10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
[X]	Annual report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
	For the fiscal year ended	September 30, 2007
-OR-
[   ]	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from                             to                            .

Commission File Number:     0-51500    

AMERICAN BANCORP OF NEW JERSEY, INC. (Exact Name of Registrant as Specified in its Charter)

New Jersey(State or Other Jurisdiction of Incorporation or Organization)	55-0897507(I.R.S. Employer Identification Number)
365 Broad Street, Bloomfield, New Jersey 07003(Address of Principal Executive Offices)	07003(Zip Code)

Registrant's telephone number, including area code: (973) 748-3600  

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $.10 per share	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [  ] Yes [X] No

Indicate by check mark if the registrant is required to file reports pursuant to Section 13 or Section 15(d) of the Act. [  ] Yes [X] No

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

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

Large accelerated filer [  ] Accelerated filer [X] Non-accelerated filer [  ]

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

The aggregate market value of the voting and non-voting common equity held by nonaffiliates of the registrant, computed by reference to the closing price of the registrant's common stock on the NASDAQ Stock Market on March 31, 2007, was $115,068,345. The exclusion from such amount of the market value of the shares owned by any person shall not be deemed an admission by the registrant that such person is an affiliate of the registrant.

As of December 7, 2007, the registrant had outstanding 11,729,062 shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE:

Parts II and IV of Form 10-K - Portions of the Annual Report to Stockholders for the year ended September 30, 2007

Part III of Form 10-K - Portions of the proxy statement for the Annual Meeting of Stockholders for the year ended September 30, 2007

2 Next Page

PART I

Forward-Looking Statements

American Bancorp of New Jersey, Inc. (the "Company" or "Registrant") may from time to time make written or oral "forward looking statements," including statements contained in documents filed with or furnished to the Securities and Exchange Commission (including this Annual Report on Form 10-K and the exhibits thereto), in its reports to stockholders and in other communications by the Company, which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve risks and uncertainties, such as statements of the Company's plans, objectives, expectations, estimates and intentions that are subject to change based on various important factors (some of which are beyond the Company's control). The following factors, among others, could cause the Company's financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations; the timely development of and acceptance of new products and services of the Company and the perceived overall value of these products and services by users, including the features, pricing and quality as compared to competitors' products and services; the identification of de novo branching opportunities and ability to attract new customers and gain market share, the impact of changes in financial services laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes; acquisitions; changes in consumer spending and saving habits; and the success of the Company at managing the risks resulting from these factors.

The Company cautions that the listed factors are not exclusive. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

Item 1. Business.

General

On October 5, 2005, American Savings, MHC (the "MHC") completed its reorganization into stock form and the Company succeeded to the business of ASB Holding Company, the MHC's former stock holding company subsidiary. Each outstanding share of common stock of the former mid-tier stock holding company (other than shares held by the MHC which were canceled) was converted into 2.55102 shares of common stock of the Company. As part of the second-step mutual to stock conversion transaction, the Company sold a total of 9,918,750 shares to eligible depositors of American Bank of New Jersey (the "Bank") in a subscription offering at $10.00 per share, including 793,500 shares purchased by the Bank's employee stock ownership plan with funds borrowed from the Company.

The Company is a New Jersey corporation that was incorporated in May 2005 for the purpose of being a holding company for the Bank, a federally-chartered stock savings bank. The Company is a unitary savings and loan holding company and conducts no significant business or operations of its own. References in this Annual Report on Form 10-K to the Company generally refer to the consolidated entity, which includes the

3 Next Page

Bank, unless the context indicates otherwise. References to "we," "us," or "our" refer to the Bank or Company, or both, as the context indicates.

The Bank was originally founded in 1919 as the American-Polish Building & Loan Association of Bloomfield, New Jersey. It became a state-chartered savings and loan association in 1948 and converted to a federally chartered savings bank in 1995. The Bank's deposits are insured by the Federal Deposit Insurance Corporation up to the maximum amount permitted by law. The Bank is regulated by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation.

Our core business is using retail deposits in order to fund a variety of mortgage and consumer loan products. We operate as a traditional community bank, offering retail banking services, one- to four-family residential mortgage loans, including first mortgages, home equity loans and lines of credit, commercial loans, including multi-family and non-residential mortgage loans, construction loans and business loans and lines of credit, as well as consumer loans. We also invest in mortgage-related securities, including mortgage-backed pass through securities and collateralized mortgage obligations, and other investment securities. The principal source of funds for our lending and investing activities is retail deposits, supplemented with Federal Home Loan Bank borrowings.

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on interest-bearing liabilities. It is a function of the average balances of loans and investments versus deposits and borrowed funds outstanding in any one period and the yields earned on those loans and investments and the cost of those deposits and borrowed funds. Our interest-earning assets consist primarily of one- to four-family residential mortgage loans, commercial loans and consumer loans, as well as residential mortgage-related securities and U.S. Agency debentures. Interest-bearing liabilities consist primarily of retail deposits and borrowings from the Federal Home Loan Bank of New York.

Market Area

Our main office. including a full service branch and our administrative headquarters, is located in Bloomfield, New Jersey. We have four additional full service branch offices located in Cedar Grove, Verona, Nutley and Clifton New Jersey. Our lending is concentrated in New Jersey and the New York metropolitan area, and our predominant sources of deposits are the communities in which our five offices are located as well as the neighboring communities. Our business of attracting deposits and making loans is primarily conducted within our market area. A downturn in the local economy could reduce the amount of funds available for deposit and the ability of borrowers to repay their loans. As a result, our profitability could decrease.

Competition

We face substantial competition in our attraction of deposits, which are our primary source of funds for lending, and in our origination of loans. Many of our competitors are significantly larger institutions and have greater financial and other resources. Our ability to compete successfully is a significant factor affecting our profitability.

Our competition for deposits and loans historically has come from other insured financial institutions such as local and regional commercial banks, savings institutions, and credit unions located in our primary market area. We also compete with mortgage banking companies for real estate loans, and commercial banks and savings institutions for consumer loans; and we face competition for deposits from investment products such as mutual funds, short-term money funds and corporate and government securities.

4 Next Page

Lending Activities

General. Historically, we have focused on the origination of one- to four-family loans. Consequently, a majority of our total loan portfolio comprises such loans as reflected in the table below. Notwithstanding, our business plan calls for significantly greater emphasis on commercial lending which includes multifamily, nonresidential, construction and business loans. Toward that end, the Bank expanded its commercial lending division with the hiring of several additional commercial lending officers and administrative support staff. While outstanding balances in commercial loans still fall below those in the one- to four-family loan category, the table below shows the dollar and percentage of portfolio growth trends in the commercial categories reflecting the Company's loan diversification strategy.

Loan Portfolio Composition. The following table analyzes the composition of our loan portfolio by loan category at the dates indicated.

	At September 30
	2007		2006		2005		2004		2003
	Amount	Percent	Amount	Percent	Amount	Percent	Amount	Percent	Amount	Percent
	(Dollars in thousands)
Type of Loans:
One- to four-family   real estate(1)	$278,183	60.92%	$283,469	68.05%	$267,052	78.09%	$251,531	80.17%	$215,984	81.59%
Multi-family and nonresidential   real estate	99,059	21.70	73,496	17.64	58,615	17.14	43,197	13.77	36,202	13.68
Land	3,341	0.73	534	0.13	-	-	-	-	-	-
Construction	48,561	10.64	33,155	7.96	1,450	0.42	7,175	2.29	1,233	0.47
Consumer	655	0.14	720	0.17	702	0.21	746	0.24	780	0.29
Home equity	19,756	4.33	19,122	4.59	13,413	3.92	10,666	3.40	8,893	3.36
Business	7,024	1.54	6,068	1.46	746	0.22	398	0.13	1,610	0.61
Total loans receivable	456,579	100.00%	416,564	100.00%	341,978	100.00%	313,713	100.00%	264,702	100.00%
Less:
Allowance for loan losses	(2,568)		(2,123)		(1,658)		(1,578)		(1,371)
Net deferred origination costs	1,084		1,100		1,036		935		796
Loans in process	(15,969)		(16,917)		(350)		(4,100)		(783)
Total loans receivable, net	$439,126		$398,624		$341,006		$308,970		$263,344

_____________

(1) Includes loans held for sale of $1,243,346, $0, $280,250, $0, and $500,000 at September 30, 2007, September 30, 2006, September 30, 2005, September 30, 2004 and September 30, 2003, respectively.

5 Next Page

Loan Maturity Schedule. The following table sets forth the maturity of our loan portfolio at September 30, 2007. Demand loans, loans having no stated maturity, and overdrafts are shown as due in one year or less. This table shows contractual maturities and does not reflect repricing or the effect of prepayments. Actual repayment of loan balances will vary significantly from their contractual maturities due to amortization and prepayments.

	At September 30, 2007
	One- to Four- Family Real Estate	Multi-family and Nonresidential Real Estate	Land	Construction	Consumer	Home Equity	Business	Total
	(Dollars in thousands)
Amounts Due:
Within 1 Year	$     1,124	$      447	$ 2,815	$ 27,335	$ 655	$           -	$ 4,626	$   37,002
After 1 year:
1 to 5 years	3,523	3,274	-	5,257	-	521	2,398	14,973
5 to 10 years	33,353	36,510	526	-	-	1,513	-	71,902
10 to 15 years	44,177	15,334	-	-	-	2,110	-	61,621
Over 15 years	196,006	43,494	-	-	-	15,612	-	255,112
Total due after one    year	277,059	98,612	526	5,257	-	19,756	2,398	403,608
Total amount due	$ 278,183	$ 99,059	$ 3,341	$ 32,592	$ 655	$ 19,756	$ 7,024	$ 440,610

6 Next Page

The following table sets forth the dollar amount of all loans at September 30, 2007 due after September 30, 2008, which have fixed interest rates and which have floating or adjustable interest rates.

	Fixed Rates	Floating or Adjustable Rates	Total
	(In thousands)
One- to four-family real estate	$ 129,414	$ 147,645	$ 277,059
Multi-family and non-residential real   estate	50,822	47,790	98,612
Land	526	-	526
Construction	-	5,257	5,257
Consumer	-	-	-
Home equity	-	19,756	19,756
Business	1,210	1,188	2,398
Total	$ 181,972	$ 221,636	$ 403,608

One- to Four-Family Real Estate Loans. As noted above, our primary lending activity historically has consisted of the origination of one- to four-family mortgage loans, most of which are secured by property located in northern New Jersey. We will generally originate a one- to four-family mortgage loan in an amount up to 80% of the lesser of the appraised value or the purchase price of a mortgaged property. For loans exceeding this guideline, private mortgage insurance on the loan is typically required.

Our residential loans are generally originated with fixed or adjustable rates and have terms of ten to thirty years. We previously offered mortgage loans with bi-weekly payments and terms up to forty years. However, we discontinued offering those products during fiscal 2007. Regarding adjustable rate loans, we offer fully amortizing, adjustable rate loans with initial fixed rate periods ranging from one to ten years. Additionally, we offer adjustable rate loans with interest only payments for the first five, seven or ten years that fully amortize after the initial interest-only period. We previously offered mortgage loans with interest only payments for the first three years but discontinued offering that product during fiscal 2007. Loans with interest only payments are generally considered to entail greater risk than loans whose terms require the payment of both interest and principal over the life of the loan. Of particular concern are borrowers' abilities to meet their payment obligations when the interest rate on the loan resets for the first time while, simultaneously, scheduled principal amortization begins to be collected over the loan's remaining term to maturity. These concurrent factors may result in significant increases to a borrower's monthly payment obligations.

The majority of our adjustable rate loan products provide for an interest rate that is tied to the one-year Constant Maturity U.S. Treasury index and have terms of up to thirty years with initial fixed rate periods of one, three, five, seven, or ten years according to the terms of the loan. During fiscal 2007 and earlier, we offered an adjustable rate loan with a rate that adjusts every three years to the three-year Constant Maturity U.S. Treasury index. However, we discontinued offering that product during the first quarter of fiscal 2008.

One- to four-family mortgage loans are generally grouped by the Bank into one of three categories based upon underwriting criteria: "Prime", "Alt-A" and "Sub-prime" mortgages. Sub-prime loans are generally defined by the Bank as loans to borrowers with deficient credit histories and/or higher debt-to-income ratios. Loans falling within the Alt-A category, as defined by the Bank, include loans to borrowers with blemished credit credentials that are less severe than those characterized by sub prime loans but otherwise preclude the loan from being considered Prime. Alt-A loans may also be characterized by other underwriting or documentation exceptions such as reduced or limited loan documentation. Loans without the deficiencies or

7 Next Page

exceptions characterizing sub-prime and Alt-A loans are considered Prime and comprise the significant majority of the one-to four-family mortgages originated and retained by the Bank.

The Bank does not currently offer sub prime loan programs. Prior to fiscal 2007, the Bank had offered a limited number of one-to four-family loan programs through which it originated and retained sub-prime loans to borrowers with deficient credit histories or higher debt-to-income ratios. At September 30, 2007, the remaining balance of these loans was approximately $1.4 million representing a total of 11 loans. All 11 loans were current as of September 30, 2007.

Through fiscal 2007, the Bank offered an Alt-A stated income loan program by which it originated and retained loans to borrowers whose income was affirmatively stated at the time of application, but not verified by the Bank. The Bank discontinued that program in the first quarter of fiscal 2008. At September 30, 2007, the remaining balance of these loans was approximately $8.5 million representing a total of 27 loans. All 27 loans were current as of September 30, 2007.

The Bank continues to offer a limited Alt-A program through which it originates and sells all such loans to FNMA under its Expanded Approval program on a non-recourse, servicing retained basis. A significant portion of the loans originated under this remaining Alt-A program support the procurement of mortgage financing for first time home buyers.

The fixed rate mortgage loans that we originate generally meet the secondary mortgage market standards of the Federal National Mortgage Association ("FNMA"). For the purposes of interest rate risk management, we have historically sold a portion of our qualifying one- to four-family residential mortgages into the secondary market without recourse on both a servicing retained and servicing released basis. Toward that end, we sold loans totaling approximately $9.3 million in the year ended September 30, 2007, $5.8 million in the year ended September 30, 2006 and $2.4 million in the year ended September 30, 2005. Purchasers of our loans included, but were not limited to, FNMA and Countrywide Home Loans.

Notwithstanding the loan sales in prior years, the Bank intends to discontinue the sale of most one- to four-family mortgage loan originations for a period of time to augment the growth in commercial loans through which the Bank will reinvest a portion of the balances of cash and cash equivalents accumulated during fiscal 2007. Such balances resulted from significant growth in deposits acquired through the Bank's de novo branches opened during the current year. Loans originated under the Bank's FNMA Alt-A program noted above will continue to be sold into the secondary market. The Bank will carefully monitor the earnings, liquidity, and balance sheet allocation impact of this strategy and make interim adjustments, as necessary, to support achievement of the Company's business plan goals and objectives.

Substantially all of our residential mortgages include a "due on sale" clause, which is a provision giving us the right to declare a loan immediately payable if the borrower sells or otherwise transfers an interest in the property to a third party. Property appraisals on real estate securing our one- to four-family residential loans are made by state certified or licensed independent appraisers approved by the Board of Directors. Appraisals are performed in accordance with applicable regulations and policies. We require title insurance policies on all first mortgage real estate loans originated. Homeowners, liability, fire and, if required, flood insurance policies are also required.

Multi-Family and Non-Residential Real Estate Loans. We originate and participate in commercial loans on multi-family and non-residential real estate properties, including loans on retail/service properties, small office buildings, strip malls and other income-producing properties. We generally require a 25% down payment or equity position for these mortgage loans. Typically these loans are made with amortization terms of up to twenty-five years. The majority of these loans are on properties located within New Jersey and the New York metropolitan area.

8 Next Page

Commercial real estate loans generally are considered to entail significantly greater risk than that which is involved with one- to four-family real estate lending. The repayment of these loans typically is dependent on the real estate securing the loan as collateral and the successful operations of the property and income stream of the borrower generated from the property. These risks can be significantly affected by economic conditions. In addition, commercial loans may carry larger balances to single borrowers or related groups of borrowers than one- to four-family loans. Furthermore, this type of real estate lending generally requires substantially greater evaluation and oversight efforts compared to one-to-four family mortgage lending.

Construction Loans. We originate and participate in construction loans throughout the New Jersey and New York metropolitan area. Our construction lending includes loans to individuals for construction of a primary residence as well as loans to builders and developers for single family homes, multi-family homes, residential tract development, condominium projects, as well as other commercial real estate projects. We have no formal limits as to the number of projects a builder may have under construction or development, and make a case by case determination on loans to builders and developers who have multiple projects under development. In some cases, we convert a construction loan to the permanent end mortgage loan upon completion of construction.

Construction lending is generally considered to involve a higher degree of credit risk than long-term permanent financing of residential properties. If the estimate of construction cost proves to be inaccurate, we may be compelled to advance additional funds to complete the construction with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If we are forced to foreclose on a project prior to completion, there is no assurance that we will be able to recover all of the unpaid portion of the loan. In addition, we may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminate period of time.

Business Loans. We also originate business loans to a variety of professionals, sole proprietorships and small businesses, primarily in our market area. These loans are generally secured by real estate. We generally require the personal guarantee of the business owner. Business lending products include term loans and lines of credit. Our business term loans generally have terms from one to five years and are mostly fixed rate loans. Our business lines of credit have terms from one to three years and are mostly adjustable rate loans.

Unlike single-family residential mortgage loans, which generally are made on the basis of the borrower's ability to make repayment from his or her employment and other income and which are secured by real property whose value tends to be more easily ascertainable, business loans typically are made on the basis of the borrower's ability to make repayment from the cash flow of the borrower's business. As a result, the availability of funds for the repayment of business loans may be substantially dependent on the success of the business itself and the general economic environment. Business loans, therefore, have greater credit risk than residential mortgage loans. In addition, business lending generally requires substantially greater evaluation and oversight efforts compared to residential or non-residential real estate lending.

Home Equity Loans. Our home equity loan portfolio includes home equity lines of credit and second mortgage term loans. Home equity lines of credit are prime-based loans that are adjusted monthly. Home equity loans are primarily originated in our market area and are generally made in amounts of up to 80% of value. We offer home equity loans on investment properties in addition to loans on primary residences. Loans on investment properties are made in amounts of up to 65% of value on second mortgage term loans and up to 60% of value of home equity lines of credit.

