Ocean Shore Holding 10-Q 2007 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, 2007

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  ¨    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 May 1, 2007, the registrant had 8,549,662 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, 2007 and December 31, 2006	1
	Unaudited Condensed Consolidated Statements of Income for the three months ended March 31, 2007 and 2006	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2007 and 2006	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
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, 2007			December 31, 2006
ASSETS
Cash and amounts due from depository institutions	$	12,738,626		$	15,656,934
Federal funds sold		24,900,000			17,700,000
Cash and cash equivalents		37,638,626			33,356,934
Investment securities held to maturity (estimated fair value—$2,463,281 at March 31, 2007; $0 at December 31, 2006)		2,462,400			—
Investment securities available for sale (amortized cost— $23,644,272 at March 31, 2007; $23,683,154 at December 31, 2006)		23,692,443			23,759,615
Mortgage-backed securities held to maturity (estimated fair value—$5,014,249 at March 31, 2007; $5,152,021 at December 31, 2006)		5,116,464			5,266,063
Mortgage-backed securities available for sale (amortized cost—$37,594,342 at March 31, 2007; $39,608,982 at December 31, 2006)		37,226,052			39,105,325
Loans—net of allowance for loan losses of $2,126,707 at March 31, 2007 and $2,049,913 at December 31, 2006		439,016,659			433,342,427
Accrued interest receivable:
Loans		1,740,435			1,761,993
Mortgage-backed securities		185,474			194,588
Investment securities		267,818			308,590
Federal Home Loan Bank stock—at cost		3,480,900			3,480,900
Office properties and equipment—net		10,030,344			10,181,236
Prepaid expenses and other assets		2,686,271			2,585,881
Cash surrender value of life insurance		9,663,241			7,600,447
Deferred tax asset		1,274,131			1,316,049
TOTAL ASSETS	$	574,481,258		$	562,260,048
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Non-interest bearing deposits	$	30,494,690		$	35,223,842
Interest bearing deposits		398,007,835			381,800,409
Advances from Federal Home Loan Bank		54,000,000			54,000,000
Junior subordinated debenture		15,464,000			15,464,000
Securities sold under agreements to repurchase		7,320,000			7,090,000
Advances from borrowers for taxes and insurance		2,629,553			2,356,247
Accrued interest payable		569,918			904,205
Other liabilities		3,259,883			2,870,831
Total liabilities		511,745,879			499,709,534
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; 8,549,662 and 8,593,819 shares outstanding at March 31, 2007 and December 31, 2006, respectively		87,627			87,627
Additional paid-in capital		37,478,375			37,299,692
Retained earnings - partially restricted		31,283,288			30,781,914
Treasury stock – at cost: 213,080 shares at March 31, 2007; 168,923 shares at December 31, 2006		(2,784,963	)		(2,190,882	)
Common stock acquired by employee benefits plans		(2,690,740	)		(2,747,990	)
Deferred compensation plans trust		(439,940	)		(416,420	)
Accumulated other comprehensive loss		(198,268	)		(263,427	)
Total stockholders’ equity		62,735,379			62,550,514
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	574,481,258		$	562,260,048

See notes to unaudited condensed consolidated financial statements.

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OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended March 31,
	2007		2006
INTEREST AND DIVIDEND INCOME:
Taxable interest and fees on loans	$	6,505,496	$	6,026,209
Taxable interest on mortgage-backed securities		531,892		470,531
Non-taxable interest on municipal securities		36,070		83,359
Taxable interest and dividends on investment securities		655,751		571,256
Total interest and dividend income		7,729,209		7,151,355
INTEREST EXPENSE:
Deposits		3,092,428		2,477,090
Advances from Federal Home Loan Bank, securities sold under agreements to repurchase and other borrowed money		1,001,552		878,590
Total interest expense		4,093,980		3,355,680
NET INTEREST INCOME		3,635,229		3,795,675
PROVISION FOR LOAN LOSSES		75,000		75,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		3,560,229		3,720,675
OTHER INCOME:
Service charges		375,479		373,551
Cash surrender value of life insurance		77,900		65,500
Other		144,798		115,915
Total other income		598,177		554,966
OTHER EXPENSE:
Salaries and employee benefits		2,004,450		1,893,887
Occupancy and equipment		710,998		665,033
Federal insurance premiums		12,901		14,510
Advertising		113,571		88,088
Professional services		152,405		142,244
Charitable contributions		30,000		30,000
Other operating expenses		307,618		296,475
Total other expenses		3,331,943		3,130,237
INCOME BEFORE INCOME TAXES		826,463		1,145,404
INCOME TAX EXPENSE		325,089		442,658
NET INCOME	$	501,374	$	702,746
Earnings per share basic:	$	0.06	$	0.08
Earnings per share diluted:	$	0.06	$	0.08

See notes to unaudited condensed consolidated financial statements.

