|Cash and cash equivalents at beginning of period                                    |  |      | 7,574   |      |   | 9,579   |  
|                                                                                    |  |      |         |      |   |         |  
|Cash and cash equivalents at end of period                                          |  | $    | 15,998  |      | $ | 17,122  |  
|                                                                                    |  |      |         |      |   |         |  

Condensed Consolidated
Statements of Cash Flows continued on next page.

6

---



ROME BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2010 and 2009
(unaudited) (in thousands)

|                                                  |  |      |       |      |   |       | 
|------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | 
|                                                  |  | 2010 |       | 2009 |  
|                                                  |  |      |       |      |  
|Supplemental disclosure of cash flow information: |  |      |       |      |   |       | 
|Non-cash investing activities:                    |  |      |       |      |   |       | 
|Transfers from loans to other real estate         |  | $    | 65    |      | $ | 192   | 
|Cash paid during the period for:                  |  |      |       |      |   |       | 
|Interest                                          |  |      | 2,327 |      |   | 3,227 | 
|                                                 
|Income taxes                                      |  |      | 1,750 |      |   | 719   | 

See accompanying notes to
unaudited condensed consolidated financial statements.

7

---



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

(1)
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
September 30, 2010 and December 31, 2009 and for the three and nine month
periods ended September 30, 2010 and 2009. 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. Management has evaluated all significant
events and transactions that occurred through the financial statement issuance
date for potential recognition or disclosure in these condensed consolidated
financial statements.

The
data in the condensed consolidated balance sheet as of December 31, 2009 was
derived from the Companys 2009 Annual Report on Form 10-K. That data, along
with the interim financial information presented in the condensed consolidated
balance sheets, statements of income, statements of shareholders
equity and comprehensive income and statements of cash flows should be read in
conjunction with the 2009 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)
Earnings per Common Share

The
Company has stock compensation awards with non-forfeitable dividend rights
which are considered participating securities. The effect of including these
participating securities in earnings per share computations is immaterial. ESOP
shares are considered outstanding for this calculation unless unearned. Diluted
earnings per common share include the dilutive effect of additional potential
common shares from stock-based compensation plans.

8

---



The following
summarizes the computation of earnings per share for the three and nine month
periods ended September 30, 2010 and 2009.

(in thousands, except per share data)

|                                             |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|-------------------------------------------- |  | --------------------------------- | ----- | -------------------------------- | - | ----- | - | ---- | ----- | - | - | ----- | -
|                                             |  | Three months ended
 September 30, |       | Nine months ended
 September 30, |  
|                                             |  |                                   |       |                                  |  
|                                             |  | 2010                              |       | 2009                             |   | 2010  |   | 2009 |      
|                                             |  |                                   |       |                                  |   |       |   |      |      
|Basic
 earnings per share:                   |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|Net Income                                   |  | $                                 | 838   |                                  | $ | 908   |   | $    | 2,679 |   | $ | 2,263 |  
|Weighted average common
 shares outstanding  |  |                                   | 6,781 |                                  |   | 6,879 |   |      | 6,787 |   |   | 6,917 |  
|Less: Average unallocated
 ESOP shares       |  |                                   | (255  | )                                |   | (301  | ) |      | (267  | ) |   | (313  | )
|                                             |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|                                             |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|Average basic shares                         |  |                                   | 6,526 |                                  |   | 6,578 |   |      | 6,520 |   |   | 6,604 |  
|                                             |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|Basic earnings per share                     |  | $                                 | 0.13  |                                  | $ | 0.14  |   | $    | 0.41  |   | $ | 0.34  |  
|                                             |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|                                             |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|Diluted
 earnings per share:                 |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|Net income                                   |  | $                                 | 838   |                                  | $ | 908   |   | $    | 2,679 |   | $ | 2,263 |  
|Weighted average basic
 shares outstanding   |  |                                   | 6,526 |                                  |   | 6,578 |   |      | 6,520 |   |   | 6,604 |  
|Effect of dilutive
 securities:              |  |                                   |      |                                  |   |      |   |      |      |   |   |      |  
|                                             |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|Weighted average diluted
 shares outstanding |  |                                   | 6,526 |                                  |   | 6,578 |   |      | 6,520 |   |   | 6,604 |  
|                                             |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|Diluted earnings per share                   |  | $                                 | 0.13  |                                  | $ | 0.14  |   | $    | 0.41  |   | $ | 0.34  |  
|                                             |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  

| |                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Stock
 options for 354,000 shares of common stock were not considered in computing
 diluted earnings per common share for the three and nine month periods ended
 September 30, 2010 and 2009 because they were antidilutive.

(3) Other Comprehensive
Income

|                                                                                          |  |                                   |      |                                  |   |       |   |      |       |   |   |       |  
|----------------------------------------------------------------------------------------- |  | --------------------------------- | ---- | -------------------------------- | - | ----- | - | ---- | ----- | - | - | ----- | -
|                                                                                          |  | Three months ended
 September 30, |      | Nine months ended
 September 30, |  
|                                                                                          |  | (in thousands)                    |     
|                                                                                          |  |                                   |     
|                                                                                          |  | 2010                              |      | 2009                             |   | 2010  |   | 2009 |      
|                                                                                          |  |                                   |      |                                  |  
|Pension and postretirement adjustments                                                    |  | $                                 | 76   |                                  | $ | 94    |   | $    | 232   |   | $ | 282   |  
|Net change in unrealized gain on available-for-sale securities arising
 during the period |  |                                   | 225  |                                  |   | 180   |   |      | 422   |   |   | 244   |  
|Reclassification adjustment for net realized gain included in net
 income                 |  |                                   | (35  | )                                |   | (26   | ) |      | (156  | ) |   | (26   | )
|                                                                                          |  |                                   |      |                                  |   |       |   |      |       |   |   |       |  
|Other comprehensive income, before tax                                                    |  |                                   | 266  |                                  |   | 248   |   |      | 498   |   |   | 500   |  
|Deferred tax effect                                                                       |  |                                   | (106 | )                                |   | (99   | ) |      | (199  | ) |   | (200  | )
|                                                                                          |  |                                   |      |                                  |   |       |   |      |       |   |   |       |  
|                                                                                          |  |                                   |      |                                  |   |       |   |      |       |   |   |       |  
|Other
 comprehensive income                                                               |  |                                   | 160  |                                  |   | 149   |   |      | 299   |   |   | 300   |  
|Net
 income                                                                               |  |                                   | 838  |                                  |   | 908   |   |      | 2,679 |   |   | 2,263 |  
|                                                                                          |  |                                   |      |                                  |   |       |   |      |       |   |   |       |  
|Total comprehensive income                                                                |  | $                                 | 998  |                                  | $ | 1,057 |   | $    | 2,978 |   | $ | 2,563 |  
|                                                                                          |  |                                   |      |                                  |   |       |   |      |       |   |   |       |  

9

---



| |  |     |                                                      
| |  | --- | -----------------------------------------------------
| |  | (4) | Securities                                           
| |  |     |                                                      
| |  |     | Securities are summarized
 as follows (In thousands):

|                                |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|------------------------------- |  | ------------------ | ------ | ------------------------ | - | ------------------------- |  | --------- | - |  | - | ------ | 
|                                |  |                    |       
|                                |  | September 30, 2010 |       
|                                |  |                    |       
|                                |  | AmortizedCost      |        | Gross
 unrealized
 gains |   | Gross
 unrealized
 losses |  | Fairvalue |  
|                                |  |                    |        |                          |   |                           |  |           |  
|Available-for-sale:             |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|State and municipal obligations |  | $                  | 1,670  |                          | $ | 164                       |  | $         |  |  | $ | 1,834  | 
|Corporate obligations           |  |                    | 10,709 |                          |   | 358                       |  |           | 1 |  |   | 11,066 | 
|                                |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|                                |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|Total debt securities           |  |                    | 12,379 |                          |   | 522                       |  |           | 1 |  |   | 12,900 | 
|                                |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|Equity and other securities     |  |                    | 430    |                          |   | 6                         |  |           |  |  |   | 436    | 
|                                |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|                                |  | $                  | 12,809 |                          | $ | 528                       |  | $         | 1 |  | $ | 13,336 | 
|                                |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|                                |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|Held-to-maturity:               |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|U.S. Government securities      |  | $                  | 1,310  |                          | $ | 56                        |  | $         |  |  | $ | 1,366  | 
|Other bonds                     |  |                    | 109    |                          |   |                          |  |           |  |  |   | 109    | 
|                                |  |                    |        |                          |   |                           |  |           |   |  |   |        | 
|                                |  | $                  | 1,419  |                          | $ | 56                        |  | $         |  |  | $ | 1,475  | 
|                                |  |                    |        |                          |   |                           |  |           |   |  |   |        | 