9 Next Page

Generally, our second mortgage term loans have fixed rates for terms of up to fifteen years. Second mortgage term loans s and home equity lines of credit do not require title insurance but do require homeowner, liability, fire and, if required, flood insurance policies.

Consumer Loans. Consumer loans consist of savings secured loans and unsecured consumer loans. We will generally lend up to 90% of the account balance on a savings secured loan. At September 30, 2007, we had $69,000 of unsecured consumer loans.

Consumer loans generally have shorter terms and higher interest rates than residential loans. The consumer loan market can be helpful in improving the spread between the average loan yield and the cost of funds and at the same time improve the matching of rate sensitive assets and liabilities.

Unsecured consumer loans, and consumer loans secured by collateral other than savings accounts, entail greater risks than residential mortgage loans. Consumer loan repayment is dependent on the borrower's continuing financial stability and is more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Finally, the application of various laws, including federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on consumer loans in the event of a default.

Our underwriting standards for consumer loans include a determination of the applicant's credit history and an assessment of the applicant's ability to meet existing obligations and payments on the proposed loan. The stability of the applicant's monthly income may be determined by verification of gross monthly income from primary employment, and additionally from any verifiable secondary income.

Loans to One Borrower. Under federal law, savings institutions have, subject to certain exemptions, lending limits to one borrower or a group of related borrowers in an amount equal to the greater of $500,000 or 15% of the institution's unimpaired capital and surplus. As of September 30, 2007, our loans to one borrower limit was approximately $12.0 million.

At September 30, 2007, our largest group of related borrowers had an aggregate balance, including unfunded commitments, of approximately $8.8 million, representing 9 loans on single purpose commercial real estate, mixed use properties, one- to four-family and a construction loan for residential properties.

At the same date, our second largest group of related borrowers had an aggregate balance including total commitments of approximately $8.0 million, representing two loans secured by a construction loan for a condominium project and a small unsecured line of credit. Our third largest group of related borrowers at that date had an aggregate balance including total commitments of approximately $7.2 million, representing seven loans secured by a catering facility, land, one- to four-family properties and receivables. At September 30, 2007 , we had 28 additional lending relationships exceeding $2.0 million, with outstanding balances at that date ranging from $2.0 million to $5.7 million. All of these lending relationships were current and performing in accordance with the terms of their loan agreements as of September 30, 2007.

Loan Originations, Purchases, Sales, Solicitation and Processing. Our loan growth arises primarily from the retail origination of our own loans and retaining such loans in portfolio. Our sources of loan originations include repeat customers, referrals from realtors and other professionals, such as attorneys, accountants and financial planners, as well as "walk-in" customers. Gross loan originations totaled approximately $130.1 million for the year ended September 30, 2007. Net of principal repayments, loan growth totaled approximately $40.5 million for the year ended September 30, 2007.

By contrast, our loan purchase activity has been limited in recent years. Toward that end, we did not purchase any whole loans during the years ended September 30, 2007, 2006 and 2005.

10 Next Page

During the years ended September 30, 2007, 2006 and 2005, we sold loans totaling $9.3 million, $5.8 million and $2.4 million, respectively. As noted earlier, we have sold these loans on a non-recourse, servicing retained and non-recourse, servicing released basis. At September 30, 2007, loans serviced for the benefit of others totaled $19.1 million.

Generally, loan sales have been part of our interest rate risk management strategy. However, for the reasons noted earlier, the Bank intends to discontinue the sale of one- to four-family mortgage loan originations for a period of time to augment the growth in commercial loans. The Bank will carefully monitor the earnings, liquidity, and balance sheet allocation impact of this strategy and make interim adjustments, as necessary, to support achievement of the Company's business plan goals and objectives.

We occasionally purchase participations in loans originated through other lending institutions. At September 30, 2007, we had participations with other institutions that had outstanding balances totaling $12.1 million. An additional $1.9 million of unfunded commitments remain outstanding related to those loans. Additionally, we have $1.7 million of outstanding loan balances from the Thrift Institutions Community Investment Corporation of New Jersey ("TICIC"). Approximately $222,000 of unfunded commitments remain outstanding related the TICIC loans. Our participations through these entities are secured by one- to four-family properties as well as multi-family or other non-one- to-four family properties, such as assisted living facilities. We may also sell participation interests in multi-family, commercial and other real estate loans or construction loans.

Loan Commitments. We provide written commitments to prospective borrowers on all one- to four-family and commercial loans. The total amount of commitments to extend credit for these loans as of September 30, 2007, was approximately $22.4 million, excluding commitments on unused lines of credit of $29.2 million and undisbursed portions of construction loans totaling $16.0 million.

Loan Approval Procedures and Authority. Our lending policies and loan approval limits are recommended by senior management and approved by the Board of Directors. Regarding our one-to-four family mortgage and home equity loans, our Loan Underwriter has individual authority to approve one-to four-family loans up to $417,000, the FNMA conforming loan limit. Our Loan Origination Manager has individual authority to approve one-to four-family loans up to $500,000 with FNMA automated underwriting approvals. The loan committee overseeing these lending activities consists of Joseph Kliminski, CEO, Fred Kowal, President & COO, Richard Bzdek, SVP Corporate Secretary and Catherine Bringuier, SVP Chief Lending Officer. Each of these officers has individual authority to approve one- to four-family loans up to $750,000. One- to four-family loans between $750,000 and $1,000,000 require two approvals, at least one of which must be from a loan committee member while the second may be from the Loan Underwriter or the Loan Origination Manager. One- to four-family loans greater than $1,000,000 require two signatures from loan committee members, one of which must be the President & COO or the SVP Chief Lending Officer.

Regarding our commercial loans, including multi-family and non-residential real estate, construction and business loans, the loan committee overseeing these lending activities consists of Joseph Kliminski, CEO, Fred Kowal, President & COO, Catherine Bringuier, SVP Chief Lending Officer and Glenn Miller, SVP Commercial Real Estate. Loan approval authority within this committee is limited to the CEO, President & COO and SVP Chief Lending Officer. Commercial loans secured by real estate up to $750,000 require the approval of either the President & COO or SVP Chief Lending Officer. Loans greater than $750,000 require two approvals from authorized members of the loan committee.

In addition to the applicable loan committee member approvals, all loans in excess of certain dollar thresholds must be presented to a subcommittee of the Board of Directors for review and approval. The Board

11 Next Page

of Director's loan committee currently comprises two outside directors - the Chairman and Vice Chairman of the Board. Through the first half of fiscal 2007, all loans over $1,750,000 required the approval of the Board of Director's loan committee. During the latter half of fiscal 2007, the loan amount threshold requiring the Board of Director's loan committee approval was increased from $1,750,000 to $2,500,000.

As with existing policies and limits, any changes recommended by management, regarding loan authority, will be subject to Board of Director approval.

Asset Quality

Loan Delinquencies and Collection Procedures. The borrower is notified by both mail and telephone when a loan is sixteen days past due. If the delinquency continues, subsequent efforts are made to contact the delinquent borrower and additional collection notices and letters are sent. When a loan is ninety days delinquent, it is referred to an attorney for repossession or foreclosure. All reasonable attempts are made to collect from borrowers prior to referral to an attorney for collection. In certain instances, we may modify the loan or grant a limited moratorium on loan payments to enable the borrower to reorganize his financial affairs, and we attempt to work with the borrower to establish a repayment schedule to cure the delinquency.

As to mortgage loans, if a foreclosure action is taken and the loan is not reinstated, paid in full or refinanced, the property is sold at judicial sale at which we may be the buyer if there are no adequate offers to satisfy the debt. Any property acquired as the result of foreclosure or by deed in lieu of foreclosure is classified as real estate owned until it is sold or otherwise disposed of. When real estate owned is acquired, it is recorded at the lower of the unpaid principal balance of the related loan or its fair market value less estimated selling costs. The initial write-down of the property is charged to the allowance for loan losses. Adjustments to the carrying value of the properties that result from subsequent declines in value are charged to operations during the period in which the declines occur. At September 30, 2007, we held no real estate owned.

Loans are reviewed on a regular basis and are placed on non-accrual status when they are more than ninety days delinquent. Loans may be placed on a non-accrual status at any time if, in the opinion of management, the collection of additional interest is doubtful. Interest accrued and unpaid at the time a loan is placed on non-accrual status is charged against interest income. Subsequent payments are either applied to the outstanding principal balance or recorded as interest income, depending on the assessment of the ultimate collectibility of the loan. At September 30, 2007, we had approximately $1.2 million of loans that were held on a non-accrual basis.

12 Next Page

Non-Performing Assets. The following table provides information regarding our non-performing loans and other non-performing assets as of the dates indicated.

	At September 30,
	2007	2006	2005	2004	2003
	(Dollars in thousands)
Loans accounted for on a non-accrual basis:
One- to four-family	$    690	$    691	$    952	$    445	$    147
Multi-family and non residential	550	1,398	101	74	369
Construction	-	-	-	-	-
Consumer	-	-	62	-	1
Home equity	-	-	48	-	-
Business	9	-	-	-	-
Total	1,249	2,089	1,163	519	517
Accruing loans contractually past due 90 days or more	-	-	-	-	-
Total non-performing loans	1,249	2,089	1,163	519	517
Real estate owned	-	-	-	-	-
Other non-performing assets	-	-	-	-	-
Total non-performing assets	$ 1,249	$ 2,089	$ 1,163	$ 519	$ 517
Allowance for loan losses to non-performing loans	205.56%	101.64%	142.62%	304.05%	265.18%
Total non-performing loans to total loans	0.28%	0.52%	0.34%	0.17%	0.20%
Total non-performing loans to total assets	0.22%	0.41%	0.21%	0.12%	0.12%
Total non-performing assets to total assets	0.22%	0.41%	0.21%	0.12%	0.12%

During the year ended September 30, 2007, gross interest income of $45,510 would have been recorded on loans accounted for on a non-accrual basis if those loans had been current, and $29,069 of interest on such loans was included in income for the year ended September 30, 2007.

Classified Assets. Management, in compliance with Office of Thrift Supervision ("OTS") guidelines, has instituted an internal loan review program, whereby non-performing loans are classified as substandard, doubtful or loss. It is our policy to review the loan portfolio, in accordance with regulatory classification procedures, on at least a quarterly basis. When a loan is classified as substandard or doubtful, management evaluates the loan for impairment. When management classifies a portion of a loan as loss, a reserve equal to 100% of the loss amount is allocated against the loan.

An asset is considered "substandard" if it is inadequately protected by the paying capacity and net worth of the obligor or the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Assets classified as "doubtful" have all of the weaknesses inherent in those classified substandard, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values. Assets, or portions thereof, classified as "loss" are considered uncollectible and of so little value that their continuance as assets without the allocation of an impairment reserve is not warranted. Assets which do not currently expose the insured institution to a sufficient degree of risk to warrant classification in one of the aforementioned categories but

13 Next Page

which have credit deficiencies or potential weaknesses are required to be designated "special mention" by management.

Management's classification of assets is reviewed by the Board on a regular basis and by the regulatory agencies as part of their examination process. The following table discloses our classification of assets and designation of certain loans as special mention as of September 30, 2007. At September 30, 2007, all of the classified assets and special mention designated assets were loans.

	At September 30, 2007
	(In thousands)
Special Mention	$   401
Substandard	1,029
Doubtful	-
Loss	-
Total	$1,430

At September 30, 2007, approximately $848,000 of loans classified as "substandard" were accounted for as non-performing loans. As of that same date, a single loan totaling approximately $401,000 classified as "special mention" was also accounted for as a non-performing loan.

Allowance for Loan Losses. The allowance for loan losses is a valuation account that reflects our estimation of the losses in our loan portfolio to the extent they are both probable and reasonable to estimate. The allowance is maintained through provisions for loan losses that are charged to income in the period they are established. We charge losses on loans against the allowance for loan losses when we believe the collection of loan principal is unlikely. Recoveries on loans previously charged-off are added back to the allowance.

Our methodology for calculating the allowance for lease and loan losses is based upon FAS 5 and FAS 114. Under FAS 114, we identify and analyze certain loans for impairment. If an impairment is identified on a specific loan, a loss allocation is recorded in the amount of that impairment. Loan types subject to FAS 114 are, multi-family mortgage loans, non-residential mortgage loans, construction loans and business loans. We also conduct a separate review of all loans on which the collectibility of principal may not be reasonably assured. We evaluate all classified loans individually and base our determination of a loss factor on the likelihood of collectibility of principal including consideration of the value of the underlying collateral securing the loan.

Under our implementation of FAS 5, we segregate loans by loan category and evaluate homogeneous loans as a group. The loss characteristics of aggregated homogeneous loans are examined using two sets of factors: (1) annual historical loss experience factors that consider the net charge-off history of the Bank and (2) environmental factors. Although there may be other factors that also warrant consideration, we consider the following environmental factors:

• levels and trends of delinquencies and impaired loans;
  
• levels and trends of charge-offs and recoveries;
  
• trends in volume and terms of loans;
  
• changes to lending policies, procedures and practices;
  
• experience, ability and depth of lending management and staff;
  
• national, regional and local economic trends and conditions;
  
• industry conditions; and
  
• changes in credit concentration.

14 Next Page

In recent years, our charge-offs have been low and, consequently, our estimation of the amount of losses in the loan portfolio both probable and reasonable to estimate has been more reflective of other factors.

Our allowance estimation methodology utilizes historical loss experience and environmental factors such as the local and national economy, loan growth rate, trends in delinquencies and non-performing loans, experience of lending personnel, and other similar factors. However, we have had significant growth in recent years. As a result of the significant loan growth, a portion of our loan portfolio is considered "unseasoned," meaning that the loans were originated less than three years ago. Generally, unseasoned loans demonstrate a greater risk of credit losses than their seasoned counterparts. Moreover, in many cases, these unseasoned loans are obligations of borrowers with whom the Bank has had no prior payment experience. In the absence of adequate historical loss experience upon which the Bank can base its allowance calculations, the Bank includes peer group information in its evaluation of the allowance. The peer group information utilized by the Bank is that of OTS regulated thrifts in the northeast region. Management believes that the majority of thrifts in the northeast region have similar loan portfolio composition.

This estimation is inherently subjective as it requires estimates and assumptions that are susceptible to significant revisions as more information becomes available or as future events change. Future additions to the allowance for loan losses may be necessary if economic and other conditions in the future differ substantially from the current operating environment. In addition, the OTS as an integral part of its examination process, periodically reviews our loan and foreclosed real estate portfolios and the related allowance for loan losses and valuation allowance for foreclosed real estate. The OTS may require the allowance for loan losses or the valuation allowance for foreclosed real estate to be increased based on its review of information available at the time of the examination, which would negatively affect our earnings.

Based on the allowance for loan loss methodology discussed above, management expects provisions for loan losses to increase as a result of the net growth in loans called for in the Company's business plan. Specifically, our business strategy calls for increased strategic emphasis in commercial real estate and business lending. The loss factors used in the Bank's loan loss calculations are generally higher for such loans compared with those applied to one- to four-family mortgage loans. Consequently, future net growth in commercial real estate and business loans may result in required loss provisions that exceed those recorded in prior years when comparatively greater strategic emphasis had been placed growing the 1-4 family mortgage loan portfolio.

15 Next Page

The following table sets forth information with respect to our allowance for loan losses for the periods indicated:

	Year Ended September 30,
	2007	2006	2005	2004	2003
	(Dollars in thousands)
Allowance balance at beginning of period	$    2,123	$    1,658	$    1,578	$    1,371	$    1,117
Provision for loan losses	445	465	81	207	254
Charge-offs:
One- to four-family real estate	-	-	-	-	-
Consumer	-	-	-	-	-
Total charge-offs	-	-	-	-	-
Recoveries:
Consumer	-	-	-	-	-
Total recoveries	-	-	-	-	-
Net (charge-offs) recoveries	-	-	-	-	-
Allowance balance at end of period	$     2,568	$     2,123	$     1,658	$     1,578	$     1,371
Total loans outstanding at end of period	$ 456,579	$ 416,564	$ 341,978	$ 313,713	$ 264,702
Average loans outstanding during period	$ 418,969	$ 369,916	$ 327,948	$ 278,632	$ 238,474
Allowance as a % of total loans	0.58%	0.53%	0.48%	0.50%	0.52%
Net loans charge-offs as a % of average loans	0.00%	0.00%	0.00%	0.00%	0.00%

16 Next Page

Allocation of Allowance for Loan Losses. The following table sets forth the allocation of our allowance for loan losses by loan category and the percent of loans in each category to total loans receivable, net, at the dates indicated. The portion of the loan loss allowance allocated to each loan category does not represent the total available for future losses which may occur within the loan category since the total loan loss allowance is a valuation allocation applicable to the entire loan portfolio.

	At September 30
	2007		2006		2005		2004		2003
	Amount	Percent of Loans to Total Loans	Amount	Percent of Loans to Total Loans	Amount	Percent of Loans to Total Loans	Amount	Percent of Loans to Total Loans	Amount	Percent of Loans to Total Loans
	(Dollars in thousands)
At end of period allocated to:
One- to four-family real       estate	$    748	60.92%	$    806	68.05%	$    782	78.09%	$    777	80.17%	$    685	81.59%
Multi-family and     non-residential real estate	1,109	21.70	878	17.64	737	17.14	680	13.77	566	13.68
Land	46	0.73	6	0.13	-	-	-	-	-	-
Construction	427	10.64	174	7.96	12	0.42	21	2.29	3	0.47
Consumer	5	0.14	5	0.17	4	0.21	4	0.24	3	0.29
Home equity	139	4.33	95	4.59	63	3.92	43	3.40	37	3.36
Business	94	1.54	115	1.46	16	0.22	9	0.13	34	0.61
Unallocated	-	-	44	-	44	-	44	-	43	-
Total allowance	$ 2,568	100.00%	$2,123	100.00%	$ 1,658	100.00%	$ 1,578	100.00%	$ 1,371	100.00%

17 Next Page

Securities Portfolio

General. Federally chartered savings banks have the authority to invest in various types of liquid assets. The investments authorized by the Bank's board-approved investment policy include U.S. government and government agency obligations, mortgage-related securities of various U.S. government agencies or government-sponsored enterprises and private corporate issuers (including securities collateralized by mortgages) and mutual funds comprising such securities. Authorized investments also include certificates of deposits of insured banks and savings institutions and municipal securities. Our policy does not permit corporate non-residential mortgage related securities. Our investment securities portfolio at September 30, 2007 did not contain securities of any issuer with an aggregate book value in excess of 10% of our equity, excluding those issued by the United States Government or its agencies.

Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," requires that securities be categorized as "held-to-maturity," "trading securities" or "available-for-sale," based on management's intent as to the ultimate disposition of each security. Statement No. 115 allows debt securities to be classified as "held-to-maturity" and reported in financial statements at amortized cost only if the reporting entity has the positive intent and ability to hold these securities to maturity. Securities that might be sold in response to changes in market interest rates, changes in the security's prepayment risk, increases in loan demand, or other similar factors cannot be classified as "held-to-maturity."

We do not currently use or maintain a trading account. Securities not classified as "held-to-maturity" are classified as "available-for-sale." These securities are reported at fair value, and unrealized gains and losses on the securities are excluded from earnings and reported, net of deferred taxes, as a separate component of equity.

All of our securities carry market risk insofar as changes in market rates of interest may cause a decrease in their market value. Investments in securities are made based on certain considerations, which include the interest rate, tax considerations, yield, settlement date and maturity of the security, our liquidity position, and anticipated cash needs and sources. The effect that the proposed security would have on our credit and interest rate risk and risk-based capital is also considered. We purchase securities to provide necessary liquidity for day-to-day operations, to aid in the management of interest rate risk and when investable funds exceed loan demand.

Our investment policy, which is approved by the Board of Directors, is designed to foster earnings and liquidity within prudent interest rate risk guidelines, while complementing our lending activities. Generally, our investment policy is to invest funds in various categories of securities and maturities based upon our liquidity needs, asset/liability management policies, investment quality, marketability and performance objectives. The Asset/Liability Management Committee, comprised of the Bank's Chief Executive Officer, President and Chief Operating Officer, Senior Vice President and Chief Financial Officer, Senior Vice President and Chief Lending Officer, Senior Vice President, Commercial Real Estate, Vice President, Branch Administration, and Vice President, Controller, is responsible for the oversight of the securities portfolio. Management conducts regular, informal meetings, generally on a weekly basis while the committee meets quarterly to formally review the Bank's securities portfolio. The results of the committee's quarterly review are reported to the full Board, which makes adjustment to the investment policy and strategies as it considers necessary and appropriate.

We do not currently participate in hedging programs, interest rate caps, floors or swaps, or other activities involving the use of off-balance sheet derivative financial instruments, but we may do so in the future as part of our interest rate risk management. Further, we do not invest in securities which are not rated investment grade.

18 Next Page

Actual maturities of the securities held by us may differ from contractual maturities because issuers may have the right to call or prepay obligations with and without prepayment penalties.

Mortgage-related Securities. Mortgage-related securities represent a participation interest in a pool of one- to four-family or multi-family mortgages, although we focus primarily on mortgage-related securities secured by one- to four-family mortgages. Our mortgage-related securities portfolio includes mortgage-backed securities and collateralized mortgage obligations issued by U.S. government agencies or government-sponsored entities, such as Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, and the Federal National Mortgage Association, as well as by private corporate issuers.

The mortgage originators use intermediaries (generally government agencies and government-sponsored enterprises, but also a variety of private corporate issuers) to pool and repackage the participation interests in the form of securities, with investors such as us receiving the principal and interest payments on the mortgages. Securities issued or sponsored by U.S. government agencies and government-sponsored entities are guaranteed as to the payment of principal and interest to investors. Privately issued securities typically offer rates above those paid on government agency issued or sponsored securities, but lack the guaranty of those agencies and are generally less liquid investments. In the absence of an agency guarantee, our policy requires that we purchase only privately-issued mortgage-related securities that have been assigned the highest credit rating (AAA) by the applicable securities rating agencies. Limiting our purchases of privately-issued mortgage-related securities to those with a AAA rating reduces our added credit risk in purchasing non-agency guaranteed securities. Moreover, because there is a robust secondary market for AAA-rated privately-issued mortgage-related securities, much of the liquidity risk otherwise associated with our investment in non-agency securities is mitigated.

Mortgage-backed securities are pass-through securities typically issued with stated principal amounts, and the securities are backed by pools of mortgages that have loans with interest rates that are within a specific range and have varying maturities. The life of a mortgage-backed security thus approximates the life of the underlying mortgages. Mortgage-backed securities generally yield less than the mortgage loans underlying the securities. The characteristics of the underlying pool of mortgages, i.e., fixed-rate or adjustable-rate, as well as prepayment risk, are passed on to the certificate holder. Mortgage-backed securities are generally referred to as mortgage participation certificates or pass-through certificates.

Collateralized mortgage obligations are mortgage-derivative products that aggregate pools of mortgages and mortgage-backed securities and create different classes of securities with varying maturities and amortization schedules as well as a residual interest with each class having different risk characteristics. The cash flows from the underlying collateral are usually divided into "tranches" or classes whereby tranches have descending priorities with respect to the distribution of principal and interest repayment of the underlying mortgages and mortgage-backed securities as opposed to pass through mortgage-backed securities where cash flows are distributed pro rata to all security holders. Unlike mortgage-backed securities from which cash flow is received and prepayment risk is shared pro rata by all securities holders, cash flows from the mortgages and mortgage-backed securities underlying collateralized mortgage obligations are paid in accordance with a predetermined priority to investors holding various tranches of the securities or obligations. A particular tranche or class may carry prepayment risk which may be different from that of the underlying collateral and other tranches.

19 Next Page

At September 30, 2007, the Company's portfolio of collateralized mortgage obligations primarily included tranches whose terms and structure support the regular receipt of principal cash flows within a wide range of prepayment speeds of the underlying collateral. This reduces the likelihood that reductions in market value resulting from movements in market interest rates may be identified as "other than temporary" which would require an adjustment to the carrying cost of the security recorded through earnings. Rather, investing in collateralized mortgage obligations allows us to better manage the prepayment and extension risk associated with conventional mortgage-related securities thereby reducing the market value sensitivity of that segment of the investment portfolio. Management believes collateralized mortgage obligations represent attractive alternatives relative to other investments due to the wide variety of maturity, repayment and interest rate options available. At September 30, 2007, collateralized mortgage obligations comprised $37.2 million of our securities portfolio.

Other Securities. In addition, at September 30, 2007 we held an approximate investment of $2.6 million in Federal Home Loan Bank of New York common stock (this amount is not shown in the securities portfolio).

The following table sets forth the carrying value of our securities portfolio at the dates indicated. Securities that are held-to-maturity are shown at our amortized cost, and securities that are available-for-sale are shown at the current market value.

	At September 30,
	2007	2006	2005
	(In thousands)
Securities Held-to-Maturity:
U.S. government and federal agency obligation	$          -	$   2,000	$   2,000
Collateralized mortgage non-agency obligations	1,855	2,137	2,503
Collateralized mortgage agency obligations	47	58	76
Government National Mortgage Association	145	200	244
Federal Home Loan Mortgage Corporation	138	286	385
Federal National Mortgage Association	4,545	5,866	2,616
Total securities held-to-maturity	6,730	10,547	7,824
Securities Available-for-Sale:
U.S. government and federal agency obligation	2,005	10,917	9,805
Collateralized mortgage non-agency obligations	-	-	-
Collateralized mortgage agency obligations	35,271	32,393	25,763
Government National Mortgage Association	81	108	148
Federal Home Loan Mortgage Corporation	9,040	12,882	4,090
Federal National Mortgage Association	11,696	18,223	12,782
Mutual fund	-	-	9,749
Total securities available-for-sale	58,093	74,523	62,337
Total	$ 64,823	$ 85,070	$ 70,161

20 Next Page

The following table sets forth certain information regarding the carrying values, weighted average yields and maturities of our investment and mortgage-backed securities portfolio at September 30, 2007. This table shows contractual maturities and does not reflect repricing or the effect of prepayments. Actual maturities may differ.

	At September 30, 2007
	One Year or Less		One to Five Years		Five to Ten Years		More than Ten Years		Total Securities
	Carrying Value	Average Yield	Carrying Value	Average Yield	Carrying Value	Average Yield	Carrying Value	Average Yield	Carrying Value	Average Yield	Market Value
	(Dollars in thousands)
U.S. Government and Federal  Agency	$ 2,005	5.18%	$        -	-%	$        -	-%	$     -	-%	$ 2,005	5.18%	$ 2,005
Mortgage-backed non-agency   Obligations	-	-	1,855	3.89	-	-	-	-	1,855	3.89	1,837
Government National Mortgage  Association	-	-	-	-	-	-	226	6.15	226	6.15	228
Federal Home Loan Mortgage  Association	789	3.07	368	2.70	19,106	4.82	18,602	4.52	38,865	4.62	38,864
Federal National Mortgage  Association	-	-	-	-	13,468	4.09	8,404	5.01	21,872	4.44	21,830
Total	$ 2,794	4.58%	$ 2,223	3.69%	$ 32,574	4.52%	$ 27,232	4.68%	$ 64,823	4.56%	$ 64,764

21 Next Page

Sources of Funds

General. Deposits are our major source of funds for lending and other investment purposes. In addition, we derive funds from loan and mortgage-backed securities principal repayments, and proceeds from the maturity, call and sale of mortgage-backed securities and investment securities. Loan and securities payments are a relatively stable source of funds, while deposit inflows are significantly influenced by general interest rates and money market conditions. Borrowings (principally from the Federal Home Loan Bank) are also used to supplement the amount of funds for lending and investment.

Deposits. Our current deposit products include checking, savings, money market, club accounts, certificates of deposit accounts ranging in terms from thirty days to ten years, and individual retirement accounts. Deposit account terms are generally determined based upon the required minimum balance amount, the amount of time that the funds must remain on deposit and the applicable interest rate.

Deposits are obtained primarily from within New Jersey. Traditional methods of advertising are used to attract new customers and deposits, including print media, direct mail and inserts included with customer statements. We have not in the past utilized the services of deposit brokers and do not expect to utilize such services at this time. During fiscal 2007, we offered special savings programs at higher promotional interest rates in connection with the opening of our Verona, Nutley and Clifton branch offices. The Bank also expects to offer special promotional programs by which premiums or incentives will be paid for the opening of checking accounts. We also periodically select particular certificate of deposit maturities for promotion.

The determination of interest rates is based upon a number of factors, including: (1) our need for funds based on loan demand, current maturities of deposits and other cash flow needs; (2) a current survey of general market rates and rates of a selected group of competitors' rates for similar products; (3) our current cost of funds and yield on assets; and (4) the alternate cost of funds on a wholesale basis, in particular the cost of advances from the Federal Home Loan Bank. Interest rates are reviewed by senior management on a weekly basis.

At September 30, 2007, $193.5 million or 45.2% of our deposits were in certificates of deposit. Our liquidity could be reduced if a significant amount of certificates of deposit, maturing within a short period of time, were not renewed. Historically, a significant portion of the certificates of deposit remain with us after they mature and we believe that this will continue. However, the need to retain these time deposits could result in an increase in our cost of funds.

At September 30, 2007, we had approximately $5.6 million of public funds on deposit at the Bank. These deposits include one account relationship whose balances at September 30, 2007 totaled approximately $5.2 million.

22 Next Page

The following table sets forth the distribution of deposits at the Bank at the dates indicated and the weighted average nominal interest rates for each period on each category of deposits presented.

	At September 30
	2007			2006			2005
	Amount	Percent of Total Deposits	Weighted Average Nominal Rate	Amount	Percent of Total Deposits	Weighted Average Nominal Rate	Amount	Percent of Total Deposits	Weighted Average Nominal Rate
Non-interest-bearing    demand deposits	$  30,494	7.11%	-%	$  23,545	7.20%	-%	$  25,583	7.50%	-%
Interest-bearing    demand deposits	111,795	26.08	4.51	31,429	9.61	2.25	39,264	11.52	1.87
Savings deposits	92,778	21.65	2.54	107,008	32.71	2.62	123,270	36.16	1.68
Time deposits	193,533	45.16	4.93	165,165	50.48	4.48	152,808	44.82	3.45
Total deposits	$ 428,600	100.00%	3.95%	$ 327,147	100.00%	3.34%	$ 340,925	100.00%	2.37%

23 Next Page

The following table shows the amount of our certificates of deposit of $100,000 or more by time remaining until maturity as of September 30, 2007.

Remaining Time Until Maturity	Certificates of Deposits
	(In thousands)
Within three months		$ 22,009
Three through six months		15,665
Six through twelve months		25,064
Over twelve months		16,961
Total		$ 79,699

Borrowings. To supplement our deposits as a source of funds for lending or investment, we borrow funds in the form of advances from the Federal Home Loan Bank. We regularly make use of Federal Home Loan Bank advances as part of our interest rate risk management, primarily to extend the duration of funding to match the longer term fixed rate loans held in the loan portfolio as part of our growth strategy.

Advances from the Federal Home Loan Bank are typically secured by the Federal Home Loan Bank stock we own and a portion of our residential mortgage loans and may be secured by other assets, mainly securities which are obligations of or guaranteed by the U.S. government. At September 30, 2007, our borrowing limit with the Federal Home Loan Bank was approximately $140.2 million. Additional information regarding our Federal Home Loan Bank advances is included under Note 8 of the Notes to the Financial Statements.

The following table sets forth certain information regarding our borrowed funds.

	At or For the Year Ended September 30,
	2007	2006	2005
Federal Home Loan Bank Advances:
Average balance outstanding	$ 44,256	$ 52,725	$ 62,056
Maximum amount outstanding   at any month-end during the period	$ 56,269	$ 56,075	$ 72,853
Balance outstanding at end of period	$ 37,612	$ 56,075	$ 53,734
Weighted average interest rate during   the period	5.14%	4.95%	4.58%
Weighted average interest rate at end   of period	5.21%	5.16%	4.84%

24 Next Page

Subsidiary Activity

In addition to American Bank of New Jersey, the Company has one other subsidiary, ASB Investment Corp., a New Jersey corporation, which was organized in June 2003 for the purpose of selling insurance and investment products, including annuities, to customers of the Bank and the general public through a third party networking arrangement. There has been very little activity at this subsidiary and sales are currently limited to the sale of fixed rate annuities.

American Bank of New Jersey has one subsidiary, American Savings Investment Corp., which was formed in August 2004 under New Jersey law as an investment company subsidiary. The purpose of this subsidiary is to invest in stocks, bonds, notes and all types of equity, mortgages, debentures and other investment securities. Holding investment securities in this subsidiary reduces our New Jersey state income tax rate.

Personnel

As of September 30, 2007, we had 78 full-time employees and 11 part-time employees. The employees are not represented by a collective bargaining unit. We believe our relationship with our employees is satisfactory.

Regulation

Set forth below is a brief description of certain laws that relate to the regulation of the Bank and the Company. The description does not purport to be complete and is qualified in its entirety by reference to applicable laws and regulations. The Bank and the Company operate in a highly regulated industry. This regulation and supervision establishes a comprehensive framework of activities in which a federal savings bank may engage and is intended primarily for the protection of the deposit insurance fund and depositors.

Any change in applicable statutory and regulatory requirements, whether by the OTS, the Federal Deposit Insurance Corporation ("FDIC") or the United States Congress, could have a material adverse impact on the Company and the Bank, and their operations. The adoption of regulations or the enactment of laws that restrict the operations of the Bank and/or the Company or impose burdensome requirements upon one or both of them could reduce their profitability and could impair the value of the Bank's franchise which could hurt the trading price of the Company's common stock.

Regulation of the Bank

General. As a federally chartered, FDIC-insured savings bank, the Bank is subject to extensive regulation by the OTS and the FDIC. This regulatory structure gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies regarding the classification of assets and the level of the allowance for loan losses. The activities of federal savings banks are subject to extensive regulation including restrictions or requirements with respect to loans to one borrower, the percentage of non-mortgage loans or investments to total assets, capital distributions, permissible investments and lending activities, liquidity management, transactions with affiliates and community reinvestment. The FDIC also has authority to examine the Bank in its role as the administrator of the Deposit Insurance Fund ("DIF"), which is the fund established upon the merger of the Savings Association Insurance Fund ("SAIF") and the Bank Insurance Fund ("BIF") in March 2006. Federal savings banks are also subject to reserve requirements of the Federal Reserve System. A federal savings bank's relationship with its depositors and borrowers is regulated by both state and federal law, especially in such matters as the ownership of savings accounts and the form and content of the bank's mortgage documents.

25 Next Page

The Bank must file regular reports with the OTS concerning its activities and financial condition, and must obtain regulatory approvals prior to entering into certain transactions such as mergers with or acquisitions of other financial institutions. The OTS regularly examines the Bank and prepares reports to the Bank's Board of Directors on deficiencies, if any, found in its operations.

Insurance of Deposit Accounts. The Bank is a member of the DIF, which is administered by the FDIC. Deposits are insured up to the applicable limits by the FDIC and such insurance is backed by the full faith and credit of the United States Government. As insurer, the FDIC imposes deposit insurance premiums and is authorized to conduct examinations of and to require reporting by FDIC-insured institutions. It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious risk to the DIF. The FDIC also has the authority to initiate enforcement actions against savings institutions, after giving the OTS an opportunity take such action, and may terminate the deposit insurance if it determines that the institution has engaged in unsafe or unsound practices or is in an unsafe or unsound condition.

The FDIC merged the BIF and SAIF to form the DIF on March 31, 2006 in accordance with the Federal Deposit Insurance Reform Act of 2005. FDIC maintains the DIF by assessing depository institutions an insurance premium. The FDIC Board approved a new risk-based premium system in November 2006 which was effective January 1, 2007. The FDIC's new regulations for risk-based deposit insurance assessments establish four Risk Categories. Risk Category I, for well-capitalized institutions that are financially sound with only a few minor weaknesses, includes approximately 95% of FDIC-insured institutions. Risk Categories II, III, and IV present progressively greater risks to the deposit insurance fund. Effective January 1, 2007, Risk Category I institutions pay quarterly assessments for deposit insurance at annual rates of five to seven basis points. The rates for Risk Categories, II, III, and IV are seven, 28, and 43 basis points, respective. Rates are subject to change with advance notice to insured institutions.