2

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock		Additional Paid-In Capital			Retained Earnings - Partially Restricted		Treasury Stock			Common Stock Acquired by Employee Benefit Plans			Deferred Compensation Plans Trust			Accumulated Other Comprehensive Income (Loss)			Total Equity
FOR THE THREE MONTHS ENDED MARCH 31, 2007
BALANCE—January 1, 2007	$	87,627	$	37,299,692		$	30,781,914	$	(2,190,882	)	$	(2,747,990	)	$	(416,420	)	$	(263,427	)	$	62,550,514
Comprehensive income:
Net income		—		—			501,374		—			—			—			—			501,374
Other comprehensive loss—
Unrealized holding gain – “Available for sale securities (net of tax $41,918)		—		—			—		—			—			—			65,159			65,159
Comprehensive income:																					566,533
Purchase of treasury stock		—		—			—		( 594,081	)		—			—			—			(594,081	)
Unallocated ESOP shares committed to employees		—		—			—		—			57,250			—			—			57,250
Excess of fair value above cost of ESOP shares committed to be released		—		19,408			—		—			—			—			—			19,408
Restricted stock shares		—		99,356			—		—			—			—			—			99,356
Stock options		—		59,919			—		—			—			—			—			59,919
Purchase of shares by deferred compensation plans trust		—		—			—		—			—			(23,520	)		—			(23,520	)
BALANCE—March 31, 2007	$	87,627	$	37,478,375		$	31,283,288	$	(2,784,963	)	$	(2,690,740	)	$	(439,940	)	$	(198,268	)	$	62,735,379
FOR THE THREE MONTHS ENDED MARCH 31, 2006
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
Other comprehensive loss—
Unrealized holding loss arising during the period (net of tax (109,522))		—		—			—		—			—			—			(182,738	)		(182,738	)
Comprehensive income:																					520,008
Reclassification upon adoption of SFAS 123 (R)		—		(1,821,490	)		—		—			1,821,490			—			—			—
Unallocated ESOP shares committed to employees		—		—			—		—			57,250			—			—			57,520
Excess of fair value above cost of ESOP shares committed to be released		—		9,389			—		—			—			—			—			9,389
Restricted stock shares		—		99,356			—		—			—			—			—			99,356
Stock options		—		76,519			—		—			—			—			—			76,519
Purchase of shares by deferred compensation plans trust		—		—			—		—			—			(10,607	)		—			(10,607	)
BALANCE—March 31, 2006	$	87,627	$	36,756,122		$	28,336,091	$	—		$	(2,919,740	)	$	(384,214	)	$	(555,689	)	$	61,320,197

See notes to unaudited condensed consolidated financial statements.

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OCEAN SHORE HOLDING CO. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
	2007			2006
OPERATING ACTIVITIES:
Net income	$	501,374		$	702,746
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		298,550			285,449
Provision for loan losses		75,000			75,000
Deferred income taxes		—			20,339
Stock based compensation expense		235,933			242,504
Loss on disposal of office properties and equipment		284			229
Cash surrender value of life insurance		(77,900	)		(65,500	)
Changes in assets and liabilities which provided (used) cash:
Accrued interest receivable		71,445			26,745
Prepaid expenses and other assets		(85,284	)		299,138
Accrued interest payable		(334,287	)		(306,132	)
Other liabilities		389,052			(27,192	)
Net cash provided by operating activities		1,074,167			1,253,326
INVESTING ACTIVITIES:
Principal collected on:
Mortgage-backed securities available for sale		1,996,284			2,294,681
Mortgage-backed securities held to maturity		148,973			114,621
Loans originated, net of repayments		(5,797,207	)		(4,435,796	)
Purchases of:
Loan receivable		(37,956	)		—
Investment securities held to maturity		(2,437,564	)		—
Federal Home Loan Bank stock		—			(1,138,500	)
Office properties and equipment		(66,757	)		(109,280	)
Life insurance contracts		(2,000,000	)		—
Proceeds from sales of Federal Home Loan Bank stock		—			823,500
Proceeds from maturities of:
Investment securities held to maturity		—			4,292,600
Investment securities available for sale		37,773			2,168,155
Net cash (used in) provided by investing activities		(8,156,454	)		4,009,981
FINANCING ACTIVITIES:
Increase in deposits		11,478,274			5,773,287
Increase (decrease) in securities sold under agreements to repurchase		230,000			(450,000	)
Advances from the Federal Home Loan Bank		—			7,000,000
Purchase of shares by deferred compensation plans trust		(23,520	)		(10,607	)
Purchase of treasury stock		(594,081	)		—
Increase in advances from borrowers for taxes and insurance		273,306			225,669
Net cash provided by financing activities		11,363,979			12,538,349
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		4,281,692			17,801,656
CASH AND CASH EQUIVALENTS—Beginning of period		33,356,934			13,400,085
CASH AND CASH EQUIVALENTS—End of period	$	37,638,626		$	31,201,741
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION—Cash paid during the period for:
Interest	$	4,428,267		$	3,661,812
Income Taxes	$	50,000		$	—

See notes to unaudited condensed consolidated financial statements.

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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, 2006. The results for the three months ended March 31, 2007 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2007 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 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 has concluded that the adoption of SFAS No. 155 does not have a material effect on its financial position or results of operations.