|                                |  |                   |       |                          |   |                           |  |           |    |  |   |        | 
|------------------------------- |  | ----------------- | ----- | ------------------------ | - | ------------------------- |  | --------- | -- |  | - | ------ | 
|                                |  | December 31, 2009 |      
|                                |  |                   |      
|                                |  | Amortized
 Cost   |       | Gross
 unrealized
 gains |   | Gross
 Unrealized
 Losses |  | Fairvalue |   
|                                |  |                   |       |                          |   |                           |  |           |   
|Available-for-sale:             |  |                   |       |                          |   |                           |  |           |    |  |   |        | 
|State and municipal obligations |  | $                 | 2,294 |                          | $ | 119                       |  | $         |   |  | $ | 2,413  | 
|Corporate obligations           |  |                   | 6,597 |                          |   | 85                        |  |           | 39 |  |   | 6,643  | 
|                                |  |                   |       |                          |   |                           |  |           |    |  |   |        | 
|Total debt securities           |  |                   | 8,891 |                          |   | 204                       |  |           | 39 |  |   | 9,056  | 
|                                |  |                   |       |                          |   |                           |  |           |    |  |   |        | 
|Equity and other securities     |  |                   | 872   |                          |   | 96                        |  |           |   |  |   | 968    | 
|                                |  |                   |       |                          |   |                           |  |           |    |  |   |        | 
|                                |  | $                 | 9,763 |                          | $ | 300                       |  | $         | 39 |  | $ | 10,024 | 
|                                |  |                   |       |                          |   |                           |  |           |    |  |   |        | 
|Held-to-maturity:               |  |                   |       |                          |   |                           |  |           |    |  |   |        | 
|U.S. Government securities      |  | $                 | 1,316 |                          | $ | 71                        |  | $         |   |  | $ | 1,387  | 
|Mortgage-backed securities      |  |                   |       |                          |   |                           |  |           |    |  |   |        | 
|GNMA                            |  |                   | 1     |                          |   |                          |  |           |   |  |   | 1      | 
|Other bonds                     |  |                   | 114   |                          |   |                          |  |           |   |  |   | 114    | 
|                                |  |                   |       |                          |   |                           |  |           |    |  |   |        | 
|                                |  | $                 | 1,431 |                          | $ | 71                        |  | $         |   |  | $ | 1,502  | 
|                                |  |                   |       |                          |   |                           |  |           |    |  |   |        | 

| |                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All of the gross
 unrealized losses on available for sale securities at both September 30, 2010
 and December 31, 2009 were less than one year in duration. The detail of
 these losses and the carrying value (at estimated fair value) of the
 underlying securities available for sale are summarized below (in thousands):

|                      |  |                    |   |                   |   |                  |  |                 |    |  |   |       | 
|--------------------- |  | ------------------ | - | ----------------- | - | ---------------- |  | --------------- | -- |  | - | ----- | 
|                      |  | September 30, 2010 |   | December 31, 2009 |  
|                      |  |                    |   |                   |  
|                      |  | Unrealized
 Loss   |   | Carrying
 Value   |   | Unrealized
 Loss |  | Carrying
 Value |   
|                      |  |                    |   |                   |   |                  |  |                 |   
|One year or less:     |  |                    |   |                   |   |                  |  |                 |    |  |   |       | 
|Corporate obligations |  | $                  | 1 |                   | $ | 415              |  | $               | 39 |  | $ | 2,891 | 
|                      |  |                    |   |                   |   |                  |  |                 |    |  |   |       | 
|Total                 |  | $                  | 1 |                   | $ | 415              |  | $               | 39 |  | $ | 2,891 | 
|                      |  |                    |   |                   |   |                  |  |                 |    |  |   |       | 

10

---



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Management
 evaluates securities for other than temporary impairment at least on a
 quarterly basis, and more frequently when economic or market conditions
 warrant such an evaluation. There were no investments deemed by management to
 be other than temporarily impaired at September 30, 2010.          
| |                                                                                                                                                                                                                                                                                                                
| | The
 following table presents the amortized cost and fair value of debt securities
 based on the contractual maturity date (in thousands). Expected maturities
 will differ from contractual maturities because issuers may have the right to
 call or prepay obligations without call or prepayment penalties.

|                                       |  |                    |        |             |   |        | 
|-------------------------------------- |  | ------------------ | ------ | ----------- | - | ------ | 
|                                       |  | September 30, 2010 |       
|                                       |  |                    |       
|                                       |  | Amortized
 Cost    |        | Fair
 Value |  
|                                       |  |                    |        |             |  
|Available-for-sale:                    |  |                    |        |             |   |        | 
|Due within one year                    |  | $                  | 1,008  |             | $ | 1,015  | 
|Due after one year through five years  |  |                    | 9,130  |             |   | 9,528  | 
|Due after five years through ten years |  |                    | 2,241  |             |   | 2,357  | 
|Due after 10 years                     |  |                    |       |             |   |       | 
|                                       |  |                    |        |             |   |        | 
|                                       |  | $                  | 12,379 |             | $ | 12,900 | 
|                                       |  |                    |        |             |   |        | 
|                                       |  |                    |        |             |   |        | 
|Held-to-maturity:                      |  |                    |        |             |   |        | 
|Due within one year                    |  | $                  |       |             | $ |       | 
|Due after one year through five years  |  |                    | 1,310  |             |   | 1,366  | 
|Due after five years through ten years |  |                    |       |             |   |       | 
|Due after ten years                    |  |                    | 109    |             |   | 109    | 
|                                       |  |                    |        |             |   |        | 
|                                       |  | $                  | 1,419  |             | $ | 1,475  | 
|                                       |  |                    |        |             |   |        | 

| |                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Securities
 pledged at both September 30, 2010 and December 31, 2009 had a carrying
 amount of $1.3 million. These securities collateralize state and Treasury
 department programs. As of these dates, there
 were no holdings of securities
 of any one issuer in an amount greater than 10% of shareholders equity.

11

---



(5) Loans

Loans
are summarized as follows:

|                                    |  |                     |         |                    |   |         | 
|----------------------------------- |  | ------------------- | ------- | ------------------ | - | ------- | 
|                                    |  | September 30,
 2010 |         | December 31,
 2009 |  
|                                    |  |                     |         |                    |  
|                                    |  | (in thousands)      |        
|Mortgage loans:                     |  |                     |         |                    |   |         | 
|Residential (1-4 family)            |  | $                   | 148,261 |                    | $ | 155,547 | 
|Commercial                          |  |                     | 50,401  |                    |   | 52,557  | 
|Construction and land               |  |                     | 3,893   |                    |   | 4,381   | 
|                                    |  |                     |         |                    |   |         | 
|                                    |  |                     |         |                    |   |         | 
|Total Mortgage loans                |  |                     | 202,555 |                    |   | 212,485 | 
|                                    |  |                     |         |                    |   |         | 
|Other loans:                        |  |                     |         |                    |   |         | 
|Commercial                          |  |                     | 30,477  |                    |   | 30,429  | 
|Automobile loans                    |  |                     | 8,030   |                    |   | 9,377   | 
|Property improvement and
 equipment |  |                     | 22,290  |                    |   | 19,251  | 
|Other consumer                      |  |                     | 14,481  |                    |   | 16,207  | 
|                                    |  |                     |         |                    |   |         | 
|                                    |  |                     |         |                    |   |         | 
|Total Other loans                   |  |                     | 75,278  |                    |   | 75,264  | 
|                                    |  |                     |         |                    |   |         | 
|                                    |  |                     |         |                    |   |         | 
|Total Loans                         |  | $                   | 277,833 |                    | $ | 287,749 | 
|                                    |  |                     |         |                    |   |         | 

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

|                                 |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|-------------------------------- |  | --------------------------------- | ----- | -------------------------------- | - | ----- | - | ---- | ----- | - | - | ----- | -
|                                 |  | Three months ended
 September 30, |       | Nine months ended
 September 30, |  
|                                 |  |                                   |       |                                  |  
|                                 |  | (in thousands)                    |      
|                                 |  | 2010                              |       | 2009                             |   | 2010  |   | 2009 |      
|                                 |  |                                   |       |                                  |   |       |   |      |      
|                                 |  |                                   |       |                                  |   |       |   |      |      
|Balance at beginning of
 period  |  | $                                 | 2,523 |                                  | $ | 2,105 |   | $    | 2,132 |   | $ | 1,936 |  
|Provision charged to
 operations |  |                                   | 75    |                                  |   |      |   |      | 540   |   |   | 200   |  
|Loans charged off                |  |                                   | (18   | )                                |   | (39   | ) |      | (130  | ) |   | (103  | )
|Recoveries                       |  |                                   | 15    |                                  |   | 16    |   |      | 53    |   |   | 49    |  
|                                 |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|                                 |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  
|Balance at end of period         |  | $                                 | 2,595 |                                  | $ | 2,082 |   | $    | 2,595 |   | $ | 2,082 |  
|                                 |  |                                   |       |                                  |   |       |   |      |       |   |   |       |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 Companys recorded investment in loans that are considered impaired totaled
 $2.6 million and $698,000 at September 30, 2010 and December 31, 2009,
 respectively. These impaired loans carried allowances of $763,000 and
 $242,000 at September 30, 2010 and December 31, 2009, respectively. The
 average recorded investment in impaired loans was $2.0 million and $705,000
 in the first nine months of 2010 and 2009, respectively. The Company
 recognized interest of $21,000 and $0 on impaired loans that were in
 compliance with all lending terms during the three month periods ended
 September 30, 2010 and 2009. Interest recognized on impaired loans that were
 in compliance with all lending terms during the nine months ended September
 30, 2010 and 2009 was $63,000 and $0 respectively.

