As filed with the Securities and Exchange Commission on March 22, 2007
Registration No. 333-______

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Gateway Community Financial Corp.
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(Exact name of registrant as specified in charter)

United States 6035 01-0569172
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(State or other jurisdiction (Primary SIC No.) (I.R.S. Employer
of incorporation or organization) Identification No.)

381 Egg Harbor Drive, Sewell, New Jersey 08080
(856) 589-6600
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(Address and telephone number of principal executive offices)

Robert C. Ahrens, President and Chief Executive Officer
381 Egg Harbor Drive, Sewell, New Jersey 08080
(856) 589-6600
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(Name, address and telephone number of agent for service)

Please send copies of all communications to:

Samuel J. Malizia, Esq.
Tiffany A. Hasselman, Esq.
MALIZIA SPIDI & FISCH, PC
901 New York Ave., N.W.
Suite 210 East
Washington, D.C. 20001
(202) 434-4660

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier registration statement for the
same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier registration statement for the
same offering. [ ]

CALCULATION OF REGISTRATION FEE

- --------------------------- ----------------- -------------------- -------------------- ----------------
Title of Each Amount Proposed Maximum Proposed Maximum Amount of
Class of Securities to be Offering Price Aggregate Registration
To Be Registered Registered Per Unit Offering Price(1) Fee
- --------------------------- ----------------- -------------------- -------------------- ----------------

Common Stock,
$0.10 Par Value 3,570,750(2) $10.00 $35,707,500 $1,096.22

Interests of participants 140,317(3) $10.00 $1,403,170 $43.08(4)
in the 401(k) Plan
- --------------------------- ----------------- -------------------- -------------------- ----------------

(1) Estimated solely for purposes of calculating the registration fee.
(2) Includes the maximum numbers of shares that may be sold or exchanged for
shares of common stock in connection with this offering.
(3) These shares are included in the 3,570,750 shares being registered.
(4) The $1,403,170 of participations to be registered are based upon the assets
of the 401(k) Plan. Pursuant to Rule 457(h)(2) under the Securities Act of
1933, no additional fee is required with respect to the interests of
participants of the 401(k) Plan.

The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

PROSPECTUS
GATEWAY COMMUNITY FINANCIAL CORP.
(Holding Company for Gloucester County Federal Savings Bank)

Up to 3,105,000 Shares of Common Stock
(Subject to Increase to up to 3,570,750 Shares)

Gateway Community Financial Corp. is offering for sale shares of its
common stock that will represent 45% of its outstanding common stock upon
completion of this offering. The remaining 55% of the common stock outstanding
upon completion of this offering will be held by Gateway Community Financial,
MHC, the mutual holding company parent of Gateway Community Financial Corp. Upon
completion of the offering, Gateway Community Financial Corp. will have between
5,100,000 and 6,900,000 shares outstanding, including shares that will be held
by Gateway Community Financial, MHC. The total number of shares of Gateway
Community Financial Corp. common stock outstanding upon completion of the
offering is subject to an independent appraisal that must be updated before the
offering can be completed and may be increased to an adjusted maximum of
7,935,000 shares without resoliciting subscribers. The shares sold in the
offering would, in that case, total 3,570,750 shares.

The offering is expected to expire at __:__ _.m., Eastern time, on
____________, 2007. We may extend this expiration date without notice to you
until ____________, 2007, unless the Office of Thrift Supervision approves a
later date.

Sandler O'Neill & Partners, L.P. will use its best efforts to assist us
in our selling efforts, but is not required to purchase any of the common stock
that is being offered for sale. Purchasers will not pay a commission to purchase
shares of common stock in the offering. All shares being sold are being offered
at a price of $10.00 per share. The offering will not be completed if we do not
sell a minimum of 2,295,000 shares. We have applied to have our common stock
listed for trading on the Nasdaq Global Market under the symbol "GCFC."

The minimum purchase is 25 shares. Once submitted, orders are
irrevocable unless the offering is terminated or extended beyond ____________,
2007. If the offering is extended beyond ____________, 2007, subscribers will
have the right to modify or rescind their purchase orders. We will hold funds
received with orders in a deposit account that we have established at Gloucester
County Federal Savings Bank for that sole purpose. We may decide during the
offering also to hold funds received with orders in a deposit account at another
insured depository institution. In either case, we will pay interest on all
funds received at a rate equal to Gloucester County Federal Savings Bank's
regular passbook savings rate. If we do terminate the offering, we will promptly
return your funds with interest. If we extend the offering beyond ____________,
2007, you will be given an opportunity to confirm, modify or rescind your order,
and if an affirmative response is not received, we will promptly return your
funds with interest.

This investment involves a degree of risk,
including the possible loss of principal.
Please read Risk Factors beginning on page ___.

OFFERING SUMMARY
Price Per Share: $10.00
Maximum,
Minimum Midpoint Maximum as adjusted
------- -------- ------- -----------

Number of shares......................... 2,295,000 2,700,000 3,105,000 3,570,750
Gross proceeds........................... $22,950,000 $27,000,000 $31,050,000 $35,707,500
Estimated offering expenses(1)........... $768,000 $810,000 $851,000 $899,000
Estimated net proceeds................... $22,182,000 $26,190,000 $30,199,000 $34,809,000
Estimated net proceeds per share......... $9.67 $9.70 $9.73 $9.75

(1) See Plan of Distribution and Marketing Arrangements on page___ for a
description of the fees payable to Sandler O'Neill & Partners, L.P. in
connection with this offering.

These securities are not deposits or savings accounts and are not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.

Neither the Securities and Exchange Commission, the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation nor any state securities
regulator has approved or disapproved these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.

Sandler O'Neill + Partners, L.P.

The date of this prospectus is ____________, 2007.

TABLE OF CONTENTS

Page
----

Summary........................................................................................
Risk Factors...................................................................................
A Warning About Forward-Looking Statements.....................................................
Use of Proceeds................................................................................
Our Policy Regarding Dividends.................................................................
Market for the Stock...........................................................................
Capitalization.................................................................................
Pro Forma Data.................................................................................
Historical and Pro Forma Capital Compliance....................................................
Selected Financial and Other Data..............................................................
Management's Discussion and Analysis of Financial Condition and Results of Operations..........
Business of Gateway Community Financial, MHC...................................................
Business of Gateway Community Financial Corp...................................................
Business of Gloucester County Federal Savings Bank.............................................
Regulation.....................................................................................
Taxation.......................................................................................
Management.....................................................................................
The Offering...................................................................................
Restrictions on Acquisition of Gateway Community Financial Corp................................
Description of Capital Stock...................................................................
Registrar and Transfer Agent...................................................................
Legal and Tax Opinions.........................................................................
Experts........................................................................................
Change in Independent Auditor..................................................................
Registration Requirements......................................................................
Where You Can Find Additional Information......................................................
Index to Consolidated Financial Statements.....................................................

[Map page]

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SUMMARY
This summary highlights selected information from this document and may not
contain all the information that is important to you. To understand this
offering fully, you should read this entire document carefully, including the
consolidated financial statements and the notes to the consolidated financial
statements beginning on page F-1 of this document. Throughout this document, the
terms "we", "us" or "our" refer to Gateway Community Financial Corp. or
Gloucester County Federal Savings Bank, or both, as the context indicates.

Gateway Community Financial, MHC
Gateway Community Financial Corp.
Gloucester County Federal Savings Bank

Gateway Community Financial Corp. is a federally-chartered corporation
that holds all of the capital stock of Gloucester County Federal Savings Bank, a
federally-chartered savings bank with roots in the community going back to 1903.
Currently, 100% of the outstanding stock of Gateway Community Financial Corp. is
held by Gateway Community Financial, MHC, a federally-chartered mutual holding
company. Upon completion of this offering, 55% of the outstanding stock of
Gateway Community Financial Corp. will be held by Gateway Community Financial,
MHC and 45% will be held by public stockholders.

Gloucester County Federal Savings Bank offers a wide range of
traditional deposit and lending services, including one-to-four family mortgage
loans, home equity loans and lines of credit, commercial real estate loans,
construction loans, commercial loans and lines of credit and consumer loans.
Gloucester County Federal Savings Bank currently operates five offices located
in Gloucester and Camden Counties, New Jersey. Gateway Community Financial
Corp.'s principal executive offices are located at the administrative offices of
Gloucester County Federal Savings Bank at 381 Egg Harbor Road, Sewell, New
Jersey 08080. The phone number at that address is (856) 589-6600. Gloucester
County Federal Savings Bank maintains a website at www.gcfbank.com.

This chart shows our current corporate structure (before this
offering).

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Gateway Community Financial, MHC
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| 100%
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Gateway Community Financial Corp.
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| 100%
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Gloucester County Federal Savings Bank
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This chart shows our new corporate structure (after this offering).
Upon completion of the offering, Gloucester County Federal Savings Bank will
change its name to "GCF Bank."

- ----------------------------- -----------------------------
Gateway Community Minority Public
Financial, MHC Stockholders
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| 55% | 45%
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Gateway Community Financial Corp.
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| 100%
--------------------------------------------------
GCF Bank
--------------------------------------------------

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Purpose of the Offering

The primary reason for our decision to sell stock is to support future
growth. The proceeds of the offering will increase our capital, allowing us to
seek to implement a growth strategy while maintaining a solid capital position.
We currently qualify as a well-capitalized institution, however, our regulatory
capital ratios are below peer and state median levels and we do not expect that
our current capital and net income can support the asset growth we would like to
achieve.

Selling stock will also mean that Gloucester County Federal Savings
Bank's depositors, employees, management and directors will have an opportunity
to acquire an equity ownership interest in us and thereby obtain an economic
interest in our future operations. In addition, we intend to utilize stock
benefit plans as a means of attracting and retaining qualified and experienced
officers, directors and employees.

Use of Proceeds

Gloucester County Federal Savings Bank will receive 50% of the net
proceeds from the offering as a capital contribution and will use those proceeds
for general business purposes. The offering proceeds may also be used to finance
the possible acquisition of other financial institutions or branches, if
appropriate opportunities arise. We do not, however, have any current
understandings, agreements or arrangements in connection with branching or
acquisitions.

We will lend a portion of the offering proceeds to the Gloucester
County Federal Savings Bank Employee Stock Ownership Plan to enable it to buy up
to 8% of the shares sold in the offering. The balance of the offering proceeds
will be retained by Gateway Community Financial Corp. and deposited with or
loaned to Gloucester County Federal Savings Bank, providing the Bank with funds
to support the Bank's lending activities. This will enable the bank to reduce
its outstanding borrowings. Gateway Community Financial Corp. may also use the
offering proceeds it retains for general corporate purposes, including
repurchasing shares of its common stock, paying cash dividends or supporting
acquisitions of other financial institutions, branches or financial services
companies. We do not, however, have any current understandings, agreements or
arrangements for any such acquisitions.

Conduct of the Offering

Rights to subscribe for shares of Gateway Community Financial Corp. common
stock have the following order of priority:

o Priority 1 - depositors of Gloucester County Federal Savings Bank at the
close of business on December 31, 2005 with deposits of at least $50.00.

o Priority 2 - the Gloucester County Federal Savings Bank Employee Stock
Ownership Plan.

o Priority 3 - depositors of Gloucester County Federal Savings Bank at the
close of business on March 31, 2007 with deposits of at least $50.00.

Please note: Subscription rights are not transferable, and persons with
subscription rights may not subscribe for shares for the benefit of any other
person. If you violate this prohibition, you may lose your rights to purchase
shares and may face criminal prosecution and/or other sanctions.

If we receive subscriptions for a number of shares that exceeds the
maximum of the offering range, we may be unable to fill, or may only partially
fill, your order. Shares will be allocated in the order of the priorities shown
above pursuant to a formula outlined in the plan of stock issuance adopted by
our board of directors.

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We are offering for sale a minimum of 2,295,000 shares and a maximum of
3,105,000 shares. The independent appraisal that we used to set the number of
shares being offered must be updated before we can complete the stock offering,
and this could result in the number of shares being increased to up to an
adjusted maximum of 3,570,750 shares. We may sell that number of shares without
any notice to you. If the updated independent appraisal is higher than the
adjusted maximum, we will be required to return all stockholders' funds to them
with interest.

If we sell between the maximum and the adjusted maximum number of
shares, the Gloucester County Federal Savings Bank Employee Stock Ownership Plan
will have the first priority right to purchase the additional shares to the
extent that its subscription has not previously been filled. Any shares
remaining will be allocated in the order of the priorities described above. See
The Stock Offering - Subscription Offering and Subscription Rights for a
description of the allocation procedure.

We may offer shares not sold in the subscription offering to the
general public in a community offering. In the community offering, we will give
a preference first to natural persons and trusts of natural persons who reside
in Gloucester and Camden Counties, New Jersey (the counties in which Gloucester
County Federal Savings Bank has offices), second to other residents of New
Jersey, and third to the general public. This part of the offering may commence
concurrently with the subscription offering or any time thereafter and may
terminate at any time without notice but no later than ____________, 2007,
unless extended.

Shares not sold in the subscription or community offering may be
offered for sale in a syndicated community offering, which would be an offering
to the general public on a best efforts basis managed by Sandler O'Neill &
Partners, L.P. This part of the offering may terminate at any time without
notice but no later than ____________, 2007, unless extended.

We have the right to reject, in whole or in part, any orders for stock
received in the community offering and syndicated community offering.

Deadline for Ordering Stock

The subscription offering will expire at __:__ _.m., Eastern time, on
____________, 2007. We may extend this expiration date without notice to you for
up to 45 days, until ____________, 2007. Once submitted, your order is
irrevocable unless the offering is extended beyond ____________, 2007. We may
request permission from the Office of Thrift Supervision to extend the offering
beyond ____________, 2007, but in no event may the offering be extended beyond
____________, 2009. If the offering is extended beyond ____________, 2007, we
will notify each subscriber, and subscribers will have the right to confirm,
modify or rescind their subscriptions. If an affirmative response is not
received, a subscriber's subscription will be canceled and funds will be
returned promptly with interest.

We may cancel the offering at any time prior to completion. If we do,
orders for common stock already submitted will be canceled and subscribers'
funds will be returned promptly with interest.

Purchase Limitations

Limitations on the purchase of stock in the offering have been set by
the plan of stock issuance adopted by our Board of Directors. These limitations
include the following:

o The minimum purchase is 25 shares.

3
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o The maximum number of shares of stock that any individual (or individuals
through a single account) may purchase is 15,000 shares.

o The maximum number of shares of stock that any individual may purchase
together with any associate or group of persons acting in concert is 25,000
shares.

If determined to be necessary or desirable by the Board of Directors,
the plan may be amended by a two-thirds vote of the full Board, with the
concurrence of the Office of Thrift Supervision. Thus, we may increase or
decrease the purchase limitations. In the event the maximum purchase limitation
is increased, persons who subscribed for the maximum will be notified and
permitted to increase their subscription.

Procedure for Ordering Stock

If you want to place an order for shares in the offering, you must
complete an original stock order form and send it to us together with full
payment. You must sign the certification that is on the reverse side of the
stock order form. We must receive your stock order form before the end of the
subscription offering or the end of the community offering, as appropriate. Once
we receive your order, you cannot cancel or change it without our consent. We
may, in our sole discretion, reject orders received in the community offering or
syndicated community offering either in whole or in part. If your order is
rejected in part, you cannot cancel the remainder of your order.

To ensure that we properly identify your subscription rights, you must
provide on your stock order form all of the information requested for each of
your deposit accounts as of the eligibility dates (December 31, 2005 and March
31, 2007). If you fail to do so, your subscription may be reduced or rejected if
the offering is oversubscribed.

You may pay for shares in the subscription offering or the community
offering in any of the following ways:

o In cash, if delivered in person. If you choose to pay by cash, you must
deliver the stock order and certification form and payment in person to any
branch office of Gloucester County Federal Savings Bank and it will be
exchanged for a bank check or money order. Please do not send cash in the
mail.

o By check or money order made payable to Gateway Community Financial Corp.

o By authorizing withdrawal from an account at Gloucester County Federal
Savings Bank. To use funds in a Gloucester County Federal Savings Bank IRA
account, you must transfer your account to an unaffiliated institution or
broker. Since IRA account transfers take time to complete, please contact
the stock information center as soon as possible for assistance.

We will hold funds received with orders in a deposit account that we
have established at Gloucester County Federal Savings Bank for that sole
purpose. We may decide during the offering also to hold funds received with
orders in a deposit account at another insured depository institution. In either
case, we will pay interest on all funds received at a rate equal to Gloucester
County Federal Savings Bank's regular passbook savings rate from the date we
receive your funds until the offering is completed or terminated.

All funds authorized for withdrawal from deposit accounts with us,
including certificates of deposit, will continue to earn interest at the
applicable account or certificate of deposit rate until the offering is
completed or terminated. However, if, as a result of a withdrawal from a
certificate of deposit, the balance falls below the minimum balance requirement,
the remaining funds will be transferred to a savings account

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and will earn interest at our regular passbook savings rate. There will be no
early withdrawal penalty for withdrawals from certificates of deposit used to
pay for stock.

Proposed Stock Purchases by Management

Our directors and executive officers and their associates have
indicated that they intend to purchase an aggregate of approximately 205,000
shares of common stock in the offering. If 2,700,000 shares are sold (the
midpoint of the offering range), their anticipated purchases would represent
7.6% of the shares sold in the offering and 3.4% of the 6,000,000 total shares
outstanding after the offering, including shares issued to Gateway Community
Financial, MHC.

Our Estimated Pro Forma Value

The independent appraisal by Feldman Financial Advisors, Inc., dated as
of ____________, 2007, established the estimated pro forma market value of
Gateway Community Financial Corp. This appraisal was based on our current and
projected financial condition and results of operations and considered the
effect of the additional capital to be raised in the stock offering as well as
the effect of the stock benefit plans we expect to implement.

Feldman Financial Advisors has estimated that as of ____________, 2007,
the pro forma market value of Gateway Community Financial Corp. ranged from a
minimum of $51 million to a maximum of $69 million. This valuation is based on
the full pro forma market value of Gateway Community Financial Corp. as though
100% of the stock was being sold to the public. The Board of Directors
considered our present level of capital and our business plans and determined
that shares representing 45% of the full valuation should be offered for sale in
this offering.

Peer Group Analysis. The appraisal incorporated an analysis of a peer
group of ten publicly traded mutual holding companies that Feldman Financial
Advisors deemed comparable to us. The companies in the peer group range in asset
size from $___ million to $___ million and have market capitalizations ranging
from $___ million to $___ million. Feldman Financial Advisors examined how we
compare to the peer group on various bases, including earnings prospects, market
area, management, acquisition activity in the state of New Jersey, stock market
conditions, subscription interest, liquidity and dividend policy. Feldman
Financial Advisors also took into account that this type of offering is
typically priced at a discount on a price-to-book basis to publicly traded
companies due to relatively high post-offering equity ratios, expected low
returns on equity, and uncertainty regarding the degree of success to be
achieved in effectively deploying capital raised in the offering, particularly
in the current interest rate environment characterized by a relatively flat
yield curve.

Pricing Ratios on a Fully-Converted Basis. Shown below are the average
and median price to earnings multiples and price to book value ratios of the
peer group companies and our price to earnings multiple and price to book value
ratio at the minimum, midpoint, maximum and adjusted maximum of our pro forma
market value as estimated by the appraisal. These pricing ratios are calculated
on a fully- converted basis, as though we had sold the full amount (100%) of our
estimated pro forma market value instead of only 45% of that value. The pricing
ratios for the peer group have also been adjusted to assume that they were fully
public, with all of their outstanding shares held by public stockholders.

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Price-to-earnings Price-to-book
multiple value ratio
-------- -----------

Pricing ratios for peer group on a fully-converted basis:
Average........................................................
Median.........................................................
Pro forma pricing ratios for Gateway Community
Financial Corp. on a fully-converted basis:
Minimum........................................................ 58.8x 70.1%
Midpoint....................................................... 62.5x 74.5%
Maximum........................................................ 66.7x 78.1%
Maximum, as adjusted........................................... 66.7x 81.5%

The independent appraisal is not necessarily indicative of the
post-stock offering trading value; therefore you should not assume or expect
that the valuation of Gateway Community Financial Corp. as indicated above means
that the common stock will trade at or above the $10.00 purchase price after the
stock offering is completed. You should not assume that Gateway Community
Financial Corp.'s common stock will not trade below $10.00 per share.

The stock price of a particular company is subject to various factors,
including, but not limited to, the amount of proceeds a company raises, the
company's historical and anticipated operating results, the nature and quality
of the company's assets, the company's market area, and the quality of
management and management's ability to deploy proceeds (such as through loans
and investments, the acquisition of other financial institutions or other
businesses, the payment of dividends and common stock repurchases). In addition,
stock prices may be affected by general market and economic conditions, the
interest rate environment, the market for financial institutions and merger or
takeover transactions, the presence of professional and other investors who
purchase stock on speculation, as well as other unforeseeable events not in the
control of management. Before you make an investment decision, we urge you to
carefully read this prospectus, including, but not limited to, the Risk Factors
section beginning on page ___. You should not assume that Gateway Community
Financial Corp.'s common stock will trade at prices similar to other mutual
holding companies.

Conditions to Completing the Offering

We cannot complete the offering unless:

o we sell at least 2,295,000 shares, the minimum of the offering range; and

o we receive the final approval of the Office of Thrift Supervision to
complete the offering.

Market for Gateway Community Financial Corp.'s Common Stock

We applied to have our common stock listed for trading on the Nasdaq
Global Market under the symbol "GCFC." Sandler O'Neill & Partners, L.P.
currently intends to become a market maker in the common stock, but it is under
no obligation to do so. We cannot assure you that other market makers will be
obtained or that an active and liquid trading market for the shares of common
stock will develop or if developed, will be maintained. After our common stock
begins trading, you may contact a stock broker to buy or sell shares.

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Dividends

We have not yet established a dividend policy, and we have not yet made
plans as to the amount or timing of cash dividends that Gateway Community
Financial Corp. may pay after the offering. The timing, amount and frequency of
dividends will be determined by the Board of Directors. There are also
restrictions on our ability to pay dividends. See Our Policy Regarding
Dividends.

If we pay dividends to stockholders of Gateway Community Financial
Corp., it is anticipated that dividends payable to Gateway Community Financial,
MHC would be waived. We must receive the non- objection of the Office of Thrift
Supervision for any dividend waiver by Gateway Community Financial, MHC. See
Regulation - Regulation of Gateway Community Financial Corp.

Restrictions on the Acquisition of Gateway Community Financial Corp. and
Gloucester County Federal Savings Bank

Federal regulations, as well as provisions contained in the charter and
bylaws of Gateway Community Financial Corp. and Gloucester County Federal
Savings Bank, restrict the ability of any person, firm or entity to acquire
Gateway Community Financial Corp., Gloucester County Federal Savings Bank, or
their capital stock. These restrictions include the requirement that a potential
acquirer of common stock obtain the prior approval of the Office of Thrift
Supervision before acquiring in excess of 10% of the voting stock of Gateway
Community Financial Corp. or Gloucester County Federal Savings Bank. Because a
majority of the shares of outstanding common stock of Gateway Community
Financial Corp. must be owned by Gateway Community Financial, MHC, any
acquisition of Gateway Community Financial Corp. must be approved by Gateway
Community Financial, MHC, and Gateway Community Financial, MHC would not be
required to pursue or approve a sale of Gateway Community Financial Corp. even
if such sale were favored by a majority of Gateway Community Financial Corp.'s
public stockholders. Additionally, Office of Thrift Supervision regulations
prohibit anyone from acquiring more than 10% of Gateway Community Financial
Corp.'s common stock for a period of three years following the offering, unless
such prohibition is waived by the Office of Thrift Supervision. The current
policy of the Office of Thrift Supervision is not to waive this prohibition.

Additionally, certain provisions within Gateway Community Financial
Corp.'s charter and bylaws limit the rights of stockholders and may deter
potential takeovers or make it more difficult and expensive to pursue a change
in control or takeover attempt that our Board of Directors opposes. As a result,
you may not have an opportunity to participate in such a transaction, and the
trading price of our stock may not rise to the level of other institutions that
are more vulnerable to hostile takeovers. Such provisions include:

o the election of directors to staggered three-year terms;
o provisions restricting stockholders from calling special meetings
of stockholders;
o the absence of cumulative voting by stockholders in elections of
directors;
o advance notice requirements for stockholder nominations and new
business; and
o the limitation of the voting rights of a single stockholder to no
more than 10% of the then-outstanding shares, including shares
held by Gateway Community Financial, MHC, for a period of five
years from the date this stock offering is completed.

Tax Effects of the Offering

The minority stock offering will not be a taxable transaction for
purposes of federal or state income taxes for Gateway Community Financial, MHC,
Gateway Community Financial Corp., Gloucester County Federal Savings Bank or
persons eligible to subscribe for stock in the offering. See Material Federal
and State Tax Consequences of the Offering.

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Stock Benefit Plans

In order to align our employees' and directors' interests closer to our
stockholders' interests, we will establish certain benefit plans that use our
stock as compensation. The Gloucester County Federal Savings Bank Employee Stock
Ownership Plan, for the benefit of employees eligible to participate in the
plan, intends to purchase 8% of the shares sold in the offering. We also intend
to adopt a stock option plan and a restricted stock plan for the benefit of
directors and officers no sooner than six months after the offering. Officers,
directors, and employees will not be required to pay cash for shares received
under the Gloucester County Federal Savings Bank Employee Stock Ownership Plan
or shares received under the restricted stock plan, but will be required to pay
the exercise price to exercise stock options. The exercise price for the options
will be at least equal to the market price of our common stock on the date of
grant.

The stock benefit plans will result in additional annual employee
compensation and benefit expenses which will reduce our earnings. See Pro Forma
Data. Additionally, the implementation of the stock option plan and restricted
stock plan may dilute your ownership interest in Gateway Community Financial
Corp. if newly issued shares are used to fund stock options and awards made
under the restricted stock plan instead of outstanding shares purchased in the
open market by Gateway Community Financial Corp.

The following table presents information, at the midpoint of the
offering range, regarding the number of shares and options expected to be made
available under the stock benefit plans. The value of the share awards is based
on an assumed value of $10.00 per share; however, this does not mean you should
assume the stock will trade at or above $10.00 per share. It could trade below
$10.00 per share. The value of the option grants was determined using the
Black-Scholes option-pricing formula. See Pro Forma Data. Ultimately, the value
of awards under the stock benefit plans will depend on the actual trading price
of our stock at a particular time, which depends on numerous factors, some of
which are out of our control.

At the Midpoint of the Offering Range
-------------------------------------
Number Percentage of
Estimated of Shares/ Total Shares
Value Options Outstanding
----- ------- -----------

Employee Stock Ownership Plan..... $2,160,000 216,000 3.6%
Restricted stock.................. $1,176,000 117,600 1.96%
Stock options..................... $1,267,140 294,000 4.9%

See Management - Stock Benefit Plans and Pro Forma Data for more
information about the stock benefit plans.

Possible Conversion of Gateway Community Financial, MHC to Stock Form

In the future, Gateway Community Financial, MHC may convert from the
mutual holding company form of organization, wherein a majority of the
outstanding stock is held by the mutual holding company, to a corporation with
100% of its shares held by public stockholders. This type of conversion
transaction is commonly known as a "second-step conversion." The Board of
Directors has no current plans to undertake a second-step conversion
transaction.

Risk Factors

This investment entails various risks including the possible loss of
principal. You may not be able to sell the stock at or above the $10.00 offering
price. You should carefully read the information under Risk Factors beginning on
page __.

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Stock Information Center

For assistance, please contact the stock information center at (___)
___-____. The stock information center's hours of operation are generally __:__
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center is closed on weekends and holidays.

- --------------------------------------------------------------------------------

RISK FACTORS

In addition to the other information in this document, you should
consider carefully the following risk factors in evaluating an investment in our
common stock.

In recent years our asset quality was poor and we charged off a significant
amount of loans. If we experience additional loan losses going forward that
exceed the amount we have reserved for loan losses, our earnings will be
adversely affected.

The risk of credit losses on loans varies with, among other things,
general economic conditions, the type of loan being made, the creditworthiness
of the borrower over the term of the loan and, in the case of a collateralized
loan, the value and marketability of the collateral for the loan. Management
maintains an allowance for loan losses based upon historical experience, an
evaluation of economic conditions and regular reviews of delinquencies and loan
portfolio quality.

In recent years we experienced significant problems with the sizable
commercial loan portfolio we had developed in an effort to improve earnings by
originating higher yielding loans. Although commercial loans tend to carry a
higher yield than residential loans, they also tend to bear greater risks. Over
the last five years, our net charge-offs of commercial real estate and
commercial loans amounted to $9.8 million. We believe we have made progress in
improving our asset quality, but our levels of non-performing assets and
classified assets continue to be higher than our peer group. If our assumptions
and judgments about the ultimate collectibility of the loan portfolio prove to
be incorrect and the allowance for loan losses is inadequate to absorb future
losses or if we are required to make material additions to the allowance, our
earnings and capital could be significantly and adversely affected.

Our earnings do not compare favorably to our peer group and there is no
assurance that our profitability will improve.

In 2002 and 2003, we reported net losses of $2.6 million and $1.7
million, respectively. This was due in large part to the high loan loss
provisions that were charged to income during those years. In 2004 and 2005, we
reported net income of $1.7 million and $1.6 million, respectively. Income for
2005 included $917,000 that was reversed from prior loan loss provisions. Net
income for 2006 fell sharply to $379,000 and included $348,000 (pre-tax) that
was reversed from prior loan loss provisions. For 2006, our net interest income
of $6.9 million was exceeded by our noninterest expense of $7.6 million. Our
challenge going forward is to improve earnings. It is possible that we could
report a loss for the current year if our net interest income continues to be
compressed to the point that it does not cover our operating expenses or our
provision for loan losses increases. Additionally, we could incur a charge later
this year if management and the Board determine to close or consolidate one of
our existing branches, which has been underperforming.

We hope to improve the overall yield of our assets by increasing our commercial
real estate and commercial loans, but (i) we may not be successful in that
effort, (ii) that type of lending poses higher risks, and (iii) we have had
trouble with this type of lending in the past.

The repayment risk related to commercial loans is considered to be
greater than the risk related to residential loans. Unlike residential mortgage
loans, which generally are made on the basis of the borrower's ability to make
repayment from his or her employment and other income, and which are secured by
real property with values that tend to be more easily ascertainable, commercial
loans typically are made on the basis of the borrower's ability to make
repayment from the cash flow of the borrowers' business,

which may include lease income. In addition, commercial loans generally result
in larger balances to single borrowers, or related groups of borrowers, than
one- to four-family loans.

At December 31, 2006, our loan portfolio included $19.0 million of
commercial real estate mortgage loans and commercial loans representing
approximately 9% of our total loans compared to $67.1 million or 34% of our
total loans at December 31, 2002. In recent years, we experienced significant
problems with our commercial lending activities; commercial real estate
mortgages and commercial loans as a percentage of total loans decreased as we
worked through problems in those portfolios and we were for a period of time,
restricted by the Office of Thrift Supervision from any new commercial lending.
Over the last five years, our net charge-offs of commercial real estate and
commercial loans amounted to $9.8 million. We believe we have improved our
underwriting, credit administration and borrower relationship management, and we
believe it is appropriate now for us to seek to increase commercial real estate
loans and commercial loans. In March 2007, we hired a commercial lender to begin
those efforts and we anticipate further expanding the commercial loan
department.

We intend to increase our originations of certain higher yielding consumer
loans, but such loans present higher risk.

In 2004, we began originating loans for the purchase and refinance of
manufactured housing. This portfolio totaled $7.5 million at December 31, 2006
and we intend to grow this portfolio to approximately $30 million. More
recently, we began providing financing for non-commercial use, personal
airplanes. We originated our first aircraft loans during the first quarter of
2007 and our current goal is to grow that portfolio to as much as $15 million by
the end of 2007. We intend to originate aircraft loans to borrowers throughout
the United States, not just in our primary market area. These types of loans are
generally considered to involve a higher degree of credit risk and if we
experience losses in these portfolios, our earnings would be adversely affected.

Changes in interest rates may adversely affect our net interest rate spread and
net interest margin, which would hurt our earnings.

We derive our income mainly from the difference or "spread" between the
interest earned on loans, securities and other interest-earning assets, and
interest paid on deposits, borrowings and other interest-bearing liabilities. In
general, the larger the spread, the more we earn. When market rates of interest
change, the interest we receive on our assets and the interest we pay on our
liabilities will fluctuate. This can cause decreases in our spread and can
adversely affect our income.

Several years ago market interest rates were at historically low
levels. However, between June 2004 and June 2006, the U.S. Federal Reserve
steadily increased its target federal funds rate, raising it 17 times, from
1.00% to 5.25%. While the federal funds rate and other short-term market
interest rates, which we use as a guide to our deposit pricing, have increased,
intermediate- and long-term market interest rates, which we use as a guide to
our loan pricing, have not increased proportionately. This has led to a
"flattening" of the market yield curve, which has even "inverted" recently as
short-term rates have exceeded longer-term rates. The relatively flat yield
curve has hurt our net interest rate spread and net interest margin because the
interest rates we pay on our deposits have repriced upwards faster than the
interest rates that we earn on our loans and investments. As of December 31,
2006, we had $113.5 million in certificates of deposit that will mature within
one year. If the yield curve remains flat, these deposits are expected to
reprice upwards faster than loans and investments, which will reduce our net
interest income.

Interest rates also affect how much money we lend. For example, when
interest rates rise, the cost of borrowing increases and loan originations tend
to decrease. In addition, changes in interest rates can affect the average life
of loans and investment securities. A reduction in interest rates generally
results in increased prepayments of loans and mortgage-backed securities, as
borrowers refinance their debt in order to reduce their borrowing cost. This
causes reinvestment risk, because we generally are not able to reinvest
prepayments at rates that are comparable to the rates we earned on the prepaid
loans or securities. Changes in market interest rates could also reduce the
value of our financial assets. If we are unsuccessful in managing the effects of
changes in interest rates, our financial condition and results of operations
could suffer.

Our return on equity is below our peers and after this offering, our return on
equity will decrease. This could negatively impact the price of our stock.

The net proceeds from the offering will substantially increase our
equity capital. It will take a significant period of time to prudently invest
this capital. For the year ended December 31, 2006, our return on average
equity, which is the ratio of our earnings divided by our average equity
capital, was 1.33%. After the offering, our return on average equity is expected
to continue to be below our peer group. Because the stock market values a
company based in part on its return on equity, our low return on equity relative
to our peer group could negatively affect the trading price of our stock. See
Pro Forma Data.

Strong competition within our market area may limit our growth and
profitability.

Competition in the banking and financial services industry in New
Jersey is intense. Many of our competitors have substantially greater resources
and lending limits than we do and offer services that we do not or cannot
provide. Price competition for loans might result in us originating fewer loans,
or earning less on our loans, and price competition for deposits might result in
a decrease in our total deposits or higher rates on our deposits. Competition in
the market for hiring experienced lenders and other highly- qualified bank
officers is also a challenge, which may restrict our ability to grow.

Our business is geographically concentrated in southern New Jersey, and a
downturn in conditions in our market area could have an adverse impact on our
profitability.

A substantial amount of our loans are to individuals and businesses in
southern New Jersey. Any decline in the economy of this market could have an
adverse impact on our earnings. Adverse economic changes may also have a
negative effect on the ability of our borrowers to make timely repayments of
their loans. Additionally, because we have a significant amount of real estate
loans, decreases in local real estate values could adversely affect the value of
property used as collateral. If we are required to liquidate a significant
amount of collateral during a period of reduced real estate values to satisfy
the debt, our earnings and capital could be adversely affected.

Additional compensation and benefit expenses following the offering will
negatively impact our profitability.

Following the offering, we will recognize additional annual employee
compensation and benefit expenses stemming from the shares granted to employees,
officers and directors under new benefit plans, including the Gloucester County
Federal Savings Bank Employee Stock Ownership Plan. We cannot predict the actual
amount of the new stock-related compensation and benefit expenses because
applicable

accounting standards require that they be based on the fair market value of the
shares of common stock at specific points in the future; however, we expect them
to be material.

New expenses that we will incur as a public company will affect our earnings.

Following the offering, our non-interest expense is likely to increase
as a result of the financial accounting, legal and various other additional
non-interest expenses usually associated with operating as a public company,
particularly as a result of the requirements of the Sarbanes-Oxley Act of 2002.
In addition, the Bank's senior management will be required to devote a
significant amount of time to such matters, diverting their full attention from
regular operations.

The implementation of stock-based benefit plans may dilute your ownership
interest in Gateway Community Financial Corp.

We intend to adopt a stock option plan and a restricted stock plan
following the stock offering. These stock benefit plans will be funded through
either open market purchases or from the issuance of authorized but unissued
shares. Stockholders would experience a reduction in ownership interest in the
event newly issued shares are used to fund stock options and awards made under
the restricted stock plan. The use of newly issued shares of stock to fund the
restricted stock plan instead of open market purchases would dilute the voting
interests of existing stockholders by approximately 1.9%. The use of newly
issued shares of stock to fund exercises of options granted under the stock
option plan instead of open market purchases would dilute the voting interests
of existing stockholders by approximately 4.7%.

Provisions in our charter and bylaws limiting the rights of stockholders may
deter potential takeovers and may reduce the trading price of our stock.

Provisions in our charter and bylaws may make it difficult and
expensive to pursue a change in control or takeover attempt that our Board of
Directors opposes. As a result, you may not have an opportunity to participate
in such a transaction, and the trading price of our stock may not rise to the
level of other institutions that are more vulnerable to hostile takeovers. Such
provisions include:

o the election of directors to staggered three-year terms;
o provisions restricting stockholders from calling special meetings
of stockholders;
o the absence of cumulative voting by stockholders in elections of
directors;
o advance notice requirements for stockholder nominations and new
business; and
o a provision that limits the voting rights of a single stockholder
to no more than 10% of the then-outstanding shares, including
shares held by Gateway Community Financial, MHC, for a period of
five years from the date this stock offering is completed.

Persons who purchase stock in the offering will own a minority of Gateway
Community Financial Corp.'s common stock and will not be able to exercise voting
control over most matters put to a vote of stockholders, including any proposal
regarding the acquisition of Gateway Community Financial Corp.

Gateway Community Financial, MHC will own 55% of Gateway Community
Financial Corp.'s common stock after the offering. The MHC's Board of Directors
is comprised of the same persons as Gateway Community Financial Corp.'s Board of
Directors and will generally be able to exercise voting control over matters put
to a vote of stockholders of Gateway Community Financial Corp., such as a vote
on a sale or merger of Gateway Community Financial Corp. or other transaction in
which stockholders

could receive a premium for their shares and the election of directors of
Gateway Community Financial Corp.

Our stock price may decline when trading commences.

We cannot guarantee that if you purchase shares in the offering you
will be able to sell them at or above the $10.00 purchase price. After the
shares of our common stock begin trading, the trading price of the common stock
will be determined by the marketplace, and will be influenced not only by our
operating results but by many factors outside of our control, including
prevailing interest rates, investor perceptions and general industry,
geopolitical and economic conditions. Publicly traded stocks, including stocks
of financial institutions, have recently experienced substantial market price
volatility. These market fluctuations might not be related to the operating
performance of particular companies whose shares are traded.

We operate in a highly regulated environment and may be adversely affected by
changes in laws and regulations.

We are subject to extensive regulation, supervision and examination by
the Office of Thrift Supervision and the Federal Deposit Insurance Corporation.
Such regulation and supervision govern the activities in which an institution
and its holding companies may engage and are intended primarily for the
protection of the insurance fund and depositors. Regulatory authorities have
extensive discretion in connection with their supervisory and enforcement
activities, including the imposition of restrictions on the operation of an
institution, the classification of assets by the institution and the adequacy of
an institution's allowance for loan losses. Any change in such regulation and
oversight, whether in the form of regulatory policy, regulations, or
legislation, including changes in the regulations governing mutual holding
companies, could have a material impact on us and our operations.

A WARNING ABOUT FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, which can be
identified by the use of words such as "believes," "expects," "anticipates,"
"estimates" or similar expressions. Forward-looking statements include:

o statements of our goals, intentions and expectations;

o statements regarding our business plans, prospects, growth and operating
strategies;

o statements regarding the quality of our loan and investment portfolios; and

o estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks and
uncertainties. Actual results may differ materially from those contemplated by
the forward-looking statements due to, among others, the following factors:

o general economic conditions, either nationally or in our market area, that
are worse than expected;

o changes in the interest rate environment that reduce our interest margins
or reduce the fair value of financial instruments;

o our ability to enter into new markets and/or expand product offerings
successfully and take advantage of growth opportunities;

o increased competitive pressures among financial services companies;

o changes in consumer spending, borrowing and savings habits;

o legislative or regulatory changes that adversely affect our business;

o adverse changes in the securities markets;

o our ability to successfully manage our growth; and

o changes in accounting policies and practices, as may be adopted by the bank
regulatory agencies, the Financial Accounting Standards Board or the Public
Company Accounting Oversight Board.

Any of the forward-looking statements that we make in this prospectus
and in other public statements we make may turn out to be wrong because of
inaccurate assumptions we might make, because of the factors illustrated above
or because of other factors that we cannot foresee. Consequently, no
forward-looking statement can be guaranteed.

USE OF PROCEEDS

We are conducting this stock offering principally to raise capital to
support our anticipated future growth. The actual net proceeds will depend on
the expenses incurred by us in connection with the offering and the total number
of shares of stock issued in the offering, which depends on the independent
valuation and market considerations. Although the actual net proceeds from the
sale of the common stock cannot be determined until the offering is completed,
we estimate that net proceeds from the sale of common stock will be between
$22.2 million and $30.2 million, or $34.8 million at the adjusted maximum. The
net proceeds may vary significantly because total expenses of the stock offering
may be significantly more or less than those estimated. Payments for shares made
through withdrawals from existing deposit accounts at Gloucester County Federal
Savings Bank will not result in the receipt of new funds for investment but will
result in a reduction of Gloucester County Federal Savings Bank's deposits and
interest expense as funds are transferred from interest-bearing certificates or
other deposit accounts.

We will lend a portion of the offering proceeds to the Gloucester
County Federal Savings Bank Employee Stock Ownership Plan to enable it to buy up
to 8% of the shares sold in the offering. If it does not buy the full amount of
its intended common stock purchase in the offering, it may purchase shares of
common stock in the open market after the stock offering. If the purchase price
of the common stock is higher than $10 per share, the amount of proceeds
required for the purchase by the Gloucester County Federal Savings Bank Employee
Stock Ownership Plan will increase.

The balance of the offering proceeds will be retained by Gateway
Community Financial Corp. and deposited with or loaned to Gloucester County
Federal Savings Bank, providing funds to support the Bank's operations. This
will enable the Bank to reduce its outstanding Federal Home Loan Bank
borrowings. Gateway Community Financial Corp. may also use the offering proceeds
it retains for general corporate purposes, including repurchasing shares of its
common stock, paying cash dividends or supporting acquisitions of other
financial institutions, branches or financial services companies. We do not,
however, have any current understandings, agreements or arrangements for any
such acquisitions.

OUR POLICY REGARDING DIVIDENDS

We have not yet determined what our dividend policy will be, and we
have no plans or understandings as to the amount or timing of cash dividends
that Gateway Community Financial Corp. may pay after the offering. Future
declarations of dividends by the Board of Directors will depend on a number of
factors, including investment opportunities, growth objectives, financial
condition, profitability, tax considerations, minimum capital requirements,
regulatory limitations, stock market characteristics and general economic
conditions. The timing, frequency and amount of dividends will be determined by
the Board. There can be no assurance that dividends will in fact be paid on the
stock or that, if paid, dividends will not be reduced or eliminated in future
periods.

Gateway Community Financial Corp.'s ability to pay dividends may also
depend on the receipt of dividends from Gloucester County Federal Savings Bank,
which is subject to a variety of regulatory limitations on the payment of
dividends. See Regulation - Regulation of Gloucester County Federal Savings Bank
- - Dividend and Other Capital Distribution Limitations. Furthermore, as a
condition to the Office of Thrift Supervision giving its authorization to
conduct the stock offering, we have agreed that we will not initiate any action
within one year of completion of the stock offering involving the payment of a
special distribution or return of capital to stockholders of Gateway Community
Financial Corp.

If Gateway Community Financial Corp. pays dividends to its
stockholders, it is anticipated that dividends payable to Gateway Community
Financial, MHC would be waived. We must notify the Office of Thrift Supervision
of any proposed dividend waiver by Gateway Community Financial, MHC. The Office
of Thrift Supervision reviews dividend waiver notices on a case-by-case basis,
and, in general, does not object to any such waiver if: (i) the waiver would not
be detrimental to the safe and sound operations of the subsidiary savings
association and (ii) the mutual holding company's board of directors determines
that such waiver is consistent with such directors' fiduciary duties to the
mutual holding company's members.

MARKET FOR THE STOCK

There is not, at this time, any market for Gateway Community Financial
Corp.'s stock. We have applied to have our common stock listed for trading on
the Nasdaq Global Market under the symbol "GCFC." Sandler O'Neill & Partners,
L.P. has advised us that it intends to make a market in our common stock
following the offering, but it is under no obligation to do so.