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 has concluded that the adoption of SFAS No. 156 does not have a material effect on its financial position or results of operations.

In July 2006, the FASB issued FASB Interpretation No. 48,“Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48 did not have an effect on the Company’s financial position or results of

5

operations. The company has no unrecognized tax benefits. At March 31, 2007, the tax years ended December 31, 2003, 2004, 2005 and 2006, along with activity for the period January 1, 2007 through March 31, 2007 remain subject to examination by all tax jurisdictions. As of March 31, 2007, no audits were in process by a tax jurisdiction that, if completed during the next twelve months, would be expected to result in a material change to the Company’s unrecognized tax benefits.

In September 2006, the FASB issued Statement No. 157,“Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 (i) defines fair value, (ii) establishes a framework for measuring fair value in GAAP and (iii) expands disclosure requirements about fair value measurements. SFAS No. 157 is effective for all financial statements issued for fiscal years beginning after November 15, 2007. The Company currently is considering the impact from the adoption of SFAS No. 157.

In September 2006, the FASB issued SFAS No. 158,“Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106 and 132(R).” This standard requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur as a component of comprehensive income. The standard also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position. The requirement to recognize the funded status of a defined benefit postretirement plan is effective as of the end of the fiscal year ending after December 15, 2006. The Company has concluded that the impact of this pronouncement and guidance does not have an effect on the Company’s financial position or results of operations. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for the fiscal years ending after December 15, 2008. The Company is continuing to evaluate the impact of this pronouncement and does not expect that the guidance will have an effect on the Company’s financial position or results of operations.

The EITF reached a consensus on EITF Issue No. 06-4,“The Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements” (“EITF 06-4”). EITF 06-4 addresses whether the postretirement benefit associated with an endorsement split-dollar life insurance arrangement is effectively settled in accordance with Statement of Financial Accounting Standards No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions” and APB Opinion No. 12 “Omnibus Opinion—1967” upon entering into such an arrangement. EITF 06-4 is effective for fiscal years beginning after December 15, 2007. The Company is considering the impact, if any, that may result from the adoption of EITF 06-4.

The EITF reached a consensus on EITF Issue No. 06-5,“Accounting for Purchases of Life Insurance—Determining the Amount that Could be Realized in Accordance with FASB Technical Bulletin No. 85-4” (“EITF 06-5”). EITF 06-5 addresses (i) whether a policyholder should consider any additional amounts included in the contractual terms of the insurance policy other than the cash surrender value in determining the amount that could be realized under the insurance contract in accordance with Technical Bulletin 85-4, (ii) whether a policyholder should consider the contractual ability to surrender all of the individual-life policies (or certificates in a group policy) at the same time in determining the amount that could be realized under the insurance contract in accordance with Technical Bulletin 85-4 and (iii) whether the cash surrender value component of the amount that could be realized under the insurance contract in accordance with Technical Bulletin 85-4 “Accounting for Purchases of Life Insurance” should be discounted in accordance with APB Opinion No. 21 “Interest on Receivables and Payables”, when contractual limitations on the ability to surrender a policy exist. EITF 06-5 is effective for fiscal years beginning after December 15, 2006. The Company has concluded that the adoption of EITF 06-5 effective January 1, 2007, does not have a material impact to our consolidated financial statements.

In February 2007, the FASB issued Statement No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities”, (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure financial instruments and certain other items at fair value. Items eligible for fair value measurement option

6

established by this statement are (i) recognized financial assets and financial liabilities (with some exceptions), (ii) firm commitments that would otherwise not be recognized at inception and that involve only financial instruments, (iii) nonfinancial insurance contracts and warranties that the insurer can settle by paying a third party to provide those goods or services and (iv) host financial instruments resulting from separation of an embedded nonfinancial derivative instrument from a nonfinancial hybrid instrument. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company is considering the impact, if any, that may result from the adoption of SFAS No. 159.

2. INVESTMENT SECURITIES

Investment securities are summarized as follows:

	March 31, 2007
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Held to Maturity
Debt securities:
U.S. Government	$	2,462,400	$	881	$	—	$	2,463,281
Available for Sale
Debt securities:
U.S. Government and Federal Agencies	$	1,321,092	$	—	$	32,327	$	1,288,765
Municipal securities		2,955,399		49,117		—		3,004,516
Corporate		11,355,609		228,374		137,206		11,446,777
Mutual Funds		8,012,172		171,142		230,929		7,952,385
Totals	$	23,644,272	$	448,633	$	400,462	$	23,692,443
	December 31, 2006
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Available for Sale
Debt securities:
U.S. Government and Federal Agencies	$	1,358,777	$	—	$	39,981	$	1,318,796
Municipal securities		2,954,971		53,948		—		3,008,919
Corporate		11,357,234		231,557		128,283		11,460,508
Mutual Funds		8,012,172		192,094		232,874		7,971,392
Totals	$	23,683,154	$	477,599	$	401,138	$	23,759,615

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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, 2007 and December 31, 2006:

