Ocean Shore Holding 10-Q 2006 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2006

OR

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

For the transition period from                    to                    

Commission file number: 0-51000

OCEAN SHORE HOLDING CO.

(Exact name of registrant as specified in its charter)

United States	22-3584037
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1001 Asbury Avenue, Ocean City, New Jersey	082266
(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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “large accelerated filer and accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer  ¨                 Accelerated Filer  ¨                 Non-accelerated Filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    Nox

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

At May 8, 2006, the registrant had 8,760,942 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 March 31, 2006 and December 31, 2005	1
	Unaudited Condensed Consolidated Statements of Income for the three months ended March 31, 2006 and 2005	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2006 and 2005	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2006 and 2005	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults upon Senior Securities	26
Item 4.	Submission of Matters to a Vote of Security Holders	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
SIGNATURES

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	March 31, 2006			December 31, 2005
ASSETS
Cash and amounts due from depository institutions	$	17,201,741		$	13,400,085
Federal funds sold		14,000,000			—
Cash and cash equivalents		31,201,741			13,400,085
Investment securities held to maturity (estimated fair value— December 2005 $4,293,635)		—			4,292,600
Investment securities available for sale (amortized cost— March 2006 $45,199,861; December 2005 $47,368,441)		45,099,814			47,285,875
Mortgage-backed securities held to maturity (estimated fair value— March 2006 $5,125,833; December 2005 $5,320,700)		5,321,062			5,435,913
Mortgage-backed securities available for sale (amortized cost— March 2006 $35,390,603; December 2005 $37,710,146)		34,581,359			37,175,682
Loans receivable—net		416,299,583			412,005,109
Accrued interest receivable:
Loans		1,614,434			1,592,328
Mortgage-backed securities		167,550			176,217
Investment securities		403,605			443,789
Federal Home Loan Bank stock—at cost		2,937,800			2,622,800
Office properties and equipment—net		8,314,993			8,399,552
Prepaid expenses and other assets		2,813,009			3,112,147
Cash surrender value of life insurance		7,404,594			7,339,094
Deferred tax asset		653,867			564,683
TOTAL ASSETS	$	556,813,411		$	543,845,874
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Non-interest bearing deposits	$	39,325,965		$	34,223,473
Interest bearing deposits		383,361,224			382,690,429
Advances from Federal Home Loan Bank		34,000,000			27,000,000
Junior subordinated debenture		15,464,000			15,464,000
Securities sold under agreements to repurchase		18,010,000			18,460,000
Advances from borrowers for taxes and insurance		2,425,994			2,200,325
Accrued interest payable		528,990			835,122
Other liabilities		2,377,051			2,404,243
Total liabilities		495,493,224			483,277,592
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, 8,762,742 shares issued		87,627			87,627
Additional paid-in capital		36,756,112			38,392,348
Retained earnings - partially restricted		28,336,091			27,633,345
Common stock acquired by employee benefits plans		(2,919,740	)		(4,798,480	)
Deferred compensation plans trust		(384,214	)		(373,607	)
Accumulated other comprehensive loss		(555,689	)		(372,951	)
Total stockholders’ equity		61,320,187			60,568,282
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	556,813,411		$	543,845,874

See notes to unaudited condensed consolidated financial statements.

1

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended March 31,
	2006		2005
INTEREST AND DIVIDEND INCOME:
Taxable interest and fees on loans	$	6,026,209	$	4,752,003
Taxable interest on mortgage-backed securities		470,531		572,265
Non-taxable interest on municipal securities		83,359		100,450
Taxable interest and dividends on investment securities		571,256		666,213
Total interest and dividend income		7,151,355		6,090,931
INTEREST EXPENSE:
Deposits		2,477,090		1,780,318
Advances from Federal Home Loan Bank, securities sold under agreements to repurchase and other borrowed money		878,590		691,556
Total interest expense		3,355,680		2,471,874
NET INTEREST INCOME		3,795,675		3,619,057
PROVISION FOR LOAN LOSSES		75,000		75,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		3,720,675		3,544,057
OTHER INCOME:
Service charges		373,551		351,384
Cash surrender value of life insurance		65,500		73,000
Other		115,915		143,795
Total other income		554,966		568,179
OTHER EXPENSE:
Salaries and employee benefits		1,893,887		1,739,622
Occupancy and equipment		665,033		583,121
Federal insurance premiums		14,510		15,010
Advertising		88,088		93,617
Professional services		142,244		158,673
Other operating expenses		326,475		321,381
Total other expenses		3,130,237		2,911,425
INCOME BEFORE INCOME TAXES		1,145,404		1,200,810
INCOME TAX EXPENSE		442,658		458,514
NET INCOME	$	702,746	$	742,296
Basic earnings per share:	$	0.08	$	0.09
Diluted earnings per share:	$	0.08	$	0.09

See notes to unaudited condensed consolidated financial statements.

