Edgar Filing: ROMA FINANCIAL CORP

f10q_063010-0375.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

	(Mark One)

	X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
		EXCHANGE ACT OF 1934

	For the quarterly period ended	June 30, 2010

	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 000-52000


	ROMA FINANCIAL CORPORATION
	(Exact name of registrant as specified in its charter)


	UNITED STATES				51-0533946
	(State or other jurisdiction of				(I.R.S. Employer
	Incorporation or organization)				Identification Number)

	2300 Route 33, Robbinsville, New Jersey			08691
	(Address of principal executive offices)			(Zip Code)

	Registrant’s telephone number, including area code:	(609) 223-8300

	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. Yes [ X ] No [ ]
	Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]
	Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer [ ] Accelerated filer [ X ] Non-accelerated filer [ ] Smaller reporting company [ ]

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

	The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date, July 20, 2010:

	$0.10 par value common stock - 30,739,053 shares outstanding

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

INDEX

		Page
		Number
PART I - FINANCIAL INFORMATION

Item 1:	Financial Statements

	Consolidated Statements of Financial Condition	2
	at June 30, 2010 and December 31, 2009 (Unaudited)

	Consolidated Statements of Income for the Three & Six Months Ended	3
	June 30, 2010 and 2009 (Unaudited)

	Consolidated Statements of Changes in Stockholders’ Equity for the Six	4
	Months Ended June 30, 2010 and 2009 (Unaudited)

	Consolidated Statements of Cash Flows for the Six Months	5
	Ended June 30, 2010 and 2009 (Unaudited)

	Notes to Consolidated Financial Statements	7

Item 2:	Management’s Discussion and Analysis of	29
	Financial Condition and Results of Operations

Item 3:	Quantitative and Qualitative Disclosure About Market Risk	35

Item 4:	Controls and Procedures	36

PART II - OTHER INFORMATION		36

1:	Legal Proceedings	36

1A:	Risk Factors	36

2	Unregistered Sales of Equity Securities and Use of Proceeds	36

3:	Defaults Upon Senior Securities	37

4:	(Reserved)	37

5:	Other Information	37

6:	Exhibits	37

SIGNATURES		38

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	June 30, 2010			December 31, 2009
	(In thousands, except for share data)
Assets

Cash and amounts due from depository institutions	$	8,403		$	9,658
Interest-bearing deposits in other banks		97,014			25,647
Money market funds		45,179			15,590
Cash and Cash Equivalents		150,596			50,895

Investment securities available for sale (“AFS”), at fair value		33,897			30,144
Investment securities held to maturity (“HTM”), at amortized cost (fair value of $288,246 and $301,673, respectively)		285,942			305,349
Mortgage-backed securities held to maturity, at amortized cost (fair value of $298,880 and $258,758, respectively)		283,378			248,426
Loans receivable, net of allowance for loan losses( $7,268 and $5,243, respectively)		609,235			585,759
Real estate and other repossessed assets		2,449			1,928
Real estate owned via equity investment		4,016			4,053
Premises and equipment, net		41,036			39,129
Federal Home Loan Bank of New York and ACBB stock		3,743			3,045
Accrued interest receivable		6,002			6,468
Bank owned life insurance		24,936			24,299
Other assets		11,641			12,506
Total Assets	$	1,456,871		$	1,312,001

Liabilities and Stockholders’ Equity
Liabilities

Deposits:
Non-interest bearing	$	37,963		$	32,481
Interest bearing		1,071,930			983,274
Total deposits		1,109,893			1,015,755
Federal Home Loan Bank of New York advances		30,739			24,826
Securities sold under agreements to repurchase		40,000			40,000
Securities purchased and not settled		43,468			-
Advance payments by borrowers for taxes and insurance		2,815			2,663
Accrued interest payable and other liabilities		11,786			12,537
Total Liabilities		1,238,701			1,095,781

Stockholders’ Equity
Common stock, $0.10 par value, 45,000,000 shares authorized, 32,731,875 shares issued;
30,781,053 and 30,932,653 shares outstanding, respectively		3,274			3,274
Paid-in capital		98,895			98,921
Retained earnings		151,998			150,131
Unearned shares held by Employee Stock Ownership Plan		(5,953	)		(6,224	)
Treasury stock, 1,950,822 and 1,799,222 shares, respectively		(30,855	)		(29,214	)
Accumulated other comprehensive loss		(883	)		(2,313	)
Total Roma Financial Corporation stockholders’ equity		216,476			214,575
Noncontrolling interest		1,694			1,645
Total Stockholders’ Equity		218,170			216,220
Total Liabilities and Stockholders’ Equity	$	1,456,871		$	1,312,001

See notes to consolidated financial statements.

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2010			2009			2010			2009
	(In thousands, except for share and per share data)					(In thousands, except for share and per share data)
Interest Income
Loans, including fees	$	8,437		$	7,618		$	16,662		$	14,930
Mortgage-backed securities held to maturity		3,413			3,659			6,558			7,552
Investment securities held to maturity		3,070			1,620			6,336			2,481
Securities available for sale		138			147			284			302
Other interest-earning assets		103			240			198			577

Total Interest Income		15,161			13,284			30,038			25,842

Interest Expense
Deposits		4,117			4,916			8,318			9,569
Borrowings		614			614			1,214			1,259

Total Interest Expense		4,731			5,530			9,532			10,828

Net Interest Income		10,430			7,754			20,506			15,014

Provision for loan losses		769			385			2,041			752

Net Interest Income after Provision for Loan Losses		9,661			7,369			18,465			14,262

Non-Interest Income
Commissions on sales of title policies		239			332			450			574
Fees and service charges on deposits and loans		399			340			806			698
Income from bank owned life insurance		283			282			560			565
Net gain from sale of mortgage loans originated for sale		130			46			185			74
Net gain for sale of available for sale securities		28			-			51			-
Other		290			286			570			471

Total Non-Interest Income		1,369			1,286			2,622			2,382

Non-Interest Expense
Salaries and employee benefits		4,638			3,997			9,020			8,040
Net occupancy expense of premises		685			678			1,393			1,438
Equipment		669			641			1,327			1,285
Data processing fees		410			400			827			787
Federal Deposit Insurance Premium		301			1,135			602			1,169
Advertising		212			208			346			380
Acquisition costs		411			-			525			-
Other		1,414			843			2,358			1,526

Total Non-Interest Expense		8,740			7,902			16,398			14,625

Income Before Income Taxes		2,290			753			4,689			2,019

Income Taxes		805			207			1,578			590

Net income before noncontrolling interests		1,485			546			3,111			1,429

Plus: net (gain) loss attributable to the noncontrolling interest		(21	)		2			(49	)		13


Net Income attributable to Roma Financial Corporation	$	1,464		$	548		$	3,062		$	1,442

Net income attributable to Roma Financial Corporation per common share
Basic and Diluted	$	.05		$	.02		$	.10		$	.05
Dividends Declared Per Share	$	.08		$	.08		$	.16		$	.16

Weighted Average Number of Common Shares Outstanding

Basic and Diluted		30,641,573			30,652,206			30,687,459			30,644,223

See notes to consolidated financial statements.

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands)

												Unearned			Accumulated
												Shares			Other
	Common Stock					Paid-In			Retained			Held			Comprehensive			Treasury			Noncontrolling
	Shares			Amount		Capital			Earnings			By ESOP			(Loss)			Stock			Interest			Total
Balance December 31, 2008		30,888		$	3,274	$	98,294		$	149,926		$	(6,765	)	$	(3,421	)	$	(29,935	)	$	1,643		$	213,016
Comprehensive income:
Net income for the six months
ended June 30, 2009										1,442												(13	)		1,429
Other comprehensive income net of taxes:
Unrealized loss on available for sale securities net of income taxes $(259)																(94	)								(94	)
Total comprehensive income																									1,335
Treasury shares released		44					(721	)											721						-
Dividends declared										(1,203	)														(1,203	)
Capital contributed by minority interest																						10			10
Stock-based compensation							574																		574
ESOP shares earned							60						271												331
Balance June 30, 2009		30,932		$	3,274	$	98,207		$	150,165		$	(6,494	)	$	(3,515	)	$	(29,214	)	$	1,640		$	214,063

Balance December 31, 2009		30,933		$	3,274	$	98,921		$	150,131		$	(6,224	)	$	(2,313	)	$	(29,214	)	$	1,645		$	216,220
Comprehensive income:
Net income for the six months
ended June 30, 2010										3,062												49			3,111
Other comprehensive income net of taxes:
Unrealized gain on available for sale securities net of income taxes and reclassification adjustment ($1,013)																1,430									1,430
Total comprehensive income																									4,541
Treasury shares repurchased		(196	)																(2,344	)					(2,344	)
Treasury shares released		44					(703	)											703						-
Dividends declared										(1,195	)														(1,195	)
Stock-based compensation							625																		625
ESOP shares earned							52						271												323
Balance June 30, 2010		30,781		$	3,274	$	98,895		$	151,998		$	(5,953	)	$	(883	)	$	(30,855	)	$	1,694		$	218,170