	March 31, 2007
	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	$	—	$	—	$	1,288,765	$	32,327	$	1,288,765	$	32,327
Corporate		2,097,652		39,145		2,412,498		98,061		4,510,150		137,206
Mutual Funds		—		—		7,778,647		230,929		7,778,647		230,929
Totals	$	2,097,652	$	39,145	$	11,479,910	$	361,317	$	13,577,562	$	400,462
	December 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	$	—	$	—	$	1,318,796	$	39,981	$	1,318,796	$	39,981
Corporate		2,110,976		27,517		2,409,891		100,766		4,520,867		128,283
Mutual Funds		—		—		7,776,702		232,874		7,776,702		232,874
Totals	$	2,110,976	$	27,517	$	11,505,389	$	373,621	$	13,616,365	$	401,138

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, 2007, three debt securities had aggregate depreciation of 3.40% from the Company’s amortized cost basis for 12 months or longer. The unrealized loss on debt securities relates principally to the changes in market interest rates. U.S. Government and federal agencies securities represent U.S. treasury and federal agency issues and are currently rated AAA by at least one bond credit rating agency. The corporate securities have no identified credit issues and have a current average credit rating of A. As management has the ability and intent to hold these debt securities until a forecasted recovery, which may be maturity, no decline is deemed to be other than temporary.

At March 31, 2007, two mutual fund holdings had aggregate depreciation of 2.88% from the Company’s amortized cost basis for 12 months or longer. Although the mutual fund holdings have unrealized losses, no credit issues have been identified that cause management to believe that declines in market value are other than temporary as the securities in the portfolios of the mutual fund holdings are AAA rated government or agencies bonds. Although the fair value of the mutual fund holdings will fluctuate as the market interest rates move, management believes that the fair value will recover as the securities held in the mutual fund portfolios mature and are reinvested at market rate yielding investments. Management has the ability and intent to hold these mutual funds until such time that the values recover.

8

The amortized cost and estimated fair value of debt securities available for sale at March 31, 2007 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, 2007
	Held to Maturity				Available for Sale Securities
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within 1 year	$	2,462,400	$	2,463,281	$	—	$	—
Due after 1 year through 5 years		—		—		1,321,092		1,288,765
Due after 5 years through 10 years		—		—		1,000,000		921,250
Due after 10 years		—		—		13,311,008		13,530,043
Totals	$	2,462,400	$	2,463,281	$	15,632,100	$	15,740,058

Mutual funds had an amortized cost of $8,012,072 and a fair value of $7,952,385 as of March 31, 2007.

9

3. MORTGAGE-BACKED SECURITIES

Mortgage-backed securities are summarized as follows:

	March 31, 2007
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Held to Maturity
GNMA pass-through certificates	$	114,600	$	3,059	$	—	$	117,659
FHLMC pass-through certificates		522,186		6,121		—		528,307
FNMA pass-through certificates		4,479,678		1,535		112,930		4,368,283
Totals	$	5,116,464	$	10,715	$	112,930	$	5,014,249
Available for Sale
FHLMC pass-through certificates	$	9,207,439	$	10,291	$	172,004	$	9,045,726
GNMA pass-through certificates		3,053,473		49,381		9,235		3,093,619
FNMA pass-through certificates		25,333,430		40,610		287,333		25,086,707
Totals	$	37,594,342	$	100,282	$	468,572	$	37,226,052
	December 31, 2006
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Held to Maturity
GNMA pass-through certificates	$	130,408	$	3,225	$	—	$	133,663
FHLMC pass-through certificates		523,747		5,799		—		529,546
FNMA pass-through certificates		4,611,908		1,090		124,186		4,488,812
Totals	$	5,266,063	$	10,144	$	124,186	$	5,152,021
Available for Sale
FHLMC pass-through certificates	$	9,577,848	$	9,060	$	192,407	$	9,394,501
GNMA pass-through certificates		3,643,514		28,973		22,071		3,650,416
FNMA pass-through certificates		26,381,481		32,278		359,437		26,054,322
Small Business Administration certificates		6,139		—		53		6,086
Totals	$	39,608,982	$	70,311	$	573,968	$	39,105,325

10

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, 2007 and December 31, 2006:

	March 31, 2007
	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	$	—	$	—	$	4,242,648	$	112,930	$	4,242,648	$	112,930
FHLMC pass-through certificates		1,304,337		1,864		6,985,181		170,140		8,289,518		172,004
GNMA pass-through certificates		—		—		692,606		9,235		692,606		9,235
FNMA pass-through certificates		11,098,530		61,088		11,312,309		226,245		22,410,839		287,333
Totals	$	12,402,867	$	62,952	$	23,232,744	$	518,550	$	35,635,611	$	581,502
	December 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	$	—	$	—	$	4,358,260	$	124,186	$	4,358,260	$	124,186
SBA pass-through certificates		—		—		6,086		53		6,086		53
FHLMC pass-through certificates		—		—		8,600,208		192,407		8,600,208		192,407
GNMA pass-through certificates		—		—		1,090,169		22,071		1,090,169		22,071
FNMA pass-through certificates		11,102,703		66,259		12,792,146		293,178		23,894,849		359,437
Totals	$	11,102,703	$	66,259	$	26,846,869	$	631,895	$	37,949,572	$	698,154

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. At March 31, 2007, twenty-three mortgage-backed securities had aggregate depreciation of 2.18% from the Company’s amortized cost basis for 12 months or longer. The unrealized losses relate principally to the changes in market interest rates. These securities represent asset backed federal agency issues and are currently rated AAA by at least one bond credit rating agency. As management has the ability and intent to hold these debt securities until a forecasted recovery, which may be maturity, no declines are deemed to be other than temporary.