Within Risk Category I, the precise rate for an individual institution with less than $10 billion in assets is generally determined by a formula using CAMELS ratings which are assigned in examinations, and financial ratios. A different method applies for larger institutions. The rate for an individual institution is applied to its assessment base, which is generally its deposit liabilities subject to certain adjustments. An institution (or its successor) insured by the FDIC on December 31, 1996 which had previously paid assessments is eligible for certain credit against deposit insurance assessments. We anticipate that this credit will reduce our FDIC premium expense for fiscal 2008 before expiring during the latter half of that year.

The Bank, like other former SAIF insured institutions and BIF insured institutions, is required to pay a Financing Corporation ("FICO") assessment in order to fund the interest on bonds issued to resolve thrift failures in the 1980s. For the first quarter of fiscal year 2007, the annual rate for this assessment is 1.14 basis points for each $100 in domestic deposits. These assessments, which may be revised based upon the level of BIF and former SAIF classified insured institution's deposits, will continue until the bonds mature in 2017 through 2019.

Regulatory Capital Requirements. OTS capital regulations require savings institutions to meet three capital standards: (1) tangible capital equal to 1.5% of total adjusted assets, (2) "Tier 1" or "core" capital equal to at least 4% (3% if the institution has received the highest possible rating on its most recent examination) of total adjusted assets, and (3) risk-based capital equal to 8% of total risk-weighted assets. At September 30, 2007 the Bank exceeded all regulatory capital requirements and was classified as "well capitalized."

26 Next Page

In addition, the OTS may require that a savings institution that has a risk-based capital ratio of less than 8%, a ratio of Tier 1 capital to risk-weighted assets of less than 4% or a ratio of Tier 1 capital to total adjusted assets of less than 4% (3% if the institution has received the highest rating on its most recent examination) take certain action to increase its capital ratios. If the savings institution's capital is significantly below the minimum required levels of capital or if it is unsuccessful in increasing its capital ratios, the OTS may restrict its activities.

For purposes of the OTS capital regulations, tangible capital is defined as core capital less all intangible assets except for certain mortgage servicing rights. Tier 1 or core capital is defined as common stockholders' equity, non-cumulative perpetual preferred stock and related surplus, minority interests in the equity accounts of consolidated subsidiaries, and certain non-withdrawable accounts and pledged deposits of mutual savings banks. The Bank does not have any non-withdrawable accounts or pledged deposits. Tier 1 and core capital are reduced by an institution's intangible assets, with limited exceptions for certain mortgage and non-mortgage servicing rights and purchased credit card relationships. Both core and tangible capital are further reduced by an amount equal to the savings institution's debt and equity investments in "non-includable" subsidiaries engaged in activities not permissible to national banks other than subsidiaries engaged in activities undertaken as agent for customers or in mortgage banking activities and subsidiary depository institutions or their holding companies.

The risk-based capital standard for savings institutions requires the maintenance of total capital of 8% of risk-weighted assets. Total capital equals the sum of core and supplementary capital. The components of supplementary capital include, among other items, cumulative perpetual preferred stock, perpetual subordinated debt, mandatory convertible subordinated debt, intermediate-term preferred stock, the portion of the allowance for loan losses not designated for specific loan losses and up to 45% of unrealized gains on equity securities. The portion of the allowance for loan and lease losses includable in supplementary capital is limited to a maximum of 1.25% of risk-weighted assets. Overall, supplementary capital is limited to 100% of core capital. For purposes of determining total capital, a savings institution's assets are reduced by the amount of capital instruments held by other depository institutions pursuant to reciprocal arrangements and by the amount of the institution's equity investments (other than those deducted from core and tangible capital) and its high loan-to-value ratio land loans and non-residential construction loans.

A savings institution's risk-based capital requirement is measured against risk-weighted assets, which equal the sum of each on-balance-sheet asset and the credit-equivalent amount of each off-balance-sheet item after being multiplied by an assigned risk weight. These risk weights range from 0% for cash to 100% for delinquent loans, property acquired through foreclosure, commercial loans, and other assets.

OTS rules require a deduction from capital for savings institutions with certain levels of interest rate risk. The OTS calculates the sensitivity of an institution's net portfolio value based on data submitted by the institution in a schedule to its quarterly Thrift Financial Report and using the interest rate risk measurement model adopted by the OTS. The amount of the interest rate risk component, if any, deducted from an institution's total capital is based on the institution's Thrift Financial Report filed two quarters earlier. The OTS has indefinitely postponed implementation of the interest rate risk component, and the Bank has not been required to determine whether it will be required to deduct an interest rate risk component from capital.

Prompt Corrective Regulatory Action. Under the OTS Prompt Corrective Action regulations, the OTS is required to take supervisory actions against undercapitalized institutions, the severity of which depends upon the institution's level of capital. Generally, a savings institution that has total risk-based capital of less than 8.0%, or a leverage ratio or a Tier 1 core capital ratio that is less than 4.0%, is considered to be undercapitalized. A savings institution that has total risk-based capital less than 6.0%, a Tier 1 core risk-based capital ratio of less than 3.0% or a leverage ratio that is less than 3.0% is considered to be "significantly

27 Next Page

undercapitalized." A savings institution that has a tangible capital to assets ratio equal to or less than 2.0% is deemed to be "critically undercapitalized." Generally, the banking regulator is required to appoint a receiver or conservator for an institution that is "critically undercapitalized." The regulation also provides that a capital restoration plan must be filed with the OTS within forty-five days of the date an institution receives notice that it is "undercapitalized," "significantly undercapitalized" or "critically undercapitalized." In addition, numerous mandatory supervisory actions become immediately applicable to the institution, including, but not limited to, restrictions on growth, investment activities, capital distributions, and affiliate transactions. The OTS may also take any one of a number of discretionary supervisory actions against undercapitalized institutions, including the issuance of a capital directive and the replacement of senior executive officers and directors.

Dividend and Other Capital Distribution Limitations. The OTS imposes various restrictions or requirements on the ability of savings institutions to make capital distributions, including cash dividends.

A savings institution that is a subsidiary of a savings and loan holding company, such as the Bank, must file an application or a notice with the OTS at least thirty days before making a capital distribution. A savings institution must file an application for prior approval of a capital distribution if: (i) it is not eligible for expedited treatment under the applications processing rules of the OTS; (ii) the total amount of all capital distributions, including the proposed capital distribution, for the applicable calendar year would exceed an amount equal to the savings bank's net income for that year to date plus the institution's retained net income for the preceding two years; (iii) it would not adequately be capitalized after the capital distribution; or (iv) the distribution would violate an agreement with the OTS or applicable regulations.

The Bank is required to file a capital distribution notice or application with the OTS before paying any dividend to the Company. However, capital distributions by the Company, as a savings and loan holding company, are not subject to the OTS capital distribution rules.

The OTS may disapprove a notice or deny an application for a capital distribution if: (i) the savings institution would be undercapitalized following the capital distribution; (ii) the proposed capital distribution raises safety and soundness concerns; or (iii) the capital distribution would violate a prohibition contained in any statute, regulation or agreement. In addition, a federal savings institution cannot distribute regulatory capital that is required for its liquidation account.

During the fiscal year ended September 30, 2007, the Bank applied for, and received, regulatory approval to pay two $4.0 million dividends to the holding company which were distributed during the quarters ended June 30, 2007 and September 30, 2007. The Bank may apply for regulatory approval to pay additional dividends to the holding company to support the Company's capital management objectives.

Qualified Thrift Lender Test. Federal savings institutions must meet a qualified thrift lender ("QTL") test or they become subject to the business activity restrictions and branching rules applicable to national banks. To qualify as a QTL, a savings institution must either (i) be deemed a "domestic building and loan association" under the Internal Revenue Code by maintaining at least 60% of its total assets in specified types of assets, including cash, certain government securities, loans secured by and other assets related to residential real property, educational loans and investments in premises of the institution or (ii) satisfy the statutory QTL test set forth in the Home Owners' Loan Act by maintaining at least 65% of its "portfolio assets" in certain "Qualified Thrift Investments" (defined to include residential mortgages and related equity investments, certain mortgage-related securities, small business loans, student loans and credit card loans, and 50% of certain community development loans). For purposes of the statutory QTL test, portfolio assets are defined as total assets minus intangible assets, property used by the institution in conducting its business, and liquid assets equal to 20% of total assets. A savings institution must maintain its status as a QTL on a monthly basis in at least

28 Next Page

nine out of every twelve months. The Bank met the QTL test as of September 30, 2007 and in each of the last twelve months and, therefore, qualifies as a QTL.

Transactions with Affiliates. Generally, federal banking law requires that transactions between a savings institution or its subsidiaries and its affiliates must be on terms as favorable to the savings institution as comparable transactions with non-affiliates. In addition, certain types of these transactions are restricted to an aggregate percentage of the savings institution's capital. Collateral in specified amounts must usually be provided by affiliates in order to receive loans from the savings institution. In addition, a savings institution may not extend credit to any affiliate engaged in activities not permissible for a bank holding company or acquire the securities of any affiliate that is not a subsidiary. The OTS has the discretion to treat subsidiaries of savings institutions as affiliates on a case-by-case basis.

Community Reinvestment Act. Under the Community Reinvestment Act ("CRA"), every insured depository institution, including the Bank, has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community. The CRA requires the OTS to assess the depository institution's record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution, such as a merger or the establishment of a branch office by the Bank. An unsatisfactory CRA examination rating may be used as the basis for the denial of an application by the OTS. The Office of Thrift Supervision assigned the Bank an overall rating of "Satisfactory" in its most recent CRA evaluation.

Federal Home Loan Bank ("FHLB") System. The Bank is a member of the FHLB of New York, which is one of twelve regional FHLBs. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from funds deposited by financial institutions and proceeds derived from the sale of consolidated obligations of the FHLB System. It makes loans to members pursuant to policies and procedures established by the board of directors of the FHLB.

As a member, the Bank is required to purchase and maintain stock in the FHLB of New York in an amount equal to the greater of 1% of our aggregate unpaid residential mortgage loans, home purchase contracts or similar obligations at the beginning of each year or 5% of FHLB advances. We are in compliance with this requirement. The FHLB imposes various limitations on advances such as limiting the amount of certain types of real estate related collateral to 30% of a member's capital and limiting total advances to a member.

The FHLBs are required to provide funds for the resolution of troubled savings institutions and to contribute to affordable housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects. These contributions have adversely affected the level of FHLB dividends paid and could continue to do so in the future.

Federal Reserve System. The Federal Reserve System requires all depository institutions to maintain non-interest-bearing reserves at specified levels against their checking accounts and non-personal certificate accounts. The balances maintained to meet the reserve requirements imposed by the Federal Reserve System may be used to satisfy the OTS liquidity requirements.

Savings institutions have authority to borrow from the Federal Reserve System "discount window," but Federal Reserve System policy generally requires savings institutions to exhaust all other sources before borrowing from the Federal Reserve System.

29 Next Page

Regulation of the Company

General. The Company is a savings and loan holding company, subject to regulation and supervision by the OTS. In addition, the OTS has enforcement authority over the Company and any non-savings institution subsidiaries. This permits the OTS to restrict or prohibit activities that it determines to be a serious risk to the Company. This regulation is intended primarily for the protection of the depositors and not for the benefit of stockholders of the Company.

Activities Restrictions. As a savings and loan holding company formed after May 4, 1999, the Company is not a grandfathered unitary savings and loan holding company under the Gramm-Leach-Bliley Act (the "GLB Act"). As a result, the Company and its non-savings institution subsidiaries are subject to statutory and regulatory restrictions on their business activities. Under the Home Owners' Loan Act, as amended by the GLB Act, the non-banking activities of the Company are restricted to certain activities specified by OTS regulation, which include performing services and holding properties used by a savings institution subsidiary, activities authorized for savings and loan holding companies as of March 5, 1987, and non-banking activities permissible for bank holding companies pursuant to the Bank Holding Company Act of 1956 (the "BHC Act") or authorized for financial holding companies pursuant to the GLB Act. Furthermore, no company may acquire control of American Bank of New Jersey unless the acquiring company was a unitary savings and loan holding company on May 4, 1999 (or became a unitary savings and loan holding company pursuant to an application pending as of that date) or the company is only engaged in activities that are permitted for multiple savings and loan holding companies or for financial holding companies under the BHC Act as amended by the GLB Act.

Mergers and Acquisitions. The Company must obtain approval from the OTS before acquiring more than 5% of the voting stock of another savings institution or savings and loan holding company or acquiring such a savings institution or savings and loan holding company by merger, consolidation or purchase of its assets. In evaluating an application for the Company to acquire control of a savings institution, the OTS would consider the financial and managerial resources and future prospects of the Company and the target institution, the effect of the acquisition on the risk to the insurance funds, the convenience and the needs of the community and competitive factors.

Sarbanes-Oxley Act of 2002. On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the "Act"). The Securities and Exchange Commission ("SEC") has promulgated new regulations pursuant to the Act and may continue to propose additional implementing or clarifying regulations as necessary in furtherance of the Act. The passage of the Act, and the regulations implemented by the SEC subject publicly-traded companies to additional and more cumbersome reporting regulations and disclosure requirements. Compliance with the Act and corresponding regulations may increase the Company's expenses.

Item 1A. Risk Factors.

Our strategic plan calls for us to diversify our loan portfolio with increased emphasis on commercial lending which may increase our operating expenses in the future and result in a higher degree of credit risk within our loan portfolio.

Commercial loans include multi-family and non-residential mortgage loans, construction loans and business loans. At September 30, 2007, our loan portfolio included commercial loans totaling $141.9 million, or 32.4% of our loans receivable, net. It is our intention to significantly increase our origination of these types of loans. As part of our plan to grow and diversify the loan mix, we may expand our commercial lending business unit and may hire additional commercial lenders over the next several years. We would expect our compensation

30 Next Page

and benefit expenses to increase significantly if we hire these lenders and associated support staff. We also expect that our construction lending program will also continue to expand in connection with our increasing strategic emphasis on commercial lending.

Commercial loans are generally considered to involve a higher degree of credit risk than long-term financing of owner-occupied residential properties. The likelihood that these loans will not be repaid or will be late in paying is generally greater than with residential loans. Furthermore, it may take some time for us to attract lending business sufficient to offset the increased compensation and benefit expenses that result from hiring the additional personnel we will need. There can be no assurance that the lenders we hire will successfully grow our loan portfolio.

Our strategic plan calls for us to expand our franchise through de novo branching. New branches are expected to increase our operating expenses and reduce our net income until they achieve profitability which can not be assured.

Our current business plan calls for us to open up to three de novo branches over approximately the next five years. Having opened three full service branches located in Verona, Nutley and Clifton, New Jersey during fiscal 2007, the Company currently has no plans or commitments to open additional de novo branches during fiscal 2008. Rather, the Company expects to direct significant strategic effort toward achieving profitability within each of these three branches while revisiting additional branching opportunities after fiscal 2008. Notwithstanding this current focus, the Company would consider additional branching projects during fiscal 2008 if appropriate opportunities were to arise.

Until new branches attract sufficient business to offset the increased expenses incurred by de novo branching, the new branches are likely to reduce our earnings. There is no assurance, however, that we will be successful in opening de novo branches. Costs for land purchase and branch construction will adversely impact earnings going forward. We currently estimate that total land, construction and equipment costs could average as much as $3.1 million per branch and could be higher. The expenses associated with opening new offices, in addition to the personnel and operating costs that we will have once these offices are open, will significantly increase noninterest expenses. Because these expenses are in fixed assets, they will not result in any additional earnings but will result in a substantial increase in depreciation and occupancy expense. There can be no assurance when, or if, these new offices will open or that we will be successful in executing this part of the business plan. If we are able to locate and obtain suitable sites for these branches, there is no guarantee that these de novo branches will be profitable.

While not a de novo branch, we also expect to incur additional costs associated with relocating and expanding the Bloomfield deposit branch. The new facility will be located on a property adjacent to our Bloomfield headquarters building where the branch is currently located. Such relocation will significantly upgrade and modernize the Bloomfield branch facility supporting the Company's deposit growth and customer service enhancement objectives. The relocation will also support potential expansion of the administrative and lending office space within the Company's existing headquarters facility where the branch is currently located should such expansion be required to support the Company's business plan. Like the de novo branches mentioned above, the relocation of the Bloomfield branch is expected to increase our operating costs through various forms of additional occupancy and depreciation costs,

We expect that changes in interest rates may have a significant, adverse impact on our net interest income.

The income from our assets and the cost of our liabilities are sensitive to changes in interest rates. Our ability to make a profit largely depends on our net interest income, which could be negatively affected by changes in interest rates. Net interest income is the difference between: (a) the interest income we earn on our interest-

31 Next Page

earning assets such as loans and securities; and (b) the interest expense we pay on our interest-bearing liabilities such as deposits and amounts we borrow. The rates we earn on our assets and the rates we pay on our liabilities are generally fixed for a contractual period of time. We, like many savings institutions, have liabilities that generally have shorter contractual maturities or other repricing characteristics than our assets. This imbalance can create significant earnings volatility, because market interest rates change over time. In a period of rising interest rates, the interest income earned on our assets may not increase as rapidly as the interest paid on our liabilities. In a period of declining interest rates the interest income earned on our assets may decrease more rapidly than the interest paid on our liabilities.

Our business is geographically concentrated in New Jersey and the New York metropolitan area. A downturn in economic conditions in the state and/or the surrounding region could have an adverse impact on our profitability.

A substantial majority of our loans are to individuals and businesses in New Jersey and the New York metropolitan area. Any decline in the regional economy could have an adverse impact on our earnings. Because we have a significant amount of real estate loans, decreases in local real estate values could adversely affect the value of property used as collateral. Adverse changes in the economy and real estate values may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings.

Strong competition within our market area may limit our growth and profitability.