2

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2006

	Common Stock		Additional Paid-In Capital			Retained Earnings - Partially Restricted		Common Stock Acquired by Employee Benefit Plans			Deferred Compensation Plans Trust			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
BALANCE—January 1, 2006	$	87,627	$	38,392,348		$	27,633,345	$	(4,798,480	)	$	(373,607	)	$	(372,951	)	$	60,568,282
Comprehensive income:
Net income							702,746											702,746
Net change in unrealized loss on securities available for sale, net of taxes of $(109,522)															(182,738	)		(182,738	)
Comprehensive income																		520,008
Effect of adoption of SFAS 123(R)				(1,821,490	)				1,821,490									—
Excess of fair value above cost of ESOP shares committed to be released				9,389														9,389
Unallocated ESOP shares committed to employees									57,250									57,250
Restricted stock shares				99,356														99,356
Incentive stock options				76,509														76,509
Purchase of shares by deferred compensation plans trust												(10,607	)					(10,607	)
BALANCE—March 31, 2006	$	87,627	$	36,756,112		$	28,336,091	$	(2,919,740	)	$	(384,214	)	$	(555,689	)	$	61,320,187

FOR THE THREE MONTHS ENDED MARCH 31, 2005

	Common Stock		Additional Paid-In Capital		Retained Earnings - Partially Restricted		Unallocated ESOP Shares			Deferred Compensation Plans Trust			Accumulated Other Comprehensive Income (Loss)			Total Equity
BALANCE—January 1, 2005	$	87,627	$	38,387,523	$	24,557,370	$	(3,205,990	)	$	(321,260	)	$	289,966		$	59,795,236
Comprehensive income:
Net income						742,296											742,296
Net change in unrealized loss on securities available for sale, net of taxes of $342,954														(546,743	)		(546,743	)
Comprehensive income																	195,553
Purchase of shares by deferred compensation plans trust											(13,557	)					(13,557	)
BALANCE—March 31, 2005	$	87,627	$	38,387,523	$	25,299,666	$	(3,205,990	)	$	(334,817	)	$	(256,777	)	$	59,977,232

See notes to unaudited condensed consolidated financial statements.

3

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
	2006			2005
OPERATING ACTIVITIES:
Net income	$	702,746		$	742,296
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		285,449			337,229
Provision for loan losses		75,000			75,000
Deferred income taxes		20,339			266,122
ESOP and restricted stock plans		156,606			—
Incentive stock option plan		76,509			—
Excess fair value above cost of ESOP shares		9,389			—
Loss on sale of office properties and equipment		229			—
Increase in cash surrender value of life insurance		(65,500	)		(73,000	)
Changes in assets and liabilities which provided (used) cash:
Accrued interest receivable		26,745			33,880
Prepaid expenses and other assets		299,138			(44,354	)
Accrued interest payable		(306,132	)		(332,933	)
Other liabilities		(27,192	)		(59,887	)
Net cash provided by operating activities		1,253,326			944,353
INVESTING ACTIVITIES:
Principal collected on:
Mortgage-backed securities held to maturity		114,621			145,390
Mortgage-backed securities available for sale		2,294,681			3,366,044
Loans originated, net of repayments		(4,435,796	)		(6,608,548	)
Purchases of:
Mortgage-backed securities held to maturity		—			(3,993,750	)
Investment securities available for sale		—			(3,998,125	)
Office properties and equipment		(109,280	)		(240,210	)
Life insurance contracts		—			(85,100	)
Proceeds from maturities of:
Investment securities held to maturity		4,292,600			—
Investment securities available for sale		2,168,155			3,181,669
Purchase of Federal Home Loan Bank stock		(315,000	)		—
Net cash provided by (used in) investing activities		4,009,981			(8,232,630	)
FINANCING ACTIVITIES:
Increase in deposits		5,773,287			955,989
Increase (decrease) in securities sold under agreements to repurchase		(450,000	)		2,630,000
Increase in advances from the Federal Home Loan Bank		7,000,000			—
Purchase of shares by deferred compensation plans trust		(10,607	)		(13,557	)
Increase in advances from borrowers for taxes and insurance		225,669			222,867
Net cash provided by financing activities		12,538,349			3,795,299
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS		17,801,656			(3,492,978	)
CASH AND CASH EQUIVALENTS—Beginning of period		13,400,085			47,395,819
CASH AND CASH EQUIVALENTS—End of period	$	31,201,741		$	43,902,841
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION—Cash paid during the period for:
Interest	$	3,661,812		$	2,804,806

See notes to condensed consolidated financial statements.

4

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 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. However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the 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, 2005. The results for the three months ended March 31, 2006 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2006 or any other period.

Use of Estimates in the Preparation of Financial Statements - The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates relate to the allowance for loan losses and deferred income taxes. Actual results could differ from those estimates.

New Accounting Pronouncements-In May 2005, the FASB issued SFAS No. 154 –“Accounting Changes and Error Corrections”. SFAS No. 154, a replacement of APB Opinion No. 20 – Accounting Changes and FASB Statement No. 3 – Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 requires retrospective application for voluntary changes in accounting principles unless it is impracticable to do so. SFAS No. 154 is effective for accounting changes and corrections of errors in fiscal years beginning after December 15, 2005. Early application is permitted for accounting changes and corrections of errors during fiscal years beginning after June 1, 2005. The adoption of SFAS No. 154 did not have a material effect on our financial condition or results of operations.

On December 19, 2005, the FASB issued FSP 94-6-1,“Terms of Loan Products That May Give Rise to a Concentration of Credit Risk”. FSP 94-6-1 addresses whether, under existing guidance, non-traditional loan products represent a concentration of credit risk and what disclosures are required for entities that originate, hold, guarantee, service, or invest in loan products whose terms may give rise to a concentration of credit risk. Non-traditional loan products expose the originator, holder, investor, guarantor, or servicer to higher credit risk than traditional loan products. Typical features of non-traditional loan products may include high loan-to-value ratios and interest or principal repayments that are less than the repayments for fully amortizing loans of an equivalent term. FSP 94-6-1 was effective upon its issuance and it did not have a material impact on the Company's financial position or disclosures.

In February 2006, the FASB issued SFAS No. 155,“Accounting for Certain Hybrid Financial Instruments”. This statement amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement resolves issues addressed in Statement 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interest in Securitized Financial Assets. This Statement is effective for all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006. The Company does not expect that the guidance will have a material effect on the Company's financial position or results of operations.

