Ocean Shore Holding Co. - FORM 10-Q

Attached files

file	filename
EX-31.2 - EXHIBIT 31.2 - Ocean Shore Holding Co.	v423511_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Ocean Shore Holding Co.	v423511_ex31-1.htm
EX-32.0 - EXHIBIT 32.0 - Ocean Shore Holding Co.	v423511_ex32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2015

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

For the transition period from to

Commission file number: 0-53856

OCEAN SHORE HOLDING CO.

(Exact name of registrant as specified in its charter)

New Jersey	80-0282446
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1001 Asbury Avenue, Ocean City, New Jersey	08226
(Address of principal executive offices)	(Zip Code)

(609) 399-0012

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x 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 ¨
(Do not check if a 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

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock as of the latest practicable date:

At November 1, 2015, the registrant had 6,403,391 shares of $0.01 par value common stock outstanding.

OCEAN SHORE HOLDING CO.

FORM 10-Q

INDEX

		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Statements of Financial Condition at September 30, 2015 and December 31, 2014	1

	Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2015 and 2014	2

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014	3

	Notes to Unaudited Condensed Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	38

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3.	Defaults upon Senior Securities	39

Item 4.	Mine Safety Disclosures	39

Item 5.	Other Information	39

Item 6.	Exhibits	39

SIGNATURES

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	September 30,			December 31,
	2015			2014
	(Dollars in thousands)
ASSETS
Cash and amounts due from depository institutions	$	8,855		$	9,023
Interest-earning bank balances		106,659			71,284

Cash and cash equivalents		115,514			80,307

Investment securities held to maturity (estimated fair value—$989 at September 30, 2015; $1,278 at December 31, 2014)		932			1,201
Investment securities available for sale (amortized cost—$108,271 at September 30, 2015; $112,205 at December 31, 2014)		107,219			110,116
Loans—net of allowance for loan losses of $3,116 at September 30, 2015 and $3,760 at December 31, 2014		785,549			774,017
Accrued interest receivable:
Loans		2,398			2,304
Investment securities		96			33
Federal Home Loan Bank stock—at cost		6,089			6,039
Office properties and equipment—net		12,496			12,870
Prepaid expenses and other assets		1,227			3,161
Real estate owned		1,904			650
Cash surrender value of life insurance		24,297			23,828
Net deferred tax asset		4,643			5,062
Goodwill		4,630			4,630
Other intangible assets		464			536
TOTAL ASSETS	$	1,067,458		$	1,024,754

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES:
Non-interest bearing deposits	$	193,384		$	98,417
Interest bearing deposits		638,626			688,661
Advances from Federal Home Loan Bank		110,000			110,000
Junior subordinated debenture		—			7,217
Advances from borrowers for taxes and insurance		4,424			4,026
Accrued interest payable		597			879
Other liabilities		9,726			9,743

Total liabilities		956,757			918,943

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued		—			—
Common stock, $.01 par value, 25,000,000 shares authorized, 7,307,590 shares issued; 6,403,191 shares outstanding at September 30, 2015; 6,393,344 shares outstanding at December 31, 2014		73			73
Additional paid-in capital		68,575			66,059
Retained earnings - partially restricted		61,030			57,055
Treasury stock—at cost: 904,399 shares at September 30, 2015; 914,246 shares at December 31, 2014		(15,035	)		(12,678	)
Common stock acquired by employee benefits plans		(2,383	)		(2,639	)
Deferred compensation plans trust		(742	)		(608	)
Accumulated other comprehensive loss		(817	)		(1,451	)

Total stockholders’ equity		110,701			105,811

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,067,458		$	1,024,754

See notes to unaudited condensed consolidated financial statements.

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
	(Dollars in thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Taxable interest and fees on loans	$	8,168	$	8,243		$	24,517	$	24,569
Taxable interest on mortgage-backed securities		346		333			1,041		1,032
Non-taxable interest on municipal securities		1		1			3		6
Taxable interest and dividends on other investment securities		262		278			767		913

Total interest and dividend income		8,777		8,855			26,328		26,520

INTEREST EXPENSE:
Interest on deposits		642		625			1,872		1,898
Interest on borrowings		1,043		1,272			3,216		3,818

Total interest expense		1,685		1,897			5,088		5,716

NET INTEREST INCOME		7,092		6,958			21,240		20,804

PROVISION FOR LOAN LOSSES		165		125			496		263

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,927		6,833			20,744		20,541

OTHER INCOME:
Service charges		487		417			1,498		1,308
Cash surrender value of life insurance		159		159			469		473
Gain on call of securities		3		86			3		86
Other		473		440			1,334		1,328

Total other income		1,122		1,102			3,304		3,195

OTHER EXPENSE:
Salaries and employee benefits		3,173		3,177			9,640		9,567
Occupancy and equipment		1,282		1,282			3,779		3,844
Federal insurance premiums		136		130			415		400
Advertising		97		125			323		313
Professional services		273		245			821		794
Real estate owned (income)expense		84		(41	)		38		51
Charitable contributions		38		38			113		113
Other operating expenses		453		495			1,221		1,345

Total other expenses		5,536		5,451			16,350		16,427

INCOME BEFORE INCOME TAXES		2,513		2,484			7,698		7,309

INCOME TAX EXPENSE		844		904			2,577		2,609

NET INCOME	$	1,669	$	1,580		$	5,121	$	4,700
Other comprehensive income, net of tax:
Unrealized (loss)gain on available for sale securities		485		(202	)		618		1,021
Unrealized gain(loss) on post retirement life benefit		5		1			16		2

COMPREHENSIVE INCOME	$	2,159	$	1,379		$	5,755	$	5,723

Earnings per share, basic:	$	0.28	$	0.25		$	0.86	$	0.74
Earnings per share, diluted:	$	0.27	$	0.25		$	0.84	$	0.73

See notes to unaudited condensed consolidated financial statements.

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
	2015			2014
	(Dollars in thousands)
OPERATING ACTIVITIES:
Net income	$	5,121		$	4,700
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		662			878
Provision for loan losses		496			263
Stock based compensation expense		727			830
Gain on sale/ call of AFS securities		(3	)		(86	)
Premium paid on retirement of junior subordinated debt		94			54
Cash surrender value of life insurance		(469	)		(473	)
Loss on disposal of office property and equipment		1			—
Changes in assets and liabilities which provided (used) cash:
Accrued interest receivable		(157	)		25
Prepaid expenses and other assets		1,934			(194	)
Accrued interest payable		(282	)		(278	)
Other liabilities		(1	)		363
Net cash provided by operating activities		8,123			6,082
INVESTING ACTIVITIES:
Principal collected on:
Investment securities available for sale		8,906			6,993
Investment securities held to maturity		175			246
Loans originated, net of repayments		(13,841	)		(29,638	)
Purchases of:
Federal Home Loan Bank stock		(50	)		(82	)
Investment securities held to maturity		(402	)		(494	)
Investment securities available for sale		(10,111	)		(14,958	)
Office properties and equipment		(289	)		(469	)
Proceeds from sale of:
Investment securities available for sale		—			1,290
Real estate owned		779			571
Federal Home Loan Bank stock		—			363
Proceeds from maturities and calls of:
Investment securities held to maturity		494			2,328
Investment securities available for sale		4,996			20,000
Net cash used in investing activities		(9,343	)		(13,850	)
FINANCING ACTIVITIES:
Increase in deposits		44,932			23,880
Dividends paid		(1,145	)		(1,222	)
Retirement of junior subordinated debt		(7,311	)		(3,146	)
Exercise of incentive stock options		3,244			99
Purchase of treasury stock		(3,557	)		(6,483	)
Purchase of shares by deferred compensation plans trust		(134	)		(20	)
Increase in advances from borrowers for taxes and insurance		398			157
Net cash provided by financing activities		36,427			13,265
NET INCREASE IN CASH AND CASH EQUIVALENTS		35,207			5,497
CASH AND CASH EQUIVALENTS—Beginning of period		80,307			87,619
CASH AND CASH EQUIVALENTS—End of period	$	115,514		$	93,116
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION—Cash paid during the period for:
Interest	$	5,300		$	5,960
Income Taxes	$	3,580		$	2,684
SUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS
Transfers of loans to real estate owned	$	2,033		$	460

See notes to unaudited condensed consolidated financial statements.

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All dollar amounts presented in the tables, except share and per share amounts, are in thousands)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation - The unaudited condensed consolidated financial statements include the accounts of Ocean Shore Holding Co. (the “Company”) and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements were prepared in accordance with instructions to Form 10-Q, pursuant to the rules and regulations of the United States Securities and Exchange Commission (SEC) for interim information, and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations, changes in stockholders’ equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the condensed consolidated financial statements have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2014. The results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015 or any other period. The Company has evaluated subsequent events through the date of the issuance of its financial statements.

Use of Estimates in the Preparation of Financial Statements - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates and assumptions relate to the allowance for loan losses, other-than-temporary impairment on investment securities, goodwill and intangible impairment, deferred income taxes and the fair value measurements of financial instruments. Actual results could differ from those estimates under different assumptions and conditions, and the differences may be material to the consolidated financial statements.

New Accounting Pronouncements – In January 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-04, Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure — a consensus of the FASB Emerging Issues Task Force, on January 17, 2014. This ASU clarifies when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The amended guidance clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. In addition, the amended guidance requires interim and annual disclosures of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amended guidance may be applied prospectively or through a modified retrospective approach and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. The adoption of the amended guidance did not have a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, which created Accounting Standard Codification (“ASC”) ASC 606 "Revenue from Contracts with Customers," superseding the revenue recognition requirements in ASC 605. This ASU requires an entity to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendment includes a five-step process to assist an entity in achieving the main principle(s) of revenue recognition under ASC 605. The amendment will be effective for the first reporting period ending after December 15, 2017. Early adoption would be permitted as of the original effective date in ASU 2014-09 which is the first reporting period ending after December 15, 2016. The adoption of the amended guidance is currently being evaluated by the Company.

In June 2014, the FASB issued ASU 2014-11, an amendment to ASC 860 “Transfers and Servicing.” This ASU requires accounting changes for repurchase to maturity and repurchase financing transactions, respectively, which will be accounted for as a secured borrowing agreement on a prospective basis. The ASU also adds additional disclosure requirements related to these transactions. The amendment will be effective for the Company for the first annual period ending after December 15, 2014. The accounting changes for all transactions affected by this amendment will have the impact recorded as a cumulative-effect adjustment to retained earnings on the date of adoption. The adoption of this accounting guidance did not have a material impact on the Company’s consolidated financial statements.