12

---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The
 principal balances of loans not accruing interest, including consumer, real
 estate, mortgage and other loans not subject to impairment disclosures
 amounted to $1.9 million at both September 30, 2010 and December 31, 2009,
 respectively. The Company held loans 90 days past due and accruing interest
 totaling $186,000 and $43,000 at September 30, 2010 and December 31, 2009,
 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 nine month periods ended September 30, 2010 and 2009 was $14,300
 and $58,800, respectively. There are no commitments to extend further credit
 on non-accruing loans.                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Included
 in the Companys classified assets at September 30, 2010 is a loan
 relationship comprised of three loans to the same borrower, which are part of
 a larger loan participation arrangement with other banks. The Companys
 portion of the arrangement totaled $4.6 million at September 30, 2010. The
 loans are secured by first and second mortgages on property held for
 development and several other unrelated properties. Due to the current
 economic climate, the borrower has been unable to develop the commercial real
 estate for sale in a timely fashion. This commercial credit was performing in
 accordance with contractual terms as of September 30, 2010 and was therefore
 accruing interest as of such date. However, management is uncertain as to the
 current and continued sources of debt service. Accordingly the Company has
 designated one of the loans as impaired. The loss related to this relationship
 could change if new information becomes available in future periods.
 Management is actively monitoring this credit and its associated collateral
 value.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | In
 addition to the impaired and non-performing loans, management has identified,
 through normal internal credit review procedures, $13.5 million in potential
 problem loans at September 30, 2010. Payments are current on $12.2 million
 or 90.4% of these loans. These problem loans are defined as loans not
 included as non-performing loans, but about which management has developed
 information regarding possible credit problems, which may cause the borrowers
 future difficulties in complying with loan repayments. The Company will
 continue to be aggressive in identifying, monitoring and resolving potential
 problem 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. The Company does not originate sub-prime mortgage loans and
 has not purchased investments collateralized by sub-prime loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(6) | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | On
 May 24, 2006, the Companys Board of Directors issued 354,000 stock options
 to directors and key employees with an exercise price equal to the market
 price of the Companys stock on that day. These options have a ten year life
 and vest ratably over a five year period or in certain cases upon retirement.
 At May 24, 2006, certain awardees met the retirement eligibility criteria and
 accordingly, stock-based compensation expense of $350,000 related to their
 options was expensed immediately. As of September 30, 2010, unrecognized
 compensation cost related to these options was $33,000. This expense is being
 amortized on a straight line basis over the remainder of the ninety month
 vesting period of the options.                                                                                                                                                                                                                                                                                                                                                          

13

---



| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Following is
 a summary of the Companys 2010 year to date stock option activity:

| |                                           |  |                                      |         |                                   |   |                               |  |   |      | 
| | ----------------------------------------- |  | ------------------------------------ | ------- | --------------------------------- | - | ----------------------------- |  | - | ---- | 
| |                                           |  | Nine Months ended September 30, 2010 |        
| |                                           |  |                                      |        
| |                                           |  | Shares                               |         | Weighted
 Average
 Exercise Price |   | Weighted
 Average
 Fair Value | 
| |                                           |  |                                      |         |                                   |   |                               | 
| | Options
 outstanding, beginning of period |  |                                      | 354,000 |                                   | $ | 12.84                         |  | $ | 1.69 | 
| | Exercised                                 |  |                                      |        |                                   |   |                              |  |   |     | 
| | Granted                                   |  |                                      |        |                                   |   |                              |  |   |     | 
| |                                           |  |                                      |         |                                   |   |                               |  |   |      | 
| | Options
 outstanding at end of period     |  |                                      | 354,000 |                                   | $ | 12.84                         |  | $ | 1.69 | 
| |                                           |  |                                      |         |                                   |   |                               |  |   |      | 
| | Options
 exercisable at end of period     |  |                                      | 283,200 |                                   | $ | 12.84                         |  | $ | 1.69 | 
| |                                           |  |                                      |         |                                   |   |                               |  |   |      | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The aggregate intrinsic value of all options outstanding and
 exercisable at September 30, 2010 was $0. No stock options were exercised
 during the quarters ended September 30, 2010 or 2009. The intrinsic value of
 options exercised during the nine months ended September 30, 2010 and
 September 30, 2009 was $0 and $18,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | On May 24, 2006, the Companys Board of Directors awarded 168,300
 shares of restricted stock to directors and certain key employees. These
 shares vest to the recipients ratably over a five year period, or in certain
 cases upon retirement and the related unrecognized compensation cost related
 to this grant will be expensed over the same period. At May 24, 2006, certain
 awardees met the retirement eligibility criteria and accordingly, stock-based
 compensation expense of $1.1 million related to their 2006 Recognition and
 Retention Plan (RRP) awards was expensed immediately. At September 30, 2010,
 the unrecognized compensation cost attributable to restricted stock awards
 was $119,000. The aggregate intrinsic value of restricted stock that is
 expected to vest in the future was $314,000 at September 30, 2010.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | For both of the three and nine month periods ended September 30, 2010
 and 2009, the compensation cost for the Companys stock option plans was
 $13,000 and $38,000, respectively. For both of the three and nine month
 periods ended September 30, 2010 and 2009 compensation cost related to the
 restricted stock plan was $44,000 and $134,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | During the three month periods
 ended September 30, 2010 and 2009, dividends of $3,000 and $6,000,
 respectively, were paid on unvested shares with non-forfeitable dividend
 rights. During the nine month periods ended September 30, 2010 and 2009,
 dividends of $15,000 and $23,000, respectively, were paid on unvested shares
 with non-forfeitable dividend rights. These dividend amounts were not
 included in net income as compensation expense due to the expectation that
 all of the awards will vest.                                                                                                                                                                                                                                                                                                                                   

|    |                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------
|(7) | Pension and
 Postretirement Medical Benefit Expenses                                                
|    |                                                                                                     
|    | The
 components of net periodic pension and postretirement benefit cost consisted
 of the following:

| |                                          |  |                                  |      |                         |   |      |   |      |    |   |   |    |  
| | ---------------------------------------- |  | -------------------------------- | ---- | ----------------------- | - | ---- | - | ---- | -- | - | - | -- | -
| |                                          |  | Three months ended September 30, |     
| |                                          |  |                                  |     
| |                                          |  | (in thousands)                   |     
| |                                          |  | Pension benefits                 |      | Postretirement benefits |  
| |                                          |  |                                  |      |                         |  
| |                                          |  | 2010                             |      | 2009                    |   | 2010 |   | 2009 |   
| |                                          |  |                                  |      |                         |   |      |   |      |   
| | Components of net periodic pension cost: |  |                                  |      |                         |   |      |   |      |    |   |   |    |  
| | Service cost                             |  | $                                |     |                         | $ |     |   | $    | 4  |   | $ | 5  |  
| | Interest
 cost                           |  |                                  | 88   |                         |   | 87   |   |      | 34 |   |   | 37 |  
| | Expected
 return on plan assets          |  |                                  | (115 | )                       |   | (108 | ) |      |   |   |   |   |  
| | Amortization                             |  |                                  | 81   |                         |   | 96   |   |      | (4 | ) |   | (2 | )
| |                                          |  |                                  |      |                         |   |      |   |      |    |   |   |    |  
| |                                          |  |                                  |      |                         |   |      |   |      |    |   |   |    |  
| | Net periodic
 pension cost               |  | $                                | 54   |                         | $ | 75   |   | $    | 34 |   | $ | 40 |  
| |                                          |  |                                  |      |                         |   |      |   |      |    |   |   |    |  

14

---



| |                                          |  |                                 |      |                         |   |      |   |      |     |   |   |     |  
| | ---------------------------------------- |  | ------------------------------- | ---- | ----------------------- | - | ---- | - | ---- | --- | - | - | --- | -
| |                                          |  | Nine months ended September 30, |     
| |                                          |  |                                 |     
| |                                          |  | (in thousands)                  |     
| |                                          |  | Pension benefits                |      | Postretirement benefits |  
| |                                          |  |                                 |      |                         |  
| |                                          |  | 2010                            |      | 2009                    |   | 2010 |   | 2009 |    
| |                                          |  |                                 |      |                         |   |      |   |      |    
| | Components of net periodic pension cost: |  |                                 |      |                         |   |      |   |      |     |   |   |     |  
| | Service cost                             |  | $                               |     |                         | $ |     |   | $    | 12  |   | $ | 15  |  
| | Interest cost                            |  |                                 | 264  |                         |   | 261  |   |      | 102 |   |   | 111 |  
| | Expected return on plan assets           |  |                                 | (345 | )                       |   | (324 | ) |      |    |   |   |    |  
| | Amortization                             |  |                                 | 243  |                         |   | 288  |   |      | (12 | ) |   | (6  | )
| |                                          |  |                                 |      |                         |   |      |   |      |     |   |   |     |  
| | Net periodic pension cost                |  | $                               | 162  |                         | $ | 225  |   | $    | 102 |   | $ | 120 |  
| |                                          |  |                                 |      |                         |   |      |   |      |     |   |   |     |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 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, 2010, the Company expects to make no
 contributions to the defined benefit pension plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(8) | Fair Value Measurement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The FASB ASC Topic 820, Financial Instruments, requires the
 disclosure of the estimated fair value of certain financial instruments. Fair
 value is the price that would be received upon sale of an asset or paid to
 transfer a liability in an orderly transaction between market participants at
 the measurement date. The following fair value hierarchy is used in selecting
 inputs, with the highest priority given to Level 1, as these are the most
 transparent or reliable.                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Level 1 - Quoted prices for identical instruments in active markets
 that the Company has the ability to access as of the measurement date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Level 2  Significant other observable inputs, such as quoted prices
 for similar instruments in active markets; quoted prices for identical or
 similar instruments in markets that are not active; and model-derived
 valuations in which all significant inputs are observable in active markets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Level 3  Significant unobservable inputs that reflect the Companys
 own assumptions about the assumptions that market participants would use in
 pricing an instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company is responsible for the valuation process and as part of
 this process may use data from outside sources in establishing fair value.
 The Company performs due diligence to understand the inputs used or how the
 data was calculated or derived. The Company corroborates the reasonableness
 of external inputs in the valuation process.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | To estimate the fair value of its available for sale securities
 portfolio, the Company obtains current market pricing from quoted market
 sources or if such quoted sources are not available, current market pricing. The fair value
 of impaired loans with specific allocations of the allowance for loan losses
 is generally based on recent real estate appraisals. These appraisals may
 utilize a single valuation approach or a combination of approaches including
 comparable sales and the income approach. Adjustments are routinely made in
 the appraisal process by the appraisers to adjust for differences between the
 comparable sales and income data available. Such adjustments are typically
 significant and result in a Level 3 classification of the inputs for
 determining fair value.

