Fixed Rates				Floating or Adjustable Rates				Total
		(In Thousands)
One- to four-family		$	28,797			$	21,492			$	50,289
Construction			3,123				9,549				12,672
Home equity			31,032				2,501				33,533
Commercial and multi-family			39,522				151,860				191,382
Commercial business			2,722				6,240				8,962
Consumer			206				—				206
Total amount due		$	105,402			$	191,642			$	297,044

Commercial and Multi-family Real Estate Loans. Our commercial and multi-family real estate loans are secured by commercial real estate (for example, shopping centers, medical buildings, retail offices) and multi-family residential units, consisting of five or more units. Permanent loans on commercial and multi-family properties are generally originated in amounts up to 75% of the appraised value of the property. Our commercial real estate loans are secured by improved property such as office buildings, retail stores, warehouses, church buildings and other non-residential buildings. Commercial and multi-family real estate loans are generally made at rates that adjust above the five year U.S. Treasury interest rate, with terms of up to 25 years, or are balloon loans with fixed interest rates which generally mature in three to five years with principal amortization for a period of up to 30 years.  Our largest commercial loan had a principal balance of $2.5 million at December 31, 2007, and was secured by a mixed use property comprised of retail and office facilities.  Our largest multi-family loan had a principal balance of $4.4 million at December 31, 2007.  Both loans were performing in accordance with their terms on that date.

 

Loans secured by commercial and multi-family real estate are generally larger and involve a greater degree of risk than one- to four-family residential mortgage loans.  The borrower’s creditworthiness and the feasibility and cash flow potential of the project is of

5

---

primary concern in commercial and multi-family real estate lending. Loans secured by income properties are generally larger and involve greater risks than residential mortgage loans because payments on loans secured by income properties are often dependent on the successful operation or management of the properties.  As a result, repayment of such loans may be subject to a greater extent than residential real estate loans to adverse conditions in the real estate market or the economy.  We intend to continue emphasizing the origination of loans secured by commercial real estate and multi-family properties.

One- to Four-Family Lending. Our one- to four-family residential mortgage loans are secured by property located in the State of New Jersey. We generally originate one- to four-family residential mortgage loans in amounts up to 80% of the lesser of the appraised value or selling price of the mortgaged property without requiring mortgage insurance.  We will originate loans with loan to value ratios up to 90% provided the borrowers obtain private mortgage insurance.  We originate both fixed rate and adjustable rate loans.  One- to four-family loans may have terms of up to 30 years.  The majority of one- to four-family loans we originate for retention in our portfolio have terms no greater than 15 years.  We offer adjustable rate loans with fixed rate periods of up to five years, with principal and interest calculated using a maximum 30-year amortization period. We offer these loans with a fixed rate for the first five years with repricing following every year after the initial period. Adjustable rate loans may adjust up to 200 basis points annually and 600 basis points over the term of the loan.  We also broker for a third party lender one- to four-family residential loans, which are primarily fixed rate loans with terms of 30 years.  Our loan brokerage activities permit us to offer customers longer-term fixed rate loans we would not otherwise originate while providing a source of fee income.  During 2007, we brokered $23.0 million in one- to four-family loans and recognized gains of $420,000 from the sale of such loans.

 

All of our one- to four-family mortgages include “due on sale” clauses, which are provisions giving us the right to declare a loan immediately payable if the borrower sells or otherwise transfers an interest in the property to a third party.

 

Property appraisals on real estate securing our single-family residential loans are made by state certified and licensed independent appraisers approved by our Board of Directors. Appraisals are performed in accordance with applicable regulations and policies.  At our discretion, we obtain either title insurance policies or attorneys’ certificates of title on all first mortgage real estate loans originated.  We also require fire and casualty insurance on all properties securing our one- to four-family loans.  We also require the borrower to obtain flood insurance where appropriate.  In some instances, we charge a fee equal to a percentage of the loan amount commonly referred to as points.