See notes to consolidated financial statements

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2010			2009
	(In thousands)

Cash Flows from Operating Activities

Net income	$	3,111		$	1,429
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of premises and equipment		952			982
Stock-based compensation		625			574
Amortization of premiums and accretion of discounts on securities		(311	)		(149	)
Accretion of deferred loan fees and discounts		(102	)		(61	)
Gain on sale of securities available for sale		(51	)		-
Net gain on sale of mortgage loans originated for sale		(185	)		(74	)
Mortgage loans originated for sale		(9,258	)		(6,522	)
Proceeds from sales of mortgage loans originated for sale		9,443			6,596
Net realized loss on sale of real estate owned		-			8
Provision for loan losses		2,041			752
ESOP shares earned		323			331
Decrease (increase) in accrued interest receivable		466			(565	)
Increase in cash surrender value of bank owned life insurance		(637	)		(481	)
Increase in other assets		(148	)		(240	)
(Decrease) in accrued interest payable		(158	)		(656	)
(Decrease) increase in other liabilities		(581	)		1,738

Net Cash Provided by Operating Activities		5,530			5,454

Cash Flows from Investing Activities

Proceeds from maturities, calls and principal repayments of securities available for sale		7,071			6,605
Proceeds from sale of securities available for sale		2,055			-
Purchases of securities available for sale		(10,003	)		(20,837	)
Proceeds from maturities, calls and principal repayments of investment securities held to maturity		172,487			77,000
Purchases of investment securities held to maturity		(110,890	)		(197,728	)
Principal repayments on mortgage-backed securities held to maturity		36,625			40,832
Purchases of mortgage-backed securities held to maturity		(70,479	)		(11,963	)
Proceeds from sale of real estate owned		-			60
Net increase in loans receivable		(25,815	)		(36,897	)
Additions to premises and equipment and real estate owned via equity investment		(2,834	)		(825	)
(Purchase) redemption of Federal Home Loan Bank of New York and ACBB stock		(698	)		496

Net Cash Used in Investing Activities		(2,481	)		(143,257	)

Cash Flows from Financing Activities
Net increase in deposits		94,138			167,278
Increase in advance payments by borrowers for taxes and insurance		152			224
Dividends paid to minority stockholders of Roma Financial Corp.		(1,207	)		(1,200	)
Redemption of Federal Home Loan Bank of New York advances		(1,087	)		(21,040	)
Proceeds from Federal Home Loan Bank of NewYork advances		7,000			-
Purchases of treasury stock		(2,344	)		-

Net Cash Provided by Financing Activities		96,652			145,272

Net Increase in Cash and Cash Equivalents		99,701			7,469

Cash and Cash Equivalents – Beginning		50,895			80,419

Cash and Cash Equivalents – Ending	$	150,596		$	87,888

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont’d)

(Unaudited)

	Six Months Ended June 30,
	2010		2009
	(In thousands)

Supplementary Cash Flows Information

Income taxes paid, net	$	1,232	$	602

Interest paid	$	9,690	$	10,172
Securities purchased and not settled	$	43,468	$	13,000
Loan receivable transferred to other repossessed assets	$	400	$	-

See notes to consolidated financial statements.

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE A – ORGANIZATION

Roma Financial Corporation (the “Company”) is a federally-chartered corporation organized in January 2005 for the purpose of acquiring all of the capital stock that Roma Bank issued in its mutual holding company reorganization. Roma Financial Corporation’s principal executive offices are located at 2300 Route 33, Robbinsville, New Jersey 08691 and its telephone number at that address is (609) 223-8300.

Roma Financial Corporation, MHC is a federally-chartered mutual holding company that was formed in January 2005 in connection with the mutual holding company reorganization. Roma Financial Corporation, MHC has not engaged in any significant business since its formation. So long as Roma Financial Corporation MHC is in existence, it will at all times own a majority of the outstanding stock of Roma Financial Corporation.

Roma Bank is a federally-chartered stock savings bank. It was originally founded in 1920 and received its federal charter in 1991. Roma Bank’s deposits are federally insured by the Deposit Insurance Fund as administered by the Federal Deposit Insurance Corporation. Roma Bank is regulated by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. The Office of Thrift Supervision also regulates Roma Financial Corporation, MHC and Roma Financial Corporation as savings and loan holding companies.

RomAsia Bank is a federally-chartered stock savings bank. RomAsia Bank received all regulatory approvals on June 23, 2009 to be a federal savings bank and began operations on that date. The Company invested $13.4 million in RomAsia Bank and currently holds a 89.55% ownership interest. RomAsia Bank is regulated by the Office of Thrift Supervision. Roma Bank and RomAsia Bank are collectively referred to as (the “Banks”).

The Banks offer traditional retail banking services, one-to four-family residential mortgage loans, multi-family and commercial mortgage loans, construction loans, commercial business loans and consumer loans, including home equity loans and lines of credit. Roma Bank operates from its main office in Robbinsville, New Jersey, and thirteen branch offices located in Mercer, Burlington and Ocean Counties, New Jersey. RomAsia Bank operates from two locations in Monmouth Junction, New Jersey. As of June 30, 2010, the Banks had 179 full-time employees and 39 part-time employees. Roma Bank maintains a website at www.romabank.com.

Roma Financial Corporation conducted a minority stock offering during 2006 in which 30% of its outstanding stock was sold to the public in a subscription offering. The offering closed July 11, 2006 and the net proceeds from the offering were approximately $96.1 million (gross proceeds of $98.2 million for the issuance of 9,819,562 shares, less offering costs of approximately $2.1 million). The Company also issued 22,584,995 shares to Roma Financial Corporation, MHC and 327,318 shares to the Roma Bank Community Foundation, Inc., resulting in a total of 32,731,875 shares issued and outstanding after the completion of the offering. A portion of the proceeds were loaned to the Roma Bank Employee Stock Ownership Plan (ESOP) to purchase 811,750 shares of the Company’s stock at a cost of $8.1 million.

Throughout this document, references to “we,” “us,” or “our” refer to the Banks or the Company, or both, as the context indicates.

NOTE B - BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, Roma Bank and Roma Bank’s wholly-owned subsidiaries, Roma Capital Investment Corp. (the “Investment Co.”) and General Abstract and Title Agency (the “Title Co.”), and the Company’s majority owned investment of 89.55% in RomAsia Bank. The consolidated statements also include the Company’s 50% interest in 84 Hopewell, LLC (the “LLC”), a real estate investment which is consolidated according to the requirements of Accounting Standards Codification Topic 810, Variable Interest Entities. All significant inter-company accounts and transactions have been eliminated in consolidation. These statements were prepared in accordance with instructions for Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with generally accepted accounting principles in the United States of America.

NOTE B - BASIS OF PRESENTATION (Continued)

In the opinion of management, all adjustments which are necessary for a fair presentation of the consolidated financial statements have been made at and for the three and six months ended June 30, 2010 and 2009. The results of operations for the three and six months ended June 30, 2010 are not necessarily indicative of the results which may be expected for the entire fiscal year or other interim periods.

The December 31, 2009 data in the consolidated statements of financial condition was derived from the Company’s audited consolidated financial statements for that date. That data, along with the interim financial information presented in the consolidated statements of financial condition, income, changes in stockholders’ equity and cash flows should be read in conjunction with the 2009 audited consolidated financial statements for the year ended December 31, 2009, including the notes thereto included in the Company’s Annual Report on Form 10-K.

The Investment Co. was incorporated in the State of New Jersey effective September 4, 2004, and began operations October 1, 2004. The Investment Co. is subject to the investment company provisions of the New Jersey Corporation Business Tax Act. The Title Co. was incorporated in the State of New Jersey effective March 7, 2005 and commenced operations April 1, 2005. The Company, together with two individuals, formed a limited liability company, 84 Hopewell, LLC. The LLC was formed to build a commercial office building in which is located the Company’s Hopewell branch, corporate offices for the other LLC members construction company and tenant space. The Company invested $370,000 in the LLC and provided a loan in the amount of $3.6 million to the LLC. The Company and the other 50% owner’s construction company both have signed lease commitments to the LLC.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates.

A material estimate that is particularly susceptible to significant change relates to the determination of the allowance for loan losses. The allowance for loan losses represents management’s best estimate of losses known and inherent in the portfolio that are both probable and reasonable to estimate. While management uses the most current information available to estimate losses on loans, actual losses are dependent on future events and, as such, increases in the allowance for loan losses may be necessary.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Banks’ allowance for loan losses. Such agencies may require the Banks to recognize additions to the allowance based on their judgments about information available to them at the time of their examinations.

Effective April 1, 2009, the Company adopted Financial Accounting Standards Board (FASB) guidance now codified as FASB ASC Topic 855, Subsequent Events. This guidance establishes general standards for accounting and for disclosure of events that occur after the balance sheet date but before financial statements are issued. The subsequent event guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition in the financial statements, identifies the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in the financial statements, and the disclosures that should be made about events or transactions that occur after the balance sheet date.

NOTE C - CONTINGENCIES

The Company, from time to time, is a party to routine litigation that arises in the normal course of business. In the opinion of management, the resolution of such litigation, if any, would not have a material adverse effect, as of June 30, 2010, on the Company’s consolidated financial position or results of operations.