Competition in the banking and financial services industry in New Jersey is intense. In our market area, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies and brokerage and investment banking firms operating locally and elsewhere. Many of these competitors have substantially greater resources and lending limits than we do and offer services that we do not or cannot provide. This competition has made it more difficult for us to make new loans and more difficult to retain deposits. Price competition for loans might result in us originating fewer loans, or earning less on our loans, and price competition for deposits might result in slower growth or reduction of our total deposits or having to pay more for our deposits.

We operate in a highly regulated environment and may be adversely affected by changes in laws and regulations.

We are subject to extensive regulation, supervision and examination by the Office of Thrift Supervision and by the Federal Deposit Insurance Corporation. This regulation and supervision govern the activities in which a bank and its holding company may engage and are intended primarily for the protection of the insurance fund and depositors. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of a bank, the classification of assets by a bank and the adequacy of a bank's allowance for loan losses. Any change in this regulation and oversight, whether in the form of regulatory policy, regulations, or legislation could have a material impact on us and our operations.

Item 1B. Unresolved Staff Comments.

None.

32 Next Page

Item 2. Properties.

At September 30, 2007, our net investment in property and equipment totaled $10.9 million. We use outside service companies for a variety of data processing services. The following table sets forth the location of our main office, separate drive-up facility and four existing branch offices, the year each opened and the net book value for each location. The table also reports the net book value of funds disbursed through September 30, 2007 relating to the Bloomfield branch relocation discussed earlier. Additional disbursements were made in the first quarter of fiscal 2008 increasing its net book value as construction of that branch continued toward an expected opening date in January 2008.

Office Location	Year Facility Opened	Leased or Owned	Net Book Value at September 30, 2007
			(In thousands)
Main Office 365 Broad Street Bloomfield, New Jersey 07003	1965	Owned	$ 1,217
Full Service Branch (in process of construction at September 30, 2007) 347 Broad Street Bloomfield, New Jersey 07003	2008	Land Lease	$    331
Bloomfield Branch Drive Up Facility 16 Pitt Street Bloomfield, New Jersey 07003	1998	Owned	$   295
Full Service Branch 310 Pompton Avenue Cedar Grove, New Jersey 07009	2001	Owned	$ 1,766
Full Service Branch 725 Bloomfield Avenue Verona, New Jersey 07044	2006	Owned	$ 3,613
Full Service Branch 213 Harrison Street Nutley, New Jersey 07110	2007	Office Lease	$   585
Full Service Branch 500 Clifton Avenue Clifton, New Jersey 07011	2007	Owned	$ 3,049

Item 3. Legal Proceedings.

From time to time the Company and its subsidiaries are parties to routine litigation, which arises in the normal course of business, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans, and other issues incident to the business of the Bank. In the opinion of management, there were no lawsuits pending or known to be contemplated at September 30, 2007 that would have a material effect on operations or income.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

33 Next Page

PART II

Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The information contained in the section captioned "Investor and Corporate Information" in the portions of the Annual Report filed as Exhibit 13 to this Form 10-K is incorporated herein by reference..

The information contained in "Note 1 of the Consolidated Financial Statements" and the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations - Capital" in the portions of the Annual Report filed as Exhibit 13 to this Form 10-K is incorporated herein by reference.

The following table summarizes our share repurchase activity during the three months ended September 30, 2007 and additional information regarding our share repurchase program.

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 Plans or Programs
Repurchases for the Month
July 1 - July 31, 2007	60,000	$10.35	60,000	293,376
August 1 - August 31, 2007	293,376	$10.90	293,376	605,774
September 1 - September 30, 2007	169,300	$11.00	169,300	436,474
Total repurchases	522,676	$10.87	522,676	436,474(1)

(1) The table above was prepared as of September 30, 2007 and reflects the completion, during August 2007, of the Company's 5% share repurchase program announced on April 30, 2007 and the Company's announcement of a subsequent 5% share repurchase program on August 29, 2007.

Item 6. Selected Financial Data.

The information contained in the table captioned "Selected Consolidated Financial and Other Data" in the portions of the Annual Report filed as Exhibit 13 to this Form 10-K is incorporated herein by reference.

Item 7 . Management's Discussion and Analysis of Financial Condition and Results of Operations.

The information contained in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report filed as Exhibit 13 to this Form 10-K is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The information contained in the section captioned "Management of Interest Rate Risk and Market Risk" in the Annual Report filed as Exhibit 13 to this Form 10-K is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data.

The Company's financial statements listed under Item 15 of this Form 10-K and included in Exhibit 13 to this Form 10-K are incorporated herein by reference.

34 Next Page

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures. An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Act")) was carried out as of September 30, 2007 under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer and several other members of our senior management. Our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2007, our disclosure controls and procedures were effective in ensuring that the information we are required to disclose in the reports we file or submit under the Act is (i) accumulated and communicated to our management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

(b) Management's annual report on internal control over financial reporting and Attestation report of the registered public accounting firm. The annual report of management on the effectiveness of our internal control over financial reporting and the attestation report thereon issued by our independent registered public accounting firm are set forth under "Management's Report on Internal Control Over Financial Reporting" and "Report of Independent Registered Public Accounting Firm" in the Annual Report filed as Exhibit 13 to this Form 10-K are incorporated by reference under "Item 8. Financial Statements and Supplementary Data."

(c) Changes in internal control over financial reporting. During the quarter ended September 30, 2007, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We do not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all error and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns in controls or procedures can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

Item 9B. Other Information.

Not applicable.

35 Next Page

PART III

Item 10. Directors and Executive Officers of the Registrant.

Information required by this item concerning the Company's directors and compliance with section 16(a) of the Act is incorporated herein by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in February 2008, except for the information contained under the heading "Compensation Committee Report on Executive Compensation", "Report of the Audit Committee of the Board of Directors" and "Stockholder Return Performance Presentation", a copy of which will be filed not later than 120 days after the close of the fiscal year.

Code of Ethics

The Company has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Company's Code of Ethics will be provided without charge upon request to the Corporate Secretary, American Bancorp of New Jersey, Inc., 365 Broad Street, Bloomfield, New Jersey 07003.

Item 11. Executive Compensation.

Information required by this item concerning compensation is incorporated herein by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in February 2008, except for the information contained under the heading "Compensation Committee Report on Executive Compensation", "Report of the Audit Committee of the Board of Directors" and "Stockholder Return Performance Presentation", a copy of which will be filed not later than 120 days after the close of the fiscal year.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information required by this item concerning security ownership of certain beneficial owners and management is incorporated herein by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in February 2008, except for the information contained under the heading "Compensation Committee Report on Executive Compensation", "Report of the Audit Committee of the Board of Directors" and "Stockholder Return Performance Presentation", a copy of which will be filed not later than 120 days after the close of the fiscal year.

EQUITY COMPENSATION PLAN INFORMATION
	(a)	(b)	(c)
	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans   approved by security holders	1,416,948	$ 9.26	-
Equity compensation plans   not approved by security   holders:
None	N/A	N/A	N/A
TOTAL	1,416,948	$ 9.26	-

36 Next Page

Item 13. Certain Relationships and Related Transactions.

Information required by this item concerning certain relationships and related transactions is incorporated herein by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in February 2008, except for the information contained under the heading "Compensation Committee Report on Executive Compensation", "Report of the Audit Committee of the Board of Directors" and "Stockholder Return Performance Presentation", a copy of which will be filed not later than 120 days after the close of the fiscal year.

Item 14. Principal Accounting Fees and Services.

Information required by this item concerning principal accounting fees and services is incorporated herein by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in February 2008, a copy of which will be filed not later than 120 days after the close of the fiscal year.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)         Listed below are all financial statements and exhibits filed as part of this Form 10-K.

1.           The consolidated statements of financial condition as of September 30, 2007 and 2006 and the related consolidated statements of income, changes in stockholders' equity, and cash flows for the three years ended September 30, 2007, together with the related notes and the report of independent certified public accountants.

37 Next Page

2.           The following exhibits are either included with this Form 10-K or incorporated herein by reference:

            (a)         List of Exhibits

3(i)	Certificate of Incorporation of American Bancorp of New Jersey, Inc.(1)
3(ii)	Bylaws of American Bancorp of New Jersey, Inc.(2)
4	Specimen Stock Certificate of American Bancorp of New Jersey(1)
10.1	Employment Agreement between American Bank of New Jersey and    Joseph Kliminski(3)†
10.2	Employment Agreement between American Savings Bank of NJ and    Eric B. Heyer(3)†
10.3	Form of Executive Salary Continuation Agreement(3)†
10.4	Employment Agreement between American Bank of New Jersey and    Fred G. Kowal(4)†
10.5	Employment Agreement between American Bank of New Jersey and Catherine M.    Bringuier(1)†
10.6	2005 Stock Option Plan(5)†
10.7	2005 Restricted Stock Plan(5)†
13	Portions of the 2006 Annual Report to Stockholders
21	Subsidiaries
23.1	Consent of Auditor
31	Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

_______________

(1)	Incorporated by reference to the Company's Registration Statement on Form S-1 (File No. 333-125957) filed with the SEC on June 20, 2005.
(2)	Incorporated by reference to the Company's Current Report on Form 8-K (File No. 0-51500) filed with the SEC on December 10, 2007.
(3)	Incorporated by reference to the Registration Statement on Form SB-2 (File No. 333-105472) of ASB Holding Company filed with the SEC on May 22, 2003.
(4)	Incorporated by reference to the Form 8-K (File No. 000-31789) of ASB Holding Company filed with the SEC on April 18, 2005.
(5)	Incorporated by reference to the definitive proxy statement (File No. 000-31789) of ASB Holding Company filed with the SEC on December 28, 2004.
†	Management or compensatory plan required to be filed as an exhibit.

38 Next Page

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized as of December 14, 2007.

AMERICAN BANCORP OF NEW JERSEY, INC.
By:	/s/ Fred G. Kowal Fred G. Kowal President and Chief Operating Officer (Duly Authorized Representative)

             Pursuant to the requirement of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of December 14, 2007.

/s/ W. George ParkerW. George Parker Chairman	/s/ Joseph KliminskiJoseph Kliminski Chief Executive Officer and Director (Principal Executive Officer)
/s/ Fred G. KowalFred G. Kowal President, Chief Operating Officer and Director	/s/ Eric B. HeyerEric B. Heyer Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)
/s/ H. Joseph NorthH. Joseph North Director	/s/ James H. WardJames H. Ward, III Vice Chairman
/s/ Vincent S. RospondVincent S. Rospond Director	/s/ Robert GaccioneRobert Gaccione Director

Next Page 39

EX-13

TABLE OF CONTENTS

Letter from the President & Chief Operating Officer	1
Financial Highlights	3
Management's Discussion and Analysis of Financial Condition and Results of Operations	5
Management's Report on Internal Control Over Financial Reporting	36
Report of Independent Registered Public Accounting Firm	37
Consolidated Statements of Financial Condition	39
Consolidated Statements of Income	40
Consolidated Statements of Changes in Stockholders' Equity	41
Consolidated Statements of Cash Flows	44
Notes to Consolidated Financial Statements	46
Directors and Officers	85
Investor and Corporate Information	86
Office Locations	88

NEXT PAGE

LETTER FROM THE PRESIDENT & CHIEF OPERATING OFFICER

Dear Fellow Stockholders:

On behalf of the Board of Directors and employees, I am pleased to present the 2007 Annual Report to Stockholders.

This was a challenging year for American Bank of New Jersey that was highlighted by a number of strategic accomplishments in the face of a difficult market environment. In accordance with our de novo branching strategy, we opened a total of three full service branches during fiscal 2007. Our newest branches, located in Verona, Nutley and Clifton, New Jersey, expanded our branch network to a total five locations. At September 30, 2007, total deposits at our three newest branches grew to $55.1 million, $23.5 million and $15.2 million, respectively. Deposits at our Bloomfield and Cedar Grove branches also increased to $223.6 million and $111.0 million, respectively. In total, our deposits increased $101.5 million or 31.0% from $327.1 million at September 30, 2006 to $428.6 million at September 30, 2007.

A portion of the increase in our total deposits provided the funding for continued growth in loans during the same period. Our loans receivable, net increased by $39.3 million, or 9.8%, from $398.6 million at September 30, 2006 to $437.9 million at September 30, 2007. Our loan growth during fiscal 2007 was highlighted by a $45.7 million or 47.5% increase in the balance of commercial loans. As a percentage of loans receivable, net, our commercial loans increased from 24.1% September 30, 2006 to 32.4% at September 30, 2007.

The level of market interest rates during 2007 continued to present a challenge for community financial institutions. The inversion of the yield curve which persisted throughout much of fiscal 2007 placed significant upward pressure on our cost of funds which outpaced the growth in our yield on earning assets for the year. As such, our net interest spread declined from 1.80% for fiscal 2006 to 1.44% for fiscal 2007. The factors resulting in the compression of the Company's net interest spread also impacted the Company's net interest margin which decreased from 2.73%% for fiscal 2006 to 2.39% for fiscal 2007.

In addition to the impact of the yield curve, the change in the Company's net interest margin was also significantly impacted by our capital management strategies. During fiscal 2007, we repurchased 2.2 million shares, or approximately 15% of the Company's stock. These share repurchases utilized approximately $26.0 million of our earning assets whose foregone interest income reduced the Company's net interest margin. Based upon the growth in the average balance of the Company's treasury stock account during fiscal 2007 and its average yield on earning assets reported for fiscal 2006, we estimate that approximately $777,000, or 63%,of the $1.2 million decrease in net interest income in fiscal 2007 from fiscal 2006 was attributable our share repurchases.

While the strategies noted above are expected to increase shareholder value over time, their execution during fiscal 2007 came at a near term cost. Noninterest expense increased by $1.9 million to $12.5 million from $10.7 million for fiscal 2006. A significant portion of this increase was attributable to additional personnel, occupancy and equipment and administrative

1NEXT PAGE

costs associated with the expansion of our branch network and increased strategic focus on commercial lending.

In total, net income decreased to $557,000 for the fiscal year ended September 30, 2007 from $2.1 million for fiscal 2006. Notwithstanding, payment of a regular quarterly dividend continued throughout fiscal 2007. The Board was pleased to provide a quarterly dividend of $0.04 to stockholders for each of the four fiscal quarters of fiscal 2007.

Fiscal 2008 will be another building year for American Bancorp of New Jersey as we continue to execute the various strategies of our business plan. In addition to expanding the Company's commercial lending portfolio and enhancing non-traditional service delivery channels, such as online cash management and remote capture services, we expect to direct significant strategic effort toward achieving profitability within each of the three branches opened during fiscal 2007. With that strategic focus, we currently expect to revisit additional branching opportunities after fiscal 2008.

On behalf of the Board of Directors and the employees, I would like to thank you once again for your investment and your continued confidence in our people and our plan. We are genuinely pleased about our vision for American Bancorp of New Jersey, and are committed to making steady progress toward our #1 goal - enhancing your investment in us.

Sincerely,

/s/ Fred G. Kowal

Fred G. Kowal
President & Chief Operating Officer

2NEXT PAGE

FINANCIAL HIGHLIGHTS

	At September 30,
	2007	2006	2005	2004	2003
	(In thousands)
SELECTED FINANCIAL DATA:
Total assets	$ 573,738	$ 514,319	$ 555,860	$ 424,944	$ 427,066
Cash and cash equivalents	37,421	7,165	125,773	8,034	38,365
Securities available-for-sale	58,093	74,523	62,337	89,495	107,391
Securities held-to-maturity	6,730	10,547	7,824	2,794	2,839
Loans held for sale	1,243	-	280	-	500
Loans receivable, net	437,883	398,624	341,006	308,970	262,844
Federal Home Loan Bank stock	2,553	3,356	3,119	2,890	3,150
Cash surrender value of life insurance	13,214	8,747	7,512	6,242	5,028
Deposits	428,600	327,147	340,925	322,716	292,826
Stock subscriptions received	-	-	115,201	-	52,137
Federal Home Loan Bank advances	37,612	56,075	53,734	57,491	55,000
Total stockholders' equity	100,593	124,861	39,506	39,314	22,339

	Years Ended September 30,
	2007	2006	2005	2004	2003
	(In thousands)
SELECTED OPERATING DATA:
Total interest income	$ 29,029	$ 25,344	$ 20,601	$ 18,204	$ 17,476
Total interest expense	16,731	11,802	9,546	8,105	8,870
Net interest income	12,298	13,542	11,055	10,099	8,606
Provision for loan losses	445	465	81	207	254
Net interest income after provision    for loan losses	11,853	13,077	10,974	9,892	8,352
Noninterest income	1,422	1,021	1,196	1,298	718
Noninterest expense	12,544	10,657	8,924	7,657	6,862
Income before income taxes	731	3,441	3,246	3,533	2,208
Income tax provision	174	1,308	1,203	1,371	805
Net income	$    557	$  2,133	$  2,043	$  2,162	$  1,403

3NEXT PAGE

	At or for the year ended September 30,
	2007		2006		2005		2004		2003
SELECTED FINANCIAL DATA*:
Performance Ratios:
Return on average assets (1)	0.10	%	0.42	%	0.46	%	0.54	%	0.39	%
Return on average equity (2)	0.51		1.68		5.30		5.77		6.48
Net interest rate spread (3)	1.44		1.80		2.28		2.28		2.14
Net interest margin (4)	2.39		2.73		2.60		2.60		2.44
Operating (noninterest) expense to       average total assets	2.31		2.08		2.02		1.92		1.89
Efficiency ratio (5)	91.43		73.18		72.84		67.18		73.60
Average interest-earning assets to       average interest-bearing liabilities	129.35		139.21		114.30		115.67		111.69
Capital Ratios:
Equity to total assets at end of period	17.53		24.28		7.11		9.25		5.23
Average equity to average assets	20.23		24.72		8.74		9.37		5.98
Asset Quality Ratios:
Non-performing loans to total loans (6)	0.28		0.52		0.34		0.17		0.20
Non-performing assets to total assets (6)	0.22		0.41		0.21		0.12		0.12
Net charge-offs to average loans       outstanding	0.00		0.00		0.00		0.00		0.00
Allowance for loan losses to       non-performing loans (6)	205.56		101.64		142.62		304.05		265.18
Allowance for loan losses to total loans	0.58		0.53		0.48		0.50		0.52
PER SHARE DATA:
Earnings per share: (7)
Basic	$   0.05		$   0.16		$   0.15		$   0.16		$   0.14
Diluted	$   0.05		$   0.16		$   0.15		$   0.16		$   0.14
Cash Dividends Paid (8)	$   0.16		$   0.16		$   0.36		$   0.00		$   0.00
Dividend Payout Ratio	335.19	%	99.02	%	70.09	%	-	%	-	%

*	Certain ratios were significantly affected by stock subscriptions received pending completion of the Company's first and second public offerings. At September 30, 2003, stock subscriptions received relating to the Company's first public offering which closed October 3, 2003 totaled $52.1 million. At the time of closing, approximately $15.3 million, less offering expenses, became capital of the Company with the remainder returned on oversubscriptions. At September 30, 2005, stock subscriptions received relating to the Company's second public offering which closed October 5, 2005 totaled $115.2 million. At the time of closing, approximately $91.3 million, less offering expenses, became capital of the Company with the remainder returned on oversubscriptions.
(1)	Net income divided by average total assets.
(2)	Net income divided by average total equity.
(3)	Difference between weighted average yield on interest-earning assets and weighted average cost of interest-bearing liabilities.
(4)	Net interest income as a percentage of average interest-earning assets.
(5)	Noninterest expense divided by the sum of net interest income and noninterest income.
(6)	Nonperforming loans consist of nonaccrual loans and loans greater than 90 days delinquent and still accruing.
(7)	Earnings per share for the fiscal year ended September 30, 2003 have been restated to reflect the conversion of 100 shares of Bank stock into 9,918,750 shares of Company stock representing 100% ownership of the Bank prior to the minority stock offering which closed on October 3, 2003.
(8)	Cash dividends paid in fiscal 2005 include a special dividend of $0.294 per share paid in December 2004 and regular quarterly dividends paid in June 2005 and September 2005 of $0.035 each. American Savings, MHC waived receipt of all dividends in 2005. Consequently, cash dividends were paid only to public shareholders during fiscal 2005.

