Forward-Looking Statements

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

Announcement of Proposed Merger

On December 15, 2008, American Bancorp of New Jersey, Inc. and Investors Bancorp, Inc. jointly announced the signing of a definitive agreement under which Investors Bancorp will acquire American Bancorp of New Jersey.

Under the terms of the agreement, as amended on March 9, 2009, 65% of American Bancorp of New Jersey shares will be converted into Investors Bancorp common stock and the remaining 35% will be converted into cash. American Bancorp of New Jersey's stockholders will have the option to elect to receive either 0.9218 shares of Investors Bancorp common stock or $12.50 in cash for each American Bancorp of New Jersey common share, subject to proration to ensure that in the aggregate 65% of the American Bancorp of New Jersey shares will be converted into stock. The transaction is intended to qualify as a reorganization for federal income tax purposes. As a result, the shares of American Bancorp exchanged for Investors Bancorp stock will be transferred on a tax-free basis.

The transaction has been approved by the boards of directors of each company and is expected to close on or about May 29, 2009, subject to customary closing conditions including regulatory approvals and approval by American Bancorp of New Jersey's shareholders. All requisite regulatory approvals for the transaction have been received and shareholders are scheduled to vote on the merger proposal at the Company's annual meeting scheduled for May 19, 2009.

After the transaction is completed, James H. Ward III, American Bancorp of New Jersey's Vice Chairman, will join the board of directors of Investors Bancorp.

Citigroup Global Markets Inc. acted as financial advisor to Investors Bancorp, and Luse, Gorman, Pomerenk & Schick, P.C. acted as legal advisor. Keefe, Bruyette & Woods, Inc. acted as financial advisor to American Bancorp of New Jersey, and Silver, Freedman & Taff, L.L.P. as legal advisor.

Business Strategy

Historically, our business strategy has been to operate as a well-capitalized independent financial institution dedicated to providing convenient access and quality service at competitive prices. Until the closing date of the proposed merger described above, we will continue to operate as a well-capitalized, independent financial institution pursuing goals and objectives of our business plan through the strategies outlined in this section.

During recent years, we have experienced significant loan and deposit growth. Our current strategy seeks to continue that growth while we evolve from a traditional thrift institution into a full service, community bank. Our key business strategies are highlighted below accompanied by a brief overview of our progress in implementing each of these strategies:

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

Having opened three full service branches located in Verona, Nutley and Clifton, New Jersey during fiscal 2007, the Company did not open additional de novo deposit branches during fiscal 2008. Rather, the Company directed significant strategic effort during fiscal 2008 toward achieving and enhancing profitability of these three branches. Based on the Company's internal branch profitability model, the Verona branch, which opened in December 2006, achieved profitability during the quarter ended March 31, 2008. The Bank's Nutley branch, which opened in May 2007, achieved profitability during the quarter ended September 30, 2008. Both Verona and Nutley continued to operate profitably through March 31, 2009. The quarterly operating loss for the Clifton branch, which opened in August 2007, continued to decrease through the most recent quarter ended March 31, 2009 compared with prior quarters. The Company expects the Clifton branch to achieve profitability during the latter half of fiscal 2009. While the Company currently has no commitments to open additional de novo deposit branches during the next fiscal year, the Company would consider additional branching projects during fiscal 2009 if appropriate opportunities were to arise.

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

For the six months ended March 31, 2009, our commercial loans, including multi-family, nonresidential real estate, construction and business loans, increased $4.8 million, or 2.7%, from $181.8 million to $186.6 million with such balances representing approximately 38% of loans receivable, net. We expect to continue our strategic emphasis on multifamily and nonresidential real estate lending throughout the remainder of fiscal 2009 while reducing our strategic focus on originating new construction loans over the near term.

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

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

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

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

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

Toward that end, the Company completed two previous share repurchase plans during fiscal 2007 through which it repurchased ten percent and five percent, respectively, of its outstanding shares. During fiscal 2008, the Company completed its third and fourth share repurchase programs through each of which it repurchased an additional five percent of its outstanding shares. A fifth share repurchase plan for an additional five percent of its outstanding shares was announced in August 2008 and remains ongoing at March 31, 2009. Additionally, the Company increased its regular quarterly cash dividend paid to shareholders from $0.04 per share to $0.05 per share during the quarter ended June 30, 2008 and continued paying a quarterly dividend of $0.05 per share through the quarter ended March 31, 2009.