5

In March 2006, the FASB issued SFAS No. 156,“Accounting for Servicing of Financial Assets” – an amendment of FASB Statement No. 140. This statement addresses the recognition and measurement of separately recognized servicing rights. The statement clarifies when a servicing right should be separately recognized, requires servicing rights to be initially measured at fair value, and allows an entity to choose to subsequently measure its servicing rights at fair value. The Statement is effective as of the beginning of an entity’s first fiscal year that begins after September 15, 2006. The Company is evaluating the impact of this pronouncement and does not expect that the guidance will have a material effect on the Company's financial position or results of operations.

2. INVESTMENT SECURITIES

Investment securities are summarized as follows:

	March 31, 2006
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Held to Maturity
Available for Sale
Debt securities:
U.S. Government and Federal Agencies	$	20,266,206	$	3,730	$	265,694	$	20,004,242
Municipal securities		4,950,244		57,264		—		5,007,508
Corporate		11,971,239		279,142		102,821		12,147,560
Mutual Funds		8,012,172		176,755		248,423		7,940,504
	$	45,199,861	$	516,891	$	616,938	$	45,099,814
	December 31, 2005
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Held to Maturity
Debt securities - Municipal securities	$	4,292,600	$	1,035	$	—	$	4,293,635
Available for Sale
Debt securities:
U.S. Government and Federal Agencies	$	22,433,195	$	5,230	$	303,427	$	22,134,998
Municipal securities		4,949,764		79,699		—		5,029,463
Corporate		11,973,310		274,114		93,018		12,154,406
Mutual Funds		8,012,172		186,931		232,095		7,967,008
	$	47,368,441	$	545,974	$	628,540	$	47,285,875

6

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 March 31, 2006 and December 31, 2005:

	March 31, 2006
	Less Than 12 Months				12 Months or Longer				Total
	Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss
Debt securities - U.S. Government and Federal Agencies	$	1,465,251	$	52,024	$	18,030,329	$	213,670	$	19,495,580	$	265,694
Corporate		1,490,844		20,110		1,526,417		82,711		3,017,261		102,821
Mutual Funds		—		—		7,761,153		248,423		7,761,153		248,423
	$	2,956,095	$	72,134	$	27,317,899	$	544,804	$	30,273,994	$	616,938
	December 31, 2005
	Less Than 12 Months				12 Months or Longer				Total
	Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss
Debt securities - U.S. Government and Federal Agencies	$	3,531,734	$	42,653	$	17,982,383	$	260,774	$	21,514,117	$	303,427
Corporate		1,490,405		20,648		1,537,204		72,370		3,027,609		93,018
Mutual Funds		—		—		7,777,482		232,095		7,777,482		232,095
	$	5,022,139	$	63,301	$	27,297,069	$	565,239	$	32,319,208	$	628,540

Management believes that the estimated fair value of the securities is dependent upon the movement in market interest rate and that the unrealized losses are temporary. The determination of whether a decline in market value is other than temporary is necessarily a matter of subjective judgment. The timing and amount of any realized losses reported in the Company’s financial statements could vary if conclusions other than those made by management were to determine whether an other than temporary impairment exists.

At March 31, 2006, 12 debt and equity securities had aggregate depreciation of 1.49% from the Company’s amortized cost basis for 12 months or longer. The unrealized loss relates principally to the changes in market interest rates. As management has the ability and intent to hold these debt securities until maturity, or for the foreseeable future, no decline is deemed to be other than temporary. Although certain equity securities have unrealized losses, no credit issues have been identified that cause management to believe that declines in market value are other that temporary. Unrealized losses on marketable equity securities that are in excess of cost, and that have been sustained for 12 months, are generally recognized by management as being other than temporary and charged to earnings, unless evidence exists to support a realizable value equal to or greater than the Company’s carrying value of the investment.

7

The amortized cost and estimated fair value of debt securities available for sale at March 31, 2006 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.

	March 31, 2006
	Available for Sale Securities
	Amortized Cost		Estimated Fair Value
Due within 1 year	$	18,853,128	$	18,629,266
Due after 1 year through 5 years		2,022,206		1,973,913
Due after 5 years through 10 years		2,000,000		1,927,480
Due after 10 years		14,312,355		14,628,651
Total	$	37,187,689	$	37,159,310

8

3. MORTGAGE-BACKED SECURITIES

Mortgage-backed securities are summarized as follows:

	March 31, 2006
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Held to Maturity
GNMA pass-through certificates	$	151,279	$	4,879	$	—	$	156,158
FHLMC pass-through certificates		3,839		318		—		4,157
FNMA pass-through certificates		5,165,944		122		200,548		4,965,518
	$	5,321,062	$	5,319	$	200,548	$	5,125,833
Available for Sale
FHLMC pass-through certificates	$	11,350,442	$	11,586	$	362,734	$	10,999,294
GNMA pass-through certificates		4,322,332		44,581		23,726		4,343,187
FNMA pass-through certificates		19,693,736		29,478		508,260		19,214,954
Small Business Administration certificates		24,093		—		169		23,924
	$	35,390,603	$	85,645	$	894,889	$	34,581,359
	December 31, 2005
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Held to Maturity
GNMA pass-through certificates	$	153,602	$	5,225	$	—	$	158,827
FHLMC pass-through certificates		4,013		347		—		4,360
FNMA pass-through certificates		5,278,298		2,050		122,835		5,157,513
	$	5,435,913	$	7,622	$	122,835	$	5,320,700
Available for Sale
FHLMC pass-through certificates	$	11,789,191	$	17,544	$	275,214	$	11,531,521
GNMA pass-through certificates		4,602,712		72,341		19,678		4,655,375
FNMA pass-through certificates		21,288,309		55,204		384,493		20,959,020
Small Business Administration certificates		29,934		—		168		29,766
	$	37,710,146	$	145,089	$	679,553	$	37,175,682