Also in June 2014, the FASB issued ASU 2014-12, an amendment to ASC 718 “Compensation-Stock Compensation.” This ASU requires that a performance target that affects vesting, and could be achieved after the requisite service period, be treated as a performance condition. Application of existing guidance in ASC 718, as it relates to awards with performance conditions that affect vesting, should continue to be used to account for such awards. The amendment will be effective for the Company for the first reporting period ending after December 15, 2014. Early adoption is permitted. The adoption of this accounting guidance did not have a material impact on the Company’s consolidated financial statements.

In August 2014, the FASB issued ASU 2014-14, an amendment to ASC 310-40 “Receivables - Troubled Debt Restructurings by Creditors.” This ASU requires that a government-guaranteed mortgage loan be de-recognized, and that a separate other receivable be recognized, upon foreclosure if the three criteria identified in the ASU are met. Upon foreclosure and meeting the three criteria, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) that is expected to be recovered from the guarantor. The amendment will be effective for the Company for the first reporting period ending after December 15, 2014. The Company adopted this amendment in 2014 on a prospective basis. The adoption of this accounting guidance did not have a material impact on the Company’s consolidated financial statements.

In August 2014, the FASB also issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU requires management to perform an assessment of going concern and provides specific guidance on when and how to assess or disclose going concern uncertainties. The new standard also defines terms used in the evaluation of going concern, such as "substantial doubt." Following application, the Company will be required to perform assessments at each annual and interim period, provide an assessment period of one year from the issuance date, and make disclosures in certain circumstances in which substantial doubt is identified. The amendment will be effective for the Company for the first reporting period ending after December 15, 2016. Earlier application is permitted. The Company does not expect this ASU to have an impact on its financial position, result of operations, or disclosures.

2. INVESTMENT SECURITIES

Investment securities are summarized as follows:

	September 30, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gain		Loss			Value
	(Dollars in thousands)
Held to Maturity
Debt Securities - Municipal	$	402	$	—	$	—		$	402
U.S. Treasury and government sponsored entity mortgage-backed securities		530		57		—			587
Totals	$	932	$	57	$	—		$	989

Available for Sale
Debt securities:
Corporate	$	9,644	$	42	$	(656	)	$	9,030
U.S. Treasury and federal agencies		16,229		—		(22	)		16,207
Equity securities		3		40		—			43
U.S. treasury and government sponsored entity mortgage-backed securities		82,395		346		(802	)		81,939
Totals	$	108,271	$	428	$	(1,480	)	$	107,219

	December 31, 2014
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gain		Loss			Value
	(Dollars in thousands)
Held to Maturity
Debt Securities - Municipal	$	494	$	—	$	—		$	494
U.S. Treasury and government sponsored entity mortgage-backed securities		707		77		—			784
Totals	$	1,201	$	77	$	—		$	1,278

Available for Sale
Debt securities:
Corporate	$	9,596	$	99	$	(856	)	$	8,839
U.S. Treasury and federal agencies		21,223		6		(238	)		20,991
Equity securities		3		25		—			28
U.S. Treasury and government sponsored entity mortgage-backed securities		81,383		278		(1,403	)		80,258
Totals	$	112,205	$	408	$	(2,497	)	$	110,116

As of September 30, 2015 and December 31, 2014, the Company had investment securities available for sale with an estimated fair value of $102.3 million and $105.1 million, respectively, pledged as collateral to secure public fund deposits.

The following table provides the gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at September 30, 2015 and December 31, 2014:

	September 30, 2015
	Less Than 12 Months					12 Months or Longer					Total
			Gross					Gross					Gross
	Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized
	Fair Value		Loss			Fair Value		Loss			Fair Value		Loss
	(Dollars in thousands)
Debt securities -
Corporate	$	—	$	—		$	3,029	$	(656	)	$	3,029	$	(656	)
U.S. Agencies		6,189		(8	)		9,986		(14	)		16,175		(22	)
U.S. treasury and government sponsored entity mortgage-backed securities		5,013		(32	)		54,658		(770	)		59,671		(802	)
Totals	$	11,202	$	(40	)	$	67,673	$	(1,440	)	$	78,875	$	(1,480	)

	December 31, 2014
	Less Than 12 Months					12 Months or Longer					Total
			Gross					Gross					Gross
	Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized
	Fair Value		Loss			Fair Value		Loss			Fair Value		Loss
	(Dollars in thousands)
Debt securities -
Corporate	$	—	$	—		$	2,826	$	(856	)	$	2,826	$	(856	)
U.S. Treasury		4,990		(5	)		9,767		(233	)		14,757		(238	)
US treasury and government sponsored entity mortgage-backed securities		10,133		(17	)		66,020		(1,386	)		76,153		(1,403	)
Totals	$	15,123	$	(22	)	$	78,613	$	(2,475	)	$	93,736	$	(2,497	)

Management has reviewed its investment securities as of September 30, 2015 and has determined that all declines in fair value below amortized cost are temporary.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The OTTI assessment is a subjective process requiring the use of judgments and assumptions. During the securities-level assessments, consideration is given to (1) the intent not to sell and probability that the Company will not be required to sell the security before recovery of its cost basis to allow for any anticipated recovery in fair value, (2) the financial condition and near-term prospects of the issuer, as well as company news and current events, and (3) the ability to collect the future expected cash flows. Key assumptions utilized to forecast expected cash flows may include loss severity, expected cumulative loss percentage, cumulative loss percentage to date, weighted average FICO and weighted average loan-to-value (“LTV”), rating or scoring, credit ratings and market spreads, as applicable.

The Company assesses and recognizes OTTI in accordance with applicable accounting standards. Under these standards, if the Company determines that a security in the unrealized loss position is designated to be sold or it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, the impairment of such security is concluded to be other than temporary and the entire amount of the unrealized loss will be recorded in earnings. If the Company has not made a decision to sell the security and it does not expect that it will be required to sell the security prior to the recovery of the amortized cost basis but the Company concludes that the entire amortized cost basis of the security will not be recovered, while the OTTI is concluded to exists, the Company only recognizes currently in earnings the amount of decline in value attributable to credit deterioration, with the remaining component of OTTI presented in other comprehensive income.

Corporate Debt Securities - The Company’s investments in the preceding table in corporate debt securities consist of corporate debt securities issued by large financial institutions and single issuer and pooled trust preferred/collateralized debt obligations backed by bank trust preferred capital securities.

At September 30, 2015, two single issuer trust preferred securities were in a continuous unrealized loss position for 12 months or longer with an aggregate depreciation of 17.8% from the Company’s amortized cost basis. The initial decline of these securities was primarily attributable to depressed market pricing of non-rated issues of trust preferred securities observed during the financial downturn. The unrealized loss position continued to improve, and the current decline of these debt securities is principally attributable to the rising interest rate environment and depressed pricing on lower yielding investments with prolonged maturities, which had an impact for these types of investments. These securities were performing in accordance with their contractual terms as of September 30, 2015, and had paid all contractual cash flows since the Company’s initial investment. Management believes these unrealized losses are not other-than-temporary based upon the Company’s analysis that the securities will perform in accordance with their terms and the Company’s intent not to sell these investments for a period of time sufficient to allow for the anticipated recovery of fair value, which may be maturity. The Company expects recovery of fair value when market conditions have stabilized and that the Company will receive all contractual principal and interest payments related to those investments.

United States Treasury, US Federal Agencies and Government Sponsored Enterprise Mortgage-backed Securities - The Company’s investments in the preceding table in United States government sponsored enterprise notes consist of debt obligations of the Federal Home Loan Bank (“FHLB”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Federal National Mortgage Association (“FNMA”). At September 30, 2015 the Company had 14 agency mortgage-backed securities with unrealized losses for 12 months or longer. Those securities had aggregate depreciation of 1.2% from the Company’s amortized cost basis. These securities were performing in accordance with their contractual terms as of September 30, 2015, and had paid all contractual cash flows since the Company’s initial investment and that the Company expects to receive all contractual principal and interest payments related to those investments. Management believes these unrealized losses are not other-than-temporary based upon the Company’s analysis that the securities will perform in accordance with their terms and the Company’s intent not to sell these investments for a period of time sufficient to allow for the anticipated recovery of fair value, which may be maturity.

The amortized cost and estimated fair value of debt securities available for sale and held to maturity at September 30, 2015 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2015
	Held to Maturity				Available for Sale Securities
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
	(Dollars in thousands)
Due within 1 year	$	402	$	402	$	3,987	$	4,004
Due after 1 year through 5 years		—		—		2,005		2,030
Due after 5 years through 10 years		—		—		6,196		6,188
Due after 10 years		—		—		13,685		13,015
Total	$	402	$	402	$	25,873	$	25,237

Not reflected in the table above, are equity securities and mortgage-backed securities. Equity securities do not have stated contractual maturities while mortgage-backed securities may have expected maturities different than those contractually stated. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Equity securities had a cost of $3 thousand and a fair value of $43 thousand as of September 30, 2015. Mortgage-backed securities had a cost of $82,395 million and a fair value of $81,939 million as of September 30, 2015.

Gains (Losses) and Proceeds on Sales of Securities

Proceeds from sales of investment securities and the realized gross gains and losses from those sales are as follows:

	Three-Month Period Ended September 30,				Nine-Month Period Ended September 30,
	2015		2014		2015		2014
	(Dollars in thousands)
Proceeds from the sales of available-for-sale securities	$	—	$	1,290	$	—	$	1,290

Gross realized gains		—		86		—		86
Total realized gains	$	—	$	86	$	—	$	86

The Company uses the specific identification method to determine the cost of the securities sold and the gain or loss recognized.

The gain realized for the three and nine month period ended September 30, 2014 was due to the sale of mortgage backed securities with a book value of $1.2 million for a gain of $84 thousand during the third quarter of 2014.

LOANS RECEIVABLE – NET

Loans receivable consist of the following:

	September 30, 2015			December 31, 2014
	(Dollars in thousands)
Real estate - mortgage:
One-to-four family residential	$	602,022		$	587,399
Commercial and multi-family		87,150			89,778
Total real estate-mortgage		689,172			677,177
Real estate - construction:
Residential		18,482			16,030
Commercial		4,743			4,141
Total real estate - construction		23,225			20,171
Commercial		20,624			22,277
Consumer:
Home equity		51,493			54,279
Other consumer loans		346			377
Total consumer loans		51,839			54,656
Total loans		784,860			774,281
Net deferred loan cost		3,805			3,496
Allowance for loan losses		(3,116	)		(3,760	)
Net total loans	$	785,549		$	774,017

The Bank originates loans to customers primarily in its local market area. The ultimate repayment of these loans is dependent to a certain degree on the local economy and real estate market. The intent of management is to hold loans originated and purchased to maturity.