A number of the strategies outlined above have historically had a detrimental impact on short term earnings. Notwithstanding, we expect to continue to execute these growth and diversification strategies designed to enhance future earnings and resist adverse changes in market conditions toward the goal of enhancing shareholder value.

In general, we expect that the reductions in market interest rates and overall steepening of the yield curve that occurred during fiscal 2008 - and have been maintained during the first half of fiscal 2009 - may have a beneficial impact on earnings over time. However, during the past two quarters, the Bank has experienced significant growth in deposits that outpaced its near term ability to deploy such incoming cash flows into creditworthy loans. Consequently, the Bank has experienced significant net growth in short term interest-earning assets and shorter duration investment securities whose current yields reflect the recent reductions in short term market interest rates to historical lows. The Bank continues to incrementally reduce its cost of interest-bearing maturity and non-maturity deposits, but such reductions have lagged the decline in short term market interest rates. As such, the rapid growth in deposits during the first half of fiscal 2009 has had a detrimental near-term impact on the Company's net interest spread and margin. The Bank expects to deploy the accumulated balances of lower yielding cash and investments into higher yielding assets over time which is expected to enhance earnings in future periods.

Executive Summary

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

For the first six months of fiscal 2009, the Company's net interest rate spread increased 21 basis points to 2.08% in comparison to 1.87% during fiscal 2008. The increase in net interest rate spread was largely attributable to a reduction in the Company's cost of interest-bearing liabilities of 57 basis points to 3.16% from 3.73% for those same comparative periods. The reduction in interest costs resulted from continued decreases in the cost of retail deposits augmented by reductions in the overall cost of borrowings. The decrease in retail deposit interest costs from the prior fiscal year continued to reflect the overall reduction in market interest rates and their effect on deposit pricing. The decrease in borrowing costs primarily reflected the cumulative, combined effects of repaying higher cost borrowings at maturity and the addition of lower cost borrowings arising from a wholesale growth transaction executed in March 2008.

The decrease in interest costs was partially offset by a reduction in the Company's yield on interest-earning assets which declined 35 basis points to 5.24% from 5.59% for those same comparative periods. This reduction in yield reflected, in part, the effects of lower market interest rates on the Company's adjustable rate loans, including construction loans, business loans and home equity lines of credit. However, the near term accumulation of short term interest-earning assets and shorter duration investment securities discussed in the preceding section contributed significantly to the reduction in earning asset yields. As noted earlier, the Bank expects to deploy the accumulated balances of lower yielding cash and investments into higher yielding assets over time which is expected to enhance earnings in future periods.

The factors resulting in the widening of the Company's net interest rate spread also positively impacted the Company's net interest margin. However, the impact of improved net interest rate spread was substantially offset by the impact of the Company's share repurchase program on the Company's net interest margin. The foregone interest income on the earning assets used to fund share repurchases contributed significantly to limiting the increase in the Company's net interest margin which increased 9 basis points to 2.59% for the six months ended March 31, 2009 from 2.50% for all of fiscal 2008.

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

Our results of operations are also affected by our provision for loan losses which reflect the overall deterioration of the economy and declining real estate values. For the six months ended March 31, 2009, the Company recorded a net loan loss provision of $1.7 million. The provision for loan losses for the current six month period reflected specific provisions totaling $1.6 million attributable to four impaired loans. The largest of these impaired loans is one fully disbursed construction loan with an outstanding principal balance of $6.8 million against which the Bank established a $1,375,000 valuation allowance during the six months ended March 31, 2009. Three additional nonperforming commercial loans with combined principal balances of approximately $679,000, net of charge offs, required loss provisions totaling $227,000 during the current six month period due to their respective nonaccrual statuses and reduced collateral values. In total, annualized net loan loss provision expense, reflected as a percentage of average earning assets, was reported as 0.55% for the six months ended March 31, 2009 compared with 0.09% for all of fiscal 2008.

At March 31, 2009, the Bank has classified 12 loans with total outstanding principal balances of $12.3 million, or 1.85% of total assets, as nonperforming representing an increase in nonperforming loan balances from $1.1 million or 0.18% of total assets at September 30, 2008. Additional information about the Bank's nonperforming loans is included in the discussion of loans receivable in following section.

Our results of operations also depend on our noninterest income and noninterest expense. Noninterest income includes deposit service fees and charges, income on the cash surrender value of life insurance, gains on sales of loans and securities, gains on sales of other real estate owned and loan related fees and charges. Noninterest income as a percentage of average assets decreased four basis points to 0.26% for the six months ended March 31, 2009 from 0.30% for all of fiscal 2008. This decrease was largely attributable to comparative decreases in branch fee income due, in part, to lower annuity sales and associated fee income as well as reductions in deposit account service charges resulting from decreased customer utilization of overdraft protection services.