11

4. LOANS RECEIVABLE – NET

Loans receivable consist of the following:

	March 31, 2007			December 31, 2006
Real estate - mortgage:
One-to-four family residential	$	326,136,677		$	316,567,389
Commercial and multi-family		32,403,774			32,661,642
Total real estate-mortgage		358,540,451			349,229,031
Real estate - construction:
Residential		7,226,034			6,983,084
Commercial		3,919,659			6,803,828
Total real estate - construction		11,145,693			13,786,912
Commercial		17,176,406			16,824,623
Consumer:
Home equity		51,900,582			53,178,740
Other consumer loans		862,699			938,184
Total consumer loans		52,763,281			54,116,924
Total loans		439,625,831			433,957,490
Net deferred loan cost		1,517,535			1,434,850
Allowance for loan losses		(2,126,707	)		(2,049,913	)
Net total loans	$	439,016,659		$	433,342,427

Changes in the allowance for loan losses are as follows:

	Three Months Ended March 31,
	2007		2006
Balance, beginning of period	$	2,049,913	$	1,752,667
Provision for loan loss		75,000		75,000
Charge-offs		—		(7,106	)
Recoveries		1,794		483
Balance, end of period	$	2,126,707	$	1,821,044

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5. DEPOSITS

Deposits consist of the following major classifications:

	March 31, 2007				December 31, 2006
	Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
NOW and other demand deposit accounts	$	214,906,443	2.44	%	$	205,337,742	1.99	%
Passbook savings and club accounts		62,304,459	1.12	%		61,616,971	1.13	%
Subtotal		277,210,902				266,954,713
Certificates with original maturities:
Within one year		72,622,971	4.72	%		74,507,694	4.58	%
One to three years		40,272,960	4.43	%		35,873,119	4.15	%
Three years and beyond		38,395,692	4.81	%		39,688,725	4.87	%
Total certificates		151,291,623				150,069,538
Total	$	428,502,525			$	417,024,251

The aggregate amount of certificate accounts in denominations of $100,000 or more at March 31, 2007 and December 31, 2006 amounted to $48,903,754 and $49,573,074, respectively.

Municipal demand deposit accounts in denominations of $100,000 or more at March 31, 2007 and December 31, 2006 amounted to $79,270,216 and $67,786,672, 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 (“EPS”), is a result of the unallocated ESOP shares and treasury stock purchases.

The calculated basic and dilutive EPS are as follows:

	Three Months Ended March 31,
	2007		2006
Numerator	$	501,374	$	702,746
Denominators:
Basic shares outstanding		8,168,162		8,296,606
Effect of dilutive securities		119,938		171,300
Dilutive shares outstanding		8,288,100		8,467,906
Earnings per share:
Basic	$	0.06	$	0.08
Dilutive	$	0.06	$	0.08

At March 31, 2007 there were 377,706 outstanding options that were anti-dilutive.

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7. STOCK BASED COMPENSATION

The Company’s 2005 Equity Based Incentive 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, 2007, 34,260 shares were fully vested and no shares were 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, 2007, 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 and 24,000 were awarded on November 21, 2006. As of March 31, 2007, 395,000 options were outstanding. During the three months ended March 31, 2007, approximately $60,000 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. As of March 31, 2007, expenses totaling $423,000 remain to be recognized over the next 4.6 years.

The estimated fair value of options granted during 2006 was $2.52 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, 2006
Dividend yield	0.00	%
Expected volatility	19.79	%
Risk-free interest rate	4.50	%
Expected life of options	5.0

The dividend yield is zero because the Company has not declared any dividends and does not expect to declare any over the life of the options. The risk-free interest rate used was based on the rates of treasury securities with maturities equal to the expected lives of the options.

14

A summary of the status of the Company’s stock options under the Equity Plan as of March 31, 2007 and changes during the three months ended March 31, 2007 are presented below:

	Three Months Ended March 31, 2007
	Number of shares		Weighted average exercise price
Outstanding at the beginning of the period	397,500		$	11.68
Granted	—			—
Exercised	—			—
Forfeited	(2,500	)	$	11.60
Outstanding at the end of the period	395,000		$	11.69
Exercisable at the end of the period	74,200		$	11.60

The following table summarizes all stock options outstanding under the Equity Plan as of March 31, 2007:

		Options Outstanding
Exercise Price		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
$	11.60	371,000	$	11.60	8.3 (in years)
$	13.00	24,000	$	13.00	9.6 (in years)

8. STOCK REPURCHASE PLAN

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. As of March 31, 2007, 200,087 shares had been purchased.