4NEXT PAGE

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 as amended and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse affect on the operations and future prospects of the Company and its wholly-owned subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory provisions; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the loan or investment portfolios; demand for loan products; deposit flows; competition; and demand for financial services in the Company's market area. These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements.

Business Strategy

Our business strategy has been to operate as a well-capitalized independent financial institution dedicated to providing convenient access and quality service at competitive prices. During recent years, we have experienced significant loan and deposit growth. Our current strategy seeks to continue that growth while we evolve from a traditional thrift institution into a full service, community bank. Our key business strategies are highlighted below accompanied by a brief overview of our progress in implementing each of these strategies:

• Grow and diversify the deposit mix by emphasizing non-maturity account relationships acquired through de novo branching and existing deposit growth. Our current business plan calls for us to open up to three de novo branches over approximately the next five years.

  Having opened three full service branches located in Verona, Nutley and Clifton, New Jersey during fiscal 2007, the Company currently has no plans or commitments to open additional de novo deposit branches during fiscal 2008. Rather, the Company expects to direct significant strategic effort toward achieving profitability within each of these three branches while revisiting additional branching opportunities after fiscal 2008. Notwithstanding this current focus, the Company would consider additional branching projects during fiscal 2008 if appropriate opportunities were to arise.

5NEXT PAGE

• Grow and diversify the loan mix by increasing commercial loan origination volume while increasing the balance of such loans as a percentage of total loans.

  For the fiscal year ended September 30, 2007, our commercial loans, including multi-family, nonresidential real estate, construction and business loans, grew $45.7 million, or 47.5%, from $96.2 million to $141.9 million. This increase has resulted in commercial loans growing from 24.1% to 32.4% of loans receivable, net over that same twelve month period. We expect to continue our strategic emphasis on commercial lending during fiscal 2008 and thereafter.

• Continue to implement or enhance alternative delivery channels for the origination and servicing of loan and deposit products.

  In support of this objective, during fiscal 2007, we completed a significant overhaul of our Internet website which serves as a portal through which our customers access a growing menu of online services. While enhancing our online services for retail customers, we are concurrently addressing the growth in business demand for such services. Toward that end, we have expanded our business online banking product and service offering to now include remote check deposit, online cash management and online bill payment services for business.

• Broaden and strengthen customer relationships by bolstering cross marketing strategies and tactics with a focus on multiple account/service relationships.

  We will continue to cross market other products and services to promote multiple account/service relationships and the retention of long term customers and core deposits. These efforts are expected to be directed to customers within all five of the Bank's branches.

• Utilize capital markets tools to effectively manage capital and enhance shareholder value.

  Toward that end, during the quarter ended March 31, 2007, the Company completed the repurchase of ten percent of its outstanding shares in accordance with its share repurchase plan announced in October 2006. A second share repurchase plan for an additional five percent of its shares was announced in April 2007 and completed in August 2007. On August 29, 2007, the Company announced a third plan to repurchase an additional five percent of its shares. Of the 605,774 shares to be repurchased in accordance with this third plan, approximately 169,000 shares or 28% were repurchased by the year ended September 30, 2007.

A number of the strategies outlined above have had a detrimental impact on near term earnings. That impact was exacerbated by challenging market conditions during fiscal 2007 that resulted from an inverted yield curve.

Notwithstanding the near term earnings consequences, we expect to continue to execute these growth and diversification strategies designed to enhance future earnings and their

6NEXT PAGE

resiliency to changes in market conditions toward the goal of enhancing shareholder value. Toward that end, we expect that our deposit pricing strategy in fiscal 2008 may reduce interest costs by continuing to incrementally lower interest rates paid on de novo branch deposits acquired during fiscal 2007 from the higher promotional rates initially offered. Additionally, we would expect that continued reductions in market interest rates and further steepening of the yield curve during fiscal 2008 may also have a beneficial impact on earnings. The resiliency of the Bank's de novo branch deposits to further interest rate reductions and movements in market interest rates and their respective impact on earnings, however, can not be assured.

Executive Summary

The Company's results of operations depend primarily on its net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. It is a function of the average balances of loans and investments versus deposits and borrowed funds outstanding in any one period and the yields earned on those loans and investments versus the cost of those deposits and borrowed funds. Our loans consist primarily of residential mortgage loans, comprising first and second mortgages and home equity lines of credit, and commercial loans, comprising multi-family and nonresidential real estate mortgage loans, construction loans and business loans. Our investments primarily include residential mortgage-related securities and U.S. Agency debentures. Our interest-bearing liabilities consist primarily of retail deposits and borrowings from the Federal Home Loan Bank of New York.

During fiscal 2007, the Company's net interest spread declined 36 basis points to 1.44% in comparison to 1.80% for fiscal 2006, as increases in the yield on earning assets lagged the continued increases in the Company's cost of interest-bearing liabilities. This decline was primarily attributable to increases in the cost of retail deposits which outpaced the improved yields on loans. Contributing to this increase in the cost of deposits was the impact of higher promotional interest rates paid on new deposit accounts at the Bank's Verona, Nutley and Clifton branches which each opened during the current fiscal year - Verona in the quarter ended December 31, 2006, Nutley in the quarter ended June 30, 2007 and Clifton in the quarter ended September 30, 2007. However, a portion of that increase continued to be attributable to upward pressure on overall deposit interest rates in the highly competitive markets serviced by the Bank whose effects were exacerbated by the inverted yield curve.

The factors resulting in the compression of the Company's net interest spread also impacted the Company's net interest margin. During fiscal 2007, the Company's net interest margin shrank 34 basis points to 2.39% from 2.73%. However, the change in the Company's net interest margin was also significantly impacted by the Company's share repurchase plans through which approximately $26.0 million of interest earning assets was utilized to repurchase 2.2 million shares, or approximately 15%, of the Company's stock.

The effects of net interest margin compression contributed significantly to decreases in net interest income. For the year ended September 30, 2007, net interest income decreased $1.2 million compared with that reported for fiscal 2006. Based upon the growth in the average balance of the Company's treasury stock account during fiscal 2007 and its average yield on earning assets reported for fiscal 2006, the Company estimates that approximately $777,000, or 63%, of the comparative decrease in net interest income was attributable to interest earned

7NEXT PAGE

during fiscal 2006 on the earning assets that were subsequently utilized in fiscal 2007 to repurchase shares.

Our net interest spread and margin may be adversely affected throughout several possible interest rate environments. The risks presented by movements in interest rates is addressed more fully under Item 3. Quantitative and Qualitative Disclosures About Market Risk found later in this report.

Our results of operations are also affected by our provision for loan losses. For the year ended September 30, 2007, the Company recorded net loan loss provision expense of $445,000 representing a decrease of $20,000 from fiscal 2006. The decrease in fiscal 2007 reflected the reversal of an $86,000 loss reserve against a previously impaired loan participation during the quarter ended December 31, 2006. Excluding this adjustment, the Company's provision expense for the year ended September 30, 2007 increased $66,000 compared with that of fiscal 2006. The reported growth in the provision for loan losses reflects the Bank's increased strategic emphasis in commercial lending and the comparatively higher rate of growth in such loan balances in the fiscal 2007. No additions to the allowance for loan losses were required during fiscal 2007 for nonperforming loans which decreased to 0.22% of total assets at September 30, 2007 from 0.41% at September 30, 2006. Net loan loss provision expense reflected as a percentage of average earning assets was consistent with that reported for fiscal 2006 at 0.09%.

Our results of operations also depend on our noninterest income and noninterest expense. Noninterest income includes deposit service fees and charges, income on the cash surrender value of life insurance, gains on sales of loans and securities, gains on sales of other real estate owned and loan related fees and charges. Excluding gains and losses on sale of assets, noninterest income as a percentage of average assets increased 0.01% to 0.26% for fiscal 2007 from 0.25% in fiscal 2006. As described at greater length within the section titled Comparison of Operating Results for the Years Ended September 30, 2007 and 2006, the increase was primarily attributable to an increase in income from the cash surrender value of life insurance partially offset by reductions in other non-interest income resulting primarily from lower collections of loan prepayment penalties.

Gains and losses on sale of assets, excluded in the comparison above, typically resulted from the Company selling long term, fixed rate mortgage loan originations into the secondary market. Demand for such loans typically fluctuates with market interest rates. As interest rates rise, market demand for long term, fixed rate mortgage loans diminishes in favor of hybrid ARMs which the Company has historically retained in its portfolio rather than selling into the secondary market. Consequently, the gains and losses on sale of loans reported by the Company have fluctuated with market conditions. Additionally, such gains and losses also reflected the impact of infrequent investment security sales for asset/liability management purposes. This was the case in fiscal 2006 when the Company realized a $271,000 loss on sale of an underperforming investment security. For fiscal 2007, the gains and losses on asset sales resulted in net gains totaling approximately 0.01% of average assets. By comparison, the gains and losses on asset sales during 2006 resulted in net losses of -0.05% of average assets.

Noninterest expense includes salaries and employee benefits, occupancy and equipment expenses, data processing and other general and administrative expenses. Generally, operating

8NEXT PAGE

costs have increased from those reported for fiscal 2006. As described at greater length within the section titled "Comparison of Operating Results for the Years Ended September 30, 2007 and 2006", a significant portion of this increase was attributable to additional personnel costs associated with executing the Company's business plan which calls for further branching and increased strategic focus on commercial lending. Benefit costs have also increased as we granted shares and options under the equity incentive plan approved by shareholders during fiscal 2006. In the aggregate, annualized noninterest expense as a percentage of average assets totaled 2.31% for fiscal 2007 - an increase of 23 basis points from 2.08% for fiscal 2006.

Management expects occupancy and equipment expense to increase in future periods as we continue to implement our de novo branching strategy to expand our branch office network. As noted earlier, having opened three full service branches located in Verona, Nutley and Clifton, New Jersey during fiscal 2007, the Company currently has no plans or commitments to open additional de novo branches during fiscal 2008. Rather, the Company expects to direct significant strategic effort toward achieving profitability within each of these three branches while revisiting additional branching opportunities after fiscal 2008. Notwithstanding the expected de novo branching hiatus for fiscal 2008, our current business plan targets the opening of up to three additional de novo branches over approximately the next five years. The costs for land purchases or leases, branch construction costs and ongoing operating costs for additional branches will impact future earnings as will those related to the three branches opened during fiscal 2007.

The Company also expects occupancy expense to increase in future periods as a result of the relocation of the Bank's Bloomfield branch site which is expected to commence in January, 2008. This relocation will significantly upgrade and modernize the Bloomfield branch facility supporting the Company's deposit growth and customer service enhancement objectives. The relocation will also support potential expansion of the administrative and lending office space within the Company's existing headquarters facility where the branch is currently located should such expansion be required to support the Company's business plan.

In an effort to reduce ongoing operating expenses, the Company enacted a reduction in workforce during the first quarter of fiscal 2008 resulting in the elimination of five managerial and administrative support positions. Salary and employee benefit expense reductions resulting from this strategy are expected to total approximately $388,000 per year beginning in the second quarter of fiscal 2008, equal to annual after-tax earnings of approximately $0.02 per share based upon the Company's outstanding shares at September 30, 2007. The Company will continue to monitor its employee staffing levels in relation to the goals and objectives of its business plan and may consider further opportunities to adjust such staffing levels, as appropriate, to support the achievement of those goals and objectives.

In total, our annualized return on average assets decreased 32 basis points to 0.10% for the fiscal 2007 from 0.42% for fiscal 2006, while annualized return on average equity decreased 117 basis points to 0.51% from 1.68% for the same comparative periods.

In addition to the items discussed above, our results of operations may also be affected significantly by other economic and competitive conditions in our market area as well as changes in applicable laws, regulations or governmental policies. Furthermore, because our

9NEXT PAGE

lending activity is concentrated in loans secured by real estate located in New Jersey and the New York metropolitan area, downturns in the regional economy could have a negative impact on our earnings.

Comparison of Financial Condition at September 30, 2007 and September 30, 2006

Our total assets increased by $59.4 million, or 11.5%, to $573.7 million at September 30, 2007 from $514.3 million at September 30, 2006. The increase reflected net growth in cash and cash equivalents, loans receivable, net, premises and equipment and the cash surrender value of life insurance partially offset by decreases in securities available for sale and securities held to maturity.

Cash and cash equivalents increased by $30.3 million, or 422.3%, to $37.4 million at September 30, 2007 from $7.2 million at September 30, 2006. The increase in cash and cash equivalents was largely attributable to the accumulation of short term, interest earning investments which resulted from the net cash inflows associated with deposit growth during the year. The cash inflows from a portion of this deposit growth were retained in short term liquid assets given the favorable yields of such assets at the time compared with that of other shorter duration investment security alternatives. The Company may reinvest a portion of its short term liquid assets into investment securities when and if that comparative yield relationship changes.

Notwithstanding this short term investment strategy, the Company expects to reinvest proceeds received through its growth in deposits into the loan portfolio over time as lending opportunities arise. To the extent supported by commercial loan demand and origination volume , the Company expects to reinvest deposit proceeds into such loans. However, the net addition of residential mortgages to the loan portfolio, including longer term, fixed rate 1-4 family mortgages previously sold into the secondary market, is expected to augment the growth in commercial loans as a reinvestment alternative for a portion of the accumulated balance of cash and cash equivalents. (See further discussion in the subsequent section titled "Quantitative and Qualitative Disclosures About Market Risk".)

Securities classified as available-for-sale decreased $16.4 million, or 22.1%, to $58.1 million at September 30, 2007 from $74.5 million at September 30, 2006. Additionally, securities held to maturity decreased approximately $3.8 million, or 36.2% to $6.7 million at September 30, 2007 from $10.5 million at September 30, 2006. The net decline in investment balances reflects the Company's continued strategy of utilizing a portion of the cash flows from the investment securities portfolio to augment the funding of its growth in commercial real estate and business loans and repay maturing borrowings. However, the net declines in investment balances also reflect the purchase of approximately $18.8 million of available for sale securities during fiscal 2007.

The following table compares the composition of the Company's investment securities portfolio by security type as a percentage of total assets at September 30, 2007 and September 30, 2006. Amounts reported exclude unrealized gains and losses on the available for sale portfolio.

10NEXT PAGE

	September 30, 2007			September 30, 2006
Type of Securities	Amount	Percent of Total Assets		Amount	Percent of Total Assets
	(Dollars in thousands)
Fixed rate MBS	$11,454	2.00	%	$14,406	2.80	%
ARM MBS	14,470	2.52		23,773	4.62
Fixed rate CMO	35,280	6.14		32,930	6.40
Floating rate CMO	2,047	0.36		2,369	0.46
Fixed rate agency debentures	2,000	0.35		12,989	2.53
Total	$ 65,251	11.37	%	$ 86,467	16.81	%

Assuming no change in interest rates, the estimated average life of the investment securities portfolio was 2.24 years and 2.37 years, respectively, at September 30, 2007 and September 30, 2006. Assuming a hypothetical immediate and permanent increase in interest rates of 300 basis points, the estimated average life of the portfolio would have extended to 2.65 years and 2.83 years at September 30, 2007 and September 30, 2006, respectively.

Loans receivable, net increased by $39.3 million, or 9.8%, to $437.9 million at September 30, 2007 from $398.6 million at September 30, 2006. The growth was comprised of net increases in commercial loans totaling $45.7 million or 47.5%. Such loans include multi-family, nonresidential real estate, construction and business loans. The increase in loans receivable, net also included net increases in home equity loans and home equity lines of credit totaling $3.0 million. Offsetting the growth in these categories was an $8.9 million decrease in the balance of 1-4 family first mortgages resulting from reduced strategic emphasis on the origination of such loans and net increases to the allowance for loan losses totaling $445,000.

The following two tables compare the composition of the Company's loan portfolio by loan type as a percentage of total assets at September 30, 2007 with that of September 30, 2006. Amounts reported exclude allowance for loan losses and net deferred origination costs.