The development of an active trading market depends on the existence of
willing buyers and sellers, the presence of which is not within our control, or
that of any market maker. The number of active buyers and sellers of our stock
at any particular time may be limited. Under such circumstances, you could have
difficulty selling your shares of common stock. We cannot assure you that an
active and liquid trading market for the shares of common stock will develop or,
if developed, will be maintained. Nor can we

assure you that, if you purchase shares of common stock in the offering, you
will be able to sell them at a price equal to or above $10.00 per share.

CAPITALIZATION

Set forth below is the historical capitalization as of December 31,
2006 of Gateway Community Financial Corp. and the pro forma capitalization of
Gateway Community Financial Corp. as of December 31, 2006 after giving effect to
the offering and to the assumptions set forth under Pro Forma Data. No effect
has been given to the issuance of additional shares of stock pursuant to any
stock option plan that may be adopted by Gateway Community Financial Corp. and
presented for approval by the stockholders after the offering. An amount equal
to 4.9% of the total number of shares outstanding after the offering, including
shares held by Gateway Community Financial, MHC, would be reserved for issuance
upon the exercise of options to be granted under the stock option plan following
the stock offering. See Management - Stock Benefit Plans - Stock Option Plan.

Pro Forma Capitalization at December 31, 2006
---------------------------------------------
Maximum,
Minimum Midpoint Maximum as adjusted
2,295,000 2,700,000 3,105,000 3,570,750
Historical, at shares sold shares sold shares sold shares sold
December 31, at $10.00 at $10.00 at $10.00 at $10.00
2006 per share per share per share per share
---- --------- --------- --------- ---------
(In thousands)

Stockholders' equity:
Common stock, $0.10 par value,
25,000,000 shares authorized, assuming
shares outstanding as shown(1)(2)............ $1 $510 $600 $690 $794
Additional paid-in capital(1)(2)................. 249 21,921 25,839 29,758 34,264
Retained earnings................................ 28,686 28,686 28,686 28,686 28,686
Accumulated other comprehensive loss............. (33) (33) (33) (33) (33)
Less:
Common stock acquired by
the Gloucester County Federal Savings Bank
Employee Stock Ownership Plan(3)............... - (1,836) (2,160) (2,484) (2,857)
Common stock acquired by
the restricted stock plan(4)................... - (1,000) (1,176) (1,352) (1,555)
------- ------- ------- ------- -------
Total stockholders' equity....................... $28,903 $48,248 $51,756 $55,265 $57,299
======= ======= ======= ======= =======

(1) Pro forma data includes shares to be held by Gateway Community Financial,
MHC after completion of the stock offering. Gateway Community Financial,
MHC is currently the sole stockholder of Gateway Community Financial Corp.
and holds 10,000 shares of common stock of Gateway Community Financial
Corp. Upon completion of the offering, Gateway Community Financial, MHC
will hold 55% of the total shares of Gateway Community Financial Corp. to
be outstanding. Total outstanding shares upon completion of the offering
will be 5,100,000, 6,000,000, 6,900,000 and 7,935,000, at the minimum,
midpoint, maximum and adjusted maximum, respectively.

(2) The historical stockholders' equity includes the initial capitalization of
the mid-tier holding company upon its formation in 2001. The pro forma
stockholders' equity includes this initial capitalization. The pro forma
additional paid-in capital amounts represent the net offering proceeds,
less the par value of all shares outstanding upon completion of the
offering. Total outstanding shares upon completion of the offering will be
5,100,000, 6,000,000, 6,900,000 and 7,935,000, at the minimum, midpoint,
maximum and adjusted maximum, respectively.

(3) Assumes that 8% of the shares sold in the offering will be purchased by the
Gloucester County Federal Savings Bank Employee Stock Ownership Plan, and
that the funds used to acquire those shares will be borrowed from Gateway

Community Financial Corp., concurrent with the offering. For an estimate of
the impact of the loan on earnings, see Pro Forma Data. Gloucester County
Federal Savings Bank intends to make scheduled discretionary contributions
to the Gloucester County Federal Savings Bank Employee Stock Ownership Plan
sufficient to enable it to service and repay its debt over a ten year
period. The amount of shares to be acquired by the Gloucester County
Federal Savings Bank Employee Stock Ownership Plan is reflected as a
reduction of stockholders' equity. See Management - Stock Benefit Plans -
Employee Stock Ownership Plan. If the Gloucester County Federal Savings
Bank Employee Stock Ownership Plan is unable to purchase stock in the stock
offering due to an oversubscription in the offering by eligible account
holders having first priority, and the purchase price in the open market is
greater than the original $10.00 price per share, there will be a
corresponding reduction in stockholders' equity. See The Offering -
Subscription Offering - Subscription Rights.

(4) Assumes that an amount equal to 1.96% of the total number of shares
outstanding after the offering, including shares held by Gateway Community
Financial, MHC, is purchased by the restricted stock plan following the
stock offering. The stock purchased by the restricted stock plan is
reflected as a reduction of stockholders' equity. See footnote (2) to the
table under Pro Forma Data.

PRO FORMA DATA

The actual net proceeds from the sale of the stock cannot be determined
until the offering is completed. The net proceeds to Gateway Community Financial
Corp. are currently estimated to be between $22.2 million and $30.2 million
($34.8 million at the adjusted maximum), based on the following assumptions:

o shares sold in the offering will be sold in either the subscription
offering or the community offering, with no shares being sold in a
syndicated community offering; and

o expenses of the offering, including the fees and expenses of Sandler
O'Neill & Partners, L.P., are estimated to be between approximately
$768,000 at the minimum and $851,000 at the maximum ($899,000 at the
adjusted maximum).

The following table sets forth Gateway Community Financial Corp.'s
historical net income and stockholders' equity prior to the offering and pro
forma net income and stockholders' equity giving effect to the offering. In
preparing this table, we have made the following assumptions:

o Pro forma net income has been calculated assuming the stock had been sold
at the beginning of the period and the net proceeds had been invested at an
average yield of 5.0% for the year ended December 31, 2006, which
approximates the yield on a one-year U.S. Treasury bill on December 31,
2006. The yield on a one-year U.S. Treasury bill, rather than an arithmetic
average of the average yield on interest-earning assets and the average
rate paid on deposits, has been used to estimate income on net proceeds
because we believe that the one-year U.S. Treasury bill rate is a more
accurate estimate of the rate that would be obtained on an investment of
net proceeds from the offering. The pro forma after-tax yield (based upon a
40.0% tax rate) on the net proceeds is assumed to be 3.00% for the year
ended December 31, 2006.

o We assumed that 8.0% of the shares sold in the offering were purchased in
the offering by the Gloucester County Federal Savings Bank Employee Stock
Ownership Plan (ESOP) at a price of $10.00 per share using funds borrowed
from Gateway Community Financial Corp. We assumed that Gloucester County
Federal Savings Bank would make annual contributions to the Gloucester
County Federal Savings Bank Employee Stock Ownership Plan in an amount at
least equal to the principal and interest requirement of the loan. We have
assumed a 10-year amortization period for the loan. The stock acquired by
the Gloucester County Federal Savings Bank Employee Stock Ownership Plan is
reflected as a reduction of stockholders' equity. See Management - Stock
Benefit Plans - Employee Stock Ownership Plan.

o We assumed that the stock option plan had been approved by stockholders of
Gateway Community Financial Corp. and that Gateway Community Financial
Corp. had reserved for future issuance upon the exercise of options to be
granted under the plan an amount of stock equal to 4.9% of the total number
of shares outstanding after the offering, including shares held by Gateway
Community Financial, MHC. We assumed that options for all shares reserved
under the plan were granted to plan participants at the beginning of the
period and that 30% of the options granted were non- qualified options for
income tax purposes. We assumed that the options would vest at a rate of
20% per year and that compensation expense would be recognized on a
straight-line basis over the 5-year vesting period. See Management - Stock
Benefit Plans - Stock Option Plan.

o We assumed that the restricted stock plan had been approved by stockholders
of Gateway Community Financial Corp. and that the restricted stock plan had
acquired an amount of stock equal to 1.96% of the total number of shares
outstanding after the offering, including shares held by Gateway Community
Financial, MHC, at the beginning of the periods presented through open
market purchases at a price of $10.00 per share using funds contributed to
the restricted stock plan by Gloucester County Federal Savings Bank. We
assumed that all shares held by the plan were granted to plan participants
at the beginning of the period, that the shares would vest at a rate of 20%
per year and that compensation expense will be recognized on a
straight-line basis over the 5-year vesting period. See Management - Stock
Benefit Plans - Restricted Stock Plan.

o We did not include any withdrawals from deposit accounts to purchase shares
in the offering.

o Historical and pro forma per share amounts have been calculated by dividing
historical and pro forma amounts by the indicated number of shares of
stock, as adjusted in the pro forma earnings per share to give effect to
the purchase of shares by the Gloucester County Federal Savings Bank
Employee Stock Ownership Plan.

o Pro forma stockholders' equity amounts have been calculated as if the stock
had been sold on December 31, 2006 and no effect has been given to the
assumed earnings effect of the transaction.

The following pro forma data relies on the assumptions we outlined
above, and this data does not represent the fair market value of the common
stock, the current value of assets or liabilities, or the amount of money that
would be distributed to stockholders if Gateway Community Financial Corp. were
liquidated. The pro forma data does not predict how much we will earn in the
future. You should not use the following information to predict future results
of operations.

The following table summarizes historical and pro forma data of Gateway
Community Financial Corp. at or for the year ended December 31, 2006 based on
the assumptions set forth above and in the notes to the tables and should not be
used as a basis for projections of market value of the stock following the stock
offering. Pro forma stockholders' equity and pro forma book value per share do
not take into account the impact of the bad debt reserve if Gateway Community
Financial Corp. were liquidated.

Pro Forma
At or For the Year Ended December 31, 2006
------------------------------------------
Maximum,
Minimum Midpoint Maximum as adjusted
2,295,000 2,700,000 3,105,000 3,570,750
shares sold shares sold shares sold shares sold
at $10.00 at $10.00 at $10.00 at $10.00
per share per share per share per share
--------- --------- --------- ---------
(Dollars in thousands,
except share and per share amounts)

Gross proceeds ............................................... $ 22,950 $ 27,000 $ 31,050 $ 35,708
Less expenses ................................................ (768) (810) (851) (899)
Less ESOP funded by Gateway Community Financial .............. (1,836) (2,160) (2,484) (2,857)
Corp. ........................................................
Less restricted stock plan adjustment ........................ (1,000) (1,176) (1,352) (1,555)
-------- -------- -------- --------
Estimated investable net proceeds ......................... $ 19,346 $ 22,854 $ 26,363 $ 30,397
======== ======== ======== ========
Net Income:
Historical ................................................ $ 379 $ 379 $ 379 $ 379
Pro forma income on net proceeds .......................... 580 686 791 912
Pro forma ESOP adjustment(1) .............................. (110) (130) (149) (171)
Pro forma restricted stock plan adjustment(2) ............. (120) (141) (162) (187)
Pro forma option adjustment(3) ............................ (190) (223) (257) (295)
-------- -------- -------- --------
Pro forma net income ...................................... $ 539 $ 571 $ 602 $ 638
======== ======== ======== ========
Pro forma earnings per share(4) ........................... $ 0.11 $ 0.10 $ 0.09 $ 0.08
======== ======== ======== ========
Stockholders' Equity:
Historical ................................................ $ 28,903 $ 28,903 $ 28,903 $ 28,903
Estimated net proceeds .................................... 22,182 26,190 30,199 34,809
Less: common stock acquired by ESOP(1) .................... (1,836) (2,160) (2,484) (2,857)
Less: common stock acquired by restricted stock plan(2).... (1,000) (1,176) (1,352) (1,555)
-------- -------- -------- --------
Pro forma stockholders' equity ............................ $ 48,250 $ 51,757 $ 55,266 $ 59,300
======== ======== ======== ========
Pro forma book value per share(4) ......................... $ 9.46 $ 8.63 $ 8.01 $ 7.47
======== ======== ======== ========

Offering price as a percentage of pro forma
book value per share....................................... 105.4% 115.9% 124.8% 133.9%

Offering price to pro forma earnings per share................ 90.9x 100.0x 111.1x 125.0x

(1) The expense of Gloucester County Federal Savings Bank's contribution to its
Employee Stock Ownership Plan (ESOP) is based on an assumed average fair
value of $10.00 per share. If the fair market value is different than
$10.00 per share at the time the shares are released to ESOP participants,
the related expense recognized will be different. A higher fair market
value will result in higher compensation expense for the Bank.

(2) The issuance of authorized but unissued shares of stock to the restricted
stock plan instead of open market purchases would dilute the voting
interests of stockholders that purchased shares in the offering by
approximately 1.9%. If the actual cost of the shares acquired by the
restricted stock plan is different than $10.00 per share, the expense
recognized will be different. There can be no assurance that stockholder
approval of the restricted stock plan will be obtained or

that the actual purchase price of the shares will be equal to $10.00 per
share. See Management - Stock Benefit Plans - Restricted Stock Plan.

(3) The pro forma net income assumes that the options granted under the stock
option plan have a value of $4.07 per option, which was determined using
the Black-Scholes-Merton option pricing formula using the following
assumptions: (i) the trading price on date of grant was $10.00 per share;
(ii) exercise price is equal to the trading price on the date of grant;
(iii) dividend yield of 0%; (iv) vesting period of 5 years and expected
life of 10 years; (v) expected volatility of 9.69%; and risk-free interest
rate of 5.15%. Because there is currently no market for Gateway Community
Financial Corp.'s common stock, the assumed expected volatility is based on
the SNL Financial MHC index. If the fair market value per share on the date
of grant is different than $10.00, or if the assumptions used in the option
pricing formula are different from those used in preparing this pro forma
data, the value of the options and the related expense recognized will be
different. There can be no assurance that the actual fair market value per
share on the date of grant, and correspondingly the exercise price of the
options, will be $10.00 per share. The issuance of authorized but unissued
shares of stock instead of open market purchases to fund exercises of
options granted under the stock option plan would dilute the voting
interests of stockholders that purchased shares in the offering by
approximately 4.7%. See Management - Stock Benefit Plans - Stock Option
Plan.

(4) For purposes of calculating earnings per share, only the shares committed
to be released under the Gloucester County Federal Savings Bank Employee
Stock Ownership Plan were considered outstanding. For purposes of
calculating book value per share, all shares under the Gloucester County
Federal Savings Bank Employee Stock Ownership Plan were considered
outstanding. We have also assumed that no options granted under the stock
option plan were exercised during the period and that the trading price of
Gateway Community Financial Corp. common stock at the end of the period was
$10.00 per share. Under this assumption, using the treasury stock method,
no additional shares of stock were considered to be outstanding for
purposes of calculating earnings per share or book value per share.

HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE

The following table presents Gloucester County Federal Savings Bank's
historical and pro forma capital position relative to its regulatory capital
requirements as of December 31, 2006. Pro forma capital levels assume receipt by
the Bank of 50% of the net proceeds at all points of the offering range. For a
discussion of the assumptions underlying the pro forma capital calculations
presented below, see Use of Proceeds, Capitalization and Pro Forma Data. For a
discussion of the capital standards applicable to Gloucester County Federal
Savings Bank, see Regulation - Regulation of Gloucester County Federal Savings
Bank - Regulatory Capital Requirements.

Pro Forma at December 31, 2006
---------------------------------------------------------------------------------------
Minimum Midpoint Maximum Maximum, as adjusted
Actual, at 2,295,000 shares sold 2,700,000 shares sold 3,105,000 shares sold 3,570,750 shares sold
December 31, 2006 at $10.00 per share at $10.00 per share at $10.00 per share at $10.00 per share
----------------- --------------------- -------------------- ------------------- ---------------------
Percentage Percentage Percentage Percentage Percentage
Amount of Assets(1) Amount of Assets(1) Amount of Assets(1) Amount of Assets(1) Amount of Assets(1)
------ ------------ ------ ------------ ------ ------------ ------ ------------ ------ ------------
(Dollars in thousands)

GAAP Capital.......... $27,446 7.83% $35,702 9.95% $37,205 10.32% $38,709 10.70% $40,439 11.12%

Tangible Capital(2)... $27,446 7.83% $35,702 9.95% $37,205 10.32% $38,709 10.70% $40,439 11.12%
Tangible Capital
Requirement......... 5,260 1.50 5,384 1.50 5,406 1.50 5,429 1.50 5,455 1.50
------- ---- ------- ---- ------- ----- ------- ----- ------- -----
Excess................ $22,186 6.33% $30,318 8.45% $31,799 8.82% $33,280 9.20% $34,984 9.62%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====

Core Capital.......... $27,446 7.83% $35,702 9.95% $37,205 10.32% $38,709 10.70% $40,439 11.12%
Core Capital
Requirement......... 10,520 3.00 10,768 3.00 10,813 3.00 10,858 3.00 10,910 3.00
------- ---- ------- ---- ------- ----- ------- ----- ------- -----
Excess................ $16,926 4.83% $24,934 6.95% $26,393 7.32% $27,851 7.70% $29,529 8.12%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====

Total Risk-Based
Capital(3)(4)....... $29,070 14.23% $37,325 17.91% $38,829 18.57% $40,333 19.22% $42,062 19.96%
Risk-Based Capital
Requirement......... 16,338 8.00 16,668 8.00 16,728 8.00 16,788 8.00 16,857 8.00
------- ---- ------- ---- ------- ----- ------- ----- ------- -----
Excess................ $12,732 6.23% $20,657 9.91% $22,101 10.57% $23,545 11.22% $25,205 11.96%
======= ==== ======= ==== ======= ===== ======= ===== ======= =====

Reconciliation of pro forma increase
in GAAP and regulatory capital:
Bank's receipt of 50% of the net
proceeds from the offering....... $11,091 $13,095 $15,100 $17,405
Less: funding of employee
stock ownership plan........... (1,836) (2,160) (2,484) (2,857)
Less: funding of future
restricted stock plan.......... (1,000) (1,176) (1,352) (1,555)
------- ------- ------- -------
Total pro forma increase in
GAAP and regulatory capital.. $ 8,255 $ 9,759 $11,263 $12,993
======= ======= ======= =======

(1) Tangible and core capital levels are shown as a percentage of total
adjusted assets. The risk-based capital level is shown as a percentage of
risk-weighted assets.
(2) Generally accepted accounting principles, referred to as "GAAP," capital
includes goodwill, intangible assets and unrealized gain (loss) on
available for sale securities, net, which are not included in regulatory
capital.
(3) Assumes net proceeds are invested in assets that carry a 50%
risk-weighting.
(4) The difference between core capital and risk-based capital is attributable
to the addition of general loan loss reserves of $1.8 million and the
deduction of $128,000 of other assets required to be deducted.

SELECTED FINANCIAL AND OTHER DATA

The following financial information and other data is derived in part
from our audited consolidated financial statements and should be read together
with the consolidated financial statements and the notes thereto beginning on
page F-1 of this document.

At December 31,
---------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
(In thousands)

Balance Sheet Data:
Assets ................................ $ 351,864 $ 308,011 $ 315,927 $ 293,414 $ 312,402
Loans receivable, net ................. 210,492 180,916 167,320 163,343 182,660
Investment securities ................. 52,797 41,315 48,451 50,361 58,222
Mortgage-backed securities ............ 59,185 54,032 61,201 40,658 23,235
Cash and cash equivalents ............. 10,618 14,031 19,760 19,448 28,729
Deposits .............................. 315,962 277,544 286,611 266,895 283,732
Short-term borrowings ................. 4,400 - - - -
Total equity .......................... 28,903 28,546 26,934 25,332 27,062

For the Year Ended December 31,
-------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
(In thousands)

Summary of Operations:
Interest and dividend income .......... $ 16,273 $ 14,221 $ 13,913 $ 14,477 $ 17,306
Interest expense ...................... 9,377 5,871 5,204 5,899 9,007
--------- --------- --------- --------- ---------
Net interest income ................... 6,896 8,350 8,709 8,578 8,299
Provision for (recovery of) loan losses (348) (917) (13) 4,342 7,550
--------- --------- --------- --------- ---------
Net interest income after provision
for (recovery of) loan losses ....... 7,244 9,267 8,722 4,236 749
Noninterest income .................... 856 883 876 793 712
Noninterest expense ................... 7,631 7,634 7,689 7,384 6,022
--------- --------- --------- --------- ---------
Income before income taxes (benefit) .. 469 2,516 1,909 (2,355) (4,561)
Income tax (benefit) .................. 90 893 259 (673) (1,924)
--------- --------- --------- --------- ---------
Net income (loss) ..................... $ 379 $ 1,623 $ 1,650 $ (1,682) $ (2,637)
========= ========= ========= ========= =========

At or For the Year Ended December 31,
-------------------------------------
2006 2005 2004 2003 2002
------ ------ ------ ------ -----

Performance Ratios:
Return on average assets
(net income divided by
average total assets)................. 0.11% 0.53% 0.54% (0.56%) (0.87%)

Return on average equity
(net income divided by
average equity)........................ 1.33 6.04 6.43 (6.44) (8.87)

Net interest rate spread................. 2.06 2.80 2.98 3.38 2.82

Net interest margin on average
interest-earnings assets............... 2.25 2.94 3.08 3.33 3.02

Average interest-earning
assets to average
interest-bearing liabilities........... 106.20 106.40 105.64 97.99 106.16

Efficiency ratio (noninterest expense
divided by the sum of net interest
income and noninterest income)......... 98.44 82.68 80.22 78.80 66.83

Non-interest expense to average assets... 2.30 2.49 2.52 2.45 1.98

Asset Quality Ratios:
Non-performing loans to total loans, net. 1.17 1.75 0.80 1.46 0.84

Non-performing assets to total assets.... 0.80 1.14 0.58 0.99 0.51

Net charge-offs (recoveries) to
average loans outstanding............ 0.44 0.01 (0.07) 5.02 0.35

Allowance for loan losses to
total loans......................... 0.85 1.65 2.31 2.31 4.36

Allowance for loan losses to
non-performing loans................ 72.99 94.46 290.76 158.73 522.19

Capital Ratios:
Average equity to average assets......... 8.71 8.85 8.48 8.65 9.75

Equity to assets at period end........... 8.21 9.27 8.53 8.63 8.66

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis reflects Gateway Community Financial
Corp.'s consolidated financial statements and other relevant statistical data
and is intended to enhance your understanding of our financial condition and
results of operations. You should read the information in this section in
conjunction with Gateway Community Financial Corp.'s consolidated financial
statements and accompanying notes thereto beginning on page F-1 of this
document, and the other statistical data provided in this prospectus.

Overview

The consolidated financial condition and results of operations of
Gateway Community Financial Corp. include Gloucester County Federal Savings
Bank. Gateway Community Financial Corp. does not at the present time engage in
any activities other than serving as a holding company for Gloucester County
Federal Savings Bank.

Our primary business is attracting retail deposits from the general
public and using those deposits, together with funds generated from operations,
principal repayments on securities and loans and borrowed funds, for our lending
and investing activities. Our loan portfolio consists of one- to four-family
residential real estate mortgages, commercial real estate mortgages,
construction loans, commercial loans, home equity loans and lines of credit, and
other consumer loans. We also invest in U.S. government agency securities,
mortgage-backed securities and other investment grade securities.

Our results of operations depend mainly on our net interest income,
which is the difference between the interest income earned on our loan and
investment portfolios and interest expense paid on our deposits and borrowed
funds. It is a function of the average balances of loans and investments versus
deposits and borrowed funds outstanding in any one period and the yields earned
on those loans and investments and the cost of those deposits and borrowed
funds. Net interest income has been constrained over the last several years, as
interest rate spreads and our net interest margin were compressed due to the
increasing interest rate environment, particularly short-term interest rates.

Our results of operations are significantly affected by non-interest
income and non-interest expense. Non-interest income consists primarily of
income from service fees and charges for normal banking operations. It also
includes income on bank-owned life insurance. Noninterest income is affected by
gains or losses on sales of securities, loans, real estate owned and other
assets. Non-interest expense includes salaries and employee benefits, occupancy
and equipment expense and other general and administrative expenses such as data
processing, professional fees and marketing/advertising costs.

Following the completion of the stock offering, our non-interest
expense will increase as a result of the increased costs associated with
managing a public company, increased compensation expenses associated with the
purchase of shares of common stock by our employee stock ownership plan, and the
adoption of one or more stock-based incentive plans. See Management -
Compensation - Future Stock Benefit Plans at page __.

Our results of operations are also affected by provisions for loan
losses. Gloucester County Federal Savings Bank's allowance for loans losses is
established though provisions for loan losses that are charged against the
Bank's income during the period the provision is made. Loans deemed to be
uncollectible are charged against the allowance for loan losses, and amounts
recovered on loans previously charged against the allowance are credited back to
the allowance. We may also make recoveries of prior provisions charged

against income when management deems it appropriate to reduce the size of the
allowance to reflect the current estimate of future losses.

Asset Quality. In recent years we experienced significant problems with
the commercial loan portfolio we had developed in an effort to increase our
earnings by increasing our origination of higher yielding loans. We were forced
to charge off a large amount of loans that we deemed to be uncollectible.
Over the last five years, our net charge-offs of commercial real estate and
commercial loans amounted to $9.8 million. We believe we have made progress in
improving our asset quality, but our levels of non- performing assets continue
to be higher than our peer group. We believe we have identified all of the
problem loans and are adequately reserved for those loans, but if that turns out
not to be the case, our earnings and capital could be significantly and
adversely affected.

Management devoted a significant amount of time to workouts of the
problem loans. In 2003, the Bank's primary regulator, the Office of Thrift
Supervision, banned the Bank from originating new commercial loans until 2005
when it deemed the Bank's underwriting, credit administration and borrower
relationship management had sufficiently improved. We believe it is appropriate
now for us to seek to increase commercial real estate loans and commercial
loans. In March 2007, we hired a commercial lender to begin those efforts and we
anticipate further expanding the commercial loan department.

We also have plans to grow a manufactured housing loan portfolio as
well as to develop a niche as a lender for non-commercial use, personal
airplanes. We anticipate that those activities will offer attractive yields and
improve our earnings, but these are generally considered riskier credits.

Earnings. In 2002 and 2003, we reported net losses of $2.6 million and
$1.7 million, respectively. This was due in large part to the high loan loss
provisions that were charged to income during those years. Net income for 2006
reflects a recovery of loan loss provisions of $348,000, and net income for 2005
reflects a recovery of loan loss provisions of $917,000.

Net income for 2006 fell by $1.2 million to $379,000, significantly
lower than net income of $1.6 million for 2005. The lower net income for 2006
was primarily due to a $1.5 million decline in net interest income from $8.4
million for 2005 to $6.9 million for 2006, a decrease of 17.4%. Interest expense
grew by $3.5 million to $9.4 million from $5.9 million (a 59.7% increase) while
interest income rose by $2.1 million to $16.3 million from $14.2 million (a
14.4% increase). Noninterest income and noninterest expense did not change
significantly between 2005 and 2006.

Our challenge going forward is to improve earnings. It is possible that
we could report a loss for the current year if our net interest income continues
to be compressed to the point that it does not cover our operating expenses.
Additionally, we could incur a charge later this year if management and the
Board determine to close one of our offices that is underperforming. Since
opening in 2003, it continues to struggle to grow deposits to a point where the
location would be profitable.

Critical Accounting Policies

Our accounting policies are integral to understanding the results
reported and our significant policies are described in Note 1 to our
consolidated financial statements beginning on page F-1 of this document. In
preparing the consolidated financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the dates of the consolidated statements of financial
condition and revenues and expenses for the periods then ended. Actual results

could differ significantly from those estimates. A material estimate that is
particularly susceptible to significant change relates to the determination of
the allowance for loan losses.

Income Taxes

The Company accounts for income taxes under the asset/liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases, as well as operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is established against deferred tax assets
when, in the judgment of management, it is more likely than not that such
deferred tax assets will not become available. Because the judgment about the
level of future taxable income is dependent to a great extent on matters that
may, at least in part, be beyond the Company's control, it is at least
reasonably possible that management's judgment about the need for a valuation
allowance for deferred taxes could change in the near term.

Other-than-Temporary Investment Security Impairment

Securities are evaluated periodically to determine whether a decline in
their value is other-than- temporary. Management utilizes criteria such as the
magnitude and duration of the decline, in addition to the reasons underlying the
decline, to determine whether the loss in value is other-than-temporary. The
term "other than-temporary" is not intended to indicate that the decline is
permanent, but indicates that the prospect for a near-term recovery of value is
not necessarily favorable, or that there is a lack of evidence to support a
realizable value equal to or greater than the carrying value of the investment.
Once a decline in value is determined to be other-than-temporary, the value of
the security is reduced and a corresponding charge to earnings is recognized.

Allowance for Loan Losses

The allowance for loan losses is maintained by management at a level
which represents the evaluation of known and inherent risks in the loan
portfolio at the consolidated balance sheet date that are both probable and
reasonable to estimate. Management's periodic evaluation of the adequacy of the
allowance is based on the Bank's past loan loss experience, known and inherent
risks in the portfolio, adverse situations that may affect the borrower's
ability to repay, the estimated value of any underlying collateral, composition
of the loan portfolio, current economic conditions, and other relevant factors.
This evaluation is inherently subjective as it requires material estimates that
may be susceptible to significant change, including the amounts and timing of
future cash flows expected to be received on impaired loans.

The allowance consists of specific and general components. The specific
component related to loans that are classified as either doubtful, substandard,
or special mention. For such loans that are also classified as impaired, an
allowance is established when the discounted cash flows (or collateral value or
observable market price) of the impaired loan is lower than the carrying value
of that loan. The general component covers nonclassified loans and is based on
historical loss experience adjusted for qualitative factors.

Although specific and general loan loss allowances are established in
accordance with management's best estimate, actual losses are dependent upon
future events and, as such, further provisions

for loan losses may be necessary in order to increase the level of the allowance
for loan losses. For example, our evaluation of the allowance includes
consideration of current economic conditions, and a change in economic
conditions could reduce the ability of our borrowers to make timely repayments
of their loans. This could result in increased delinquencies and increased
non-performing loans, and thus a need to make increased provisions to the
allowance for loan losses, which would be a charge to income during the period
the provision is made, resulting in a reduction to our earnings. A change in
economic conditions could also adversely affect the value of the properties
collateralizing our real estate loans, resulting in increased charge-offs
against the allowance and reduced recoveries, and thus a need to make increased
provisions to the allowance for loan losses. Furthermore, a change in the
composition of our loan portfolio or growth of our loan portfolio could result
in the need for additional provisions.

Comparison of Financial Condition at December 31, 2006 and December 31, 2005

Assets. Total assets increased by $43.9 million, or 14.2%, to $351.9
million at December 31, 2006 from $308.0 million at December 31, 2005. This
increase was primarily due to increases in investment securities available for
sale and loans receivable.

Loans. Net loans receivable increased $29.6 million, or 16.4%, to
$210.5 million at December 31, 2006 from $180.9 million at December 31, 2005.
Loan growth in residential mortgages and home equity loans and lines of credit
resulted from economic growth in our market area and our increased marketing
efforts. The increases in those loan categories offset a decrease in auto loans,
which have decreased over the last several years following our decision to
significantly reduce indirect auto lending.

One- to four-family residential mortgages increased by 38.6% to $102.8
million at December 31, 2006 from $74.1 million at December 31, 2005. Home
equity loans and lines of credit increased by 19.5% to $59.3 million from $49.7
million. Commercial real estate loans and commercial loans totaled $14.3 million
and $4.6 million at December 31, 2006, representing 6.8% and 2.1% of our total
loans at that date. Commercial real estate loans and commercial loans as a
percentage of total loans have decreased in recent years as we worked through
problem loans and charged off a significant amount of such loans. We anticipate
that this segment of our loan portfolio will, however, rebound as we seek to
increase commercial real estate loans and commercial loans. We have recently
hired a commercial lender as part of our plan to diversify our loan portfolio
and improve our interest rate spread and margins. We also anticipate growing the
consumer loan portfolio by focusing on manufactured housing loans and aircraft
loans.

Deposits. Deposits increased by $38.4 million, or 13.8% to $316.0
million at December 31, 2006, from $277.5 million at December 31, 2005.
Certificates of deposit increased by $18.5 million or 12.9% to $162.1 million
during the year and accounted for approximately 51% of our total deposits at
both year- ends. Jumbo certificates of deposit (those with a minimum balance of
$100,000) comprised 33.9% of all certificates of deposit as of December 31,
2006. Certificates of deposit as of December 31, 2006 that were scheduled to
mature during 2007 amounted to $113.5 million.

Investment Securities. Investment securities increased $16.6 million,
or 17.4% to $112.0 million at December 31, 2006, from $95.3 million at December
31, 2005. This increase was due, primarily to our investment of funds from new
deposits and borrowings in mortgage-backed securities and, to a lesser extent,
in U.S. government agency securities.

Bank-Owned Life Insurance. We have purchased insurance on the lives of
a group of our key employees. The policies were purchased to help offset the
increase in the costs of various retirement benefits. The cash surrender value
of these policies is included as an asset on our balance sheet, and any

increase in the cash surrender value is recorded as noninterest income. In the
event of the death of an insured individual under these policies, we would
receive a death benefit, which would be recorded as noninterest income.

Borrowings. Funds borrowed from the Federal Home Loan Bank of New York
totaled $4.4 million at December 31, 2006, compared to no borrowings outstanding
at December 31, 2005. The increase in borrowed funds, combined with the increase
in deposits, was used to fund growth of the loan portfolio and the purchase of
investment securities.

Equity. Total equity was $28.9 million at December 31, 2006 and $28.5
million at December 31, 2005. The increase reflected net income of $379,000 for
the year, offset by a $22,000 increase in accumulated other comprehensive losses
resulting from higher unrealized losses on investment securities available for
sale at December 31, 2006.

Comparison of Operating Results for 2006, 2005 and 2004

General. Net income for 2006 decreased by $1.2 million, or 76%, to
$379,000 for 2006 compared to $1.6 million for 2005. Net income was
significantly lower for 2006 versus 2005 primarily due to a 17.4% decline in net
interest income and a smaller recovery of loan losses, which decreased from
$917,000 in 2005 to $348,000 in 2006. Net income for 2005 was slightly lower
than 2004's net income of $1.7 million, as an increase in recoveries of loan
losses of $904,000 in 2006 partially offset a decrease in net interest income of
$360,000 and an increase in income taxes of $634,000. Net income for 2004 was
$1.7 million. Net interest income for 2004 was $359,000 higher than for 2005.

Net Interest Income. Net interest income decreased by $1.5 million, or
17.4%, to $6.9 million for 2006 from $8.4 million for 2005. The decrease was
primarily attributable to an 74 basis point decrease in our interest rate spread
to 2.06% for 2006 from 2.80% for 2005. Our interest rate spread continues to
trend downward. Our interest rate spread for the fourth quarter of 2006 was __%.
The decrease in the net interest spread was due to average yields on
interest-earning assets increasing at a slower pace than the cost of
interest-bearing liabilities. During 2006, the Federal Reserve Board of
Governors increased its target for the federal funds rate six times, resulting
in increases in short-term interest rates while longer- term rates remained
relatively stable.

Net interest income for 2004 of $8.7 million resulted from lower
interest expense during that year. The net interest spread for 2004 was 2.98%.

The tables on pages _____ set forth the components of our net interest
income, yields on interest-earning assets and costs of interest-bearing
liabilities, and the effect on net interest income arising from changes in
volumes and rates.

Interest Income. Interest income increased $2.1 million, or 14.4%, to
$16.3 million for 2006 from $14.2 million for 2005. The increase resulted from a
$25.1 million increase in average interest-earning assets which had the effect
of increasing interest income by $1.8 million. In addition, there was a 28 basis
point increase in the overall yield on interest earning assets to 5.27% for
2006, from 4.99% for 2005 which increased interest income by $243,000. Loans
increased on average $28.6 million between the two periods, along with an
increase in the average balance of investment securities of $7.5 million and a
decrease in mortgage-backed securities of $6.0 million. Other interest earning
assets decreased by $5.1 million. The average yield on loans decreased to 5.74%
for 2006, from 5.81% for 2005. The average yields on

investment securities increased to 4.54% from 3.79% and the average yield on
mortgage backed securities increased to 4.34% from 3.93% for the 2006 and 2005
periods, respectively.

Interest income for 2004 was $308,000 less than 2005. The average yield
on interest earning assets for 2004 was 4.92%.

Interest Expense. Interest expense increased $3.5 million, or 59.7%, to
$9.4 million for 2006 from $5.9 million for 2005. The increase resulted from a
$24.1 million increase in average interest-bearing liabilities, which had the
effect of increasing interest expense by $1.3 million. In addition, there was a
102 basis point increase in the overall cost of interest-bearing liabilities to
3.21% for 2006 from 2.19% for 2005, which increased interest expense by $2.2
million. Money market and savings accounts decreased in the aggregate by
approximately $1.0 million, while certificates of deposits increased in the
aggregate by $13.1 million between the two periods, as depositors moved funds
into higher-yielding accounts in the higher interest rate environment. The
average balance of borrowed funds increased $12.7 million during the same
comparative periods. The cost of certificates of deposit increased to 4.17% for
2006 from 3.24% for 2005. The cost of borrowed funds increased to 5.36% from
4.06% for the same respective periods. The additional deposits and borrowings
were used to fund increases in loans and to purchase investment securities.

Interest expense for 2004 was $667,000 less than 2005. The average cost
of interest-bearing liabilities for 2004 was 1.94%.

Provision for Loan Losses. The allowance for loan losses is a valuation
account that reflects our estimation of the losses inherent in our loan
portfolio to the extent they are both probable and reasonable to estimate. The
allowance is established through provisions for loan losses that are charged to
income in the period they are established. We charge losses on loans against the
allowance for loan losses when we believe the collection of loan principal is
unlikely. Recoveries on loans previously charged-off are added back to the
allowance. We may also make recoveries of prior provisions charged against
income when management deems it appropriate to reduce the size of the allowance
to reflect the current estimate of future losses.

In each of the last three years, we took recoveries from the allowance
for loan losses after having made provisions to the allowance of $4.3 million in
2003 and $7.6 million in 2002. As of 2006 year-end, our classified loans
amounted to $6.2 million as compared to $16.7 million at December 31, 2004. This
was the primary reason that we determined it appropriate to take recoveries of
$13,000, $917,000 and $348,000 in 2004, 2005, and 2006, respectively. The amount
recovered from the allowance each year is reflected in the net income for that
year.

Noninterest Income. Noninterest income decreased by $27,000, or 3.1%,
to $856,000 for 2006, from $883,000 for 2005. Service charges and other fees
increased by $71,000 resulting from increased volume and earnings on bank-owned
life insurance increased $11,000. These increases were partially offset by
losses on the sale of securities of $30,000 and a decrease in other
miscellaneous non-interest income of $79,000.

Noninterest income for 2005 was $7,000 higher than noninterest income
for 2004. Increases in income for 2005 from bank-owned life insurance and other
miscellaneous non-interest income of $35,000 and $11,000, respectively, were
offset by a $15,000 decrease in income from service charges and other fees and a
gain of $23,000 on the sale of securities in 2004 that was not present in 2005.

Income on bank-owned life insurance increased in each of the last three
years represented approximately 24%, 28% and 30% of total noninterest income in
2004, 2005 and 2006, respectively. Our investment in bank-owned life insurance
totaled $7.5 million at December 31, 2006 versus $7.2 million a year earlier.

Noninterest Expense. Non-interest expense was $7.6 million in both 2006
and 2005. An increase in compensation and employee benefits expense of $91,000
and an increase in data processing expense of $22,000 were offset by a decrease
in occupancy and equipment expense of $46,000 and a decrease in federal deposit
insurance premiums of $46,000. Noninterest expense for 2004 was $7.7 million.
Compensation and benefits expense for 2004 was $71,000 lower than in 2005 but
professional fees were $83,000 higher and other miscellaneous noninterest
expenses were $67,000 higher. Professional fees and other expenses were higher
in 2004 than in 2005 mainly as a result of the high level of problem loans we
had in 2004 as compared to 2005.

The largest component of non-interest expense is compensation and
employee benefits, which at $4.4 million for 2006 represented 58% of total
noninterest expense for the year. After the stock offering, additional annual
employee compensation and benefit expenses stemming from the shares granted to
employees, officers and directors under new benefit plans will increase this
category of expense. We will recognize expense for our employee stock ownership
plan when shares are committed to be released to participants' accounts and will
recognize expenses for restricted stock awards over the vesting period of awards
made to recipients. In addition, we will be required to recognize compensation
expense related to stock options outstanding based upon the fair value of such
awards at the date of grant over the period that such awards are earned.
Additions to our lending staff are also expected to result in increases in
compensation expense.

We also expect that noninterest expense will be higher going forward as
a result of the accounting, legal and various other additional noninterest
expenses associated with operating as a public company, particularly as a result
of the requirements of the Sarbanes-Oxley Act of 2002.

Income Taxes. Income tax expense for 2006 was $90,000 as compared to
$893,000 for 2005 and $259,000 for 2004. The reduction for 2006 reflects the
much lower pre-tax income for that year as well as a reduction in the effective
tax rate. The decrease in the effective tax rate was due to an increase in
income from tax-exempt securities. The increase in income tax expense for 2005
as compared to 2004 reflects higher pre-tax income for 2005 compared to 2004 as
well as a $273,000 valuation allowance in 2004 that had the effect of reducing
taxes for that year.

Average Balance Sheet. The following table sets forth certain
information relating to Gateway Community Financial Corp. at and for the periods
indicated. The average yields and costs are derived by dividing income or
expense by the average daily balance of assets or liabilities, respectively, for
the periods presented.

At December 31, For the Year Ended December 31,
------------------ -------------------------------------------------------------------------------
2006 2006 2005 2004
------------------ -------------------------------------------------------------------------------
Average Average Average Average
Yield/ Average Yield/ Average Yield/ Average Yield/
Balance Cost Balance Interest Cost Balance Interest Cost Balance Interest Cost
------- ---- ------- -------- ---- ------- -------- ---- ------- -------- ----

Interest-earning assets: (Dollars in thousands)
Loans receivable(1).......... $212,305 5.81% $199,752 $11,474 5.74% $171,130 $ 9,940 5.81% $165,622 $ 9,800 5.92%
Mortgage-backed securities... 59,185 4.85% 55,642 2,416 4.34% 61,596 2,423 3.93% 56,933 2,108 3.70%
Investment securities........ 52,797 4.88% 51,845 2,285 4.54% 44,323 1,660 3.79% 48,024 1,862 3.90%
Other interest-earning
assets..................... 1,407 5.78% 3,007 98 3.26% 8,098 197 2.43% 12,662 143 1.13%
-------- -------- ------- -------- -------- -------- -------
Total interest-earning
assets.................... 326,067 4.60% 310,246 16,273 5.27% 285,147 14,220 4.99% 283,241 13,913 4.92%
------- -------- -------
Noninterest-earning assets.... 25,797 23,643 25,039 26,202
Allowance for loan losses..... (1,813) (2,442) (3,713) (3,947)
-------- -------- -------- --------
Total assets................ $351,864 $331,447 $306,473 $305,496
======== ======== ======== ========
Interest-bearing liabilities:
Interest bearing demand...... $ 35,926 1.49% $ 35,901 373 1.04% $ 36,610 221 0.60% $ 36,491 194 0.53%
Money market deposits........ 44,637 4.00% 34,959 1,339 3.83% 22,877 419 1.83% 25,837 297 1.15%
Savings accounts............. 63,470 2.10% 55,250 590 1.07% 68,301 683 1.00% 73,552 737 1.00%
Certificates of deposit...... 162,107 4.60% 153,155 6,386 4.17% 140,021 4,540 3.24% 132,238 3,975 3.01%
Federal Home Loan Bank
advances.................. 4,400 5.33% 12,859 689 5.36% 197 8 4.06% - - -%
-------- ------- ------- -------- -------- --------- --------
Total interest-bearing
liabilities............... 310,830 3.65% 292,124 9,377 3.21% 268,006 5,871 2.19% 268,118 5,203 1.94%
------- -------- --------
Noninterest-bearing
liabilities................. 12,131 10,721 11,612 11,730
-------- -------- -------- --------
Total liabilities............ 322,961 302,845 279,618 279,848
Retained earnings............. 28,903 28,602 26,855 25,648
-------- -------- -------- --------
Total liabilities and
retained earnings.......... $351,864 $331,447 $306,473 $305,496
======== ======== ======== ========
Net interest income........... $6,896 $8,349 $8,710
====== ====== ======
Interest rate spread(2)....... 2.06% 2.80% 2.98%
====== ====== ======
Net yield on interest-
earning assets(3)........... 2.25% 2.94% 3.08%
====== ====== ======
Ratio of average
interest-earning assets
to average interest-
bearing liabilities......... 106.20% 106.40% 105.64%
====== ====== ======

- -----------------
(1) Non-accruing loans have been included in loans receivable, and the effect
of such inclusion was not material.
(2) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net yield on interest-earning assets represents net interest income as a
percentage of average interest-earning assets.