15

---



| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | Assets
 measured at fair value on a recurring basis are summarized below (in
 thousands of dollars).

| |                                  |  |         |     |         |   |         |  |                                        |   |  |   |        | 
| | -------------------------------- |  | ------- | --- | ------- | - | ------- |  | -------------------------------------- | - |  | - | ------ | 
| |                                  |  | Level 1 |     | Level 2 |   | Level 3 |  | Total
 Assets
 measured
 at fair value |  
| | September 30, 2010               |  |         |     |         |   |         |  |                                        |  
| | Available
 for sale securities:  |  |         |     |         |   |         |  |                                        |   |  |   |        | 
| | State and
 municipal obligations |  | $       |    |         | $ | 1,834   |  | $                                      |  |  | $ | 1,834  | 
| | Corporate
 obligations           |  |         |    |         |   | 11,066  |  |                                        |  |  |   | 11,066 | 
| | Equity and
 other obligations    |  |         | 36  |         |   | 400     |  |                                        |  |  |   | 436    | 
| |                                  |  |         |     |         |   |         |  |                                        |   |  |   |        | 
| | December 31, 2009                |  |         |     |         |   |         |  |                                        |   |  |   |        | 
| | Available
 for sale securities:  |  |         |     |         |   |         |  |                                        |   |  |   |        | 
| | State and
 municipal obligations |  | $       |    |         |   | 2,413   |  |                                        |  |  |   | 2,413  | 
| | Corporate
 obligations           |  |         |    |         |   | 6,643   |  |                                        |  |  |   | 6,643  | 
| | Equity and
 other obligations    |  |         | 568 |         |   | 400     |  |                                        |  |  |   | 968    | 

| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Assets
 measured at fair value on a non-recurring basis are summarized below (in
 thousands of dollars).

| |                    |  |         |   |         |   |         |  |                                        |       |  |   |       | 
| | ------------------ |  | ------- | - | ------- | - | ------- |  | -------------------------------------- | ----- |  | - | ----- | 
| |                    |  | Level 1 |   | Level 2 |   | Level 3 |  | Total
 Assets
 measured
 at fair value |      
| | September 30, 2010 |  |         |   |         |   |         |  |                                        |       |  |   |       | 
| | Impaired
 loans    |  | $       |  |         | $ |        |  | $                                      | 1,865 |  | $ | 1,865 | 
| | December 31, 2009  |  |         |   |         |   |         |  |                                        |       |  |   |       | 
| | Impaired
 loans    |  | $       |  |         | $ |        |  | $                                      | 456   |  | $ | 456   | 

|                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                    | Impaired loans, which are measured for impairment using the fair
 value of the collateral for collateral dependent loans, had a cost basis of
 $2.6 million and $698,000 at September 30, 2010 and December 31, 2009,
 respectively. These loans carried a valuation allowance of $763,000 and
 $242,000 at September 30, 2010 and December 31, 2009. These loans required
 additions to the provision for loan losses of $18,000 and $526,000 for the
 three and nine month periods ended September 30, 2010. No additional
 provision for loan losses was required during the same periods of 2009.
|                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|The following methods and assumptions were used by the Company in
 estimating fair values of financial instruments:
|                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                    | Cash and cash
 equivalents: For these short-term instruments that
 generally mature in ninety days or less, the carrying value approximates fair
 value.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                    | Securities: The fair values of securities available
 for sale are determined by obtaining quoted prices on nationally recognized
 securities exchanges (Level 1 inputs) or if unavailable, current market
 pricing or by relying on the securities relationship to other benchmark
 quoted securities (Level 2 inputs).                                                                                                                                                                                                                                                                             
|                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                    | Federal Home Loan
 Bank Stock:It is not practicable to determine the
 value of FHLB stock due to restrictions placed on its transferability.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                    | Loans:
 The fair values of impaired loans are estimated as discussed previously. The
 fair values for all other loans are estimated using discounted cash flow
 analyses, using interest rates currently being offered for loans with similar
 terms to borrowers of similar credit rating. The Company has not considered
 market illiquidity in estimating the fair value of loans due to uncertain and
 inconsistent market pricing being experienced at measurement date.                                                                                                                        

16

---



|                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                   | Accrued Interest:
 The fair value of accrued interest receivable and payable approximates
 carrying value.                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                   | Deposits:
 The fair values of demand deposits (interest and non-interest checking)
 savings accounts and money market accounts are, by definition, equal to the
 amount payable on demand at the reporting date (i.e., their carrying
 amounts). Fair values for fixed-rate certificates of deposits are estimated
 using a discounted cash flow calculation that applies interest rates
 currently being offered on these products to a schedule of aggregated
 expected monthly maturities on time deposits.
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                   | Borrowings:Fair
 values of long-term borrowings are estimated using a discounted cash flow
 approach, based on current market rates for similar borrowings.                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                   | Off-balance-sheet
 instruments: Fair values for the Companys
 off-balance-sheet instruments (lines of credit and commitments to fund loans)
 are based on fees currently charged to enter into similar agreements, taking
 into account the remaining terms of the agreements and the counterparties
 credit standing. The fair value of these financial instruments is immaterial
 and has therefore been excluded from the table below.                                                                   
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|The estimated carrying values and fair values of the Companys
 financial instruments for September 30, 2010 and December 31, 2009 are as
 follows (in thousands):

| |                               |  |                    |         |                   |   |                  |  |             |         |  |   |         | 
| | ----------------------------- |  | ------------------ | ------- | ----------------- | - | ---------------- |  | ----------- | ------- |  | - | ------- | 
| |                               |  | September 30, 2010 |         | December 31, 2009 |  
| |                               |  |                    |         |                   |  
| |                               |  | Carrying
 amount   |         | Fair
 value       |   | Carrying
 amount |  | Fair
 value |        
| |                               |  |                    |         |                   |   |                  |  |             |        
| | Financial assets:             |  |                    |         |                   |   |                  |  |             |         |  |   |         | 
| | Cash and cash equivalents     |  | $                  | 15,998  |                   | $ | 15,998           |  | $           | 7,574   |  | $ | 7,574   | 
| | Securities available for sale |  |                    | 13,336  |                   |   | 13,336           |  |             | 10,024  |  |   | 10,024  | 
| | Securities held to maturity   |  |                    | 1,419   |                   |   | 1,475            |  |             | 1,431   |  |   | 1,502   | 
| | Loans, net                    |  |                    | 275,238 |                   |   | 282,188          |  |             | 285,617 |  |   | 288,524 | 
| | Accrued interest receivable   |  |                    | 1,122   |                   |   | 1,122            |  |             | 1,117   |  |   | 1,117   | 
| | Financial liabilities:        |  |                    |         |                   |   |                  |  |             |         |  |   |         | 
| | Non-interest bearing deposits |  |                    | 36,485  |                   |   | 36,485           |  |             | 31,790  |  |   | 31,790  | 
| | Interest bearing deposits     |  |                    | 190,392 |                   |   | 190,667          |  |             | 184,849 |  |   | 185,320 | 
| | Borrowings                    |  |                    | 37,873  |                   |   | 39,299           |  |             | 47,869  |  |   | 48,342  | 
| | Accrued interest payable      |  |                    | 100     |                   |   | 100              |  |             | 127     |  |   | 127     | 

|    |                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Fair value estimates are made at a specific point in time, based on
 relevant market information and information about the financial instrument.
 These estimates are subjective in nature and involve uncertainties and
 matters of significant judgment and, therefore, cannot be determined with
 precision. Changes in assumptions could significantly affect the estimates.
|    |                                                                                                                                                                                                                                                                                                                                                                                 
|(9) | Subsequent Events                                                                                                                                                                                                                                                                                                                                                               

On October
12, 2010, Berkshire Hills Bancorp, Inc., the parent company of Berkshire Bank,
and the Company entered into an Agreement and Plan of Merger pursuant to which
the Company will merge with and into Berkshire Hills Bancorp, Inc. in a
transaction valued at approximately $74 million. Under the terms of the Merger
Agreement, 70% of the outstanding shares of Rome common stock will be converted
into the right to receive 0.5658 shares of Berkshire common stock for each
share of Rome and the remaining 30% of outstanding shares of Rome will be
exchanged for $11.25 in cash. Rome stockholders will have the right to elect to
receive cash or Berkshire common stock as outlined above, subject to 70% of
Rome common stock

17

---



receiving Berkshire common stock and the proration procedures contained
in the Merger Agreement. Concurrent with the merger, it is expected that the
Bank will merge with and into Berkshire Bank. The transaction is subject to
customary closing conditions, including the receipt of regulatory approvals and
approval by the shareholders of the Company, and is currently expected to be
completed in the first quarter of 2011. The directors and executive officers of
Rome have agreed to vote their shares in favor of the approval of the Merger
Agreement at the stockholders meeting to be held to vote on the proposed
transaction. If the merger is not consummated under certain circumstances, Rome
has agreed to pay Berkshire a termination fee of $3.5 million.

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. (Rome
Bancorp or the Company) with the Securities and Exchange Commission, in Rome
Bancorp 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 wishes to caution readers not to place undue reliance on such
forward-looking statements, which speak only as of the date made. Rome Bancorp
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 Rome Savings Bank (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. Since
its conversion to a federal charter on April 27, 2004, the Bank has been
regulated by the OTS as a federal savings bank.

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-earning 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 availability of funds. 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 such area.
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.