NOTE D – EARNINGS PER SHARE

Basic earnings per share is based on the weighted average number of common shares actually outstanding adjusted for Employee Stock Ownership Plan (“ESOP”) shares not yet committed to be released. Diluted EPS is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of outstanding stock options and unvested stock awards, if dilutive, using the treasury stock method. Shares issued and reacquired during any period are weighted for the portion of the period they were outstanding.

Outstanding stock options and restricted stock grants for the three and six months ended June 30, 2010 were not considered in the calculation of diluted earnings per share because they were antidilutive.

NOTE E – STOCK BASED COMPENSATION

Equity Incentive Plan

At the Annual Meeting held on April 23, 2008, stockholders of the Company approved the Roma Financial Corporation 2008 Equity Incentive Plan. On June 25, 2008 directors, senior officers and certain employees of the Company were granted, in the aggregate, 820,000 stock options and awarded 222,000 shares of restricted stock.

The 2008 Plan enables the Board of Directors to grant stock options to executives, other key employees and nonemployee directors. The options granted under the Plan may be either incentive stock options or non-qualified stock options. The Company has reserved 1,292,909 shares of common stock for issuance upon the exercise of options granted under the 2008 Plan and 517,164 shares for grants of restricted stock. The Plan will terminate in ten years from the grant date. Options will be granted with an exercise price not less than the Fair Market Value of a share of Common Stock on the date of the grant. Options may not be granted for a term greater than ten years. Stock options granted under the Incentive Plan are subject to limitations under Section 422 of the Internal Revenue Code. The number of shares available under the 2008 Plan, the number of shares subject to outstanding options and the exercise price of outstanding options will be adjusted to reflect any stock dividend, stock split, merger, reorganization or other event generally affecting the number of Company’s outstanding shares. At June 30, 2010, there were 472,909 shares available for option grants under the 2008 Plan and 295,164 shares available for grants of restricted stock.

The Company accounts for stock based compensation under FASB ASC Topic 718, “Compensation-Stock Compensation”. ASC Topic 718 covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. ASC Topic 718 requires that compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is measured based on the fair value of the equity or liability instruments issued.

ASC Topic 718 also requires the Company to realize as a financing cash flow rather than an operating cash flow, as previously required, the benefits of realized tax deductions in excess of previously recognized tax benefits on compensation expense. In accordance with SEC Staff Accounting Bulletin (“SAB”) No. 107, the Company classified share-based compensation for employees and outside directors within “salaries and employee benefits” in the consolidated statement of income to correspond with the same line item as the cash compensation paid.

The stock options will vest over a five year service period and are exercisable within ten years. Compensation expense for all option grants is recognized over the awards’ respective requisite service period.

Restricted shares, granted on June 25, 2008, vest over a five year service period, management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period of the awards of five years. The number of shares granted and the grant date market price of the Company’s common stock determines the fair value of the restricted shares under the Company’s restricted stock plan.

NOTE E – STOCK BASED COMPENSATION (Continued)

The following is a summary of the status of the Company’s stock option activity and related information for the six months ended June 30, 2010:

	Number of Stock Options		Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life	Aggregate Intrinsic Value

Balance at January 1, 2010		820,000	$	13.67

Granted		-		-
Exercised		-		-
Forfeited		-		-

Balance at June 30, 2010		820,000	$	13.67	8.0 years	$	0.00

Exercisable at June 30, 2010		328,000	$	13.67

The following is a summary of the status of the Company’s restricted shares as of June 30, 2010 and changes during the three months ended June 30, 2010.

	Number of Restricted Shares		Weighted Average Grant Date Fair Value

Non-vested restricted shares at January 1, 2010		177,600	$	13.67

Granted		-		-
Forfeited		-		-
Vested		44,400		13.67
Non-vested restricted shares at June 30, 2010		133,200	$	13.67

Stock option and stock award expenses included in compensation expense was $300,000 and $597,000, respectively, for the three and six months ended June 30, 2010 with a respective tax benefit of $120,000 and $239,000, and $300,000 and $574,000, respectively for the three and six months ended June 30, 2009, with a respective tax benefit of $120,000 and $230,000. At June 30, 2010, approximately $3.6 million of unrecognized cost, related to outstanding stock options and restricted shares, will be recognized over a period of approximately 3.00 years.

Equity Incentive Plan – RomAsia Bank

The stockholders of RomAsia Bank approved an equity incentive plan in 2009. On January 6, 2010, directors, senior officers and certain employees of the RomAsia Bank were granted, in the aggregate, options to purchase 75,500 shares of RomAsia common stock.

The Plan enables the Board of Directors of RomAsia Bank to grant stock options to executives, other key employees and nonemployee directors. The options granted under the Plan may be either incentive stock options or non-qualified stock options. RomAsia has reserved 225,000 shares of it’scommon stock for issuance upon the exercise of options granted under the Plan. The Plan will terminate in ten years from the grant date. Options will be granted with an exercise price not less than the Fair Market Value of a share of RomAsia’s Common Stock on the date of the grant. Options may not be granted for a term greater than ten years. Stock options granted under the Incentive Plan are subject to limitations under Section 422 of the Internal Revenue Code. The number of shares available under the Plan, the number of shares subject to outstanding options and the exercise price of outstanding options will be adjusted to reflect any stock dividend, stock split, merger, reorganization or other event generally affecting the number of Company’s outstanding shares. At June 30, 2010, there were 149,500 shares available for option grants under the Plan.

NOTE E – STOCK BASED COMPENSATION (Continued)


Expected life	6.5 years
Risk-free rate		3.33	%
Volatility		25.76	%
Dividend yield		0.0	%
Fair Value	$	2.89

The following is a summary of the status of the RomAsia’s stock option activity and related information for the three months ended June 30, 2010:

	Number of Stock Options		Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life	Aggregate Intrinsic Value

Balance at January 1, 2010		-	$	-

Granted		75,500		8.47
Exercised		-		-
Forfeited		-		-

Balance at June 30, 2010		75,500	$	8.47	9.50 years	$	0.00

Exercisable at June 30, 2010		-

Stock option expense, related to the RomAsia plan included with compensation expense was $11,000 and $21,000 for the three and six months ended June 30, 2010, and zero for three and six months ended June 30, 2009, with a related tax benefit of $5,000 and $9,000 for the three and six months ended June 30, 2010, and zero in 2009. At June 30, 2010, approximately $197,000 unrecognized cost, related to outstanding stock options, will be recognized over a period of approximately 4.50 years.

Employee Stock Ownership Plan

Roma Bank has an Employee Stock Ownership Plan (“ESOP”) for the benefit of employees who meet the eligibility requirements defined in the plan. The ESOP trust purchased 811,750 shares of common stock as part of the stock offering using proceeds from a loan from the Company. The total cost of the shares purchased by the ESOP trust was $8.1 million, reflecting a cost of $10 per share. Roma Bank makes cash contributions to the ESOP on a quarterly basis sufficient to enable the ESOP to make the required loan payments to the Company. The loan bears an interest rate of 8.25% with principal and interest payable in equal quarterly installments over a fifteen year period. The loan is secured by the shares of the stock purchased.

Shares purchased with the loan proceeds were initially pledged as collateral for the term loan and are held in a suspense account for future allocation among participants. Shares released from the suspense account will be allocated among the participants on the basis of compensation, as described by the Plan, in the year of allocation. As shares are committed to be released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings per share computations. As of June 30, 2010 there were 593,286 unearned shares. The Company’s ESOP compensation expense was $159 thousand and $323 thousand, and $175 thousand and $397 thousand, respectively, for the three and six months ended June 30, 2010 and 2009.

NOTE F- REAL ESTATE OWNED VIA EQUITY INVESTMENTS

In 2008, Roma Bank, together with two individuals, formed 84 Hopewell, LLC. The LLC was formed to build a commercial office building which includes Roma Bank’s Hopewell branch, corporate offices for the other 50% owners’ construction company and tenant space. Roma Bank made a cash investment of approximately $360,000 in the LLC and provided a loan to the LLC in the amount of $3.6 million. Roma Bank and the construction company both have signed lease commitments to the LLC. With the adoption of guidance in regards to variable interest entities now codified in FASB ASC Topic 810, “Consolidation”, the Company is required to perform an analysis to determine whether such an investment meets the criteria for consolidation into the Company’s financial statements. As of June 30, 2010 and December 31, 2009, this variable interest entity met the requirements of ASC Topic 810 for consolidation based on Roma Bank being the primary financial beneficiary. This was determined based on the amount invested by the Bank compared to the other partners to the LLC and the lack of personal guarantees. As of June 30, 2010, the LLC had $4.0 million in fixed assets and a loan from Roma Bank for $3.5 million, which was eliminated in consolidation. The LLC had accrued interest payable to the Bank of $11 thousand at June 30, 2010 and during the three and six months then ended the Bank had paid $26 thousand and $51 thousand in rent to the LLC. Both of these amounts were eliminated in consolidation. Roma Bank’s 50% share of the LLC’s net income for the six months ended June 30, 2010 was $33 thousand.