 

Construction Loans. We offer loans to finance the construction of various types of commercial and residential property.  We originated $48.4 million of such loans during the year ended December 31, 2007.  Construction loans to builders generally are offered with terms of up to eighteen months and interest rates are tied to the prime rate plus a margin.  These loans generally are offered as adjustable rate loans.  We will originate residential construction loans for individual borrowers and builders, provided all necessary plans and permits are in order.  Construction loan funds are disbursed as the project progresses.  At December 31, 2007, our largest construction loan was $3.3 million, of which $2.0 million was disbursed. This

 

6

---

construction loan has been made for the construction of residential properties.  At December 31, 2007, this loan was performing in accordance with its terms.

 

Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate.  Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction and development and the estimated cost (including interest) of construction.  During the construction phase, a number of factors could result in delays and cost overruns.  If the estimate of construction costs proves to be inaccurate, we may be required to advance funds beyond the amount originally committed to permit completion of the project.  Additionally, if the estimate of value proves to be inaccurate, we may be confronted, at or prior to the maturity of the loan, with a project having a value which is insufficient to assure full repayment.

 

Home Equity Loansand Home Equity Lines of Credit.  We offer home equity loans and lines of credit that are secured by the borrower’s primary residence.  Our home equity loans can be structured as loans that are disbursed in full at closing or as lines of credit.  Home equity loans and lines of credit are offered with terms up to 15 years.  Virtually all of our home equity loans are originated with fixed rates of interest and home equity lines of credit are originated with adjustable interest rates tied to the prime rate.  Home equity loans and lines of credit are underwritten under the same criteria that we use to underwrite one- to four-family loans.  Home equity loans and lines of credit may be underwritten with a loan-to-value ratio of 80% when combined with the principal balance of the existing mortgage loan.  At the time we close a home equity loan or line of credit, we file a mortgage to perfect our security interest in the underlying collateral.  At December 31, 2007, the outstanding balances of home equity loans and lines of credit totaled $35.4 million, or 9.58% of our loan portfolio.

 

Commercial Business Loans.  Our commercial business loans are underwritten on the basis of the borrower’s ability to service such debt from income.  Our underwriting standards for commercial business loans include a review of the applicant’s tax returns, financial statements, credit history and an assessment of the applicant’s ability to meet existing obligations and payments on the proposed loan based on cash flow generated by the applicant’s business.  Commercial business loans are generally made to small and mid-sized companies located within the State of New Jersey. In most cases, we require collateral of equipment, accounts receivable, inventory, chattel or other assets before making a commercial business loan.  Our largest commercial business loan at December 31, 2007 had a principal balance of $3.9 million and was secured by a combination of commercial and residential real estate.

 

Commercial business loans generally have higher rates and shorter terms than one- to four-family residential loans, but they may also involve higher average balances and a higher risk of default since their repayment generally depends on the successful operation of the borrower’s business.

 

Consumer Loans.  We make various types of secured and unsecured consumer loans and loans that are collateralized by new and used automobiles. Consumer loans generally have terms of three years to ten years.

 

7

---

Consumer loans are advantageous to us because of their interest rate sensitivity, but they also involve more credit risk than residential mortgage loans because of the higher potential for default, the nature of the collateral and the difficulty in disposing of the collateral.

 

The following table shows our loan origination, purchase, sale and repayment activities for the periods indicated.