Rate/Volume Analysis. The following table reflects the sensitivity of
Gateway Community Financial Corp.'s interest income and interest expense to
changes in volume and in interest rates during the periods indicated. Each
category reflects the: (1) changes in volume (changes in volume multiplied by
old rate); (2) changes in rate (changes in rate multiplied by old volume); and
(3) net change. The net change attributable to the combined impact of volume and
rate has been allocated proportionally to the absolute dollar amounts of change
in each.

Year Ended December 31, Year Ended December 31,
--------------------------- ---------------------------
2006 vs. 2005 2005 vs. 2004
--------------------------- ---------------------------
Increase (Decrease) Increase (Decrease)
Due to Due to

Volume Rate Net Volume Rate Net
------ ------ ----- ------ ------ ----

Interest and dividend income:
Loans receivable ................... $ 1,643 $ (109) $ 1,534 $ 313 $ (173) $ 140
Mortgage-backed securities ......... 95 (102) (7) 179 136 315
Investment securities .............. 288 337 625 (147) (55) (202)
Other interest-earning assets ...... (216) 117 (99) (25) 79 54
------- ------- ------- ------- ------- -------
Total interest-earning assets ..... $ 1,810 $ 243 $ 2,053 $ 320 $ (13) $ 307
======= ======= ======= ======= ======= =======

Interest expense:
Interest-bearing demands ........... $ (4) $ 156 $ 152 $ 1 $ 26 $ 27
Money market deposits .............. 300 620 920 (29) 151 122
Savings accounts ................... (144) 51 (93) (53) (1) (54)
Certificates of deposit ............ 456 1,390 1,846 242 323 565
Advances from Federal Home Loan Bank 678 3 681 -- 8 8
------- ------- ------- ------- ------- -------
Total interest-bearing liabilities $ 1,286 $ 2,220 $ 3,506 $ 161 $ 507 $ 668
======= ======= ======= ======= ======= =======

Change in net interest income ....... $ 524 $(1,977) $(1,453) $ 159 $ (520) $ (361)
======= ======= ======= ======= ======= =======

Management of Interest Rate Risk and Market Risk

Qualitative Analysis. Because the majority of our assets and
liabilities are sensitive to changes in interest rates, a significant form of
market risk for us is interest rate risk, or changes in interest rates.

Several years ago market interest rates were at historically low
levels. However, beginning in June 2004, the U.S. Federal Reserve steadily
increased its target federal funds rate, raising it significantly. While the
federal funds rate and other short-term market interest rates, which we use as a
guide to our deposit pricing, have increased, intermediate- and long-term market
interest rates, which we use as a guide to our loan pricing, have not increased
proportionately. This has led to a "flattening" of the market yield curve, which
has even "inverted" recently as short-term rates have exceeded long-term rates
over an

intermediate maturity horizon. The relatively flat yield curve has hurt our net
interest rate spread and net interest margin because the interest rates we pay
on our deposits have repriced upwards faster than the interest rates that we
earn on our loans and investments.

Quantitative Analysis. The following tables present Gloucester County
Federal Savings Bank's net portfolio value as of December 31, 2006. The net
portfolio values shown in these tables were calculated by the Office of Thrift
Supervision, based on information provided by Gloucester County Federal Savings
Bank.

At December 31, 2006
-------------------------------------------------------------------------
Net Portfolio Value
Net Portfolio Value as % of Present Value of Assets
------------------------- --------------------------------------------
Changes in Net Portfolio Basis Point
Rates(1) $ Amount $ Change % Change Value Ratio Change
-------- -------- -------- -------- ----------- ------
(Dollars in thousands)

+300 bp 17,802 -16,958 -49% 5.31% -442 bp
+200 bp 23,938 -10,822 -31% 6.98% -275 bp
+100 bp 29,586 -5,174 -15% 8.45% -128 bp
0 bp 34,760 9.73%
- -100 bp 37,421 2,661 +8% 10.34% +61 bp
- -200 bp 37,542 2,782 +8% 10.31% +58 bp

- ----------
(1) The -300bp scenario is not shown due to the relatively low prevailing
interest rate environment.

Future interest rates or their effect on net portfolio value or net
interest income are not predictable. Computations of prospective effects of
hypothetical interest rate changes are based on numerous assumptions, including
relative levels of market interest rates, prepayments, and deposit run-offs, and
should not be relied upon as indicative of actual results. Certain shortcomings
are inherent in this type of computation. Although certain assets and
liabilities may have similar maturity or periods of repricing, they may react at
different times and in different degrees to changes in the market interest
rates. The interest rate on certain types of assets and liabilities, such as
demand deposits and savings accounts, may fluctuate in advance of changes in
market interest rates, while rates on other types of assets and liabilities may
lag behind changes in market interest rates. Certain assets, such as adjustable
rate mortgages, generally have features which limit changes in interest rates on
a short-term basis and over the life of the asset. In the event of a change in
interest rates, prepayments and early withdrawal levels could deviate
significantly from those assumed in making the calculations set forth above.
Additionally, an increased credit risk may result as the ability of many
borrowers to service their debt may decrease in the event of an interest rate
increase.

Notwithstanding the discussion above, the quantitative interest rate
analysis presented above indicates that a rapid increase in interest rates would
adversely affect our net portfolio value and earnings.

Liquidity, Commitments and Capital Resources

The Bank must be capable of meeting its customer obligations at all
times. Potential liquidity demands include funding loan commitments, cash
withdrawals from deposit accounts and other funding needs as they present
themselves. Accordingly, liquidity is measured by our ability to have sufficient
cash reserves on hand, at a reasonable cost and/or with minimum losses.

The Asset and Liability Management Committee of the Board of Directors
sets limits and controls to guide senior management's managing of our overall
liquidity position and risk. This Committee, along with senior management, is
responsible for ensuring that our liquidity needs are being met on both a daily
and long term basis.

Our approach to managing day-to-day liquidity is measured through our
daily calculation of investable funds and/or borrowing needs to ensure adequate
liquidity. In addition, we constantly evaluate our short-term and long-term
liquidity risk and strategy based on current market conditions, outside
investment and/or borrowing opportunities, short and long-term economic trends,
and anticipated short and long-term liquidity requirements. The Bank's loan and
deposit rates may be adjusted as another means of managing short and long-term
liquidity needs. We do not at present participate in derivatives or other types
of hedging instruments to meet liquidity demands, as we take a conservative
approach in managing liquidity.

The following table discloses our contractual obligations as of
December 31, 2006. Payment amounts represent the principal amounts for
certificates of deposit and short-term borrowings. The Bank presently conducts
business from five offices plus an administrative building, all of which are
owned by the Bank. Thus, no lease obligations are shown in the following table.

Less Than After
Total 1 Year 1-3 Years 4-5 Years 5 Years
------- -------- --------- --------- --------
(In thousands)

Certificates of deposit.......... $162,107 $113,516 $23,033 $18,128 $7,430
Short-term borrowings............ 4,400 4,400 - - -
Director retirement plan(1)...... 410 54 108 108 140
-------- -------- ------- ------- ------
Total........................ $166,917 $117,970 $23,141 $18,236 $7,570
======== ======== ======= ======= ======

-------------------
(1) The Bank maintains a retirement plan for its directors (the
Director Fee Continuation Agreement) under which each eligible director
will receive benefits following retirement. This plan also has a
pre-retirement death benefit. More information about this plan can be
found under Director Compensation in the Management section of this
prospectus.

The following table discloses our commitments as of December 31, 2006,
all of which represent amounts committed to customers.

Total
Amounts Less Than Over
Committed 1 Year 1-3 Years 4-5 Years 5 Years
--------- -------- --------- --------- --------
(In thousands)

Lines of credit......................... $4,030 $ 134 $1,278 $2,618 $ -
Construction loans in process........... 223 223 - - -
Other commitments to extend credit...... 2,758 2,758 - - -
Standby letters of credit............... 1,206 1,206 - - -
------ ------ ------ ------ -------
Total............................... $8,217 $4,322 $1,278 $2,618 $ -
====== ====== ====== ====== =======

Regulatory Capital Compliance. Consistent with its goals to operate a
sound and profitable financial organization, the Bank actively seeks to maintain
its status as a well-capitalized institution in accordance with regulatory
standards. As of December 31, 2006, the Bank exceeded all applicable regulatory
capital requirements and was well-capitalized. See Note 15 to our consolidated
financial statements beginning at page F-1 for more information about the Bank's
regulatory capital compliance.

Off-Balance Sheet Arrangements

We are a party to financial instruments with off-balance-sheet risk in
the normal course of our business of investing in loans and securities as well
as in the normal course of maintaining and improving Gloucester County Federal
Savings Bank's facilities. These financial instruments include significant
purchase commitments, such as commitments related to capital expenditure plans
and commitments to purchase investment securities or mortgage-backed securities,
and commitments to extend credit to meet the financing needs of our customers.
At December 31, 2006, we had no significant off-balance sheet commitments other
than commitments to extend credit totaling $8.2 million, as shown in the table
above.

Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Our exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for commitments to
extend credit is represented by the contractual amount of those instruments. We
use the same credit policies in making commitments and conditional obligations
as we do for on-balance-sheet instruments. Since a number of commitments
typically expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. For additional information
regarding our outstanding lending commitments at December 31, 2006, see Note 14
our consolidated financial statements beginning on page F-1.

Impact of Inflation

The financial statements included in this document have been prepared
in accordance with accounting principles generally accepted in the United States
of America. These principles require the measurement of financial position and
operating results in terms of historical dollars, without considering changes in
the relative purchasing power of money over time due to inflation.

Our primary assets and liabilities are monetary in nature. As a result,
interest rates have a more significant impact on our performance than the
effects of general levels of inflation. Interest rates, however, do not
necessarily move in the same direction or with the same magnitude as the price
of goods and services, since such prices are affected by inflation. In a period
of rapidly rising interest rates, the liquidity and maturities of our assets and
liabilities are critical to the maintenance of acceptable performance levels.

The principal effect of inflation on earnings, as distinct from levels
of interest rates, is in the area of noninterest expense. Expense items such as
employee compensation, employee benefits and occupancy and equipment costs may
be subject to increases as a result of inflation. An additional effect of
inflation is the possible increase in the dollar value of the collateral
securing loans that we have made. We are unable to determine the extent, if any,
to which properties securing our loans have appreciated in dollar value due to
inflation.

Recent Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("FAS") No. 123R, Share-Based
Payment, which replaces FAS No. 123, Accounting for Stock-Based Compensation and
supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. This
statement requires that all share-based payments to employees, including grants
of employee stock options, be recognized as compensation costs in the financial
statements based on their

fair values. The impact of the adoption of this standard will be dependent on
the nature and extent of stock- based compensation granted in future periods.
See Pro Forma Data on page __ for an illustration of the application of this
standard.

In February 2006, the FASB issued FAS No. 155, Accounting for Certain
Hybrid Instruments, an amendment of FASB Statements No. 133 and 140. FAS No. 155
allows financial instruments that have embedded derivatives to be accounted for
as a whole (eliminating the need to bifurcate the derivative from its host) if
the holder elects to account for the whole instrument on a fair value basis.
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 adoption of this standard is not expected to have a material
effect on our results of operations or financial position.

In March 2006, the FASB issued FAS No. 156, Accounting for Servicing of
Financial Assets. This statement, which is an amendment to FAS No. 140, will
simplify the accounting for servicing assets and liabilities, such as those
common with mortgage securitization activities. Specifically, FAS No. 156
addresses the recognition and measurement of separately recognized servicing
assets and liabilities and provides an approach to simplify efforts to obtain
hedge-like (offset) accounting. FAS No. 156 also clarifies when an obligation to
service financial assets should be separately recognized as a servicing asset or
a servicing liability; requires that a separately recognized servicing asset or
servicing liability be initially measured at fair value, if practicable; and
permits an entity with a separately recognized servicing asset or servicing
liability to choose either of the amortization or fair value methods for
subsequent measurement. The provisions of FAS No. 156 are effective as of the
beginning of the first fiscal year that begins after September 15, 2006. The
adoption of this standard did not have a material effect on our results of
operations or financial position.

In September 2006, the FASB issued FAS No. 157, Fair Value
Measurements, which provides enhanced guidance for using fair value to measure
assets and liabilities. The standard applies whenever other standards require or
permit assets or liabilities to be measured at fair value. The standard does not
expand the use of fair value in any new circumstances. FAS No. 157 is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. Early adoption is
permitted. The adoption of this standard is not expected to have a material
effect on our results of operations or financial position.

In September 2006, the FASB issued FAS No. 158, Employers' Accounting
for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB
Statements No. 87, 88, 106 and 132(R). FAS No. 158 requires that a company
recognize the overfunded or underfunded status of its defined benefit post
retirement plans (other than multiemployer plans) as an asset or liability in
its statement of financial position and that it recognize changes in the funded
status in the year in which the changes occur through other comprehensive
income. FAS No. 158 also requires the measurement of defined benefit plan assets
and obligations as of the fiscal year-end, in addition to footnote disclosures.
On December 31, 2006, we adopted FAS No. 158, except for the measurement
provisions, which are effective for fiscal years ending after December 15, 2008.
The adoption of this standard is not expected to have a material effect on our
results of operations or financial position.

such position in the financial statement. FIN 48 also requires expanded
disclosure with respect to income tax positions taken that are not certain to be
realized. This interpretation is effective for fiscal years beginning after
December 15, 2006, and will require management to evaluate every open tax
position that exists in every jurisdiction on the date of initial adoption. We
are currently evaluating the impact the adoption of the standard will have on
our results of operations.

In September 2006, the FASB reached consensus on the guidance provided
by Emerging Issues Task Force Issue 06-4 ("EITF 06-4"), Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life
Insurance Arrangements. The guidance is applicable to endorsement split-dollar
life insurance arrangements, whereby the employer owns and controls the
insurance policy, that are associated with a postretirement benefit. EITF 06-4
requires that for a split-dollar life insurance arrangement within the scope of
the issue, an employer should recognize a liability for future benefits in
accordance with FAS No. 106 (if, in substance, a postretirement benefit plan
exists) or Accounting Principles Board Opinion No. 12 (if the arrangement is, in
substance, an individual deferred compensation contract) based on the
substantive agreement with the employee. EITF 06-4 is effective for fiscal years
beginning after December 15, 2007. The Company is currently evaluating the
impact the adoption of the standard will have on the Company's results of
operations or financial condition.

In September 2006, the FASB reached consensus on the guidance provided
by Emerging Issues Task Force Issue 06-5 ("EITF 06-5"), Accounting for Purchases
of Life Insurance-Determining the Amount That Could Be Realized in Accordance
with FASB Technical Bulletin No. 85-4, Accounting for Purchases of Life
Insurance. EITF 06-5 states that 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. EITF 06-5 also states that a policyholder should determine
the amount that could be realized under the life insurance contract assuming the
surrender of an individual-life by individual-life policy (or certificate by
certificate in a group policy). EITF 06-5 is effective for fiscal years
beginning after December 15, 2006. We are currently evaluating the impact the
adoption of the standard will have on our results of operations or financial
condition.

BUSINESS OF GATEWAY COMMUNITY FINANCIAL, MHC

Gateway Community Financial, MHC is a federal mutual holding company
and is subject to regulation by the Office of Thrift Supervision. Gateway
Community Financial, MHC currently owns 100% of the outstanding common stock of
Gateway Community Financial Corp. Upon completion of the offering, it will own
55%. So long as Gateway Community Financial, MHC is in existence, it will own a
majority of the outstanding common stock of Gateway Community Financial Corp. If
Gateway Community Financial, MHC converted to a full stock company in what is
referred to as a "second-step conversion," it would cease to exist. The Board of
Directors has no current plans to undertake a second- step transaction.

The primary business activity of Gateway Community Financial, MHC going
forward will continue to be owning a majority of Gateway Community Financial
Corp.'s common stock. Gateway Community Financial, MHC, however, is authorized
to engage in any other business activities that are permissible for mutual
holding companies under federal law, including investing in loans and
securities. Gateway Community Financial, MHC does not maintain offices separate
from those of Gloucester County Federal Savings Bank or employ any persons other
than certain Gloucester County Federal Savings Bank officers. Officers of
Gateway Community Financial, MHC are not separately compensated for their
service.

BUSINESS OF GATEWAY COMMUNITY FINANCIAL CORP.

Gateway Community Financial Corp. is a federal mutual holding company
subsidiary and is subject to regulation by the Office of Thrift Supervision. It
was organized for the purpose of being a holding company for Gloucester County
Federal Savings Bank.

Gateway Community Financial Corp.'s primary activity is and will
continue to be holding all of the stock of Gloucester County Federal Savings
Bank. Gateway Community Financial Corp. intends to use the proceeds of the
offering as discussed under Use of Proceeds. Gateway Community Financial Corp.
does not maintain offices separate from those of Gloucester County Federal
Savings Bank or employ any persons other than certain Gloucester County Federal
Savings Bank officers. Officers of Gateway Community Financial Corp. are not
separately compensated for their service.

BUSINESS OF GLOUCESTER COUNTY FEDERAL SAVINGS BANK

General

Gloucester County Federal Savings Bank is a federal stock savings bank.
Its deposits are insured by the Federal Deposit Insurance Corporation and it is
regulated by the Office of Thrift Supervision and the Federal Deposit Insurance
Corporation.

Our primary business is attracting retail deposits from the general
public and using those deposits, together with funds generated from operations,
principal repayments on securities and loans, and borrowed funds, for our
lending and investing activities. Our loan portfolio consists of one- to
four-family residential real estate mortgages, commercial real estate mortgages,
construction loans, commercial loans, home equity loans and lines of credit, and
other consumer loans. We also invest in U.S. government agency securities,
mortgage-backed securities and other investment grade securities. At December
31, 2006, our total assets were $351.9 million, and loans receivable, net
comprised 60% of total assets while our securities portfolio amounted to 32% of
total assets.

At December 31, 2006, we operated from five office locations plus an
administrative center and our total number of employees (counted on a full-time
equivalent basis) was 68.

Market Area. Our business of attracting deposits and making loans is
primarily conducted within our market area. A downturn in the local economy
could reduce the amount of funds available for deposit and the ability of
borrowers to repay their loans. As a result, our profitability could decrease.

We generally define the core market area for each of our offices by a
number of factors, including political boundaries, natural geographic and
man-made barriers, traffic patterns and the competitive situation. We currently
have four offices in Gloucester County, New Jersey and one office in Camden
County, New Jersey.

Glassboro Office. The demographics for this office reflect an average
sized market which is projected to experience slight growth in both population
and households through 2011. This market has higher levels of education and
white-collar jobs, and below average household income levels as well as fewer
family households when compared to the Gloucester County average. The market has
a total of 7,910 households which are concentrated in the upper affluent market
segment, in the 35-44 age bracket. This is an average-sized market in terms of
potential retail deposits and loans with below average propensities for most
deposit and loan products. This market has a higher number of businesses per
square

mile when compared to the Gloucester County average, with a large concentration
in the Membership Organization industry.

Monroe Township Office. The demographics for this office reflect an
average sized market which is projected to experience moderate growth in both
population and households through 2011. The market has higher levels of
education and white-collar jobs, and household income levels as well as an in
line level of family households when compared to the Gloucester County average.
The market has a total of 9,830 households which are concentrated in the upper
affluent market segment in the 35-44 age bracket. This is an average-sized
potential retail deposit and loan market with above average propensities for
most deposit and loan products. This market has a higher number of businesses
per square mile when compared to the Gloucester County average, with a large
concentration in the Construction - Special Trade Contractors industry.

Pitman Office. The demographics for this office reflect an small market
which is projected to experience moderate growth in both population and
households through 2011. This market has higher levels of education and
white-collar jobs, and below average household income levels as well as fewer
family households when compared to the Gloucester County average. The market has
a total of 4,361 households which are concentrated in the upper affluent market
segment, in the 35-44 and 45-54 age brackets. This is an average-sized market in
terms of potential retail deposits and loans with at or below average
propensities for most deposit and loan products. This market has a higher number
of businesses per square mile when compared to the Gloucester County average,
with a large concentration in the Construction - Special Trade Contractors and
industry.

Washington Township Office. The demographics for this office reflect a
large sized market which is projected to experience moderate growth in both
population and households through 2011. The market has higher levels of
education and white collar jobs, and household income levels as well as more
family households when compared to the Gloucester County average. The market has
a total of 19,208 households which are concentrated in the upper affluent market
segment in the 35-44 and 45-54 age brackets. This is an average sized potential
retail deposit and loan market with above average propensities for all deposit
and loan products. This market has a higher number of businesses per square mile
when compared to the Gloucester County average, with a large concentration in
Health Services industry.

Competition. We operate in a market area with a high concentration of
banking and financial institutions, and we face substantial competition in
attracting deposits and in originating loans. A number of our competitors are
significantly larger institutions with greater financial and managerial
resources and lending limits. Our ability to compete successfully is a
significant factor affecting our growth potential and profitability.

Our competition for deposits and loans historically has come from other
insured financial institutions such as local and regional commercial banks,
savings institutions, and credit unions located in our primary market area. We
also compete with mortgage banking and finance companies for real estate loans
and with commercial banks and other savings institutions for real estate loans
in addition to consumer and commercial loans, and we face competition for funds
from investment products such as mutual funds, short-term money funds and
corporate and government securities. There are large competitors operating
throughout our total market area, and we also face strong competition from other
community-based financial institutions.

Within the market areas for each of our five present locations (Erial,
Glassboro, Monroe Township, Pitman and Washington Township), our deposit share
as of June 30, 2006 was 1.2%, 14.1%, 9.6%, 42.8% and 9.4%, respectively.

Lending Activities

In recent years, commercial real estate and commercial loans as a
percentage of total loans have decreased as we worked through problem loans and
charged off a significant amount of such loans. We had begun originating a large
amount of commercial real estate and commercial loans in the late 1990s, but
experienced problems with those loans. We anticipate that this segment of our
loan portfolio will, however, rebound as we seek to increase commercial real
estate loans and commercial loans. We have recently hired a commercial lender as
part of our plan to diversify our loan portfolio and improve our interest rate
spread and margins.

Loan Portfolio Composition. The following table analyzes the
composition of our loan portfolio by loan category at the dates indicated.

At December 31,
2006 2005 2004 2003 2002
-------------------- -------------------- ------------------ ----------------- -------------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
(Dollars in Thousands)

Type of Loans:
- --------------
Real estate loans:
One-to-four family....... $102,755 48.08% $ 74,115 39.71% $ 56,736 32.44% $ 46,638 27.20% $ 50,489 25.78%
Home equity.............. 59,327 27.76 49,657 26.60 41,112 23.51 40,920 23.86 32,158 16.42
Commercial............... 14,472 6.77 13,889 7.45 18,116 10.36 22,578 13.17 34,668 17.70
Construction............. 711 0.33 1,667 0.89 776 0.44 815 0.48 2,278 1.16

Commercial.................. 4,561 2.14 6,022 3.23 11,533 6.59 16,870 9.84 32,405 16.55

Consumer and other loans:
Auto..................... 21,136 9.89 33,591 18.00 40,890 23.38 41,832 24.39 41,677 21.28
Manufactured housing..... 7,512 3.51 5,422 2.90 3,392 1.94 - - - -
Savings account.......... 1,093 0.51 1,080 0.58 1,106 0.63 948 0.55 1,183 0.60
Other.................... 2,155 1.01 1,203 0.64 1,248 0.71 878 0.51 1,001 0.51
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Total loans............ $213,722 100.00% $186,646 100.00% $174,909 100.00% $171,479 100.00% $195,859 100.00%
======== ====== ======== ====== ======== ====== ======== ====== ======== ======

Deferred loan fees (costs).. (164) (156) (8) 200 347
Less: unearned income....... 1,581 2,850 3,634 4,074 4,523
Less: allowance for
possible loan losses..... 1,813 3,036 3,963 3,862 8,329
-------- -------- -------- -------- --------
Total loans, net....... $210,865 $180,916 $167,320 $163,343 $182,660
======== ======== ======== ======== ========

Loan Maturity Schedule. The following tables set forth the maturity of
our loan portfolio at December 31, 2006. Demand loans, loans having no stated
maturity, and overdrafts are shown as due in one year or less. Loans are stated
in the following tables at contractual maturity and actual maturities could
differ due to prepayments.

At December 31, 2006
----------------------------------------------------------------------------------------------------------------
Real estate
1-to-4 Home Real estate Manufactured Savings
family equity commercial Construction Commercial Auto Housing Account Other Total
------ ------ ---------- ------------ ---------- ---- ------- ------- ----- -----
(In thousands)

Amounts Due:
Within 1 Year ..... $ 96 $ 120 $ 1,558 $ - $ 2,058 $ 708 $ - $ 27 $ 23 $ 4,590
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

After 1 year:
1 to 3 years .... 885 2,080 269 - 617 8,557 - 87 23 12,518
3 to 5 years .... 215 4,223 3,402 - 1,123 11,123 - 50 67 20,203
5 to 10 years ... 5,253 18,846 3,497 - 468 708 140 791 299 30,003
10 to 15 years .. 17,750 33,958 2,662 - 295 40 989 138 1,743 57,574
Over 15 years ... 78,556 100 3,084 711 - - 6,383 - - 88,834
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Total due after
one year......... 102,659 59,207 12,914 711 2,503 20,428 7,512 1,066 2,132 209,132
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total amount due .. $102,755 $ 59,327 $ 14,472 $ 711 $ 4,561 $ 21,136 $ 7,512 $ 1,093 $ 2,155 $213,722
======== ======== ======== ======== ======== ======== ======== ======== ======== ========

The following table sets forth the dollar amount of all loans at
December 31, 2006 that are due after December 31, 2007.

Floating or
Adjustable
Fixed Rates Rates Total
----------- ----- -----
(In thousands)
Real estate loans:
One-to-four family............ $100,931 $1,728 $102,659
Home equity................... 59,207 - 59,207
Commercial.................... 11,844 1,070 12,914
Construction.................. 711 - 711

Commercial........................ 1,838 665 2,503

Consumer:
Auto........................... 20,428 - 20,428
Manufactured housing........... 7,512 - 7,512
Savings account................ 1,066 - 1,066
Other.......................... 556 1,576 2,132
-------- ------ --------
Total...................... $204,093 $5,039 $209,132
======== ====== ========

Residential Lending. Currently, our main lending activity consists of
the origination of residential real estate loans, including single family homes
and residences housing up to four families. Our primary lending territory is
Gloucester County and surrounding areas in southern New Jersey, however, to a
smaller degree, we do originate loans throughout the entire state. We are
currently exploring expanding lending into eastern Pennsylvania and northern
Delaware. Although we underwrite most loans to conform to secondary market
standards, we generally retain the loans we originate in our portfolio. We
purchase loans to supplement our own originations and will continue to purchase
loans if the rates are attractive. In 2006 and 2005 we purchased $13.7 million
and $7.1 million of one-to-four family first mortgage loans in our market area
from a national lender. The seller retains servicing on these loans.

Our underwriting policies permit the origination of single family first
mortgage loans, for primary residence, with a loan-to-value of up to 95%. We
also offer an affordable housing/first time home buyer program, which uses the
95% loan-to-value limit but permits the borrower to have equity in the real
estate of only 3%. Loans in excess of 90% loan-to-value must have private
mortgage insurance. Our loan-to- value limit for non-single family first
mortgage loans (on one-to-four family properties) for primary residence is 80%.
We offer mortgage loans on non-owner occupied, investment properties with a 75%
loan-to-value limit.

Our fixed rate mortgage loans have terms of 10 to 30 years. Our
adjustable rate mortgages have 30 year terms.

We originate adjustable rate mortgages, or ARMs, at rates based upon
the U.S. Treasury One Year Constant Maturity as an index. We currently offer
either a 3/1 ARM or a 5/1 ARM. The rates on these loans reset on an annual
basis, beginning either the third or the fifth year, and have a two percent
annual adjustment cap, a five percent lifetime adjustment cap and a 3% floor.

Property appraisals on real estate securing one-to-four family
residential loans are made by state certified or licensed independent
appraisers.

Home Equity Lending. We offer home equity loans and home equity lines
of credit with loan-to- value amounts up to 90% of the appraised value less the
outstanding balance of the first mortgage, if the property securing the loan is
the borrower's primary or secondary residence. A 70% loan-to-value limit applies
otherwise.

Our home equity loans are generally originated for terms of up to 30
years. Our home equity line of credit has a five year draw period during which
the borrower may obtain advances on the line of credit, followed by a ten year
repayment period. The minimum periodic payment on the home equity line of credit
during the draw period is 0.005% of the outstanding principal balance plus
accrued interest. A variable rate with a 5% lifetime adjustment cap but no
annual adjustment cap applies to all home equity lines of credit.

Automated Valuation Models (AVM) are used for home equity loans and
lines of credit in amounts of $250,000 or less. Should the AVM not provide
sufficient value to support the request, a full appraisal may be requested by
the borrower at the borrower's expense.

We have recently introduced a CyberLoan home equity product, marketed
on a third party loan referral website. We pay a fee to advertise on this
website. These loans will be primarily located in New Jersey, but may also be
originated in eastern Pennsylvania and in northern Delaware. This program
commenced in the second quarter of 2007. These loans will be originated using
the services of remote closing agents.

Commercial Lending. Our primary commercial lending area is Gloucester,
Camden, Cumberland, Salem, Atlantic, Ocean, Cape May and Burlington Counties.
Loans outside of these counties are permitted (i) in order to allow the Bank to
follow existing customers when they may have borrowing needs outside of this
defined market area, or (ii) if we believe the loan to be a high quality credit.
We also will participate in loan originations with other financial institutions
on loans outside of our primary commercial lending area.

Our commercial underwriting standards require that borrowers have an
established history of legal and ethical financial dealings and that careful
consideration is given to the borrower's history, general background, management
experience and future plans, external environment, financial condition and
proposed collateral. We obtain as much specific information as possible about
the borrower's business and ability to manage its business in order to be
satisfied that the individuals have the capability to properly operate the
business. We generally require that borrowers who are not existing customers
should demonstrate at least two methods of repayment, one of which will be from
cash flow (or asset conversion) and the other will be from collateral of
determinable value or from a clear ability to liquidate other non-collateral
assets. We attempt to structure our commercial loans to meet the needs of our
customers with repayment over a period which shows a direct relationship to (i)
the purpose, (ii) the cash flow capabilities of the customer, and (iii) the
economic life of the collateral.

Our commercial real estate lending consists primarily of mortgage loans
for the acquisition or refinance of service/retail and mixed-use properties,
churches and non-profit properties, professional facilities and other commercial
real estate. The maximum loan-to-value ratio on most commercial real estate
loans we originate is 75%. The maximum term is normally no more than ten years,
with payments

based on a twenty-five year amortization. We offer fixed and adjustable rate
commercial real estate mortgages but generally will not offer a fixed rate
period of more than seven years.

We will provide financing for the owner-occupied commercial building as
well as for real estate investment. We will underwrite non-recourse loans if we
believe they are sufficiently supported by long- term leases with strong
tenants. We offer bridge or swing loans to provide temporary financing which
transfers equity from one or more parcels of real estate (present) to another
(future). The maximum loan amount for a bridge or swing loan will be 90% of the
appraised value of the property to be sold less all prior liens. Additional
collateral may be obtained to meet this loan-to-value requirement.

We offer non-real estate commercial loans consisting of regular lines
of credit and revolving lines of credit to businesses to finance short-term
working capital needs like accounts receivable and inventory. In general, lines
of credit allow for intermittent borrowings and repayments, and are not usually
accompanied by extensive loan agreements. They are generally priced on a
floating rate basis. Our policy is for all lines of credit to be secured and, if
possible, supported also by junior liens on real estate. Business assets such as
accounts receivable, inventory, equipment, furniture and fixtures may be used to
secure lines of credit. We generally provide regular lines of credit with a
maximum term of 18 months. Revolving lines of credit generally have a maximum
term of two years, but may be up to seven years if then converted to an
amortizing term loan.

We originate commercial term loans with maturities generally no longer
than 18 months. We also originate commercial term loans with a monthly or
quarterly amortization schedule to fund longer-term borrowing needs such as
purchasing equipment, property improvements or other fixed asset needs. We fix
the maturity of a term loan to correspond to the useful life of any equipment
purchased, if appropriate, and generally do not exceed a ten-year term, except
for certain real estate transactions. Term loans can be secured with a variety
of collateral, including business assets such as accounts receivable and
inventory or long-term assets such as equipment, furniture, fixtures or real
estate. When the purpose of a term loan is the purchase of new equipment that
will be pledged as collateral for the loan, the maximum advance is typically no
more than 90% of the purchase price. Used equipment may also be used as
collateral. The primary source of repayment for term loans is the global cash
flow of the borrowing entity.

Where a commercial loan is secured by "liquid collateral" (cash,
marketable securities, or cash surrender value of life insurance), we will offer
considerable flexibility with the repayment schedule or will underwrite these
loans with no maturity, on a demand basis. The loan to value limits for loans
secured by liquid collateral are:

o Cash - 100%
o United States Treasury Issues - 90%
o Common stocks actively traded on the New York and American stock
exchanges or listed on NASDAQ - 80%
o Municipal Bonds - 80%
o Mutual Funds - 70%
o Corporate Bonds - 75%
o Cash Surrender Value of Life Insurance - 90%
o Margin Stock - 50%.

Our commercial loan offerings also include overdrafts of demand deposit
accounts divided into four categories:

o Pure overdrafts
o Overdrafts that can be covered by available funds in other
deposit accounts (other than certificates of deposit) at the Bank
in the name of that depositor
o Overdrafts that can be covered by availability under
pre-established credit facilities of that depositor
o Overdrafts of a technical nature, caused internally.

We will also provide interim financing to commercial borrowers in
anticipation of a sale of an asset or closing of a long-term refinancing.

Unlike single-family residential mortgage loans, which generally are
made on the basis of the borrower's ability to make repayment from his or her
employment and other income, and which are secured by real property whose value
tends to be more easily ascertainable, commercial loans (including real estate
as well as non-real estate loans) typically are made on the basis of the
borrower's ability to make repayment from the cash flow of the borrower's
business or rental income produced by the property. As a result, the
availability of funds for the repayment of commercial loans may be substantially
dependent on the success of the business or rental property itself and the
general economic environment. Commercial loans, therefore, have greater credit
risk than one-to-four family residential mortgages or consumer loans. In
addition, commercial loans generally result in larger balances to single
borrowers, or related groups of borrowers and also generally require
substantially greater evaluation and oversight efforts.

Construction Lending. We originate construction and land acquisition
loans for owner-occupied residences, and we also provide financing to builders
and real estate developers for land acquisition and development and residential
or commercial construction. During the first quarter of 2007, we originated a
$1.9 million land acquisition and development loan with an 18-month term.

Construction funds are disbursed periodically upon inspections made by
our inspectors on the completion of each phase, usually in three draws.
Additional draws may be made at the borrower's request, however we generally
limit the funds disbursed to 80% of the appraised loan-to-value of the land and
improvements at any time during construction. Commercial construction loans are
limited to 75% of appraised value. Land acquisition and development loans are
limited to the lower of 90% of cost or 80%of the appraised value. Land
acquisition and development loans on properties with approved takeout financing
may be originated at up to 90% of the appraised value. Land loans are limited to
65% of the cost or appraised value.

Construction lending is generally considered to involve a higher degree
of credit risk than residential mortgage lending. If the estimate of
construction cost proves to be inaccurate, we may be compelled to advance
additional funds to complete the construction with repayment dependent, in part,
on the success of the ultimate project rather than the ability of a borrower or
guarantor to repay the loan. If we are forced to foreclose on a project prior to
completion, there is no assurance that we will be able to recover all of the
unpaid portion of the loan. In addition, we may be required to fund additional
amounts to complete a project and may have to hold the property for an
indeterminate period of time.

Consumer Lending. Our consumer lending products include loans for new
and used autos, boats, recreational vehicles (RVs) and aircraft and loans for
manufactured housing as well as secured and unsecured personal loans, account
loans and overdraft lines of credit.

The majority of the auto loans currently in our portfolio are indirect
auto loans the Bank purchased from one auto leasing company with which the Bank
maintained a relationship for over 20 years. Several

years ago, we determined to terminate the arrangement with that company because
the average rate on these loans due to the pass-through pricing resulted in a
below market yield. We will continue to originate direct auto loans to customers
of the Bank and a limited amount of indirect auto lending, but the overall size
of the auto loan portfolio is expected to decrease significantly as the indirect
loans from that particular relationship mature. We may resume a larger amount of
indirect auto lending through dealers if we find more profitable arrangements.

In 2004 we began originating loans for the purchase and refinance of
manufactured housing. The majority of these loans are indirect loans generated
by an independent outside source and purchased by the Bank with limited
recourse. The maximum loan amount is $200,000 and the loan-to-value limit is 80%
for homes on leased land (with a minimum cash deposit of 20%) and up to 90% for
loans that include the land the home occupies. We require a first lien on the
home and we record a first mortgage if it is a land/home loan. We currently
intend to limit this portfolio to approximately $30 million.

In 2007 we began providing financing for non-commercial use, personal
airplanes. During the first quarter of 2007 we originated four non-commercial
aircraft loans with an aggregate balance of approximately $1 million. We
anticipate growing this part of the consumer portfolio significantly as a niche
lending area, with the goal of growing the portfolio to as much as $15 million
in the first year. Our underwriting of these loans is done with a 90%
loan-to-value and the maximum loan amount is $1 million.

We also offer secured and unsecured personal loans with terms of up to
four years with a minimum and maximum balance of $1,000 and $15,000,
respectively.

Consumer lending is generally considered to involve a higher degree of
credit risk than residential mortgage lending. Consumer loan repayment is
dependent on the borrower's continuing financial stability and can be adversely
affected by job loss, divorce, illness or personal bankruptcy. The application
of various federal laws, including federal and state bankruptcy and insolvency
laws, may limit the amount which can be recovered on consumer loans in the event
of a default.

Loans to One Borrower. Under federal law, savings institutions have,
subject to certain exemptions, lending limits to one borrower in an amount equal
to the greater of $500,000 or 15% of the institution's unimpaired capital and
surplus. Accordingly, as of December 31, 2006, our loans to one borrower legal
limit was approximately $4.4 million. Our largest borrower at that date had one
loan outstanding with a balance at that date of $1.7 million, representing a
mortgage on a vacation home on the New Jersey shore. The Bank's loans to one
borrower legal lending limit will be higher following the stock offering because
the stock offering proceeds will increase the Bank's capital.

Loan Approval Procedures and Authority. Lending policies and loan
approval limits are approved and adopted by the Board of Directors. Lending
authority is vested primarily in a loan committee comprised of senior officers.
This committee may approve loans up to $750,000. Prior Board approval is
required for loans in excess of $750,000. Certain other Bank employees also have
limited lending authority and may authorize first mortgage loans up to $417,000
(the current conforming limit for sale in the secondary market as a non-jumbo
loan) and home equity and other secured loans up to $400,000. All loans require
the approval of at least two authorized employees.

Asset Quality

Loan Delinquencies and Collection Procedures. When a loan is 90 days
delinquent, the Board may determine to refer it to an attorney for repossession
or foreclosure. All reasonable attempts are made to collect from borrowers prior
to referral to an attorney for collection. In certain instances, we may modify
the loan or grant a limited moratorium on loan payments to enable the borrower
to reorganize his or her financial affairs, and we attempt to work with the
borrower to establish a repayment schedule to cure the delinquency.

With respect to mortgage loans, if a foreclosure action is taken and
the loan is not reinstated, paid in full or refinanced, the property is sold at
judicial sale at which we may be the buyer if there are no adequate offers to
satisfy the debt. Any property acquired as the result of foreclosure or by deed
in lieu of foreclosure is classified as real estate owned until it is sold or
otherwise disposed of. When real estate owned is acquired, it is recorded at the
lower of the unpaid principal balance of the related loan or its fair market
value less estimated selling costs. The initial writedown of the property is
charged to the allowance for loan losses. Adjustments to the carrying value of
the property that result from subsequent declines in value are charged to
operations in the period in which the declines occur.

Loans are generally placed on non-accrual status when they are more
than 90 days delinquent, however loans may be placed on a non-accrual status at
any time if, in the opinion of management, the collection of additional interest
is doubtful. Interest accrued and unpaid at the time a loan is placed on
non-accrual status is charged against interest income. Subsequent payments are
either applied to the outstanding principal balance or recorded as interest
income, depending on the assessment of the ultimate collectibility of the loan.

Non-Performing Assets. The following table provides information
regarding our non-performing loans and other non-performing assets.

At December 31,
--------------------------------------------------
2006 2005 2004 2003 2002
------ ------ ------ ------ ------
(Dollars in thousands)

Loans accounted for on a non-accrual basis:
- -------------------------------------------
Real Estate:
One-to-four family ............................. $ 103 $ 106 $ 452 $ 421 $ 349
Home equity .................................... 16 16 16 125 88
Commercial ..................................... 1,570 1,818 829 384 557
Construction ................................... - - - 600 -

Commercial ......................................... 663 1,087 27 641 497

Consumer:
Auto ........................................... 42 24 39 231 62
Other .......................................... 55 26 - 10 12
------ ------ ------ ------ ------
Total non-accrual loans .......................... 2,449 3,076 1,363 2,411 1,564
------ ------ ------ ------ ------

Accruing loans contractually past due 90 days or more:
- ------------------------------------------------------
Real Estate:
One-to-four family ............................. 32 122 - - -
Consumer:
Auto ........................................... - - - 8 -
Other consumer ................................. 2 16 - 14 31
------ ------ ------ ------ ------
Total accruing loans past due 90 days or more .... 34 138 0 22 31
------ ------ ------ ------ ------
Total non-performing loans ........................... $2,484 $3,214 $1,363 $2,433 $1,595
====== ====== ====== ====== ======
Real estate owned .................................... $ 288 $ 288 $ 461 $ 448 $ --
====== ====== ====== ====== ======
Other non-performing assets .......................... $ 49 $ 11 $ -- $ 14 $ --
====== ====== ====== ====== ======
Total non-performing assets .......................... $2,820 $3,513 $1,823 $2,895 $1,595
====== ====== ====== ====== ======
Total non-performing loans to total loans ............ 1.17% 1.75% 0.80% 1.46% 0.84%
====== ====== ====== ====== ======
Total non-performing loans to total assets ........... 0.71% 1.04% 0.43% 0.83% 0.51%
====== ====== ====== ====== ======
Total non-performing assets to total assets .......... 0.80% 1.14% 0.58% 0.99% 0.51%
====== ====== ====== ====== ======

Classified Assets. Management, in compliance with federal guidelines,
has instituted an internal loan review program, whereby loans are classified as
special mention, substandard, doubtful or loss. It is our policy to review the
loan portfolio, in accordance with regulatory classification procedures, on at
least a quarterly basis. When a loan is classified as substandard or doubtful,
management is required to evaluate the loan for impairment. When management
classifies a portion of a loan as loss, a reserve equal to 100% of the loss
amount is required to be established or the loan is to be charged-off.

An asset that does not currently expose the Bank to a sufficient degree
of risk to warrant an adverse classification, but which possesses credit
deficiencies or potential weaknesses that deserve management's close attention
is classified as "special mention."

An asset classified as "substandard" is inadequately protected by the
current net worth and paying capacity of the obligor or the collateral pledged,
if any. Assets so classified have well-defined weaknesses and are characterized
by the distinct possibility that the Bank will sustain some loss if the
deficiencies are not corrected.

An asset classified as "doubtful" has all the weaknesses inherent in a
"substandard" asset with the added characteristic that the weaknesses make
collection or liquidation in full, on the basis of currently existing facts,
conditions, and values, highly questionable and improbable. The possibility of a
loss on a doubtful asset is high.

That portion of an asset classified as "loss" is considered
uncollectible and of such little value that its continuance as an asset, without
establishment of a specific valuation or charge-off, is not warranted. This
classification does not necessarily mean that an asset has absolutely no
recovery or salvage value; but rather, it is not practical or desirable to defer
writing off a basically worthless asset even though partial recovery may be
effected in the future.

At December 31, 2006, all of our classified assets and special mention
designated assets were loans. At December 31, 2006, none of the loans classified
as "special mention," $1.5 million of loans classified as "substandard" and
$745,000 of the loans classified as "doubtful" are included in the table of non-
performing assets shown above.

The following table discloses our classification of assets and
designation of certain loans as special mention as of December 31, 2006.

At December 31,
--------------------------------------
2006 2005 2004
---- ---- ----
(In thousands)

Special Mention.............. $1,954 $1,162 $3,412
Substandard.................. 3,414 6,124 12,334
Doubtful..................... 796 1,246 924
Loss......................... - - -
------ ------ -------
Total...................... $6,164 $8,532 $16,670
====== ====== =======

Allowance for Loan Losses. The allowance for loan losses is established
through provisions for loan losses charged against income. Loans deemed to be
uncollectible are charged against the allowance for loan losses, and subsequent
recoveries, if any, are credited to the allowance.