NOTE G – INVESTMENT SECURITIES

The following summarizes the amortized cost and estimated fair value of securities available for sale at June 30, 2010 and December 31, 2009 with gross unrealized gains and losses therein: (in thousands):

	June 30, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Available for sale:
Mortgage-backed securities-U.S. Government Sponsored Enterprises (GSE’s)	$	9,177	$	397	$	-		$	9,574
Obligations of state and political subdivisions		5,236		76		25			5,287
U.S. Government (including agencies)		12,477		82		5			12,554
Equity securities		1,383		1,824		1			3,206
Mutual fund shares		2,808		-		29			2,779
Corporate bond		500		-		3			497

	$	31,581	$	2,379	$	63		$	33,897

NOTE G – INVESTMENT SECURITIES (Continued)

	December 31, 2009
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Available for sale:
Mortgage-backed securities-U.S. Government Sponsored Enterprises (GSE’s)	$	8,091	$	217	$	-		$	8,308
Obligations of state and political subdivisions		9,557		48		149			9,456
U.S. Government (including agencies)		8,500		3		196			8,307
Equity securities		1,383		4		-			1,387
Mutual fund shares		2,740		-		54			2,686

	$	30,271	$	272	$	399		$	30,144

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

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
June 30, 2010:
Mortgage-backed securities-GSE’s	$	-	$	-	$	-	$	-	$	-	$	-
Obligations of state & political subdivisions		1,315		25		-		-		1,315		25
U.S. Government, (including agencies)		1,001		5		-		-		1,001		5
Mutual funds		-		-		2,779		29		2,779		29
Equity security		49		1		-		-		49		1
Corporate bond		497		3		-		-		497		3

	$	2,862	$	34	$	2,779	$	29	$	5,641	$	63

December 31, 2009:
U.S. Government (including agencies)	$	8,307	$	196	$	-	$	-		8,307		196
Obligations of state & political subdivisions		5,351		149		-		-		5,351		149
Mutual funds		-		-		2,686		54		2,686		54

	$	13,658	$	345	$	2,686	$	54	$	16,344	$	399

NOTE G – INVESTMENT SECURITIES (Continued)

The amortized cost and estimated fair value of securities available for sale at June 30, 2010 by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:

	Amortized Cost		Fair Value
	(in Thousands)

One year or less	$	540	$	541
After one to five years		1,006		1,001
After five to ten years		9,431		9,496
After ten years		7,236		7,300
Total		18,213		18,338
Mortgage-backed securities		9,177		9,574
Equity securities		1,383		3,206
Mutual funds		2,808		2,779
Total	$	31,581	$	33,897

The following summarizes the amortized cost and estimated fair value of securities held to maturity at June 30, 2010 and December 31, 2009 with gross unrealized gains and losses therein: (in thousands):

	June 30, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value
	(In Thousands)

Held to maturity:
U.S. Government (including agencies)	$	273,019	$	2,048	$	10		$	275,057
Obligations of state and political subdivisions		11,942		248		-			12,190
Corporate bond		981		18		-			999

	$	285,942	$	2,314	$	10		$	288,246

	December 31, 2009
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value
	(In Thousands)

Held to maturity:
U.S. Government (including agencies)	$	292,427	$	149	$	3,897		$	288,679
Obligations of state and political subdivisions		11,943		139		86			11,996
Corporate bond		979		19		-			998

	$	305,349	$	307	$	3,983		$	301,673

NOTE G – INVESTMENT SECURITIES (Continued)

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

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
June 30, 2010
U.S. Government	$	11,960	$	10	$	-	$	-	$	11,960	$	10
Obligations of state & political subdivisions		-		-		-		-		-		-
	$	11,960	$	10	$	-	$	-	$	11,960	$	10

December 31, 2009
U.S. Government	$	243,639	$	3,897	$	-	$	-	$	243,639	$	3,897
Obligations of state & political subdivisions		5,574		86		-		-		5,574		86
	$	249,213	$	3,983	$	-	$	-	$	249,213	$	3,983

The amortized cost and estimated fair value of securities held to maturity at June 30, 2010 by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:

	Amortized Cost		Fair Value
	(In Thousands)

One year or less	$	55	$	55
After one to five years		12,735		12,817
After five to ten years		206,485		208,443
After ten years		66,667		66,931
Total	$	285,942	$	288,246

Proceeds from the sale of securities available for sale amounted to $1.6 million and $2.1 million for the three and six months ended June 30, 2010 with a realized gain of $28 thousand and $51 thousand, respectively. There were no sales of securities available for sale for the three and six months ended June 30, 2009.

Management evaluates securities for other-than-temporary-impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

In determining OTTI under the ASC Topic 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost; (2) the financial condition and near term prospects of the issuer; (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary-impairment decline exists involves a high degree of subjectivity and judgment and is based on information available to management at a point in time. An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.

NOTE G – INVESTMENT SECURITIES (Continued)

When OTTI for debt securities, occurs under the model, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If any entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors shall be recognized in other comprehensive income, net of applicable tax benefit. The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.

At June 30, 2010, the Company’s available for sale and held to maturity debt securities portfolio consisted of approximately 170 securities, of which 10 were in an unrealized loss position for less than twelve months and 0 were in a loss position for more than twelve months. No OTTI charges were recorded for the three or six months ended June 30, 2010. The Company does not intend to sell these securities and it is not more likely than not that we will be required to sell these securities. Unrealized losses primarily relate to interest rate fluctuations and not credit concerns.

The available for sale mutual funds consists of CRA investments and currently have an unrealized loss of approximately $29 thousand. They have been in a loss position for the last two years with the greatest unrealized loss being approximately $184 thousand. Management does not believe the mutual fund securities available for sale are OTTI due to reasons of credit quality. Accordingly, as of June 30, 2010, management believes the impairments are temporary and no impairment loss has been realized in the Company’s consolidated income statement.

Approximately $110.1 million of securities held to maturity are pledged as collateral for Federal Home Loan Bank of New York (“FHLBNY”) advances, borrowings, and deposits at June 30, 2010.

The following tables set forth the composition of our mortgage- backed securities portfolio as of June 30, 2010 and December 31, 2009 (in thousands):

	June 30, 2010
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In Thousands)

Government National Mortgage Association	$	6,296	$	241	$	1		$	6,537
Federal Home Loan Mortgage Corporation		109,905		6,586		260			116,231
Federal National Mortgage Association		156,512		8,548		1			165,058
Collateralized mortgage obligations-GSE’s		10,665		421		32			11,054

	$	283,378	$	15,796	$	294		$	298,880

NOTE G – INVESTMENT SECURITIES (Continued)

	December 31, 2009
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In Thousands)

Government National Mortgage Association	$	7,148	$	149	$	21		$	7,276
Federal Home Loan Mortgage Corporation		123,244		5,190		721			127,713
Federal National Mortgage Association		107,294		5,299		23			112,570
Collateralized mortgage obligations-GSE’s		10,740		459		-			11,199

	$	248,426	$	11,097	$	765		$	258,758

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

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)

June 30, 2010
Government National Mortgage Association	$	-	$	1	$	-	$	-	$	-	$	1
Federal Home Loan Mortgage Corporation		3,430		250		735		10		4,166		260
Federal National Mortgage Association		-		-		9		1		9		1
Collateralized Mortgage Obligations-GSE’s		1,977		32		-		-		1,976		32
	$	5,407	$	283	$	744	$	11	$	6,151	$	294

The amortized cost and estimated fair value of mortgage backed securities held to maturity at June 30, 2010 by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:

	Amortized Cost		Fair Value
	(In Thousands)

One year or less	$	3	$	2
After one to five years		22,732		23,860
After five to ten years		29,602		31,579
After ten years		231,041		243,439
Total	$	283,378	$	298,880

NOTE G – INVESTMENT SECURITIES (Continued)

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)

December 31, 2009:
Government National Mortgage Association	$	994	$	20	$	52	$	1	$	1,046	$	21
Federal Home Loan Mortgage Corporation		5,230		224		1,549		497		6,779		721
Federal National Mortgage Association		-		-		1,131		23		1,131		23

	$	6,224	$	244	$	2,732	$	521	$	8,956	$	765

As of June 30, 2010, there was 1 Government National Mortgage Association, 10 Federal Home Loan Mortgage Corporation, 3 Federal National Mortgage Association, and 1 collateralized mortgage obligations, in unrealized loss positions. Management does not believe that any of the individual unrealized losses represent an other-than-temporary impairment. The unrealized losses on mortgage-backed securities relate primarily to fixed interest rate and, to a lesser extent, adjustable interest rate securities. Such losses are the result of changes in interest rates and not credit concerns. The Bank, the Investment Co. and RomAsia Bank does not intend to sell these securities and it is not more likely than not that they will be required to sell these securities, therefore, no OTTI is required.