Gains and losses on sale of assets, included in noninterest income, typically resulted from the Company selling long term, fixed rate mortgage loan originations into the secondary market. Demand for such loans typically moves inversely with market interest rates. That is, as interest rates rise, market demand for long term, fixed rate mortgage loans diminishes in favor of hybrid ARMs which the Company has historically retained in its portfolio rather than selling into the secondary market. By contrast, when interest rates decline, market demand for long term, fixed rate mortgage loans increases due to favorable refinancing opportunities and improved affordability of housing. Consequently, the gains and losses on sale of loans reported by the Company have historically fluctuated with market conditions. Additionally, changes to the Company's asset/liability management strategy - such as those implemented during fiscal 2008 by which all loans originated were added to the portfolio - will also cause fluctuations in gains and losses on sale of loans. Additionally, such gains and losses also reflected the impact of infrequent investment security sales for asset/liability management purposes. As a percentage of average total assets, the Company reported no gains and losses on asset sales for the six months ended March 31, 2009 while such gains and losses totaled less than 0.01% for all of fiscal 2008.

Noninterest expense includes salaries and employee benefits, occupancy and equipment expenses, data processing and other general and administrative expenses. As a percentage of average total assets, noninterest expense for the six months ended March 31, 2009 totaled 2.19% representing an eight basis point reduction from 2.27% reported for all of fiscal 2008.

A significant portion of the improvement in noninterest expense was attributable to various compensation-related factors. For example, as a continuation of the efforts initiated during fiscal 2008, additional adjustments to the Company's non-branch staffing levels were initiated in the first quarter of fiscal 2009 resulting in further reductions in the Company's number of full time equivalent employees. Through March 31, 2009, the Company has reduced its number of full time equivalent employees by over 11% since the beginning of fiscal 2008. The Company will continue to monitor its employee staffing levels in relation to the goals and objectives of its business plan and may consider further opportunities to adjust such staffing levels, as appropriate, to support the achievement of those goals and objectives.

Additionally, in 2008, the Company recognized an increase in compensation expense attributable to the death of a Director Emeritus of the Company during the second fiscal quarter. Under the terms of the Company's restricted stock and stock option plans, the vesting of the remaining unearned benefits accruing to the director through these plans was automatically accelerated. As such, the Company incurred an acceleration of the remaining pre-tax expenses associated with these benefits totaling approximately $254,000 during fiscal 2008 for which no comparable expense has been recorded in fiscal 2009.

The noninterest expense reported for both comparative periods fully reflects the ongoing costs of the three full-service branches opened during fiscal 2007. In general, management expects occupancy and equipment expense to increase in the future as we continue to implement our de novo branching strategy to expand our branch office network. As noted earlier, while the Company currently has no commitments to open additional de novo deposit branches during the next fiscal year, the Company would consider additional branching projects during fiscal 2009 if appropriate opportunities were to arise. Our current business plan targets the opening of up to three additional de novo branches over approximately the next five years. The costs for land purchases or leases, branch construction costs and ongoing operating costs for additional branches will impact future earnings.

The Company also expects occupancy and data processing expense to continue to reflect the costs associated with the relocation of the Bank's Bloomfield branch which opened in April 2008. This relocation has significantly upgraded and modernized the Bloomfield branch facility, supporting the Company's deposit growth and customer service enhancement objectives. The relocation will also support potential expansion of the administrative and lending office space within the Company's existing headquarters facility, where the branch had previously been located, should such expansion be required to support the Company's business plan.

The Company has reported noteworthy increases in legal and professional and consulting expenses relating to the upcoming merger with Investors Bancorp announced on December 15, 2008. For the six months ended March 31, 2009, such merger-related expenses totaled approximately $315,000. Additionally, the Company has reported significant increases in other noninterest expense attributable largely to increases in FDIC insurance assessments.

In total, our return on average assets decreased 22 basis points to -0.01% for the six months ended March 31, 2009 from 0.21% for all of fiscal 2008, while return on average equity decreased 135 basis points to -0.04% from 1.31% for the same comparative periods.

Comparison of Financial Condition at March 31, 2009 and September 30, 2008

Our total assets increased by $45.3 million, or 7.3%, to $666.9 million at March 31, 2009 from $621.6 million at September 30, 2008. The increase primarily reflected comparatively higher balances of cash and equivalents, investment securities and loans receivable, net.