9

The following table provides the gross unrealized losses and estimated fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, at March 31, 2006 and December 31, 2005:

	March 31, 2006
	Less Than 12 Months				12 Months or Longer				Total
	Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss
FNMA pass-through certificates-held-to-maturity	$	3,494,448	$	137,202	$	1,316,497	$	63,346	$	4,810,945	$	200,548
SBA pass-through certificates		—		—		23,924		169		23,924		169
FHLMC pass-through certificates		4,822,566		172,842		5,486,476		189,892		10,309,042		362,734
GNMA pass-through certificates		374,693		736		1,103,511		22,990		1,478,204		23,726
FNMA pass-through certificates		2,446,550		67,820		13,867,364		440,440		16,313,914		508,260
	$	11,138,257	$	378,600	$	21,797,772	$	716,837	$	32,936,029	$	1,095,437
	December 31, 2005
	Less Than 12 Months				12 Months or Longer				Total
	Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss
FNMA pass-through certificates-held-to-maturity	$	3,651,184	$	77,532	$	1,339,509	$	45,303	$	4,990,693	$	122,835
SBA pass-through certificates		—		—		29,766		168		29,766		168
FHLMC pass-through certificates		4,763,766		99,930		5,718,543		175,284		10,482,309		275,214
GNMA pass-through certificates		206,343		195		1,111,778		19,483		1,318,121		19,678
FNMA pass-through certificates		8,492,438		169,824		9,938,447		214,669		18,430,885		384,493
	$	17,113,731	$	347,481	$	18,138,043	$	454,907	$	35,251,774	$	802,388

Management believes that the estimated fair value of the securities is dependent upon the movement in market interest rates and that the unrealized losses are temporary. The determination of whether a decline in market value is other than temporary is necessarily a matter of subjective judgment. The timing and amount of any realized losses reported in the Company’s financial statements could vary if conclusions other than those made by management were to determine whether an other than temporary impairment exists.

At March 31, 2006, 20 mortgage-backed securities had aggregate depreciation of 3.18% from the Company’s amortized cost basis for 12 months or longer. The unrealized losses relate principally to the changes in market interest rates. As management has the ability and intent to hold these debt securities until maturity, or for the foreseeable future, no declines are deemed to be other than temporary.

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4. LOANS RECEIVABLE — NET

Loans receivable consist of the following:

	March 31, 2006			December 31, 2005
Real estate - mortgage:
One-to-four family residential	$	296,336,472		$	294,295,873
Commercial and multi-family		30,204,822			28,725,017
Total real estate-mortgage		326,541,294			323,020,890
Real estate - construction:
Residential		12,523,702			12,230,271
Commercial		9,673,085			11,018,586
Total real estate - construction		22,196,787			23,248,857
Commercial		16,915,201			16,582,359
Consumer:
Home equity		50,379,432			48,536,606
Other consumer loans		811,774			1,135,459
Total consumer loans		51,191,206			49,672,065
Total loans		416,844,488			412,524,170
Net deferred loan cost		1,276,139			1,233,606
Allowance for loan losses		(1,821,044	)		(1,752,667	)
Net total loans	$	416,299,583		$	412,005,109
Changes in the allowance for loan losses are as follows:
	Three Months Ended March 31,
	2006			2005
Balance, beginning of period	$	1,752,667		$	1,466,295
Provision for loan loss		75,000			75,000
Charge-offs		(7,106	)		(4,466	)
Recoveries		483			898
Balance, end of period	$	1,821,044		$	1,537,728

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5. DEPOSITS

Deposits consist of the following major classifications:

	March 31, 2006				December 31, 2005
	Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
NOW and other demand deposit accounts	$	207,066,085	1.79	%	$	207,015,598	1.56	%
Passbook savings and club accounts		74,871,934	1.14	%		79,437,866	1.16	%
Subtotal		281,938,019				286,453,464
Certificates with original maturities:
Within one year		58,960,920	3.80	%		46,783,779	3.32	%
One to three years		38,538,582	3.65	%		41,164,569	3.41	%
Three years and beyond		43,249,668	4.82	%		42,512,090	4.81	%
Total certificates		140,749,170				130,460,438
Total	$	422,687,189			$	416,913,902

The aggregate amount of certificate accounts in denominations of $100,000 or more at March 31, 2006 and December 31, 2005 amounted to $46,358,387 and $42,241,555, respectively.

Municipal demand deposit accounts in denominations of $100,000 or more at March 31, 2006 and December 31, 2005 amounted to $64,874,264 and $60,129,245, respectively.

6. EARNINGS PER SHARE

Basic net income per share is based upon the weighted average number of common shares outstanding, while diluted net income per share is based upon the weighted average number of common shares outstanding and common share equivalents that would arise from the exercise of dilutive securities.

The difference between the common shares issued and the common shares outstanding, for the purposes of calculating basic earnings per share, is a result of the unallocated ESOP and restricted stock shares.

The calculated basic and dilutive earnings per share “EPS” are as follows:

	Three Months Ended March 31,
	2006		2005
Numerator	$	702,746	$	742,296
Denominators:
Basic shares outstanding		8,296,606		8,447,868
Effect of dilutive securities		171,300		—
Dilutive shares outstanding		8,467,906		8,447,868
Earnings per share:
Basic	$	0.08	$	0.09
Dilutive	$	0.08	$	0.09

At March 31, 2006 there were 383,500 outstanding options that were anti-dilutive.