11NEXT PAGE

The table below generally defines loan type by loan maturity and/or repricing characteristics:

	September 30, 2007			September 30, 2006
Type of Loans	Amount	Percent of Total Assets		Amount	Percent of Total Assets
	(Dollars in thousands)
Construction	$ 32,592	5.68	%	$ 16,238	3.16	%
1/1 and 3/3 ARMs	7,642	1.33		5,835	1.13
3/1 and 5/1 ARMs	142,254	24.80		140,124	27.24
5/5 and 10/10 ARMs	46,017	8.02		43,770	8.51
7/1 and 10/1 ARMs	3,500	0.61		2,061	0.40
15 year fixed or less	129,158	22.52		111,725	21.72
Greater than 15 year fixed	52,012	9.07		53,984	10.50
HELOC	19,756	3.44		19,122	3.72
Consumer	655	0.11		720	0.14
Business	7,024	1.22		6,068	1.18
Total	$ 440,610	76.80	%	$ 399,647	77.70	%

At September 30, 2007 and September 30, 2006, respectively, the balance of one- to four-family mortgage loans included $22.6 million and $20.0 million of thirty year adjustable rate loans with initial fixed interest rate periods of three to five years during which time monthly loan payments comprise interest only. After the initial period, the monthly payments on such loans are adjusted to reflect the collection of both interest and principal over the loan's remaining term to maturity.

The table below generally defines loan type by collateral or purpose:

	September 30, 2007			September 30, 2006
Type of Loans	Amount	Percent of Total Assets		Amount	Percent of Total Assets
	(Dollars in thousands)
Construction	$ 32,592	5.68	%	$ 16,238	3.16	%
1-4 family mortgage	278,183	48.50		283,469	55.11
Multifamily (5+) mortgage	30,585	5.33		35,088	6.82
Nonresidential mortgage	68,474	11.94		38,408	7.47
Land	3,341	0.58		534	0.10
1-4 family HELOC	19,756	3.44		19,122	3.72
Consumer	655	0.11		720	0.14
Business	7,024	1.22		6,068	1.18
Total	$ 440,610	76.80	%	$ 399,647	77.70	%

12NEXT PAGE

Total deposits increased by $101.5 million, or 31.0%, to $428.6 million at September 30, 2007 from $327.1 million at September 30, 2006. This increase was primarily attributable to the opening of the Bank's newest full service branches located in Verona, Nutley and Clifton, New Jersey which opened in the quarters ended December 31, 2006, June 30, 2007 and September 30, 2007, respectively. In total, noninterest bearing checking accounts increased approximately $6.9 million or 29.5% while interest bearing checking accounts, including a promotional, high yield money market account offered in conjunction with the Bank's newest branches, grew $80.4 million or 255.7%. For that same period, time deposits grew $28.4 million or 17.2% while savings deposit balances declined $14.2 million or 13.3%. The decline in savings account balances was due largely to the disintermediation of such balances into higher yielding accounts.

At September 30, 2007, the Bank held approximately $5.6 million of municipal deposits, representing a reduction of approximately $11.3 million from $16.9 million at September 30, 2006. The outflow of municipal deposits included the closing of one municipal account relationship whose balances at September 30, 2006 totaled approximately $11.8 million.

The following table compares the composition of the Company's deposit portfolio by category as a percentage of total assets at September 30, 2007 with that of September 30, 2006.

	September 30, 2007			September 30, 2006
Deposit category	Amount	Percent of Total Assets		Amount	Percent of Total Assets
	(Dollars in thousands)
Money market checking	$ 92,550	16.13	%	$ 20,474	3.98	%
Noninterest bearing checking	30,494	5.31		23,545	4.58
Interest bearing checking	19,245	3.35		10,955	2.13
Money market savings	10,263	1.79		13,396	2.60
Other savings	82,515	14.38		93,612	18.20
Certificates of deposit	193,533	33.74		165,165	32.12
Total	$ 428,600	74.70	%	$ 327,147	63.61	%

13NEXT PAGE

The following table compares the composition of the Company's deposit portfolio by branch as a percentage of total assets at September 30, 2007 with that of September 30, 2006.

	September 30, 2007			September 30, 2006
Deposit category	Amount	Percent of Total Assets		Amount	Percent of Total Assets
	(Dollars in thousands)
Bloomfield	$223,557	38.97	%	$227,369	44.21	%
Cedar Grove	111,030	19.35		99,778	19.40
Verona	55,193	9.62		-	-
Nutley	23,534	4.10		-	-
Clifton	15,286	2.66		-	-
Total	$428,600	74.70	%	$327,147	63.61	%

FHLB advances decreased $18.5 million, or 32.9%, to $37.6 million at September 30, 2007 from $56.1 million at September 30, 2006. The reduction was primarily attributable to the repayment of fixed rate FHLB advances totaling $8.1 million and the repayment of overnight borrowings totaling $10.4 million.

The following table compares the composition of the Company's borrowing portfolio by remaining term to maturity as a percentage of total assets at September 30, 2007 with that of September 30, 2006. Scheduled principal payments on amortizing borrowings are reported as maturities.

	September 30, 2007			September 30, 2006
Remaining Term	Amount	Percent of Total Assets		Amount	Percent of Total Assets
	(Dollars in thousands)
Overnight	$      -	-	%	$ 10,400	2.02	%
One year or less	12,065	2.10		8,063	1.57
One to two years	7,547	1.32		12,065	2.36
Two to three years	6,000	1.05		7,547	1.47
Three to four years	6,000	1.05		6,000	1.16
Four to five years	5,000	0.87		6,000	1.16
More than five years	1,000	0.17		6,000	1.16
Total	$ 37,612	6.56	%	$ 56,075	10.90	%

Equity decreased $24.3 million, or 19.4% to $100.6 million at September 30, 2007 from $124.9 million at September 30, 2006. The reported decrease in equity was primarily attributable to a $26.0 million increase in Treasury stock resulting from the Company's share repurchases during fiscal 2007.

14NEXT PAGE

Comparison of Operating Results for the Years Ended September 30, 2007 and 2006

General. Net income for the year ended September 30, 2007 was $557,000, a decrease of $1.6 million, or 73.9% from the year ended September 30, 2006. The decrease in net income resulted from a decrease in net interest income and an increase in noninterest expense partially offset by a decrease in the provision for loan losses, an increase in noninterest income and a decrease in the provision for income taxes.

Interest Income. Total interest income increased 14.5% or $3.7 million to $29.0 million for the year ended September 30, 2007 from $25.3 million for the year ended September 30, 2006. For those same comparative years, the average yield on interest-earning assets increased 52 basis points to 5.64% from 5.12% while the average balance of interest-earning assets increased $19.0 million to $514.4 million from $495.4 million.

Interest income on loans increased $4.4 million or 21.5%, to $24.7 million for fiscal 2007 from $20.3 million for fiscal 2006. This increase was due, in part, to a $49.1 million increase in the average balance of loans receivable, including loans held for sale, to $419.0 million for fiscal 2007 from $369.9 million for fiscal 2006. In addition, the average yield on loans increased 39 basis points to 5.88% from 5.49% for those same comparative periods. The increase in the average balance and yield on loans receivable was primarily attributable to the Company's strategic emphasis on commercial lending.

The rise in interest income on loans was partially offset by lower interest income on securities, which decreased $975,000 or 24.8% to $3.0 million for fiscal 2007 from $3.9 million for fiscal 2006. The decrease was due in part, to a $28.1 million decline in the average balance of investment securities to $70.3 million for fiscal 2007 from $98.4 million for fiscal 2006. The impact on interest income attributable to this decrease was partially offset by a 21 basis point increase in the average yield on securities which grew to 4.20% from 3.99% for the same comparative periods. The increase in yield primarily resulted from the maturity and repayment of lower yielding investment securities coupled with higher yields on newly purchased securities and existing adjustable rate securities in portfolio which have repriced upward in accordance with the general movement of market interest rates.

Further, interest and dividend income on federal funds sold, other interest-bearing deposits and FHLB stock increased $295,000 to $1.4 million for fiscal 2007 from $1.1 million for fiscal 2006. This growth in income was due, in part, to an increase in the average yield on these assets which grew 150 basis points to 5.66% in fiscal 2007 from 4.16% in fiscal 2006. The impact of the increase in average yield was partially offset by a decline in the average balance of these assets which decreased $2.0 million to $25.1 million in fiscal 2007 from $27.1 million in fiscal 2006. The average balances reported and used for yield calculations reflect, where appropriate, the reduction for outstanding checks issued against such accounts. This has the effect of increasing the reported yield on such assets.

Interest Expense. Total interest expense increased by $4.9 million or 41.8% to $16.7 million for fiscal 2007 from $11.8 million for fiscal 2006. For those same comparative years, the average cost of interest-bearing liabilities increased 89 basis points from 3.32% to 4.21%, while

15NEXT PAGE

the average balance of interest-bearing liabilities increased $41.8 million or 11.7% to $397.6 million for fiscal 2007 from $355.9 million for fiscal 2006.

Interest expense on deposits increased $5.3 million or 57.3% to $14.5 million for fiscal 2007 from $9.2 million for fiscal 2006. This increase was due largely to growth in the average balance of interest-bearing deposits which grew $50.3 million to $353.4 million for fiscal 2007 from $303.1 million for fiscal 2007. The reported net growth in average interest-bearing deposits comprised $39.7 million and $21.3 million of growth in the average balance of interest-bearing checking accounts and certificates of deposit, respectively. Offsetting this growth was a net decline in the average balance of savings accounts totaling $10.7 million.

The growth in the average balance of interest-bearing deposits for fiscal 2007 was primarily attributable to the Bank's branch in Verona, New Jersey which opened in the first quarter of fiscal 2007. To a lesser extent, average balance of interest bearing deposits was also influenced by the growth in the Nutley and Clifton branches which opened later in the year. The growth in deposits at the Bank's three newest branches, coupled with higher promotional interest rates paid on those deposits, contributed significantly to the reported increase in deposit interest expense. However, a portion of this increase was also attributable to continued upward pressure on deposit interest rates in the other highly competitive markets serviced by the Bank.

In total, the average cost of interest-bearing deposits increased 106 basis points to 4.09% for fiscal 2007 from 3.03% for fiscal 2006. The components of this increase include a 225 basis point increase in the average cost of interest-bearing checking accounts to 4.41% from 2.16%, a 90 basis point increase in the average cost of certificates of deposit to 4.77% from 3.87%, and a 52 basis point increase in the average cost of savings accounts to 2.66% from 2.14%.

Interest expense on FHLB advances decreased $337,000 to $2.3 million for fiscal 2007 from $2.6 million for fiscal 2006. This decrease was due, in part, to a $8.5 million decrease in the average balance of advances to $44.3 million for fiscal 2007 from $52.7 million for fiscal 2006. The impact on interest expense from the lower average balances reported were offset, in part, by a 19 basis point increase in the average cost of advances to 5.14% for fiscal 2007 from 4.95% for fiscal 2006. The higher average cost for the current period was primarily attributable to the repayment of maturing term advances since the close of the earlier comparative period whose total weighted average cost was below that of the average outstanding balance of the remaining advances during fiscal 2007.

Net Interest Income. Net interest income decreased by $1.2 million or 9.2%, to $12.3 million for fiscal 2007 from $13.5 million for fiscal 2006. The Company's net interest rate spread declined 36 basis points to 1.44% from 1.80% for the same comparative periods, while the net interest margin decreased 34 basis points to 2.39% from 2.73%. As noted earlier, the change in the Company's net interest margin was also significantly impacted by the Company's share repurchase plans through which approximately $26.0 million of interest earning assets was utilized to repurchase 2.2 million shares, or approximately 15%, of the Company's stock. Based upon the growth in the average balance of the Company's treasury stock account during fiscal 2007 and its average yield on earning assets reported for fiscal 2006, the Company estimates that approximately $777,000, or 63%, of the $1.2 million decrease in net interest income was

16NEXT PAGE

attributable to interest earned during fiscal 2006 on the earning assets that were subsequently utilized in fiscal 2007 to repurchase shares.

Provision for Loan Losses. Using the allowance methodology described under Critical Accounting Policies found later in this discussion, the provision for loan losses totaled $445,000 for fiscal 2007, representing a decrease of $20,000 from fiscal 2006. The provision expense for 2007 reflected the reversal of an $86,000 loss reserve against a previously impaired loan participation. Management's review of the loan conducted as of December 31, 2006 concluded that, based upon the loan's consistent payment history and the improved financial performance of the underlying commercial property, the loan was no longer impaired resulting in the reversal of the prior impairment reserve. The loan's classification was also upgraded from doubtful to substandard. Excluding this adjustment, the Bank's provision expense for 2007 totaled $531,000 or an increase of $66,000 compared with that recorded during fiscal 2006. This adjusted variance reflects the increase in loan loss provision generally attributable to the comparatively higher net growth in our commercial loan portfolio between the two fiscal years. Specifically, as adjusted, each period's provision resulted largely from the incremental growth in the outstanding balance of the loans on which historical and environmental loss factors are applied. For the year ended September 30, 2007, outstanding loan balances, excluding the allowance for loan loss and loans held for sale, increased $39.8 million to $440.5 million from $400.7 million at September 30, 2006. The growth was comprised of net increases in commercial loans totaling $45.7 million. Such loans include multi-family, nonresidential real estate, construction and business loans. The increase in loans receivable net also included net increases in home equity loans and home equity lines of credit totaling $3.0 million. Offsetting the growth in these categories was a $8.9 million decrease in the balance of 1-4 family first mortgages.

By comparison, for the year ended September 30, 2006, total outstanding loan balances, excluding the allowance for loan loss and loans held for sale, grew by $58.1 million - an amount exceeding that of the current year. However, the growth was comprised of net increases in the outstanding balance of commercial loans, as defined above, of approximately $35.8 million - comparatively lower net growth on those loans on which the Bank applies relatively higher historical and environment loss factors. Loan growth in the earlier period also included net increases in one- to four-family mortgages totaling $13.0 million coupled with increases in home equity loans and home equity lines of credit of $9.2 million - loan types for which the Bank applies comparatively lower historical and environmental loss factors.

In total, the allowance for loan losses as a percentage of gross loans outstanding increased to 0.58% at September 30, 2007- an increase of 5 basis points from 0.53% at September 30, 2006. These ratios reflect allowance for loan loss balances of $2.6 million and $2.1 million, respectively. The overall increase in the ratio of allowance to gross loans reported reflects the changing composition of the portfolio with greater strategic emphasis on loans with higher risk factors. As noted earlier, no additions to the allowance for loan losses were required for nonperforming loans, which decreased to 0.22% of total assets at September 30, 2007 from 0.41% at September 30, 2006. The level of the allowance is based on estimates and the ultimate losses may vary from those estimates.

17NEXT PAGE

Noninterest Income. Noninterest income increased $401,000 to $1.4 million for fiscal 2007 from $1.0 million for fiscal 2006. The net increase was attributable, in large part, to a comparative decrease in losses on sale of investment securities totaling $260,000. The losses reported in the prior period included a $271,000 loss on sale of one underperforming investment security. The Company also reported an increase of $153,000 in income from the cash surrender value of life insurance attributable to a combination of higher average balances and improved yields on those assets. The Company also recognized a $28,000 increase in the gain on sale of loans resulting from comparatively greater 1-4 family mortgage loan sales than had been recorded in the prior period. Offsetting these increases in noninterest income were comparative reductions in other noninterest income of $39,000. This decline resulted primarily from comparatively lower receipts of loan prepayment penalties due to lower commercial loan prepayments partially offset by increases in loan withdrawal fees and loan servicing fees.

Noninterest Expense. Noninterest expense increased $1.9 million to $12.5 million for fiscal 2007 from $10.7 million for fiscal 2006. Significant components of this growth in operating costs include comparative increases to salaries and employee benefits of $1.7 million, increased occupancy and equipment costs of $149,000, increases in data processing costs of $95,000, increases in advertising and marketing costs of $95,000 and increases to other noninterest expenses of $124,000. Offsetting these increases were decreases of $150,000 and $123,000 in legal costs and professional and consulting fees, respectively.

The $1.7 million increase in salaries and employee benefits for the comparative periods includes increases of approximately $551,000 that were directly attributable to the Bank's three full service branches that were opened during fiscal 2007. Salary and employee benefit expenses for 2007 also increased approximately $113,000 due to net staffing additions in the Bank's commercial lending department. Other noteworthy increases to salaries and employee benefits resulted from the implementation of the Company's 2006 Equity Incentive Plan approved by shareholders in May, 2006. Specifically, total expenses associated with the Company's restricted stock and stock option plans increased approximately $653,000 in fiscal 2007 compared with that reported for fiscal 2006. Finally, the variance for the comparative years also reflects the reversal of $131,000 of profit sharing expense recorded in the first quarter of the earlier comparative period resulting from the discontinuation of that benefit.

The remaining $190,000 increase in noninterest expense during fiscal 2007 included increases in occupancy and equipment, advertising and other noninterest expense totaling $368,000 which were largely attributable to the start up and ongoing operation of the Bank's three newest branches opened during fiscal 2007. The Company also recognized an increase in data processing costs of $95,000 in 2007. A portion of this increase was also attributable to the start up and ongoing operation of the Bank's newest branches. However, the increase in data processing costs for fiscal 2007 also included approximately $64,000 of one-time expenses attributable to upgrading the Bank's public website and online banking services and the implementation of certain outsourced network infrastructure management services. The latter expense resulted from the Bank's decision to consolidate the provision of a variety of information technology administration support services under a single outsourced service provider. Such services had previously been rendered by a combination of other outsourced and in-house resources. This decision also resulted in the elimination of one managerial position within the Bank's MIS department during the fourth quarter ended September 30, 2007.

18NEXT PAGE

The reported decrease in legal fees was primarily attributable to comparatively lower utilization of legal services during fiscal 2007. The earlier comparative period included expenses for legal services resulting from the completion of the Company's second step conversion for which similar expenses were not incurred during the current year. Legal expenses during the earlier comparative period included those relating to the modification of the Bank's employee benefit plans, including the Bank's 401k and ESOP, as well as the development of the 2006 Equity Incentive Plan.

Finally, comparative decreases in professional and consulting fees were primarily the result of lower internal and external audit costs associated with the Sarbanes Oxley Act of 2002 during the current year. The expense incurred for fiscal 2006 included a portion of the first year costs associated with the development, implementation and audit of controls over financial statement reporting in accordance with Section 404 of the Act. The lower costs in fiscal 2007 reflect the reduced financial burden of maintaining and updating those controls as required to ensure ongoing compliance with the Act.