Changes in the allowance for loan losses are as follows:

	Nine months Ended September 30,
	2015			2014
	(Dollars in thousands)
Balance, beginning of period	$	3,760		$	4,199
Provision for loan loss		496			263
Charge-offs		(1,140	)		(509	)
Recoveries		—			76
Balance, end of period	$	3,116		$	4,029

The provision for loan losses charged to expense is based upon past loan loss experiences, a series of qualitative factors, and an evaluation of losses in the current loan portfolio, including the specific evaluation of impaired loans. Values assigned to the qualitative factors and those developed from historic loss experience provide a dynamic basis for the calculation of reserve factors for both pass–rated loans (general pooled allowance) and the criticized and classified loans that continue to perform.

Non-performing assets segregated by classification are as follows:

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
Real estate
One-to-four family residential	$	2,798	$	3,626
Commercial and multi-family		1,580		803
Real estate – construction		144		143
Commercial		—		501
Consumer		568		502
Non-accrual loans		5,090		5,575
Troubled debt restructuring, non-accrual		660		694
Total non-performing loans		5,750		6,269
Real estate owned		1,904		650
Total non-performing assets	$	7,654	$	6,919

A rollforward of the Company’s nonaccretable and accretable yield on loans accounted for under ASU 310-30, Loans and Debts Securities Acquired with Deteriorated Credit Quality, is shown below for the nine month period ended September 30, 2015 and 2014:

	Contractual Receivable Amount			Nonaccretable (Yield)/Premium			Accretable (Yield)/Premium			Carrying Amount
	(Dollars in thousands)
Balance at January 1, 2015	$	44,216		$	(2,540	)	$	542		$	42,218
Principal reductions		(4,211	)		—			—			(4,211	)
Charge-offs, net		(64	)		64			—			—
Amortization of loan premium		—			—			(87	)		(87	)
Balance at September 30, 2015	$	39,941		$	(2,476	)	$	455		$	37,920

Balance at January 1, 2014	$	50,837		$	(3,099	)	$	746		$	48,484
Principal reductions		(4,675	)		—			—			(4,675	)
Charge-offs, net		(439	)		439			—			—
Amortization of loan premium		—			—			(153	)		(153	)
Balance at September 30, 2014	$	45,723		$	(2,660	)	$	593		$	43,656

An age analysis of past due loans, segregated by class of loans, as of September 30, 2015 and December 31, 2014 are as follows:

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable
	(Dollars in thousands)
September 30, 2015
Real estate
1-4 family residential	$	1,484	$	—	$	2,917	$	4,401	$	597,621	$	602,022
Commercial and multi-family		—		—		1,580		1,580		85,570		87,150
Construction		—		—		144		144		23,081		23,225
Commercial		—		—		—		—		20,624		20,624
Consumer		190		138		568		896		50,943		51,839
Total	$	1,674	$	138	$	5,209	$	7,021	$	777,839	$	784,860

December 31, 2014
Real estate
1-4 family residential	$	2,323	$	—	$	4,255	$	6,578	$	580,821	$	587,399
Commercial and multi-family		831		—		803		1,634		88,144		89,778
Construction		—		—		143		143		20,028		20,171
Commercial		—		—		501		501		21,776		22,277
Consumer		485		5		567		1,057		53,599		54,656
Total	$	3,639	$	5	$	6,269	$	9,913	$	764,368	$	774,281

Impaired loans are set forth in the following table. No interest income was recognized on impaired loans subsequent to their classification as impaired.

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
	(Dollars in thousands)
September 30, 2015
With no related allowance recorded
Real Estate
1-4 Family Residential	$	5,683	$	5,860	$	—	$	150
Commercial and Multi-Family		1,545		1,545		—		257
Construction		144		144		—		144
Commercial		—		—		—		—
Consumer		1,232		1,232		—		65
With an allowance recorded
Real Estate
1-4 Family Residential		4,016		4,286		592		287
Commercial and Multi-Family		285		310		23		285
Construction		—		—		—		—
Commercial		187		187		4		187
Consumer		69		115		64		35
Total
Real Estate
1-4 Family Residential	$	9,699	$	10,146	$	592	$	187
Commercial and Multi-Family		1,830		1,855		23		261
Construction		144		144		—		144
Commercial		187		187		4		187
Consumer		1,301		1,347		64		62

December 31, 2014
With no related allowance recorded
Real Estate
1-4 Family Residential	$	4,585	$	4,622	$	—	$	139
Commercial and Multi-Family		1,324		1,324		—		265
Construction		143		143		—		143
Commercial		—		—		—		—
Consumer		970		970		—		57
With an allowance recorded
Real Estate
1-4 Family Residential		5,787		6,138		721		340
Commercial and Multi-Family		—		—		—		—
Commercial		—		—		—		—
Consumer		702		702		254		351
Total		181		181		55		90
Real Estate
1-4 Family Residential	$	10,372	$	10,760	$	721	$	207
Commercial and Multi-Family		1,324		1,324		—		265
Construction		143		143		—		143
Commercial		702		702		254		351
Consumer		1,151		1,151		55		61

Included in the Company’s loan portfolio are modified commercial loans. Per FASB ASC 310-40, Troubled Debt Restructuring (“TDR”), a modification is one in which the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider, such as providing for a below market interest rate and/or forgiving principal or previously accrued interest; this modification may stem from an agreement or be imposed by law or a court, and may involve a multiple note structure. Generally, prior to the modification, the loans which are modified as a TDR are already classified as non-performing. These loans may only be returned to performing (i.e. accrual status) after considering the borrower’s sustained repayment performance for a reasonable amount of time, generally six months; this sustained repayment performance may include the period of time just prior to the restructuring. As of September 30, 2015, the Company entered into eighteen TDR agreements with a total carrying value of $4.2 million, of which five were not performing totaling $660 thousand. These loans had a specific reserve of $515 thousand. The following table presents an analysis of the Company’s TDR agreements existing as of September 30, 2015 and December 31, 2014, respectively.

	As of September 30, 2015					As of December 31, 2014
		Outstanding Recorded Investment					Outstanding Recorded Investment
	Number of Contracts	Pre- Modification		Post- Modification		Number of Contracts	Pre- Modification		Post- Modification
		(Dollars in thousands)					(Dollars in thousands)
1-4 Family Residential	10	$	3,401	$	3,401	8	$	3,335	$	3,335
Commercial Mortgage	2		250		250	–		–		–
Consumer	5		368		368	4		287		287
Commercial	1		187		187	1		201		201
Total	18	$	4,206	$	4,206	13	$	3,823	$	3,823

Federal regulations require us to review and classify our assets on a regular basis. In addition, federal banking regulators have the authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss. “Substandard assets” must have one or more defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful assets” have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified as “loss” is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. The regulations also provide for a “special mention” category, described as assets which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. When we classify an asset as substandard or doubtful we establish a specific allowance for loan losses. If we classify an asset as loss, we charge off an amount equal to 100% of the portion of the asset classified loss.

The following table presents classified loans by class of loans as of September 30, 2015 and December 31, 2014.

	Real Estate
	1-4 Family Residential				Commercial and Multi-Family				Construction				Commercial				Consumer
	9/30/2015		12/31/2014		9/30/2015		12/31/2014		9/30/2015		12/31/2014		9/30/2015		12/31/2014		9/30/2015		12/31/2014
	(Dollars in thousands)
Grade:
Special Mention	$	3,559	$	3,948	$	547	$	572	$	—	$	—	$	48	$	444	$	701	$	915
Substandard		6,472		9,370		4,406		4,010		144		143		569		659		1,117		1,189
Doubtful and Loss		—		—		—		—		—		—		—		—		—		14
Total	$	10,031	$	13,318	$	4,953	$	4,582	$	144	$	143	$	617	$	1,103	$	1,818	$	2,118

The following table presents the credit risk profile of loans based on payment activity as of September 30, 2015 and December 31, 2014.

	Real Estate
	1-4 Family Residential				Commercial and Multi-Family				Construction				Commercial				Consumer
	9/30/2015		12/31/2014		9/30/2015		12/31/2014		9/30/2015		12/31/2014		9/30/2015		12/31/2014		9/30/2015		12/31/2014
	(Dollars in thousands
Performing	$	598,734	$	583,773	$	85,570	$	88,975	$	23,081	$	20,028	$	20,624	$	21,776	$	51,102	$	54,154
Non-Performing (1)		3,288		3,626		1,580		803		144		143		—		501		737		502
Total	$	602,022	$	587,399	$	87,150	$	89,778	$	23,225	$	20,171	$	20624	$	22,277	$	51,839	$	54,656

(1)

9/30/2015 data includes non-performing TDR loans

The following table details activity in the allowance for possible loan losses by portfolio segment for the periods ended September 30, 2015 and December 31, 2014. Allocation of a portion of the allowance to one category does not preclude its availability to absorb losses in other categories.

	Real Estate
	1-4 Family Residential			Commercial and Multi-Family			Construction			Commercial			Consumer			Total
	(Dollars in thousands)
September 30, 2015
Allowance for credit losses:
Beginning Balance	$	2,318		$	625		$	33		$	380		$	404		$	3,760
Charge-offs		(565	)		(25	)		—			(306	)		(244	)		(1,140	)
Recoveries		—			—			—			—			—			—
Provision for loan losses		204			(329	)		(2	)		250			373			496
Ending balance	$	1,957		$	271		$	31		$	324		$	533		$	3,116
Ending balance: individually evaluated for impairment	$	592		$	23		$	—		$	4		$	64		$	683
Ending balance: collectively evaluated for impairment	$	1,365		$	248		$	31		$	320		$	469		$	2,433
Loan Receivables:
Ending balance	$	602,022		$	87,150		$	23,225		$	20,624		$	51,839		$	784,860
Ending balance: individually evaluated for impairment	$	9,699		$	1,830		$	144		$	187		$	1,301		$	13,161
Ending balance: collectively evaluated for impairment	$	592,323		$	85,320		$	23,081		$	20,437		$	50,538		$	771,699

December 31, 2014
Allowance for credit losses:
Beginning Balance	$	2,981		$	551		$	85		$	230		$	352		$	4,199
Charge-offs		(538	)		—			—			—			(439	)		(977	)
Recoveries		1			—			—			75			—			76
Provision for loan losses		(126	)		74			(52	)		75			491			462
Ending balance	$	2,318		$	625		$	33		$	380		$	404		$	3,760
Ending balance: individually evaluated for impairment	$	721		$	—		$	—		$	254		$	55		$	1,030
Ending balance: collectively evaluated for impairment	$	1,597		$	625		$	33		$	126		$	349		$	2,730
Loan Receivables:
Ending balance	$	587,399		$	89,778		$	20,171		$	22,277		$	54,656		$	774,281
Ending balance: individually evaluated for impairment	$	10,372		$	1,324		$	143		$	702		$	1,151		$	13,692
Ending balance: collectively evaluated for impairment	$	577,027		$	88,454		$	20,028		$	21,575		$	53,505		$	760,589

4. DEPOSITS

Deposits consist of the following major classifications:

	September 30, 2015					December 31, 2014
			Weighted					Weighted
			Average					Average
	Amount		Interest Rate			Amount		Interest Rate
	(Dollars in thousands)
NOW and other demand deposit accounts	$	482,000		0.12	%	$	439,623		0.13	%
Passbook savings and club accounts		171,474		0.20	%		168,686		0.20	%
Subtotal		653,474					608,309
Certificates with original maturities:
Within one year		31,767		0.30	%		42,821		0.29	%
One to three years		123,470		0.95	%		113,927		0.92	%
Three years and beyond		23,299		1.59	%		22,021		1.73	%
Total certificates		178,536					178,769
Total	$	832,010				$	787,078

The aggregate amount of certificate accounts in denominations of $100 thousand or more at September 30, 2015 and December 31, 2014 amounted to $67.1 million and $68.8 million, respectively. Currently, deposits in excess of $250 thousand are generally not federally insured.