9. INCOME TAXES

Income taxes decreased $118,000 to $325,000 for an effective tax rate of 39.3% for the three months ended March 31, 2007 compared to $443,000 for an effective tax rate of 38.7% from the same period in 2006.

15

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, 2006 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.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2007 AND DECEMBER 31, 2006

Total assets of the Company increased by $12.2 million to $574.5 million at March 31, 2007, from $562.3 million at December 31, 2006. Loans receivable, net, increased $5.7 million, investment and mortgage-backed securities increased $400,000 and cash and cash equivalents increased by $4.3 million. Asset growth was funded by an increase in deposits of $11.5 million.

Investments

Investments increased $2.4 million to $26.2 million at March 31, 2007 from $23.8 million at December 31, 2006. The increase was the result of a purchase of short-term US Treasuries. Mortgage-backed securities decreased by $2.1 million to $42.3 million from $44.4 million at December 31, 2006 due to normal monthly payments received.

Loans

Loans receivable, net, increased $5.7 million to $439.0 million at March 31, 2007 from $433.3 million at December 31, 2006. Loan originations totaled $25.4 million for the three months ended March 31, 2007 resulting in a slight increase over the $24.7 million originated in three months ended March 31, 2006. Real estate mortgage loan originations totaled $16.7 million, real estate construction originations totaled

16

$2.6 million, consumer loan originations totaled $4.6 million and commercial loan originations totaled $1.6 million in for the quarter-ended March 2007. Origination activity was offset by $19.7 million of normal loan payments and payoffs.

The following table summarizes changes in the loan portfolio in the three months ended March 31, 2007.

	March 31, 2007			December 31, 2006			$ change			% change
	(Dollars in thousands)
Real estate – mortgage:
One-to-four-family residential	$	326,137		$	316,567		$	9,570		3.0	%
Commercial and multi-family		32,404			32,662			(258	)	(0.8	)
Total real estate – mortgage		358,541			349,229			9,311		2.7
Real estate – construction:
Residential		7,226			6,983			243		3.5
Commercial		3,920			6,804			(2,884	)	(42.4	)
Total real estate – construction		11,146			13,787			(2,641	)	(19.2	)
Commercial		17,176			16,825			351		2.1
Consumer
Home equity		51,901			53,179			(1,278	)	(2.4	)
Other consumer loans		863			938			(75	)	(8.1	)
Total consumer loans		52,764			54,117			(1,353	)	(2.5	)
Total loans		439,627			433,957			5,668		1.3
Net deferred loan cost		1,517			1,435			82		5.8
Allowance for loan losses		(2,127	)		(2,050	)		(77	)	(3.8	)
Net total loans	$	439,017		$	433,342		$	5,675		1.3	%

Non-Performing Assets

Non-performing assets totaled $373,000 at March 31, 2007. There was no charge-offs in the first quarter, compared to $7,000 in the same period last year. The allowance for loan losses was 0.48% of total loans at March 31, 2007 versus 0.44% and March 31, 2006.

	Three Months Ended March 31,
	2007			2006
	(In thousands)
Allowance for loan losses:
Allowance at beginning of period	$	2,050		$	1,753
Provision for loan losses		75			75
Recoveries		2			—
Charge-offs		—			7
Net charge-offs		(2	)		7
Allowance at end of period	$	2,127		$	1,821
Allowance for loan losses as a percent of total Loans		0.48	%		0.44	%
Allowance for loan losses as a percent of Non-performing loans		570.5	%		608.9	%

17

	March 31, 2007			December 31, 2006
	(In thousands)
Nonaccrual loans:
Real estate mortgage loans	$	137		$	415
Commercial		—			—
Consumer loans		236			116
Total of non-accrual and 90 days or more past due loans	$	373		$	531
Total non-performing loans to total loans		0.08	%		0.12	%
Total non-performing loans to total assets		0.06	%		0.09	%
Total non-performing assets and troubled debt restructurings to total assets		0.06	%		0.09	%

Deposits

Deposits increased by $11.5 million, or 2.8%, to $428.5 million at March 31, 2007 from $417.0 million at December 31, 2006. Interest bearing demand deposits increased $14.3 million, time deposits increased by $1.2 million, savings accounts increased by $700,000 and interest bearing checking decreased $4.7 million. The company continued its focus on attracting core deposits. Customers are trending toward higher interest rate products.

The following table summarizes changes in deposits in the three months ended March 31, 2007.

	March 31, 2007		December 31, 2006		$ change			% change
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	30,495	$	35,224	$	(4,729	)	(13.4	)%
Interest-bearing demand deposits		184,411		170,114		14,297		8.4
Savings accounts		62,305		61,617		688		1.1
Certificates of deposit		151,292		150,070		1,222		0.8
Total	$	428,503	$	417,025	$	11,478		2.8	%

Borrowings

Federal Home Loan Bank advances remained unchanged at $54.0 million at March 31, 2007 from December 31, 2006. Other borrowings increased $230,000 to $22.8 million at March 31, 2007 from $22.6 million at December 31, 2006. The increase in total borrowings was used for general purposes.