Provision for Income Taxes. The provision for income taxes decreased $1.1 million for fiscal 2007 compared with fiscal 2006. For those same comparative years, the Company's effective tax rate was 23.8% and 38.0%, respectively. The lower effective tax rate in the current period rate was largely the result of the level of "tax favored" income reported by the Company for the comparative years in relation to the level of pretax net income reported by the Company for those same periods. "Tax favored" income arises from revenue sources on which the Company pays income taxes at a comparatively lower effective tax rate than it generally pays on other sources of income.

Specifically, the Company's effective tax rate is influenced by the level of interest income on investment securities held by the Bank's investment subsidiary, American Savings Investment Corporation ("ASIC"). ASIC is a wholly owned New Jersey investment subsidiary formed in August 2004 by American Bank of New Jersey. The purpose of this subsidiary is to invest in stocks, bonds, notes and all types of equity, mortgages, debentures and other investment securities. Interest income from this subsidiary is taxed by the state of New Jersey at an effective rate lower than the statutory corporate state income tax rate. Additionally, the Company also recognizes tax exempt income from the cash surrender value of bank owned life insurance.

The Company recognized income from these two "tax favored" sources during both fiscal 2007 and fiscal 2006. However, the comparatively lower pretax net income reported for fiscal 2007 resulted in the items discussed above having a proportionally greater net beneficial impact on the Company's reported effective tax rate in the current year.

Comparison of Operating Results for the Years Ended September 30, 2006 and 2005

General. Net income for the year ended September 30, 2006 was $2.1 million, an increase of $90,000, or 4.4% from the year ended September 30, 2005. The increase in net income resulted from an increase in net interest income offset by a decrease in noninterest income coupled with increases in noninterest expense, the provision for loan losses and the provision for income taxes.

19NEXT PAGE

Interest Income. Total interest income increased 23.0% or $4.7 million to $25.3 million for the year ended September 30, 2006 from $20.6 million for the year ended September 30, 2005. For those same comparative years, the average yield on interest-earning assets increased 28 basis points to 5.12% from 4.84% while the average balance of interest-earning assets increased $69.5 million or 16.3% to $495.4 million from $425.9 million.

Interest income on loans increased $2.8 million or 16.2%, to $20.3 million for the year ended September 30, 2006 from $17.5 million for the same period in 2005. This increase was due, in part, to a $42.0 million increase in the average balance of loans receivable to $369.9 million for the year ended September 30, 2006 from $327.9 million for the year ended September 30, 2005. In addition, the average yield on loans increased 17 basis points to 5.49% from 5.32% for those same comparative periods. The increase in the average balance of loans receivable was the result of loan originations exceeding repayments due to strong borrower demand and a growing strategic emphasis on commercial lending.

The rise in interest income on loans was augmented by higher interest income on securities, which increased $1.2 million or 43.7% to $3.9 million for the year ended September 30, 2006 from $2.7 million for fiscal 2005. The increase was due in part, to a 76 basis point increase in the average yield on securities which grew to 3.99% from 3.23% for the same comparative periods. The impact on interest income attributable to this increase was further augmented by a $13.8 million increase in the average balance of investment securities to $98.4 million for the year ended September 30, 2006 from $84.6 million for the same 2005 period. The increase in yield primarily resulted from purchases of investment securities with the proceeds of the Company's second step conversion and higher yields on adjustable rate securities which have repriced upward in accordance with the general movement of market interest rates.

Further, interest and dividend income on federal funds sold, other interest-bearing deposits and FHLB stock increased $717,000 to $1.1 million for the year ended September 30, 2006 from $408,000 for fiscal 2005. This increase was due, in part, to an increase of $13.7 million in the average balance of these assets to $27.1 million for the year ended September 30, 2006 from $13.3 million for the year ended September 30, 2005. The impact on interest income attributable to this growth was further augmented by a 110 basis point rise in the average yield on these assets which increased to 4.16% from 3.06%.

Interest Expense. Total interest expense increased by $2.3 million or 23.6% to $11.8 million for the year ended September 30, 2006 from $9.5 million for fiscal 2005. For those same comparative periods, the average cost of interest-bearing liabilities increased 76 basis points from 2.56% to 3.32%, while the average balance of interest-bearing liabilities decreased $16.7 million or 4.5% to $355.9 million for the year ended September 30, 2006 from $372.6 million for fiscal 2005.

Interest expense on deposits increased $2.5 million or 37.15% to $9.2 million for the year ended September 30, 2006 from $6.7 million for fiscal 2005. This increase was due, in part, to the disintermediation of lower cost transaction account balances into higher yielding certificates of deposit. The average balance of interest-bearing deposits, including stock subscriptions received, decreased $7.4 million to $303.1 million for the year ended September 30, 2006 from

20NEXT PAGE

$310.5 million for fiscal 2005. The components of this net decrease for the comparative periods include a decline in the average balance of savings and interest bearing checking deposits of $26.3 million and $864,000 respectively. These decreases were largely offset by an increase in the average balance of higher costing certificates of deposit totaling $19.8 million.

The impact on interest expense attributable to the disintermediation noted above was exacerbated by an 87 basis point increase in the average cost of interest-bearing deposits to 3.03% for the year ended September 30, 2006 from 2.16% for fiscal 2005. The components of this increase include an 86 basis point increase in the average cost of certificates of deposit, an 84 basis point increase in the average cost of interest-bearing checking accounts and a 60 basis point increase in the average cost of savings accounts.

Interest expense on FHLB advances decreased $233,000 to $2.6 million for the year ended September 30, 2006 from $2.8 million for the fiscal 2005. This decrease was due, in part, to a $9.3 million decrease in the average balance to $52.7 million for the year ended September 30, 2006 from $62.1 million for fiscal 2005. The impact on expense attributable to this decrease in average balance was partly offset by a 37 basis point increase in the average cost of advances from 4.58% for the year ended September 30, 2005 to 4.95% for fiscal 2006. The higher average cost for the current period was partly due to the lower average balance of overnight repricing line of credit borrowings compared with that held during the earlier comparative period. The cost of such overnight borrowings during that earlier period was significantly less than that of the remaining portfolio of fixed-rate term advances. Additionally, the maturity of lower costing term advances in fiscal 2006 have resulted in comparatively higher costs for the remaining portfolio of fixed-rate term advances.

Net Interest Income. Net interest income increased by $2.5 million or 22.5%, to $13.5 million for the year ended September 30, 2006 from $11.1 million for fiscal 2005. The net interest rate spread declined 48 basis points from 2.28% to 1.80% for the same comparative periods, while the net interest margin increased 13 basis points from 2.60% to 2.73%.

Provision for Loan Losses. Using the allowance methodology described under Critical Accounting Policies found later in this discussion, the provision for loan losses totaled $465,000 for the year ended September 30, 2006 representing an increase of $384,000 over fiscal 2005. The Company's net loan loss provision for the earlier comparative period reflected the reversal of a previously recorded loss provision of $42,000. After adjusting for the reversal in that earlier period, the increase in loan loss provision is generally attributable to the comparatively higher net growth in our commercial loan portfolio. Specifically, each year's comparative provision resulted from the incremental growth in the outstanding balance of the loans on which historical and environmental loss factors are applied. For the year ended September 30, 2006, outstanding loan balances, excluding the allowance for loan loss, increased 16.8% or $57.8 million to $400.7 million from $342.9 million at September 30, 2005. The growth comprised a net increase in the disbursed balances of construction loans of $15.1 million, net increases in multi-family and nonresidential real estate loans totaling $15.4 million and a net increase in business loans totaling $5.3 million. Additional components of the net change in gross loan balances included net increases in one- to four-family mortgages totaling $13.0 million coupled with increases in home equity loans and lines of credit of $9.2 million.

21NEXT PAGE

By comparison, for the year ended September 30, 2005, outstanding loan balances, excluding the allowance for loan loss, grew $32.4 million or 10.4% from $310.5 million at September 30, 2004 to $342.9 million at September 30, 2005. The growth was primarily comprised of net increases in multi-family and nonresidential real estate loans totaling $15.4 million coupled with net increases in one- to four-family mortgages totaling $15.8 million. Additional components of the net change in gross loan balances included increases in home equity loans of $2.7 million and net increases in business and consumer loans totaling $304,000. This growth was offset by a decline in the disbursed balance of construction loans totaling $1.9 million.

In total, the allowance for loan losses as a percentage of gross loans outstanding increased 5 basis points to 0.53% at September 30, 2006 from 0.48% at September 30, 2005. These ratios reflect allowance for loan loss balances of $2.1 million and $1.7 million, respectively. The increase in the ratio of allowance to gross loans reflects the changing composition of the portfolio which reflects comparatively greater net growth in loans with higher risk factors. The level of the allowance is based on estimates and the ultimate losses may vary from those estimates.

Noninterest Income. Noninterest income decreased $175,000 to $1.0 million for the year ended September 30, 2006 compared to $1.2 million for fiscal 2005. This reduction was primarily attributable to a $271,000 loss on sale of an underperforming investment security during the first quarter of fiscal 2006 compared with a similar loss on sale of $16,000 in fiscal 2005. This net $255,000 variance was offset, in part, by increases to other noninterest income categories. Deposit service fees and charges increased $32,000 due primarily to increased receipts of deposit account service charges offset by reduced levels of fee income from annuity sales. The Company also recorded comparatively higher income from cash surrender value of life insurance of approximately $45,000 reflecting higher policy balances held by the Company and increases in policy yields attributable to increases in market interest rates.

Noninterest Expense. Noninterest expense increased $1.7 million, or 19.4% to $10.7 million for the year ended September 30, 2006 from $8.9 million for the year ended September 30, 2005. This increase was attributable to higher expenses for salaries and benefits, occupancy and equipment, advertising, legal, professional and consulting fees, and other noninterest expenses partially offset by decreases in data processing expenses.

Salaries and employee benefits increased $1.0 million or 17.2% to $6.9 million for the year ended September 30, 2006 as compared to $5.9 million for fiscal 2005. Salaries and wages including bonus and payroll taxes, increased $448,000 Such increases were primarily attributable to growth in the Company's commercial lending staff and additions to retail deposit personnel in anticipation of the Company's next branch opening coupled with overall annual increases in employee compensation.

Retirement and stock benefit plan costs increased $809,000 resulting primarily from increased ESOP costs stemming from completion of Company's second step conversion and the subsequent implementation of the Company's 2006 Equity Incentive Plan approved by shareholders in May, 2006. ESOP costs increased $310,000 from $270,000 for fiscal 2005 to $580,000 for fiscal 2006 (See Note 5 Employee Stock Ownership Plan). For those same comparative periods, restricted stock plan costs increased $430,000 from $207,000 to $637,000.

22NEXT PAGE

The amount recorded in fiscal 2005 reflected only nine months of RSP expenses reflecting plan approval by shareholders in January 2005. By comparison, the amount recorded in fiscal 2006 included a full year of RSP benefits approved in 2005 plus a pro rata portion of the annual RSP benefits relating to the Company's 2006 Equity Incentive Plan approved by shareholders in May, 2006. Finally, the Company began recognizing stock options expense upon the adoption of FAS 123R on October 1, 2005. For the year ended September 30, 2006, the Company recorded $384,000 in stock options expense for which no comparative expense was recorded in the prior fiscal year. Together, these factors contributed $1.1 million to the comparative increase in retirement and stock benefit plan costs. These benefit cost increases were partly offset by a comparative decrease in profit sharing expense of $306,000 resulting from $131,000 of accrued plan expenses that were reversed in fiscal 2006 due to the Company's discontinuation of that plan. By comparison, profit sharing plan expenses in fiscal 2005 totaled $175,000.

Medical and other insurance benefit premiums, net of employee co-payments, increased approximately $64,000 while other employee expenses increased approximately $71,000 resulting primarily from comparatively greater costs associated with employee training and personnel procurement expenses.

Finally, offsetting these net increases in salaries and employee benefits for the year ended September 30, 2006 was a net decrease in director compensation expense of $382,000 due largely to costs recognized in the earlier comparative period relating to changes in the Company's director retirement plan for which no comparable costs were incurred in fiscal 2006.

Occupancy and equipment expense increased $119,000 to $949,000 for the year ended September 30, 2006 as compared to $830,000 for fiscal 2005 while data processing costs decreased by approximately $17,000. The increase in occupancy and equipment costs was attributable, in large part, to the recognition of approximately $91,000 of deposit branch acquisition costs in the more recent period relating to sites for which the Bank and/or Seller were unable to fulfill the conditional terms of the sales contract. Such expenses would have been capitalized into the depreciable cost of the branch had they come to fruition. Notwithstanding these challenges, the Company continues to pursue its deposit branch growth strategy. Toward that end, the Bank opened a full service branch located on Bloomfield Avenue in Verona, New Jersey in November 2006. The remaining increase in occupancy and equipment costs is attributable primarily to additional property tax expense relating to that branch. Additionally, the Company recently received the requisite municipal approvals needed to construct a full service branch on a site in Clifton, New Jersey.

Increases in noninterest expense also included increases in advertising and marketing expenses of approximately $62,000 attributable primarily to costs associated with enhanced corporate and lending marketing programs. Legal expenses for the year ended September 30, 2006 were $52,000 higher than those recorded for fiscal 2005. This comparative increase in legal expenses was attributable, in large part, to the Company's annual meeting held in May, 2006 and matters addressed by shareholders at that time. Additionally, professional and consulting fees increased $257,000 to $531,000 for the year ended September 30, 2006 from $274,000 for fiscal 2005. In large part, these increases were attributable to audit and consulting costs incurred by the Company relating to compliance with the Sarbanes Oxley Act of 2002 and the outsourcing of other internal audit and compliance-related services.

23NEXT PAGE

Finally, the Company recognized noteworthy increases in a variety of other noninterest expenses in fiscal 2006 compared with fiscal 2005. Other noninterest expenses increased $247,000 from $752,000 for the year ended September 30, 2005 to $999,000 for the year ended September 30, 2006. A significant portion of this increase was directly attributable to the Company's conversion into a fully public entity. Such cost increases include those associated with corporate insurance, transfer agent services, NASDAQ membership fees and regulatory oversight costs. Additional increases in other noninterest expense resulted from the implementation of the Company's strategic growth and business diversification strategies. For example, the Company recognized a substantial portion of the general and administrative "start up costs" of its new deposit branch in the fourth quarter of fiscal 2006. The Verona branch location opened in the first quarter of fiscal 2007.

Provision for Income Taxes. The provision for income taxes increased $195,000 for the year ended September 30, 2006 compared with fiscal 2005. For those same comparative periods, the Company's effective tax rate was 38.0% and 37.1%, respectively. The net increase in the effective tax rate was attributable, in part, to the decline in the average balance of investment securities held by the Bank's investment subsidiary, American Savings Investment Corporation ("ASIC"). ASIC is a wholly owned New Jersey investment subsidiary formed in August 2004 by American Bank of New Jersey. The purpose of this subsidiary is to invest in stocks, bonds, notes and all types of equity, mortgages, debentures and other investment securities. Interest income from this subsidiary is taxed by the state of New Jersey at an effective rate lower than the statutory corporate state income tax rate.

Throughout fiscal 2006, cash flows from ASIC were utilized by the Bank to fund loan growth. This resulted in comparatively lower net income recorded by the investment subsidiary offset by greater net income recorded by the Bank resulting in the increase in the Company's effective income tax rate.

Additionally, the Company recorded comparatively higher non-deductible expenses associated with incentive stock options due to the adoption of FAS 123R in the current fiscal year. Partially offsetting these factors were comparatively higher levels of tax exempt income in fiscal 2006 from the cash surrender value of bank owned life insurance compared with that recorded in fiscal 2005.

24NEXT PAGE

Average Balances, Interest, and Average Yields/Cost

EX-21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

Parent	Subsidiary	Percentage of Ownership	State of Incorporation or Organization
American Bancorp of New Jersey, Inc.	American Bank of New Jersey	100%	Federal
American Bancorp of New Jersey, Inc.	ASB Investment Corp.	100%	New Jersey
American Bank of New Jersey	American Savings Investment Corp.	100%	New Jersey

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

American Bancorp of New Jersey, Inc.
365 Broad Street
Bloomfield, New Jersey 07003

We consent to the incorporation by reference in Registration Statement Nos.333-131398, 333-131397 and 333-137801 on Form S-8 filed by American Bancorp of New Jersey, Inc., of our reports dated December 11, 2007, with respect to the consolidated financial statements of American Bancorp of New Jersey, Inc. and the effectiveness of internal control over financial reporting, which reports appear in this Annual Report on Form 10-K of American Bancorp of New Jersey, Inc. for the year ended September 30, 2007.

Crowe Chizek and Company LLC

Livingston, New Jersey
December 11, 2007

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Joseph Kliminski, Chief Executive Officer of American Bancorp of New Jersey, Inc., certify that: 1.           I have reviewed this annual report on Form 10-K of American Bancorp of New Jersey, Inc.; 2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;          b)           Designed such internal control over financial reporting, or caused such internal control over financial statement reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;          c)           Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and          d)           Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and          b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 14, 2007 /s/ Joseph Kliminski Joseph Kliminski
Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Eric B. Heyer, Senior Vice President, Treasurer and Chief Financial Officer of American Bancorp of New Jersey, Inc., certify that: 1.           I have reviewed this annual report on Form 10-K of American Bancorp of New Jersey, Inc.; 2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;          b)           Designed such internal control over financial reporting, or caused such internal control over financial statement reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;          c)           Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and          d)           Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and          b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 14, 2007 /s/ Eric B. Heyer Eric B. Heyer
Senior Vice President, Treasurer and
Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. [] 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

             In connection with the Annual Report of American Bancorp of New Jersey, Inc. (the "Company") on Form 10-K for the year ended September 30, 2007 as filed with the Securities and Exchange Commission (the "Report"), we, Joseph Kliminski, Chief Executive Officer, and Eric B. Heyer, Senior Vice President, Treasurer and Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

             (1)             The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

             (2)             The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statementes included in the Report.

/s/ Joseph KliminskiJoseph Kliminski Chief Executive Officer (Principal Executive Officer)	/s/ Eric B. HeyerEric B. Heyer Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)
Date: December 14, 2007	Date: December 14, 2007