Municipal demand deposit accounts in denominations of $100 thousand or more at September 30, 2015 and December 31, 2014 amounted to $208.2 million and $181.0 million, respectively.

5. EARNINGS PER SHARE

Basic net income per share is based upon the weighted average number of common shares outstanding, net of any treasury shares, while diluted net income per share is based upon the weighted average number of common shares outstanding, net of any treasury shares, after consideration of the potential dilutive effect of common stock equivalents, based upon the treasury stock method using an average market price for the period, and impact of unallocated Employee Stock Ownership Plan (“ESOP”) shares.

The calculated basic and dilutive EPS are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(Dollars in thousands, except per share data)
Numerator – Net Income	$	1,669	$	1,580	$	5,121	$	4,700
Denominators:
Basic average shares outstanding		6,043,604		6,226,913		5,983,355		6,333,123
Effect of dilutive common stock equivalents		101,532		134,943		105,272		136,334
Diluted average shares outstanding		6,145,136		6,361,856		6,088,627		6,469,457

Earnings per share:
Basic	$	0.28	$	0.25	$	0.86	$	0.74
Diluted	$	0.27	$	0.25	$	0.84	$	0.73

At September 30, 2015 and 2014, there were 318,265 and 598,328 outstanding anti-dilutive options, respectively, 35,150 and 63,490 outstanding dilutive non-vested shares, respectively.

STOCK-BASED COMPENSATION

Stock-based compensation is accounted for in accordance with FASB ASC 718, Compensation – Stock Compensation. The Company establishes fair value for its equity awards to determine their cost. The Company recognizes the related expense for employees over the appropriate vesting period, or when applicable, service period. However, consistent with the stock compensation topic of the FASB Accounting Standards Codification, the amount of stock-based compensation recognized at any date must at least equal the portion of the grant date value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. In accordance with FASB ASC 505-50, Equity-Based Payments to Non-Employees, the compensation expense for non-employees is recognized on the grant date, or when applicable, the service period.

The Company’s 2005 and 2010 Equity-Based Incentive Plans (the “Equity Plans”) authorizes the issuance of shares of common stock pursuant to awards that may be granted in the form of stock options to purchase common stock (“options”) and awards of shares of common stock (“stock awards”). The purpose of the Equity Plans is to attract and retain personnel for positions of substantial responsibility and to provide additional incentive to certain officers, directors, advisory directors, employees and other persons to promote the success of the Company. Under the Equity Plan, options expire ten years after the date of grant, unless terminated earlier under the option terms. A committee of non-employee directors has the authority to determine the conditions upon which the options granted will vest. Options are granted at the then fair market value of the Company’s stock.

A summary of the status of the Company’s stock options under the Equity Plans as of September 30, 2015 and 2014 and changes during the nine months ended September 30, 2015 and 2014 are presented below:

	Nine Months Ended September 30, 2015				Nine Months Ended September 30, 2014
	Number of shares		Weighted average exercise price		Number of shares		Weighted average exercise price
Outstanding at the beginning of the period		674,391	$	12.15		680,200	$	12.14
Granted		—		—		—		—
Exercised		287,130	$	13.08		5,809	$	11.49
Forfeited		3,894	$	11.69		—		—
Outstanding at the end of the period		383,367	$	11.45		674,391	$	12.15
Exercisable at the end of the period		309,367	$	10.94		524,462	$	12.06
Stock options vested or expected to vest (1)		345,030	$	11.45		606,952	$	12.15

(1) Includes vested shares and nonvested shares after a forfeiture rate, which is based upon historical data, is applied.

The following table summarizes all stock options outstanding under the Equity Plan as of September 30, 2015:

	Options Outstanding
Date Issued	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
November 21, 2006		14,506	$	14.78	1.1 years
November 20, 2007		17,274	$	11.32	2.1 years
August 18, 2010		210,159	$	10.21	4.9 years
March 15, 2011		13,600	$	12.06	5.5 years
August 17, 2011		45,938	$	11.53	5.9 years
November 19, 2012		17,100	$	13.10	7.1 years
November 19, 2013		64,790	$	14.14	8.1 years
Total		383,367	$	11.45	5.4 years

The compensation expense recognized for the three and nine months ended September 30, 2015 was $46 thousand and $138 thousand, respectively, as compared to $46 thousand and $138 thousand for the three and nine months ended September 30, 2014, respectively.

At September 30, 2015, there was $290 thousand of total unrecognized compensation cost related to options granted under the stock option plans. That cost is expected to be recognized over a weighted average period of 1.9 years.

Summary of Non-vested Stock Award Activity:

	Nine Months ended September 30, 2015				Nine Months ended September 30, 2014
	Number of shares		Weighted avg grant date fair value		Number of shares		Weighted avg grant date fair value
Beginning of period		54,950	$	10.74		83,290	$	10.99
Issued		—		—		—		—
Forfeited		—		—		—		—
Vested		19,800	$	10.30		19,800	$	10.30
Outstanding at September 30, 2014		35,150	$	14.08		63,490	$	12.91

The compensation expense recognized for the three and nine months ended September 30, 2015 was $45 thousand and $208 thousand, respectively, as compared to $81 thousand and $244 thousand for the three and nine months ended September 30, 2014, respectively.

As of September 30, 2015, there was $383 thousand of total unrecognized compensation costs related to non-vested stock awards. That cost is expected to be recognized over a weighted average period of 2.9 years.

INCOME TAXES

Income tax expense was $2.6 million for an effective tax rate of 33.5% for the nine months ended September 30, 2015 compared to $2.6 million for an effective tax rate of 35.7% for the same period in 2014.

Periodic reviews of the carrying amount of deferred tax assets are made to determine if the establishment of a valuation allowance is necessary. If based on the available evidence in future periods, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized, a deferred tax valuation allowance would be established. Consideration is given to all positive and negative evidence related to the realization of the deferred tax assets. Items considered in this evaluation include historical financial performance, expectation of future earnings, the ability to carry back losses to recoup taxes previously paid, length of statutory carryforward periods, experience with operating loss and tax credit carryforwards not expiring unused, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. The evaluation is based on current tax laws as well as expectations of future performance. At September 30, 2015 and December 31, 2014, no valuation allowance has been recorded for any portfolio of the outstanding deferred tax asset.

The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated income statement. As of September 30, 2015, the tax years ended December 31, 2012 through 2014 were subject to examination by the Internal Revenue Service, while the tax years ended December 31, 2014 were subject to New Jersey examination.

STOCKHOLDERS’ EQUITY

During the third quarter of 2015, the Board of Directors of the Company declared a cash dividend of $0.06 per share, which was paid on August 21, 2015 to stockholders of record as of the close of business on July 29, 2015.

On March 3, 2015, the Company announced that its Board of Directors authorized a stock repurchase program under which the Company will repurchase up to 130,000 shares of the Company’s outstanding common stock, or approximately 2% of outstanding shares. The Company repurchased a total of 16,400 shares at a weighted average cost of $14.82 per share during the three months ended September 30, 2015 completing the program.

No reclassification adjustments were recognized in Accumulated Other Comprehensive Income during the three and nine months ended September 30, 2015. Reclassification adjustments recognized in Accumulated Other Comprehensive Income during the three and nine months ended September 30, 2014 are as follows:

	For the Three and Nine Months Ended September 30, 2014
	Three months change									Nine months change
	Pre-tax			Tax			After-tax			Pre-tax			Tax			After-tax
	(Dollars in thousands)
Unrealized holding loss on securities available for sale during the period	$	(2,764	)	$	1,072		$	(1,692	)	$	(2,764	)	$	1,072		$	(1,692	)
Reclassification adjustment for net gains included in net income⁽¹⁾		86			(30	)		56			86			(30	)		56
Net unrealized loss on securities available for sale	$	(2,678	)	$	1,042		$	(1,636	)	$	(2,678	)	$	1,042		$	(1,636	)

(1) All amounts are included in non-interest income in the unaudited condensed consolidated statements of operations.

A summary of the changes in components of Accumulated Other Comprehensive Income for the three and nine months ended September 30, 2015 and 2014 are presented below:

	Unrealized Gain (Loss) on Available for Sale Securities			Loss on Post Retirement Life Benefit			Accumulated Other Comprehensive Income
	(Dollars in thousands)
Three month period comparison
Beginning balance - 07/01/2015	$	(1,149	)	$	(158	)	$	(1,307	)
Current period change		815			5			820
Tax benefit		(330	)		─			(330	)
Ending balance – 09/30/2015	$	(664	)	$	(153	)	$	(817	)

Beginning balance - 07/01/2014	$	(1,434	)	$	(9	)	$	(1,443	)
Current period change		(326	)		1			(325	)
Tax benefit		124			─			124
Ending balance – 09/30/2014	$	(1,636	)	$	(8	)	$	(1,644	)

Nine month period comparison
Beginning balance - 01/01/2015	$	(1,282	)	$	(169	)	$	(1,451	)
Current period change		1,037			16			1,053
Tax benefit		(419	)		─			(419	)
Ending balance – 09/30/2015	$	(664	)	$	(153	)	$	(817	)

Beginning balance – 01/01/2014	$	(2,657	)	$	(10	)	$	(2,667	)
Current period change		1,709			2			1,711
Tax benefit		(688	)		─			(688	)
Ending balance – 09/30/2014	$	(1,636	)	$	(8	)	$	(1,644	)

FAIR VALUE MEASUREMENTS

The Company accounts for fair value measurement in accordance with FASB ASC 820, Fair Value Measurements and Disclosures. FASB ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FASB ASC 820 does not require any new fair value measurements. The definition of fair value retains the exchange price notion in earlier definitions of fair value. FASB ASC 820 clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability. The definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price). FASB ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. FASB ASC 820 also clarifies the application of fair value measurement in a market that is not active.