Cash and cash equivalents increased by $20.8 million, or 102.1%, to $41.2 million at March 31, 2009 from $20.4 million at September 30, 2008. The net increase in cash and cash equivalents primarily reflects net growth in deposits partially offset by growth in investment securities and loans receivable, net and repayment of maturing and amortizing borrowings.

The Company expects to continue reinvesting the proceeds received through its growth in deposits into the loan portfolio over time as lending opportunities arise. To the extent supported by loan demand and origination volume, the Company expects to reinvest deposit proceeds into its commercial loan portfolio. However, the net addition of residential mortgages to the loan portfolio, including longer term, fixed rate one- to four-family mortgages which were historically sold into the secondary market, may continue augmenting the growth in the Company's commercial loans. (See further discussion in the subsequent section titled "Quantitative and Qualitative Disclosures About Market Risk".)

Securities classified as available-for-sale increased $13.1 million, or 16.2%, to $94.3 million at March 31, 2009 from $81.2 million at September 30, 2008 while securities held-to-maturity decreased approximately $705,000, or 9.4% to $6.8 million from $7.5 million for those same comparative periods.

The balance of available-for-sale securities includes investments acquired in a wholesale growth transaction executed during fiscal 2008 through which the Company purchased approximately $50.0 million of mortgage-related investment securities funded by an equivalent amount of borrowings. The ongoing net interest income resulting from this transaction continues to augment the Company's earnings to offset a portion of the near term costs associated with executing its business plan. Through this transaction, the Company took advantage of the opportunity to acquire agency, AAA-rated mortgage-related securities at historically wide interest rate spreads in relation to the cost of wholesale funding sources.

The following table compares the composition of the Company's investment securities portfolio by security type as a percentage of total assets at March 31, 2009 with that of September 30, 2008. Amounts reported exclude unrealized gains and losses on the available for sale portfolio.

                                                             March 31, 2009                     September 30, 2008
                                                                     Percent of                             Percent of
Type of Securities                                    Amount        Total Assets          Amount           Total Assets
                                                                            (Dollars in thousands)

Fixed rate MBS                                       $ 43,643                 6.55 %    $    48,669                  7.83 %
ARM MBS                                                 8,900                 1.33            9,454                  1.52
Fixed rate CMO                                         25,236                 3.78           29,699                  4.78
Floating rate CMO                                       1,518                 0.23            1,750                  0.28
Fixed rate agency debentures                           20,001                 3.00                -                     -

Total                                                $ 99,298                14.89 %    $    89,572                 14.41 %

Assuming no change in interest rates, the estimated average life of the investment securities portfolio was 2.32 years and 4.42 years, respectively, at March 31, 2009 and September 30, 2008. Assuming a hypothetical immediate and permanent increase in interest rates of 300 basis points, the estimated average life of the portfolio would have extended to 4.77 years and 6.03 years at March 31, 2009 and September 30, 2008, respectively.

Loans receivable, net increased by $12.1 million, or 2.5%, to $490.7 million at March 31, 2009 from $478.6 million at September 30, 2008. The growth was comprised of net increases in commercial loans totaling $4.8 million or 2.7%. This growth comprised net increases in multifamily, nonresidential real estate, land and business loans of $11.7 million partially offset by net reductions in the outstanding balance of construction loans of $6.8 million. The increase in loans receivable, net also included net increases in one- to four-family first mortgages of $7.5 million, net increases in home equity loans and home equity lines of credit totaling $1.1 million and net increases in consumer loans of $259,000. Offsetting the growth in these categories was a net increase to the allowance for loan losses totaling $1.6 million. As described earlier, the increase in the allowance for loan losses was largely attributable to a $1,375,000 specific valuation allowance established against one impaired construction loan. The remaining net growth in the allowance was attributable, in part, to provisions, net of charge offs, associated with three other impaired commercial loans plus general provisions associated with overall growth in the loan portfolio.

One- to four-family mortgage loans are generally grouped by the Bank into one of three categories based upon underwriting criteria: "Prime", "Alt-A" and "Sub-prime" mortgages. Sub-prime loans are generally defined by the Bank as loans to borrowers with deficient credit histories and/or higher debt-to-income ratios. Loans falling within the Alt-A category, as defined by the Bank, include loans to borrowers with blemished credit credentials that are less severe than those characterized by Sub- prime loans but otherwise preclude the loan from . . .