NOTE H - LOANS RECEIVABLE, NET

Loans receivable, net at June 30, 2010 and December 31, 2009 were comprised of the following (in thousands):

		June 30,	December 31
		2010	2009
Real estate mortgage loans:
Conventional 1-4 family	$	262,278	$	251,937
Commercial and multi-family		182,831		172,334
		445,109		424,271
Construction		23,000		26,162
Consumer:
Equity and second mortgages		137,248		133,199
Other		1,139		1,024
		138,387		134,223
Commercial		15,714		12,302

Total loans		622,210		596,958
Less:
Allowance for loan losses		7,268		5,243
Deferred loan fees		465		432
Loans in process		5,242		5,524
		12,975		11,199
Total loans receivable, net	$	609,235	$	585,759

Impaired loans and related amounts recorded in the allowance for loan losses are summarized as follows:

			June 30, 2010		December 31, 2009
			(In Thousands)

Recorded investment in impaired loans without specific allowance	$	21,664		$	16,842
Recorded investment in impaired loans with specific allowance		9,894			7,783
Related allowance for loan losses		(4,132	)		(2,483	)
	$	27,426		$	22,142

Non-accrual loans increased $5.5 million to $20.3 million at June 30, 2010 compared to $14.8 million at December 31, 2009. Included in the increase is $4.2 million of commercial loans and $1.3 million of residential mortgages and equity loans. Approximately 80% of the loans added to the commercial non-performing category represent loans to builder developers. The remaining loan added to commercial non-performing loans was to a restaurant. The Company is taking a proactive approach in identifying loans at an early stage that may be experiencing cash flow deterioration or collateral weakening even though the loan remains current. The Company is in the process of obtaining new appraisals on all substandard real estate loans and any other loans that are identified as having early warning signs of weakening.

NOTE I - DEPOSITS

A summary of deposits by type of account as of June 30, 2010 and December 31, 2009 is as follows (dollars in thousands):

	June 30, 2010					December 31, 2009
			Weighted					Weighted
			Avg. Int.					Avg. Int.
	Amount		Rate			Amount		Rate
Demand:
Non-interest bearing checking	$	37,963		0.00	%	$	32,481		0.00	%
Interest bearing checking		131,656		0.44	%		129,505		0.44	%
		169,619		0.35	%		161,986		0.35	%
Savings and club		315,219		0.96	%		275,990		0.91	%
Certificates of deposit		625,055		2.48	%		577,779		2.47	%
Total	$	1,109,893		1.72	%	$	1,015,755		1.71	%

At June 30, 2010, the Company had contractual obligations for certificates of deposit that mature as follows (in thousands):

One year or less	$	405,053
After one to three years		181,973
After three years		38,029
Total	$	625,055

NOTE J – PREMISES AND EQUIPMENT

Premises and equipment consisted of the following as of June 30, 2010 and December 31, 2009 (in thousands):

	Estimated
	Useful		June 30,		December 31,
	Lives		2010		2009
Land for future development		-	$	1,054	$	1,054
Construction in progress		-		147		220
Land and land improvements		-		5,428		5,428
Buildings and improvements	20-50 yrs			37,191		35,299
Furnishings and equipment	3-10 yrs.			10,583		9,543
Total premises and equipment				54,403		51,544
Accumulated depreciation				13,367		12,415
Total			$	41,036	$	39,129

NOTE K – FEDERAL HOME LOAN BANK ADVANCES AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

At June 30, 2010 and December 31, 2009, the Banks had outstanding amortizing Federal Home Bank of New York (FHLBNY) advances as follows (dollars in thousands):

	June 30, 2010		December 31, 2009
		Interest		Interest
	Amount	Rate	Amount	Rate
Maturing:
September 30, 2010	$739	4.49%	$ 1,826	4.49%

Scheduled principal payments are follows (in thousands):
One year or less	$	739
More than one year through three years		-
	$	739

At June 30, 2010 and December 31, 2009, Roma Bank and RomAsia Bank also had outstanding FHLBNY advances totaling $30.0 million and $23.0 million, respectively. The borrowings are as follow (in thousands):

06/30/2010		12/31/2009		Interest Rate			Maturity Date	Call Date

$	23,000	$	23,000		3.90	%	10/29/2017	10/29/2010
	500		500		0.67	%	09/20/2010		-
	1,500		1,500		0.90	%	03/21/2011		-
	3,500		3,500		1.47	%	03/19/2012		-
	1,500		1,500		2.09	%	03/19/2013		-
$	30,000	$	30,000

Securities sold under agreements to repurchase are treated as financings and are reflected as a liability in the consolidated statements of financial condition. Securities sold under an agreement to repurchase amounted to $40.0 million at June 30, 2010 and December 31, 2009. The maturities and respective interest rates are as follows: $10.0 million maturing in 2015, callable 08/22/10, at 3.22%; $20.0 million maturing in 2018, callable at 08/22/11, at 3.51%; and $10.0 million maturing in 2018, callable at 08/22/13, at 3.955%. The agreement is collateralized by securities described in the underlying agreement which are held in safekeeping by the FHLBNY. At June 30, 2010, the fair value of the mortgage-backed securities used as collateral under the agreement was approximately $48 million.

NOTE L – RETIREMENT PLANS

Components of net periodic pension cost for the three months ended June 30, 2010 and 2009 were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009

Service cost	$	96		$	97		$	192		$	194
Interest cost		155			147			310			294
Expected return on plan assets		(144	)		(123	)		(288	)		(246	)
Amortization of unrecognized net loss		61			89			122			178
Amortization of unrecognized past service liability		4			4			8			7

Net periodic benefit expense	$	172		$	214		$	344		$	427

NOTE M – CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

In the normal course of business, the Company enters into off-balance sheet arrangements consisting of commitments to fund residential and commercial loans and lines of credit. Outstanding loan commitments at June 30, 2010 were as follows (in thousands):

	June 30,
	2010
Residential mortgage and equity loans	$	12,177
Commercial loans committed not closed		15,367
Commercial lines of credit		14,743
Consumer unused lines of credit		41,428
Commercial standby letters of credit		1,317
	$	85,032

In the ordinary course of business to meet the financial needs of the Company’s customers, the Company is party to financial instruments with off-balance-sheet risk. These financial instruments include unused lines of credit and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated financial statements. The contract or notional amounts of these instruments express the extent of involvement the Company has in each category of financial instruments.

The Company’s exposure to credit loss from nonperformance by the other party to the above-mentioned financial instruments is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The contract or notional amount of financial instruments which represent credit risk at June 30, 2010 and December 31, 2009 is as follows (in thousands):

	June 30,		December 31,
	2010		2009
Standby letters of credit	$	1,317	$	4,210
Outstanding loan and credit line commitments	$	83,715	$	67,791

Standby letters of credit are conditional commitments issued by the Company which guarantee performance by a customer to a third party. The credit risk and underwriting procedures involved in issuing letters of credit are essentially the same as that involved in extending loan facilities to customers. These are irrevocable undertakings by the Company, as guarantor, to make payments in the event a specified third party fails to perform under a non-financial contractual obligation. Most of the Company’s performance standby letters of credit arise in connection with lending relationships and have terms of one year or less. The current amount of the liability related to guarantees under standby letters of credit issued is not material as of June 30, 2010.

Outstanding loan commitments represent the unused portion of loan commitments available to individuals and companies as long as there is no violation of any condition established in the contract. Outstanding loan commitments generally have a fixed expiration date of one year or less, except for home equity loan commitments which generally have an expiration date of up to 15 years. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral, if any, obtained, upon extension of credit is based upon management’s credit evaluation of the customer. While various types of collateral may be held, property is primarily obtained as security. The credit risk involved in these financial instruments is essentially the same as that involved in extending loan facilities to customers.

NOTE M – CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS (Continued)

The Banks have non-cancelable operating leases for branch offices. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year at June 30, 2010: (In thousands)

Year Ended June 30:

2011	$	496
2012		500
2013		512
2014		529
2015		535
Thereafter		6,872
Total Minimum Payments Required	$	9,444

Included in the total required minimum lease payments is $1,805,000 of payments to the LLC. The Company eliminates these payments in consolidation.

NOTE N – FAIR VALUE MEASUREMENTS AND DISCLOSURES

The Company follows the guidance on fair value measurements now codified as FASB ASC Topic 820, “Fair Value Measurements and Disclosures”. Fair value measurements are not adjusted for transaction costs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.

The fair value measurement hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

NOTE N –FAIR VALUE MEASUREMENTS AND DISCLOSURES (Continued)

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2010, were as follows:

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs		Total Fair Value June 30, 2010
	(In Thousands)

Securities available for sale	$	-	$	33,897	$	-	$	33,897

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy, used at December 31, 2009 were as follows:

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs		Total Fair Value December 31, 2009
	(In Thousands)

Securities available for sale	$	-	$	30,144	$	-	$	30,144

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2010, were as follows:

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs		Total Fair Value June 30, 2010
	(In Thousands)

Impaired loans	$	-	$	-	$	5,762	$	5,762
Real estate and other assets owned	$	-	$	-	$	2,449	$	2,449

NOTE N –FAIR VALUE MEASUREMENTS AND DISCLOSURES (Continued)

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2009, were as follows:

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs		Total Fair Value December 31, 2009
	(In Thousands)

Impaired loans	$	-	$	-	$	5,300	$	5,300
Real estate owned	$	-	$	-	$	1,928	$	1,928

Real estate and other repossessed assets owned increased from December 31, 2009 and June 30, 2010 by the addition of $911 in repossessed real estate and other assets, which was offset by the reduction in listing prices of $390.