FASB ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

In addition, the Company is to disclose the fair value measurements for financial assets on both a recurring and non-recurring basis.

The following tables presents assets that are measured at fair value on a recurring basis by major product category and fair value hierarchy as of September 30, 2015 and December 31, 2014:

	Category Used for Fair Value Measurement
September 30, 2015	Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Securities available for sale:
U.S. government sponsored entity mortgage-backed securities	$	—	$	81,939	$	—
U.S. Treasury and federal agencies				16,207		—
State and municipal obligations		—		—		—
Corporate securities		—		9,030		—
Equity securities		43		—		—
Totals	$	43	$	107,176	$	—

	Category Used for Fair Value Measurement
December 31, 2014	Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Securities available for sale:
U.S. government sponsored entity mortgage-backed securities	$	—	$	80,258	$	—
U.S. Treasury and federal agencies				20,991		—
State and municipal obligations		—		—		—
Corporate securities		—		8,839		—
Equity securities		28		—		—
Totals	$	28	$	110,088	$	—

In accordance with the fair value measurement and disclosures topic of the FASB Accounting Standards Codification management assessed whether the volume and level of activity for certain assets have significantly decreased when compared with normal market conditions. The Company concluded that there was not a significant decrease in the volume and level of activity with respect to certain investments included in the corporate debt securities and classified as level 2 in accordance with the framework for fair value measurements. Fair value for such securities is obtained from third party broker quotes. The Company evaluated these values to determine that the quoted price is based on current information that reflects orderly transactions or a valuation technique that reflects market participant assumptions by benchmarking the valuation results and assumptions used against similar securities that are more actively traded in order to assess the reasonableness of the estimated fair values. The fair market value estimates we assign to these securities assume liquidation in an orderly fashion and not under distressed circumstances.

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company measures impaired loans, FHLB stock and loans or bank properties transferred into other real estate owned at fair value on a non-recurring basis.

Summary of Non-Recurring Fair Value Measurements

			Category Used for Fair Value Measurement
Nine Month Period Ended	Total		Level 1		Level 2		Level 3		Total Losses
	(Dollars in thousands)
September 30, 2015
Assets:
Impaired loans	$	3,875	$	─	$	1,718	$	2,157	$	(123	)
Real estate owned		1,587		─		1,587		─		(255	)

September 30, 2014
Assets:
Impaired loans	$	5,609	$	─	$	2,459	$	3,150	$	(441	)
Real estate owned		248		─		248		─		(55	)

Impaired Loans

The Company considers a loan to be impaired when it becomes probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of the loan agreement. Under FASB ASC 310, collateral dependent impaired loans are valued based on the fair value of the collateral, which is based on appraisals, less cost to sell. These adjustments are based upon observable inputs, and therefore, the fair value measurement has been categorized as a level 2 measurement. In some cases, adjustments are made to the appraised values for various factors, including age of the appraisal, age of the comparables included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement. Total loans remeasured at fair value for the nine months ended September 30, 2015 were $3.9 million. Such loans were carried at the value of $4.0 million immediately prior to remeasurement, resulting in the recognition of impairment through earnings in the amount of $123 thousand. Total loans remeasured at fair value for the nine months ended September 30, 2014 were $5.6 million. Such loans were carried at the value of $6.1 million immediately prior to remeasurement, resulting in the recognition of impairment through earnings in the amount of $441 thousand.

Real Estate Owned

Once an asset is determined to be uncollectible, the underlying collateral is repossessed and reclassified to foreclosed real estate and repossessed assets. These assets are carried at lower of cost or fair value of the collateral, less cost to sell. These adjustments are based upon observable inputs, and therefore, the fair value measurement has been categorized as a Level 2 measurement. In some cases, adjustments are made to the appraised values for various factors, including age of the appraisal, age of the comparables included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement. Total real estate owned remeasured at fair value for the nine months ended September 30, 2015 was $1.6 million. These properties were carried at a value of $1.8 million immediately prior to remeasurement, resulting in $255 thousand of impairment through earnings. Total real estate owned remeasured at fair value for the nine months ended September 30, 2014 was $248 thousand. These properties were carried at a value of $303 thousand immediately prior to remeasurement, resulting in $55 thousand of impairment through earnings.

Fair Value of Financial Instruments

In accordance with FASB ASC 825-10-50-10, the Company is required to disclose the fair value of financial instruments. The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a distressed sale. Fair value is best determined using observable market prices; however, for many of the Company’s financial instruments, no quoted market prices are readily available. In instances where quoted market prices are not readily available, fair value is determined using present value or other techniques appropriate for the particular instrument. These techniques involve some degree of judgment and, as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange. Different assumptions or estimation techniques may have a material effect on the estimated fair value. The following table summarizes these results:

			Category Used For Fair Value
September 30, 2015	Carrying Amount		Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	115,514	$	115,514	$	—	$	—
Investment securities:
Held to maturity		932		—		989		—
Available for sale		107,219		43		107,176		—
Loans receivable, net		785,549		—		797,564		—
Federal Home Loan Bank stock		6,089		—		6,089		—

Liabilities:
NOW and other demand deposit accounts		482,000		—		495,162		—
Passbook savings and club accounts		171,474		—		179,658		—
Certificates		178,536		—		179,280		—
Advances from Federal Home Loan Bank		110,000		—		118,347		—
Junior subordinated debenture		—		—		—		—

			Category Used For Fair Value
December 31, 2014	Carrying Amount		Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	80,307	$	80,307	$	—	$	—
Investment securities:
Held to maturity		1,201		—		1,278		—
Available for sale		110,116		28		110,088		—
Loans receivable, net		774,017		—		791,095		—
Federal Home Loan Bank stock		6,039		—		6,039		—

Liabilities:
NOW and other demand deposit accounts		439,623		—		458,328		—
Passbook savings and club accounts		168,686		—		168,893		—
Certificates		178,769		—		179,224		—
Advances from Federal Home Loan Bank		110,000		—		118,777		—
Junior subordinated debenture		7,217		—		7,217		—

Cash and Cash Equivalents—For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.

Investment and Mortgage-Backed Securities—For investment securities, fair values are based on a combination of quoted prices for identical assets in active markets, quoted prices for similar assets in markets that are either actively or not actively traded and pricing models, discounted cash flow methodologies, or similar techniques that may contain unobservable inputs that are supported by little or no market activity and require significant judgment. For investment securities that do not actively trade in the marketplace, (primarily our investment in trust preferred securities of non-publicly traded companies) fair value is obtained from third party broker quotes. The Company evaluates prices from a third party pricing service, third party broker quotes, and from another independent third party valuation source to determine their estimated fair value. These quotes are benchmarked against similar securities that are more actively traded in order to assess the reasonableness of the estimated fair values. The fair market value estimates we assign to these securities assume liquidation in an orderly fashion and not under distressed circumstances. For securities classified as available for sale, the changes in fair value are reflected in the carrying value of the asset and are shown as a separate component of stockholders’ equity.

Loans Receivable - Net—The fair value of loans receivable is estimated based on the present value using discounted cash flows based on estimated market discount rates at which similar loans would be made to borrowers and reflect similar credit ratings and interest rate risk for the same remaining maturities.

FHLB Stock—Although FHLB stock is an equity interest in an FHLB, it is carried at cost because it does not have a readily determinable fair value as its ownership is restricted and it lacks a market. While certain conditions are noted that required management to evaluate the stock for impairment, it is currently probable that the Company will realize its cost basis. Management concluded that no impairment existed as of September 30, 2015. The estimated fair value approximates the carrying amount.

NOW and Other Demand Deposit, Passbook Savings and Club, and Certificates Accounts—The fair value of NOW and other demand deposit accounts and passbook savings and club accounts is the amount payable on demand at the reporting date. The fair value of certificates is estimated by discounting future cash flows using interest rates currently offered on certificates with similar remaining maturities.

Advances from FHLB—The fair value was estimated by determining the cost or benefit for early termination of each individual borrowing.

Junior Subordinated Debenture—The fair value was estimated by discounting approximate cash flows of the borrowings by yields estimating the fair value of similar issues.

Commitments to Extend Credit and Letters of Credit—The majority of the Bank’s commitments to extend credit and letters of credit carry current market interest rates if converted to loans. Because commitments to extend credit and letters of credit are generally unassignable by either the Bank or the borrower, they only have value to the Bank and the borrower. The estimated fair value approximates the recorded deferred fee amounts, which are not significant.

The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2015 and December 31, 2014. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since September 30, 2015 and December 31, 2014, and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

10.

GOODWILL AND INTANGIBLE ASSETS

Goodwill totaled $4.6 million at September 30, 2015 as compared to $4.6 million at December 31, 2014. The Company completed its annual goodwill impairment test as of August 1, 2015 and concluded that goodwill was not impaired. At September 30, 2015, no triggering events have occurred from the date of the impairment test that would have impaired goodwill.

The core deposit intangible totaled $464 thousand at September 30, 2015 as compared to $536 thousand at December 31, 2014. The core deposit intangible is being amortized over its estimated useful life of approximately 15 years from August 1, 2011.

11.

REAL ESTATE OWNED

Summary of Real Estate Owned (“REO”):

	2015									2014
	Residential			Commercial						Residential			Commercial
	Property			Property			Total			Property			Property			Total
	(Dollars in thousands)									(Dollars in thousands)
Balance, January 1,	$	609		$	41		$	650		$	295		$	203		$	498
Transfers into Real Estate Owned		1,839			195			2,034			460			–			460
Sales of Real Estate Owned		(585	)		(195	)		(780	)		(410	)		(161	)		(571	)
Balance, September 30,	$	1,863		$	41		$	1,904		$	345		$	42		$	387

12.

JUNIOR SUBORDINATED DEBT

On August 26, 2015, the Company redeemed the remaining $7.2 million principal amount of its 8.67% Capital Securities issued by Ocean Shore Capital Trust I, a wholly-owned subsidiary of the Company. The Company paid a redemption premium of $94 thousand. As a result, all other borrowings were paid-off at September 30, 2015 from $7.2 million at December 31, 2014.

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

PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

This Quarterly Report may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, but rather are statements based on Ocean Shore Holding’s current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions.

Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets and changes in the quality or composition of the Company’s loan or investment portfolios. Additional factors that may affect our results are discussed in our Annual Report on Form 10-K for the year ended December 31, 2014 under “Item 1A. Risk Factors.” These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. Ocean Shore Holding assumes no obligation to update any forward-looking statements.