Stockholders’ Equity

Stockholders’ equity increased by $185,000 to $62.7 million at March 31, 2007, from $62.6 million at December 31, 2006. The increase was the result of earnings of $500,000 for the period offset by treasury stock purchases and changes in accumulative other comprehensive income.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

Net income was $501,000 for the three months ended March 31, 2007 as compared to $703,000 for the three months ended March 31, 2006. The $202,000, or 28.7%, decrease in 2007 from 2006 was due primarily to a decrease in net interest income of $160,000 and an increase in other expenses of $202,000 offset by an increase in other income of $43,000 and a decrease in income tax expense of $118,000.

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	Three Months Ended March 31,
	2007			2006
	(Dollars in thousands, except share and per share data)
Net income	$	501		$	703
Basic and diluted earnings per share	$	0.06		$	0.08
Return on average assets (annualized)		0.36	%		0.51	%
Return on average equity (annualized)		3.18	%		4.59	%

Net Interest Income

The following table summarizes changes in interest income and interest expense for the three-month periods ended March 31, 2007 and 2006.

	Three Months Ended March 31,
	2007		2006		$ change		% change
	(Dollars in thousands)
INTEREST INCOME:
Loans	$	6,505	$	6,026	479		7.9	%
Investment securities		1,006		1,059	(53	)	(5.0	)
Other interest-earning assets		218		66	152		232.0
Total interest income		7,729		7,151	578		8.1
INTEREST EXPENSE:
Deposits		3,092		2,477	615		24.8
Borrowings		1,002		879	123		14.0
Total interest expense		4,094		3,356	738		22.0
Net interest income	$	3,635	$	3,795	(160	)	(4.2	)

Interest income increased by $600,000 for the quarter ended March 31, 2007 compared to March 31, 2006, including a $400,000 increase in mortgage loan income, a $100,000 increase consumer loan income and a $150,000 increase in income on other interest-earning assets partially offset by a $50,000 decrease in investment securities income. The increase in loan income resulted from an increase in the average balance of loans of $21.8 million and an increase in the average yield of 15 basis points. Investment income decreased $53,000 as the average balance decrease of $20.3 million was offset by an increase in the average yield of 107 basis points. Income in federal funds sold increased $152,000 as the average balance increased $10.7 million and the average yield increased by 83 basis points.

Interest expense increased by $738,000, including an increase in municipal deposit expense of $203,000, an increase in time deposit expense of $365,000 and an increase in interest expense on borrowings of $123,000. Municipal deposit expense increased as a result of higher balances and higher 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 $12.1 million offset by a lower average rate paid of 22 basis points.

The interest rate spread and net interest margin of the Company were 2.40% and 2.79% respectively, for the three months ended March 31, 2007, compared to 2.64% and 2.98% for the same period in 2006. The increase in average earning assets of $12.2 million and the increase in average yield of 31 basis points was offset by a rise of average interest bearing liabilities of $12.1 million and an increase in the average cost paid on these liabilities of 56 basis points. New loans and investments at rates higher than the existing portfolio were offset by a rise in short-term interest rates paid in the first quarter of 2007 compared to 2006, increasing the cost of interest expense on deposits and borrowings.

19

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.

Average Balance Tables

	Three Months Ended March 31, 2007							Three Months Ended March 31, 2006
	Average Balance			Interest and Dividends		Yield/Cost		Average Balance			Interest and Dividends		Yield/Cost
Assets:
Interest-earning assets:
Loans	$	435,904		$	6,505	5.97	%	$	414,104		$	6,026	5.82	%
Investment securities		69,303			1,006	5,80	%		89,604			1,059	4.73	%
Other interest-earning assets		16,690			218	5.22	%		5,985			66	4.39	%
Total interest-earning assets		521,897			7,729	5.92	%		509,693			7,151	5.61	%
Noninterest-earning assets		42,016							43,109
Total assets	$	563,913						$	552,802
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing demand deposits		177,110			1,222	2.76	%		173,762			925	2.13	%
Savings accounts		60,727			168	1.11	%		76,324			216	1.13	%
Certificates of deposit		149,403			1,702	4.56	%		137,148			1,336	3.90	%
Total interest-bearing deposits		387,240			3,092	3.19	%		387,233			2,477	2.56	%
FHLB advances		54,000			567	4.20	%		30,825			311	4.03	%
Securities sold under agreements to repurchase		7,403			100	5.38	%		18,487			233	5.03	%
Subordinated debt		15,464			335	8.67	%		15,464			335	8.67	%
Total Borrowings		76,867			1,002	5.21	%		64,776			879	5.43	%
Total interest-bearing liabilities		464,107			4,094	3.53	%		452,009			3,356	2.97	%
Noninterest-bearing liabilities		36,731							39,515
Total liabilities		500,838							491,524
Retained earnings		63,075							61,278
Total liabilities and retained earnings	$	563,913						$	552,802
Net interest income				$	3,635						$	3,795
Interest rate spread						2.40	%						2.64	%
Net interest margin						2.79	%						2.98	%
Average interest-earning assets to average interest-bearing liabilities		112.45	%						112.76	%

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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, 2007 and $75,000 in the three months ended March 31, 2006. 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, growth in the loan portfolio and the current economic environment.