The following information should not be interpreted as an estimate of the fair value of the Company since a fair value calculation is only provided for a limited portion of the Company assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at June 30, 2010, and December 31, 2009.

Cash and Cash Equivalents (Carried at Cost)

The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values.

Securities

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

Loans Receivable (Carried at Cost)

The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired Loans (Generally Carried at Fair Value)

Impaired loans carried at fair value are those impaired loans in which the Company has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair

NOTE N –FAIR VALUE MEASUREMENTS AND DISCLOSURES (Continued)

value at June 30, 2010 consists of the loan balances of $9.9 million, net of a valuation allowance of $4.1 million. The fair value at December 31, 2009 consists of the loan balances of $7.8 million, net of a valuation allowance of $2.5 million.

Other Real Estate Owned

Real estate owned assets are adjusted to fair value less estimated selling costs upon transfer of the loans to real estate owned. Subsequently, real estate owned assets are carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. These assets are included as Level 3 fair values.

Federal Home Loan Bank Stock and ACBB Stock (Carried at Cost)

The carrying amount of this restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.

Accrued Interest Receivable and Payable (Carried at Cost)

The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposit Liabilities (Carried at Cost)

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

Federal Home Loan Bank of New York Advances and Securities Sold Under Agreements to Repurchase (Carried at Cost)

Fair values of FHLB advances and securities sold under agreements to repurchase are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Off-Balance Sheet Financial Instruments (Disclosed at Cost)

Fair values for the Company’s off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing. The fair value of these off-balance sheet financial instruments are not considered material as of June 30, 2010 and December 31, 2009.

NOTE N –FAIR VALUE MEASUREMENTS AND DISCLOSURES (Continued)

The carrying amounts and estimated fair values of financial instruments are as follows:


	June 30, 2010				December 31, 2009
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	150,596	$	150,596	$	50,895	$	50,895
Securities available for sale		33,897		33,897		30,144		30,144
Investment securities held to maturity		285,942		288,246		305,349		301,673
Mortgage-backed securities held to maturity		283,378		298,880		248,426		258,758
Loans receivable, net		609,235		619,887		585,759		594,853
Federal Home Loan Bank of New York Stock and ACBB stock		3,743		3,743		3,045		3,045
Interest receivable		6,002		6,002		6,468		6,468

Financial liabilities:
Deposits		1,109,893		1,111,456		1,015,755		1,032,497
Federal Home Loan Bank of New York Advances		30,739		33,418		24,826		27,097
Securities sold under agreements to repurchase		40,000		43,987		40,000		42,737
Accrued interest payable		1,068		1,068		1,226		1,226

Limitations

The fair value estimates are made at a discrete point in time based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Further, the foregoing estimates may not reflect the actual amount that could be realized if all or substantially all of the financial instruments were offered for sale. This is due to the fact that no market exists for a sizable portion of the loan, deposit and off balance sheet instruments.

In addition, the fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to value anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets that are not considered financial assets include premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.

NOTE O –OTHER COMPREHENSIVE INCOME

Components of accumulated other comprehensive loss at June 30, 2010 and December 31, 2009 were as follows (in thousands):

	June 30, 2010			December 31, 2009
	(in Thousands)

Net unrealized gain (loss) on securities available for sale	$	2,316			$	(127	)
Tax effect		(957	)			56
Net of tax amount		1,359				(71	)

Minimum pension liability		(3,745	)			(3,745	)
Tax effect		1,503				1,503
Net of tax amount		(2,242	)			(2,242	)

Accumulated other comprehensive loss	$	(883	)		$	( 2,313	)

The components of other comprehensive income for the six months ended June 30, 2010 and 2009 and their related tax effects are presented in the following table:

	June 30, 2010			June 30, 2009
	(in Thousands)

Unrealized holding gains on available for sale securities:
Unrealized holding gains (losses) arising during the year	$	2,495			$	(352	)
Reclassification adjustment for Realized gains on sales		(51	)			-
Net unrealized gains (losses) on securities available for sale		2,444				(352	)
Tax effect		(1,014	)			258

Other comprehensive income	$	1,430			$	(94	)

NOTE P – SUBSEQUENT EVENT

On July 16, 2010, the Company completed the merger of Sterling Banks, Inc. with Roma Financial Corporation. Roma Financial Corporation acquired all of the outstanding shares of Sterling for a total purchase price of $14.7 million in cash, or $2.52 per share for each share of Sterling common stock outstanding.

Because the merger was completed within one week of this filing, the Company is still in the process of gathering the necessary information, including the fair market values, that are necessary to complete the initial accounting.

The assets, liabilities and equity interests acquired in the transaction have not materially changed from those disclosed at the time the proposed merger was announced. See the Company’s Current report on Form 8-K filed with the SEC on March 18, 2010.

No measurement period adjustments were recognized during the reporting period or to the date of the filing.

ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “believes,” “expects,” “anticipates,” “estimates” or similar expressions. Forward – looking statements include:

·	Statements of our goals, intentions and expectations;

·	Statements regarding our business plans, prospects, growth and operating strategies;

·	Statements regarding the quality of our loan and investment portfolios; and

·	Estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:

·	General economic conditions, either nationally or in our market area, that are worse than expected;

·	Changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments;

·	Our ability to enter into new markets and/or expand product offerings successfully and take advantage of growth opportunities;

·	Increased competitive pressures among financial services companies;

·	Changes in consumer spending, borrowing and savings habits;

·	Legislative or regulatory changes that adversely affect our business;

·	Adverse changes in the securities markets;

·	Our ability to successfully manage our growth; and

·	Changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board.

Any of the forward-looking statements that we make in this report and in other public statements we make may turn out to be wrong because of inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Consequently, no forward-looking statement can be guaranteed.

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

General

Total assets increased by $144.9 million to $1.5 billion at June 30, 2010, compared to $1.3 billion at December 31, 2009. Total liabilities increased $142.9 million to $1.2 billion at June 30, 2010, compared to $1.1 billion at December 31, 2009. Total stockholders’ equity increased $1.9 million to $218.2 million at June 30, 2010. The increase in assets was primarily funded by deposit growth of $94.1 million and $43.5 million liability for securities purchased and not settled at June 30, 2010. The increase in assets consists primarily of a $99.7 million increase in cash and cash equivalents.

Deposits

Total deposits increased $94.1 million to $1.1 billion at June 30, 2010, compared to $1.0 billion at December 31, 2009. Non-interest bearing demand deposits increased $5.5 million to $38.0 million at June 30, 2010, and interest bearing demand deposits increased $2.1 million to $131.7 million. Savings and club accounts increased $39.2 million to $315.2 million, and certificates of deposit increased $47.3 million to $625.1 million at June 30, 2010.

Investments (Including Mortgage-Backed Securities)

The investment portfolio increased $19.3 million to $603.2 million at June 30, 2010, compared to $583.9 million at December 31, 2009. Securities available for sale increased $3.8 million to $33.9 million at June 30, 2010, compared to $30.1 million at December 31, 2009, primarily due to investments made by RomAsia Bank. Investments held to maturity decreased $19.4 million to $285.9 million at June 30, 2010, compared to $305.3 million at December 31, 2009, primarily due to calls. Mortgage-backed securities increased $35.0 million to $283.4 million at June 30, 2010, compared to $248.4 million at December 31, 2009.

Loans

Net loans increased by $23.5 million to $609.2 million at June 30, 2010, compared to $585.8 million at December 31, 2009. Commercial and multi-family real estate mortgages increased $10.5 million to $182.8 million at June 30, 2010, compared to $172.3 million at December 31, 2009. Gross construction loans decreased $3.2 million to $23.0 million at June 30, 2010, compared to $26.2 million at December 31, 2009. Residential and consumer loans increased $14.5 million from December 31, 2009 to June 30, 2010. The poor economy has caused loan demand to languish.

Other Assets

All other asset categories, except cash and cash equivalents, increased by $2.4 million from December 31, 2009 to June 30, 2010. This increase was primarily caused by an increase of $1.9 million in premises and equipment, and an increase in real estate and other repossessed assets of $521 thousand. Premises and equipment increased primarily because of two major branch renovations, the fit out of unused space at the corporate headquarters, and the new branch opened by RomAsia. This was offset to some degree by a decrease in other assets in this category.

Borrowed Money

The $5.9 million increase in Federal Home Loan Bank of New York (FHLBNY) advances during the six months ended June 30, 2010 was due to $7.0 million in borrowings by RomAsia Bank offset by principal repayments of $1.1 million on Roma Bank FHLBNY advances. At June 30, 2010, the outstanding FHLBNY borrowings were $31.3 million, compared to $24.8 million at December 31, 2009.