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7. STOCK BASED COMPENSATION

In August 2005, the shareholders of the Company approved the adoption of the 2005 Equity Based Incentive Plan (the “Equity Plan”). The Equity Plan provides for the grant of shares of common stock of the Company to certain officers, directors and employees of the Company. In order to fund the grant of shares under the Equity Plan, the Equity Plan Trust (the “Trust”) purchased 171,300 shares of the Company’s common stock in the open market for approximately $2.0 million, an average price of $11.70 per share. The Company made sufficient contributions to the Trust to fund these purchases. No additional purchases are expected to be made by the Trust under this plan. Pursuant to the terms of the plan, all 171,300 shares acquired by the Trust were granted to certain officers and directors of the Company in August 2005. The Equity Plan shares will generally vest at the rate of 20% per year over five years. As of March 31, 2006, no shares have been fully vested or forfeited.

Compensation expense related to the shares granted is recognized ratably over the five-year vesting period in an amount which totals the market price of the Company’s stock at the date of grant. During the three months ended March 31, 2006, approximately 8,565 shares were amortized to expense, based on the proportional vesting of the awarded shares. During the three months ended March 31, 2006, approximately $99,000 was recognized in compensation expense for the plan.

The Equity Plan also authorizes the grant of stock options to officers, employees and directors of the Company to acquire shares of common stock with an exercise price equal to the fair market value of the common stock on the grant date. Options will generally become vested and exercisable at the rate of 20% per year over five years. A total of 429,374 shares of common stock have been reserved for future issuance pursuant to the Equity Plan, of which 396,000 were awarded on August 10, 2005. As of March 31, 2006, 383,500 options were outstanding. During the three months ended March 31, 2006, approximately $77,000 was recognized in compensation expense for the plan.

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards (“SFAS”) 123(R) using a modified prospective application. Accordingly, prior period amounts have not been restated. The adoption required a reclassification to additional paid in capital of $1,821,000 from common stock acquired by employee benefits plans trust. In the first quarter of 2006, the adoption of SFAS 123(R) resulted in incremental stock-based compensation expense of $77,000. The incremental stock-based compensation expense caused income before taxes to decrease by $77,000, net income to decrease by $62,000 and diluted earnings per share to decrease by $0.01 per share. As of March 31, 2006, expenses totaling $626,000 remain to be recognized over the next 4.4 years.

Share-based compensation costs prior to January 1, 2006 were recognized using the intrinsic value method in accordance with Accounting Principles Board Opinion (“APB”) No. 25,“Accounting for Stock Issued to Employees.” For disclosure purposes, pro forma net income and net income per share data were provided in accordance with SFAS No. 123,“Accounting for Stock-Based Compensation,” as if the fair value method had been applied. Under SFAS No. 123, compensation cost related to stock options granted to employees was computed based on the fair value of the stock option at the date of grant using the Black-Scholes option pricing model. Prior to the adoption of SFAS 123(R) had compensation costs been determined based on the fair market value of the stock options, consistent with the provisions of SFAS No. 123, the Company’s net income and earnings per share would have been unchanged for the three months ended March 31, 2005, as the Company had not entered into any share based compensation arrangements at that time.

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The estimated fair value of options granted during 2005 was $2.31 per share. The fair value was estimated on the date of grant using the Black-Scholes Single Option Pricing Model with the following weighted average assumptions used:

	Year Ended December 31, 2005
Dividend yield	0.00	%
Expected volatility	21.54	%
Risk-free interest rate	4.07	%
Expected life of options	5.0

A summary of the status of the Company’s stock options under the Equity Plan as of March 31, 2006 and changes during the three months ended March 31, 2006 are presented below:

	Three Months Ended 31, 2006
	Number of shares		Weighted average exercise price
Outstanding at the beginning of the period	388,500		$	11.60
Granted	—			—
Exercised	—			—
Forfeited	(5,000	)		11.60
Outstanding at the end of the period	383,500			11.60
Exercisable at the end of the period	—		$	—

The following table summarizes all stock options outstanding under the Equity Plan as of March 31, 2006:

		Options Outstanding
Exercise Price		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
					(in years)
$	11.60	383,500	$	11.60	9.3

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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, 2005 under “Item 1. Business – 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 a federally chartered savings and loan holding company established in 1998 to be the holding company for Ocean City Home Bank (the “Bank”). Ocean Shore Holding’s business activity is the ownership of the outstanding capital stock of Ocean City Home Bank. Accordingly, the information set forth in this report, including the consolidated financial statements and related financial data, relates primarily to the Bank.

The Bank is a federally chartered savings bank. We operate as a community-oriented financial institution offering a wide range of financial services to consumers and businesses in our market area. We attract deposits from the general public, small businesses and municipalities and use those funds to originate real estate loans, small commercial loans and consumer loans, which we hold primarily for investment.

On December 21, 2004, the Company completed its initial public offering, issuing a total of 8,762,742 shares of the Company’s common stock, of which 4,761,000 shares, or 54.3%, were issued to OC Financial MHC, 343,499 shares, or 3.9%, were issued to the Bank’s Employee Stock Ownership Plan, 166,492 shares, or 1.9%, were issued to the Ocean City Home Charitable Foundation, and 3,491,751 shares, or 39.8%, were issued to eligible depositors. Net proceeds of the offering were $36.8 million.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2006 AND DECEMBER 31, 2005

Total assets of the Company increased by $13.0 million to $556.8 million at March 31, 2006, from $543.8 million at December 31, 2005. Loans receivable increased $4.3 million, investment and mortgage-backed securitities decreased $9.2 mllion and cash and case equivalents increased by $17.8 million. Asset growth was funded by a $5.8 million increase in deposits and a $6.5 million increase in borrowings.