Other Income

The following table summarizes other income for the three months ended March 31, 2007 and 2006 and the changes between the periods.

	Three Months Ended March 31,
	2007		2006		% Change
	(Dollars in thousands)
OTHER INCOME:
Service charges	$	375	$	374	0.5	%
Cash surrender value of life insurance		78		65	18.9
Other		145		116	24.9
Total other income	$	598	$	555	7.8

Other income increased $43,000 to $598,000, or 7.8%, for the three-month period ended March 31, 2007 from the same period in 2006. Increases in income resulted from additional income earned on the cash surrender value of bank-owned life insurance and additional fees and commissions.

Other Expense

The following table summarizes other expense for the three months ended March 31, 2007 and 2006 and the changes between periods.

	Three Months Ended March 31,
	2007		2006		% Change
	(Dollars in thousands)
OTHER EXPENSE:
Salaries and employee benefits	$	2,004	$	1,894	5.8	%
Occupancy and equipment		711		665	6.9
Federal insurance premiums		13		15	(11.1	)
Advertising		114		88	28.9
Professional services		152		142	7.1
Other operating expense		338		326	3.4
Total other expense	$	3,332	$	3,130	6.4

Other expenses increased $200,000, or 6.4%, to $3.3 million for the three-month period ended March 31, 2007 from the same period in 2006. Increase costs associated with the opening of a new branch office in November of 2006 accounted for $104,000, or 3.3% of the 6.4% increase in other expenses. In addition,

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salaries and employee benefits increased $40,000 due to regular salary increases, occupancy and equipment, advertising, other professional services and all other operating expenses accounted for the remaining $56,000 increase.

Income Taxes

Income taxes declined $118,000 to $325,000 for an effective tax rate of 39.3% for the three months ended March 31, 2007, compared to $443,000 for an effective tax rate of 38.7% from the same period in 2006. The decline was a result of lower taxable income.

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, 2007, cash and cash equivalents totaled $37.6 million. Securities classified as available-for-sale whose market value exceeds our cost, which provide additional sources of liquidity, totaled $15.9 million at March 31, 2007. In addition, at March 31, 2007, we had the ability to borrow a total of approximately $149.2 million from the Federal Home Loan Bank of New York, which included available overnight lines of credit of $53.6 million. On that date, we had no overnight advances outstanding.

At March 31, 2007, we had $50.5 million in loan commitments outstanding, which included $17.6 million in undisbursed loans, $24.1 million in unused home equity lines of credit and $8.8 million in commercial lines of credit. Certificates of deposit due within one year of March 31, 2007 totaled $100.6 million, or 66.5% 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, 2007, the Bank exceeded all of its regulatory capital requirements with tangible capital of $58.7 million, or 10.56% of total adjusted assets, which is above the required level of $8.3 million or 1.5%; core capital of $58.7 million, or 10.56% of total adjusted assets which is above the required level of $22.2 million or 4.0%; and risk-based capital of $60.8 million, or 19.22% of risk-weighted assets, which is above the required level of $25.3 million or 8.0%. The Bank is considered a “well-capitalized” institution under the Office of Thrift Supervision’s prompt corrective action regulations.

On April 18, 2007, the Company announced that its board of directors approved the repurchase of up to 200,000 shares of the Company’s outstanding common stock, which is approximately 5% of outstanding shares not held by OC Financial MHC. The program began on April 30, 2007. 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 2, 2007, the Company had not repurchased any shares under this plan.

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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, 2007 Percentage Change in Estimated Net Interest Income Over
	12 Months		24 Months
200 basis point increase in rates	(1.09	)%	(5.35	)%
100 basis point decrease in rates	0.19		(1.16	)

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, 2007 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	$	59,834	$	(30,168	)	(34	)%	10.63	%	(429	)bp
200		71,345		(18,658	)	(21	)	12.36		(256	)
100		82,583		(7,419	)	(8	)	13.95		(97	)
0		90,003		—		—		14.92		—
(100)		89,275		(728	)	(1	)	14.69		(23	)
(200)		80,515		(9,488	)	(11	)	13.30		(162	)
(300)		71,571		(18,432	)	(20	)	11.83		(309	)

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, 2007, 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 officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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, 2006.

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, 2007 through January 31, 2007	0		0	0	44,606
Month #2 February 1, 2007 through February 28, 2007	17,900	$	13.49	17,900	26,706
Month #3 March 1, 2007 through March 31, 2007	26,257	$	13.43	26,257	449
Total	44,157	$	13.45	44,157

(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. As of March 31, 2007, all of the 200,087 approved shares have been purchased.

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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 9, 2007	/s/ Steven E. Brady
	Steven E. Brady
	President and Chief Executive Officer
Date: May 9, 2007	/s/ Donald F. Morgenweck
	Donald F. Morgenweck
	Chief Financial Officer and Senior Vice President

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