 

		Years Ended December 31,
		2007				2006				2005				2004				2003
		(In Thousands)
Beginning of period		$	322,438			$	288,145			$	249,315			$	191,138			$	123,435
Originations by Type:
Real estate mortgage:
One- to four-family residential			6,454				9,203				4,299				4,103				22,768
Construction			48,415				34,889				35,765				19,326				6,392
Home equity			14,512				15,821				13,998				14,212				9,393
Commercial and multi-family			55,892				51,542				70,471				64,219				62,966
Commercial business			16,987				7,946				8,968				8,628				2,544
Consumer			215				222				203				284				924
Total loans originated			142,475				119,623				133,704				110,772				104,987
Purchases:
Real estate mortgage:
One- to four-family residential			—				—				—				—				—
Construction			3,726				4,870				3,645				4,289				2,223
Home equity			—				—				—				—				—
Commercial and multi-family			5,267				1,737				—				8,450				3,207
Commercial business			600				400				1,000				—				—
Consumer			—				—				—				—				—
Total loans purchased			9,593				7,007				4,645				12,739				5,430
Sales:
Real estate mortgage:
One- to four-family residential			—				—				—				—				—
Construction			5,040				2,044				1,273				959				—
Home equity			—				—				—				—				—
Commercial and multi-family			1,275				3,388				—				788				3,480
Commercial business			—				—				—				1,128				—
Consumer			—				—				—				—				—
Total loans sold			6,315				5,432				1,273				2,875				3,480
Principal repayments			97,396				86,905				98,246				62,459				39,234
Transfer of loans to real estate owned			1,446				—				—				—				—
Total reductions			98,842				92,337				99,519				65,334				42,714
Increase (decrease) in other items, net			—				—				—				—				—
Net increase			46,911				34,293				38,830				58,177				67,703
Ending balance		$	369,349			$	322,438			$	288,145			$	249,315			$	191,138

Loan Approval Authority and Underwriting. We establish various lending limits for executive management and also maintain a loan committee. The loan committee is comprised of the Chairman of the Board, the President, the Senior Lending Officer and five non-employee members of the Board of Directors.  The President or the Senior Lending Officer, together with one other loan officer, have authority to approve applications for real estate loans up to $500,000, other secured loans up to $500,000 and unsecured loans up to $25,000. The loan committee considers all applications in excess of the above lending limits and the entire board of directors ratifies all such loans.

 

8

---

Upon receipt of a completed loan application from a prospective borrower, a credit report is ordered. Income and certain other information is verified. If necessary, additional financial information may be requested. An appraisal is required for the underwriting of all one- to four-family loans.  We may rely on an estimate of value of real estate performed by our Senior Lending Officer for home equity loans or lines of credit of up to $250,000.  Appraisals are processed by state certified independent appraisers approved by the Board of Directors.

 

An attorney’s certificate of title is required on all newly originated real estate mortgage loans.  In connection with refinancing and home equity loans or lines of credit in amounts up to $250,000, we will obtain a record owner’s search in lieu of an attorney’s certificate of title.  Borrowers also must obtain fire and casualty insurance. Flood insurance is also required on loans secured by property that is located in a flood zone.

 

Loan Commitments. Written commitments are given to prospective borrowers on all approved real estate loans. Generally, we honor commitments for up to 60 days from the date of issuance. At December 31, 2007, our outstanding loan origination commitments totaled $2.9 million, outstanding construction loans in progress totaled $40.0 million and undisbursed lines of credit totaled $14.5 million.

 

Non-performing and Problem Assets

 

Loan Delinquencies.  We send a notice of nonpayment to borrowers when their loan becomes 15 days past due.  If such payment is not received by month end, an additional notice of nonpayment is sent to the borrower.  After 60 days, if payment is still delinquent, a notice of right to cure default is sent to the borrower giving 30 additional days to bring the loan current before foreclosure is commenced. If the loan continues in a delinquent status for 90 days past due and no repayment plan is in effect, foreclosure proceedings will be initiated.