18

---



Net income for the third quarter of 2010 decreased to $838,000, from
the prior years third quarter net income of $908,000. The significant factors
and trends impacting the third quarter of 2010, which are discussed in greater
depth below, were as follows:

| |   |                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net interest income before loan loss provision increased by $179,000,
 or 5.5%, from the same quarter last year principally due to a decrease in
 interest expense stemming from decreases in the rates paid on deposits and
 borrowings, as well as a decrease in average outstanding borrowings.
| |  | The Company recorded a $75,000 provision for loan losses in the third
 quarter of 2010 versus no provision for loan losses in the third quarter of
 2009.                                                                                                                                         
| |  | Other non-interest income increased by $143,000, or 21.5%, from the
 third quarter 2009 levels primarily due to increased gains on sales of
 residential loan originations into the secondary market.                                                                                             
| |  | Non-interest expense increased by $453,000 to $3.0 million in the
 quarter ended September 30, 2010 from $2.6 million for the same period of
 2009 primarily due to an increase in professional fees.                                                                                             
| |  | Income tax expense for the third quarter of 2010 decreased to
 $324,000 compared to $460,000 in the third quarter of 2009, primarily due to
 lower pre-tax income and a reduction in New York State income taxes payable
 due to amendments in New York State taxation statutes.                  

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 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, the Company encourages the reader to review each of the
policies included in Note 2 to the consolidated financial statements reported
on the Companys 2009 Annual Report on Form 10-K to obtain a better
understanding of how its 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

19

---



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 September 30, 2010 |         | For the three months ended September 30, 2009 |  
|                                                                  |  |                                               |         |                                               |  
|                                                                  |  | Average 
 Balance                             |         | Interest
 Income/
 Expense                    |   | Average
 Yield/
 Cost |  | Average
 Balance |      | Interest
 Income/
 Expense |   | Average
 Yield/
 Cost | 
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       | 
|                                                                  |  | (Dollars in thousands)                        |        
|                                                                  |  |                                               |        
|Assets:                                                           |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Interest-earning assets:                                          |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Loans                                                             |  | $                                             | 274,143 |                                               | $ | 4,007                 |  |                  | 5.80 | %                          | $ | 283,982               |  | $ | 4,148 |   |  | 5.80 | %
|Securities (1)                                                    |  |                                               | 17,408  |                                               |   | 179                   |  |                  | 4.08 |                            |   | 12,689                |  |   | 159   |   |  | 4.98 |  
|Federal funds sold & other interest bearing
 deposits             |  |                                               | 6,913   |                                               |   | 3                     |  |                  | 0.16 |                            |   | 11,106                |  |   | 4     |   |  | 0.13 |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Total interest-earnings assets                                    |  |                                               | 298,464 |                                               |   | 4,189                 |  |                  | 5.57 |                            |   | 307,777               |  |   | 4,311 |   |  | 5.56 |  
|Noninterest-earning assets                                        |  |                                               | 28,501  |                                               |   |                       |  |                  |      |                            |   | 27,334                |  |   |       |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Total assets                                                      |  | $                                             | 326,965 |                                               |   |                       |  |                  |      |                            | $ | 335,111               |  |   |       |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Liabilities and Shareholders Equity:                             |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Interest-bearing liabilities:                                     |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Savings accounts                                                  |  | $                                             | 85,498  |                                               | $ | 86                    |  |                  | 0.40 |                            | $ | 83,681                |  | $ | 84    |   |  | 0.40 |  
|Time deposits                                                     |  |                                               | 70,075  |                                               |   | 304                   |  |                  | 1.71 |                            |   | 72,203                |  |   | 440   |   |  | 2.41 |  
|Money market accounts                                             |  |                                               | 18,966  |                                               |   | 48                    |  |                  | 1.01 |                            |   | 15,863                |  |   | 47    |   |  | 1.18 |  
|Other interest bearing deposits                                   |  |                                               | 16,714  |                                               |   | 16                    |  |                  | 0.39 |                            |   | 14,642                |  |   | 15    |   |  | 0.42 |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Total interest-bearing deposits                                   |  |                                               | 191,253 |                                               |   | 454                   |  |                  | 0.94 |                            |   | 186,389               |  |   | 586   |   |  | 1.25 |  
|Borrowings                                                        |  |                                               | 37,563  |                                               |   | 299                   |  |                  | 3.16 |                            |   | 55,081                |  |   | 466   |   |  | 3.35 |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Total interest-bearing liabilities                                |  |                                               | 228,816 |                                               |   | 753                   |  |                  | 1.31 |                            |   | 241,470               |  |   | 1,052 |   |  | 1.73 |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Noninterest-bearing deposits                                      |  |                                               | 34,685  |                                               |   |                       |  |                  |      |                            |   | 30,059                |  |   |       |   |  |      |  
|Other liabilities                                                 |  |                                               | 3,922   |                                               |   |                       |  |                  |      |                            |   | 5,266                 |  |   |       |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Total liabilities                                                 |  |                                               | 267,423 |                                               |   |                       |  |                  |      |                            |   | 276,795               |  |   |       |   |  |      |  
|Shareholders equity                                              |  |                                               | 59,542  |                                               |   |                       |  |                  |      |                            |   | 58,316                |  |   |       |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Total liabilities and shareholders equity                        |  | $                                             | 326,965 |                                               |   |                       |  |                  |      |                            | $ | 335,111               |  |   |       |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Net interest income                                               |  |                                               |         |                                               |   | 3,436                 |  |                  |      |                            |   |                       |  |   | 3,259 |   |  |      |  
|Tax equivalent adjustment on securities                           |  |                                               |         |                                               |   |                      |  |                  |      |                            |   |                       |  |   | (2    | ) |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Net interest income per consolidated financial
 statements        |  |                                               |         |                                               | $ | 3,436                 |  |                  |      |                            |   |                       |  | $ | 3,257 |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |  |                  |      |                            |   |                       |  |   |       |   |  |      |  
|Net interest rate spread                                          |  |                                               |         |                                               |   |                       |  |                  | 4.26 | %                          |   |                       |  |   |       |   |  | 3.83 | %
|Net interest margin                                               |  |                                               |         |                                               |   |                       |  |                  | 4.57 | %                          |   |                       |  |   |       |   |  | 4.20 | %
|Ratio of interest-earning assets to
 interest-bearing liabilities |  |                                               |         |                                               |   |                       |  |                  | 1.30 | x                          |   |                       |  |   |       |   |  | 1.27 | x

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

20

---



|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|----------------------------------------------------------------- |  | --------------------------------------------- | ------- | --------------------------------------------- | - | --------------------- | - | ---------------- | ---- | -------------------------- | - | --------------------- |  | - | ------ | - |  | ---- | -
|                                                                  |  | Average Balances, Interest and Average Yields |        
|                                                                  |  |                                               |        
|                                                                  |  | For
the nine months ended
September 30, 2010  |         | For the nine months ended
 September 30, 2009 |  
|                                                                  |  |                                               |         |                                               |  
|                                                                  |  | Average
 Balance                              |         | Interest
 Income/
 Expense                    |   | Average
 Yield/
 Cost |   | Average
 Balance |      | Interest
 Income/
 Expense |   | Average
 Yield/
 Cost | 
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       | 
|                                                                  |  | (Dollars in thousands)                        |        
|                                                                  |  |                                               |        
|Assets:                                                           |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Interest-earning assets:                                          |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Loans                                                             |  | $                                             | 281,644 |                                               | $ | 12,125                |   |                  | 5.76 | %                          | $ | 290,652               |  | $ | 12,626 |   |  | 5.81 | %
|Securities (1)                                                    |  |                                               | 15,704  |                                               |   | 513                   |   |                  | 4.37 |                            |   | 10,457                |  |   | 372    |   |  | 4.76 |  
|Federal funds sold & other interest bearing
 deposits             |  |                                               | 2,799   |                                               |   | 3                     |   |                  | 0.15 |                            |   | 6,711                 |  |   | 8      |   |  | 0.17 |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Total interest-earnings assets                                    |  |                                               | 300,147 |                                               |   | 12,641                |   |                  | 5.63 |                            |   | 307,820               |  |   | 13,006 |   |  | 5.65 |  
|Noninterest-earning assets                                        |  |                                               | 27,967  |                                               |   |                       |   |                  |      |                            |   | 27,601                |  |   |        |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Total assets                                                      |  | $                                             | 328,114 |                                               |   |                       |   |                  |      |                            | $ | 335,421               |  |   |        |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Liabilities and Shareholders Equity:                             |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Interest-bearing liabilities:                                     |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Savings accounts                                                  |  | $                                             | 84,610  |                                               | $ | 253                   |   |                  | 0.40 |                            | $ | 82,411                |  | $ | 247    |   |  | 0.40 |  
|Time deposits                                                     |  |                                               | 71,143  |                                               |   | 967                   |   |                  | 1.82 |                            |   | 72,424                |  |   | 1,464  |   |  | 2.70 |  
|Money market accounts                                             |  |                                               | 17,649  |                                               |   | 134                   |   |                  | 1.01 |                            |   | 14,886                |  |   | 147    |   |  | 1.32 |  
|Other interest bearing deposits                                   |  |                                               | 15,362  |                                               |   | 44                    |   |                  | 0.38 |                            |   | 13,970                |  |   | 42     |   |  | 0.40 |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Total interest-bearing deposits                                   |  |                                               | 188,764 |                                               |   | 1,398                 |   |                  | 0.99 |                            |   | 183,691               |  |   | 1,900  |   |  | 1.38 |  
|Borrowings                                                        |  |                                               | 39,782  |                                               |   | 902                   |   |                  | 3.03 |                            |   | 56,321                |  |   | 1,359  |   |  | 3.23 |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Total interest-bearing liabilities                                |  |                                               | 228,546 |                                               |   | 2,300                 |   |                  | 1.35 |                            |   | 240,012               |  |   | 3,259  |   |  | 1.82 |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Noninterest-bearing deposits                                      |  |                                               | 33,127  |                                               |   |                       |   |                  |      |                            |   | 29,876                |  |   |        |   |  |      |  
|Other liabilities                                                 |  |                                               | 6,493   |                                               |   |                       |   |                  |      |                            |   | 6,639                 |  |   |        |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Total liabilities                                                 |  |                                               | 268,166 |                                               |   |                       |   |                  |      |                            |   | 276,527               |  |   |        |   |  |      |  
|Shareholders equity                                              |  |                                               | 59,948  |                                               |   |                       |   |                  |      |                            |   | 58,894                |  |   |        |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Total liabilities and shareholders equity                        |  | $                                             | 328,114 |                                               |   |                       |   |                  |      |                            | $ | 335,421               |  |   |        |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Net interest income                                               |  |                                               |         |                                               |   | 10,341                |   |                  |      |                            |   |                       |  |   | 9,747  |   |  |      |  
|Tax equivalent adjustment on securities                           |  |                                               |         |                                               |   | (4                    | ) |                  |      |                            |   |                       |  |   | (10    | ) |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Net interest income per consolidated                              |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|financial statements                                              |  |                                               |         |                                               | $ | 10,337                |   |                  |      |                            |   |                       |  | $ | 9,737  |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|                                                                  |  |                                               |         |                                               |   |                       |   |                  |      |                            |   |                       |  |   |        |   |  |      |  
|Net interest rate spread                                          |  |                                               |         |                                               |   |                       |   |                  | 4.28 | %                          |   |                       |  |   |        |   |  | 3.83 | %
|Net interest margin                                               |  |                                               |         |                                               |   |                       |   |                  | 4.61 | %                          |   |                       |  |   |        |   |  | 4.23 | %
|Ratio of interest-earning assets to
 interest-bearing liabilities |  |                                               |         |                                               |   |                       |   |                  | 1.31 | x                          |   |                       |  |   |        |   |  | 1.28 | x