The allowance for loan losses is maintained at a level by management
which represents the evaluation of known and inherent risks in the loan
portfolio at the consolidated balance sheet date that are both probable and
reasonable to estimate. Management's periodic evaluation of the adequacy of the
allowance is based on the Bank's past loan loss experience, known and inherent
risks in the portfolio, adverse situations that may affect the borrower's
ability to repay, the estimated value of any underlying collateral, composition
of the loan portfolio, current economic conditions, and other relevant factors.
This evaluation is inherently subjective as it requires material estimates that
may be susceptible to significant change, including the amounts and timing of
future cash flows expected to be received on impaired loans.

A loan is considered impaired when, based on current information and
events, it is probable that the Bank will be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms of
the loan agreement. Factors considered by management in determining impairment
include payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due. Loans that experience
insignificant payment delays and payment shortfalls generally are not classified
as impaired. Management determines the significance of payment delays and
payment shortfalls on a case-by-case basis, taking into consideration all of the
circumstances surrounding the loan and the borrower, including the length of the
delay, the reasons for the delay, the borrower's prior payment record, and the
amount of the shortfall in relation to the principal and interest owed.
Impairment is measured on a loan-by-loan basis for commercial and construction
loans by the present value of expected future cash flows discounted at the
loan's effective interest rate, the loan's obtainable market price, or the fair
value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively
evaluated for impairment. Accordingly, the Bank does not separately identify
individual consumer and residential mortgage loans for impairment disclosures.

Although specific and general loan loss allowances are established in
accordance with management's best estimate, actual losses are dependent upon
future events and, as such, further provisions for loan losses may be necessary
in order to increase the level of the allowance for loan losses. For example,
our evaluation of the allowance includes consideration of current economic
conditions, and a change in economic conditions could reduce the ability of our
borrowers to make timely repayments of their loans. This could result in
increased delinquencies and increased non-performing loans, and thus a need to
make increased provisions to the allowance for loan losses, which would be a
charge to income during the period the provision is made, resulting in a
reduction to our earnings. A change in economic conditions could also adversely
affect the value of the properties collateralizing our real estate loans,
resulting in increased charge-offs against the allowance and reduced recoveries,
and thus a need to make increased provisions to the allowance for loan losses.
Furthermore, a change in the composition of our loan portfolio or growth of our
loan portfolio could result in the need for additional provisions.

In addition, an integral part of its regulatory examination process,
the Office of Thrift Supervision periodically reviews our loan and foreclosed
real estate portfolios and the related allowance for loan losses and valuation
allowance for foreclosed real estate. It may require the allowance for loan
losses or the valuation allowance for foreclosed real estate to be increased
based on their review of information available at the time of the examination,
which would negatively affect our earnings.

The following table sets forth information with respect to our
allowance for loan losses at the dates indicated.

For the Year Ended December 31,
-----------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------

Allowance balance (at beginning of period) .... $ 3,036 $ 3,963 $ 3,862 $ 8,329 $ 1,468
Provision for loan losses ..................... (348) (917) (13) 4,342 7,550
Charge-offs:
Real estate:
One-to-four family ........................ - (17) - (19) -
Commercial ................................ (531) (23) - (1,329) -

Commercial .................................. (373) (37) (337) (7,313) (544)

Consumer .................................... (84) - (82) (165) (157)
--------- --------- --------- --------- ---------
Total charge-offs ....................... (988) (77) (419) (8,826) (701)
--------- --------- --------- --------- ---------
Recoveries:
Real estate:
One-to-four family ........................ 4 - 17 - -
Commercial ................................ 33 - 85 - -

Commercial .................................. 74 52 402 4 -

Consumer .................................... 2 15 29 13 12
--------- --------- --------- --------- ---------
Total recoveries ........................ 113 67 533 17 12
--------- --------- --------- --------- ---------
Net (charge-offs) recoveries .................. (875) (10) 114 (8,809) (689)
--------- --------- --------- --------- ---------
Allowance balance (at end of period) .......... $ 1,813 $ 3,036 $ 3,963 $ 3,862 $ 8,329
========= ========= ========= ========= =========

Total loans outstanding ....................... $ 212,305 $ 183,952 $ 171,283 $ 167,205 $ 190,989
========= ========= ========= ========= =========
Average loans outstanding ..................... $ 199,752 $ 171,130 $ 165,622 $ 175,412 $ 196,541
========= ========= ========= ========= =========
Allowance for loan losses as a percentage of
total loans outstanding .................... 0.85% 1.65% 2.31% 2.31% 4.36%
========= ========= ========= ========= =========
Net charge-offs (recoveries) as a percentage of
average loans outstanding .................. 0.44% 0.01% (0.07)% 5.02% 0.35%
========= ========= ========= ========= =========

Allocation of Allowance for Loan Losses. The following table sets forth
the allocation of our allowance for loan losses by loan category and the percent
of loans in each category to total loans receivable, net, at the dates
indicated. The portion of the loan loss allowance allocated to each loan
category does not represent the total available for future losses which may
occur within the loan category since the total loan loss allowance is a
valuation reserve applicable to the entire loan portfolio.

At December 31,
--------------------------------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
--------------------- ---------------------- -------------------- --------------------- --------------------
Loan Loan Loan Loan Loan
Amount of Category Amount of Category Amount of Category Amount of Category Amount of Category
Allowance as a Allowance as a Allowance as a Allowance as a Allowance as a
Allocated Percentage Allocated Percentage Allocated Percentage Allocated Percentage Allocated Percentage
to Loan of Total to Loan of Total to Loan of Total to Loan of Total to Loan of Total
Category Loans Category Loans Category Loans Category Loans Category Loans
-------- ------- -------- ------- -------- ------- -------- ------- -------- ------
(Dollars in thousands)

Real estate:
One-to-four
family........... $ 419 48.08% $ 460 39.71% $ 287 32.44% $ 170 27.20% $ 182 25.78%
Home equity........ 297 27.76 248 26.60 206 23.51 205 23.86 161 16.42
Commercial........ 484 6.77 465 7.45 948 10.36 897 13.17 1,397 17.70
Construction...... 4 0.33 7 1.89 40 0.44 4 0.48 7 1.16

Commercial............ 355 2.14 1,195 3.23 1,824 6.59 2,050 9.84 6,250 16.55

Consumer:
Auto.............. 132 9.89 440 18.00 248 23.38 243 24.39 309 21.28
Manufactured
housing......... 39 3.51 143 2.90 9 1.94 - - - -
Savings account... - 0.51 - 0.58 - 0.63 - 0.55 - 0.60
Other............. 1 1.01 7 0.64 2 0.71 2 0.51 2 0.51
Unallocated 82 71 399 291 21
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total............ $1,813 100.00% $3,036 100.00% $3,963 100.00% $3,862 100.00% $8,329 100.00%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======

Securities Portfolio

Our investment policy is designed to foster earnings and manage cash
flows within prudent interest rate risk and credit risk guidelines. Generally,
our investment policy is to invest funds in various categories of securities and
maturities based upon our liquidity needs, asset/liability management policies,
pledging requirements, investment quality, marketability and performance
objectives.

All of our securities carry market risk insofar as increases in market
rates of interest may cause a decrease in their market value. Prior to
investing, consideration is given to the interest rate, tax considerations,
market volatility, yield, settlement date and maturity of the security, our
liquidity position, and anticipated cash needs and sources. The effect that the
proposed security would have on our credit and interest rate risk and risk-based
capital is also considered.

Federally chartered savings banks have the authority to invest in
various types of liquid assets. The investments authorized under the Bank's
investment policy include U.S. government and government agency securities,
municipal securities (consisting of bond obligations of state and local
governments), mortgage-backed securities, collateralized mortgage obligations
and corporate bonds. On a short-term basis, our investment policy authorizes
investment in federal funds, certificates of deposits and money market
investments with insured institutions and with brokerage firms.

Statement of Financial Accounting Standards No. 115, Accounting for
Certain Investments in Debt and Equity Securities, requires that securities be
categorized as "held to maturity," "trading securities" or "available-for-sale,"
based on management's intent as to the ultimate disposition of each security.
Statement No. 115 allows debt securities to be classified as "held to maturity"
and reported in financial statements at amortized cost only if the reporting
entity has the positive intent and ability to hold these securities to maturity.
Securities that might be sold in response to changes in market interest rates,
changes in the security's prepayment risk, increases in loan demand, or other
similar factors cannot be classified as "held to maturity."

We do not currently use or maintain a trading account. Securities not
classified as "held to maturity" are classified as "available-for-sale." These
securities are reported at fair value, and unrealized gains and losses on the
securities are excluded from earnings and reported, net of deferred taxes, as a
separate component of stockholders' equity.

We do not currently participate in hedging programs, interest rate
caps, floors or swaps, or other activities involving the use of off-balance
sheet derivative financial instruments, however, we may in the future utilize
such instruments if we believe it would be beneficial for managing our interest
rate risk. Further, we do not purchase securities which are not rated investment
grade.

Actual maturities of the securities held by us may differ from
contractual maturities because issuers may have the right to call or prepay
obligations with or without prepayment penalties. Callable securities pose
reinvestment risk because we may not be able to reinvest the proceeds from
called securities at an equivalent or higher interest rate.

Mortgage-backed Securities and Collateralized Mortgage Obligations.
Mortgage-related securities represent a participation interest in a pool of one-
to four-family or multi-family mortgages. We primarily invest in mortgage-backed
securities secured by one- to four-family mortgages. Our mortgage-related
securities portfolio includes mortgage-backed securities and collateralized
mortgage

obligations issued by U.S. government agencies or government-sponsored entities,
such as Freddie Mac, Ginnie Mae, and Fannie Mae.

The mortgage originators use intermediaries (generally government
agencies and government-sponsored enterprises, but also a variety of private
corporate issuers) to pool and repackage the participation interests in the form
of securities, with investors such as us receiving the principal and interest
payments on the mortgages. Securities issued or sponsored by U.S. government
agencies and government-sponsored entities are guaranteed as to the payment of
principal and interest to investors. Privately issued non-government, corporate
issuers' securities typically offer rates above those paid on government agency
issued or sponsored securities, but lack the guaranty of those agencies and are
generally less liquid investments.

Mortgage-backed securities are pass-through securities typically issued
with stated principal amounts, and the securities are backed by pools of
mortgages that have loans with interest rates that are within a specific range
and have varying maturities. The life of a mortgage-backed security thus
approximates the life of the underlying mortgages. Mortgage-backed securities
generally yield less than the mortgage loans underlying the securities. The
characteristics of the underlying pool of mortgages, i.e., fixed-rate or
adjustable-rate, as well as prepayment risk, are passed on to the certificate
holder. Mortgage-backed securities are generally referred to as mortgage
participation certificates or pass-through certificates.

Collateralized mortgage obligations are mortgage-derivative products
that aggregate pools of mortgages and mortgage-backed securities and create
different classes of securities with varying maturities and amortization
schedules as well as a residual interest with each class having different risk
characteristics. The cash flows from the underlying collateral are usually
divided into "tranches" or classes whereby tranches have descending priorities
with respect to the distribution of principal and interest repayment of the
underlying mortgages and mortgage-backed securities as opposed to pass through
mortgage-backed securities where cash flows are distributed pro rata to all
security holders. Unlike mortgage-backed securities from which cash flow is
received and risk is shared pro rata by all securities holders, cash flows from
the mortgages and mortgage-backed securities underlying collateralized mortgage
obligations are paid in accordance with a predetermined priority to investors
holding various tranches of the securities or obligations.

The following table sets forth certain information regarding the
amortized cost, weighted average yields and maturities of our securities
portfolio at December 31, 2006. This table shows contractual maturities and does
not reflect repricing or the effect of prepayments. Actual maturities may
differ.

As of December 31, 2006
-----------------------------------------------------------------------------------------------------
Maturing Maturing Maturing Maturing
Within 2007 2008-2011 2012-2016 after 2016 Total
(One Year) (One to Five Years) (Five to Ten Years) (More than Ten Years) Investment Securities
---------- ------------------- ------------------ ---------------------- -----------------------
Amortized Avg. Amortized Avg. Amortized Avg. Amortized Avg. Amortized Avg Fair
Cost Yield Cost Yield Cost Yield Cost Yield Cost Yield Value
----- ------- ------ ------- ------ ------- ------ ------- ------ ------- -----
(Dollars in thousands)

Corporate securities....... $ - -% $ 1,028 5.65% $ - -% $ - -% $ 1,028 5.65% $ 1,001
U.S. government agency
securities.............. - - 17,807 3.86 11,479 5.88 15,185 6.14 44,471 5.16 44,277
Obligations of state and
political subdivisions.. 4,519 3.81 406 4.27 - - 625 4.00 5,550 3.42 5,560
Government National
Mortgage Association.... - - - - 26 5.38 4,661 5.34 4,687 5.31 4,681
Federal Home Loan
Mortgage Corporation.... - - 1,594 4.50 - - 1,757 4.39 3,351 4.44 3,314
Federal National Mortgage
Association............. - - 5,255 4.29 4,608 4.54 6,930 5.05 16,793 4.67 16,409
Collateralized mortgage
obligations............. - - - - - - 34,353 4.92 34,353 4.92 33,799
------ ---- ------- ---- ------- ---- ------- ---- -------- ---- --------

Total.................... $4,519 3.81% $26,090 3.84% $16,113 5.49% $63,511 5.19% $110,233 4.87% $109,041
====== ==== ======= ==== ======= ==== ======= ==== ======== ==== ========

The following table sets forth the carrying value of our securities
portfolio at the dates indicated.

At December 31,
----------------------------------------------------
2006 2005 2004 2003 2002
-------- -------- -------- -------- --------
(In thousands)

Investment Securities Available for Sale:
- ----------------------------------------------
Equity securities ............................ $ 1,718 $ 1,729 $ 1,689 $ 1,144 $ 1,149
U.S. government agency securities ............ 12,434 - - - -
Corporate securities ......................... - - - 3,208 3,303
-------- -------- -------- -------- --------
Total investment securities
available for sale ................ 14,152 1,729 1,689 4,351 4,452
-------- -------- -------- -------- --------
Mortgage-Backed Securities Available for Sale:
Government National Mortgage
Association ............................... 200 324 514 719 1,002
-------- -------- -------- -------- --------
Investment Securities Held to Maturity:
- ---------------------------------------
U.S. government agency securities ............ 32,067 35,351 33,364 16,998 13,910
Corporate securities ......................... 1,028 3,059 12,846 28,460 38,959
Obligations of states and political
subdivisions ............................. 5,550 1,176 552 552 903
-------- -------- -------- -------- --------
Total investment securities
held to maturity .................. 38,645 39,586 46,762 46,010 53,771
-------- -------- -------- -------- --------
Mortgage-Backed Securities Held to Maturity:
- --------------------------------------------
Government National Mortgage Association ..... 4,489 7,266 11,494 15,682 12,659
Federal Home Loan Mortgage Corporation ....... 3,351 2,983 3,991 3,271 3,085
Federal National Mortgage Association ........ 16,793 18,810 21,493 19,777 6,489
Collateralized mortgage obligations .......... 34,353 24,649 23,710 1,208 -
-------- -------- -------- -------- --------
Total mortgage-backed securities
held to maturity ................... 58,985 53,708 60,688 39,939 22,233
-------- -------- -------- -------- --------
Total ....................................... $111,982 $ 95,348 $109,652 $ 91,019 $ 81,457
======== ======== ======== ======== ========

Sources of Funds

General. Deposits are our major source of funds for lending and other
investment purposes. We also have the ability to borrow funds from the Federal
Home Loan Bank to supplement deposits as a source of funds.

In addition, we derive funds from loan and mortgage-backed securities
principal repayments, and proceeds from the maturity and call of investment
securities. Loan and securities payments are a relatively stable source of
funds, while deposit inflows and outflows are significantly influenced by
pricing strategies and money market conditions.

Deposits. Our current deposit products include checking and savings
accounts, certificates of deposit and fixed or variable rate individual
retirement accounts (IRAs). Deposit account terms vary, primarily as to the
required minimum balance amount, the amount of time, if any, that the funds must
remain on deposit and the applicable interest rate. The determination of deposit
and certificate interest rates is based upon a number of factors, including: (1)
need for funds based on loan demand, current maturities of deposits and other
cash flow needs; (2) a current survey of a selected group of competitors' rates
for similar products; (3) economic conditions; and (4) business plan
projections.

We traditionally have obtained deposits primarily from within New
Jersey. We recently introduced a new product, our CyberSavings account, which
has brought deposits into the Bank from throughout the

United States. This product is a high-yield, multi-tiered savings account that
is accessible only via the internet and is not marketed through our branches or
locally. To grow these deposits, we pay a fee to a third party referral website
which advertises financial products. We are currently promoting this product by
offering the highest tier rate for the first 90 days, regardless of the account
balance. We launched this product in December 2006 and CyberSavings accounts
grew quickly, totaling approximately $17 million by the end of the first quarter
of 2007.

We do not at this time utilize the services of deposit brokers.
Premiums or incentives for opening accounts are offered. We periodically select
particular certificate of deposit maturities for promotion in connection with
asset/liability management and interest rate risk concerns.

The following table sets forth the distribution of deposits by account
type as of the dates indicated. The increase in money market accounts from 2005
to 2006 is attributable to our introduction in 2005 of a multi-tiered money
market account we call the "Money Maker."

At December 31,
--------------------------------------
2006 2005 2004
-------- -------- --------
(In thousands)

Non-interest-bearing deposits.. $ 9,532 $ 12,123 $ 8,634
Savings ....................... 63,761 62,551 71,810
NOW checking .................. 35,926 34,560 38,641
Money market .................. 44,637 24,662 24,349
Certificates of deposit ....... 162,107 143,648 142,913
-------- -------- --------
Total ....................... $315,962 $277,544 $286,349
======== ======== ========

At December 31, 2006, $162.1 million of our deposits, representing
51.3% of total deposits, were certificates of deposit. The inflow of
certificates of deposit and the retention of such deposits upon maturity are
significantly influenced by general interest rates and money market conditions,
making certificates of deposit traditionally a more volatile source of funding
than core deposits. Our liquidity could be reduced if a significant amount of
certificates of deposit maturing within a short period of time were not renewed.
To the extent that such deposits do not remain with us, they may need to be
replaced with borrowings which could increase our cost of funds and negatively
impact our net interest rate spread and our financial condition.

The following table sets forth certificates of deposit classified by
interest rate as of the dates indicated.

At December 31,
------------------------------
2006 2005 2004
-------- -------- --------
(In thousands)

Interest Rate
2.00% or less....... $ - $ 3,328 $ 41,278
2.01-4.00% ......... 29,261 83,200 74,964
4.01-6.00% ......... 131,207 55,560 14,693
6.01-8.00% ......... 1,638 1,559 11,978
-------- -------- --------
Total ............ $162,107 $143,648 $142,913
======== ======== ========

The following table sets forth the amount and maturities of
certificates of deposit as of December 31, 2006.

Amount Due
---------------------------------------------------------------------------------------------
Within After
Interest Rate 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
- ------------- ------ --------- --------- --------- --------- ------- -----
(In thousands)

2.00% or less....... $ - $ - $ - $ - $ - $ - $ -
2.01-4.00%.......... 18,753 4,374 2,988 1,971 1,174 - 29,261
4.01-6.00%.......... 93,220 11,603 3,971 9,618 5,364 7,430 131,207
6.01-8.00%.......... 1,543 95 - - - - 1,638
-------- ------- ------ ------- ------ ------ --------
Total............. $113,516 $16,089 $6,943 $11,589 $6,538 $7,430 $162,107
======== ======= ====== ======= ====== ====== ========

The following tables show the amount of certificates of deposit of
$100,000 or more by time remaining until maturity as of December 31, 2006.

Certificates of Deposits
------------------------
Maturity Period (In thousands)
- ---------------
Within three months................ $18,344
Three through six months........... 14,715
Six through twelve months.......... 10,330
Over twelve months................. 11,621
-------
$55,010
=======

Borrowings. We borrow funds from the Federal Home Loan Bank to
supplement deposits as a source of funds. Short-term Federal Home Loan Bank
advances generally have original maturities of less than one year. The details
of these short-term advances are presented below for the dates and periods
indicated. At December 31, 2006, our borrowings consisted of $4.4 million of
FHLB overnight repurchase agreements.

At or For the
Year Ended December 31,
------------------------------------
2006 2005 2004
---- ---- ----
(Dollars in thousands)

Federal Home Loan Bank Advances:
Balance outstanding at end of period........... $ 4,400 $ - $ -
Average balance outstanding.................... 12,859 197 -
Maximum amount outstanding
at any month-end during the period.......... 24,100 - -
Average interest rate during the year.......... 5.36% 4.03% -
Weighted average rate at end of year........... 5.33% - -

Additional information regarding our borrowings is included under Note
10 to our consolidated financial statements beginning on page F-1.

Properties and Equipment

At December 31, 2006, our investment in property and equipment, net of
depreciation and amortization, totaled $6.5 million. We operated from five
offices at that date, plus an administrative center, and own each of those
locations.

Legal Proceedings

Gloucester County Federal Savings Bank, from time to time, is a party
to routine litigation which arises in the normal course of business, such as
claims to enforce liens, condemnation proceedings on properties in which it
holds security interests, claims involving the making and servicing of real
property loans, and other issues incident to its business. There were no
lawsuits pending or known to be contemplated against Gateway Community Financial
Corp. or Gloucester County Federal Savings Bank at December 31, 2006 that were
expected to have a material effect on operations or income.

REGULATION

Gloucester County Federal Savings Bank and Gateway Community Financial
Corp. operate in a highly regulated industry. This regulation establishes a
comprehensive framework of activities in which a savings and loan holding
company and federal savings bank may engage and is intended primarily for the
protection of the deposit insurance fund and depositors. Set forth below is a
brief description of certain laws that relate to the regulation of Gloucester
County Federal Savings Bank and Gateway Community Financial Corp. The
description does not purport to be complete and is qualified in its entirety by
reference to applicable laws and regulations.

Regulatory authorities have extensive discretion in connection with
their supervisory and enforcement activities, including the imposition of
restrictions on the operation of an institution and its holding company, the
classification of assets by the institution and the adequacy of an institution's
allowance for loan losses. Any change in such regulation and oversight, whether
in the form of regulatory policy, regulations, or legislation, including changes
in the regulations governing mutual holding companies, could have a material
adverse impact on Gateway Community Financial Corp., Gloucester County Federal
Savings Bank, and their operations. The adoption of regulations or the enactment
of laws that restrict the operations of Gloucester County Federal Savings Bank
and/or Gateway Community Financial Corp. or impose burdensome requirements upon
one or both of them could reduce their profitability and could impair the value
of Gloucester County Federal Savings Bank's franchise, resulting in negative
effects on the trading price of Gateway Community Financial Corp. common stock.

Regulation of Gloucester County Federal Savings Bank

General. As a federally chartered, Federal Deposit Insurance
Corporation-insured savings bank, Gloucester County Federal Savings Bank is
subject to extensive regulation by the Office of Thrift Supervision and the
Federal Deposit Insurance Corporation. This regulatory structure gives the
regulatory authorities extensive discretion in connection with their supervisory
and enforcement activities and examination policies, including policies
regarding the classification of assets and the level of the allowance for loan
losses. The activities of federal savings banks are subject to extensive
regulation, including restrictions or requirements with respect to loans to one
borrower, the percentage of non-mortgage loans or investments to total assets,
capital distributions, permissible investments and lending activities,
liquidity, transactions with affiliates and community reinvestment. Federal
savings banks are also subject to reserve requirements imposed by the Federal
Reserve System. A federal savings bank's relationship with its

depositors and borrowers is regulated by both state and federal law, especially
in such matters as the ownership of savings accounts and the form and content of
the bank's mortgage documents.

Gloucester County Federal Savings Bank must file reports with the
Office of Thrift Supervision concerning its activities and financial condition,
and must obtain regulatory approvals prior to entering into certain
transactions, such as mergers with or acquisitions of other financial
institutions. The Office of Thrift Supervision regularly examines Gloucester
County Federal Savings Bank and prepares reports to the Bank's Board of
Directors on deficiencies, if any, found in its operations. The Office of Thrift
Supervision has substantial discretion to impose enforcement action on an
institution that fails to comply with applicable regulatory requirements,
particularly with respect to its capital requirements. In addition, the Federal
Deposit Insurance Corporation has the authority to recommend to the Director of
the Office of Thrift Supervision that enforcement action be taken with respect
to a particular federal savings bank and, if action is not taken by the
Director, the Federal Deposit Insurance Corporation has authority to take such
action under certain circumstances.

Insurance of Deposit Accounts. The Bank's deposits are insured to
applicable limits by the Federal Deposit Insurance Corporation ("FDIC").
Although the FDIC is authorized to assess premiums under a risk-based system for
such deposit insurance, most insured depository institutions have not been
required to pay premiums for the last ten years. The Federal Deposit Insurance
Reform Act of 2005 (the "Reform Act") resulted in significant changes to the
federal deposit insurance program: (i) effective March 31, 2006, the Bank
Insurance Fund and the Savings Association Insurance Fund were merged into a new
combined fund, called the Deposit Insurance Fund; (ii) the current $100,000
deposit insurance coverage will be indexed for inflation (with adjustments every
five years, commencing January 1, 2011); and (iii) deposit insurance coverage
for retirement accounts was increased to $250,000 per participant subject to
adjustment for inflation. In addition, the Reform Act gave the FDIC greater
latitude in setting the assessment rates for insured depository institutions,
which could be used to impose minimum assessments.

The FDIC is authorized to set the reserve ratio for the Deposit
Insurance Fund annually at between 1.15% and 1.5% of estimated insured deposits.
If the Deposit Insurance Fund's reserves exceed the designated reserve ratio,
the FDIC is required to pay out all or, if the reserve ratio is less than 1.5%,
a portion of the excess as a dividend to insured depository institutions based
on the percentage of insured deposits held on December 31, 1996 adjusted for
subsequently paid premiums. Insured depository institutions that were in
existence on December 31, 1996 and paid assessments prior to that date (or their
successors) are entitled to a one-time credit against future assessments based
on the amount of their assessable deposits on that date. The Bank anticipates
that it will be able to offset its deposit insurance premium for 2007 with the
$245,000 special one-time assessment credit it will receive during 2007.

Pursuant to the Reform Act, the FDIC has determined to maintain the
designated reserve ratio at 1.25%. The FDIC has also adopted a new risk-based
premium system that provides for quarterly assessments based on an insured
institution's ranking in one of four risk categories based on their examination
ratings and capital ratios. Beginning in 2007, well-capitalized institutions
with the CAMELS ratings of 1 or 2 will be grouped in Risk Category I and will be
assessed for deposit insurance at an annual rate of between five and seven basis
points, with the assessment rate for an individual institution to be determined
according to a formula based on a weighted average of the institution's
individual CAMEL component ratings plus either five financial ratios or the
average ratings of its long-term debt. Institutions in Risk Categories II, III
and IV will be assessed at annual rates of 10, 28 and 43 basis points,
respectively.

In addition, all FDIC-insured institutions are required to pay
assessments to the FDIC to fund interest payments on bonds issued by the
Financing Corporation ("FICO"), an agency of the Federal

government established to recapitalize the predecessor to the SAIF. The FICO
assessment rates, which are determined quarterly, averaged 0.013% of insured
deposits in fiscal 2006. These assessments will continue until the FICO bonds
mature in 2017.

Regulatory Capital Requirements. Office of Thrift Supervision capital
regulations require savings institutions to meet three minimum capital
standards: (1) tangible capital equal to 1.5% of total adjusted assets, (2)
"Tier 1" or "core" capital equal to at least 4% (3% if the institution has
received the highest possible rating on its most recent examination) of total
adjusted assets, and (3) risk-based capital equal to 8% of total risk-weighted
assets. At December 31, 2006, Gloucester County Federal Savings Bank was in
compliance with the minimum capital standards and qualified as "well
capitalized." For Gloucester County Federal Savings Bank's compliance with these
regulatory capital standards, see Historical and Pro Forma Capital Compliance as
well as Note 15 to the consolidated financial statements. In assessing an
institution's capital adequacy, the Office of Thrift Supervision takes into
consideration not only these numeric factors but also qualitative factors, and
has the authority to establish higher capital requirements for individual
institutions where necessary.

The Office of Thrift Supervision may require any savings institution
that has a risk-based capital ratio of less than 8%, a ratio of Tier 1 capital
to risk-weighted assets of less than 4% or a ratio of Tier 1 capital to total
adjusted assets of less than 4% (3% if the institution has received the highest
rating on its most recent examination) to take certain action to increase its
capital ratios. If the savings institution's capital is significantly below the
minimum required levels of capital or if it is unsuccessful in increasing its
capital ratios, the institution's activities may be restricted.

For purposes of the capital regulations, tangible capital is defined as
core capital less all intangible assets except for certain mortgage servicing
rights. Tier 1 or core capital is defined as common stockholders' equity,
non-cumulative perpetual preferred stock and related surplus, minority interests
in the equity accounts of consolidated subsidiaries, and certain
non-withdrawable accounts and pledged deposits of mutual savings banks.
Gloucester County Federal Savings Bank does not have any non-withdrawable
accounts or pledged deposits. Tier 1 and core capital are reduced by an
institution's intangible assets, with limited exceptions for certain mortgage
and non-mortgage servicing rights and purchased credit card relationships. Both
core and tangible capital are further reduced by an amount equal to the savings
institution's debt and equity investments in "non-includable" subsidiaries
engaged in activities not permissible for national banks other than subsidiaries
engaged in activities undertaken as agent for customers or in mortgage banking
activities and subsidiary depository institutions or their holding companies.

The risk-based capital standard for savings institutions requires the
maintenance of total capital of 8% of risk-weighted assets. Total capital equals
the sum of core and supplementary capital. The components of supplementary
capital include, among other items, cumulative perpetual preferred stock,
perpetual subordinated debt, mandatory convertible subordinated debt,
intermediate-term preferred stock, the portion of the allowance for loan losses
not designated for specific loan losses and up to _____% of unrealized gains on
equity securities. The portion of the allowance for loan and lease losses
includable in supplementary capital is limited to a maximum of 1.25% of
risk-weighted assets. Overall, supplementary capital is limited to 100% of core
capital. For purposes of determining total capital, a savings institution's
assets are reduced by the amount of capital instruments held by other depository
institutions pursuant to reciprocal arrangements and by the amount of the
institution's equity investments (other than those deducted from core and
tangible capital) and its high loan-to-value ratio land loans and
non-residential construction loans.

A savings institution's risk-based capital requirement is measured
against risk-weighted assets, which equal the sum of each on-balance-sheet asset
and the credit-equivalent amount of each off-balance-sheet item after being
multiplied by an assigned risk weight. These risk weights range from 0% for cash
to 100% for delinquent loans, property acquired through foreclosure, commercial
loans, and certain other assets.

Dividend and Other Capital Distribution Limitations. A savings
institution, like Gloucester County Federal Savings Bank, that is a subsidiary
of a savings and loan holding company must file an application or a notice with
the Office of Thrift Supervision at least thirty days before making a capital
distribution, such as paying a dividend to Gateway Community Financial Corp. The
Office of Thrift Supervision imposes various restrictions or requirements on the
ability of savings institutions to make capital distributions, including cash
dividends. A savings institution must file an application for prior approval of
a capital distribution if: (i) it is not eligible for expedited treatment under
the applications processing rules of the Office of Thrift Supervision; (ii) the
total amount of all capital distributions, including the proposed capital
distribution, for the applicable calendar year would exceed an amount equal to
the savings institution's net income for that year to date plus the
institution's retained net income for the preceding two years; (iii) it would
not adequately be capitalized after the capital distribution; or (iv) the
distribution would violate an agreement with the Office of Thrift Supervision or
applicable regulations. The Office of Thrift Supervision may disapprove a notice
or deny an application for a capital distribution if: (i) the savings
institution would be undercapitalized following the capital distribution; (ii)
the proposed capital distribution raises safety and soundness concerns; or (iii)
the capital distribution would violate a prohibition contained in any statute,
regulation or agreement.

Capital distributions by Gateway Community Financial Corp., as a
savings and loan holding company, are not subject to the Office of Thrift
Supervision capital distribution rules. Because Gateway Community Financial
Corp. will retain 50% of the net proceeds of the stock offering, the possibility
that Gloucester County Federal Savings Bank would need to file an application
rather than a notice for capital distributions is not expected to affect the
payment of cash dividends by Gateway Community Financial Corp. to its
stockholders or the amount of such dividends.

Safety and Soundness Standards. As required by statute, the federal
banking agencies have adopted guidelines establishing general standards relating
to internal controls, information and internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth, asset
quality, earnings and compensation, fees and benefits. The guidelines require,
among other things, the implementation of appropriate systems and practices to
identify and manage the risks and exposures specified in the guidelines. If it
is determined that a savings institution has failed to meet any standard
prescribed by the guidelines, the institution may be required to submit an
acceptable plan to achieve compliance with the standard.

Qualified Thrift Lender Test. Savings institutions must meet a
qualified thrift lender test or they become subject to the business activity
restrictions and branching rules applicable to national banks. To qualify as a
qualified thrift lender, a savings institution must either (i) be deemed a
"domestic building and loan association" under the Internal Revenue Code by
maintaining at least 60% of its total assets in specified types of assets,
including cash, certain government securities, loans secured by and other assets
related to residential real property, educational loans and investments in
premises of the institution or (ii) satisfy the statutory qualified thrift
lender test set forth in the Home Owners' Loan Act by maintaining at least 65%
of its portfolio assets in qualified thrift investments (defined to include
residential mortgages and related equity investments, certain mortgage-related
securities, small business loans, student loans and credit card loans). For
purposes of the statutory qualified thrift lender test, portfolio assets are
defined as

total assets minus goodwill and other intangible assets, the value of property
used by the institution in conducting its business, and specified liquid assets
up to 20% of total assets. A savings institution must maintain its status as a
qualified thrift lender on a monthly basis in at least nine out of every twelve
months. Gloucester County Federal Savings Bank met the qualified thrift lender
test as of December 31, 2006 and in each of the last twelve months and,
therefore, qualifies as a qualified thrift lender.

A savings bank that fails the qualified thrift lender test and does not
convert to a bank charter generally will be prohibited from: (1) engaging in any
new activity not permissible for a national bank, (2) paying dividends not
permissible under national bank regulations, and (3) establishing any new branch
office in a location not permissible for a national bank in the institution's
home state. In addition, if the institution does not requalify under the
qualified thrift lender test within three years after failing the test, the
institution would be prohibited from engaging in any activity not permissible
for a national bank and would have to repay any outstanding advances from the
Federal Home Loan Bank as promptly as possible.

Community Reinvestment Act. Under the Community Reinvestment Act, every
insured depository institution, including Gloucester County Federal Savings
Bank, has a continuing and affirmative obligation consistent with its safe and
sound operation to help meet the credit needs of its entire community, including
low and moderate income neighborhoods. The Community Reinvestment Act does not
establish specific lending requirements or programs for financial institutions
nor does it limit an institution's discretion to develop the types of products
and services that it believes are best suited to its particular community. The
Community Reinvestment Act requires the depository institution's record of
meeting the credit needs of its community to be assessed and taken into account
in the evaluation of certain applications by such institution, such as a merger
or the establishment of a branch office by Gloucester County Federal Savings
Bank. An unsatisfactory Community Reinvestment Act examination rating may be
used as the basis for the denial of an application. Gloucester County Federal
Savings Bank received a "satisfactory" rating in its most recent Community
Reinvestment Act examination.

Federal Home Loan Bank System. Gloucester County Federal Savings Bank
is a member of the Federal Home Loan Bank of New York, which is one of twelve
regional federal home loan banks. Each federal home loan bank serves as a
reserve or central bank for its members within its assigned region. It is funded
primarily from funds deposited by financial institutions and proceeds derived
from the sale of consolidated obligations of the Federal Home Loan Bank System.
It makes loans to members pursuant to policies and procedures established by its
board of directors.

As a member, Gloucester County Federal Savings Bank is required to
purchase and maintain stock in the Federal Home Loan Bank of New York in an
amount equal to the greater of 1% of our aggregate unpaid residential mortgage
loans, home purchase contracts or similar obligations at the beginning of each
year or 5% of our outstanding Federal Home Loan Bank advances.

The Federal Home Loan Banks are required to provide funds for the
resolution of troubled savings institutions and to contribute to affordable
housing programs through direct loans or interest subsidies on advances targeted
for community investment and low- and moderate-income housing projects. These
contributions have adversely affected the level of Federal Home Loan Bank
dividends paid and could continue to do so in the future. In addition, these
requirements could result in the Federal Home Loan Banks imposing a higher rate
of interest on advances to their members.

The USA Patriot Act. Gloucester County Federal Savings Bank is subject
to regulations implementing the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or
the USA Patriot Act. The USA Patriot Act gives the federal

government powers to address terrorist threats through enhanced domestic
security measures, expanded surveillance powers, increased information sharing
and broadened anti-money laundering requirements. By way of amendments to the
Bank Secrecy Act, Title III of the USA Patriot Act takes measures intended to
encourage information sharing among bank regulatory agencies and law enforcement
bodies. Further, certain provisions of Title III impose affirmative obligations
on a broad range of financial institutions, including banks, thrifts, brokers,
dealers, credit unions, money transfer agents and parties registered under the
Commodity Exchange Act.

Among other requirements, Title III of the USA Patriot Act and the
related regulations impose the following requirements with respect to financial
institutions:

o Establishment of anti-money laundering programs that include, at
minimum: (i) internal policies, procedures, and controls; (ii)
specific designation of an anti-money laundering compliance
officer; (iii) ongoing employee training programs; and (iv) an
independent audit function to test the anti-money laundering
program.

o Establishment of a program specifying procedures for obtaining
identifying information from customers seeking to open new
accounts, including verifying the identity of customers within a
reasonable period of time.

o Establishment of appropriate, specific, and, where necessary,
enhanced due diligence policies, procedures, and controls
designed to detect and report money laundering.

o Prohibitions on establishing, maintaining, administering or
managing correspondent accounts for foreign shell banks (foreign
banks that do not have a physical presence in any country), and
compliance with certain record keeping obligations with respect
to correspondent accounts of foreign banks.

Bank regulators are directed to consider a holding company's
effectiveness in combating money laundering when ruling on applications under
the Federal Reserve Act and the Bank Merger Act.

Regulation of Gateway Community Financial Corp.

General. Gateway Community Financial Corp. is a savings and loan
holding company within the meaning of Section 10 of the Home Owners' Loan Act.
It is required to file reports with the Office of Thrift Supervision and is
subject to regulation and examination by the Office of Thrift Supervision.
Gateway Community Financial Corp. must also obtain regulatory approval from the
Office of Thrift Supervision before engaging in certain transactions, such as
mergers with or acquisitions of other financial institutions. In addition, the
Office of Thrift Supervision has enforcement authority over Gateway Community
Financial Corp. and any non-savings institution subsidiaries. This permits the
Office of Thrift Supervision to restrict or prohibit activities that it
determines to be a serious risk to Gloucester County Federal Savings Bank. This
regulation is intended primarily for the protection of the depositors and not
for the benefit of stockholders of Gateway Community Financial Corp.

Activities Restrictions. As a savings and loan holding company and as a
subsidiary holding company of a mutual holding company, Gateway Community
Financial Corp. is subject to statutory and regulatory restrictions on its
business activities. The non-banking activities of Gateway Community Financial
Corp. and its non-savings institution subsidiaries are restricted to certain
activities specified by Office of Thrift Supervision regulation, which include
performing services and holding properties used by

a savings institution subsidiary, activities authorized for savings and loan
holding companies as of March 5, 1987, and non-banking activities permissible
for bank holding companies pursuant to the Bank Holding Company Act of 1956 or
authorized for financial holding companies pursuant to the Gramm-Leach-Bliley
Act. Before engaging in any non-banking activity or acquiring a company engaged
in any such activities, Gateway Community Financial Corp. must obtain prior
Office of Thrift Supervision approval of such planned activity or acquisition.

Mergers and Acquisitions. Gateway Community Financial Corp. must obtain
approval from the Office of Thrift Supervision before acquiring, directly or
indirectly, more than 5% of the voting stock of another savings institution or
savings and loan holding company or acquiring such an institution or holding
company by merger, consolidation or purchase of its assets. Federal law also
prohibits a savings and loan holding company from acquiring more than 5% of a
company engaged in activities other than those authorized for savings and loan
holding companies by federal law or acquiring or retaining control of a
depository institution that is not insured by the Federal Deposit Insurance
Corporation. In evaluating an application for Gateway Community Financial Corp.
to acquire control of a savings institution, the Office of Thrift Supervision
would consider the financial and managerial resources and future prospects of
Gateway Community Financial Corp. and the target institution, the effect of the
acquisition on the risk to the insurance funds, the convenience and the needs of
the community and competitive factors.

Waivers of Dividends by Gateway Community Financial, MHC. Office of
Thrift Supervision regulations require Gateway Community Financial, MHC to
provide prior notice to the Office of Thrift Supervision of any proposed waiver
of its receipt of dividends from Gateway Community Financial Corp. The Office of
Thrift Supervision reviews dividend waiver notices on a case-by-case basis, and,
in general, does not object to any such waiver if: (i) the waiver would not be
detrimental to the safe and sound operations of the subsidiary savings
association and (ii) the mutual holding company's board of directors determines
that such waiver is consistent with such directors' fiduciary duties to the
mutual holding company's members. Subject to the non-objection of the Office of
Thrift Supervision, we anticipate that Gateway Community Financial, MHC will
waive the receipt of any dividends paid by Gateway Community Financial Corp.

Conversion of Gateway Community Financial, MHC to Stock Form. Office of
Thrift Supervision regulations permit Gateway Community Financial, MHC to
convert from the mutual form of organization to the capital stock form of
organization, commonly referred to as a second step conversion. In a second step
conversion, a new holding company would be formed as the successor to Gateway
Community Financial Corp., Gateway Community Financial, MHC's corporate
existence would end, and certain depositors of Gloucester County Federal Savings
Bank would receive the right to subscribe for shares of the new holding company.
In a second step conversion, each share of common stock held by stockholders
other than Gateway Community Financial, MHC would be automatically converted
into shares of common stock of the new holding company.

Acquisition of Control. Under the federal Change in Bank Control Act, a
notice must be submitted to the Office of Thrift Supervision if any person
(including a company), or group acting in concert, seeks to acquire "control" of
a savings and loan holding company or savings association. An acquisition of
"control" can occur upon the acquisition of 10% or more of the voting stock of a
savings and loan holding company or savings institution or as otherwise defined
by the Office of Thrift Supervision. Under the Change in Bank Control Act, the
Office of Thrift Supervision has 60 days from the filing of a complete notice to
act, taking into consideration certain factors, including the financial and
managerial resources of the acquirer and the anti-trust effects of the
acquisition. Any company that so acquires control would then be subject to
regulation as a savings and loan holding company.

Federal Securities Laws

General. Gateway Community Financial Corp. has filed with the
Securities and Exchange Commission a registration statement under the Securities
Act of 1933 for the registration of the common stock to be issued pursuant to
the offering. Upon completion of the offering, Gateway Community Financial Corp.
common stock will continue to be registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934. Gateway Community
Financial Corp. will be subject to the information, proxy solicitation, insider
trading restrictions and other requirements under the Securities Exchange Act of
1934.

Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002 implemented
various legislative reforms addressing, among other matters, corporate
governance, auditing and accounting, executive compensation, and enhanced and
timely disclosure of corporate information. As directed by Section 302(a) of
Sarbanes-Oxley Act and the implementing rules of the Securities and Exchange
Commission, Gateway Community Financial Corp.'s Chief Executive Officer and
Chief Financial Officer each will be required to certify that its quarterly and
annual reports do not contain any untrue statement of a material fact. The rules
have several requirements, including having these officers certify that: they
are responsible for establishing, maintaining and regularly evaluating the
effectiveness of our internal controls; they have made certain disclosures to
our auditors and the audit committee of the Board of Directors about our
internal controls; and they have included information in our quarterly and
annual reports about their evaluation and whether there have been significant
changes in our internal controls or in other factors that could significantly
affect internal controls.

TAXATION

Federal Taxation

Savings institutions are subject to the Internal Revenue Code of 1986,
as amended, in the same general manner as other corporations.

All thrift institutions are now subject to the same provisions as banks
with respect to deductions for bad debts. Thrift institutions that are treated
as "small banks" (the average adjusted bases for all assets of such institution
equals $500 million or less) under the Internal Revenue Code may account for bad
debts by using the experience method for determining additions to their bad debt
reserve. Thrift institutions that are not treated as small banks must now use
the specific charge-off method.

Gateway Community Financial Corp. may exclude from its income 100% of
dividends received from Gloucester County Federal Savings Bank as a member of
the same affiliated group of corporations. A 70% dividends received deduction
generally applies with respect to dividends received from corporations that are
not members of such affiliated group.

Gateway Community Financial, MHC, Gateway Community Financial Corp. and
Gloucester County Federal Savings Bank file separate federal tax returns. The
Bank's income tax return was audited by the IRS in 2002.

State Taxation

Gateway Community Financial, MHC, Gateway Community Financial Corp. and
Gloucester County Federal Savings Bank file New Jersey income tax returns and
are subject to a 9% state income tax that is calculated based on federal taxable
income, subject to certain adjustments.

The state income tax returns of Gateway Community Financial, MHC,
Gateway Community Financial Corp. and Gloucester County Federal Savings Bank
have not been audited during the past five years. For additional information,
see Note 11 to the consolidated financial statements beginning on page F-1.