 

Loans are reviewed and are placed on a non-accrual status when the loan becomes more than 90 days delinquent or when, in our opinion, the collection of additional interest is doubtful. Interest accrued and unpaid at the time a loan is placed on nonaccrual status is charged against interest income.  Subsequent interest payments, if any, are either applied to the outstanding principal balance or recorded as interest income, depending on the assessment of the ultimate collectability of the loan.  At December 31, 2007, we had $3.8 million in non-accruing loans.  Our largest exposure of non-performing loans at that date consisted of one loan, with a principal balance of $1.4 million, to a civic organization in central New Jersey that has experienced a reduction in its revenue and as such has encountered difficulties in meeting its financial obligations.  A consistent, substantive and on-going dialogue has been established with the principals of this facility to ascertain, develop and implement a plan to address this situation.  Another loan relationship with an exposure of $1.2 million is also in non-accrual status.  This loan was originated in concert with another financial institution by means of a participation agreement on a parcel of real estate in Rumson, New Jersey.  The principal in this facility has filed for protection under the bankruptcy laws of the United States and this situation is presently being adjudicated under those applicable laws.

 

A loan is considered impaired when it is probable the borrower will not repay the loan according to the original contractual terms of the loan agreement. We have determined that first

 

9

---

mortgage loans on one- to four-family properties and all consumer loans represent large groups of smaller-balance homogeneous loans that are collectively evaluated. Additionally, we have determined that an insignificant delay (less than 90 days) will not cause a loan to be classified as impaired and a loan is not impaired during a period of delay in payment, if we expect to collect all amounts due including interest accrued at the contractual interest rate for the period of delay.  We independently evaluate all loans identified as impaired. We estimate credit losses on impaired loans based on the present value of expected cash flows or the fair value of the underlying collateral if the loan repayment is derived from the sale or operation of such collateral. Impaired loans, or portions of such loans, are charged off when we determine that a realized loss has occurred. Until such time, an allowance for loan losses is maintained for estimated losses. Cash receipts on impaired loans are applied first to accrued interest receivable unless otherwise required by the loan terms, except when an impaired loan is also a nonaccrual loan, in which case the portion of the receipts related to interest is recognized as income. At December 31, 2007, we had six loans totaling $3.8 million which are classified as impaired and on which loan loss allowances totaling $728,000 have been established.  During 2007, interest income of $64,000 was recognized on impaired loans.

 

The following table sets forth delinquencies in our loan portfolio as of the dates indicated:

 

		At December 31, 2007																At December 31, 2006
		60-89 Days								90 Days or More								60-89 Days								90 Days or More
		Number of Loans				Principal Balance of Loans				Number of Loans				Principal Balance of Loans				Number of Loans				Principal Balance of Loans				Number of Loans				Principal Balance of Loans
		(Dollars in Thousands)
Real estate mortgage:
One- to four-  family residential			—			$	—				1			$	319				—			$	—				—			$	—
Construction			—				—				1				1,247				1				1,356				—				—
Home equity			—				—				1				149				—				—				—				—
Commercial and multi-family			2				1,770				5				2,558				—				—				1				307
Total			2				1,770				8				4,273				1				1,356				1				307
Commercial business			—				—				—				—				—				—				—				—
Consumer			—				—				—				—				1				2				1				16
Total delinquent loans			2			$	1,770				8			$	4,273				2			$	1,358				2			$	323
Delinquent loans to total loans							0.48	%							1.16	%							0.42	%							0.10	%

10

---

		At December 31, 2005																At December 31, 2004
		60-89 Days								90 Days or More								60-89 Days								90 Days or More
		Number of Loans				Principal Balance of Loans				Number of Loans				Principal Balance of Loans				Number of Loans				Principal Balance of Loans				Number of Loans				Principal Balance of Loans
		(Dollars in Thousands)
Real estate mortgage:
One- to four-   family residential			—			$	—				1			$	79				—			$	—				1			$	173
Construction			—				—				—				—				—				—				—				—
Home equity			—				—				—				—				1				29				—				—
Commercial and multi-family			—				—				4				803				—				—				1				313
Total			—				—				5				882				1				29				2				486
Commercial business			—				—				1				150				1				123				3				515
Consumer			—				—				—				—				—				—				1				3
Total delinquent loans			—			$	—				6			$	1,032				2			$	152				6			$	1,004
Delinquent loans to total loans							—	%							0.36	%							0.06	%							0.40	%