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

21

---



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.

|                                   |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|---------------------------------- |  | ------------------------------------------------- | ---- | ------------------------------------------------ | - | ---- | - | ---- | ---- | ------ | - | ---- | - | - | ---- | - | - | ---- | -
|                                   |  | Three
months ended September 30, 2010
compared to |      | Nine
months ended September 30, 2010
compared to |  
|                                   |  | Three months ended September 30, 2009             |      | Nine months ended September 30, 2009             |  
|                                   |  |                                                   |      |                                                  |  
|                                   |  | Increases
 (decreases) due to                     |      | Increases
 (decreases) due to                    |  
|                                   |  | Rate                                              |      | Volume                                           |   | Net  |   | Rate |      | Volume |   | Net  |  
|                                   |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |  
|                                   |  | (in thousands)                                    |     
|Assets:                            |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|Interest-earning assets:           |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|Loans                              |  | $                                                 | (1   | )                                                | $ | (140 | ) | $    | (141 | )      | $ | (116 | ) | $ | (385 | ) | $ | (501 | )
|Securities (1)                     |  |                                                   | (39  | )                                                |   | 59   |   |      | 20   |        |   | (46  | ) |   | 187  |   |   | 141  |  
|Federal funds sold & other         |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|Interest bearing deposits          |  |                                                   |     |                                                  |   | (1   | ) |      | (1   | )      |   |     |   |   | (5   | ) |   | (5   | )
|                                   |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|Total interest-earnings assets     |  |                                                   | (40  | )                                                |   | (82  | ) |      | (122 | )      |   | (162 | ) |   | (203 | ) |   | (365 | )
|                                   |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|Interest-bearing liabilities:      |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|Savings accounts                   |  |                                                   |     |                                                  |   | 2    |   |      | 2    |        |   | (1   | ) |   | 7    |   |   | 6    |  
|Time deposits                      |  |                                                   | (123 | )                                                |   | (13  | ) |      | (136 | )      |   | (471 | ) |   | (26  | ) |   | (497 | )
|Money market accounts              |  |                                                   | (8   | )                                                |   | 9    |   |      | 1    |        |   | (40  | ) |   | 27   |   |   | (13  | )
|Other interest bearing deposits    |  |                                                   | (1   | )                                                |   | 2    |   |      | 1    |        |   | (2   | ) |   | 4    |   |   | 2    |  
|                                   |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|Total interest-bearing deposits    |  |                                                   | (132 | )                                                |   |     |   |      | (132 | )      |   | (514 | ) |   | 12   |   |   | (502 | )
|Borrowings                         |  |                                                   | (19  | )                                                |   | (148 | ) |      | (167 | )      |   | (58  | ) |   | (399 | ) |   | (457 | )
|                                   |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|Total interest-bearing liabilities |  |                                                   | (151 | )                                                |   | (148 | ) |      | (299 | )      |   | (572 | ) |   | (387 | ) |   | (959 | )
|                                   |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  
|Net change (1)                     |  | $                                                 | 111  |                                                  | $ | 66   |   | $    | 177  |        | $ | 410  |   | $ | 184  |   | $ | 594  |  
|                                   |  |                                                   |      |                                                  |   |      |   |      |      |        |   |      |   |   |      |   |   |      |  

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

Comparison of
Financial Condition at September 30, 2010 and December 31, 2009:

Total
assets at September 30, 2010 increased to $331.6 million compared to $329.9
million at December 31, 2009. The Companys net loan portfolio decreased by
$10.4 million, or 3.6%, from $285.6 million at December 31, 2009 to $275.2
million at September 30, 2010. During the first nine months of 2010, the
Company originated approximately $40.8 million of loans, compared to
approximately $39.9 million of loans originated in the same period of 2009.

Total
deposits increased to $226.9 million at September 30, 2010 from $216.6 million
at December 31, 2009. During the first three quarters of 2010, savings deposits
increased by $3.4 million, or 4.1%, and money market balances increased by $4.2
million, or 26.8%. Time deposits decreased by $2.3 million, or 3.1%, to $69.6
million at September 30, 2010 from $71.9 million at year end 2009. Balances of
non-interest bearing deposits increased by $4.7 million, or 14.8%, while other
interest bearing deposits increased by $209,000, or 1.4%, over the first nine
months of 2010.

As a result
of increased loan sale activity and increases in deposit balances, the Company
continued to pay down debt during the first nine months of 2010. Borrowings
from the Federal Home Loan Bank of New York (FHLB) decreased from $47.9
million at December 31, 2009 to $37.9 million at the end of the current
quarter.

22

---



Comparison of
Operating Results for the Three-Month Periods Ended September 30, 2010 and 2009

General

During the
three months ended September 30, 2010, the Company recorded net income of $838,000,
compared to $908,000 for the third quarter of 2009. The decrease in net income
is comprised of an increase in net interest income before the provision for
loan losses of $179,000, an increase in non-interest income of $143,000, and a
decrease in income tax expense of $136,000, partially offset by an increase the
provision for loan losses of $75,000, an increase in non-interest expense of
$453,000.

Diluted
earnings per share decreased to $0.13 per diluted share for the quarter ended
September 30, 2010 from $0.14 per diluted share in the quarter ended September
30, 2009. Average diluted shares decreased to 6,526,000 for the third quarter
of 2010 from 6,578,000 in the same period of 2009 due to the Companys stock
repurchases over the past year.

Net Interest Income

Net
interest income before loan loss provision for the quarter ended September 30,
2010 increased by $179,000, or 5.5%, compared to the same quarter of 2009. This
increase is primarily attributable to a decrease in interest expense due to
lower average balances and rates paid on interest bearing liabilities,
partially offset by a decrease in interest income due to a decrease in the
average balance of loans outstanding.

Interest Income

Interest
income decreased to $4.2 million for the quarter ended September 30, 2010 from
$4.3 million for the same quarter of 2009. Average loan balances for the third
quarter of 2010 were $274.1 million, a decrease of $9.8 million from the
average outstanding loans for the third quarter of 2009 as a result of
continued sales of residential loan originations into the secondary market. The
yield on the Companys loan portfolio was stable at 5.80% for both the quarter
ended September 30, 2010 and the same period last year. The mix of the loan
portfolio has changed slightly from the same period a year ago, with a larger
percentage of the portfolio being in higher yielding commercial loans and
mortgages, resulting in the stability of the overall portfolio yield in a
period of declining rates. Interest income on securities increased by $22,000
from $157,000 for the quarter ended September 30, 2009 to $179,000 for the
quarter ended September 30, 2010. The average balance of securities increased
by $4.7 million, or 37.0%, from the third quarter of 2009 to $17.4 million for
the current quarter while the tax equivalent yield on the Companys securities
decreased to 4.08% from 4.98%.

Interest Expense

Interest
expense decreased to $753,000 for the quarter ended September 30, 2010 from
$1.1 million for the same quarter of 2009. Interest expense on deposits
decreased to $454,000 for the quarter ended September 30, 2010 from $586,000
for the quarter ended September 30, 2009, due to lower rates paid on time
deposits consistent with market trends over the past year. This was partially
offset by an increase in the average balance of interest-bearing deposits to
$191.3 million for the quarter ended September 30, 2010, from $186.4 million
for the same period of 2009. Interest expense on borrowed funds decreased to
$299,000 for the quarter ended September 30, 2010 from $466,000 for the
comparative quarter of 2009 due to a decrease in both the average balances of
borrowings and their interest rates in 2010. The average balance of borrowings
decreased to $37.6 million in the current quarter compared to $55.1 million in
the third quarter of 2009. Cash received from increased customer deposits and
loan sales were utilized to repay borrowings as they matured. The rate on the
Companys borrowings decreased to 3.16% during the third quarter of 2010 from
3.35% in the same quarter of 2009 as the Company repaid some of its longer
maturity advances during the first quarter of 2010.

23

---



Provision for Loan
Losses

The Company
recorded a $75,000 provision for loan losses in the third quarter of 2010,
compared to no loan loss provision in the same period of 2009. The additional
provision was deemed necessary to cover an increase in the Companys level of
non-performing loans. At September 30, 2010, non-performing loans as a percent
of loans increased to 0.75% compared to 0.67% at December 31, 2009. Over the
same nine month period, the allowance for loan losses as a percent of
non-performing loans increased to 125.2% from 111.4%. The majority of the
increase in non-performing loans is in the single family residential loan
portfolio, which management believes to be adequately collateralized. The
allowance for loan losses as a percentage of loans increased to 0.93% at
September 30, 2010 compared to 0.74% at December 31, 2009.