Other Liabilities

Other liabilities increased $42.9 million to $58.1 million at June 30, 2010. The net increase was primarily due to $43.5 million liability recorded for securities purchased and not settled at June 30, 2010.

Stockholders’ Equity

Stockholders’ equity increased $2.0 million to $218.2 million at June 30, 2010 compared to $216.2 million at December 31, 2009. The net increase was primarily due to net income of $3.1 million and an increase of $1.4 million in other comprehensive income, which was offset by $1.2 million in dividend payments and $2.3 million in stock repurchases.

Comparison of Operating Results for the Three Months Ended June 30, 2010 and 2009

General

Net income increased $916 thousand to $1.5 million for the quarter ended June 30, 2010, compared to $548 thousand for the prior year period. The increase was primarily due to an increase of $2.7 million in net interest income, reduced by an increase of $838 thousand in non-interest expense, an increase of $384 thousand in the provision for loan losses and an increase of $598 thousand in income tax expense.

Interest Income

Interest income increased by $1.9 million to $15.2 million for the three months ended June 30, 2010 compared to $13.3 million for the prior year period. Interest income from loans increased $819 thousand to $8.4 million for the three months ended June 30, 2010. The increase was primarily due to an increase in the portfolio, which was offset by a decrease in the weighted average interest rate on loans. Interest income from residential mortgage loans increased $100 thousand over the comparable quarter ended June 30, 2009, while interest income from equity loans increased $2 thousand. The weighted average interest rates for mortgage and equity loans at June 30, 2010 were 5.38% and 5.38%,

respectively, compared to 5.57% and 5.59%, respectively, in the prior year. Interest income from commercial and multifamily mortgage loans and commercial loans increased $734 thousand from period to period. The weighted average interest rate for commercial and multi-family mortgage loans and commercial loans was 6.1% at June 30, 2010, and 6.03% at June 30, 2009.

Interest income from mortgage-backed securities decreased $254 thousand over the comparable quarter in 2009. The decrease was primarily due to the decrease in the portfolio balance from year to year. Interest income from investments held to maturity increased $1.4 million for the quarter ended June 30, 2010. This increase was primarily due to an increase in the portfolio from year to year. Interest income on securities available for sale changed minimally from period to period. Interest income from other interest earning assets decreased $137 thousand for the three months ended June 30, 2010, compared to the same period in 2009. This decrease was primarily due to a slight decrease in the average balance of overnight funds from year to year, and by a decrease in overnight rates during the comparable periods.

Interest Expense

Interest expense decreased $799 thousand for the three month period ended June 30, 2010 to $4.7 million compared to $5.5 million for the three months ended June 30, 2009. The decrease was all related to interest expense on deposits. Total deposits increased $178.4 million during the twelve month period ended June 30, 2010. The effect of the increased portfolio was offset by a decrease in the weighted average interest rate of 40 basis points to 1.72% at June 30, 2010.

Provision for Loan Losses

The loan loss provision for the three months ended June 30, 2010 increased $384 thousand to $769 thousand. The increase is representative of the risk profile of the loan portfolio and loan growth in each period. Impaired loans increased $12.1 million to $27.4 million, net of specific reserves, at June 30, 2010, compared to $15.3 million, net of specific reserves, at June 30, 2009. These loans remain well collateralized and where needed, appropriate specific reserves have been established. The Company is taking a proactive approach in identifying loans at an early stage that may be experiencing cash flow deterioration or collateral weakening even though the loan remains current. The Company obtains new appraisals at least annually on substandard assets. Subsequent to June 30, 2010, non- performing loans totaling $159 thousand paid in full.

Non-Interest Income

Non-interest income increased $83 thousand to $1.4 million for the three months ended June 30, 2010, compared to $1.3 million for the three months ended June 30, 2009. The net increase was primarily derived from increases in gains on sales of mortgage loans and investments of $84 thousand and $28 thousand, respectively,and, an increase in late charges on loans of $70 thousand. These increases were offset by a decrease in commissions on sale of title policies of $93 thousand.

Non-Interest Expense

Non-interest expense increased $838 thousand to $8.7 million for the three months ended June 30, 2010 compared to $7.9 million for the three months ended June 30, 2009. Salaries and employee benefits increased $641 thousand to $4.6

million for the three months ended June 30, 2010 compared to the same period in the prior year. This increase represents an increase in salaries primarily due to new positions, annual wage adjustments of 3%, and $70 thousand related to the opening of a new branch by RomAsia in June 2010. Other non-interest expenses increased $571 thousand to $1.4 million for the three months ended June 30, 2010, primarily caused by real estate and other repossessed assets expenses. Expenses related to the acquisition of Sterling Banks increased non-interest expense by $411 thousand during the quarter ended June 30, 2010. Federal Deposit Insurance Premium expense decreased $834 thousand because of the special assessment in 2009.

Provision for Income Taxes

Income tax expense increased by $598 thousand to $805 thousand for the three months ended June 30, 2010 compared to $207 thousand for the three months ended June 30, 2009 primarily as a result of higher pre-tax income and a majority of the merger expense is not tax deductible. Income tax expense, represented an effective rate of 35.1% for the three months ended June 30, 2010, compared to 27.5% in the prior year quarter. The Company pays a state tax rate of 3.6% on the taxable income of the Investment Company and 9.0 % on the taxable income of the other entities.

Comparison of Operating Results for the Six Months Ended June 30, 2010 and 2009

General

Net income increased $1.6 million to $3.1 million for the six months ended June 30, 2010, compared to $1.4 million for the prior year period. The increase was primarily due to an increase of $4.2 million in net interest income after the provision for loan losses reduced by an increase of $1.8 million in other non-interest expense.

Interest Income

Interest income increased by $4.2 million to $30.0 million for the six months ended June 30, 2010 compared to $25.8 million for the prior year period. Interest income from loans increased $1.7 million to $16.7 million for the six months ended June 30, 2010. The increase in interest income from loans was primarily due to an increase in the loan portfolio, offset to some degree by a decrease in the weighted average interest rate on loans. Interest income from residential mortgage loans increased $214 thousand over the comparable six month period ended June 30, 2010 and 2009, while interest income from equity loans decreased approximately $69 thousand. The weighted average interest rates for mortgage and equity loans at June 30, 2010 were 5.38% and 5.38%, respectively, compared to 5.57% and 5.59%, respectively, in the prior year. Interest income from commercial and multifamily mortgage loans and commercial loans increased $1.5 million from year to year. The weighted average interest rate for commercial and multi-family mortgage loans and commercial loans was 6.19% at June 30, 2010 and 6.03% at June 30, 2009.

Interest income from mortgage-backed securities decreased $1.0 million over the comparable six month period in 2009 due to a reduction in the portfolio caused primarily by principal repayments. Interest income from investments held to maturity increased $3.9 million for the six months ended June 30, 2010 as compared to June 30, 2009. The increase was primarily related to the increase in the held to maturity portfolio. Interest income on securities available for sale decreased $19 thousand from year to year. Interest income on other interest earning assets decreased $380 thousand for the six months ended June 30, 2010 compared to the same period in 2009. This decrease was primarily due to a significant decrease in both the average balance of overnight funds from year to year, and by a significant decrease in overnight rates during the period.

Interest Expense

Interest expense decreased $1.3 million for the six month period ended June 30, 20010 to $9.5 million compared to $10.8 million for the six months ended June 30, 2009. The decrease was due to a $1.3 million decrease in interest paid on deposits. The portfolio of interest bearing deposits increased $178.4 million from year to year. The weighted average interest rate on deposits decreased 40 basis points between June 30, 2009 and June 30, 2010 to 1.72%. Interest expense on borrowed money decreased $45 thousand for the six month period ended June 30, 2010, compared to 2009 due to a decrease in average borrowed funds for 2010 over 2009.

Provision for Loan Losses

The loan loss provision for the six months ended June 30, 2010 increased $1.3 million to $2.0 million compared to the comparable prior year period. The increase is representative of the risk profile of the loan portfolio and loan growth from period to period. Impaired loans increased $12.1 million to $27.4 million, net of specific reserves, at June 30, 2010, compared to $15.3 million, net of specific reserves, at June 30, 2009. These loans remain well collateralized and

no material losses are anticipated. Subsequent to June 30, 2010, non-performing loans in the amount of $159 thousand paid in full.

Non-Interest Income

Non-interest income increased $240 thousand to $2.6 million for the six months ended June 30, 2010, compared to $2.4 million for the six months ended June 30, 2009. The net increase was derived from fees and service charges on loans which increased $108 thousand from period to period primarily due to an increase in late charges, an increase in gains on sales of mortgage loans of $111 thousand, and an increase of $51 thousand in gains on sale of securities available for sale. These increases were offset by a decrease of $124 thousand in commissions on sales of title policies.