MANAGEMENT

General

Gateway Community Financial Corp.'s Board of Directors is currently
composed of seven members, with each director serving for a term of three years
in accordance with the requirement in Gateway Community Financial Corp.'s bylaws
that directors be divided into three classes, as nearly equal in number as
possible, with one class elected annually. Each director of Gateway Community
Financial Corp. also serves as a director of Gateway Community Financial, MHC
and Gloucester County Federal Savings Bank. Gateway Community Financial Corp.'s
and Gloucester County Federal Savings Bank's officers are appointed annually by
the Board of Directors and serve at the Board's discretion.

Current
Director Term
Age Position Since(1) Expires
--- -------- -------- -------
Directors:

John S. Gligor, Sr. 66 Chairman of the Board 1996 2007
Walter N. Friedrich 57 Vice Chairman of the Board 1993 2008
Robert C. Ahrens 56 President, Chief Executive Officer and Director 1998 2009
Scott P. Newman 39 Director 2004 2009
Dennis L. King 60 Director 1988 2007
Frank D. Wilson 59 Director 2004 2007
Robert A. Jones 84 Director 1963 2009

Senior Management:
Timothy P. Hand 42 Executive Vice President and Chief Operating Officer
Bruce E. Haines 55 Senior Vice President and Chief Lending Officer
Francis J. Walsh 64 Vice President and Chief Financial Officer
Kristin T. McIlvaine 43 Vice President of Finance

- ----------------------
(1) Indicates the year the individual first became a director of Gloucester
County Federal Savings Bank. Upon the formation of Gateway Community
Financial Corp. in 2001, each person serving at that time as a director of
Gloucester County Federal Savings Bank became a director of Gateway
Community Financial Corp.

Biographical Information

John S. Gligor, Sr. is Vice President and Partner of Concord Truss
Company in Woodbury Heights, New Jersey.

Walter N. Friedrich joined Friedrich Heating & Air Conditioning Inc. in
1972 and became president of the company in 1982.

Robert C. Ahrens joined Gloucester County Federal Savings Bank in June
1973. In March 1997, Mr. Ahrens was appointed president of the Bank and, in
January 1998, Mr. Ahrens also became a director of the Bank. Prior to becoming
president, Mr. Ahrens held numerous positions with the Bank, including Assistant
Treasurer, Treasurer, Chief Lending Officer, Senior Vice President and Executive
Vice President.

Scott P. Newman is Vice President of American Title Abstract Corp in
Turnersville, New Jersey.

Dennis L. King is currently an adjunct professor at Camden County
College. He was previously employed by the Bank as vice president and chief
financial officer from 1996 to 1999 and as senior vice president and chief
financial officer from 1999 to 2002. Prior to his employment with the Bank, Mr.
King was the owner and president of Far Horizons Travel in Blackwood, New Jersey
and an adjunct professor a Camden County College.

Frank D. Wilson is owner and president of S.J. Graphics (t/a Kiwa
Printing & Graphics), a small commercial printer on the cutting edge of modern
digital technology, located in Westville, New Jersey.

Robert A. Jones is retired from Campbell Soup Company where he was
employed from 1947 through 1986 in various positions, including fieldman,
purchasing agent and Director of Agricultural Purchasing.

Timothy P. Hand joined Gloucester County Federal Savings Bank in 1990.
Mr. Hand was appointed Assistant Vice President/Compliance Officer in 1998 and
Senior Vice President/Chief Lending Officer in 2002. In 2004, Mr. Hand was
appointed to his current position of Executive Vice President/Chief Operating
Officer. Prior to joining the Bank, Mr. Hand worked for Dun and Bradstreet.

Bruce E. Haines joined Gloucester County Federal Savings Bank in
January 2003 as Manager of Commercial Lending. In January 2004, he was promoted
to Vice President and Chief Lending Officer. In January 2006, he was promoted to
Senior Vice President and Chief Lending Officer. Prior to joining the Bank, Mr.
Haines served as Executive Vice President of Equity Bank in Marlton, New Jersey.

Francis J. Walsh joined Gloucester County Federal Savings Bank as
Comptroller in 1990. In 2004 he was promoted to Chief Financial Officer. Prior
to joining the Bank, Mr. Walsh was employed as the chief financial officer of
the Burlington County Bridge Commission in Palmyra, New Jersey.

Kristin T. McIlvaine joined Gloucester County Federal Savings Bank as a
member of the Board of Directors in 2004. In April 2007, she resigned her seat
as a director in order to join the Bank as an employee at that time. This
transition from a director to an employee is to allow for a transition period
while the Bank prepares for the anticipated third quarter 2007 retirement of its
current Chief Financial Officer, Francis Walsh. Ms. McIlvaine is a certified
public accountant. Prior to joining the Bank as an employee, Ms. McIlvaine was a
partner in the firm of Fitzpatrick & McIlvaine, CPA's, PC in Sewell, New Jersey.
She specialized in tax and financial planning for businesses and individuals.

Compensation Discussion and Analysis

The following section is intended to provide an understanding of our
overall compensation program for our senior management. Specific information
about the compensation paid to the executives for 2006 follows this section.

Our compensation program is designed to reward executive officers'
contribution to our Company and the teamwork they instill throughout our
employee divisions. It is our core philosophy that the compensation of our
executive officers should reflect their success as a management team in
attaining key operating objectives. Our desire is to attract and retain highly
qualified executives, motivating them to achieve performance that is consistent
with our corporate goals and objectives and rewarding them for superior
performance. Our goal is for executive compensation to be competitive with those
of our peers, with additional compensation opportunities to reward attainment of
higher levels of performance results.

We do not intend after the offering to make our stock price a
significant factor in determining annual compensation because the price of our
stock is subject to a number of factors outside the control of our management.
Over time, we believe that good operational results will be reflected in our
stock price, but we do not wish to encourage or reward a short-term focus on our
stock price to the potential detriment of achieving longer-term corporate goals
and objectives, including enhancing long-tern shareholder value.

A committee of independent directors oversees the establishment of the
components and amount of compensation paid to our senior management. The
committee looks at various factors in evaluating senior management compensation,
including:

o How much experience does the executive have?
o How has the executive's performance been for both the current
year and prior years?
o What is the executive's potential for future development?
o What is the executive's immediate level of responsibility?

We do not currently have stock-based compensation available to us as a
component of our compensation program. After the offering, we will seek to use
stock-based compensation to align the interests of our senior management with
the stockholders' interests, motivating our executives to build long-term
stockholder value. The annual compensation of our executive officers currently
consists of the following primary elements:

1. Base Salary

Salary compensation is based on our company's performance relative to
comparable peer company performance. Base salaries are established by comparing
our executives' qualifications, experience and responsibilities with similar
positions at our peers. Internal equity is also a consideration.

2. Retirement Plans

The Bank also provides retirement benefits to executive officers under
the Executive Incentive Retirement Plan. The annual awards made to the
executives under this plan are based upon a deferred bonus award and the Bank's
net income as a percentage to budget.

3. 401(k) Match

We offer an employer match to encourage saving for retirement.

Compensation of Executive Officers

The following table summarizes all compensation during 2006 for our
principal executive officer, Robert C. Ahrens, our principal financial officer,
Francis J. Walsh, and certain other senior executive officers.

Compensation for the Year Ended December 31, 2006
-------------------------------------------------
Change
Non-Equity in All
Incentive Plan Pension Other
Salary Compensation(1) Value(2) Compensation(3) Total
------ --------------- -------- --------------- -----

Robert C. Ahrens $200,000 $7,071 $75,000 $6,998 $289,069
President and CEO

Timothy P. Hand $125,000 $4,365 $20,000 $4,510 $153,875
EVP and COO

Bruce E. Haines $105,000 $3,680 $18,000 $3,788 $130,468
SVP and CLO

Francis J. Walsh $100,000 $3,570 $82,000 $3,610 $189,180
VP and CFO

- ------------------
(1) Represents the award made to the individual for 2006 under the Bank's
Executive Incentive Retirement Plan as well as the interest earned during
2006 on the individual's account balance under the plan.
(2) Represents the increase in the present value of the individual's
accumulated benefit between December 31, 2005 and December 31, 2006.
(3) Represents the Bank's matching contributions to the 401(k) Plan and life
insurance premiums paid on behalf of the individuals.

Executive Incentive Retirement Plan. The Bank's Executive Incentive
Retirement Plan provides for either a lump sum payment or equal annual
installments for a period of 15 years commencing on the first day of the
calendar month following the termination of employment due to retirement,
resignation, disability or death. All payments under the plan are in accordance
with Code Section 409A. The amount payable is based on the vested balance of the
executive's accumulated awards plus interest at the prime rate published in The
Wall Street Journal, credited annually. The annual awards are based upon a
deferred bonus award and the Bank's net income as a percentage to budget. The
percentage vested is 20% per full year of employment from the date of each
award. The participant becomes fully vested at age 65. Upon the death of the
participant, the beneficiary shall receive the remaining balance paid in a lump
sum. The total plan expense for the year ended December 31, 2006 was
approximately $36,000.

Interest Earned Account
2006 on Account Balance Balance at
Awards During 2006 December 31, 2006
------ ----------- -----------------

Robert C. Ahrens $4,000 $3,071 $45,748
Timothy P. Hand $2,500 $1,865 $27,849
Bruce E. Haines $2,100 $1,580 $23,585
Francis J. Walsh $2,000 $1,570 $23,339

401(k) Savings and Profit Sharing Plan. The Gloucester County Federal
Savings Bank 401(k) Savings and Profit Sharing Plan is a tax-qualified defined
contribution savings plan with a profit sharing component for the benefit of all
eligible employees. In addition, employees may also voluntarily elect to defer
between 1% and 50% of their compensation as 401(k) savings under the plan, not
to exceed applicable limits under federal tax laws. In calendar year 2007, an
employee could defer up to the lower of $15,500 or 50% of his salary. Employees
age 50 and over may make catch-up contributions ($5,000 in 2007). The plan also
provides for matching contributions up to a maximum of 50% of the first 6% of a
person's salary for each participant. Employee contributions are immediately
fully vested. Matching contributions are immediately vested.

The Bank's employees may use their account balances in the 401(k)
Savings and Profit Sharing Plan to pay for shares of stock in the stock
offering. Employees do not have special rights, however, to subscribe for stock
in the offering. Their eligibility to subscribe depends on whether they were
account holders with $50 on deposit at December 31, 2005 or March 31, 2007.
Their orders will be allocated under the normal order of subscription rights
priority in the same manner as all other eligible depositors. Following the
stock offering, Bank employees may purchase additional shares of Gateway
Community Financial Corp. common stock through the plan using funds in their
Gloucester County Federal Savings Bank 401(k) Savings and Profit Sharing Plan
accounts. The plan trustee will purchase such shares in regular open market
stock transactions at market prices.

Pension Plan. The Bank maintains a qualified noncontributory defined
benefit plan ("Retirement Plan") for employees. All employees who have worked
for a period of six month of service and attainment of age 21 are eligible to
accrue benefits under the Retirement Plan. Annual contributions to the
Retirement Plan are made in order to satisfy the actuarially determined minimum
funding requirements in accordance with the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").

At the normal retirement age of 65, the plan is designed to provide a
single life annuity with no ancillary benefits. For a married participant, the
normal form of benefit is an actuarially reduced joint and survivor annuity
where, upon the participant's death, the participant's spouse is entitled to
receive a benefit equal to 50% of the amount paid during the participant's
lifetime. The joint and survivor annuity will be actuarially equivalent to the
single life annuity. If a member dies in active service, after having become
fully or partially vested, his beneficiary would be entitled to a lump sum death
benefit equal to the commuted value of 84 monthly retirement allowance
installments, which would have been payable had his allowance commenced as of
the first day of the month in which he died. The regular form of all retirement
benefits (normal, early or disability) is guaranteed for the life of the retiree
but not less than 84 monthly installments. If a retiree dies before 84 monthly
installments have been paid, his beneficiary would be

entitled to the commuted value of such unpaid installments paid in a lump sum.
Either the member or beneficiary may elect to have this benefit paid in the form
of installments.

The annual retirement benefit provided is an amount equal to the sum of
2.75% times years of benefit service (not to exceed 25) times the average annual
salary for five consecutive years of highest salary. Retirement benefits are
also payable upon retirement due to early and late retirement, disability or
death. An early retirement benefit is available beginning at age 55 for a
benefit of 2.75% times years of benefit service (not to exceed 25) times the
average annual salary for five consecutive years of highest salary. This early
retirement benefit is reduced if payments begin before age 65. A reduced benefit
is payable upon early retirement at or after age 55. Benefits are payable in
various annuity forms.

The following table provides information with respect payments or other
benefits at, following, or in connection with retirement under the Pension Plan.

Number of Present value of Payments During
Years Credited Accumulated Last Fiscal
Service Benefit(1) Year
------- ------- ----
Robert C. Ahrens 33 $539,000 $0

Timothy P. Hand 16 $87,000 $0

Bruce E. Haines 3 $49,000 $0

Francis J. Walsh 16 $403,000 $0

- --------------
(1) Assumptions used: half of the qualified benefits valued at 7.75% and the
other half valued at 5.00%, discounted to current age at 7.75%, no
pre-retirement decrements.

Employment Agreements and Potential Payments Upon Termination or Change
in Control. The Bank has entered into employment agreements with Messrs. Ahrens,
Hand and Haines. Mr. Ahrens', Mr Hand's and Mr. Haines' current base salaries
are $225,000, $145,000 and $120,000, respectively. Mr. Ahrens' employment
agreements has a term of three years while Mr. Hand's and Mr. Haines' agreements
have terms of one year. Each of the agreements provides for an annual one-year
extension of the term of the agreement upon determination of the Board of
Directors that the executive's performance has met the requirements and
standards of the Board, so that the remaining term of the agreement continues to
be three years, in the case of Mr. Ahrens, and one year, in the case of Messrs.
Hand and Haines. If the Bank terminates Messrs. Ahrens, Hand or Haines without
"just cause" as defined in the agreement, they will be entitled to a
continuation of their salary from the date of termination through the remaining
term of their agreement, but in no event for a period of less than 12 months and
during the same period, the cost of obtaining all health, life, disability, and
other benefits at levels substantially equal to those being provided on the date
of termination of employment. Messrs. Ahrens', Hand's and Haines' employment
agreements provide that if their employment is terminated without just cause
within twenty-four months of a change in control, they will be paid an amount
equal to approximately three times their base salary for Mr. Ahrens and one year
in the case of Messrs. Hand and Haines. This amount may be paid in a lump sum at
the employee's discretion. If not paid in a lump sum, the amount is paid over 36
months for Mr. Ahrens and 12 months for Messrs. Hand and Haines or the remaining
term of the agreement, whichever is less.

Compensation of Directors

Board Fees. Gloucester County Federal Savings Bank directors currently
are paid a fee of $1,200 per board meeting. The chairman and vice chairman of
the Board of Directors currently are paid a fee of $2,100 and $1,600,
respectively, per board meeting. Committee chairman and directors are paid $300
and $250, respectively, per committee meeting attended.

No additional compensation is paid for serving on the Boards of Gateway
Community Financial Corp. or Gateway Community Financial, MHC. Mr. Ahrens, as an
employee director, is not compensated for serving as a director.

The following table summarizes compensation to our directors during
2006. There was no compensation to the directors during 2006 other than the cash
fees paid for board meeting and committee meeting attendance and accruals under
our Director Fee Continuation Plan. Information about the payments to directors
under that plan upon retirement or death is set forth below.

Total Director Compensation
for the Year Ended December 31, 2006
------------------------------------

Cash Fees for
Board and
Committee All
Meeting Other
Attendance Compensation Total
---------- ------------ -----
John S. Gligor, Sr. $37,350
Walter N. Friedrich $29,950
Robert A. Jones $23,750
Dennis L. King $25,050
Scott P. Newman $23,350
Frank D. Wilson $23,850
Kristin T. McIlvaine(1) $25,900

- ----------------
(1) Ms. McIlvaine served as a director during 2006. In April 2007, she resigned
from the Board and became an employee of the Bank.

Director Fee Continuation Plan. Gloucester County Federal Savings
Bank's Director Fee Continuation Plan provides retirement benefits to the
directors of Gloucester County Federal Savings Bank. A benefit is provided for
50% of the average of the three years highest years of the director's total
compensation. The benefit is payable upon normal retirement age of 80 or age 65
and ten years of service as a director. Such benefit is payable annually for 10
years. If the director dies prior to receiving the 10 annual payments, the
remaining payments may be made in a lump sum or annual installments to his
beneficiary. If the director dies prior to normal retirement age, the benefit is
payable in either a lump sum or 10 annual installments to his beneficiary.

Vesting in this plan is 10% for each full year of service. If the
director terminates service prior to normal retirement date, the director will
receive the accrued balance of the account multiplied by the vested percentage.
This severance compensation shall be paid in 10 equal annual payments.

Upon a change in control, if the director suffers a termination of
service, then the director shall receive the normal retirement benefits, as if
the director had been serving the Bank until the normal retirement age.

Future Stock Benefit Plans

Employee Stock Ownership Plan. The Bank intends to establish the
Gloucester County Federal Savings Bank Employee Stock Ownership Plan for the
exclusive benefit of participating employees of Gloucester County Federal
Savings Bank, to be implemented prior to the completion of the offering.
Participating employees are salaried, full-time employees who have completed at
least one year of service and have attained the age of 21. An application for a
letter of determination as to the tax-qualified status of the Gloucester County
Federal Savings Bank Employee Stock Ownership Plan will be submitted to the IRS.
Although no assurances can be given, we expect that a favorable letter of
determination will be received from the IRS.

The Gloucester County Federal Savings Bank Employee Stock Ownership
Plan is to be funded by contributions made by Gloucester County Federal Savings
Bank in cash or common stock. Benefits may be paid either in shares of the
common stock or in cash. The Gloucester County Federal Savings Bank Employee
Stock Ownership Plan will borrow funds with which to acquire up to 8% of the
shares sold in the offering.

The Gloucester County Federal Savings Bank Employee Stock Ownership
Plan may elect, in whole or in part, to fill its order through open market
purchases subsequent to the closing of the offering, subject to any required
regulatory approval. It intends to borrow funds from Gateway Community Financial
Corp. The loan is expected to be for a term of ten years at an annual interest
rate equal to the prime rate published in The Wall Street Journal. Presently it
is anticipated that the Gloucester County Federal Savings Bank Employee Stock
Ownership Plan will purchase up to 8% of the shares sold in the offering. The
loan will be secured by the shares purchased and earnings of employee stock
ownership plan assets. Shares purchased with loan proceeds will be held in a
suspense account for allocation among participants as the loan is repaid. It is
anticipated that all contributions will be tax-deductible.

Contributions to the Gloucester County Federal Savings Bank Employee
Stock Ownership Plan and shares released from the suspense account will be
allocated among participants on the basis of total taxable cash compensation.
All participants must have completed a year of service during the plan year, or
have terminated employment following death, disability or retirement, in order
to receive an allocation. Participant benefits become fully vested in their
allocations following three years of service. Employment service before the
adoption of the Gloucester County Federal Savings Bank Employee Stock Ownership
Plan shall be credited for the purposes of vesting. Contributions to the
Gloucester County Federal Savings Bank Employee Stock Ownership Plan by
Gloucester County Federal Savings Bank are discretionary and as a result
benefits payable under the Gloucester County Federal Savings Bank Employee Stock
Ownership Plan cannot be estimated.

The Board of Directors has appointed the non-employee directors to a
committee that will administer the Gloucester County Federal Savings Bank
Employee Stock Ownership Plan and serve as its trustees. The trustees must vote
all allocated shares as directed by plan participants. Unallocated shares and
allocated shares for which no timely direction is received will be voted as
directed by the Board of Directors or the Gloucester County Federal Savings Bank
Employee Stock Ownership Plan's committee, subject to the trustees' fiduciary
duties.

Stock Option Plan. We intend to adopt a stock option plan for the
benefit of directors and officers after the passage of at least six months
following the completion of the offering. Up to 4.9% of the total number of
shares of common stock outstanding after the offering, including shares held by
Gateway Community Financial, MHC, will be reserved for issuance under the stock
option plan. No determinations have been made as to any specific grants to be
made under the stock option plan or the terms thereof.

The purpose of the stock option plan will be to attract and retain
qualified personnel in key positions, provide officers and directors with a
proprietary interest in Gateway Community Financial Corp. as an incentive to
contribute to our success and reward directors and officers for outstanding
performance. Although the terms of the stock option plan have not yet been
determined, it is expected that the stock option plan will provide for the grant
of: (1) options to purchase the common stock intended to qualify as incentive
stock options under the Internal Revenue Code (incentive stock options); and (2)
options that do not so qualify (non-incentive stock options). The exercise price
of any options will be not less than the fair market value of the common stock
on the date of grant. Any stock option plan would be in effect for up to 10
years following the earlier of adoption by the Board of Directors or approval by
the stockholders. Options would expire no later than 10 years following the date
granted and would expire earlier if the option committee so determines or in the
event of termination of employment. Options would be granted based upon several
factors, including seniority, job duties and responsibilities and job
performance.

Restricted Stock Plan. We also intend to establish a restricted stock
plan to provide our officers and directors with a proprietary interest in
Gateway Community Financial Corp. after the passage of at least six months
following the completion of the offering. The restricted stock plan is expected
to provide for the award of common stock, subject to vesting restrictions, to
eligible officers and directors.

We expect to contribute funds to the restricted stock plan to acquire,
in the aggregate, up to 1.96% of the total number of shares of common stock
outstanding after the offering, including shares held by Gateway Community
Financial, MHC. Shares used to fund the restricted stock plan may be acquired
through open market purchases or provided from authorized but unissued shares.
No determinations have been made as to the specific terms of the restricted
stock plan.

Dilution. While our intention is to fund the stock option plan and
restricted stock plan through open market purchases, stockholders will
experience a reduction or dilution in ownership interest if the plans are
instead funded with newly-issued shares.

The issuance of authorized but unissued shares of stock to the
restricted stock plan instead of open market purchases would dilute the voting
interests of existing stockholders by approximately 1.9%.

The issuance of authorized but unissued shares of stock to the stock
option plan instead of open market purchases would dilute the voting interests
of existing stockholders by approximately 4.7%.

Stockholder Approval of Stock Options and Restricted Stock. The stock
option plan and restricted stock plan will comply with all applicable Office of
Thrift Supervision regulation in effect of the time the plans are adopted. Those
regulations are subject to change. We will submit the stock options plan and
restricted stock plans to stockholders for their approval, at which time we will
provide stockholders with detailed information about the plans and the required
approval. Under current Office of Thrift Supervision Regulations, the plans must
be approved by a majority of the total votes eligible to be cast by our
stockholders, other than Gateway Community Financial, MHC. The Office of Thrift
Supervision has proposed changes to its regulations regarding equity incentive
plans that would eliminate the requirement to obtain the separate vote of
minority stockholders for the plans if they are implemented more than one

year after completion of a minority stock offering. In the event that the
proposed Office of Thrift Supervision regulations are adopted in final form,
Gateway Community Financial, MHC, as the holder of a majority of the shares of
Gateway Community Financial Corp. would control the outcome of any vote to
approve an equity incentive plan that occurs more than one year after the
completion of the offering.

Transactions with Management and Others

No directors, executive officers or their immediate family members were
engaged, directly or indirectly, in transactions with Gateway Community
Financial Corp. or Gloucester County Federal Savings Bank during the three years
ended December 31, 2006 that exceeded $120,000 (excluding loans with the Bank).

Gloucester County Federal Savings Bank makes loans to its officers,
directors and employees in the ordinary course of business. Such loans do not
include more than the normal risk of collectibility or present other unfavorable
features.

Director Independence

Other than Mr. Robert Ahrens, who is our President and Chief Executive
Director, each member of our Board of Directors is an outside director
independent of management, Gateway Community Financial Corp. and Gloucester
County Federal Savings Bank. Each is free of any relationship that would
interfere with the exercise of independent judgment in carrying out their duties
as directors. The Board of Directors carefully monitors any situation that could
cause a member to cease to be independent under the requirements of the Nasdaq
Global Market.

Proposed Stock Purchases by Management

Preliminary indications from our directors and executive officers and
their associates are that they will subscribe for an aggregate of approximately
205,000 shares in the stock offering. If 2,700,000 shares are sold (the midpoint
of the offering range), their anticipated purchases would represent 7.6% of the
shares sold in the offering and 3.4% of the 6,000,000 total shares outstanding
after the offering, including shares issued to Gateway Community Financial, MHC.

The following table sets forth the intended purchases of those
directors and executive officers who have indicated that they intend to purchase
shares in the offering. The intended purchases of each director's or officer's
associates are included in that director's or officer's total.

Number of
Name Shares
---- ------
John S. Gligor, Sr....................... 25,000
Walter N. Friedrich...................... 20,000
Robert C. Ahrens......................... 25,000
Scott P. Newman.......................... 25,000
Dennis L. King........................... 25,000
Frank D. Wilson.......................... 25,000
Timothy P. Hand.......................... 20,000
Bruce E. Haines.......................... 20,000
Kristin T. McIlvaine..................... 20,000
-------
Total............................... 205,000
=======

The above table does not include purchases by the Gloucester County
Federal Savings Bank Employee Stock Ownership Plan and does not take into
account any stock benefit plans to be adopted following the stock offering. If
the stock benefit plans are adopted as discussed in this prospectus and were
funded with newly issued shares instead of shares acquired in open market
purchases, the aggregate ownership of directors and executive officers would
increase.

Purchases of common stock in the offering by directors and executive
officers and their associates will be counted toward the minimum of 2,295,000
shares required to be sold to public stockholders to complete the offering.
Management may, but is not required to, purchase additional shares in the
offering to satisfy this minimum, subject to the limitation on the individual
maximum share purchase limitations and the requirement that directors, executive
officers and their associates may not purchase, in the aggregate, more than 30%
of the shares sold in the offering.

THE OFFERING

The Board of Directors adopted the plan authorizing the stock offering
on January 29, 2007, subject to the approval of the Office of Thrift
Supervision. We received authorization from the Office of Thrift Supervision to
conduct the stock offering on ____________, 2007. Office of Thrift Supervision
authorization does not constitute a recommendation or endorsement of an
investment in our stock by the Office of Thrift Supervision.

General

Gateway Community Financial Corp. will sell its common stock to
eligible depositors of Gloucester County Federal Savings Bank in a subscription
offering and, if shares are available, to the general public in a community
offering and/or a syndicated community offering. The stock offering will be
accomplished

in accordance with the procedures set forth in the plan, the requirements of
applicable laws and regulations, and the policies of the Office of Thrift
Supervision.

We are offering for sale between 2,295,000 shares at the minimum and
3,105,000 shares at the maximum of the offering range (3,570,750 shares at the
adjusted maximum. The minimum purchase is 25 shares of common stock (minimum
investment of $250). Our common stock is being offered at a fixed price of
$10.00 per share in the offering. Interest will be paid on subscription funds
from the date the payment is received until the offering is either completed or
terminated.

We may cancel the offering at any time prior to completion. If we do,
orders for common stock already submitted will be canceled and subscribers'
funds will be returned with interest.

In accordance with Rule 15c2-4 of the Securities Exchange Act of 1934,
pending completion or termination of the offering, subscription funds received
by us will be invested only in investments permissible under Rule 15c2-4.

Purposes of the Stock Offering

The proceeds from the sale of common stock of Gateway Community
Financial Corp. will provide Gloucester County Federal Savings Bank with new
equity capital, which will support future growth and expanded operations. While
Gloucester County Federal Savings Bank currently exceeds all regulatory capital
requirements to be considered well capitalized, the sale of stock, coupled with
the accumulation of earnings, less dividends or other reductions in capital,
from year to year, provides a means for the orderly preservation and expansion
of Gloucester County Federal Savings Bank's capital base.

The offering will afford our directors, officers and employees the
opportunity to become stockholders, which we believe to be an effective
performance incentive and an effective means of attracting and retaining
qualified personnel. The offering also will provide our customers and local
community members with an opportunity to acquire our stock.

Conduct of the Offering

Subject to the limitations of the plan of stock issuance adopted by our
Board of Directors, shares of common stock are being offered in descending order
of priority in the subscription offering to:

o Eligible Account Holders (depositors at the close of business on December
31, 2005 with deposits of at least $50.00);

o the Gloucester County Federal Savings Bank Employee Stock Ownership Plan;
and

o Supplemental Eligible Account Holders (depositors at the close of business
on March 31, 2007 with deposits of at least $50.00).

To the extent that shares remain available and depending on market
conditions at or near the completion of the subscription offering, we may
conduct a community offering and possibly a syndicated community offering. The
community offering, if any, may commence at any time during or subsequent to the
completion of the subscription offering. A syndicated community offering, if we
conduct one, would commence just prior to, or as soon as practicable after, the
termination of the subscription offering. In any community offering or
syndicated community offering, we will fill orders for our common stock in an

equitable manner as determined by the Board of Directors in order to achieve a
wide distribution of the stock.

Any shares sold above the maximum of the offering range may be sold to
the Gloucester County Federal Savings Bank Employee Stock Ownership Plan before
satisfying remaining unfilled orders of Eligible Account Holders to fill the
plan's subscription, or the plan may purchase some or all of the shares covered
by its subscription after the offering in the open market, subject to any
required regulatory approval.

Subscription Offering

Subscription Rights. Non-transferable subscription rights to subscribe
for the purchase of common stock have been granted under the plan of stock
issuance to the following persons in the following order of priority:

Priority 1: Eligible Account Holders. Each Eligible Account Holder
shall be given the opportunity to purchase, subject to the overall limitations
described under The Stock Offering - Limitations on Purchases of Common Stock,
up to the greater of (i) the maximum purchase limitation in the community
offering (i.e., 15,000 shares), (ii) one-tenth of 1% of the total shares of
common stock offered in the subscription and community offering, and (iii) 15
times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of common stock offered in the
subscription and community offering by a fraction, of which the numerator is the
total amount of the qualifying deposits of the Eligible Account Holder and the
denominator is the total amount of all qualifying deposits of all Eligible
Account Holders. If there are insufficient shares available to satisfy all
subscriptions of Eligible Account Holders, shares will be allocated to Eligible
Account Holders so as to permit each subscribing Eligible Account Holder to
purchase a number of shares sufficient to make his total allocation equal to the
lesser of 100 shares or the number of shares ordered. Thereafter, unallocated
shares will be allocated to remaining subscribing Eligible Account Holders whose
subscriptions remain unfilled in the same proportion that each subscriber's
qualifying deposit bears to the total amount of qualifying deposits of all
subscribing Eligible Account Holders, in each case measured as of December 31,
2005, whose subscriptions remain unfilled. Subscription rights received by
officers and directors of Gateway Community Financial Corp. or Gloucester County
Federal Savings Bank, and such persons' associates, based on their increased
deposits in Gloucester County Federal Savings Bank in the one year preceding
December 31, 2005 will be subordinated to the subscription rights of all other
Eligible Account Holders. To ensure proper allocation of stock, each Eligible
Account Holder must list on his order form all accounts in which he had an
ownership interest as of the Eligibility Record Date. Failure to list an
account, or providing incorrect information, could result in the loss of all or
a part of the subscriber's allocation.

Priority 2: The Employee Stock Ownership Plan. If there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account
Holders, the Gloucester County Federal Savings Bank Employee Stock Ownership
Plan may be given the opportunity to purchase in the aggregate up to but less
than 5% of the total number of shares of common stock issued in the offering to
public stockholders and to Gateway Community Financial, MHC. It is expected that
the Gloucester County Federal Savings Bank Employee Stock Ownership Plan will
purchase up to 8% of the shares sold in the offering. To the extent that it does
not purchase shares in the offering, it intends to purchase shares in the open
market purchases subsequent to the closing of the offering, subject to any
required regulatory approval.

Priority 3: Supplemental Eligible Account Holders. If there are
sufficient shares remaining after satisfaction of subscriptions by Eligible
Account Holders and the employee stock ownership plan, each

Supplemental Eligible Account Holder shall be given the opportunity to purchase,
subject to the overall limitations described under The Stock Offering -
Limitations on Purchases of Common Stock, up to the greater of (i) the maximum
purchase limitation in the community offering (i.e., 15,000 shares), (ii) one-
tenth of 1% of the total shares of common stock offered in the subscription and
community offering, and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of common stock
offered in the subscription and community offering by a fraction, of which the
numerator is the amount of the qualifying deposits of the Supplemental Eligible
Account Holder and the denominator is the total amount of all qualifying
deposits of all Supplemental Eligible Account Holders. If Supplemental Eligible
Account Holders subscribe for a number of shares which, when added to the shares
subscribed for by Eligible Account Holders and the employee stock ownership
plan, is in excess of the total number of shares offered in the offering, the
shares of common stock will be allocated among subscribing Supplemental Eligible
Account Holders first so as to permit each subscribing Supplemental Eligible
Account Holder to purchase a number of shares sufficient to make his total
allocation equal to the lesser of 100 shares or the number of shares ordered.
Thereafter, unallocated shares will be allocated to each subscribing
Supplemental Eligible Account Holder whose subscription remains unfilled in the
same proportion that each subscriber's qualifying deposit bear to the total
amount of qualifying deposits of all subscribing Supplemental Eligible Account
Holders, in each case measured as of March 31, 2007, whose subscriptions remain
unfilled. To ensure proper allocation of stock, each Supplemental Eligible
Account Holder must list on his order form all accounts in which he had an
ownership interest as of the Supplemental Eligibility Record Date. Failure to
list an account, or providing incorrect information, could result in the loss of
all or a part of the subscriber's allocation.

Restrictions on Transfer of Subscription Rights and Shares. Applicable
regulations and the plan of stock issuance prohibits any person with
subscription rights, including Eligible Account Holders and Supplemental
Eligible Account Holders, from transferring or entering into any agreement or
understanding to transfer the legal or beneficial ownership of the subscription
rights or the shares of common stock to be issued when subscription rights are
exercised. Subscription rights may be exercised only by the person to whom they
are granted. Each person subscribing for shares will be required to certify that
such person is purchasing shares solely for his own account and that he has no
agreement or understanding regarding the sale or transfer of the shares. The
regulations also prohibit any person from offering or making an announcement of
an offer or intent to make an offer to purchase subscription rights or shares of
common stock before the completion of the offering.

We will pursue any and all legal and equitable remedies in the event we
become aware of the transfer of subscription rights and will not honor orders
which we determine involve the transfer of subscription rights.

Deadlines for Purchasing Stock

The subscription offering will terminate at __:__ _.m., Eastern time,
on ____________, 2007. We may extend this expiration date without notice to you
for up to 45 days, until ____________, 2007. Once submitted, your order is
irrevocable unless the offering is extended beyond ____________, 2007. We may
request permission from the Office of Thrift Supervision to extend the offering
beyond ____________, 2007, and the Office of Thrift Supervision may grant one or
more extensions of the offering of up to 90 days per extension, but in no event
may the offering be extended beyond ____________, 2009. If the offering is
extended beyond ____________, 2007, we will notify each subscriber and
subscribers will have the right to confirm, modify or rescind their
subscriptions. If an affirmative response is not received prior to the
expiration of the resolicitation period, a subscriber's subscription will be
canceled and funds will be returned with interest.

A community offering and a syndicated community offering, if such
offerings are conducted, may terminate at any time without notice but no later
than ____________, 2007.

Community Offering

If less than the total number of shares of common stock to be
subscribed for in the offering are sold in the subscription offering then shares
remaining unsubscribed may be made available for purchase in the community
offering to certain members of the general public. The maximum amount of common
stock that any one person may purchase in the community offering is 15,000
shares, or $150,000.

Preference in the community shall be given first to natural persons and
trusts of natural persons residing in Gloucester and Camden Counties, New Jersey
and second to other natural persons and trusts of natural persons residing in
New Jersey. If shares are available for these "preferred purchasers" in the
community offering but there are insufficient shares to satisfy all orders, the
available shares will be allocated first to each preferred purchasers whose
order we accept in an amount equal to the lesser of 100 shares or the number of
shares ordered by each such subscriber, if possible. After that, unallocated
shares will be allocated among the remaining preferred purchasers whose orders
remain unsatisfied in the same proportion that the unfilled order of each such
subscriber bears to the total unfilled orders of all such subscribers. If, after
filling the orders of the first group of preferred purchasers (natural persons
and trusts of natural persons residing in Gloucester and Camden Counties, New
Jersey) and then the orders of the second group of preferred purchasers (natural
persons and trusts of natural persons residing in New Jersey), shares are
available for other subscribers in the community offering but there are
insufficient shares to satisfy all orders, shares will be allocated in the same
manner as for preferred purchasers.

We will consider persons residing in one of the specified counties if
they occupy a dwelling in the county and establish an ongoing physical presence
in the county that is not merely transitory in nature. We may utilize depositor
or loan records or other evidence provided to us to make a determination as to
whether a person is a resident in one of the specified counties. In all cases,
the determination of residence status will be made by us in our sole discretion.

The community offering, if any, may commence at any time during or
subsequent to the completion of the subscription offering. The community
offering, if any, must be completed within 45 days after the completion of the
subscription offering unless otherwise extended by the Office of Thrift
Supervision.

If we receive regulatory approval for an extension, all subscribers
will be notified of the extension and of the duration of any extension that has
been granted, and will have the right to confirm, increase, decrease or rescind
their orders. If we do not receive an affirmative response from a subscriber to
any resolicitation, the subscriber's order will be rescinded and all funds
received will be promptly returned with interest.

The opportunity to subscribe for shares of common stock in the
community offering is subject to our right to reject orders, in whole or part,
either at the time of receipt of an order or as soon as practicable following
the expiration date of the offering. If your order is rejected in part, you will
not have the right to cancel the remainder of your order.

Syndicated Community Offering

The plan of stock issuance provides that, if necessary, all shares of
common stock not purchased in the subscription offering and community offering
may be offered for sale to the general public in a

syndicated community offering to be managed by Sandler O'Neill & Partners, L.P.,
acting as our agent. In such capacity, Sandler O'Neill may form a syndicate of
other broker-dealers. Alternatively, we may sell any remaining shares in an
underwritten public offering. Neither Sandler O'Neill nor any registered
broker-dealer will have any obligation to take or purchase any shares of the
common stock in the syndicated community offering; however, Sandler O'Neill has
agreed to use its best efforts in the sale of shares in any syndicated community
offering. The syndicated community offering would terminate no later than 45
days after the expiration of the subscription offering, unless extended by us,
with approval of the Office of Thrift Supervision. See - Community Offering
above for a discussion of rights of subscribers in the event an extension is
granted.

The opportunity to subscribe for shares of common stock in the
syndicated community offering is subject to our right to reject orders, in whole
or part, either at the time of receipt of an order or as soon as practicable
following the expiration date of the offering. If your order is rejected in
part, you will not have the right to cancel the remainder of your order.

The maximum amount of common stock that any one person may purchase in
the syndicated community offering is 15,000 shares, or $150,000. We may begin
the syndicated community offering or underwritten public offering at any time
following the commencement of the subscription offering.

If we are unable to find purchasers from the general public for all
unsubscribed shares, we will make other purchase arrangements, if feasible.
Other purchase arrangements must be approved by the Office of Thrift Supervision
and may provide for purchases by directors, officers, their associates and other
persons in excess of the limitations provided in the plan of stock issuance and
in excess of the proposed director purchases discussed earlier, although no
purchases are currently intended. If other purchase arrangements cannot be made,
we may do any of the following: terminate the stock offering and promptly return
all funds; return all funds, then set a new offering range and notify all
subscribers to give them the opportunity to confirm, cancel or change their
orders; or take such other actions as may be permitted by the Office of Thrift
Supervision.

Limitations on Purchases of Common Stock

The following additional limitations have been imposed on purchases of
shares of common stock:

1. The maximum number of shares which may be purchased in the
offering by any individual (or individuals through a single
account) shall not exceed 15,000 shares, or $150,000. This limit
applies to stock purchases in total in the subscription,
community and syndicated community offerings.

2. The maximum number of shares that may be purchased by any
individual together with any associate or group of persons acting
in concert is 25,000 shares, or $250,000. Any persons or entities
having the same address on an account or stock order form are
considered to be acting in concert. This limit applies to stock
purchases in total in the subscription, community and syndicated
community offerings. This limit does not apply to the Gloucester
County Federal Savings Bank Employee Stock Ownership Plan which
may subscribe for up to but less than 5% of the total number of
shares of common stock issued in the offering to public
stockholders and to Gateway Community Financial, MHC.

3. The maximum number of shares which may be purchased in all
categories in the offering by our officers and directors and
their associates in the aggregate shall not exceed 30% of the
total number of shares sold in the offering.

4. The minimum order is 25 shares, or $250.

5. If the number of shares otherwise allocable to any person or that
person's associates would be in excess of the maximum number of
shares permitted as set forth above, the number of shares
allocated to that person shall be reduced to the lowest
limitation applicable to that person, and then the number of
shares allocated to each group consisting of a person and that
person's associates shall be reduced so that the aggregate
allocation to that person and his associates complies with the
above maximums, and the maximum number of shares shall be
reallocated among that person and his associates in proportion to
the shares subscribed by each (after first applying the maximums
applicable to each person, separately).

6. Depending upon market or financial conditions, with the approval
of the Office of Thrift Supervision and without notice to
subscribers, we may decrease or increase the purchase and
ownership limitations. If a purchase limitation is increased,
subscribers in the subscription offering who ordered the maximum
amount will be given the opportunity to increase their
subscriptions up to the then applicable limit. We also may, in
our sole discretion, contact other large subscribers to give them
the same opportunity. The effect of this type of resolicitation
will be an increase in the number of shares owned by subscribers
who increase their subscriptions.

7. If the total number of shares offered increases in the offering
due to an increase in the maximum of the estimated valuation
range of up to 15% (the adjusted maximum) the additional shares
will generally be issued in the following order of priority: (a)
to fill the employee stock ownership plan's subscription; (b) if
there is an oversubscription at the Eligible Account Holder
level, to fill unfilled subscriptions of Eligible Account
Holders; (c) if there is an oversubscription at the Supplemental
Eligible Account Holder level, to fill unfilled subscriptions of
Supplemental Eligible Account Holders; (d)to fill orders received
in a community offering; with preference given to persons who
live in the local community; and (e) to fill orders received in
the syndicated community offering. The Gloucester County Federal
Savings Bank Employee Stock Ownership Plan may, however, elect to
fill part or all of its stock order in the open market, after
completion of the stock offering.

8. No person will be allowed to purchase any stock if that purchase
would be illegal under any federal or state law or regulation or
would violate regulations or policies of the National Association
of Securities Dealers. We and/or our representatives may ask for
an acceptable legal opinion from any purchaser regarding the
legality of the purchase and may refuse to honor any purchase
order if that opinion is not timely furnished.

9. We have the right to reject any order submitted by a person whose
representations we believe are untrue or who we believe is
violating, circumventing or intends to violate, evade or
circumvent the terms and conditions of the plan of stock
issuance, either alone or acting in concert with others.

10. The above restrictions also apply to purchases by persons acting
in concert under applicable regulations of the Office of Thrift
Supervision. Under regulations of the Office of Thrift
Supervision, our directors are not considered to be affiliates or
a group acting in concert with other directors solely as a result
of membership on our Board of Directors.

11. In addition, in any community offering or syndicated community
offering, we must first fill orders for our common stock up to a
maximum of 2% of the total shares issued in the offering in a
manner that will achieve a wide distribution of the stock, and
thereafter any remaining shares will be allocated on an equal
number of shares per order basis, until all orders have been
filled or the shares have been exhausted.

The term "associate" of a person is defined in the plan of stock
issuance pursuant to the regulations of the Office of Thrift Supervision to
mean:

(1) any corporation or organization of which that person is a senior
officer or partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities;

(2) any trust or other estate in which that person has a substantial
beneficial interest or as to which that person serves as trustee
or in a similar fiduciary capacity; or

(3) an individual who is related by blood or marriage to that person
if they live in the same home as that person.

For example, a corporation for which a person serves as an officer
would be an associate of that person and all shares purchased by that
corporation would be included with the number of shares which that person
individually could purchase under the above limitations.

In addition, pursuant to the regulations of the Office of Thrift
Supervision, directors or senior officers of Gloucester County Federal Savings
Bank and Gateway Community Financial Corp. who are related by blood or marriage
will be considered associates of each other.

The term "acting in concert" means:

(1) knowing participation in a joint activity or interdependent
conscious parallel action towards a common goal whether or not
pursuant to an express agreement; or

(2) a combination or pooling of voting or other interests in the
securities of an issuer for a common purpose pursuant to any
contract, understanding, relationship, agreement or other
arrangement, whether written or otherwise.

A person or company which acts in concert with another person or
company ("other party") shall also be deemed to be acting in concert with any
person or company who is also acting in concert with that other party. We will
presume that certain persons are acting in concert based upon various facts,
including the fact that persons have joint account relationships or the fact
that such persons have filed joint Schedules 13D with the Securities and
Exchange Commission with respect to other companies. We reserve the right to
make an independent investigation of any facts or circumstances brought to our
attention that indicate that one or more persons acting independently or as a
group acting in concert may be attempting to violate or circumvent the
regulatory prohibition on the transferability of subscription rights.