		At December 31, 2003
		60-89 Days								90 Days or More
		Number of Loans				Principal Balance of Loans				Number of Loans				Principal Balance of Loans
		(Dollars in Thousands)
Real estate mortgage:
One- to four-   family residential			1			$	103				—			$	—
Construction			—				—				—				—
Home equity			—				—				—				—
Commercial and multi-family			—				—				—				—
Total			1				103				—				—
Commercial business			3				355				3				386
Consumer			—				—				—				—
Total delinquent loans			4			$	458				3			$	386
Delinquent loans to total loans							0.24	%							0.20	%

11

---

The table below sets forth the amounts and categories of non-performing assets in the Bank’s loan portfolio.  Loans are placed on non-accrual status when the collection of principal and/or interest become doubtful.  For all years presented, BCB Community Bank has had no troubled debt restructurings (which involve forgiving a portion of interest or principal on any loans or making loans at a rate materially less than that of market rates).  Foreclosed assets include assets acquired in settlement of loans.

		At December 31,
		2007				2006				2005				2004				2003
		(Dollars in Thousands)
Non-accruing loans:
One- to four-family residential		$	319			$	—			$	—			$	173			$	—
Construction			1,247				—				—				—				—
Home equity			149				—				—				—				—
Commercial and multi-family			2,039				307				637				313				67
Commercial business			—				—				150				67				—
Consumer			—				16				—				—				—
Total			3,754				323				787				553				67
Accruing loans delinquent more than 90 days:
One- to four-family residential			—				—				—				—				—
Construction			—				—				—				—				—
Home equity			—				—				—				—				—
Commercial and multi-family			519				—				166				—				319
Commercial business			—				—				—				448				—
Consumer			—				—				79				3				—
Total			519				—				245				451				319
Total non-performing loans			4,273				323				1,032				1,004				386
Foreclosed assets			287				—				—				6				—
Total non-performing assets		$	4,560			$	323			$	1,032			$	1,010			$	386
Total non-performing assets as a percentage   of total assets			0.81	%			0.06	%			0.22	%			0.27	%			0.13	%
Total non-performing loans as a percentage   of total loans			1.16	%			0.10	%			0.36	%			0.40	%			0.20	%

For the year ended December 31, 2007, gross interest income which would have been recorded had our non-accruing loans been current in accordance with their original terms amounted to $287,000.  We received and recorded $64,000 in interest income for such loans for the year ended December 31, 2007.

Classified Assets.  Our policies provide for a classification system for problem assets.  Under this classification system, problem assets are classified as “substandard,” “doubtful,” “loss” or “special mention.”  An asset is considered substandard if it is inadequately protected by its current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard assets include those characterized by the “distinct possibility” that “some loss” will be sustained if the deficiencies are not corrected.  Assets classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weakness present makes “collection or liquidation in full” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.”  Assets classified as loss are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted, and the loan is charged-off.  Assets may be designated special mention because of potential weaknesses that do not currently warrant classification in one of the aforementioned categories.

 

12

---

When we classify problem assets, we may establish general allowances for loan losses in an amount deemed prudent by management.  General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. A portion of general loss allowances established to cover possible losses related to assets classified as substandard or doubtful may be included in determining our regulatory capital. Specific valuation allowances for loan losses generally do not qualify as regulatory capital. At December 31, 2007, we had no assets classified as doubtful, $2.4 million in assets classified as substandard, all of which were also classified as impaired and $3.8 million in assets classified as special mention, of which $1.4 million was classified as impaired. The loans classified as substandard represent primarily commercial loans secured either by residential real estate, commercial real estate or heavy equipment.  The loans that have been classified substandard were classified as such primarily because either updated financial information has not been timely provided, or the collateral underlying the loan is in the process of being revalued.