Investments

Investments decreased $6.5 million to $45.1 million at March 31, 2006 from $51.6 million at December 31, 2005. The decrease was the result of maturities of $2.2 million of agency notes and $4.3 million of

15

municipal securities. Mortgage-backed securities decreased by $2.7 million to $39.9 million from payments received and valuation adjustments totaling $2.7 million.

Loans

Loans receivable increased $4.3 million to $416.3 million at March 31, 2006 from $412.0 million at December 31, 2005. Loan originations totaled $24.7 million for the three months ended March 31, 2006, including real estate mortgage loan originations of $13.5 million, real estate construction originations of $5.5 million, consumer loan originations of $4.2 million and $1.5 million in commercial loan originations. Originations were offset by $20.4 million in normal loan payments and payoffs.

The following table summarizes changes in the loan portfolio in the three months ended March 31, 2006.

	March 31, 2006			December 31, 2005			$ change			% change
	(Dollars in thousands)
Real estate – mortgage:
One-to-four-family residential	$	296,336		$	294,296		$	2,040		0.69	%
Commercial and multi-family		30,205			28,725			1,480		5.15	%
Total real estate - mortgage		326,541			323,021			3,520		1.09	%
Real estate – construction:
Residential		12,524			12,230			293		2.40	%
Commercial		9,673			11,019			(1,346	)	(12.21	)%
Total real estate – construction		22,197			23,249			(1,052	)	(4.53	)%
Commercial		16,915			16,582			333		2.01	%
Consumer
Home equity		50,379			48,537			1,843		3.80	%
Other consumer loans		812			1,135			(324	)	(28.51	)%
Total consumer loans		51,191			49,672			1,519		3.06	%
Total loans		416,844			412,524			4,320		1.05	%
Net deferred loan cost		1,276			1,234			43		3.45	%
Allowance for loan losses		(1,821	)		(1,753	)		(68	)	3.90	%
Net total loans	$	416,299		$	412,005		$	4,294		1.04	%

Non-Performing Assets

Non-performing assets totaled $299,000 at March 31, 2006. Net charge-offs were $7,000 in the first quarter, compared to $28,000 in the same period last year. The allowance for loan losses was 0.44% of total loans at March 31, 2006 and March 31, 2005.

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	Three Months Ended March 31,
	2006			2005
	(In thousands)
Allowance for loan losses:
Allowance at beginning of period	$	1,753		$	1,466
Provision for loan losses		75			75
Recoveries		—			1
Charge-offs		7			4
Net charge-offs		7			4
Allowance at end of period	$	1,821		$	1,538
Allowance for loan losses as a percent of total loans		0.44	%		0.44	%
Allowance for loan losses as a percent of Non-performing loans		608.9	%		N/M
	March 31, 2006			December 31, 2005
	(In thousands)
Non-performing assets:
Nonaccrual loans:
Mortgage loans	$	283		$	91
Consumer loans		16			7
Total nonperforming assets	$	299		$	98
Non-performing loans as a percent of total loans		0.07	%		0.02	%
Non-performing assets as a percent of total assets		0.05	%		0.02	%

Deposits

Deposits increased by $5.8 million, or 1.4%, to $422.7 million at March 31, 2006 from $416.9 million at December 31, 2005. Noninterest bearing deposits increased $700,000, time deposits increased by $10.3 million, savings accounts decreased by $4.6 million and interest bearing checking decreased $600,000.

The following table summarizes changes in deposits in the three months ended March 31, 2006.

	March 31, 2006		December 31, 2005		$ change			% change
	(Dollars in thousands)
NOW and other demand deposit accounts	$	207,066	$	207,016	$	50		0.0	%
Passbook savings and club accounts		74,872		79,438		(4,566	)	(5.7	)%
Subtotal		281,938		286,454		(4,514	)	(1.6	)%
Certificates with original maturities:
Within one year		58,960		46,784		12,177		26.0	%
One to three years		38,539		41,165		(2,626	)	(6.4	)%
Three years and beyond		43,250		42,512		738		1.7	%
Total certificates		140,749		130,461		10,288		7.9	%
Total	$	422,687	$	416,914	$	5,773		1.4	%

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Borrowings

Federal Home Loan Bank advances increased $7.0 million to $34.0 million at March 31, 2006 from December 31, 2005. Other borrowings decreased $500,000 from $18.5 million at December 31, 2005 to $18.0 million at March 31, 2006. The increases in total borrowings were used for general purposes.

Stockholders’ Equity

Stockholders’ equity increased by $700,000 to $61.3 million at March 31, 2006, from $60.6 million at December 31, 2005. The increase was the result of earnings of $700,000 for the period.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005

Net income was $703,000 for the three months ended March 31, 2006 as compared to $742,000 for the three months ended March 31, 2005. The $39,000, or 5.3%, decrease in 2006 from 2005 was due primarily to an increase in net interest income of $176,000 offset by a decrease in other income of $13,000 and an increase in other expenses of $219,000.

	Three Months Ended March 31,
	2006			2005
	(Dollars in thousands, except share and per share data)
Net income	$	703		$	742
Basic and diluted earnings per share	$	0.08		$	0.09
Return on average assets (annualized)		0.51	%		0.56	%
Return on average equity (annualized)		4.59	%		4.92	%

Net Interest Income

The following table summarizes changes in interest income and interest expense for the three-month periods ended March 31, 2006 and 2005.