We have the right, in our sole discretion, to determine whether
prospective purchasers are "associates" or "acting in concert." These
determinations are in our sole discretion and may be based on whatever evidence
we believe to be relevant, including joint account relationships or shared
addresses on the records of Gloucester County Federal Savings Bank.

Each person purchasing shares of the common stock in the offering will
be considered to have confirmed that his purchase does not conflict with the
maximum purchase limitation. If the purchase limitation is violated by any
person or any associate or group of persons affiliated or otherwise acting in
concert with that person, we will have the right to purchase from that person at
the $10.00 purchase price per share all shares acquired by that person in excess
of that purchase limitation or, if the excess shares have been sold by that
person, to receive the difference between the purchase price per share paid for
the excess shares and the price at which the excess shares were sold by that
person. Our right to purchase the excess shares will be assignable.

Common stock purchased pursuant to the offering will be freely
transferable, except for shares purchased by our directors and executive
officers. For certain restrictions on the common stock purchased by our
directors and executive officers, see The Offering - Restrictions on
Transferability by Directors and Executive Officers.

Ordering and Receiving Common Stock

Use of Order Forms. Rights to subscribe may only be exercised by
completion of an order form. Any person receiving an order form who desires to
subscribe for shares of common stock must do so prior to the applicable
expiration date by delivering by mail or in person a properly executed and
completed order form, together with full payment of the purchase price for all
shares for which subscription is made or include appropriate authorization in
the space provided on the order form for withdrawal of full payment from a
deposit account at Gloucester County Federal Savings Bank; provided, however,
that if the Gloucester County Federal Savings Bank Employee Stock Ownership Plan
subscribes for shares during the subscription offering, it will not be required
to pay for the shares at the time it subscribes but rather may pay for the
shares upon completion of the offering. All subscription rights will expire on
the expiration date, whether or not we have been able to locate each person
entitled to subscription rights. To place an order in the community offering, an
investor must complete an order form and return it prior to the applicable
expiration date. Once submitted, subscription orders cannot be revoked without
our consent.

We may, in our sole discretion, permit institutional investors to
submit irrevocable orders together with the legally binding commitment for
payment and to thereafter pay for such shares of common stock for which they
subscribe in the community offering at any time before the 48 hours prior to the
completion of the offering. This payment may be made by wire transfer. Our
interpretation of the terms and conditions of the plan of stock issuance and of
the acceptability of the order forms will be final.

To ensure that your stock purchase eligibility and priority are
properly identified, you must list all accounts on the order form, giving all
names in each account and the account number as of the appropriate eligibility
date. We will strive to identify your ownership in all accounts, but cannot
guarantee we will identify all accounts in which you have an ownership interest.

If a stock order form:

o is not delivered to a subscriber and is returned to us by the United States
Postal Service or we are unable to locate the addressee;

o is not received by us or is received after the applicable expiration date;

o is not completed correctly or executed; or

o is not accompanied by the full required payment for the shares subscribed
for, including instances where a savings account or certificate balance
from which withdrawal is authorized is unavailable, uncollected or
insufficient to fund the required payment, but excluding subscriptions by
the employee stock ownership plan;

then the subscription rights for that person will lapse as though that person
failed to return the completed order form within the time period specified.

However, we may, but will not be required to, waive any irregularity on
any order form or require the submission of corrected order forms or the
remittance of full payment for subscribed shares by a date that we may specify.
The waiver of an irregularity on an order form in no way obligates us to waive
any other irregularity on any other order form. Waivers will be considered on a
case by case basis. We are not required to accept orders received on photocopies
or facsimile order forms, or for which payment is to be made by wire transfer or
payment from private third parties. Our interpretation of the terms and
conditions of the plan of stock issuance and of the acceptability of the order
forms will be final, subject to the authority of the Office of Thrift
Supervision.

The reverse side of the order form contains a certification form
mandated by regulation. We will not accept order forms where the certification
form is not executed. By executing and returning the certification form, you
will be certifying that you received this prospectus and acknowledging that the
common stock is not a deposit account and is not insured or guaranteed by the
federal government. You also will be acknowledging that you received disclosure
concerning the risks involved in this offering. The certification form could be
used as support to show that you understand the nature of this investment.

To ensure that each purchaser receives a prospectus at least 48 hours
before the applicable expiration date, in accordance with Rule 15c2-8 of the
Securities Exchange Act of 1934, no prospectus will be mailed any later than
five days prior to the expiration date or hand delivered any later than two days
prior to the expiration date. Execution of the order form will confirm receipt
or delivery in accordance with Rule 15c2-8. Order forms will only be distributed
with a prospectus.

Payment for Shares. For subscriptions to be valid, payment for all
subscribed shares will be required to accompany all properly completed order
forms, on or prior to the expiration date specified on the order form unless we
extend the date. The Gloucester County Federal Savings Bank Employee Stock
Ownership Plan may pay for the shares it subscribes for upon completion of the
offering. Payment for shares of common stock may be made:

o in cash, if delivered in person;

o by check or money order made payable to Gateway Community Financial Corp.;
or

o for shares subscribed for in the subscription offering, by authorization of
withdrawal from deposit accounts maintained with Gloucester County Federal
Savings Bank.

If you choose to pay by cash, you must deliver the stock order and
certification form and payment in person to any branch office of Gloucester
County Federal Savings Bank and it will be exchanged for a bank check or money
order. Please do not send cash in the mail.

In accordance with Rule 15c2-4 of the Securities Exchange Act of 1934,
subscribers' checks must be made payable to Gateway Community Financial Corp.,
and checks received by the stock information center will be deposited directly
to the segregated deposit account at Gloucester County Federal Savings Bank
established to hold funds received as payment for shares. Interest will be paid
on payments made by cash, check or money order at Gloucester County Federal
Savings Bank's regular passbook savings rate of interest from the date payment
is received until the offering is completed or terminated. We may decide during
the offering also to hold funds received with orders in a deposit account at
another insured depository institution. In either case, we will pay interest on
all funds received at a rate equal to Gloucester County Federal Savings Bank's
regular passbook savings rate.

The Gloucester County Federal Savings Bank Employee Stock Ownership
Plan will not be required to pay for the shares subscribed for at the time it
subscribes, but rather may pay for shares of common stock subscribed for upon
the completion of the offering; provided that there is in force from the time of
its subscription until the completion of the offering a loan commitment from an
unrelated financial institution or from us to lend to the employee stock
ownership plan, at that time, the aggregate purchase price of the shares for
which it subscribed.

Appropriate means by which account withdrawals may be authorized are
provided on the order form. If a subscriber authorizes us to withdraw the amount
of the purchase price from his or her deposit account, we will do so as of the
completion of the offering, though the account must contain the full amount
necessary for payment at the time the subscription is received. Once a
withdrawal has been authorized, none of the designated withdrawal amount may be
used by a subscriber for any purpose other than to purchase the common stock for
which a subscription has been made until the offering has been completed or
terminated. In the case of payments authorized to be made through withdrawal
from savings accounts, all sums authorized for withdrawal will continue to earn
interest at the applicable account rate until the offering has been completed or
terminated. Sums authorized for withdrawal from a certificate of deposit will
continue to earn interest at the contract rate on the certificate until the
offering has been completed or terminated. Interest penalties for early
withdrawal applicable to certificate accounts will not apply to withdrawals
authorized for the purchase of shares. However, if a partial withdrawal results
in a certificate account with a balance less than the applicable minimum balance
requirement, the certificate shall be canceled at the time of withdrawal,
without penalty, and the remaining balance will be converted into a savings
account and will earn interest at the regular passbook savings rate subsequent
to the withdrawal. In the case of payments made in cash or by check or money
order, funds will be placed in a segregated account and interest will be paid by
Gloucester County Federal Savings Bank at the regular passbook savings rate from
the date payment is received until the offering is completed or terminated. An
executed order form, once we receive it, may not be modified, amended, or
rescinded without our consent, unless the offering is not completed within 45
days after the conclusion of the subscription offering, in which event
subscribers may be given the opportunity to increase, decrease, or rescind their
subscription for a specified period of time. If the offering is not completed
for any reason, all funds submitted pursuant to the offerings will be promptly
refunded with interest as described above.

A subscriber interested in using funds in an individual retirement
account to purchase common stock must do so through a self-directed IRA account.
Gloucester County Federal Savings Bank IRA accounts are not self-directed
accounts. To use funds in an IRA account at Gloucester County Federal Savings
Bank, a subscriber must make a trustee-to-trustee transfer of the IRA funds held
at Gloucester County Federal Savings Bank to a trustee offering a self-directed
IRA program with the agreement that the funds will be used to purchase shares in
the offering. There will be no early withdrawal or Internal Revenue Service
interest penalties for transfers. The new trustee would hold the common stock in
a self-directed account in the same manner as we now hold the depositor's IRA
funds. An annual administrative fee may be payable to the new trustee.
Subscribers interested in using funds in a Gloucester County Federal Savings
Bank IRA account to purchase common stock should contact the stock information
center as soon as possible so that the necessary forms may be forwarded for
execution and returned before the subscription offering ends. In addition,
federal laws and regulations require that officers, directors and 10%
stockholders who use self-directed IRA funds to purchase shares of common stock
in the subscription offering, make purchases for the exclusive benefit of IRA
accounts.

Federal regulations prohibit Gloucester County Federal Savings Bank
from lending funds or extending credit to any person to purchase the common
stock in the offering.

Stock Information Center. Our stock information center is located at
___________________, New Jersey. The phone number is (___) ___-____. The stock
information center's hours of operation are __:__ a.m. to __:__ p.m., Eastern
time, Monday through Friday.

Delivery of Stock Certificates. Certificates representing common stock
issued in the offering will be mailed by our transfer agent to the persons
entitled thereto at the address noted on the order form, as soon as practicable
following completion of the offering. Any certificates returned as undeliverable
will be held until claimed by persons legally entitled thereto or otherwise
disposed of in accordance with applicable law. Until certificates for the common
stock are available and delivered to subscribers, subscribers may not be able to
sell the shares of stock for which they subscribed, even though trading of our
common stock may have commenced.

Restrictions on Repurchase of Shares

Under Office of Thrift Supervision regulations, we may not, for a
period of one year from the date of the completion of the offering, repurchase
any of our common stock from any person, except (1) in an offer made to all
stockholders to repurchase the common stock on a pro rata basis, approved by the
Office of Thrift Supervision, (2) the repurchase of qualifying shares of a
director, or (3) repurchases to fund restricted stock plans or tax-qualified
employee stock benefit plans, including the employee stock ownership plan. Where
extraordinary circumstances exist, the Office of Thrift Supervision may approve
the open market repurchase of up to 5% of our common stock during the first year
following the offering. To receive such approval, we must establish compelling
and valid business purposes for the repurchase to the satisfaction of the Office
of Thrift Supervision. Furthermore, repurchases of any common stock are
prohibited if they would cause Gloucester County Federal Savings Bank's
regulatory capital to be reduced below the amount required under the regulatory
capital requirements imposed by the Office of Thrift Supervision. If, in the
future, the rules and regulations regarding the repurchase of stock are
liberalized, we may utilize the rules and regulations then in effect.

How We Determined the $10.00 Per Share Price and the Number of Shares to Be
Issued in the Stock Offering

The plan of stock issuance requires that the purchase price of the
common stock must be based on the appraised pro forma market value of Gateway
Community Financial Corp. and Gloucester County Federal Savings Bank, as
determined on the basis of an independent valuation. For its services in making
this appraisal, Feldman Financial Advisors's fees and out-of-pocket expenses are
estimated to total approximately $47,500. We have agreed to indemnify Feldman
Financial Advisors and any employees of Feldman Financial Advisors who act for
or on behalf of Feldman Financial Advisors in connection with the appraisal
against any and all loss, cost, damage, claim, liability or expense of any kind,
including claims under federal and state securities laws, arising out of any
misstatement, untrue statement of a material fact or omission to state a
material fact in the information supplied by us to Feldman Financial Advisors,
unless Feldman Financial Advisors is determined to be negligent or otherwise at
fault.

Feldman Financial Advisors made its appraisal in reliance upon the
information contained in this prospectus, including the financial statements.
Feldman Financial Advisors also considered the following factors, among others:

o the present and projected operating results and financial condition of
Gateway Community Financial Corp. and Gloucester County Federal Savings
Bank, which were prepared by Gloucester County Federal Savings Bank and
then adjusted by Feldman Financial Advisors to reflect the estimated net
proceeds of this offering, the estimated expense of our stock benefit plans
and the economic and demographic conditions in Gloucester County Federal
Savings Bank's existing marketing area as prepared by Feldman Financial
Advisors;

o certain historical, financial and other information relating to Gloucester
County Federal Savings Bank prepared by Gloucester County Federal Savings
Bank; and

o the impact of the stock offering on our net worth and earnings potential as
calculated by Feldman Financial Advisors.

The appraisal also incorporated an analysis of a peer group of
publicly-traded mutual holding companies that Feldman Financial Advisors
considered to be comparable to Gloucester County Federal Savings Bank. The peer
group analysis conducted by Feldman Financial Advisors included a total of 10
publicly-traded mutual holding companies with total assets of more than $___
million and less than $___ million. The analysis of comparable publicly-traded
institutions included an evaluation of the average and median price-to-earnings
and price-to-book value ratios indicated by the market prices of the peer
companies. Feldman Financial Advisors applied the peer group's pricing ratios,
as adjusted to allow for differences between Gateway Community Financial Corp.
and the peer group, to Gateway Community Financial Corp.'s pro forma earnings
and book value to derive the estimated pro forma market value of Gateway
Community Financial Corp.

On the basis of the foregoing, Feldman Financial Advisors advised in
its opinion, dated March __, 2007, that the estimated pro forma market value of
Gateway Community Financial Corp. on a fully- converted basis ranged from a
minimum of $51 million to a maximum of $69 million with a midpoint of $60
million. The Board of Directors determined that 45% of the total shares of
common stock to be outstanding upon completion of the offering should be sold.
Based on the estimated valuation and the $10.00 per share price, the total
number of shares of common stock that Gateway Community Financial Corp. will
issue, including shares issued to Gateway Community Financial, MHC, will range
from a

minimum of 2,295,000 shares to a maximum of 3,105,000 shares, with a midpoint of
2,700,000 shares. The shares of Gateway Community Financial Corp. stock that are
not offered for sale in the offering will be issued to Gateway Community
Financial, MHC, which will own 55% of the total outstanding common stock upon
completion of the offering.

The estimated valuation range may be amended with the approval of the
Office of Thrift Supervision or if necessitated by subsequent developments in
the consolidated financial condition of Gateway Community Financial Corp. or
market conditions generally. In the event the estimated valuation range is
updated to amend the value of Gateway Community Financial Corp. on a
fully-converted basis below $51 million, which is the minimum of the estimated
valuation range, or above $79.4 million, which is the adjusted maximum of the
estimated valuation range, a new appraisal will be filed with the Office of
Thrift Supervision.

Feldman Financial Advisors' valuation is not intended, and must not be
construed, as a recommendation of any kind as to the advisability of purchasing
Gateway Community Financial Corp.'s shares. Feldman Financial Advisors did not
independently verify the consolidated financial statements and other information
provided by us, nor did Feldman Financial Advisors value independently our
assets or liabilities. The valuation considers us as a going concern and should
not be considered as an indication of our liquidation value. Moreover, because
this valuation is necessarily based upon estimates and projections of a number
of matters, all of which are subject to change from time to time, no assurance
can be given that persons purchasing common stock in the offerings will
thereafter be able to sell such shares at prices at or above the purchase price
or in the range of the valuation described above.

No sale of shares of common stock in the stock offering may be
completed unless Feldman Financial Advisors confirms that nothing of a material
nature has occurred which would cause it to conclude that the aggregate value of
the common stock to be issued is materially incompatible with the estimate of
the aggregate consolidated pro forma market value of Gateway Community Financial
Corp. and Gloucester County Federal Savings Bank. If this confirmation is not
received, we may cancel the stock offering, extend the offering period and
establish a new estimated valuation and offering range and/or estimated price
range, extend, reopen or hold a new offering or take any other action the Office
of Thrift Supervision may permit.

Depending upon market or financial conditions following the start of
the subscription offering, the total number of shares of common stock to be
issued may be increased or decreased without a resolicitation of subscribers,
provided that the product of the total number of shares issued times the
purchase price is not below the minimum or more than 15% above the maximum of
the estimated valuation range. If market or financial conditions change so as to
cause the aggregate value of the common stock to be issued to be below the
minimum of the estimated valuation range or more than 15% above the maximum of
this range, purchasers will be resolicited and be permitted to continue their
orders, in which case they will need to reconfirm their subscriptions prior to
the expiration of the resolicitation offering or their subscription funds will
be promptly refunded with interest, or be permitted to modify or rescind their
subscriptions. Any change in the estimated valuation range must be approved by
the Office of Thrift Supervision.

An increase in the number of shares of common stock to be issued as a
result of an increase in the estimated pro forma market value would decrease
both a subscriber's ownership interest and Gateway Community Financial Corp.'s
pro forma net income and stockholders' equity on a per share basis while
increasing pro forma net income and stockholders' equity on an aggregate basis.
A decrease in the number of shares of common stock to be issued would increase
both a subscriber's ownership interest and Gateway

Community Financial Corp.'s pro forma net income and stockholders' equity on a
per share basis while decreasing pro forma net income and stockholders' equity
on an aggregate basis.

Copies of the appraisal report of Feldman Financial Advisors, including
any amendments, and the detailed report of the appraiser setting forth the
method and assumptions for the appraisal are available for inspection at the
Bank's main office and the other locations specified under Where You Can Find
More Information. The appraisal report is an exhibit to the registration
statement filed with the Securities and Exchange Commission.

Plan of Distribution and Marketing Arrangements

We have engaged Sandler O'Neill & Partners, L.P., a broker-dealer
registered with the National Association of Securities Dealers, as a financial
and marketing advisor in connection with the offering of our common stock. In
its role as financial and marketing advisor, Sandler O'Neill will assist us in
the offering as follows:

o consulting as to the securities marketing implications of any aspect of the
plan of stock issuance;

o reviewing with our Board of Directors the financial impact of the offering
based upon the independent appraiser's appraisal of the common stock;

o reviewing all offering documents, including the prospectus, stock order
forms and related offering materials (we are responsible for the
preparation and filing of such documents);

o assisting in the design and implementation of a marketing strategy for the
offering;

o assisting us in scheduling and preparing for meetings with potential
investors and broker-dealers; and

o providing such other general advice and assistance we may request to
promote the successful completion of the offering.

For these services, Sandler O'Neill will receive a fee of 1.0% of the
aggregate dollar amount of the common stock sold in the subscription and
community offerings if the stock issuance is consummated, excluding in each case
shares purchased by the Gloucester County Federal Savings Bank Employee Stock
Ownership Plan and shares purchased by our directors, officers and employees and
their immediate families. We have made an advance payment of $25,000 to Sandler
O'Neill for expenses. Any unused portion of this advance will be refunded if the
offering is not consummated.

The plan of stock issuance provides that, if necessary, all shares of
common stock not purchased in the subscription offering and community offering
may be offered for sale to the general public in a syndicated community offering
to be managed by Sandler O'Neill. In such capacity, Sandler O'Neill may form a
syndicate of other broker-dealers. Neither Sandler O'Neill nor any registered
broker-dealer will have any obligation to take or purchase any shares of the
common stock in the syndicated community offering; however, Sandler O'Neill has
agreed to use its best efforts in the sale of shares in any syndicated community
offering. If there is a syndicated community offering, Sandler O'Neill will
receive a management fee of 1.0% of the aggregate dollar amount of the common
stock sold in the syndicated community offering. The total fees payable to
Sandler O'Neill and other National Association of Securities

Dealers member firms in the syndicated community offering shall not exceed 6.5%
of the aggregate dollar amount of the common stock sold in the syndicated
community offering.

We also will reimburse Sandler O'Neill for its reasonable out-of-pocket
expenses (including legal fees and expenses) associated with its marketing
effort, up to a maximum of $60,000. If the plan of stock issuance is terminated
or if Sandler O'Neill terminates its agreement with us in accordance with the
provisions of the agreement, Sandler O'Neill will only receive reimbursement of
its reasonable out-of-pocket expenses. We will indemnify Sandler O'Neill against
liabilities and expenses (including legal fees) incurred in connection with
certain claims or litigation arising out of or based upon untrue statements or
omissions contained in the offering material for the common stock, including
liabilities under the Securities Act of 1933.

We have also engaged Sandler O'Neill to act as our records management
agent in connection with the offering. In its role as records management agent,
Sandler O'Neill will assist us in the offering as follows: (1) consolidation of
accounts and development of a central file; (2) preparation of order forms; (3)
organization and supervision of the conversion center; and (4) subscription
services. For these services, Sandler O'Neill will receive a fee of $24,000 and
reimbursement for its reasonable out-of-pocket expenses, up to a maximum of
$26,000. We have made an advance payment of $5,000 to Sandler O'Neill for these
services.

Sandler O'Neill has not prepared any report or opinion constituting a
recommendation or advice to us or to persons who subscribe for our common stock,
nor has it prepared an opinion as to the fairness to us of the purchase price or
the terms of the common stock offered for sale. Sandler O'Neill expresses no
opinion as to the prices at which the common stock, once issued, may trade.

Our directors and executive officers may participate in the
solicitation of offers to purchase common stock. Other trained employees may
participate in the offering in ministerial capacities, providing clerical work
in effecting a sales transaction or answering questions of a ministerial nature.
Other questions of prospective purchasers will be directed to executive officers
or registered representatives of Sandler O'Neill. We will rely on Rule 3a4-1 of
the Securities Exchange Act of 1934 so as to permit officers, directors and
employees to participate in the sale of our common stock. No officer, director
or employee will be compensated for his or her participation by the payment of
commissions or other remuneration based either directly or indirectly on the
transactions in the common stock.

Restrictions on Transferability by Directors and Executive Officers

Shares of the common stock purchased by our directors or executive
officers cannot be sold for a period of one year following completion of the
offering, except for a disposition of shares after death. To ensure this
restriction is upheld, shares of the common stock issued to directors and
executive officers will bear a legend restricting their sale. Appropriate
instructions will be issued to the transfer agent with respect to applicable
restrictions on transfer of such stock. Any shares issued to directors and
executive officers as a stock dividend, stock split or otherwise with respect to
restricted stock will be subject to the same restriction.

For a period of three years following the offering, our directors and
executive officers and their associates may not, without the prior approval of
the Office of Thrift Supervision, purchase our common stock except from a broker
or dealer registered with the SEC. This prohibition does not apply to negotiated
transactions including more than 1% of our common stock or purchases made by tax
qualified or non-tax

qualified employee stock benefit plans which may be attributable to individual
directors or executive officers.

We have filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933 for the registration of
the common stock to be issued in the offering. This registration does not cover
the resale of the shares. Shares of common stock purchased by persons who are
not affiliates of us may be resold without registration. Shares purchased by an
affiliate of us will have resale restrictions under Rule 144 of the Securities
Act. If we meet the current public information requirements of Rule 144, each
affiliate of ours who complies with the other conditions of Rule 144, including
those that require the affiliate's sale to be aggregated with those of certain
other persons, would be able to sell in the public market, without registration,
a number of shares not to exceed, in any three-month period, the greater of 1%
of our outstanding shares or the average weekly volume of trading in the shares
during the preceding four calendar weeks. We may make future provisions to
permit affiliates to have their shares registered for sale under the Securities
Act under certain circumstances.

Restrictions on Agreements or Understandings Regarding Transfer of Common Stock
to be Purchased in the Offering

Before the completion of the offering, no depositor may transfer or
enter into an agreement or understanding to transfer any subscription rights or
the legal or beneficial ownership of the shares of common stock to be purchased
in the offering. Depositors who submit an order form will be required to certify
that their purchase of common stock is solely for their own account and there is
no agreement or understanding regarding the sale or transfer of their shares. We
intend to pursue any and all legal and equitable remedies after we become aware
of any agreement or understanding, and will not honor orders we reasonably
believe to involve an agreement or understanding regarding the sale or transfer
of shares.

Effects of the Stock Offering

General. The stock offering will not have any effect on Gloucester
County Federal Savings Bank's present business of accepting deposits and
investing its funds in loans and other investments permitted by law. The stock
offering will not result in any change in the existing services provided to
depositors and borrowers, or in existing offices, management, and staff. After
the stock offering, Gloucester County Federal Savings Bank will continue to be
subject to regulation, supervision, and examination by the Office of Thrift
Supervision and the Federal Deposit Insurance Corporation.

Deposits and Loans. Each holder of a deposit account in Gloucester
County Federal Savings Bank at the time of the stock offering will continue as
an account holder in Gloucester County Federal Savings Bank after the stock
offering, and the stock offering will not affect the deposit balance, interest
rate or other terms. Each deposit account will be insured by the Federal Deposit
Insurance Corporation to the same extent as before the stock offering.
Depositors will continue to hold their existing certificates, savings records,
checkbooks and other evidence of their accounts. The stock offering will not
affect the loans of any borrower from Gloucester County Federal Savings Bank.
The amount, interest rate, maturity, security for, and obligations under each
loan will remain contractually fixed as they existed prior to the stock
offering.

Voting Rights. As a stock savings bank, all voting rights of Gloucester
County Federal Savings Bank are held solely by its sole stockholder, Gateway
Community Financial Corp. All voting rights of Gateway Community Financial Corp.
are held solely by its sole stockholder, Gateway Community Financial, MHC. All
voting rights of Gateway Community Financial, MHC are held by the Board of

Directors of Gateway Community Financial, MHC. After the stock offering, the
voting rights of Gateway Community Financial Corp. will be held by its
stockholders. Gateway Community Financial, MHC will own a majority of the
outstanding common stock of Gateway Community Financial Corp., and thus the
Board of Directors of Gateway Community Financial, MHC, which is comprised of
the same individuals who are directors of Gateway Community Financial Corp.,
will control the affairs of Gateway Community Financial Corp., including the
election of directors of Gateway Community Financial Corp.

Material Federal and State Tax Consequences of the Offering. We have
received an opinion from Malizia Spidi & Fisch, PC on the material federal tax
consequences of the stock offering to Gateway Community Financial Corp., the
purchasers of its common stock and the recipients of subscription rights to
purchase such common stock. The opinion has been filed as an exhibit to the
registration statement of which this prospectus is a part and covers those
federal tax matters that are material to the transaction. Such opinion is made
in reliance upon various statements, representations and declarations as to
matters of fact made by us, as detailed in the opinion. The opinion provides
that:

o we will recognize no gain or loss upon the receipt of money in
exchange for shares of common stock; and

o no gain or loss will be recognized by Eligible Account Holders,
Supplemental Eligible or Account Holders upon the distribution to
them of the nontransferable subscription rights to purchase
shares of common stock.

The opinion in the second bullet above is predicated on representations
from Gloucester County Federal Savings Bank, Gateway Community Financial Corp.
and Gateway Community Financial, MHC that no person shall receive any payment,
whether in money or property, in lieu of the issuance of subscription rights.
The opinion in the second bullet above is also based on the position that the
subscription rights to purchase shares of common stock received by Eligible
Account Holders and Supplemental Eligible Account Holders have a fair market
value of zero. In reaching their opinion stated in the second bullet above,
Malizia Spidi & Fisch, PC has noted that the subscription rights will be granted
at no cost to the recipients, will be legally non-transferable and of short
duration, and will provide the recipients with the right only to purchase shares
of common stock at the same price to be paid by members of the general public in
any community offering. Malizia Spidi & Fisch, PC believes that it is more
likely than not that the fair market value of the subscription rights to
purchase common stock is zero. Malizia Spidi & Fisch, PC has noted in its
opinion that they are not aware of the Internal Revenue Service claiming in any
similar transaction that subscription rights have any market value. In that
there are no judicial opinions or official Internal Revenue Service positions on
this issue, however, such position related to subscription rights comes to a
reasoned conclusion instead of an absolute conclusion on these issues. Such
conclusion of counsel is supported by a letter from Feldman Financial Advisors
furnished to us which states that the subscription rights do not have any value
when they are distributed or exercised. If the Internal Revenue Service
disagrees with this valuation of subscription rights and determines that such
subscription rights have value, income may be recognized by recipients of these
rights, in certain cases whether or not the rights are exercised. This income
may be capital gain or ordinary income, and Gateway Community Financial Corp.
could recognize gain on the distribution of these rights. Based on the
foregoing, Malizia Spidi & Fisch, PC believes that it is more likely than not
that the nontransferable subscription rights to purchase our common stock have
no value.

We are also subject to New Jersey income taxes and have received an
opinion from S.R. Snodgrass, A.C. that the stock offering will be treated for
New Jersey state tax purposes similar to the treatment of the stock offering for
federal tax purposes.

Unlike a private letter ruling from the IRS, the federal and state tax
opinions have no binding effect or official status, and no assurance can be
given that the conclusions reached in any of those opinions would be sustained
by a court if contested by the IRS or the New Jersey tax authorities. Eligible
Account Holders and Supplemental Eligible Account Holders are encouraged to
consult with their own tax advisers as to the tax consequences in the event the
subscription rights are determined to have any market value.

Interpretation, Amendment or Termination of the Plan of Stock Offering

If determined to be necessary or desirable by the Board of Directors,
the plan may be amended by a two-thirds vote of the full Board, with the
concurrence of the Office of Thrift Supervision. To the extent permitted by law,
all interpretations by us of the plan of stock issuance will be final; however,
such interpretations have no binding effect on the Office of Thrift Supervision.
The plan of stock issuance provides that, if deemed necessary or desirable, we
may substantively amend the plan of stock issuance as a result of comments from
regulatory authorities or otherwise.

Completion of the offering requires the sale of all shares of the
common stock within ninety days following approval of the plan of stock issuance
by the Office of Thrift Supervision, unless an extension is granted by the
Office of Thrift Supervision. If this condition is not satisfied, the plan of
stock issuance will be terminated and we will continue our business. We may
terminate the plan of stock issuance at any time.

Conditions to the Offering

Completion of the offering is subject to several factors, including:

1. the receipt of all the required approvals of the Office of Thrift
Supervision for the issuance of common stock in the offering, and

2. the sale of 2,295,000 shares of common stock.

If such conditions are not met before we complete the offering, all
funds received will be promptly returned with interest and all withdrawal
authorizations will be canceled. The stock purchases of our officers and
directors will be counted for purposes of meeting the minimum number of shares.

RESTRICTIONS ON ACQUISITION OF GATEWAY COMMUNITY FINANCIAL CORP.

General

The principal federal regulatory restrictions which affect the ability
of any person, firm or entity to acquire Gateway Community Financial Corp.,
Gloucester County Federal Savings Bank or their respective capital stock are
described below. Also discussed are certain provisions in Gateway Community
Financial Corp.'s charter and bylaws which may be deemed to affect the ability
of a person, firm or entity to acquire Gateway Community Financial Corp.

Statutory and Regulatory Restrictions on Acquisition

The Change in Bank Control Act provides that no person, acting directly
or indirectly or through or in concert with one or more other persons, may
acquire control of a savings institution unless the Office

of Thrift Supervision has been given 60 days prior written notice. The Home
Owners' Loan Act provides that no company may acquire "control" of a savings
institution without the prior approval of the Office of Thrift Supervision. Any
company that acquires such control becomes a savings and loan holding company
subject to registration, examination and regulation by the Office of Thrift
Supervision. Pursuant to federal regulations, control of a savings institution
is conclusively deemed to have been acquired by, among other things, the
acquisition of more than 25% of any class of voting stock of the institution or
the ability to control the election of a majority of the directors of an
institution. Moreover, control is presumed to have been acquired, subject to
rebuttal, upon the acquisition of more than 10% of any class of voting stock, or
of more than 25% of any class of stock of a savings institution, where certain
enumerated "control factors" are also present in the acquisition.

The Office of Thrift Supervision may prohibit an acquisition of control
if:

o it would result in a monopoly or substantially lessen competition;

o the financial condition of the acquiring person might jeopardize the
financial stability of the institution; or

o the competence, experience or integrity of the acquiring person indicates
that it would not be in the interest of the depositors or of the public to
permit the acquisition of control by such person.

These restrictions do not apply to the acquisition of a savings
institution's capital stock by one or more tax-qualified employee stock benefit
plans, provided that the plans do not have beneficial ownership of more than 25%
of any class of equity security of the savings institution.

For a period of three years following completion of the stock issuance,
Office of Thrift Supervision regulations generally prohibit any person from
acquiring or making an offer to acquire beneficial ownership of more than 10% of
the stock of Gateway Community Financial Corp. or Gloucester County Federal
Savings Bank without Office of Thrift Supervision approval.

Current Office of Thrift Supervision regulations permit a mutual
holding company to be acquired by a mutual institution or in a remutualization
transaction. However, the Office of Thrift Supervision has issued a policy
statement indicating that it views remutualization transactions as raising
significant issues concerning disparate treatment of minority stockholders and
mutual members of the target entity and raising issues concerning the effect on
the mutual members of the acquiring entity. Under certain circumstances, the
Office of Thrift Supervision intends to give these issues special scrutiny and
reject applications providing for the remutualization of a mutual holding
company unless the applicant can clearly demonstrate that the Office of Thrift
Supervision's concerns are not warranted.

Charter and Bylaws of Gateway Community Financial Corp.

The following discussion is a summary of certain provisions of the
charter and bylaws of Gateway Community Financial Corp. that relate to corporate
governance. The description is necessarily general and qualified by reference to
the charter and bylaws.

Classified Board of Directors. The Board of Directors of Gateway
Community Financial Corp. is required by the bylaws to be divided into three
staggered classes as equal in size as is possible, with one class elected
annually by stockholders for three-year terms. A classified Board promotes
continuity and stability of management of Gateway Community Financial Corp., but
makes it more difficult for stockholders to change a majority of the directors
because it generally takes at least two annual elections of directors for this
to occur. Directors are elected by a plurality of votes cast, and because
Gateway Community Financial, MHC will own a majority of the common stock, it
will control the election of directors.

Limitation of Beneficial Ownership and Voting. For a period of three
years following the offering, Office of Thrift Supervision regulations generally
prohibit any person from acquiring or making an offer to acquire beneficial
ownership of more than 10% of the then-outstanding shares of Gateway Community
Financial Corp. common stock without Office of Thrift Supervision prior
approval.

Additionally, our charter includes a provision that limits the voting
rights of a single stockholder to no more than 10% of the then-outstanding
shares, including shares held by Gateway Community Financial, MHC, for a period
of five years from the date this stock offering is completed.

Authorized but Unissued Shares of Capital Stock. Following the stock
offering, Gateway Community Financial Corp. will have authorized but unissued
shares of preferred stock and common stock. See Description of Capital Stock.
Although these shares could be used by the Board of Directors of Gateway
Community Financial Corp. to make it more difficult or to discourage an attempt
to obtain control of Gateway Community Financial Corp. through a merger, tender
offer, proxy contest or otherwise, it is unlikely that we would use or need to
use shares for these purposes because Gateway Community Financial, MHC will own
a majority of the common stock.

Special Meetings of Stockholders. Gateway Community Financial Corp.'s
bylaws provide that special meetings of stockholders may be called only by the
chairman of the Board, the president, or a majority of the Board of Directors,
or upon the written request of the holders of not less than one-tenth of all of
the outstanding stock of Gateway Community Financial Corp.

How Shares are Voted. Gateway Community Financial Corp.'s bylaws
provide that there will not be cumulative voting by stockholders for the
election of Gateway Community Financial Corp.'s directors. No cumulative voting
rights means that Gateway Community Financial, MHC, as the holder of a majority
of the shares eligible to be voted at a meeting of stockholders, may elect all
directors of Gateway Community Financial Corp. to be elected at that meeting.
This could prevent minority stockholder representation on Gateway Community
Financial Corp.'s Board of Directors.

Procedures for Stockholder Nominations. Gateway Community Financial
Corp.'s bylaws provide that any stockholder wanting to make a nomination for the
election of directors or a proposal for new business at a meeting of
stockholders must send written notice to the Secretary of Gateway Community
Financial Corp. at least five days before the date of the annual meeting. The
bylaws further provide that if a stockholder wanting to make a nomination or a
proposal for new business does not follow the prescribed procedures, the
proposal will not be considered until an adjourned, special, or annual meeting
of the stockholders taking place thirty days or more thereafter. Management
believes that it is in the best interests of Gateway Community Financial Corp.
and its stockholders to provide enough time for management to disclose to
stockholders information about a dissident slate of nominations for directors.
This advance notice requirement may also give management time to solicit its own
proxies in an attempt to defeat any dissident slate of nominations if management
thinks it is in the best interest of stockholders generally. Similarly, adequate
advance notice of stockholder proposals will give management time to study such
proposals and to determine whether to recommend to the stockholders that such
proposals be adopted.

Indemnification. Gateway Community Financial Corp.'s bylaws provide for
indemnification of its officers, directors and employees to the fullest extent
authorized by the regulations of the Office of Thrift Supervision.

DESCRIPTION OF CAPITAL STOCK

General

Gateway Community Financial Corp. is authorized to issue 25,000,000
shares of common stock, par value $0.10 per share and 5,000,000 shares of serial
preferred stock, no par value. Upon completion of the stock offering, we will
have between 2,295,000 shares of common stock at the minimum and

100

3,105,000 shares of common stock at the maximum of the offering range
outstanding (3,570,750 shares at the adjusted maximum), including shares that
will be held by Gateway Community Financial, MHC. Upon payment of the purchase
price shares of common stock issued in the offering will be fully paid and
non-assessable. Each share of common stock will have the same relative rights
as, and will be identical in all respects with, each other share of common
stock. The common stock will represent non- withdrawable capital, will not be an
account of insurable type and will not be insured by the Federal Deposit
Insurance Corporation or any other governmental agency. The Board of Directors
can, without stockholder approval, issue additional shares of common stock,
although Gateway Community Financial, MHC, so long as it is in existence, must
own a majority of Gateway Community Financial Corp.'s outstanding shares of
common stock.

Common Stock

Distributions. Gateway Community Financial Corp. can pay dividends if,
as and when declared by its Board of Directors, subject to compliance with
limitations which are imposed by law. See Our Policy Regarding Dividends. The
holders of common stock of Gateway Community Financial Corp. will be entitled to
receive and share equally in such dividends as may be declared by the Board of
Directors of Gateway Community Financial Corp. out of funds legally available
therefor. If Gateway Community Financial Corp. issues preferred stock, the
holders thereof may have a priority over the holders of the common stock with
respect to dividends.

Voting Rights. The holders of common stock will possess exclusive
voting rights in Gateway Community Financial Corp. The holder of shares of
common stock will be entitled to one vote for each share held on all matters
subject to stockholder vote and will not have any right to cumulate votes in the
election of directors.

Liquidation Rights. In the event of any liquidation, dissolution, or
winding-up of Gateway Community Financial Corp., the holders of the common stock
generally would be entitled to receive, after payment of all debts and
liabilities of Gateway Community Financial Corp. (including all debts and
liabilities of Gloucester County Federal Savings Bank), all assets of Gateway
Community Financial Corp. available for distribution. If preferred stock is
issued, the holders thereof may have a priority over the holders of the common
stock in the event of liquidation or dissolution.

Preemptive Rights; Redemption. Because the holders of the common stock
do not have any preemptive rights with respect to any shares Gateway Community
Financial Corp. may issue, the Board of Directors may sell shares of capital
stock of Gateway Community Financial Corp. without first offering such shares to
existing stockholders. The common stock will not be subject to any redemption
provisions.

Preferred Stock

We are authorized to issue up to 5,000,000 shares of serial preferred
stock and to fix and state voting powers, designations, preferences, or other
special rights of preferred stock and the qualifications, limitations and
restrictions of those shares as the Board of Directors may determine in its
discretion. Preferred stock may be issued in distinctly designated series, may
be convertible into common stock and may rank prior to the common stock as to
dividends rights, liquidation preferences, or both, and may have full or limited
voting rights. The issuance of preferred stock could adversely affect the voting
and other rights of holders of common stock.

101

The authorized but unissued shares of preferred stock and the
authorized but unissued and unreserved shares of common stock will be available
for issuance in future mergers or acquisitions, in future public offerings or
private placements. Except as otherwise required to approve the transaction in
which the additional authorized shares of preferred stock would be issued, no
stockholder approval generally would be required for the issuance of these
shares.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for Gateway Community Financial
Corp.'s common stock will be Registrar and Transfer Company, Cranford, New
Jersey.

LEGAL AND TAX OPINIONS

The legality of the issuance of the common stock being offered and
certain matters relating to the stock offering and federal taxation will be
passed upon for us by Malizia Spidi & Fisch, PC, Washington, D.C. Matters
relating to state taxation will be passed upon for us by S.R. Snodgrass, A.C.,
Wexford, Pennsylvania. Certain legal matters will be passed upon for Sandler
O'Neill & Partners, L.P. by Muldoon Murphy & Aguggia LLP, Washington, D.C.

EXPERTS

The consolidated financial statements of Gateway Community Financial
Corp. at December 31, 2006 and 2005 and for each of the years in the three year
period ended December 31, 2006 have been included in this prospectus in reliance
upon the report of S.R. Snodgrass, A.C., appearing elsewhere in this prospectus,
and upon the authority of said firm as experts in accounting and auditing.

Feldman Financial Advisors, Inc. has consented to the publication in
this document of a summary of its letter to Gateway Community Financial Corp.
setting forth its conclusion as to the estimated pro forma market value of the
common stock and has also consented to the use of its name and statements with
respect to it appearing in this document.

REGISTRATION REQUIREMENTS

Prior to completion of the offering, we will register our common stock
with the SEC pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended. We will be subject to the information, proxy solicitation, insider
trading restrictions, tender offer rules, periodic reporting and other
requirements of the SEC under the Securities Exchange Act of 1934. We will not
deregister the common stock under the Securities Exchange Act of 1934 for a
period of at least three years following the stock offering.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under
the Securities Act of 1933, as amended, with respect to the common stock offered
in this document. As permitted by the rules and regulations of the SEC, this
document does not contain all the information set forth in the registration
statement. The statements contained in this document as to the contents of any
contract or other document filed as an exhibit to the Form S-1 are, of
necessity, brief descriptions. The registration statement and exhibits can be
examined without charge at the public reference facilities of the SEC located at
100 F Street, N.E., Washington, D.C. You may obtain information on the operation
of the Public Reference Room by calling 1-800-SEC-0330. The SEC also maintains a
web site that contains reports,

102

proxy and information statements and other information regarding registrants,
including Gateway Community Financial Corp., that file electronically with the
SEC. The address for this web site is http://www.sec.gov.

We have filed an application for approval of the stock issuance with
the Office of Thrift Supervision. This prospectus omits certain information
contained in that application. That information can be examined without charge
at the public reference facilities of the Office of Thrift Supervision located
at 1700 G Street, N.W., Washington, D.C. 20552.

A copy of our charter and bylaws, filed as exhibits to the registration
statement as well as those of Gloucester County Federal Savings Bank and Gateway
Community Financial, MHC, are available without charge from Gateway Community
Financial Corp. Copies of the plan of stock issuance are also available without
charge.

103

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm......................F-1

Consolidated Balance Sheet
as of December 31, 2006 and 2005 .................................. F-2

Consolidated Statement of Income
for the Years Ended December 31, 2006, 2005 and 2004................F-3

Consolidated Statement of Changes in Stockholders' Equity
for the Years Ended December 31, 2006, 2005 and 2004................F-4

Consolidated Statement of Cash Flows
for the Years Ended December 31, 2006, 2005 and 2004............... F-5

Notes to Consolidated Financial Statements.................................. F-7

All schedules are omitted as the required information either is not
applicable or is included in the consolidated financial statements or related
notes.

104

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Gateway Community Financial Corp.

We have audited the consolidated balance sheet of Gateway Community Financial
Corp. and subsidiary as of December 31, 2006 and 2005, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 2006. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Gateway Community
Financial Corp. and subsidiary as of December 31, 2006 and 2005, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2006, in conformity with U.S. generally accepted
accounting principles.

/s/S.R. Snodgrass, A.C.