 

Allowances for Loan Losses.  A provision for loan losses is charged to operations based on management’s evaluation of the losses that may be incurred in our loan portfolio.  The evaluation, including a review of all loans on which full collectability of interest and principal may not be reasonably assured, considers: (1) the risk characteristics of the loan portfolio; (2) current economic conditions; (3) actual losses previously experienced; (4) the level of loan growth; and (5) the existing level of reserves for loan losses that are possible and estimable.

 

We monitor our allowance for loan losses and make additions to the allowance as economic conditions dictate. Although we maintain our allowance for loan losses at a level that we consider adequate for the inherent risk of loss in our loan portfolio, future losses could exceed estimated amounts and additional provisions for loan losses could be required.  In addition, our determination of the amount of the allowance for loan losses is subject to review by the New Jersey Department of Banking and Insurance and the FDIC, as part of their examination process. After a review of the information available, our regulators might require the establishment of an additional allowance. Any increase in the loan loss allowance required by regulators would have a negative impact on our earnings.

 

13

---

The following table sets forth an analysis of the Bank’s allowance for loan losses.

 

		Years Ended December 31,
		2007				2006				2005				2004				2003
		(Dollars in Thousands)
Balance at beginning of period		$	3,733			$	3,090			$	2,506			$	2,113			$	1,233
Charge-offs:
One- to four-family residential			—				—				—				—				—
Construction			270				—				—				—				—
Home equity			—				—				—				—				—
Commercial and multi-family			—				—				—				—				—
Commercial business			—				66				522				332				—
Consumer			15				1				24				—				—
Total charge-offs			285				67				546				332				—
Recoveries			17				85				12				35				—
Net charge-offs (recoveries)			268				(18	)			534				297				—
Provisions charged to operations			600				625				1,118				690				880
Ending balance		$	4,065			$	3,733			$	3,090			$	2,506			$	2,113
Ratio of non-performing assets to total assets at the end of period			0.81	%			0.06	%			0.22	%			0.27	%			0.13	%
Allowance for loan losses as a percent of total loans outstanding			1.10	%			1.16	%			1.07	%			1.01	%			1.11	%
Ratio of net charge-offs (recoveries) during the period to loans outstanding at end of the period			0.07	%			(0.01	)%			0.19	%			0.13	%			—	%
Ratio of net charge-offs (recoveries) during the period to non-performing loans at the end of the period			6.27	%			(5.57	)%			51.74	%			29.58	%			—	%

 

14

---

 

Allocation of the Allowance for Loan Losses.  The following table illustrates the allocation of the allowance for loan losses for each category of loan.  The allocation of the allowance to each category is not necessarily indicative of future loss in any particular category and does not restrict our use of the allowance to absorb losses in other loan categories.

 

		At December 31,
		2007								2006								2005								2004								2003
		Amount				Percent of Loans in each Category in Total Loans				Amount				Percent of Loans in each Category in Total Loans				Amount				Percent of Loans in each Category in Total Loans				Amount				Percent of Loans in each Category in Total Loans				Amount				Percent of Loans in each Category in Total Loans
		(Dollars in Thousands)
Type of loan:
One- to four-family		$	221				14.96	%		$	69				13.64	%		$	76				12.11	%		$	78				13.98	%		$	105				17.74	%
Construction			885				13.53				1,068				12.06				329				9.98				217				7.70				125				5.24
Home equity			172				9.58				126				10.02				91				8.43				82				8.27				50				8.80
Commercial and multi-family			2,476				56.35				2,285				59.60				2,180				64.26				1,669				63.68				1,178				60.25
Commercial business			262				5.38				168				4.56				401				5.06				444				6.07				649				7.35
Consumer			49				0.20				17				0.12				13				0.16				16				0.30				6				0.62
Total		$	4,065				100.00	%		$	3,733				100.00	%		$	3,090				100.00	%		$	2,506				100.00	%		$	2,113				100.00	%

15

---