	Three Months Ended March 31,
	2006		2005		$ change			% change
	(Dollars in thousands)
INTEREST INCOME:
Loans	$	6,026	$	4,752	$	1,274		26.8	%
Investment securities		1,059		1,169		(110	)	(9.4	)%
Other interest-earning assets		66		170		(104	)	(61.4	)%
Total interest income		7,151		6,091		1,060		17.4	%
INTEREST EXPENSE:
Deposits		2,477		1,780		697		39.2	%
Borrowings		879		692		187		27.0	%
Total interest expense		3,356		2,472		884		35.8	%
Net interest income	$	3,795	$	3,619	$	176		4.9	%

Interest income increased by $1.1 million, including a $797,000 increase in mortgage loan income, a $258,000 increase in commercial loan income and a $219,000 increase in consumer loan income. The increase in loan income resulted from an increase in the average balance of loans of $72.0 million, and an increase in the average yield of 18 basis points. Investment income decreased $8,000, income in federal funds sold decreased $105,000 and income in mortgage-backed securities decreased by $102,000.

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Decreases in balances from maturities and repayments of principal of investments, federal funds sold and mortgage-backed securities resulted in the lower income.

Interest expense increased by $884,000, including an increase in municipal deposit expense of $330,000, an increase in time deposit expense of $418,000 and an increase in interest expense on borrowings of $187,000. Municipal deposit expense increased as a result of higher balances and rising interest rates, while time deposit expense increased as a result of deposit growth and an increase in the average rate paid. Borrowing expense increased as a result of a higher average balance of borrowings of $16.4 million offset by a lower average rate paid of 28 basis points.

The interest rate spread and net interest margin of the Company were 2.64% and 2.98% respectively, for the three months ended March 31, 2006, compared to 2.72% and 2.98% for the same period in 2005. The increase in average earning assets of $24.7 million and the increase in average yield of 59 basis points was offset by a rise of average interest bearing liabilities of $23.5 million and an increase in the average cost paid on these liabilities of 66 basis points. New loans and investments at rates higher than the existing portfolio were offset by the continued rise in short-term interest rates increasing the cost of interest expense on deposits and borrowings.

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 balances of 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 included in average balances only. 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.

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Average Balance Tables

	Three Months Ended March 31, 2006							Three Months Ended March 31, 2005
	Average Balance			Interest and Dividends		Yield/Cost		Average Balance			Interest and Dividends		Yield/Cost
Assets:
Interest-earning assets:
Loans	$	414,104		$	6,026	5.82	%	$	342,152		$	4,752	5.56	%
Investment securities		89,604			1,059	4.73	%		114,869			1,169	4.07	%
Other interest-earning assets		5,985			66	4.39	%		27,996			170	2.43	%
Total interest-earning assets		509,693			7,151	5.61	%		485,017			6,091	5.02	%
Noninterest-earning assets		43,109							43,549
Total assets	$	552,802			7,151			$	528,566			6,091
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing demand deposits		173,762			925	2.13	%		169,768			591	1.39	%
Savings accounts		76,324			216	1.13	%		94,900			269	1.13	%
Certificates of deposit		137,148			1,336	3.90	%		115,457			920	3.19	%
Total interest-bearing deposits		387,233			2,477	2.56	%		380,124			1,780	1.87	%
FHLB advances		30,825			311	4.03	%		10,000			77	3.07	%
Securities sold under agreements to repurchase		18,487			233	5.03	%		22,946			280	4.88	%
Subordinated debt		15,464			335	8.67	%		15,464			335	8.67	%
Total Borrowings		64,776			879	5.43	%		48,410			692	5.71	%
Total interest-bearing liabilities		452,009			3,356	2.97	%		428,534			2,472	2.31	%
Noninterest-bearing liabilities		39,515							39,709
Total liabilities		491,524							468,243
Retained earnings		61,278							60,323
Total liabilities and retained earnings	$	552,802						$	528,566
Net interest income				$	3,795						$	3,619
Interest rate spread						2.64	%						2.72	%
Net interest margin						2.98	%						2.98	%
Average interest-earning assets to average interest-bearing liabilities		112.76	%						113.18	%

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Provision for Loan Losses

We review the level of the allowance for loan losses on a monthly 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 collectibility of the loan portfolio. The provision for loan losses was $75,000 in the three months ended March 31, 2006 and 2005. 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 March 31, 2006 and 2005 and the changes between the periods.

	Three Months Ended March 31,
	2006		2005		% Change
	(Dollars in thousands)
OTHER INCOME:
Service charges	$	374	$	351	6.3	%
Cash surrender value of life insurance		65		73	(10.3	)%
Other		116		144	(19.4	)%
Total other income	$	555	$	568	(2.3	)%

Other income decreased $13,000 to $555,000, or 2.3%, for the three-month period ended March 31, 2006 from the same period in 2005. Increases in fees were offset by decreases in income on bank-owned life insurance and investment advisory commissions.

Other Expense

The following table summarizes other expense for the three months ended March 31, 2006 and 2005 and the changes between periods.

	Three Months Ended March 31,
	2006		2005		% Change
	(Dollars in thousands)
OTHER EXPENSE:
Salaries and employee benefits	$	1,894	$	1,740	8.9	%
Occupancy and equipment		665		583	14.0	%
Federal insurance premiums		15		15	0.0	%
Advertising		88		94	(5.9	)%
Professional services		142		159	(10.4	)%
Other operating expense		326		321	1.6	%
Total other expense	$	3,130	$	2,911	7.5	%

Other expenses increased $200,000 to $3.1 million for the three-month period ended March 31, 2006 from the same period in 2005. Salaries and employee benefits increased $154,000 due to regular salary increases and the cost of share based compensation. Occupancy and equipment increased $82,000 due

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primarily to increases associated with a new branch office opened the third quarter of 2005. These increases were offset by decreases of $23,000 in advertising and other professional services.