Wexford, PA
March 20, 2007

F-1

GATEWAY COMMUNITY FINANCIAL CORP.
CONSOLIDATED BALANCE SHEET

December 31,
2006 2005
------------- -------------

ASSETS
Cash and due from banks $ 9,792,977 $ 7,094,534
Interest-bearing deposits in other banks 825,203 1,636,118
Federal funds sold - 5,300,000
------------- -------------
Cash and cash equivalents 10,618,180 14,030,652

Investment securities available for sale 14,151,943 1,729,053
Investment securities held to maturity
(fair value $38,404,079 and $38,955,768) 38,645,234 39,586,162
Mortgage-backed securities available for sale 200,059 324,314
Mortgage-backed securities held to maturity
(fair value $58,002,971 and $52,771,675) 58,984,533 53,708,105
Loans receivable 212,305,275 183,951,358
Less allowance for loan losses 1,813,469 3,035,676
------------- -------------
Net loans 210,491,806 180,915,682
Accrued interest receivable 1,733,571 1,106,854
Real estate owned 287,592 287,592
Premises and equipment 6,468,933 6,549,886
Federal Home Loan Bank stock 581,600 355,000
Bank-owned life insurance 7,462,020 7,205,131
Other assets 2,238,354 2,212,379
------------- -------------

TOTAL ASSETS $ 351,863,825 $ 308,010,810
============= =============

LIABILITIES
Deposits $ 315,962,427 $ 277,544,217
Short-term borrowings 4,400,000 -
Advances by borrowers for taxes and insurance 514,511 474,957
Accrued interest payable and other liabilities 2,083,690 1,445,686
------------- -------------

TOTAL LIABILITIES 322,960,628 279,464,860
------------- -------------
Commitments and Contingencies (Note 14)

STOCKHOLDERS' EQUITY
Preferred stock, par value $.10; 5,000,000 shares authorized
no shares issued and outstanding - -
Common stock, par value $.10; 25,000,000 shares authorized;
10,000 shares issued and outstanding 1,000 1,000
Additional paid-in capital 249,000 249,000
Retained earnings 28,685,843 28,306,369
Accumulated other comprehensive loss
(32,646) (10,419)
------------- -------------

TOTAL STOCKHOLDERS' EQUITY 28,903,197 28,545,950
------------- -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 351,863,825 $ 308,010,810
============= =============

See accompanying notes to the consolidated financial statements.

F-2

GATEWAY COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENT OF INCOME

Year Ended December 31,
2006 2005 2004
------------ ------------ ------------

INTEREST AND DIVIDEND INCOME
Loans receivable $ 11,474,291 $ 9,940,497 $ 9,800,017
Interest-bearing deposits in other banks and federal funds sold 97,856 196,997 142,910
Investment securities
Taxable 2,149,634 1,621,073 1,837,680
Exempt from federal income tax 135,502 38,799 24,388
Mortgage-backed securities 2,416,192 2,423,423 2,108,277
------------ ------------ ------------
Total interest and dividend income 16,273,475 14,220,789 13,913,272
------------ ------------ ------------
INTEREST EXPENSE
Deposits 8,688,512 5,863,428 5,203,667
Short-term borrowings 688,692 7,937 -
------------ ------------ ------------
Total interest expense 9,377,204 5,871,365 5,203,667
------------ ------------ ------------

NET INTEREST INCOME 6,896,271 8,349,424 8,709,605

Recovery of loan losses (348,444) (916,695) (12,766)
------------ ------------ ------------

NET INTEREST INCOME AFTER RECOVERY
OF LOAN LOSSES 7,244,715 9,266,119 8,722,371
------------ ------------ ------------
NONINTEREST INCOME
Service charges and other fees 445,954 375,439 390,570
Investment securities (losses) gains, net (30,145) - 22,788
Earnings on bank-owned life insurance 256,889 245,689 211,060
Other 182,953 262,031 251,155
------------ ------------ ------------
Total noninterest income 855,651 883,159 875,573
------------ ------------ ------------

NONINTEREST EXPENSE
Compensation and employee benefits 4,427,176 4,336,167 4,265,410
Occupancy and equipment 1,247,148 1,292,666 1,253,504
Data processing 608,416 586,478 560,825
Federal insurance premiums 35,228 80,828 121,071
Professional fees 235,151 238,834 321,988
Other 1,077,773 1,099,110 1,166,343
------------ ------------ ------------
Total noninterest expense 7,630,892 7,634,083 7,689,141
------------ ------------ ------------

Income before income taxes 469,474 2,515,195 1,908,803

Income taxes 90,000 892,597 258,570
------------ ------------ ------------
NET INCOME $ 379,474 $ 1,622,598 $ 1,650,233
============ ============ ============

See accompanying notes to the consolidated financial statements.

F-3

GATEWAY COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

Accumulated
Additional Other Total
Common Paid-in Retained Comprehensive Stockholders' Comprehensive
Stock Capital Earnings Income (Loss) Equity Income
----- ------- -------- ------------- ------ ------

Balance, December 31, 2003 $1,000 $249,000 $25,033,538 $ 48,018 $25,331,556

Net income 1,650,233 1,650,233 $1,650,233
Other comprehensive loss:
Unrealized loss on available-
for-sale securities, net of
reclassification adjustment,
net of tax benefit of $24,427 (47,418) (47,418) (47,418)
----------
Comprehensive income $1,602,815
------ -------- ----------- -------- ----------- ==========

Balance, December 31, 2004 $1,000 $249,000 26,683,771 26,934,371
600

Net income 1,622,598 1,622,598 $1,622,598
Other comprehensive loss:
Unrealized loss on available-
for-sale securities, net of
reclassification adjustment,
net of tax benefit of $5,676 (11,019) (11,019) (11,019)
----------
Comprehensive income $1,611,579
------ -------- ----------- -------- ----------- ==========

Balance, December 31, 2005 $1,000 $249,000 28,306,369 (10,419) 28,545,950

Net income 379,474 379,474 $ 379,474
Other comprehensive loss:
Unrealized loss on available-
for-sale securities, net of
reclassification adjustment,
net of tax benefit of $11,450 (22,227) (22,227) (22,227)
----------
Comprehensive income $ 357,247
------ -------- ----------- -------- ----------- ==========

Balance, December 31, 2006 $1,000 $249,000 $28,685,843 $(32,646) $28,903,197
====== ======== =========== ======== ===========

Components of other comprehensive loss: 2006 2005 2004
--------- --------- ---------
Changes in net unrealized loss on
investment securities available for sale $(42,123) $(11,019) $(32,378)
Realized losses (gains) included in net income,
net of tax (expense) benefit of $10,249,
$0, and $(7,748) 19,896 - (15,040)
-------- -------- --------

Total $(22,227) $(11,019) $(47,418)
======== ======== ========

See accompanying notes to the consolidated financial statements.

F-4

GATEWAY COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31,
2006 2005 2004
------------ ------------ ------------

OPERATING ACTIVITIES
Net income $ 1,622,598 $ 1,650,233 $ 379,474
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 457,255 508,915 502,102
Recovery of loan losses (348,444) (916,695) (12,766)
Amortization of discounts, premiums,
and loan origination fees 42,925 303,788 85,503
Deferred income taxes 329,257 341,072 (236,453)
Earnings on bank-owned life insurance (256,889) (245,689) (211,060)
Gain on sale of premises and equipment (6,000) (88,086) -
Gain on sale of other assets, net (74,994) - -
Loss (gain) on sales of real estate owned - 10,233 (91,344)
Investment securities losses (gains), net 30,145 - (22,788)
(Increase) decrease in accrued interest receivable (626,717) 87,851 157,014
Increase in accrued interest payable 453,063 48,381 42,221
(Increase) decrease in prepaid income taxes (53,871) (589,922) 1,294,808
Other, net (123,054) 399,366 358,847
------------ ------------ ------------
Net cash provided by operating activities 202,150 1,481,812 3,516,317
------------ ------------ ------------
INVESTING ACTIVITIES
Investment securities available for sale:
Purchases (13,391,659) - (571,271)
Maturities and repayments 992,332 - 3,168,374
Investment securities held to maturity:
Purchases (16,602,852) (5,604,188) (25,430,000)
Maturities and repayments 13,527,685 12,603,000 24,451,993
Proceeds from sales 3,969,812 - -
Mortgage-backed securities available for sale:
Maturities and repayments 123,083 188,325 198,147
Mortgage-backed securities held to maturity:
Purchases (18,482,000) (15,121,550) (39,634,113)
Maturities and repayments 13,104,583 21,881,669 19,008,580
Net increase in loans receivable (15,517,336) (5,542,077) (4,431,856)
Purchase of loans (13,741,460) (7,100,406) -
Purchase of premises and equipment (383,302) (452,670) (234,674)
Proceeds from sale of premises and equipment 13,000 184,478 -
Purchase of Federal Home Loan Bank stock (4,897,600) (304,100) (210,500)
Redemption of Federal Home Loan Bank stock 4,671,000 1,227,700 -
Proceeds from sales of real estate owned 142,328 163,011 606,137
------------ ------------ ------------
Net cash (used for) provided by investing activities (46,472,386) 2,123,192 (23,079,183)
------------ ------------ ------------

FINANCING ACTIVITIES
Net increase (decrease) in deposits 38,418,210 (9,310,154) 19,776,004
Net increase in short-term borrowings 4,400,000 - -
Net increase (decrease) in advances by borrowers for taxes
and insurance 39,554 (24,379) 99,308
------------ ------------ ------------
Net cash provided by (used for) financing activities 42,857,764 (9,334,533) 19,875,312
------------ ------------ ------------

(Decrease) increase in cash and cash equivalents (3,412,472) (5,729,529) 312,446

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 14,030,652 19,760,181 19,447,735
------------ ------------ ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 10,618,180 $ 14,030,652 $ 19,760,181
============ ============ ============

See accompanying notes to the consolidated financial statements.

F-5

GATEWAY COMMUNITY FINANCIAL CORP. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting and reporting policies applied in the
presentation of the accompanying consolidated financial statements follows:

Nature of Operations and Basis of Presentation
- ----------------------------------------------

Gateway Community Financial Corp. (the "Company"), a federally chartered
corporation who's principal activity is the ownership and management of its
wholly owned subsidiary, Gloucester County Federal Savings Bank (the "Bank").
The Bank generates commercial, residential, and consumer loans and receives
deposits from customers located primarily in Gloucester County, New Jersey, and
surrounding areas. The Bank operates under a federal bank charter and provides
full banking services. The Company and the Bank are subject to regulations by
the Office of Thrift Supervision.

The consolidated financial statements of the Company include the accounts of the
Bank. All intercompany transactions have been eliminated in consolidation.

The accounting principles followed by the Company and the methods of applying
these principles conform to U.S. generally accepted accounting principles and to
general practice within the banking industry. In preparing the consolidated
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the balance
sheet date and related revenues and expenses for the period. Actual results
could differ significantly from those estimates.

Investment and Mortgage-Backed Securities
- -----------------------------------------

Investment and mortgage-backed securities are classified at the time of
purchase, based on management's intention and ability, as securities held to
maturity or securities available for sale. Debt securities, acquired with the
intent and ability to hold to maturity are stated at cost and adjusted for
amortization of premium and accretion of discount, which are computed using a
level yield method and are recognized as adjustments of interest income over the
period to maturity. Certain other debt and equity securities have been
classified as available for sale to serve principally as a source of liquidity.
Unrealized holding gains and losses for available-for-sale securities are
reported as a separate component of retained earnings, net of tax, until
realized. Realized securities gains and losses are computed using the specific
identification method. Interest and dividends on investment securities are
recognized as income when earned.

Common stock of the Federal Home Loan Bank of New York ("FHLB") represents
ownership in an institution which is wholly owned by other financial
institutions. This equity security is accounted for at cost and classified
separately on the accompanying Consolidated Balance Sheet.

F-6

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans Receivable
- ----------------

Loans receivable are stated at their unpaid principal amounts net of any
unearned income, deferred loan fees, and the allowance for loan losses. Interest
on consumer loans is credited to operations over the term of each loan using a
method which approximates the interest method. Interest on all other loans is
recognized as income when earned on the accrual method. Interest accrued on
loans more than 90 days delinquent is generally offset by a reserve for
uncollected interest and is not recognized as income.

The accrual of interest is generally discontinued when management has serious
doubts about further collectibility of principal or interest, even though the
loan may be currently performing. A loan may remain on accrual status if it is
in the process of collection and is either guaranteed or well secured. When a
loan is placed on nonaccrual status, unpaid interest is charged against income.
Interest received on nonaccrual loans is either applied to principal or reported
as interest income, according to management's judgment as to the collectibility
of principal.

Loan origination fees and certain direct loan origination costs are being
deferred and the net amount amortized as an adjustment of the related loan's
yield. The Company is amortizing these amounts over the contractual life of the
related loans using the interest method.

Allowance for Loan Losses
- -------------------------

The allowance for loan losses is established through provisions for loan losses
charged against income. Loans deemed to be uncollectible are charged against the
allowance for loan losses, and subsequent recoveries, if any, are credited to
the allowance.

The allowance for loan losses is maintained at a level by management which
represents the evaluation of known and inherent risks in the loan portfolio at
the consolidated balance sheet date. Management's periodic evaluation of the
adequacy of the allowance is based on the Bank's past loan loss experience,
known and inherent risks in the portfolio, adverse situations that may affect
the borrower's ability to repay, the estimated value of any underlying
collateral, composition of the loan portfolio, current economic conditions, and
other relevant factors. This evaluation is inherently subjective as it requires
material estimates that may be susceptible to significant change, including the
amounts and timing of future cash flows expected to be received on impaired
loans.

F-7

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Allowance for Loan Losses (Continued)
- -------------------------

A loan is considered impaired when, based on current information and events, it
is probable that the Bank will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement. Factors considered by management in determining impairment include
payment status, collateral value, and the probability of collecting scheduled
principal and interest payments when due. Loans that experience insignificant
payment delays and payment shortfalls generally are not classified as impaired.
Management determines the significance of payment delays and payment shortfalls
on a case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrower, including the length of the delay, the
reasons for the delay, the borrower's prior payment record, and the amount of
the shortfall in relation to the principal and interest owed. Impairment is
measured on a loan-by-loan basis for commercial and construction loans by the
present value of expected future cash flows discounted at the loan's effective
interest rate, the loan's obtainable market price, or the fair value of the
collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for
impairment. Accordingly, the Bank does not separately identify individual
consumer and residential mortgage loans for impairment disclosures.

Premises and Equipment
- ----------------------

Premises and equipment are stated at cost, less accumulated depreciation.
Depreciation is principally computed on the straight-line method over the
estimated useful lives of the related assets, which range from 3 to 10 years for
furniture and equipment and 25 to 50 years for building premises. Expenditures
for maintenance and repairs are charged against income as incurred. Costs of
major additions and improvements are capitalized.

Real Estate Owned
- -----------------

Real estate owned acquired in settlement of foreclosed loans is carried at the
lower of cost or fair value minus estimated cost to sell. Valuation allowances
for estimated losses are provided when the carrying value exceeds the fair
value. Direct costs incurred on such properties are recorded as expenses of
current operations.

Income Taxes
- ------------

The Company and the Bank file separate federal income tax returns. Deferred tax
assets or liabilities are computed based on the difference between the financial
statement and income tax basis of assets and liabilities using the enacted
marginal tax rates. Deferred income tax expenses or benefits are based on the
changes in the deferred tax asset or liability from period to period.

Bank-Owned Life Insurance
- -------------------------

The Company owns insurance on the lives of a certain group of key employees. The
policies were purchased to help offset the increase in the costs of various
fringe benefit plans including healthcare. The cash surrender value of these
policies is included as an asset on the Consolidated Balance Sheet, and any
increases in the cash surrender value is recorded as noninterest income on the
Consolidated Statement of Income. In the event of the death of an insured
individual under these policies, the Company would receive a death benefit,
which would be recorded as noninterest income.

Defined Benefit Plan
- --------------------

The Bank sponsors a trusteed, defined benefit pension plan covering all eligible
employees. The Bank's funding policy is to make annual contributions, as needed,
based upon the funding formula developed by the plan's actuary.

F-8

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income (Loss)
- ---------------------------

The Company is required to present comprehensive income (loss) and its
components in a full set of general-purpose financial statements for all periods
presented. Other comprehensive income (loss) is composed exclusively of
unrealized holding gains and losses on the available-for-sale securities
portfolio. The Company has elected to report the effects of other comprehensive
income (loss) as part of the Consolidated Statement of Changes in Stockholders'
Equity.

Cash Flow Information
- ---------------------

Management has defined cash and cash equivalents as "Cash and due from banks,"
"Interest-bearing deposits in other banks," and "Federal funds sold." Cash
payments for interest in 2006, 2005, and 2004 were $8,924,141, $5,822,984, and
$5,161,446, respectively. Cash payments for income taxes in 2006 and 2005 were
$40,000 and $1,327,577, respectively. There were no cash payments for income
taxes in 2004.

Reclassification of Comparative Amounts
- ---------------------------------------

Certain comparative account balances for the prior periods have been
reclassified to conform to the current period's classifications. Such
reclassifications did not affect retained earnings or net income.

Recent Accounting Pronouncements
- --------------------------------

On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("FAS") No. 123R, Share-Based
Payment, which replaces FAS No. 123, Accounting for Stock-Based Compensation,
and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees.
This statement requires that all share-based payments to employees, including
grants of employee stock options, be recognized as compensation costs in the
financial statements based on their fair values. The impact of the adoption of
this standard will be dependent on the nature and extent of stock-based
compensation granted in future periods.

In February 2006, the FASB issued FAS No. 155, Accounting for Certain Hybrid
Instruments, an amendment of FASB Statements No. 133 and 140. FAS No. 155 allows
financial instruments that have embedded derivatives to be accounted for as a
whole (eliminating the need to bifurcate the derivative from its host) if the
holder elects to account for the whole instrument on a fair value basis. 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 adoption of this standard is not expected to have a material effect on
the Company's results of operations or financial position.

In March 2006, the FASB issued FAS No. 156, Accounting for Servicing of
Financial Assets. This statement, which is an amendment to FAS No. 140, will
simplify the accounting for servicing assets and liabilities, such as those
common with mortgage securitization activities. Specifically, FAS No. 156
addresses the recognition and measurement of separately recognized servicing
assets and liabilities and provides an approach to simplify efforts to obtain
hedge-like (offset) accounting. FAS No. 156 also clarifies when an obligation to
service financial assets should be separately recognized as a servicing asset or
a servicing liability; requires that a separately recognized servicing asset or
servicing liability be initially measured at fair value, if practicable; and
permits an entity with a separately recognized servicing asset or servicing
liability to choose either of the amortization or fair value methods for
subsequent measurement. The provisions of FAS No. 156 are effective as of the
beginning of the first fiscal year that begins after September 15, 2006. The
adoption of this standard is not expected to have a material effect on the
Company's results of operations or financial position.

F-9

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In September 2006, the FASB issued FAS No. 157, Fair Value Measurements, which
provides enhanced guidance for using fair value to measure assets and
liabilities. The standard applies whenever other standards require or permit
assets or liabilities to be measured at fair value. The standard does not expand
the use of fair value in any new circumstances. FAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Early adoption is permitted. The
adoption of this standard is not expected to have a material effect on the
Company's results of operations or financial position.

In September 2006, the FASB issued FAS No. 158, Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB
Statements No. 87, 88, 106 and 132(R). FAS No. 158 requires that a company
recognize the overfunded or underfunded status of its defined benefit post
retirement plans (other than multiemployer plans) as an asset or liability in
its statement of financial position and that it recognize changes in the funded
status in the year in which the changes occur through other comprehensive
income. FAS No. 158 also requires the measurement of defined benefit plan assets
and obligations as of the fiscal year-end, in addition to footnote disclosures.
On December 31, 2006, the Company adopted FAS No. 158, except for the
measurement provisions, which are effective for fiscal years ending after
December 15, 2008. The adoption of this standard is not expected to have a
material effect on the Company's results of operations or financial position.

In June 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"), Accounting
for Uncertainty in Income Taxes. FIN 48 is an interpretation of FAS No. 109,
Accounting for Income Taxes, and it seeks to reduce the diversity in practice
associated with certain aspects of measurement and recognition in accounting for
income taxes. This interpretation clarifies that management is expected to
evaluate an income tax position taken or expected to be taken for likelihood of
realization before recording any amounts for such position in the financial
statement. FIN 48 also requires expanded disclosure with respect to income tax
positions taken that are not certain to be realized. This interpretation is
effective for fiscal years beginning after December 15, 2006, and will require
management to evaluate every open tax position that exists in every jurisdiction
on the date of initial adoption. The Company is currently evaluating the impact
the adoption of the standard will have on the Company's results of operations.

In September 2006, the FASB reached consensus on the guidance provided by
Emerging Issues Task Force Issue 06-4 ("EITF 06-4"), Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life
Insurance Arrangements. The guidance is applicable to endorsement split-dollar
life insurance arrangements, whereby the employer owns and controls the
insurance policy, that are associated with a postretirement benefit. EITF 06-4
requires that for a split-dollar life insurance arrangement within the scope of
the issue, an employer should recognize a liability for future benefits in
accordance with FAS No. 106 (if, in substance, a postretirement benefit plan
exists) or Accounting Principles Board Opinion No. 12 (if the arrangement is, in
substance, an individual deferred compensation contract) based on the
substantive agreement with the employee. EITF 06-4 is effective for fiscal years
beginning after December 15, 2007. The Company is currently evaluating the
impact the adoption of the standard will have on the Company's results of
operations or financial condition.

In September 2006, the FASB reached consensus on the guidance provided by
Emerging Issues Task Force Issue 06-5 ("EITF 06-5"), Accounting for Purchases of
Life Insurance--Determining the Amount That Could Be Realized in Accordance with
FASB Technical Bulletin No. 85-4, Accounting for Purchases of Life Insurance.
EITF 06-5 states that 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. EITF 06-5 also states that a policyholder should determine
the amount that could be realized under the life insurance contract assuming the
surrender of an individual-life by individual-life policy (or certificate by
certificate in a group policy). EITF 06-5 is effective for fiscal years
beginning after December 15, 2006. The Company is currently evaluating the
impact the adoption of the standard will have on the Company's results of
operations or financial condition.

F-10

2. INVESTMENT SECURITIES

The amortized cost and fair values of investment securities available for sale
and held to maturity are summarized as follows:

2006
---------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------------- --------------- -------------- ---------------

Available for Sale
U.S. government agency securities $ 12,404,579 $ 63,466 $ (33,860) $ 12,434,185
Equity securities 1,798,599 - (80,841) 1,717,758
--------------- --------------- -------------- ---------------
Total $ 14,203,178 $ 63,466 $ (114,701) $ 14,151,943
=============== =============== ============== ===============
Held to Maturity
U.S. government agency securities $ 32,066,989 $ 5,672 $ (229,778) $ 31,842,883
Corporate securities 1,028,378 - (26,896) 1,001,482
Obligations of state and
political subdivisions 5,549,867 9,847 - 5,559,714
--------------- --------------- -------------- ---------------

Total $ 38,645,234 $ 15,519 $ (256,674) $ 38,404,079
=============== =============== ============== ===============

2005
---------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------------- --------------- -------------- ---------------

Available for Sale
Equity securities $ 1,746,053 $ - $ (17,000) $ 1,729,053
=============== ============== ============== ===============
Held to Maturity
U.S. government agency securities $ 35,350,766 $ 776 $ (607,118) $ 34,744,424
Corporate securities 3,059,088 4,841 (35,141) 3,028,788
Obligations of state and
political subdivisions 1,176,308 6,248 - 1,182,556
--------------- --------------- -------------- ---------------

Total $ 39,586,162 $ 11,865 $ (642,259) $ 38,955,768
=============== =============== ============== ===============

F-11

2. INVESTMENT SECURITIES (Continued)

As of December 31, 2006, the amortized cost and fair value of investments in
debt securities, by contractual maturity, are shown below.

Available for Sale Held to Maturity
----------------------------------- ----------------------------------

Amortized Fair Amortized Fair
Cost Value Cost Value
--------------- --------------- --------------- ---------------

Due within one year $ - $ - $ 4,519,094 $ 4,519,317
Due after one year through five years - - 19,241,392 19,075,194
Due after five years through ten years 3,500,000 3,503,768 7,978,651 7,952,188
Due after ten years 8,904,579 8,930,417 6,906,097 6,857,380
--------------- --------------- --------------- ---------------

Total $ 12,404,579 $ 12,434,185 $ 38,645,234 $ 38,404,079
=============== =============== =============== ===============

At December 31, 2006 and 2005, the carrying value of securities pledged to
secure public funds totaled $1,682,677 and $2,160,459, respectively.

As of December 31, 2006, proceeds from the sale of investment securities of
$3,969,812 resulted in the recognition of a loss of $30,145. These securities
were sold within three months of maturity. There were no investment sales during
2005. As of December 31, 2004, proceeds from a called investment security of
$1,291,763 resulted in the recognition of a gain of $22,788.

3. MORTGAGE-BACKED SECURITIES

The amortized cost and fair value of mortgage-backed securities available for
sale and held to maturity are summarized as follows:

Available for Sale
Government National
Mortgage Association $ 198,288 $ 1,771 $ - $ 200,059
============== =============== ============== ===============
Held to Maturity
Government National
Mortgage Association $ 4,488,561 $ 15,594 $ (22,913) $ 4,481,242
Freddie Mac 3,350,639 5,425 (42,324) (3,313,740
Fannie Mae 16,792,592 33,732 (417,578) 16,408,746
Collateralized mortgage obligations 34,352,741 25,635 (579,133) 33,799,243
-------------- --------------- -------------- ------------------

Total $ 58,984,533 $ 80,386 $ (1,061,948) $ 58,002,971
============== =============== ============== ===============

F-12

3. MORTGAGE-BACKED SECURITIES (Continued)

Available for Sale
Government National
Mortgage Association $ 323,101 $ 1,213 $ - $ 324,314
============== =============== ============== ===============

Held to Maturity
Government National
Mortgage Association $ 7,266,072 $ 14,598 $ (59,612) $ 7,221,058
Freddie Mac 2,982,953 2,609 (67,470) 2,918,092
Fannie Mae 18,809,993 20,897 (398,665) 18,432,225
Collateralized mortgage obligations 24,649,087 31,133 (479,920) 24,200,300
-------------- --------------- -------------- ---------------

Total $ 53,708,105 $ 69,237 $ (1,005,667) $ 52,771,675
============== =============== ============== ===============

As of December 31, 2006, the amortized cost and fair value of mortgage-backed
securities, by contractual maturity, are shown below. Mortgage-backed securities
provide for periodic payments of principal and interest and have contractual
lives ranging from 2 to 30 years. Due to expected repayment terms being
significantly less than the underlying mortgage loan pool contractual
maturities, the estimated lives of these securities could be significantly
shorter.

Available for Sale Held to Maturity
----------------------------------- ----------------------------------

Amortized Fair Amortized Fair
Cost Value Cost Value
--------------- --------------- --------------- ---------------

Due after one year through
five years $ - $ - $ 6,848,554 $ 6,579,264
Due after five years through
ten years - - 4,634,845 4,528,314
Due after ten years 198,288 200,059 47,501,134 46,895,393
--------------- ------------ --------------- --------------

Total $ 198,288 $ 200,059 $ 58,984,533 $ 58,002,971
=============== ============ =============== ==============

F-13

4. UNREALIZED LOSSES ON SECURITIES

The following table shows the Company's fair value and gross unrealized losses,
aggregated by investment category and length of time that the individual
securities have been in a continuous unrealized loss position, at December 31.

2006
------------------------------------------------------------------------------------------------
Less than Twelve Months Twelve Months or Greater Total
----------------------------- ------------------------------ -----------------------------
Gross Gross Gross
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
-------------- ----------- -------------- ------------ -------------- ------------

U.S. government agency
securities $ 15,702,902 $ (82,162) $ 18,617,933 $ (181,476) $ 34,320,835 $ (263,638)
Corporate securities 1,001,483 (26,896) 1,001,483 (26,896)
Government National
Mortgage Association 373,717 (1,486) 2,153,967 (21,427) 2,527,684 (22,913)
Freddie Mac - - 1,593,564 (42,324) 1,593,564 (42,324)
Fannie Mae 276,353 (2,127) 12,679,336 (415,451) 12,955,689 (417,578)
Collateralized mortgage
obligations 10,042,798 (29,669) 18,512,258 (549,464) 28,555,056 (579,133)
------------- ----------- -------------- ------------ -------------- -------------
Total debt securities 26,395,770 (115,444) 54,558,541 (1,237,038) 80,954,311 (1,352,482)

Equity securities - - 1,717,758 (80,841) 1,717,758 (80,841)
------------- ----------- ------------- ------------ ------------- ------------
$ 26,395,770 $ (115,444) $ 56,276,299 $ (1,317,879) $ 82,672,069 $ (1,433,323)
============= =========== ============= ============ ============= ============

2005
------------------------------------------------------------------------------------------------
Less than Twelve Months Twelve Months or Greater Total
----------------------------- ------------------------------ -----------------------------
Gross Gross Gross
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
------------- ----------- ---------------- ------------ ------------- ------------

U.S. government agency
securities $ 24,013,919 $ (351,499) $ 9,730,349 $ (255,619) $ 33,744,268 $ (607,118)
Corporate securities 1,000,666 (29) 1,008,121 (35,112) 2,008,787 (35,141)
Government National
Mortgage Association 1,150,717 (1,462) 3,491,265 (58,150) 4,641,982 (59,612)
Freddie Mac 717,024 (6,238) 2,015,443 (61,232) 2,732,467 (67,470)
Fannie Mae 10,741,656 (242,500) 5,245,759 (156,165) 15,987,415 (398,665)
Collateralized mortgage
obligations 10,941,672 (180,309) 12,160,252 (299,611) 23,101,924 (479,920)
------------- ----------- ------------- ------------ ------------- ------------
Total debt securities 48,565,654 (782,037) 33,651,189 (865,889) 82,216,843 (1,647,926)

Equity securities - - 483,000 (17,000) 483,000 (17,000)
------------- ----------- ------------- ------------ ------------- ------------
$ 48,565,654 $ (782,037) $ 34,134,189 $ (882,889) $ 82,699,843 $ (1,664,926)
============= =========== ============= ============ ============= ============

The policy of the Company is to recognize an other-than-temporary impairment of
equity securities where the fair value has been significantly below cost for
three consecutive quarters. For fixed maturity investments with unrealized
losses due to interest rates where the Company has the positive intent and
ability to hold the investment for a period of time sufficient to allow a market
recovery, declines in value below cost are not assumed to be other than
temporary. There are 100 positions that are temporarily impaired at December 31,
2006. The Company reviews its position quarterly and has asserted that at
December 31, 2006, the declines outlined in the above table represent temporary
declines and the Company does have the intent and ability either to hold those
securities to maturity or to allow a market recovery.

The Company has concluded that any impairment of its investment securities
portfolio is not other than temporary but is the result of interest rate changes
that are not expected to result in the noncollection of principal and interest
during the period.

F-14

5. LOANS RECEIVABLE

Loans receivable consist of the following:

2006 2005
------------- -------------
Real estate loans:
1 - 4 family $ 102,754,981 $ 74,115,053
Home equity 59,327,434 49,656,695
Commercial 14,472,039 13,889,193
Construction 1,666,900
710,700
------------- -------------
177,265,154 139,327,841

Commercial 4,561,481 6,022,416

Consumer and other loans
Auto loans 21,135,672 33,591,356
Manufactured housing loans 7,512,182 5,422,063
Savings account loans 1,093,176 1,079,574
Other 2,154,123 1,203,032
------------- -------------
31,895,153 41,296,025
------------- -------------
Less:
Deferred loan costs (164,153) (154,968)
Unearned income 1,580,666 2,849,892
Allowance for loan losses 1,813,469 3,035,676
------------- -------------
3,229,982 5,730,600
------------- -------------

Total $ 210,491,806 $ 180,915,682
============= =============

The Company's primary activity is with customers located within Gloucester
County and surrounding areas. Commercial, residential, and personal loans are
granted. Although the Company has a diversified loan portfolio at December 31,
2006 and 2005, repayment of these loans is dependent upon the local economic
conditions in its immediate trade area.

Activity in the allowance for loan losses for the years ended December 31 is as
follows:

2006 2005 2004
----------- ----------- -----------

Balance, January 1 $ 3,035,676 $ 3,962,656 $ 3,861,946

Loans charged off (988,259) (76,832) (418,797)
Recoveries 114,496 66,547 532,273
----------- ----------- -----------

Net loans charged off (873,763) (10,285) 113,476
Recovery of loan losses (348,444) (916,695) (12,766)
----------- ----------- -----------

Balance, December 31 $ 1,813,469 $ 3,035,676 $ 3,962,656
=========== =========== ===========

The Company had nonaccrual loans, inclusive of impaired loans, of $2,313,789,
$3,370,443, and $1,487,893 at December 31, 2006, 2005, and 2004, respectively.
Interest income on loans would have increased by $116,810, $140,779, and
$125,218 during 2006, 2005, and 2004, respectively, if these loans had performed
in accordance with their original terms.

F-15

5. LOANS RECEIVABLE

Information with respect to impaired loans as of and for the years ended
December 31 is as follows:

2006 2005 2004
---------- ---------- ----------

Impaired loans with a related
allowance for loan losses $2,125,398 $3,148,515 $ 855,687
Impaired loans without a related
allowance for loan losses - - -
Related allowance for loan losses 561,767 1,138,231 125,673
Average recorded balance of impaired loans 2,449,032 1,852,937 1,301,632
Interest income recognized on impaired loans 62,397 3,277 19,389

In the normal course of business, loans are extended to directors, executive
officers, and their associates. A summary of loan activity for those directors,
executive officers, and their associates with aggregate balances of $120,000 or
more for the year ended December 31 is as follows:

2005 Additions Repayments 2006
---------- ----------- ---------- -----------

$ 581,539 $ 146,526 $ 77,632 $ 650,435

6. ACCRUED INTEREST RECEIVABLE

Accrued interest receivable consists of the following:

2006 2005
------------ ------------

Investment securities $ 714,889 $ 343,283
Mortgage-backed securities 234,134 204,432
Loans receivable 784,548 559,139
------------ ------------

Total $ 1,733,571 $ 1,106,854
============ ============

7. PREMISES AND EQUIPMENT

Premises and equipment consist of the following:

2006 2005
------------ ------------

Land and improvements $ 762,703 $ 770,627
Buildings and improvements 6,897,076 6,871,116
Furniture and equipment 2,891,096 2,842,409
Construction in progress 134,354 30,036
Automobiles 46,395 35,000
------------ ------------
10,731,624 10,549,188
Less accumulated depreciation (4,262,691) (3,999,302)
------------ ------------

Total $ 6,468,933 $ 6,549,886
============ ============

Depreciation expense for the years ended December 31, 2006, 2005, and 2004, was
$457,255, $508,915, and $502,102, respectively.

F-16

8. FEDERAL HOME LOAN BANK STOCK

The Bank is a member of the FHLB system. As a member, the Bank maintains an
investment in the capital stock of the FHLB, at cost, in an amount not less than
the greater of 1 percent of its outstanding home loans or 5 percent of its
outstanding notes payable to the FHLB as calculated at December 31 of each year.

9. DEPOSITS

Comparative details of deposits are as follows:

2006 2005
---------------------------------- -----------------------------------
Amount % Amount %
---------------- -------------- --------------- ----------------

Non-interest-bearing $ 9,532,029 3.0 % $ 12,123,517 4.4 %
--------------- ------------- -------------- ---------------
Interest-bearing:
Savings 63,761,165 20.2 62,551,038 22.5
NOW checking 35,926,129 11.4 34,560,371 12.5
Money market 44,636,577 14.1 24,661,590 8.9
--------------- ------------- -------------- ---------------
144,323,871 45.7 121,772,999 43.9
--------------- ------------- -------------- ---------------
Time certificates of deposit:
2.00% or less - - 3,327,749 1.2
2.01 - 4.00% 29,261,168 9.3 83,200,209 30.0
4.01 - 6.00% 131,207,362 41.5 55,560,420 20.0
6.01 - 8.00% 1,637,997 0.5 1,559,323 0.5
--------------- ------------- -------------- ---------------
162,106,527 51.3 143,647,701 51.7
--------------- ------------- -------------- ---------------
Total $ 315,962,427 100.0 % $ 277,544,217 100.0 %
=============== ============= ============== ===============

The scheduled maturities of time certificates of deposits at December 31, 2006,
are as follows:

Year Ending
December 31,
--------------------------------

2007 $ 113,516,368
2008 16,089,264
2009 6,943,370
2010 11,588,833
2011 6,538,663
Thereafter 7,430,029
------------

Total $ 162,106,527
============

The aggregate amount of certificates of deposit with a minimum denomination of
$100,000 was $55,010,327 and $47,379,397 at December 31, 2006 and 2005,
respectively. Deposits in excess of $100,000 are not federally insured.

F-17

9. DEPOSITS (Continued)

Maturities on time deposits of $100,000 or more at December 31, 2006 are as
follows:

Within three months $ 18,344,635
Beyond three but within six months 14,714,662
Beyond six but within twelve months 10,329,691
Beyond one year 11,621,339
---------------

$ 55,010,327
===============

Interest expense by deposit category for the years ended December 31 is as
follows:

2006 2005 2004
---------------- ---------------- ----------------

Savings $ 587,347 $ 680,234 $ 733,973
NOW and money market 1,714,798 642,697 494,708
Time certificates of deposit 6,386,367 4,540,497 3,974,986
--------------- -------------- ---------------

$ 8,688,512 $ 5,863,428 $ 5,203,667
=============== ============== ===============

10. SHORT-TERM BORROWINGS

Short-term borrowings include overnight repurchase agreements through the FHLB.
The outstanding balances and related information for short-term borrowings are
summarized as follows:

2006 2005 2004
---------------- ---------------- ----------------

Balance at year-end $ 4,400,000 $ - $ -
Average balance outstanding 12,859,178 196,986 -
Maximum month-end balance 24,100,000 - -
Weighted-average rate at year-end 5.33% - -
Weighted-average rate during the year 5.36% 4.03% -

The Bank has a credit arrangement with the FHLB with a total available borrowing
limit of approximately $101.5 million at December 31, 2006. This credit
arrangement is subject to annual renewal, incurs no service charges, and is
secured by the Bank's FHLB stock, mortgage-backed securities, and qualifying
first-mortgage loans.

11. INCOME TAXES

The components of the income tax expense for the years ended December 31 are
summarized as follows:

2006 2005 2004
--------------- --------------- ---------------

Current:
Federal $ (239,257) $ 381,976 $ 481,230
State - 169,549 13,793
-------------- --------------- ---------------
(239,257) 551,525 495,023
Deferred 271,784 417,152 99,981
Valuation allowance 57,473 (76,080) (336,434)
-------------- --------------- ---------------

Total $ 90,000 $ 892,597 $ 258,570
============== =============== ===============

F-18

11. INCOME TAXES (Continued)

The following temporary differences gave rise to the net deferred tax assets:

2006 2005
---------------- ----------------

Deferred tax assets:
Allowance for loan losses $ 873,255 $ 1,170,062
Net operating loss carryforward 310,586 253,113
Net unrealized loss on securities 16,818 5,367
Other 351,855 403,905
---------------- ----------------
Total gross deferred tax assets 1,552,514 1,827,080
Less valuation allowance 310,586 253,113
---------------- ----------------
Deferred tax assets after valuation allowance 1,241,928 1,573,967
---------------- ----------------
Deferred tax liabilities:
Premises and equipment 40,839 60,439
---------------- ----------------
Total gross deferred tax liabilities 40,839 60,439
---------------- ----------------

Net deferred tax assets $ 1,201,089 $ 1,518,895
================ ================

At December 31, 2006, the Company has an available net operating loss
carryforward of $3,450,951 for state tax purposes that will expire in 2011.

The reconciliation of the federal statutory rate and the Company's effective
income tax rate is as follows:

2006 2005 2004
------------------------ ---------------------- ------------------------
% of % of % of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
----------- --------- ---------- -------- ----------- ---------

Tax expense at statutory rate $ 159,621 34.0 % $ 855,166 34.0 % $ 648,993 34.0 %
State income, net of
federal tax 46,200 9.8 111,902 4.4 9,103 0.5

Effect of tax free income (126,909) (27.0) (95,621) (3.8) (79,412) (4.2)
Valuation allowance - - - - (273,118) (14.3)
Other, net 11,088 2.4 21,150 0.9 (46,996) (2.5)
---------- -------- --------- ------- ----------- --------
Actual tax expense
and effective rate $ 90,000 19.2 % $ 892,597 35.5 % $ 258,570 13.5 %
========== ======== ========= ======= =========== ========

F-19

12. REGULATORY MATTERS

Cash and Due from Banks
- -----------------------

The Bank is required to maintain reserve funds in cash or on deposit with the
Federal Reserve Bank. As of December 31, 2006 and 2005, the Bank had required
reserves of $1,129,000 and $994,000, respectively, composed principally of vault
cash and a depository amount held with the Federal Reserve Bank.

13. EMPLOYEE BENEFITS

Defined Benefit Plan
- --------------------

The Bank sponsors a trusteed, defined benefit pension plan covering
substantially all employees and officers. The plan calls for benefits to be paid
to eligible employees at retirement based primarily upon years of service with
the Bank and compensation rates near retirement. The Bank's funding policy is to
make annual contributions as needed based upon the funding formula developed by
the plan's actuary. This plan is considered a multi-employer plan for which the
Company makes contributions, when necessary, to provide benefits to eligible
employees upon their retirement. Pension contributions to this plan amounted to
$787,517, $836,355, and $381,678 for the years ended December 31, 2006, 2005,
and 2004, respectively.

Defined Contribution Plan
- -------------------------

The Company sponsors a thrift plan with a 401(k) option. The Company matches up
to 6 percent of each eligible employee's contribution to the plan. Employees are
eligible after one year of service. Employer contributions to this plan amounted
to $50,121, $44,334, and $41,808 for the years ended December 31, 2006, 2005,
and 2004, respectively.

Supplemental Retirement Plans
- -----------------------------

The Bank maintains a Director Fee Continuation Agreement `(Director Plan") to
provide benefits to eligible directors. The Director Plan provides benefits to
eligible directors upon their retirement from the Board and a preretirement
death benefit. Each eligible director will receive an annual benefit equal to
fifty percent of the average of the three highest Director's total compensation
prior to the Director's retirement for a period of ten years.

F-20

13. EMPLOYEE BENEFITS (Continued)

The following table sets forth the change in plan assets and benefit obligation
at December 31:

Director Plan
-------------------------------------
2006 2005
---------------- ----------------

Change in benefit obligation:
Benefit obligation at beginning of year $ 700,146 $ 659,734
Service cost 35,916 43,086
Interest cost 58,739 52,722
Benefits paid (121,240) (55,396)
-------------- --------------
Benefit obligation at end of year 673,561 700,146

Fair value of plan assets at end of year - -
-------------- --------------

Funded status $ (673,561) $ (700,146)
============== ==============

Components of Net Periodic Benefit Cost
- ---------------------------------------

Director Plan
----------------------------------------
2006 2005 2004
---------- ----------- -----------

Net periodic benefit cost:
Service cost $ 35,916 $ 43,086 $ 102,886
Interest cost 58,739 52,722 38,775
--------- ---------- ----------

Net periodic benefit cost $ 94,655 $ 95,808 $ 141,661
========= ========== ==========

The discount rate used to determine benefit obligations for the Director Plan at
the measurement dates was 7.50 percent for each of the periods ended December
31, 2006, 2005, and 2004.

At December 31, 2006, the projected benefit payments for the Plans are as
follows:

Director
Plan
----------------
2007 $ 54,017
2008 54,017
2009 54,017
2010 54,017
2011 54,017
2012 - 2016 139,879
---------------

$ 409,964
===============

The Bank also maintains an Executive Incentive Retirement Plan Agreement
("Executive Plan") with executives of the Bank. The Executive Plan provides the
executives with supplemental retirement benefits based upon current salary and
percentage award and a preretirement death benefit. The award covered under the
agreement shall be paid to the executive for the executive's services as
determined at the sole discretion of the Board of Directors, based upon net
income. The executives shall be vested in each award individually at a rate of
twenty percent per full year of employment with the Bank from the date of each
such award. The executives are 100 percent vested after obtaining age 65.
Payments to the executives will be in either equal annual installments for
fifteen years or in a lump sum. The costs recognized by the Bank were $32,764,
$43,551, and $14,220, for the years ended December 31, 2006, 2005, and 2004,
respectively.

The Bank is the beneficiary of life insurance policies with a cash surrender
value at December 31, 2006, of $7,462,020 that have been purchased as a method
of financing benefits under these Plans.

F-21

14. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments
- -----------

In the normal course of business, the Company makes various commitments which
are not reflected in the accompanying consolidated financial statements. These
instruments involve, to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized in the Consolidated Balance Sheet. The
Company's exposure to credit loss in the event of nonperformance by the other
parties to the financial instruments is represented by the contractual amounts
as disclosed. The Company minimizes its exposure to credit loss under these
commitments by subjecting them to credit approval and review procedures and
collateral requirements as deemed necessary. Commitments generally have fixed
expiration dates within one year of their origination.

Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Performance letters of
credit represent conditional commitments issued by the Bank to guarantee the
performance of a customer to a third party. These instruments are issued
primarily to support bid or performance-related contracts. The coverage period
for these instruments is typically a one-year period with an annual renewal
option subject to prior approval by management. Fees earned from the issuance of
these letters are recognized over the coverage period. For secured letters of
credit, the collateral is typically Bank deposit instruments or customer
business assets.

The off-balance sheet commitments consisted of the following:

2006 2005
--------------- ----------------

Commitments to extend credit $ 7,011,038 $ 9,284,878
Standby letters of credit 1,205,909 401,325

Commitments to extend credit consist of fixed-rate commitments with interest
rates ranging from 5.375 percent to 6.75 percent. The commitments outstanding at
December 31, 2006, contractually mature in less than one year.