Included in
the Companys classified assets at September 30, 2010 is a loan relationship
comprised of three loans to the same borrower, which are part of a larger loan
participation arrangement with other banks. The Companys portion of the
arrangement totaled $4.6 million at September 30, 2010. The loans are secured
by first and second mortgages on property held for development and several
other unrelated properties. Due to the current economic climate, the borrower
has been unable to develop the commercial real estate for sale in a timely
fashion. This commercial credit was performing in accordance with contractual
terms as of September 30, 2010 and was therefore accruing interest as of such
date. However, management is uncertain as to the current and continued sources
of debt service. Accordingly the Company has designated one of the loans as
impaired. The loss related to this relationship could change if new information
becomes available in future periods. Management is actively monitoring this
credit and its associated collateral value.

As
described in Note 5 of the Notes to the Consolidated Financial Statements, the
Company has in place procedures to identify and monitor potential problem
loans. The Company regularly reviews problem loans and other assets in its
portfolio to determine whether any require classification in accordance with
the Companys policy and applicable regulations. 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.

Non-Interest Income
and Non-Interest Expense

Non-interest
income increased by $143,000 to $808,000 in the third quarter of 2010 from
$665,000 in the same period of 2009, largely due to an increase in gains
realized on the sale of residential mortgage originations into the secondary
market.

Non-interest
expense increased by $453,000 to $3.0 million in the third quarter of 2010 from
$2.6 million in the same quarter of 2009. The majority of this increase is
attributable to professional fees incurred in relation to the Companys
impending merger with Berkshire Hills Bancorp, Inc., as more fully described in
Note 9 of the Notes to the Consolidated Financial Statements. Income tax
expense for the third quarter of 2010 decreased to $324,000 from $460,000 in
the same period of 2009, primarily due to both the decrease in pre-tax income
as well as recently enacted amendments to New York States banking tax
statutes, which reduced the Companys income tax expense by $67,000.

Comparison of
Operating Results for the Nine-Month Periods Ended September 30, 2010 and 2009

General

During the
nine months ended September 30, 2010, the Company recorded net income of $2.7
million compared to $2.3 million for the first nine months of 2009. The
increase resulted from an increase in net interest income before the provision
for loan losses of $600,000 and an increase in non-interest income of

24

---



$739,000, partially offset by an increase in the provision for loan
losses of $340,000, an increase in non-interest expense of $407,000 and a
$176,000 increase in income tax expense.

Diluted
earnings per share increased to $0.41 per diluted share for the nine months
ended September 30, 2010 in comparison to $0.34 per diluted share for the same
period of 2009. The year-to-date 2010 average outstanding diluted shares
decreased to 6,520,000 from 6,604,000 due to ongoing treasury stock purchases.

Net Interest Income

Net
interest income before loan loss provision for the nine months ended September
30, 2010 increased by $600,000 or 6.2%, as compared to the same period of 2009.
This increase is attributable to a decrease in the average balance of
borrowings and rates paid on deposits and borrowings, partially offset by a
reduction in the average balances of and yields earned on assets.

Interest Income

Interest
income decreased to $12.6 million for the nine month period ended September 30,
2010 from $13.0 million for the first three quarters of 2009. Average earning
assets for the first nine months of 2010 decreased to $300.1 million from
$307.8 million in the same period of 2009. This reduction is due to the sale of
a substantial portion of the Companys newly originated residential loans into
the secondary market over the past year. The yield on earning assets decreased
slightly to 5.63% for the nine months ended September 30, 2010, from 5.65% for
the first nine months of 2009. Average loan balances for the first nine months
of 2010 were $281.6 million, a decrease of $9.1 million from the average
outstanding loans for the same period of 2009. The yield on the Companys loan
portfolio for the nine months ended September 30, 2010 was 5.76% compared to a
yield of 5.81% for the same period last year. Interest income on securities
increased $147,000 from $362,000 for the nine months ended September 30, 2009
to $509,000 for the nine months ended September 30, 2010 as the average balance
of the investment portfolio increased to $15.7 million for the first nine
months of 2010 from $10.5 million during the same period of 2009. Finally,
interest income on federal funds sold and other interest bearing deposits
decreased by $5,000 to $3,000 for the first nine months of 2010 from the same
period in 2009 due to decreases in average balances of these funds.

Interest Expense

Interest
expense decreased to $2.3 million for the nine months ended September 30, 2010
from $3.3 million for the nine months ended September 30, 2009. Interest
expense on deposits decreased to $1.4 million for the nine months ended
September 30, 2010 from $1.9 million for the nine months ended September 30,
2009 as a result of a decrease in the cost of these deposits from 1.38% to
0.99% partially offset by an increase in the average balance of deposits to
$188.8 million this year from $183.7 million during the first three quarters of
2009. Interest expense on borrowed funds decreased to $902,000 for the nine
months ended September 30, 2010 from $1.4 million for the comparative period of
2009 primarily due to a decrease in the average balance of borrowings to $39.8
million in the current year to date as compared to $56.3 million in the nine
months ended September 30, 2009. Deposit growth and proceeds of loan sales have
been used to pay down advances upon their maturity. The rate paid on these
borrowings decreased from 3.23% for the nine months ended September 30, 2009 to
3.03% for the same period this year.

Provision for Loan
Losses

The Company
recorded a $540,000 provision for loan losses in the first nine months of 2010
versus a $200,000 provision in the same period of 2009. The 2010 year to date
provision was recorded to provide for decline in value of collateral for a
commercial loan and an increase in non-performing loans. The Companys ratio of
non-performing loans to total loans increased to 0.75% at September 30, 2010,
from 0.67% at the previous year end. The majority of the Companys
non-performing loans are in the single family residential loan

25

---



portfolio which management believes is well collateralized. The
Companys year to date net loan charge-offs were $77,000 in the first nine
months of 2010, compared to $54,000 for the same period of 2009.

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.

Non-Interest Income
and Non-Interest Expense

Non-interest
income increased to $2.6 million for the first three quarters of 2010 from $1.8
million for the first nine months of 2009. The increase is attributable to
gains on sales of real estate and securities and an increase in fee revenue. In
the first quarter of 2010, the Company sold a parcel of non-operating
commercial real estate, realizing a gain of $418,000. During the first nine
months of 2010, the Company recorded gains of $156,000 on the sales of five
investment securities; by contrast in the same period of 2009 one security was
sold at a gain of $26,000.

Non-interest
expense increased to $8.4 million in the first nine months of 2010 compared to
$8.0 million in the same period of 2009, principally due to the increase in
professional fees incurred, as more described in the discussion for the third
quarter, above.

Income tax
expense for the first nine months of 2010 increased to $1.3 from $1.1 million
in the same period of 2009, principally due to the increase in pre-tax income.

Liquidity and Capital
Resources

The
Companys primary sources of funds consist of deposits, scheduled amortization
and prepayments of loans, maturities of investments, interest-bearing deposits
at other financial institutions and funds provided from operations. The Bank
also has borrowing capacity with the FHLB that allows it to borrow up to $57.8
million which is collateralized by a portion of the residential mortgage
portfolio. At September 30, 2010, the Bank had no outstanding borrowings
against this line of credit, and outstanding advances and amortizing notes
totaling $37.9 million. At September 30, 2010, the Company also had
approximately $8.5 million in unused short term borrowing capacity at the
Federal Reserve Bank of New York, which is collateralized by a portion of the
consumer loan portfolio.

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 nine months
ended September 30, 2010, the Company originated loans of approximately $40.8
million, compared to $39.9 million of loans in the same period of 2009. For the
past several quarters, the Company has been selling a large percentage of its
residential loan originations into the secondary market. Loan sales through
nine months of 2010 were $14.1 million, compared to $7.3 million for the same
period of 2009. These loans are sold with the Company retaining the servicing
for the purchasers. Year to date 2010 security purchases were $5.4 million
compared to $7.2 million for the same period of 2009.

At
September 30, 2010, the Company had loan commitments to borrowers of
approximately $13.4 million, and available letters and lines of credit of approximately
$19.1 million.

Time
deposit accounts scheduled to mature within one year were $49.7 million at
September 30, 2010. Based on the Companys deposit retention experience and
current pricing strategy, the Company anticipates

26

---



that a significant portion of these time deposits will remain with the
Company. The Company is committed to maintaining a strong liquidity position;
therefore, the Company monitors its liquidity position on a daily basis. The
Company anticipates that the Company will have sufficient funds to meet the
Companys current funding commitments. The marginal cost of new funding
however, whether from deposits or borrowings from the FHLB, 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 FHLB in the future.

At
September 30, 2010, the Bank exceeded each of the applicable regulatory capital
requirements. The Banks leverage (Tier 1) capital at September 30, 2010 was
$57.5 million, or 17.25% of adjusted assets. In order to be classified as
well-capitalized by the OTS, the Bank is required to have leverage (Tier 1)
capital of $16.7 million, or 5.0% of adjusted assets. To be classified as a well-capitalized
bank by the OTS, the Bank must also have a Tier 1 risk-based capital ratio of
6% and a total risk-based capital ratio of 10.0%. At September 30, 2010, the
Bank had a Tier 1 risk-based capital ratio of 23.78% and a total risk-based
capital ratio of 24.85%.

The Company
paid cash dividends of $0.27 per share during the nine months ended September
30, 2010 totaling $1.8 million.

During the
first nine months of 2010, $201,000 was expended to repurchase 22,568 shares of
the Companys common stock.

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.

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.

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, 2009. 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 2009 Form 10-K.

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 the 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 Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosure.

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.