Non-Interest Expense

Non-interest expense increased $1.7 million to $16.4 million for the six months ended June 30, 2010, compared to $14.6 million for the six months ended June 30, 2009. Salaries and related benefits increased $980 thousand to $9.0 million for the six months ended June 30, 2010, compared to $8.0 million for the same period in the prior year. This increase represents an increase in salaries primarily due to new positions, annual wage adjustments of 3%, and costs related to the opening of a new branch by RomAsia in June 2010. Other non-interest expenses increased $832 thousand to $2.4 million for the six months ended June 30, 2010, primarily caused by real estate and other repossessed assets expenses. Expenses related to the acquisition of Sterling Banks increased non-interest expense by $525 thousand during the six months ended June 30, 2010. Federal Deposit Insurance premiums decreased during the six months ended June 30, 2010 compared to the same period in 2009 due to the special assessment in 2009.

Provision for Income Taxes

Income tax expense increased by $980 thousand to $1.6 million for the six months ended June 30, 2010, compared to $590 thousand for the six months ended June 30, 2009. Income tax expense, represented a rate of 33.6% for the six months ended June 30, 2010, compared to 29.2% in the prior year. The decrease in tax rate is primarily due to the lower percentage of tax free income to taxable income from period to period. The Company pays a state tax rate of 3.6% on the taxable income of the Investment Company and 9.0% on the taxable income of the other entities.

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. We believe that the most critical accounting policy upon which our financial condition and results of operation depend, and which involves the most complex subjective decisions or assessments, is the allowance for loan losses.

The allowance for loan losses is the amount estimated by management as necessary to cover credit losses in the loan portfolio both probable and reasonably estimable at the balance sheet date. The allowance is established through the provision for loan losses which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of our most critical. The methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high degree of judgment involved, the subjectivity of the assumptions utilized and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.

As a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans is critical in determining the amount of the allowance required for specific loans. Assumptions for appraisals are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property securing a loan and the related allowance determined. The assumptions supporting such appraisals are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable on the related loans.

Management performs a monthly evaluation of the adequacy of the allowance for loan losses. We consider a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates by management that may be susceptible to significant change based on changes in economic and real estate market conditions.

The evaluation has a specific and general component. The specific component relates to loans that are delinquent or otherwise identified as problem loans through the application of our loan review process. All such loans are evaluated individually, with principal consideration given to the value of the collateral securing the loan. Specific allowances are established as required by this analysis. The general component is determined by segregating the remaining loans by type of loan. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations.

Actual loan losses may be significantly more than the allowances we have established which could have a material negative effect on our financial results.

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. The Company considers the determination of this valuation allowance to be a critical accounting policy because of the need to exercise significant judgment including projections of future taxable income. These judgments and estimates are reviewed on a continual basis as regulatory and business factors change. A valuation allowance for deferred tax assets may be required if the amount of taxes recoverable through loss carry-back declines, or if the Company projects lower levels of future taxable income. Such a valuation allowance would be established through a charge to income tax expense, which would adversely affect the Company’s operating results.

New Accounting Pronouncements

The FASB has issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurements as set forth in Codification Subtopic 820-10. The FASB’s objective is to improve these disclosures and, thus, increase the transparency in financial reporting. Specifically, ASU 2010-06 amends Codification Subtopic 820-10 to now require:

● A reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and

Level 2 fair value measurements and describe the reasons for the transfers; and

● In the reconciliation for fair value measurements using significant unobservable inputs, a reporting

entity should present separately information about purchases, sales, issuances, and settlements.

In addition, ASU 2010-06 clarifies the requirements of the following existing disclosures:

● For purposes of reporting fair value measurement for each class of assets and liabilities, a reporting

entity needs to use judgment in determining the appropriate classes of assets and liabilities; and

● A reporting entity should provide disclosures about the valuation techniques and inputs used to

measure fair value for both recurring and nonrecurring fair value measurements.

ASU 2010-06 is effective for interim and annual reporting period beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our financial position or results of operation.

The FASB has issued ASU 2010-10, Consolidation (Topic 810): Amendments for Certain Investment Funds. The amendments in the ASU defer the effective date of certain amendments to the consolidation requirements of FASB

New Accounting Pronouncements (Continued)

Accounting Standards Codification™ (Codification) Topic 810. Consolidation, resulting from the issuance of FASB Accounting Standard No. 167, Amendments to FASB Interpretation 46(R). Specifically, the amendments to the consolidation requirements of Topic 810 resulting from the issuance of Statement 167 are deferred for a reporting entity’s interest in an entity:

● That has all the attributes of an investment company; or

● For which it is industry practice to apply measurement principles for financial reporting purposes that are

consistent with those followed by investment companies.

The ASU does not defer the disclosure requirements in the Statement 167 amendments to Topic 810. The amendments in this ASU are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009, and for interim for interim periods within that first annual reporting period. Early application is not permitted. The adoption of this standard did not have a material impact on our financial position or results of operation.

ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk

Asset and Liability Management

The majority of the Company’s assets and liabilities are monetary in nature. Consequently, the Company’s most significant form of market risk is interest rate risk. The Company’s assets, consisting primarily of mortgage loans, have generally longer maturities than the Company’s liabilities, consisting primarily of short-term deposits. As a result, a principal part of the Company’s business strategy is to manage interest rate risk and reduce the exposure of its net interest income to changes in market interest rates. Management of the Company does not believe that there has been a material adverse change in market risk during the three months ended June 30, 2010.

Net Portfolio Value

The Company’s interest rate sensitivity is monitored by management through the use of the OTS model which estimates the change in the Company’s net portfolio value (“NPV”) over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets, liabilities, and off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The OTS produces its analysis based upon data submitted on the Company’s quarterly Thrift Financial Reports. The following table sets forth Roma Bank’s NPV as of March 31, 2010, the most recent date the NPV was calculated by the OTS (in thousands):

Change In											NPV as Percent of Portfolio
Interest rates			NPV								Value of Assets
In Basis Points					Dollar			Percent			NPV			Change in
(Rate Shock)			Amount		Change			Change			Ratio			Basis Points

	+300	bp	$	157,389	$	(76,855	)		(33	)%		12.97	%		(476	)bp
	+200	bp		181,042		(53,201	)		(23	)%		14.44	%		(329	)bp
	+100	bp		209,335		(24,908	)		(11	)%		16.25	%		(148	)bp
	0	bp		234,243		-			0	%		17.73	%		-
	-100	bp		253,072		18,828			(8	)%		18.78	%		105	bp

The following table sets forth RomAsia Bank’s NPV as of March 31, 2010, the most recent date the NPV was calculated by the OTS (in thousands):

Change In											NPV as Percent of Portfolio
Interest rates			NPV								Value of Assets
In Basis Points					Dollar			Percent			NPV			Change in
(Rate Shock)			Amount		Change			Change			Ratio			Basis Points

	+300	bp	$	7,656	$	(7,577	)		(50	)%		7.98	%		(649	)bp
	+200	bp		10,457		(4,757	)		(31	)%		10.53	%		(394	)bp
	+100	bp		12,987		(2,227	)		(15	)%		12.69	%		(178	)bp
	0	bp		15,214		-			-	%		14.47	%		-
	-100	bp		17,000		1,787			12	%		15.84	%		136	bp

Management of the Company believes that there has not been a material adverse change in the market risk during the three months ended June 30, 2010.

ITEM 4 – Controls and Procedures

An evaluation was performed under the supervision, and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule l3a-l5(e) promulgated under the Securities Exchange Act of 1934, as amended) as of June 30, 2010. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of June 30, 2010.

No change in the Company’s internal controls over financial reporting (as defined in Rule l3a-l5(f) promulgated under the Securities Exchange Act of 1934, as amended) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1 – Legal Proceedings

There were no material pending legal proceedings at June 30, 2010 to which the Company or its subsidiaries is a party other that ordinary routine litigation incidental to their respective businesses.

ITEM 1A – Risk Factors

Management does not believe there were any material changes to the risk factors presented in the Company’s Form 10-K for the year ended December 31, 2009 during the most recent quarter.

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

On March 18, 2010, the Company announced a five percent open market stock repurchase program, equivalent to 360,680 shares, in open market, based on stock availability, price and the Company’s financial performance. As of June 30, 2010, 196,000 shares were repurchased under the current plan. The following table reports information regarding repurchases of the Company’s common stock during the quarter ended June 30, 2010.

Period	Total Number of Shares Repurchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Number of shares that may Yet Be Purchased Under the Plan

April 1-30, 2010		57,000	$	12.48		57,000		277,680
May 1-31, 2010		56,000	$	11.81		56,000		221,680
June 1-30, 2010		57,000	$	11.30		57,000		164,680
Total		170,000	$	11.96		170,000		164,680

ITEM 3 – Defaults Upon Senior Securities

None

ITEM 4 – (Reserved)

None

ITEM 5 – Other Information

No measurement period adjustments were recognized during the reporting period or to the date of the filing.

ITEM 6 – Exhibits

31.1

Certifications of the Chief Executive Officer pursuant to Rule 13a-14(a)

31.2

Certifications of the Chief Financial Officer pursuant to Rule 13a-14(a)

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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

	ROMA FINANCIAL CORPORATION (Registrant)
Date: July 23, 2010	By:	/s/ Peter A. Inverso
		Peter A. Inverso President and Chief Executive Officer
Date: July 23, 2010	By:	/s/ Sharon L. Lamont
		Sharon L. Lamont Chief Financial Officer