GENERAL

Ocean Shore Holding Co. (“Ocean Shore Holding” or the “Company”) is the holding company for Ocean City Home Bank (the “Bank”). The Company’s assets consist of its investment in Ocean City Home Bank and its liquid investments. The Company is primarily engaged in the business of directing, planning, and coordinating the business activities of the Bank.

Ocean City Home Bank is a federally chartered savings bank. The Bank operates as a community-oriented financial institution offering a wide range of financial services to consumers and businesses in our market area. The Bank attracts deposits from the general public, small businesses and municipalities and uses those funds to originate a variety of consumer and commercial loans, which we hold primarily for investment.

MARKET AREA

We are headquartered in Ocean City, New Jersey, and serve the southern New Jersey shore communities through a total of eleven full-service offices, of which nine are located in Atlantic County and two in Cape May County. Our markets are in the southeastern corner of New Jersey, approximately 65 miles east of Philadelphia and 130 miles south of New York.

The economy of Atlantic County is dominated by the service sector, of which the gaming industry in nearby Atlantic City is the primary employer. Four of the 12 Atlantic City casinos that were operating as of January 1, 2014 closed during the year and a fifth declared bankruptcy. The casino closings in 2014 resulted in the loss of approximately 8,000 jobs. We do not maintain any branches in Atlantic City, but Atlantic City is within our lending area and some of our borrowers are employed in the gaming industry. We closely monitor the economic environment in our market area and in Atlantic City in particular, and we track our exposure to borrowers who are employed in the gaming industry. In order to mitigate the loss of jobs from casino closures while positioning Atlantic City for future growth in other industries, several other ventures in the area, which are expected to create employment, have been recently announced and are at the final stages of completion. Both a Bass Pro Shop and a $134 million convention center at Harrah’s Resort Atlantic City were recently completed. Additionally, The Pier Shops of Caesar were purchased by a Philadelphia developer and will receive a full renovation. Outside of Atlantic City, The Richard Stockton College of New Jersey recently announced its takeover of the FAA Next Gen Research Park. The Research Park will be located on the campus of the Federal Aviation Administration’s William J. Hughes Technical Center in Egg Harbor Township. At full build out, the Research Park consists of seven buildings encompassing 400,000 square feet of research and development facilities. During 2014, the Stockton Aviation Research and Technology Park was selected by the FAA as one of the National test sites for future government use of commercial drones.

While Ocean City Home Bank is not engaged in lending to the casino industry, the employment or businesses of many of Ocean City Home Bank’s customers directly or indirectly benefit from the industry. As of September 30, 2015, we had $16.8 million of loans outstanding to borrowers who, at the time of origination, were employed in the gaming industry, representing 2.1% of total loans. Of these loans, less than $3.6 million were made to borrowers who were employed at the time of origination at casinos/hotels that subsequently closed or declared bankruptcy. To date, we have not experienced a significant impact from the downturn in the gaming industry, which has experienced declining revenue and employment since 2006.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2014 AND DECEMBER 31, 2014

Total assets of the Company increased $42.7 million to $1,067.5 million at September 30, 2015 from $1,024.8 million at December 31, 2014. Loans receivable, net, increased $11.5 million, investment and mortgage-backed securities decreased $3.2 million and cash and cash equivalents increased by $35.2 million. Deposits increased $44.9 million while borrowings decreased $7.2 million.

Investments

Investments and mortgage-backed securities decreased $3.2 million to $108.2 million at September 30, 2015 from $111.3 million at December 31, 2014. The decrease was the result of repayments, calls and maturities of $14.7 million partially offset by purchases of $10.5 million of agency investments and an improvement in the unrealized holding loss on investment securities of $1.0 million.

Loans

Loans receivable, net, increased $11.5 million to $785.5 million at September 30, 2015 from $774.0 million at December 31, 2014. The increase resulted from increases in the real estate mortgage portfolio of $12.0 million and real estate construction loans of $3.1 million offset by decreases in commercial loans of $1.7 million and consumer loans of $2.8 million. Loan originations totaled $119.8 million for the nine months ended September 30, 2015 compared to $114.4 million originated in the nine months ended September 30, 2014. Real estate mortgage loan originations totaled $74.4 million, real estate construction loan originations totaled $20.0 million, consumer loan originations totaled $12.9 million and commercial loan originations totaled $12.5 million for the first nine months of 2015. Origination activity was offset by $108.3 million of normal loan payments and payoffs, compared to payments and payoffs of $85.8 million in the same period of the prior year. The higher than normal increase in residential loans payoffs resulted from higher refinance activity due to the low interest rate environment on loans.

The following table summarizes changes in the loan portfolio in the nine months ended September 30, 2015.

	September 30, 2015			December 31, 2014			$ change			% change
	(Dollars in thousands)
Real estate – mortgage:
One-to-four-family residential	$	602,022		$	587,399		$	14,623			2.5	%
Commercial and multi-family		87,150			89,778			(2,628	)		-2.9
Total real estate – mortgage		689,172			677,177			11,995			1.8

Real estate – construction:
Residential		18,482			16,030			2,452			15.3
Commercial		4,743			4,141			602			14.5
Total real estate – construction		23,225			20,171			3,054			15.1

Commercial		20,624			22,277			(1,653	)		-7.4

Consumer
Home equity		51,493			54,279			(2,786	)		-5.1
Other consumer loans		346			377			(31	)		-8.2
Total consumer loans		51,839			54,656			(2,817	)		-5.2

Total loans		784,860			774,281			10,579			1.4
Net deferred loan cost		3,805			3,496			309			8.8
Allowance for loan losses		(3,116	)		(3,760	)		644			-17.1
Net total loans	$	785,549		$	774,017		$	11,532			1.5

Non-Performing Assets

Non-performing assets totaled $7.7 million, or 0.72% of total assets, at September 30, 2015 compared to $6.9 million or 0.68% of total assets at December 31, 2014 and $7.9 million, or 0.76% of total assets, at September 30, 2014. The increase of $735 thousand from December 31, 2014 was the result of increases in real estate owned of $1.3 million offset by decreases in non-performing loans of $485 thousand and TDR non-accrual loans of $34 thousand. Non-performing assets consisted of 18 residential mortgages totaling $2.8 million, one real estate construction mortgage totaling $144 thousand, five real estate commercial mortgages totaling $1.6 million, eight consumer equity loans totaling $568 thousand, five TRD non-accrual loans totaling $660 thousand and seven real estate owned properties totaling $1.9 million. Real estate owned increased by one property while the total balance increased to $1.9 million at September 30, 2015 from $650 thousand at December 31, 2014 as non-performing loans migrated to real estate owned. The Company has two real estate owned properties under contract for sale for gross proceeds totaling $715 thousand.

The allowance for loan losses decreased $644 thousand to $3.1 million, or 0.40% of total net loans, from $3.8 million at December 31, 2014, or 0.49% of total net loans. The decrease in the allowance for loan losses resulted from net charge offs of $1.1 million offset by an addition to the allowance of $496 thousand. Net charge-offs totaled $1.1 million in 2015 compared to $433 thousand for the same period in 2014. The loss factors used to calculate the allowance were relatively stable in September 2015 from December 2014. The allowance levels were maintained to reflect a reserve level deemed appropriate by management in light of factors such as the level of non-performing loans, collateral position, credit characteristics of the underlying borrowers and current economic conditions. At September 30, 2015, the specific allowance on loans individually evaluated for impairment was $683 thousand and pooled allowance on the remainder of the loan portfolio was $2.4 million as compared to specific allowance on loans individually evaluated for impairment of $1.0 million and pooled allowance on the reminder of the loan portfolio of $2.8 million at December 31, 2014.

	Nine months Ended September 30,
	2015			2014
	(Dollars in thousands)
Allowance for loan losses:
Allowance at beginning of period	$	3,760		$	4,199
Provision for loan losses		496			263

Recoveries		–			76
Charge-offs		(1,140	)		(509	)
Net (charge-offs) recoveries		(1,140	)		(433	)
Allowance at end of period	$	3,116		$	4,029
Allowance for loan losses as a percent of total loans
		0.40	%		0.52	%

Allowance for loan losses as a percent of non-performing loans		54.2	%		53.7	%

	September 30, 2015			December 31, 2014
	(Dollars in thousands)
Nonaccrual loans:
Real estate – residential	$	2,798		$	3,626
Real estate – commercial		1,580			803
Real estate – construction		144			143
Commercial		–			501
Consumer		568			502
Total		5,090			5,575
Troubled debt restructurings – nonaccrual		660			694
Total nonaccrual loans		5,750			6,269
Real estate owned		1,904			650
Total non-performing assets	$	7,654		$	6,919

Total non-performing loans to total loans		0.73	%		0.81	%
Total non-performing loans to total assets		0.54	%		0.61	%
Total non-performing assets to total assets		0.72	%		0.68	%

Deposits

Deposits increased $44.9 million, or 5.7%, to $832.0 million at September 30, 2015 from $787.1 million at December 31, 2014. Non-interest bearing demand deposits increased $95.0 million, interest bearing demand deposits decreased $52.6 million, savings accounts increased by $2.8 million and certificates of deposit decreased by $233 thousand. A repricing of interest bearing demand deposits to non-interest bearing demand deposits led to the change of category of those deposits. Municipal deposits increased $27.1 million at September 30, 2015 compared to December 31, 2014 as a result of seasonal deposits. The Company continued its focus on attracting core deposits which totaled $653.5 million or 78.5% of total deposits.

The following table summarizes changes in deposits in the nine months ended September 30, 2015.

	September 30,		December 31,
	2015		2014		$ change			% change
	(Dollars in thousands)
Non-interest-bearing demand deposits	$	193,384	$	98,417	$	94,967			96.5	%
Interest-bearing demand deposits		288,617		341,206		(52,589	)		-15.4
Savings accounts		171,473		168,686		2,787			1.7
Time deposits		178,536		178,770		(233	)		-0.1
Total	$	832,010	$	787,079	$	44,932			5.8

Borrowings

Federal Home Loan Bank advances were unchanged at $110.0 million at September 30, 2015 from December 31, 2014. Other borrowings were reduced to zero at September 30, 2015 compared to $7.2 million at December 31, 2014. During the quarter ended September 30, 2015, the Company redeemed the remaining $7.2 million liquidation value of its 8.67% capital securities issued by Ocean Shore Capital Trust I.

Stockholders’ Equity

Stockholders’ equity increased $4.9 million to $110.7 million at September 30, 2015, from $105.8 million at December 31, 2014, primarily as a result of $5.1 million of net income, proceeds from exercises of stock options of $3.2 million, increases in contra benefit plans of $122 thousand and an increase in other comprehensive income of $634 thousand offset by an increase in treasury stock of $2.4 million and dividends paid of $1.1 million.

COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

Net income was $1.7 million for the three months ended September 30, 2015 as compared to $1.6 million for the three months ended September 30, 2014. The increase of $89 thousand, or 5.6%, in 2015 from 2014 was due primarily to an increase in net interest income, other income and a decrease in income tax expense offset by an increase in other expenses and provision for loan losses.

Net income was $5.1 million for the nine months ended September 30, 2015 as compared to $4.7 million for the nine months ended September 30, 2014. The $421 thousand, or 9.0%, increase in 2015 from 2014 was due primarily to an increase in net interest income, other income and decreases in other expenses and income taxes offset by an increase in provision for loan losses.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in thousands, except per share data)
Net income	$	1,669		$	1,580		$	5,121		$	4,700
Basic earnings per share	$	0.28		$	0.25		$	0.86		$	0.74
Diluted earnings per share	$	0.27		$	0.25		$	0.84		$	0.73
Return on average assets (annualized)		0.62	%		0.61	%		0.65	%		0.61	%
Return on average equity (annualized)		6.10	%		5.90	%		6.34	%		5.84	%

Net Interest Income

The following table summarizes changes in interest income and interest expense for the three month periods ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015		2014		$ change			% change
	(Dollars in thousands)
INTEREST INCOME:
Loans	$	8,168	$	8,243	$	(75	)		-0.9	%
Investment securities		609		612		(3	)		(0.5	)
Total interest income	$	8,777		8,855		(78	)		(0.9	)

INTEREST EXPENSE:
Deposits		642		625		17			2.7
Borrowings		1,043		1,272		(229	)		(18.0	)
Total interest expense		1,685		1,897		(212	)		(11.2	)
Net interest income	$	7,092	$	6,958		134			1.9

Net interest income increased by $134 thousand, or 1.9%, for the quarter ended September 30, 2015 compared to the same period in 2014. The interest rate spread and net interest margin of the Company were 3.02% and 3.17%, respectively, for the three months ended September 30, 2015, compared to 3.08% and 3.15%, respectively, for the same period in 2014. The increase in the net interest margin of two basis points resulted from an increase in the average balance of interest-earning assets of $10.3 million, a decrease in the average balance of interest-bearing liabilities of $72.0 million, a decrease in average rate paid on deposits and borrowings of three basis points offset by a decrease in the yield on interest-earning assets of eight basis points.

Interest income decreased by $78 thousand, or 0.9%, for the quarter ended September 30, 2015 compared to September 30, 2014. The decrease in interest income resulted from a decrease in the average balance of investments of $1.5 million and lower yields on loans of 11 basis points offset by an increase in the average balance of loans of $11.7 million and yield on investments of two basis points. The decrease in average balance of investments resulted from investment calls and maturities. The decrease in loan yield resulted from lower rates on new loans originated and payoffs or refinances of higher yielding loans offset by increased loan balances from new originations at lower rates.

Interest expense decreased by $212 thousand, or 11.2%, for the quarter ended September 30, 2015 over the same period last year. The decrease in interest expense resulted from decreases in the average balance of interest-bearing deposits of $66.9 million, borrowings of $5.0 million and rates paid on FHLB advances of 44 basis points offset by an increase in the cost of deposits of five basis points. The decrease in the average balance of interest-bearing deposits resulted primarily from a change in terms to not pay interest on a segment of interest bearing demand deposits while the decrease in the cost of FHLB advances resulted from refinancing of maturing advances to a lower rate.

The following table summarizes changes in interest income and interest expense for the nine month periods ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015		2014		$ change			% change
	(Dollars in thousands)
INTEREST INCOME:
Loans	$	24,517	$	24,569	$	(52	)		(0.2	)%
Investment securities		1,811		1,951		(140	)		(7.2	)
Total interest income		26,328		26,520		(192	)		0.7

INTEREST EXPENSE:
Deposits		1,872		1,898		(26	)		(1.4	)
Borrowings		3,216		3,818		(602	)		(15.8	)
Total interest expense		5,088		5,716		(628	)		(11.0	)
Net interest income	$	21,240	$	20,804		436			2.1

Net interest income increased by $436 thousand, or 2.1%, for the nine months ended September 30, 2015 compared to the same period in 2014. The interest rate spread and net interest margin of the Company were 3.02% and 3.17%, respectively, for the nine months ended September 30, 2015, compared to 3.07% and 3.15%, respectively, for the same period in 2014. The increase resulted from an increase in interest-earning assets of $10.0 million, a decrease in the average balance of interest-bearing deposits and borrowings of $79.2 million, and decreases in the average rates paid on deposits and borrowings of one basis point offset by a decrease in yield on earning assets of seven basis points.

Interest income decreased by $192 thousand, or 0.7%, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. The decrease in interest income resulted from a decrease in the average balance of investments of $6.6 million and lower yields on loans of 10 basis points and investments of four basis points offset by an increase in the average balance of loans of $16.6 million. The decrease in average balance of investments resulted from investment calls and maturities. The decrease in loan yield resulted from lower rates on new loans originated and payoffs or refinances of higher yielding loans offset by increased loan balances from new originations at lower rates.

Interest expense decreased by $628 thousand, or 11.0%, for the nine months ended September 30, 2015 over the same period last year. The decrease in interest expense resulted from decreases in the average balance of interest-bearing deposits of $75.4 million, borrowings of $3.8 million and rates paid on FHLB advances of 44 basis points offset by an increase in the cost of deposits of four basis points. The decrease in the average balance of interest-bearing deposits resulted primarily from a change in terms to not pay interest on a segment of interest bearing demand deposits while the decrease in the cost of FHLB advances resulted from refinancing of maturing advances to a lower rate.

The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. The yields and costs are annualized for presentation purposes. For purposes of this table, average balances have been calculated using the average daily balances and nonaccrual loans are only included in average balances. Loan fees are included in interest income on loans and are insignificant. Interest income on loans and investment securities has not been calculated on a tax equivalent basis because the impact would be insignificant.

Average Balance Tables

	Three Months Ended September 30, 2015								Three Months Ended September 30, 2014
	Average Balance			Interest and Dividends		Yield/ Cost			Average Balance			Interest and Dividends		Yield/ Cost
	(Dollars in thousands)								(Dollars in thousands)
Assets:
Interest-earning assets:
Loans	$	780,769		$	8,169		4.18	%	$	769,054		$	8,243		4.29	%
Investment securities		114,243			609		2.13	%		115,706			612		2.11	%
Total interest-earning assets		895,012			8,777		3.92	%		884,760			8,855		4.00	%
Noninterest-earning assets		173,735								154,939
Total assets	$	1,068,747							$	1,039,699

Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	282,193			124		0.18	%	$	348,854			139		0.16	%
Savings accounts		171,199			87		0.20	%		169,652			86		0.20	%
Certificates of deposit		178,807			431		0.96	%		180,630			400		0.88	%
Total interest-bearing deposits		632,199			642		0.41	%		699,136			625		0.36	%

FHLB advances		110,000			946		3.44	%		110,000			1,067		3.88	%
Subordinated debt		4,393			0		8.86	%		9,435			205		8.68	%
Total borrowings		114,393			1,043		3.65	%		119,435			1,272		4.26	%
Total interest-bearing liabilities		746,592			1,685		0.90	%		818,571			1,897		0.93	%
Noninterest-bearing demand accounts		199,437								102,304
Other liabilities		13,328								11,786
Total liabilities		959,357								932,661

Stockholders’ equity		109,390								107,038
Total liabilities and stockholders’ equity	$	1,068,747							$	1,039,699

Net interest income				$	7,092							$	6,958
Interest rate spread							3.02	%							3.08	%
Net interest margin							3.17	%							3.15	%
Average interest-earning assets to average interest-bearing liabilities		119.88	%							108.09	%

Average Balance Tables

	Nine Months Ended September 30, 2015								Nine Months Ended September 30, 2014
	Average Balance			Interest And Dividends		Yield/ Cost			Average Balance			Interest and Dividends		Yield/ Cost
	(Dollars in thousands)								(Dollars in thousands)
Assets:
Interest-earning assets:
Loans	$	777,226		$	24,518		4.21	%	$	760,610		$	24,569		4.31	%
Investment securities		114,748			1,810		2.10	%		121,369			1,951		2.14	%
Total interest-earning assets		891,974			26,328		3.94	%		881,979			26,520		4.01	%
Noninterest-earning assets		154,597								151,238
Total assets	$	1,046,571							$	1,033,217

Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	270,928		$	358		0.18	%	$	339,906		$	391		0.15	%
Savings accounts		170,222			256		0.20	%		169,976			255		0.20	%
Certificates of deposit		178,719			1,257		0.94	%		185,401			1,252		0.90	%
Total interest-bearing deposits		619,869			1,871		0.40	%		695,283			1,898		0.36	%

FHLB advances		110,000			2,807		3.40	%		110,000			3,167		3.84	%
Subordinated debt		6,265			410		8.73	%		10,015			651		8.67	%
Total borrowings		116,265			3,217		3.69	%		120,015			3,818		4.24	%
Total interest-bearing liabilities		736,134			5,088		0.92	%		815,298			5,716		0.93	%
Noninterest-bearing demand accounts		190,022								99,146
Other		12,644								11,532
Total liabilities		938,800								925,976

Stockholders’ equity		107,771								107,241
Total liabilities and stockholders’ equity	$	1,046,571							$	1,033,217

Net interest income				$	21,240							$	20,804
Interest rate spread							3.02	%							3.07	%
Net interest margin							3.17	%							3.15	%
Average interest-earning assets to average interest-bearing liabilities		121.17	%							108.18	%

Provision for Loan Losses

We review the level of the allowance for loan losses on a quarterly basis and establish the provision for loan losses based on the volume and types of lending, delinquency levels, loss experience, the amount of classified loans, economic conditions and other factors related to the collectability of the loan portfolio. The provision for loan losses was $165 thousand and $496 thousand in the three and nine months ended September 30, 2015, respectively, compared to $125 thousand and $263 thousand in the three and nine months ended September 30, 2014, respectively. The provision was primarily to maintain a reserve level deemed appropriate by management in light of factors such as the level of non-performing loans and the current economic environment.

Other Income

The following table summarizes other income for the three months ended September 30, 2015 and 2014 and the changes between the periods.

	Three Months Ended September 30,
	2015		2014		% Change
	(Dollars in thousands)
OTHER INCOME:
Service charges	$	487	$	417		16.8	%
Cash surrender value of life insurance		159		159		0.0
Gain on sale of investments		3		86		(96.5	)
Other		473		440		7.3
Total other income	$	1,122	$	1,102		1.8

Other income increased $20 thousand, or 1.8%, to $1.1 million for the three-month period ended September 30, 2015 from the same period in 2014. The net increase in other income for the quarter ended September 30, 2015 resulted from increases in deposit account fees and other income of $103 thousand offset by a lower gain on sale of investments due to lower sale activity in the period. The Company reported approximately $3 thousand and $86 thousand for the quarters ended September 30, 2015 and 2014, respectively.