Income Taxes

Income taxes declined $16,000 to $443,000 for an effective tax rate of 38.7% for the three months ended March 31, 2006, compared to $459,000 for an effective tax rate of 38.2% from the same period in 2005. The decline was a result of the lower earnings before income 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 March 31, 2006, cash and cash equivalents totaled $31.2 million. Securities classified as available-for-sale whose market value exceeds our cost, which provide additional sources of liquidity, totaled $21.3 million at March 31, 2006. In addition, at March 31, 2006, we had the ability to borrow a total of approximately $160.5 million from the Federal Home Loan Bank of New York, which included available overnight lines of credit of $101.8 million. On that date, we had no overnight advances outstanding.

At March 31, 2006, we had $48.6 million in loan commitments outstanding, which included $19.6 million in undisbursed loans, $23.0 million in unused home equity lines of credit and $6.0 million in commercial lines of credit. Certificates of deposit due within one year of March 31, 2006 totaled $78.0 million, or 55.4% 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 March 31, 2006, the Bank exceeded all of its regulatory capital requirements with tangible capital of $55.4 million, or 10.35% of total adjusted assets, which is above the required level of $8.0 million or 1.5%; core capital of $55.4 million, or 10.35% of total adjusted assets which is above the required level of $21.4 million or 4.0%; and risk-based capital of $57.3 million, or 18.9% of risk-weighted assets, which is above the required level of $24.2 million or 8.0%. The Bank is considered a “well-capitalized” institution under the Office of Thrift Supervision’s prompt corrective action regulations.

On March 29, 2006, the Company announced its board of directors approved the repurchase of up to 200,087 shares of the Company's outstanding common stock, which is 5% of outstanding shares not held by OC Financial MHC. The program began on May 1, 2006. Repurchases, which will be conducted through open market purchases or privately negotiated transactions, will be made from time to time depending on market conditions and other factors. Repurchased shares will be held in treasury. As of the close of business on May 8, 2006, the Company had repurchased 1,800 shares under this plan at a cost of $22,000.

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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 Ocean Shore Holding.

	At March 31, 2006 Percentage Change in Estimated Net Interest Income Over
	12 Months		24 Months
200 basis point increase in rates	(1.13	)%	(4.49	)%
100 basis point decrease in rates	1.14	%	(1.70	)%

The 200 and 100 basis point change in rates in the above table is assumed to occur evenly over the following twelve months. Based on the scenario above, net interest income would be adversely affected (within our internal guidelines) in the twelve-month and twenty-four month period if rates rose by 200 basis points. In addition, if rates declined by 100 basis points net interest income would be positively affected in the twelve-month period and adversely affected (within our internal guidelines) in the twenty-four month period. The reason for the increase in the twelve-month period is that more short-term deposits will reprice faster at lower rates than assets.

Net Portfolio Value Analysis

In addition to a net interest income simulation analysis, we use an interest rate sensitivity analysis prepared by the Office of Thrift Supervision to review our level of interest rate risk. This analysis measures interest rate risk by computing changes in net portfolio value 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. Net portfolio value 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 100 to 300 basis point increase or 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, which is based on information that we provide to the Office of Thrift Supervision, presents the change in our net portfolio value at March 31, 2006 that would occur in the event of an immediate change in interest rates based on Office of Thrift Supervision assumptions, with no effect given to any steps that we might take to counteract that change.

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	Net Portfolio Value (Dollars in Thousands)							Net Portfolio Value as % of Portfolio Value of Assets
Basis Point (“bp”) Change in Rates	$ Amount		$ Change			% Change		NPV Ratio		Change
300 bp	$	53,914	$	(27,812	)	(34	)%	9.97	%	(412	) bp
200		63,104		(18,622	)	(23	)%	11.40	%	(269	)
100		72,854		(8,872	)	(11	)%	12.85	%	(124	)
0		81,726		—		—		14.09	%	—
(100)		83,437		1,711		2	%	14.22	%	13
(200)		77,952		(3,774	)	(5	)%	13.27	%	(82	)
(300)		69,151		(12,575	)	(15	)%	11.79	%	(230	)

The Office of Thrift Supervision uses certain assumptions in assessing the interest rate risk of savings associations. 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 months ended March 31, 2006, 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

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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 and principal financial offers, as appropriate to allow timely decisions regarding required disclosure. In addition, based on that evaluation, no change in the Company’s internal control over financial reporting occurred during the quarter ended March 31, 2006 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

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 companies Annual Report on Form 10-K for the year ended December 31, 2005.

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

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	(d) Maximum Number (or Appropriate Dollar Value) of Shares (or units) that May Yet Be Purchased Under the Plans or Programs
Month #1 January 1, 2006 through January 31, 2006	None	None	None	449
Month #2 February 1, 2006 through February 28, 2006	None	None	None	449
Month #3 March 1, 2006 through March 31, 2006	None	None	None	200,536
Total	None	None	None	200,536

(1) On August 10, 2005, the Company’s Board of Directors approved the formation and funding of a trust that will purchase 171,749 shares of the Company’s common stock in the open market with funds contributed by the Company. As of September 23, 2005, 171,300 shares were purchased. The remaining 449 shares have not been awarded and may be purchased from time to time at the discretion of the independent trustee of the trust and the shares will be used to fund restricted stock awards under the Company’s 2005 Equity Incentive Plan.

(2) On March 29, 2006, the Company’s Board of Directors approved the repurchase of 200,087 shares of the Company’s common stock in the open market.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

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

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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: May 11, 2006	/s/ Steven E. Brady
	Steven E. Brady
	President and Chief Executive Officer

Date: May 11, 2006	/s/ Donald F. Morgenweck
	Donald F. Morgenweck
	Chief Financial Officer and Senior Vice President

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