27

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Part II - OTHER INFORMATION

|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

Following
the public announcement of the execution of the merger agreement between Rome
Bancorp and Berkshire Hills Bancorp, on October 18, 2010, Stephen Bushansky
filed a stockholder class action lawsuit in the Supreme Court of the State of
New York, County of the Bronx, and, on October 27, 2010, James and Liliana
DiCastro filed a stockholder class action lawsuit in the Chancery Court of the
State of Delaware, each against Rome Bancorp, Inc., Berkshire Hills Bancorp,
Inc., and the directors of Rome Bancorp, Inc. Each lawsuit purports to be
brought on behalf of all of Rome Bancorps public stockholders and alleges that
the directors of Rome Bancorp breached their fiduciary duties to Rome Bancorps
stockholders by failing to take steps necessary to obtain a fair and adequate
price for Rome Bancorps common stock. The lawsuit seeks to enjoin the proposed
merger from proceeding and seeks unspecified compensatory and/or rescissory
damages on behalf of Rome Bancorps stockholders. Each lawsuit is in a
preliminary stage. Rome Bancorp believes that the lawsuits are meritless and
intends to vigorously defend itself against the allegations.

|         |             
|-------- | ------------
|Item 1A. | Risk Factors

The
recent adoption of regulatory reform legislation may have a material effect on
our operations and capital requirements.

On July 21,
2010, President Obama signed into law the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the Reform Act). The Reform Act is intended to
address perceived weaknesses in the U.S. financial regulatory system and to
prevent future economic and financial crises. There are many provisions of the
Reform Act which are to be implemented through regulations to be adopted by the
federal bank regulatory agencies within specified time frames following the
effective date of the Reform Act, which creates a risk of uncertainty as to the
effect that such provisions will ultimately have. We do not believe that the
Reform Act will have a material impact on our core operations. However, we
believe the following provisions of the Reform Act will have an impact on us,
though it is not possible for us to determine at this time whether and to what
extent the Reform Act will have a material effect on our business, financial
condition or results of operations:

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | New Regulatory Regime. On July 21, 2011,
 unless the Secretary of the Treasury opts to delay such date for up to an
 additional nine months, the OTS will be eliminated and the OCC will take over
 the regulation of all federal savings associations, such as Rome Bancorp. The
 FRB will acquire the OTSs authority over all savings and loan holding
 companies, such as Rome Bancorp, and will also become the supervisor of all
 subsidiaries of savings and loan holding companies other than depository
 institutions. As a result, we will now be subject to regulation, supervision
 and examination by two federal banking agencies, the OCC and the FRB, rather
 than just by the OTS, as is currently the case. The Reform Act also provides
 for the creation of the Bureau of Consumer Financial Protection, or the CFPB.
 Although the CFPB will have only limited supervisory authority over
 institutions with less than $10 billion in assets, such as Rome Bancorp,
 Inc., the establishment of the CFPB could result in more stringent consumer
 protection regulations than those imposed by bank regulatory agencies
 previously.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Consolidated Holding Company Capital Requirements.
 The Reform Act requires the federal banking agencies to establish
 consolidated risk-based and leverage capital requirements for insured
 depository institutions, depository institution holding companies and
 systemically important nonbank financial companies. These requirements must
 be no less than those to which insured depository institutions are currently
 subject, and the new requirements will effectively eliminate the use of trust
 preferred securities as a component of Tier 1 capital for depository
 institution holding companies of our size. As a result, on                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

28

---



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  | the fifth anniversary of the effective date of the Reform Act, we
 will become subject to consolidated capital requirements to which we have not
 been subject to previously.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Roll Back of Federal Preemption. The Reform
 Act significantly rolls back the federal preemption of state consumer
 protection laws that is currently enjoyed by federal savings associations and
 national banks by (i) requiring that a state consumer financial law prevent
 or significantly interfere with the exercise of a federal savings
 associations or national banks powers before it can be preempted, (ii)
 mandating that any preemption decision be made on a case by case basis rather
 than a blanket rule and (iii) ending the applicability of preemption to
 subsidiaries and affiliates of national banks and federal savings
 associations. As a result, we may now be subject to state consumer protection
 laws in each state where we do business, and those laws may be interpreted
 and enforced differently in different states.

The Reform
Act also includes provisions, subject to further rulemaking by the federal bank
regulatory agencies, that may affect our future operations, including
provisions that create minimum standards for the origination of mortgages,
restrict proprietary trading by banking entities, restrict the sponsorship of
and investment in hedge funds and private equity funds by banking entities and
that remove certain obstacles to the conversion of savings associations to
national banks. We will not be able to determine the impact of these provisions
until final rules are promulgated to implement these provisions and other
regulatory guidance is provided interpreting these provisions.

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

The
following table provides information with respect to purchases made by or on
behalf of the Company or any affiliated purchases (as defined in Rule 106-18
(a)(3) under the Securities Exchange Act of 1934) of the Companys common stock
during the quarter ended September 30, 2010.

COMPANY
PURCHASES OF EQUITY SECURITIES

|                                              |  |                                                     |   |                                                |  |                                                                                                         |  |                                                                                                                                             |   |  |  |         | 
|--------------------------------------------- |  | --------------------------------------------------- | - | ---------------------------------------------- |  | ------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------- | - |  |  | ------- | 
|Period                                        |  | (a) Total Number 
 of Shares (or 
 Units) Purchased |   | (b) Average Price 
 Paid per Share 
 (or Unit) |  | (c) Total Number of 
 Shares (or Units) 
 Purchased as Part of 
 Publicly Announced 
 Plans or Programs |  | (d) Maximum 
 Number (or 
 Approximate 
 Dollar Value) of 
 Shares (or Units) 
 that may yet be 
 Purchased under 
 the Plans or 
 Programs |  
|                                              |  |                                                     |   |                                                |  |                                                                                                         |  |                                                                                                                                             |  
|July 1, 2010 through July 31, 2010            |  |                                                     |  |                                                |  |                                                                                                        |  |                                                                                                                                             |  |  |  | 189,894 | 
|August 1, 2010 through August 31, 2010        |  |                                                     |  |                                                |  |                                                                                                        |  |                                                                                                                                             |  |  |  | 189,894 | 
|September 1, 2010 through September 30,
 2010 |  |                                                     |  |                                                |  |                                                                                                        |  |                                                                                                                                             |  |  |  | 189,894 | 
|                                              |  |                                                     |   |                                                |  |                                                                                                         |  |                                                                                                                                             |   |  |  |         | 
|Total                                         |  |                                                     |  |                                                |  |                                                                                                        |  |                                                                                                                                             |  |  |  | 189,894 | 

|        |                                                     
|------- | ----------------------------------------------------
|Item 3. | Defaults Upon Senior Securities                     
|        |                                                     
|        | None.                                               
|        |                                                     
|Item 4. | Submission of Matters to a Vote of Security
 Holders

29

---



|        |                  
|------- | -----------------
|        | None.            
|        |                  
|Item 5. | Other Information
|        |                  
|        | None.            
|        |                  
|Item 6. | Exhibits         

|      |                                                                                                                                                        
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1   | Amended and Restated Plan
 of Conversion and Agreement and Plan of Reorganization. (1)                                                                 
|2.2   | Agreement and Plan of
 merger dated as of October 12, 2010 by and between Berkshire Hills Bancorp,
 Inc. and                                           
|      | Rome Bancorp, Inc. (9)                                                                                                                                 
|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  | Amended and restated form
 of One Year Change in Control Agreement by and among certain officers and
 Rome Bancorp, Inc. and The Rome Savings Bank. (8)
|10.6  | Amended and restated form
 of Employment Agreement between New Rome Bancorp, Inc. and Charles M. Sprock.
 (8)                                          
|10.7  | Amended and restated form
 of Employment Agreement between The Rome Savings Bank and Charles M. Sprock.
 (8)                                           
|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)                                                                        
|10.14 | Rome Bancorp, Inc. 2006
 Stock Option Plan. (7)                                                                                                        
|10.15 | Rome Bancorp, Inc. 2006
 Recognition and Retention Plan. (7)                                                                                           
|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.                                                  
|    |                                                                                                                                                              | 
|(7) | Incorporated
 by reference to Rome Bancorp, Inc.s Form S-8 filed with the Commission on
 May 19, 2006, as amended.                                         
|    |                                                                                                                                                              | 
|(8) | Incorporated
 by reference to Rome Bancorp, Inc.s Form 8-K filed with the Commission on
 December 3, 2007.                                                 
|    |                                                                                                                                                              | 
|(9) | Incorporated
 by reference to Rome Bancorp, Inc.s Form 8-K filed with the Commission on
 October 12, 2010.                                                 

30

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SIGNATURES

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

ROME BANCORP, INC.

|                         |  |                                                                                             |  |                  | 
|------------------------ |  | ------------------------------------------------------------------------------------------- |  | ---------------- | 
|Name                     |  | Title                                                                                       |  | Date             | 
|                         |  |                                                                                             |  |                  | 
|                         |  |                                                                                             |  |                  | 
|/s/Charles
 M. Sprock    |  | Chairman of
 the Board, President and Chief Executive Officer (Principal Executive Officer) |  | November 8, 2010 | 
|                         |  |                                                                                             |  |                 
|Charles M.
 Sprock       |  |                                                                                             |  |                 
|                         |  |                                                                                             |  |                 
|/s/David C.
 Nolan       |  | Executive
 Vice President and Chief Financial Officer (Principal Financial Officer)         |  | November 8, 2010 | 
|                         |  |                                                                                             |  |                 
|David C.
 Nolan          |  |                                                                                             |  |                 
|                         |  |                                                                                             |  |                  | 
|/s/Mary
 Faith Messenger |  | Vice
 President and Controller (Principal Accounting Officer)                               |  | November 8, 2010 | 
|                         |  |                                                                                             |  |                 
|Mary Faith
 Messenger    |  |                                                                                             |  |                 

31

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