The New York City metropolitan market area is characterized as urban while the Nassau and Suffolk market areas are suburban.

This market area has a stable population and household base. During the past four years, the population of Kings, Nassau and Suffolk counties increased 1.28%, 1.15%, and 4.32% respectively. In 2004, the median household income for Kings, Nassau, and Suffolk counties was $34,330, $79,831 and $71,855, respectively. Banks primary lending area is concentrated in Brooklyn and Long Island, New York, although loans are originated in all five boroughs of New York City as well as Westchester County, New York. One- to four-family residential real estate in this market area is characterized by a large number of attached and semi-detached houses, including a number of two-and three-family homes and cooperative apartments.

Historically, the Company’s principal lending activity has been the origination of first mortgage loans for the purchase or refinancing of one- to four-family residential real property. Over the previous five years, the Company has increased its origination of multi-family, commercial real estate and construction lending in an effort to increase interest income.

Historically, the Company has originated mortgage loans pursuant to underwriting standards that generally conform to Freddie Mac guidelines. Loan origination activities are primarily concentrated in Brooklyn and Long Island, New York. New loans are generated primarily from walk-in customers, customer referrals, a network of mortgage brokers, and other parties with whom the Company does business, and from the efforts of employees and advertising. Loan applications are underwritten and processed at the Company’s main office. The Company syndicates and sells participation interests in portions of its multi-family, commercial real estate and construction loans in consideration of the Company’s legal lending limits as well as internal portfolio management guidelines. The Company generally sells longer-term mortgage loans and generally retains the majority of its shorter-term mortgage loans in the Company’s loan portfolio. The Company services all loans that it originates.

Historically, the Company’s primary lending activity consisted of the origination of one- to four-family residential mortgage loans that are primarily secured by properties located in Brooklyn and Long Island, New York.

The Company also offers adjustable-rate mortgage loans with one and three-year adjustment periods based on changes in a designated United States Treasury index. The Company originated $465,000 of adjustable rate one- to four-family residential loans during the year ended September 30, 2004 and no such loans during the year ended September 30, 2003. The Company’s adjustable rate mortgage loans provide for maximum rate adjustments of 200 basis points per adjustment, with a lifetime maximum adjustment of 600 basis points.

Loans secured by multi-family real estate totaled approximately $35.7 million, or 21.7%, of the total loan portfolio at September 30, 2004. Multi-family real estate loans generally are secured by rental properties (including multi-family apartment buildings) or for

Cash and Federal funds sold declined by $18.2 million, or 69.7%, to $7.9 million at September 30, 2004 from $26.1 million at September 30, 2003.

Net loans, including loans held for sale, increased $2.2 million, or 1.4% to $163.0 million at September 30, 2004 from $160.8 million at September 30, 2003.

Deposits increased by $6.9 million, or 2.8%, to $256.6 million at September 30, 2004,from $249.7 million at September 30, 2003.

Retained earnings increased by $4.1 million, or 12.6%, to $36.6 million at September 30, 2004, from $32.5 million at September