The following table summarizes other income for the nine months ended September 30, 2015 and 2014 and the changes between the periods.

	Nine Months Ended September 30,
	2015		2014		% Change
	(Dollars in thousands)
OTHER INCOME:
Service charges	$	1,498	$	1,308		14.5	%
Cash surrender value of life insurance		469		473		(0.8	)
Gain on sale of investments		3		86		(96.5	)
Other		1,334		1,328		0.5
Total other income	$	3,304	$	3,195		3.4

Other income increased $109 thousand, or 3.4%, to $3.3 million for the nine-month period ended September 30, 2015 from the same period in 2014. The net increase in other income for the nine months ended September 30, 2015 resulted from increases in deposit account fees and debit card commissions of $205 thousand offset by decreases in and cash surrender value of life insurance and other income of $13 thousand and lower gain on sale of investments for the period. The Company reported gains of approximately $3 thousand and $86 thousand for the nine months ended September 30, 2015 and 2014, respectively.

Other Expense

The following table summarizes other expense for the three months ended September 30, 2015 and 2014 and the changes between periods.

	Three Months Ended September 30,
	2015		2014			% Change
	(Dollars in thousands)
OTHER EXPENSE:
Salaries and employee benefits	$	3,173	$	3,177			(0.1	)%
Occupancy and equipment		1,282		1,282			0.0
Federal insurance premiums		136		130			34.6
Advertising		97		125			(22.4	)
Professional services		273		245			11.4
Real estate owned expense		84		(41	)		(304.9	)
Other operating expense		491		533			7.9
Total other expense	$	5,536	$	5,451			1.6

N/M – not measurable

Other expenses increased $85 thousand, or 1.6%, to $5.5 million for the three-month period ended September 30, 2015 from the same period in 2014. The increase in other expense for the third quarter of 2015 compared to 2014 resulted from increases in FDIC insurance and REO expenses of $130 thousand offset by decreases in salaries and benefits, occupancy and equipment, advertising expenses and other expenses of $45 thousand. Other operating expenses for the third quarter of 2015 and 2014 include expenses of $94 thousand and $54 thousand, respectively, of premiums paid for the early redemption of junior subordinated debentures in connection with the concurrent redemption of trust preferred securities.

The following table summarizes other expense for the nine months ended September 30, 2015 and 2014 and the changes between the periods.

	Nine Months Ended September 30,
	2015		2014		% Change
	(Dollars in thousands)
OTHER EXPENSE:
Salaries and employee benefits	$	9,640	$	9,567		0.8	%
Occupancy and equipment		3,779		3,844		(1.7	)
Federal insurance premiums		415		400		3.8
Advertising		323		313		3.2
Professional services		821		794		3.4
Real estate owned expense		38		51		(25.5	)
Other operating expense		1,334		1,458		(8.5	)
Total other expense	$	16,350	$	16,427		(0.5	)

N/M – not measurable

Other expenses decreased to $16.35 million for the nine-month period ended September 30, 2015 from the same period in 2014. The decrease in the nine-month period of 2015 compared to 2014 resulted from decreases in occupancy and equipment, REO expenses and other expenses of $175 thousand were offset by increases in salaries and benefits, FDIC insurance and advertising expenses of $98 thousand. Other operating expenses for the nine-month periods of 2015 and 2014 include expenses $94 thousand and $54 thousand, respectively, of premiums paid for the early redemption of junior subordinated debentures in connection with the concurrent redemption of trust preferred securities.

Income Taxes

Income taxes decreased $60 thousand to $844 thousand for an effective tax rate of 33.6% for the three months ended September 30, 2015, compared to $904 thousand for an effective tax rate of 36.4% from the same period in 2014. The decrease resulted from a change in the mix of assets with a tax preference offset by higher net income before taxes.

Income taxes decreased $32 thousand to $2.6 million for an effective tax rate of 33.5% for the nine months ended September 30, 2015, compared to $2.6 million for an effective tax rate of 35.7% from the same period in 2014. The decrease resulted from a change in the mix of assets with a tax preference offset by higher net income before taxes.

Liquidity and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of investment securities and borrowings from the Federal Home Loan Bank of New York. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

We regularly adjust our investments in liquid assets based upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities and (4) the objectives of our asset/liability management policy.

Our most liquid assets are cash and cash equivalents and interest-bearing deposits. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At September 30, 2015, cash and cash equivalents totaled $115.5 million and securities classified as available-for-sale whose market value exceeds our cost, which provide additional sources of liquidity, totaled $28.3 million. In addition, at September 30, 2015, we had the ability to borrow a total of approximately $302.3 million from the Federal Home Loan Bank of New York.

At September 30, 2015, we had $77.9 million in loan commitments outstanding, which included $31.4 million in undisbursed loans, $28.2 million in unused home equity lines of credit and $18.3 million in commercial lines and letters of credit. Certificates of deposit due within one year of September 30, 2015 totaled $119.6 million, or 67.0% of certificates of deposit. We believe, however, based on past experience that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

At September 30, 2015, the Bank exceeded all of its regulatory capital requirements with Tier 1 leverage capital of $97.7 million, or 9.21% of total adjusted assets, which is above the required level of $42.4 million or 4.0%; common equity Tier 1 risk-based capital of $97.7 million, or 17.63% of total adjusted assets which is above the required level of $24.9 million or 4.5%; Tier 1 risk-based capital of $97.7 million, or 17.63% of total adjusted assets which is above the required level of $33.2 million or 6.0%; and total risk-based capital of $100.8 million, or 18.20% of risk-weighted assets, which is above the required level of $44.3 million or 8.0%. The Bank is considered a “well-capitalized” institution under the applicable prompt corrective action regulations.

At September 30, 2015, the Company had the following levels of regulatory capital: Tier 1 leverage capital ratio 10.24% of total adjusted assets, common equity Tier 1 risk-based capital ratio of 19.21% of risk-weighted assets; Tier 1 risk-based capital ratio of 19.21% of risk-weighted assets and total risk-based capital ratio 19.77% of risk-weighted assets.

MARKET RISK MANAGEMENT

Net Interest Income Simulation Analysis

We analyze our interest rate sensitivity position to manage the risk associated with interest rate movements through the use of interest income simulation. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest sensitive.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period.

Simulation analysis is only an estimate of our interest rate risk exposure at a particular point in time. We continually review the potential effect changes in interest rates could have on the repayment of rate sensitive assets and funding requirements of rate sensitive liabilities.

The following table reflects changes in estimated net interest income only for the Company:

	At June 30, 2015 Percentage Change in Estimated Net Interest Income Over
	12 Months			24 Months

200 basis point increase in rates		7.21	%		10.53	%
100 basis point decrease in rates		(0.94	)		(3.12	)

N/M – not measurable

The 200 and 100 basis point change in rates in the above table is assumed to occur evenly over the following 12 and 24-month periods. Based on the scenario above, net interest income would be positively affected (within our internal guidelines) in the 12-month and 24-month periods if rates rose by 200 basis points and negatively affected (within our internal guidelines) in the 12-month and 24-month periods if rates decreased by 100 basis points.

Economic Value of Equity Analysis

In addition to a net interest income simulation analysis, we use an interest rate sensitivity analysis to review our level of interest rate risk. This analysis measures interest rate risk by computing changes in economic value of equity of our cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates. Economic value of equity (EVE) represents the market value of portfolio equity and is equal to the market value of assets minus the market value of liabilities, with adjustments made for off-balance sheet items. This analysis assesses the risk of loss in market risk sensitive instruments in the event of a sudden and sustained 50 to 300 basis point increase or a sustained 50 to 100 basis point decrease in market interest rates with no effect given to any steps that we might take to counter the effect of that interest rate movement. We measure interest rate risk by modeling the changes in net portfolio value over a variety of interest rate scenarios. The following table presents the change in our net portfolio value at June 30, 2015 that would occur in the event of an immediate change in interest rates based on management’s assumptions, with no effect given to any steps that we might take to counteract that change.

Basis Point (“bp”)	Economic Value of Equity (Dollars in Thousands)								Economic Value of Equity as % of Portfolio Value of Assets
Change in Rates	$ Amount		$ Change			% Change			EVE Ratio		Change
300 bp	$	99,752	($	38,269	)		(27.73	)		10.58		(279.25	)bp
200		114,426		(23,595	)		(17.10	)		11.75		(161.88	)
100		127,506		(10,514	)		(7.62	)		12.70		(66.85	)
50		133,078		(4,943	)		(3.58	)		13.07		(30.28	)
0		138,021		–			–			13.37		–
(50)		140,751		2,730			1.98			13.48		10.72
(100)		140,734		2,713			1.97			13.36		(0.67	)

The Company uses certain assumptions in assessing its interest rate risk. These assumptions relate to interest rates, loan prepayment rates, deposit decay rates, and the market values of certain assets under differing interest rate scenarios, among others. As with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, expected rates of prepayments on loans and early withdrawals from certificates could deviate significantly from those assumed in calculating the table.

OFF-BALANCE SHEET ARRANGEMENTS

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit.

For the three and nine months ended September 30, 2015 and 2014, we engaged in no off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information required by this item is included in Item 2 of this report under “Market Risk Management.”

Item 4. Controls and Procedures

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information regarding the Company’s stock repurchases during the three months ended September 30, 2015:

Period	(a) Total number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or units) Purchased as Part of Publicly Announced Plans or Programs (1)		(d) Maximum Number (or Appropriate Dollar Value) of Shares (or units) that May Yet Be Purchased Under the Plans or Programs

Month #1 July 1, 2015 through July 31, 2015		16,400	$	14.82		16,400		—

Month #2 August 1, 2015 through August 31, 2015		5,927	$	15.18		—		—

Month #3 September 1, 2015 through September 30, 2015		—		—		—		—

Total		22,327	$	14.92		16,400		—

(1)

On March 3, 2015 the Company’s Board of Directors approved the repurchase of up to 130,000 shares of the Company’s common stock.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosure

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

31.1

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.0

Section 1350 Certification of Chief Executive Officer and Chief Financial Officer.

101.0

The following materials from the Ocean Shore Holding Co. Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Financial Condition, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes.

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.

	OCEAN SHORE HOLDING CO.
	(Registrant)

Date: November 9, 2015	/s/ Steven E. Brady
	Steven E. Brady
	President and Chief Executive Officer

Date: November 9, 2015	/s/ Donald F. Morgenweck
	Donald F. Morgenweck
	Chief Financial Officer and Senior Vice President

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