Contingent Liabilities
- ----------------------

In 2003, three lawsuits were filed by the Bank against a land developer for
damages resulting from unpaid commercial loans and two foreclosure actions. The
contractor has filed counterclaims in all instances. In addition, one lawsuit
includes as defendants all contract purchasers of lots in a development who may
claim vendees' liens for deposits given to the developer. Numerous contract
purchasers have or will file answers to the foreclosure action, including
counterclaims against the Bank for compensatory damages representing monies paid
by the contract purchasers to the land developer. The counterclaims are premised
upon alleged improper allocation of loan payments by the Bank and the alleged
failure of the Bank to maintain deposits in escrow accounts. The contractor is
seeking compensatory and punitive damages in an unspecified amount, as well as
to invalidate the Bank's liens on the subject property. All pending Law Division
matters in New Jersey State Court have been stayed due to the land developer's
filing in bankruptcy court. At this time, outside counsel for the Bank cannot
offer an opinion as to the probable outcome. The Bank believes the suit is
without merit and is vigorously defending its position.

In the normal course of business, the Company and its subsidiaries are involved
in various legal proceedings primarily involving the collection of outstanding
loans. None of these proceedings are expected to have a material effect on the
financial position or results of operations of the Company.

F-22

15. REGULATORY CAPITAL REQUIREMENTS

Federal regulations require the Bank to maintain certain minimum amounts of
capital. Specifically, the Bank is required to maintain certain minimum dollar
amounts and ratios of Total and Tier I capital to risk-weighted assets and of
Tier I capital to average total assets.

In addition to the capital requirements, the Federal Deposit Insurance
Corporation Improvement Act ("FDICIA") established five capital categories
ranging from "well capitalized" to "critically undercapitalized." Should any
institution fail to meet the requirements to be considered "adequately
capitalized," it would become subject to a series of increasingly restrictive
regulatory actions. Management believes as of December 31, 2006, the Bank met
all capital adequacy requirements to which they are subject.

As of December 31, 2006 and 2005, the OTS categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action. To be
classified as a well capitalized financial institution, Total risk-based, Tier 1
risk-based, core capital, and tangible equity capital ratios must be at least 10
percent, 6 percent, 5 percent, and 1.5 percent, respectively. There have been no
conditions or events since the notification that management believes have
changed the Bank's category.

The following table reconciles capital under U.S. generally accepted accounting
principles.

2006 2005
-------------- ----------------

Total stockholders' equity $ 28,635,072 $ 28,280,488
Other disallowed assets (1,167,044) (918,679)
Nonqualifying equity instruments (1,000) (1,000)
Accumulated other comprehensive (income) loss (20,709) 10,419
-------------- ---------------

Tier I, core, and tangible capital 27,446,319 27,371,228

Allowance for loan losses 1,750,068 2,311,533
Other assets required to be deducted (126,717) (188,326)
-------------- --------------

Total risk-based capital $ 29,069,670 $ 29,494,435
============= ==============

F-23

15. REGULATORY CAPITAL REQUIREMENTS (Continued)

The following table reflects the Bank's capital ratios and minimum requirements
at December 31.

2006 2005
----------------------------------- -----------------------------------
Amount Ratio Amount Ratio
----------------- --------------- --------------- ----------------

Total Capital
(to Risk-Weighted Assets)
-------------------------

Actual $ 29,069,670 14.2 % $ 29,494,435 16.1 %
For Capital Adequacy Purposes 16,337,680 8.0 14,735,882 8.0
To Be Well Capitalized 20,422,110 10.0 18,419,853 10.0

Tier I Capital
(to Risk-Weighted Assets)
-------------------------

Actual $ 27,446,319 13.4 % $ 27,371,228 14.9 %
For Capital Adequacy Purposes 8,168,840 4.0 7,367,941 4.0
To Be Well Capitalized 12,253,260 6.0 11,051,912 6.0

Core Capital
(to Adjusted Assets)
-------------------------

Actual $ 27,446,319 7.8 % $ 27,371,228 8.9 %
For Capital Adequacy Purposes 10,520,036 3.0 9,215,572 3.0
To Be Well Capitalized 17,533,393 5.0 15,359,287 5.0

Tangible Capital
(to Adjusted Assets)
-------------------------

Actual $ 27,446,319 7.8 % $ 27,371,228 8.9 %
For Capital Adequacy Purposes 5,260,018 1.5 4,607,786 1.5
To Be Well Capitalized N/A N/A

Prior to the enactment of the Small Business Job Protection Act discussed in
Note 11, the Bank accumulated approximately $2,855,000 of retained earnings,
which represents allocations of income to bad debt deductions for tax purposes
only. Since this amount represents the accumulated bad debt reserves prior to
1988, no provision for federal income tax has been made for such amount. If any
portion of this amount is used other than to absorb loan losses (which is not
anticipated), the amount will be subject to federal income tax at the current
corporate rate.

F-24

16. FAIR VALUE DISCLOSURE

The estimated fair values of the Company's financial instruments at December 31
are as follows:

2006 2005
------------------------------------ ------------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
---------------- ---------------- ---------------- ----------------

Financial assets:
Cash and cash
equivalents $ 10,618,180 $ 10,618,180 $ 14,030,652 $ 14,030,652
Investment securities:
Available for sale 14,151,943 14,151,943 1,729,053 1,729,053
Held to maturity 38,645,234 38,404,079 39,586,162 38,955,768
Mortgage-backed securities:
Available for sale 200,059 200,059 324,314 324,314
Held to maturity 58,984,533 58,002,971 53,708,105 52,771,675
Loans receivable, net 210,491,806 205,707,806 180,915,682 178,929,682
Accrued interest receivable 1,733,571 1,733,571 1,106,854 1,106,854
FHLB stock 581,600 581,600 355,000 355,000
Bank-owned life insurance 7,462,020 7,462,020 7,205,131 7,205,131

Financial liabilities:
Deposits $ 315,962,427 $ 314,266,427 $ 277,544,217 $ 275,398,061
Short-term borrowings 4,400,000 4,400,000 - -
Advances by borrowers
for taxes and insurance 514,511 514,511 474,957 474,957
Accrued interest payable 573,526 573,526 120,463 120,463

Financial instruments are defined as cash, evidence of an ownership interest in
an entity, or a contract which creates an obligation or right to receive or
deliver cash or another financial instrument from/to a second entity on
potentially favorable or unfavorable terms.

Fair value is defined as the amount at which a financial instrument could be
exchanged in a current transaction between willing parties other than in a
forced or liquidation sale. If a quoted market price is available for a
financial instrument, the estimated fair value would be calculated based upon
the market price per trading unit of the instrument.

If no readily available market exists, the fair value estimates for financial
instruments are based upon manage-ment's judgment regarding current economic
conditions, interest rate risk, expected cash flows, future estimated losses,
and other factors as determined through various option pricing formulas or
simulation modeling. As many of these assumptions result from judgments made by
management based upon estimates which are inherently uncertain, the resulting
estimated fair values may not be indicative of the amount realizable in the sale
of a particular financial instrument. In addition, changes in the assumptions on
which the estimated fair values are based may have a significant impact on the
resulting estimated fair values.

As certain assets, such as deferred tax assets and premises and equipment, are
not considered financial instruments, the estimated fair value of financial
instruments would not represent the full value of the Company.

The Company employed simulation modeling in determining the estimated fair value
of financial instruments for which quoted market prices were not available based
upon the following assumptions:

Cash and Cash Equivalents, Accrued Interest Receivable, FHLB Stock, Short-Term
- --------------------------------------------------------------------------------
Borrowings, Advances by Borrowers for Taxes and Insurance, and Accrued Interest
- --------------------------------------------------------------------------------
Payable
- -------

The fair value is equal to the current carrying value.

F-25

16. FAIR VALUE DISCLOSURE (Continued)

Investment and Mortgage-Backed Securities
- -----------------------------------------

The fair value of these securities is equal to the available quoted market
price. If no quoted market price is available, fair value is estimated using the
quoted market price for similar securities.

Loans Receivable, net and Deposits
- ----------------------------------

The fair value of loans is estimated by discounting the future cash flows using
a simulation model which estimates future cash flows based upon current market
rates adjusted for prepayment risk and credit quality. Savings, checking, and
money market deposit accounts are valued at the amount payable on demand as of
year-end. Fair values for time deposits are estimated using a discounted cash
flow calculation that applies contractual costs currently being offered in the
existing portfolio to current market rates being offered for deposits of similar
remaining maturities.

Bank-Owned Life Insurance
- -------------------------

The fair value is equal to the cash surrender value of the life insurance
policies.

Commitments to Extend Credit
- ----------------------------

These financial instruments are generally not subject to sale, and estimated
fair values are not readily available. The carrying value, represented by the
net deferred fee arising from the unrecognized commitment, and the fair value,
determined by discounting the remaining contractual fee over the term of the
commitment using fees currently charged to enter into similar agreements with
similar credit risk, are not considered material for disclosure. The contractual
amounts of unfunded commitments are presented in Note 14.

17. STOCK OFFERING

On January 29, 2007, the Board of Directors of the Company and the Bank
unanimously adopted a Plan of Stock Issuance (the "Plan") pursuant to which
Company will offer shares of its common stock of up to but less than 50 percent
of its total outstanding common stock to eligible depositors of the Bank in a
subscription offering and, if necessary, to the general public of the community
and/or in a syndicated offering. The majority of the common stock will continue
to be owned by the Company. The Plan is subject to the approval of the Office of
Thrift Supervision ("OTS").

The regulations of the OTS prohibit the Bank from declaring or paying a cash
dividend if the effect thereof would cause the Bank's regulatory capital to be
reduced below either the amount required for the liquidation account or the
federal regulatory capital requirement in section 567.2 of the Rules and
Regulations of the OTS.

Costs associated with the conversion will be deferred and deducted from the
proceeds of the stock offering. If, for any reason, the offering is not
successful, the deferred costs will be charged to operations. As of December 31,
2006, there was approximately $48,000 of costs incurred with the conversion.

F-26

18. PARENT COMPANY

Condensed financial information of Gateway Community Financial Corp. is as
follows:

CONDENSED BALANCE SHEET

December 31,
2006 2005
--------------- ----------------

ASSETS
Cash and due from banks $ 268,125 $ 265,460
Investment in subsidiary, the Bank 28,635,072 28,280,490
--------------- ----------------

TOTAL ASSETS $ 28,903,197 $ 28,545,950
=============== ================

STOCKHOLDERS' EQUITY $ 28,903,197 $ 28,545,950
=============== ================

CONDENSED STATEMENT OF INCOME

Year Ended December 31,
2006 2005 2004
----------- ------------ ------------

Interest income $ 2,665 $ 2,638 $ 2,619

Equity in undistributed earnings of subsidiary 376,809 1,619,960 1,647,614
----------- ------------ ------------

NET INCOME $ 379,474 $ 1,622,598 $ 1,650,233
=========== ============ ============

CONDENSED STATEMENT OF CASH FLOWS

Year Ended December 31,
2006 2005 2004
----------- ------------- ------------

OPERATING ACTIVITIES
Net income $ 379,474 $ 1,622,598 $ 1,650,233
Equity in undistributed earnings
of subsidiary (376,809) (1,619,960) (1,647,614)
----------- ------------- ------------

Net cash provided by operating activities 2,665 2,638 2,619
----------- ------------- ------------

Increase in cash and cash equivalents 2,665 2,638 2,619

CASH AT BEGINNING OF YEAR 265,460 262,822 260,203
----------- ------------- ------------

CASH AT END OF YEAR $ 268,125 $ 265,460 $ 262,822
=========== ============= ============

F-27

Interests in
Gloucester County Federal Savings Bank
Employees' Savings and Profit Sharing Plan and Trust
and
Offering of 140,317 Shares of
Common Stock, $.10 par value per share,
of
Gateway Community Financial Corp.

This Prospectus Supplement relates to the offer and sale to
participants in the Gloucester County Federal Savings Bank Employees' Savings
and Profit Sharing Plan and Trust of participation interests and shares of
Gateway Community Financial Corp.

In connection with the initial public offering of common stock of
Gateway Community Financial Corp., a United States corporation, you may invest
in the stock of Gateway Community Financial Corp. Your eligibility to purchase
stock utilizing your 401(k) Plan assets is determined based upon your stock
subscription rights as a depositor of Gloucester County Federal Savings Bank.
Participation in the 401(k) Plan does not give you any special rights to
purchase stock in the initial public offering. You may direct the trustee of the
plan to purchase the stock with plan assets which are attributable to you as a
participant. This prospectus supplement relates to your decision whether or not
to invest all or a portion of your plan funds in Gateway Community Financial
Corp. common stock.

If you direct the trustee to invest all or a portion of your plan funds
in Gateway Community Financial Corp. common stock in the initial public
offering, the price paid for such shares will be $10.00 per share. This price is
the price that will be paid by all other persons who purchase shares of Gateway
Community Financial Corp. stock in the initial public offering.

If you direct the trustee to invest all or a portion of your plan funds
in Gateway Community Financial Corp. common stock after the initial public
offering, shares purchased for your account in open market transactions, and the
price paid for such shares, will be the market price at the time of the
purchase, which may be more or less than the initial public offering price of
$10.00 per share.

The prospectus of Gateway Community Financial Corp. dated ________ __,
2007, which is attached to this prospectus supplement, includes detailed
information regarding Gateway Community Financial Corp. common stock, and the
financial condition, results of operation, and business of Gateway Community
Financial Corp. and Subsidiary. This prospectus supplement provides information
regarding the plan. You should read this prospectus supplement together with the
prospectus and keep both for future reference.

Please refer to Risk Factors beginning on page __ of the prospectus.

These securities have not been approved or disapproved by the
Securities and Exchange Commission, the Office of Thrift Supervision, or any
other federal agency or any state securities commission, nor has such
commission, office, or other agency or any state securities commission passed
upon the accuracy or adequacy of this prospectus supplement. Any representation
to the contrary is a criminal offense.

These securities are not deposits or savings accounts and are not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

The date of this prospectus supplement is ________ __, 2007.

TABLE OF CONTENTS

The Offering............................................................................1

Securities Offered.............................................................1
Election to Purchase Stock in the Initial Offering.............................1
Value of Participation Interests...............................................1
Purchase Price of Gateway Community Financial Corp. Common Stock...............1
Method of Directing Investments................................................2
Time for Directing Investment..................................................2
Irrevocability of Investment Direction.........................................2
Direction to Purchase the Stock After the Initial Offering.....................2
Nature of Each Participant's Interest in
Gateway Community Financial Corp. Common Stock........................3
Voting and Tender Rights of the Stock..........................................3
Minimum Investment.............................................................3

Description of the Plan.................................................................3

General........................................................................3
Eligibility and Participation..................................................4
Contributions and Benefits Under the Plan......................................4
Limitation on Contributions....................................................4
Investment of Plan Assets......................................................5
Performance of Previous Funds..................................................7
Performance of the Employer Stock Fund.........................................8
Benefits Under the Plan....................................................... 8
Withdrawals and Distributions From the Plan................................... 8
Administration of the Plan.................................................... 9
Reports to Plan Participants..................................................10
Amendment and Termination.................................................... 10
Merger, Consolidation, or Transfer........................................... 10
Federal Income Tax Consequences...............................................10
Restrictions on Resale........................................................11
SEC Reporting and Short-Swing Profit Liability................................11
Additional Information........................................................11

Legal Opinions.........................................................................12

Investment Election Form.......................................................Appendix-A

Change of Investment Allocation Form...........................................Appendix-B

Special Tax Notice Regarding Plan Payments.....................................Appendix-C

THE OFFERING

Securities Offered

The securities offered in connection with this prospectus supplement
are participation interests in the plan and shares of Gateway Community
Financial Corp. common stock. At March 8, 2007, there were sufficient funds in
the Plan to purchase up to140,317 shares of Gateway Community Financial Corp.
common stock in the offering. Only employees of Gloucester who meet the
eligibility requirements under the plan may participate. Information with regard
to the plan is contained in this prospectus supplement and information with
regard to the stock offering and the financial condition, results of operation,
and business of Gloucester is contained in the attached prospectus.

Election to Purchase Stock in the Initial Offering

Your eligibility to purchase stock utilizing your 401(k) Plan assets is
determined based upon your stock subscription rights as a depositor of
Gloucester County Federal Savings Bank. All plan participants are eligible to
direct a transfer of funds (other than funds held in the Personal Choice
Retirement Account) to the Gateway Community Financial Corp. Stock Fund.
However, transfer directions are subject to subscription rights and purchase
priorities. Your order for shares in the Stock Offering will be filled based on
your subscription rights. Gateway Community Financial Corp. has granted rights
to subscribe for shares of Gateway Community Financial Corp. common stock to the
following persons in the following order of priority: (1) persons with $50 or
more on deposit at Gloucester County Federal Savings Bank as of December 31,
2005 and (2) persons with $50 or more on deposit at Gloucester County Federal
Savings Bank as of March 31, 2007. If you fall into one of the above
subscription offering categories, you have subscription rights to purchase
shares of common stock in the offering and you may use funds in the Plan account
to pay for your purchase of shares of Gateway Community Financial Corp. common
stock. You also will be permitted to direct ongoing purchases of the stock under
the plan after the initial offering. See "Direction to Purchase Stock After the
Initial Offering."

Participation in the 401(k) Plan does not give you any special rights
to purchase stock in the initial public offering. You may direct the trustee of
the plan to invest all or part of the funds (other than funds held in the
Personal Choice Retirement Account) in your account in the Employer Stock Fund.
Based upon your election, the trustees of the plan will subscribe for Gateway
Community Financial Corp. shares in the initial offering. You also will be
permitted to direct ongoing purchases of the stock under the plan after the
initial offering. See "Direction to Purchase Stock After the Initial Offering."
The plan's trustee will follow your investment directions. Amounts not
transferred to the Employer Stock Fund will remain invested in the other
investment funds of the plan as directed by you. See "Investment of Plan
Assets."

Value of Participation Interests

As of March 8, 2007, the total market value of the assets of the plan
equaled $1,403,167. The plan administrator has informed each participant of the
value of his or her account in the plan as of ________ __, 2007. The value of
the plan assets represents your past contributions to the plan, employer
matching contributions, profit-sharing contributions, plus or minus earnings or
losses on contributions, less withdrawals and loans. You may direct up to 100%
of the value of your account assets to invest in the Employer Stock Fund.
However, in connection with the initial offering of the stock, if you elect to

purchase the stock, you will be required to invest a minimum amount of your
account assets in the Employer Stock Fund.

Purchase Price of Gateway Community Financial Corp. Common Stock

The funds transferred to the Employer Stock Fund for the purchase of
the stock issued in the initial offering will be used by the trustee to purchase
shares of Gateway Community Financial Corp. common stock. The price paid for
such shares of the stock will be $10.00. This price is the price that will be
paid by all other persons who purchase shares of the stock in the initial
offering.

Your account assets directed for investment in the Employer Stock Fund
after the initial offering shall be invested by the trustee to purchase shares
of Gateway Community Financial Corp. common stock in open market transactions.
The price paid by the trustee for shares of the Gateway Community Financial
Corp. common stock in the initial offering, or otherwise, will not exceed
"adequate consideration" as defined in Section 3(18) of the Employee Retirement
Income Security Act.

Method of Directing Investments

Appendix A of this prospectus supplement includes an investment
election form for you to direct a transfer to the Employer Stock Fund in the
initial offering of all or a portion of your account under the plan. Appendix B
of this prospectus supplement includes Pentegra's change of investment
allocation form which is to be used to direct funds to the Employer Stock Fund
for the initial offering.

If you wish to invest all or part of your account in the Employer Stock
Fund in the initial offering you need to complete Appendices A and B.
Additionally, you may indicate the directed investment of future contributions
under the plan for investment in the Employer Stock Fund. If you do not wish to
make an investment election, you do not need to take any action and your current
elections will remain in effect.

Time for Directing Investment

The deadline for submitting your direction to invest funds in the
Employer Stock Fund in order to purchase the stock issued in the initial
offering is noon on ________ __, 2007. If you want to invest in the Employer
Stock Fund, you must return the attached form to Christopher B. Dudley at
Gloucester by noon on ________ __, 2007.

After the initial offering, you will still be able to direct the
investment of your account under the plan in the Employer Stock Fund and in
other investment alternatives.

Irrevocability of Investment Direction

The direction to invest your plan funds in the Employer Stock Fund in
the initial offering cannot be changed after you have turned in your forms.
However, you will be able to direct your account to purchase the stock after the
initial offering by directing amounts in your account into the Employer Stock
Fund.

Direction to Purchase the Stock After the Stock Offering

Following completion of the stock offering, you will be permitted to
direct that a certain percentage of your interest in the trust fund (up to 100%)
be transferred to the Employer Stock Fund and invested in Gateway Community
Financial Corp. common stock, or to the other investment funds available under
the plan. Alternatively, you may direct that a certain percentage of your
interest in the Employer Stock Fund be transferred to the trust fund to be
invested in the other investment funds available in accordance with the terms of
the plan. You can direct future contributions made to the plan by you or on your
behalf to be invested in the Employer Stock Fund. Following your initial
election, the allocation of your interest in the Employer Stock Fund may be
changed daily by filing a change of investment allocation form with the plan
administrator or by calling Pentegra's voice response unit at (800) 433-4422 and
changing your investment allocation by phone or by Internet at www.Pentegra.com.

Nature of Each Participant's Interest in Gateway Community Financial Corp.
Common Stock

The trustee will hold Gateway Community Financial Corp. common stock in
the name of the plan. Each participant has an allocable interest in the
investment funds of the plan but not in any particular assets of the plan.
Accordingly, a specific number of shares of the stock will not be directly
attributable to the account of any individual participant. Dividend rights
associated with the stock held by the Employer Stock Fund will be allocated to
the Employer Stock Fund. Any increase (or decrease) in the value of the fund as
a result of dividend rights will be reflected in each participant's allocable
interest in the Employer Stock Fund.

Voting and Tender Rights of the Stock

You will direct the trustee of the plan about how to vote your Gateway
Community Financial Corp. shares. If you do not give voting instruction or
tender instruction to the trustee, the trustee will vote or tender those shares
within its discretion as a fiduciary under the plan or as directed by the plan
administrator.

Minimum Investment

The minimum investment of assets directed by a participant for the
purchase of the stock in the initial offering is $250.00, and investments must
be in increments of $10.00. Funds may be directed for the purchase of the stock
attributable to your account regardless of whether your account assets are 100%
vested at the time of your investment election. There is no minimum level of
investment after the initial offering for investment in the Employer Stock Fund.

DESCRIPTION OF THE PLAN

General

Gloucester adopted a 401(k) plan effective October 1, 1997. Effective
May 1, 2007, Gloucester amended and restated its old plan into the new plan in
order to include the Employer Stock Fund as an investment alternative. The plan
is a deferred compensation arrangement established in accordance with the
requirements under Section 401(a) and Section 401(k) of the Internal Revenue
Code. The plan received a determination letter from the IRS that the plan is
qualified under Section 401(a) of the Internal Revenue

Code and that its trust is qualified under Section 501(a) of the Internal
Revenue Code. Gloucester intends for the plan, in operation, to comply with the
requirements under Section 401(a) and Section 401(k) of the Internal Revenue
Code. Gloucester expects to adopt any amendments to the plan that may be
necessary to ensure the continued qualified status of the plan under the
Internal Revenue Code and other federal regulations.

Employee Retirement Income Security Act. The plan is an "individual
account plan" other than a "money purchase pension plan" within the meaning of
the Employee Retirement Income Security Act. As such, the plan is subject to all
of the provisions of Title I (Protection of Employee Benefit Rights) and Title
II (Amendments to the Internal Revenue Code Relating to Retirement Plans) of the
act, except the funding requirements contained in Part 3 of Title I of the act,
which do not apply to an individual account plan (other than a money purchase
plan). The plan is not subject to Title IV (Plan Termination Insurance) of the
act. Neither the funding requirements contained in Part 3 of Title I of the act
nor the plan termination insurance provisions contained in Title IV of the act
will be extended to participants or beneficiaries under the plan.

Federal tax law imposes substantial restrictions on your right to
withdraw amounts held under the plan before your termination of employment with
Gloucester. Federal law may also impose a 10% excise tax on withdrawals you make
from the plan before you reach the age of 59 1/2, regardless of whether the
withdrawal occurs during or after your employment with Gloucester.

Full Text of Plan. The following portions of this prospectus supplement
are summaries of provisions in the plan. They are not complete and are qualified
in their entirety by the full text of the plan. You may obtain copies of the
full plan by sending a request to Christopher B. Dudley at Gloucester. You
should carefully read the full text of the plan document to understand your
rights and obligations under the plan.

Eligibility and Participation

You may participate in the plan on the first day of the month after age
21 and completing 1,000 hours of service during a 12-month period with
Gloucester. As of March 8, 2007, 42 employees had elected to participate in the
plan. The plan year is January 1 to December 31.

Contributions and Benefits Under the Plan

Plan Participant Contributions. You can contribute to the plan on a
pretax basis. Contributions are automatically deducted from your salary each pay
period. When you contribute on a pretax basis, you pay no federal income tax on
your eligible deferrals until you withdraw money from the plan. You are
permitted to contribute amounts of not less than 1% and not more than 50% of
your taxable compensation reported on Form W-2. You may change the amount of
your contributions once per calendar quarter and your changes will be effective
on the first day of the following pay period.

Gloucester Contributions. Gloucester may match your contribution to the
plan, but we are not obligated to match your contributions. Gloucester currently
matches 50% of your contributions up to 6% of your salary. Gloucester
contributions are subject to revision by us.

Limitation on Contributions

Limitation on Employee Salary Deferral. Although you may contribute up
to 50% of your pay to the plan, federal tax law limits the dollar amount of your
annual contribution to $15,500 in 2007. If you are age 50 or more as of December
31, 2007 you can make catch-up contributions of $5,000 in 2007. The Internal
Revenue Service periodically adjusts this limit for inflation. Contributions in
excess of this limit and earnings on those contributions generally will be
returned to you by April 15 of the year following your contribution, and they
will be subject to regular federal income taxes.

Limitation on Annual Additions and Benefits. Under federal tax law,
your contributions and our contributions to the plan may not exceed the lesser
of 100% of your annual pay, or $45,000. Contributions that we make to any other
retirement program that we sponsor may also count against these limits.

Special Rules About Highly-Paid Employees. Special provisions of the
Internal Revenue Code limit contributions by employees who receive annual pay
greater than $100,000. If you are in this category, some of your contribution
may be returned if your contribution, when measured as a percentage of your pay,
is substantially higher than the contributions made by other employees.

If your annual pay is less than $145,000, we may be required to make a
minimum contribution to the plan of 3% of your annual pay if the plan is
considered to be a "top heavy" plan under federal tax law. The plan is
considered "top heavy" if, in any year, the value of the plan accounts of
employees making more than $145,000 represent more than 60 percent of the value
of all accounts.

Investment of Plan Assets

All amounts credited to your plan account are held in trust. A trustee
appointed by Gloucester 's Board of Directors administers the trust and invests
the plan assets. The plan offers the following investment choices:

S&P 500 Stock Fund: Invests in the stocks of a broad array of
established U.S. companies. Its objective is long-term: to earn higher returns
by investing in the largest companies in the U.S. economy.

Stable Value Fund: Invests primarily in Guaranteed Investment Contracts
and Synthetic Guaranteed Investment Contracts. Its objective is
short-to-intermediate term: to achieve a stable return over short to
intermediate periods of time while preserving the value of a participant's
investment.

S&P MidCap Stock Fund: Invests in the stocks of mid-sized U.S.
companies. Its objective is long- term: to earn higher returns which reflect the
growth potential of such companies.

Money Market Fund: Invests in a broad range of high-quality short-term
instruments. Its objective is short-term: to achieve competitive short-term
rates of return while preserving the value of the participant's principal.

Government Bond Fund: Invests in U.S. Treasury bonds with maturities of
20 years or more. Its objective is long-term: to earn a higher level of income
along with the potential for capital appreciation.

Income Plus Asset Allocation Fund: Invests approximately 80% of its
portfolio in a combination of stable value investments and U.S. bonds. The
balance is invested in U.S. and international stocks. Its objective is
intermediate-term: to preserve the value of a participant's investment over
short periods of time and to offer some potential for growth.

Growth and Income Asset Allocation Fund: Invests in U.S. domestic and
international stocks, U.S. domestic bonds, and stable value investments. Its
objective is intermediate-term: to provide a balance between the pursuit of
growth and protection from risk.

Growth Asset Allocation Fund: Invests the majority of its assets in
stocks -- domestic as well as international. Its objective is long-term: to
pursue high growth of a participant's investment over time.

International Stock Fund: Invests in over 1,000 foreign stocks in 20
countries. Its objective is long-term: to offer the potential return of
investing in the stocks of established non-U.S. companies, as well as the
potential risk-reduction of broad diversification.

Russell 2000 Stock Fund: Invests in most, or all, of the same stocks
held in the Russell 2000 Index. Its objective is long-term: to earn high returns
in smaller U.S. companies by matching its benchmark, the Russell 2000 Index.

S&P 500/Growth Stock Fund: Invests in most, or all, of the stocks held
in the S&P/BARRA Growth Index which are large-capitalization growth stocks. Its
objective is long-term: to match its benchmark, the S&P/BARRA Growth Index.

S&P 500/Value Stock Fund: Invests in most, or all, of the stocks held
in the S&P/BARRA Value Index which are large-capitalization value stocks. Its
objective is long-term: to match its benchmark, the S&P/BARRA Value Index.

Nasdaq 100 Stock Fund: The fund is intended for long-term investors
seeking to capture the growth potential of the 100 largest and most actively
traded non-financial companies on the Nasdaq Stock Market. The Fund's benchmark
is the Nasdaq 100 Index.

The U.S. REIT Index Fund: The U.S. REIT Index Fund invests in a
portfolio of publicly traded Real Estate Investment Trusts designed to track the
Morgan Stanley REIT Index, which represents over 90% of the total U.S. real
estate equities market. The U.S. REIT Index Fund offers investors exposure to a
diverse set of real estate holdings across property types and geographic
markets. Equity REITs are the most common type of REIT, and generate earnings
from the rental income received on their holdings and capital gains from the
sale of properties.

Aggregate Bond Index Fund: The Fund invests primarily in government,
corporate, mortgage- backed and asset-backed securities. The Fund invests in a
well-diversified portfolio that is representative of the broad domestic bond
market.

Schwab Personal Choice Retirement Account (PCRA). The PCRA is a fully
self-managed environment, which gives participants more flexibility and allows
participants to personalize investments. Allows participants to exercise full
securities trading discretion.

Employer Stock Fund: The Employer Stock Fund consists primarily of
investments in common stock of Gateway Community Financial Corp.

Performance of Previous Funds

The annual percentage return on these funds for calendar years 2006,
2005 and 2004 was approximately:

Assumes all dividends are re-invested and does not take into effect
fund expenses which would reduce average annual returns.

Fund 2006 2005 2004
---- ---- ---- ----
Money Market Fund 4.7% 2.9% 1.0%
Stable Value Fund 3.9% 3.7% 3.6%
Government Bond Fund 1.1% 7.0% 8.4%
S&P 500 Stock Fund 15.1% 4.3% 10.2%
S&P MidCap Stock Fund 9.7% 12.0% 16.0%
International Stock Fund 25.5% 13.0% 19.6%
Income Plus Asset Allocation Fund 6.6% 4.8% 6.6%
Growth Asset Allocation Fund 14.4% 6.7% 12.7%
Growth & Income Asset Allocation Fund 10.5% 5.7% 9.8%
Russell 2000 Stock Fund 17.5% 4.2% 17.7%
S&P 500/Growth Stock Fund 10.7% 3.4% 5.5%
S&P 500/Value Stock Fund 19.9% 5.2% 15.1%
Nasdaq 100 Stock Fund 6.2% 0.9% 9.9%
US REIT Index Fund 34.8% 11.9% 30.3%
Aggregate Bond Index Fund* 3.6% N/A N/A

* Aggregate Bond Index Fund began on April 30, 2006.

Performance of the Employer Stock Fund

The Employer Stock Fund is invested in the common stock of Gateway
Community Financial Corp. As of the date of this prospectus supplement, none of
the shares of common stock have been issued or are outstanding and there is no
established market for the Gateway Community Financial Corp. common stock.
Accordingly, there is no record of the investment performance of the Employer
Stock Fund. Performance

of the Employer Stock Fund depends on a number of factors, including the
financial condition and profitability of Gateway Community Financial Corp. and
market conditions for Gateway Community Financial Corp. common stock generally.

Please note that investment in the Employer Stock Fund is not an
investment in a savings account or certificate of deposit, and such investment
in Gateway Community Financial Corp. common stock through the Employer Stock
Fund is not insured by the FDIC or any other regulatory agency. Further, no
assurances can be given with respect to the price at which the stock may be sold
in the future.

Investments in the Employer Stock Fund may involve certain special
risks relating to investments in the common stock of Gateway Community Financial
Corp. For a discussion of these risk factors, see "Risk Factors" beginning on
page __ of the prospectus.

Benefits Under the Plan

Vesting. The contributions that you make in the plan and our matching
contributions are fully vested and cannot be forfeited.

Withdrawals and Distributions From the Plan

Withdrawals Before Termination of Employment. Your plan account
provides you with a source of retirement income. But, while you are employed by
Gloucester, if you need funds from your account before retirement, you may be
eligible to receive either an in-service withdrawal, or (from your pre-tax
contributions) a hardship distribution. You can apply for a hardship
distribution from the plan by contacting Christopher B. Dudley at Gloucester. In
order to qualify for a hardship withdrawal, you must have an immediate and
substantial need to meet certain expenses, like a mortgage payment or medical
bill, and have no other reasonably available resources to meet your financial
need. If you qualify for a hardship distribution, the trustee will make the
distribution proportionately from the investment funds in which you have
invested your account balance. Hardship withdrawals (except for medical expenses
exceeding 7.5% of your adjusted gross income) and in-service withdrawals are
subject to a 10% early distribution penalty.

Distributions Upon Termination for Any Other Reason. If you terminate
employment with Gloucester for any reason other than retirement, disability or
death and your account balance exceeds $500, the trustee will distribute your
benefits to you the later of the April 1 of the calendar year after you turn age
70 1/2 or when you retire, unless you request otherwise. You may elect to
maintain your account balance in the plan for as long as Gloucester maintains
the plan or you may elect one or more of the forms of distribution available
under the plan. If your account balance does not exceed $500, the trustee will
generally distribute your benefits to you as soon as administratively
practicable following termination of employment.

Distributions Upon Disability. If you can no longer work because of a
disability, as defined in the plan, you may withdraw your total account balance
under the plan and have that amount paid to you in accordance with the terms of
the plan. If you later become reemployed after you have withdrawn some or all of
your account balance, you may not repay to the plan any withdrawn amounts.

Distributions Upon Death. If you die before your benefits are paid from
the plan, your benefits will be paid to your surviving spouse or designated
beneficiary.

Form of Benefits. Payment of your benefits upon your retirement,
disability, or other termination of employment will be made in a lump sum
payment, installments, or an annuity.

If you die before receiving benefits pursuant to your retirement,
disability, or termination of employment, your beneficiary will receive a lump
sum payment, unless the payment would exceed $500 and an election is made for
annual installments up to 5 years. Your spouse can receive payments for up to 10
years.

Nonalienation of Benefits. Except with respect to federal income tax
withholding and as provided with respect to a qualified domestic relations
order, as defined in the Internal Revenue Code, benefits payable under the plan
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any
kind, either voluntary or involuntary, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any
rights to benefits payable under the plan shall be void.

Plan Loans. You may borrow money from the vested portion of your
account. The minimum amount you may borrow is $1,000. The maximum amount is 50%
of your vested account balance. You may never borrow more than $50,000 minus the
highest outstanding balance on any individual loan during the last 12 months.

You may take up to five years to repay a general purpose loan. If you
are using the loan to purchase your primary residence, a repayment period of 15
years is permissible. You must repay the loan through payroll deductions.

If you fail to make any loan repayment when due, your loan will be in
default. The full amount of the loan will be due and payable by the last day of
the calendar quarter following the calendar quarter which contains the due date
of the last monthly installment payment. If the outstanding balance of the loan
is in default and is not repaid in the aforementioned time period, you will be
considered to have received a distribution of said amount.

Administration of the Plan

Gloucester is the plan administrator. The Bank of New York will serve
as trustee and custodian for all investment funds under the plan except the
Employer Stock Fund. Robert C. Ahrens and Christopher B. Dudley will serve as
trustees with respect to the Employer Stock Fund during the initial public
offering by Gateway Community Financial Corp. After the stock of Gateway
Community Financial Corp. begins trading, the Bank of New York also will be the
trustee for the Employer Stock Fund. The plan administrator is responsible for
the administration of the plan, interpretation of the provisions of the plan,
prescribing procedures for filing applications for benefits, preparation and
distribution of information explaining the plan, maintenance of plan records,
books of account and all other data necessary for the proper administration of
the plan, and preparation and filing of all returns and reports relating to the
plan which are required to be filed with the U.S. Department of Labor and the
IRS, and for all disclosures required to be made to participants, beneficiaries
and others under the Employee Retirement Income Security Act.

The trustee receives and holds the contributions to the plan in trust
and distributes them to participants and beneficiaries in accordance with the
terms of the plan and the directions of the plan administrator. The trustee is
responsible for investment of the assets of the trust. The address of the plan

administrator and the trustee for the Employer Stock Fund is 381 Egg Harbor
Road, Sewell, New Jersey 08080. The address of the Bank of New York is One Wall
Street, New York, New York, 10286.

Reports to Plan Participants

The plan administrator will furnish to each participant a statement at
least quarterly showing:

o the balance in your account as of the end of that period;

o the amount of contributions allocated to your account for that period; and

o the adjustments to your account to reflect earnings or losses (if any).

If you invest in the Employer Stock Fund, you will also receive a copy
of Gateway Community Financial Corp.'s Annual Report to Stockholders and a proxy
statement related to stockholder meetings.

Amendment and Termination

It is the intention of Gloucester to continue the plan indefinitely.
Nevertheless, Gloucester, within its sole discretion, may terminate the plan at
any time. If the plan is terminated in whole or in part, then regardless of
other provisions in the plan, you will have a fully vested interest in your
accounts. Gloucester reserves the right to make, from time to time, any
amendment or amendments to the plan that do not cause any part of the trust to
be used for, or diverted to, any purpose other than the exclusive benefit of
participants or their beneficiaries; provided, however, that Gloucester may make
any amendment it determines necessary or desirable, with or without retroactive
effect, to comply with the Employee Retirement Income Security Act.

Merger, Consolidation, or Transfer

In the event of the merger or consolidation of the plan with another
plan, or the transfer of the trust assets to another plan, the plan requires
that each participant would (if either the plan or the other plan then be
terminated) receive a benefit immediately after the merger, consolidation, or
transfer that is equal to or greater than the benefit he or she would have been
entitled to receive immediately before the merger, consolidation, or transfer
(if the plan had then terminated).

Federal Income Tax Consequences

The following discussion is only a brief summary of certain federal
income tax aspects of the plan. You should not rely on this summary as a
complete or definitive description of the material federal income tax
consequences relating to the plan. At the time you receive a distribution from
the plan, you will receive a tax notice which conforms to the IRS safe harbor
explanation of the distribution in accordance with IRS Notice 2002-3. The tax
rules that affect your benefits under the plan change frequently and may vary
based on your individual situation. This summary also does not discuss how state
or local tax laws affect your plan benefits. We urge you to consult your tax
advisor with respect to any distribution from the plan and transactions
involving the plan.

Federal tax law provides the participants under the plan with a number
of special benefits:

(1) you pay no current income tax on your contributions or Gloucester
contributions; and

(2) the earnings on your plan accounts are not taxable until you
receive a distribution.

These benefits are conditioned on the plan's compliance with special
requirements of federal tax law. We intend to satisfy all of the rules that
apply to the plan. However, if the rules are not satisfied, the special tax
benefits available to the plan may be lost.

Special Distribution Rules. If you turned 50 before 1986, you may be
eligible to spread the taxes on the distribution over as much as 10 years. You
should consult with your tax advisor to determine if you are eligible for this
special tax benefit and whether it is appropriate to your financial needs.

Distributions: Rollovers and Direct Transfers to Another Qualified Plan
or to an IRA. You may roll over virtually all distributions from the plan to
retirement programs sponsored by other employers or to an individual retirement
account. We will provide you with detailed information on how to roll over a
distribution when you are eligible to receive benefits under the plan.

Restrictions on Resale

If you are an "affiliate" of Gateway Community Financial Corp. or
Gloucester County Federal Savings Bank, you may be subject to special rules
under federal securities laws that affect your ability to sell shares you hold
in the Employer Stock Fund. Directors, officers and substantial shareholders of
Gateway Community Financial Corp. are generally considered "affiliates." Any
person who may be an "affiliate" of Gloucester may wish to consult with counsel
before transferring any common stock they own. If you are not considered an
"affiliate" of Gloucester you may freely sell any shares of Gateway Community
Financial Corp. common stock distributed to you under the plan, either publicly
or privately.

SEC Reporting and Short-Swing Profit Liability

If you are an officer, director or more than 10% owner of Gateway
Community Financial Corp., you may be required to report purchases and sales of
Gateway Community Financial Corp. common stock through the plan to the
Securities and Exchange Commission. In addition, you may be subject to special
rules that provide for the recovery by Gateway Community Financial Corp. of
profits realized by an officer, director or a more than 10% owner from the
purchase and sale or sale and purchase of the common stock within any six-month
period. However, the rules except many transactions involving the plan from the
reporting and profit recovery rules. You should consult with us regarding the
impact of these rules on your transactions involving Gateway Community Financial
Corp. common stock.

Additional Information

This prospectus supplement dated ________ __, 2007 is part of the
prospectus of Gateway Community Financial Corp. dated ________ __, 2007. This
prospectus supplement shall be delivered to plan participants together with the
prospectus and is not complete unless it is accompanied by the prospectus.

LEGAL OPINIONS

The validity of the issuance of the common stock will be passed upon by
Malizia Spidi & Fisch, PC, Washington, D.C., which acted as special counsel for
Gateway Community Financial Corp. in connection with the initial public offering
by Gateway Community Financial Corp.

Appendix-A: Investment Election Form

Appendix-A
----------

Gloucester County Federal Savings Bank Employees' Savings and
Profit Sharing Plan and Trust

-----------------------------

Participant Voluntary Investment Election Form

-----------------------------

Name of Plan Participant:
-----------------------------

Social Security Number:
-----------------------------

1. Instructions.
------------

In connection with the initial public offering of Gateway Community
Financial Corp., Gloucester has adopted the Gloucester County Federal Savings
Bank Employees' Savings and Profit Sharing Plan and Trust to permit plan
participants to direct all, or a portion, of the assets attributable to their
participant accounts into a new fund: the Employer Stock Fund. The assets
attributable to a participant's account that are transferred at the direction of
the participant into the Employer Stock Fund will be used to purchase shares of
common stock of Gateway Community Financial Corp. to be issued in the initial
stock offering of Gateway Community Financial Corp.

To direct a transfer of all or a part of the funds credited to your
account to the Employer Stock Fund, you should complete this form and return it
to Christopher B. Dudley, at 381 Egg Harbor Road, Sewell, New Jersey 08080, who
will retain this form and return a copy to you. If you need any assistance in
completing this form, please contact Christopher B. Dudley at (856) 589-6600
Ext. 325. If you do not complete and return this form by ________ __, 2007, at
noon, the funds credited to your account under the plan will continue to be
invested in accordance with your prior investment direction, or in accordance
with the terms of the plan if no investment direction has been provided.

2. Investment Directions.
---------------------

As a participant in the plan, I hereby voluntarily elect to direct the
trustee of the plan to invest the below indicated dollar sum of my participant
account balance under the plan as indicated below.

I hereby voluntarily elect and request to direct investment of the
below indicated dollar amount of my participant account funds for the purchase
of the common stock to be issued in Gateway Community Financial Corp.'s initial
offering (minimum investment of $250.00; rounded to the nearest $10.00
increment; maximum investment permissible is _______ shares of common stock or
$_______): $___________. Enter your $ level of requested purchase through the
plan. Such amount may not exceed the vested portion of assets held under the
plan for you. Please note that the actual number of shares of common stock
purchased on your behalf under the plan may be limited or reduced in accordance
with the plan of stock issuance of Gateway Community Financial Corp. based upon
the total number of shares of common stock subscribed for by other parties. On
the attached Appendix-B, please indicate from which funds such investments
should be transferred. Only available funds may be used for purchase.

All other funds in my participant account will remain invested as
previously requested. All future contributions under the plan will continue to
be invested as previously requested or as revised by me at a later date.

3. Purchaser Information.
---------------------

The ability of participants in the Plan to purchase Common Stock in the
Stock Offering and to direct their current account balances into the Employer
Stock Fund is based upon the participant's subscription rights. Please indicate
your status.

[ ] Check here if you had $50.00 or more in your account with Gloucester
County Federal Savings Bank as of December 31, 2005.

[ ] Check here if you had $50.00 or more in your account with Gloucester
County Federal Savings Bank as of March 31, 2007 (but not as of
December 31, 2005).

4. Acknowledgment.
--------------

I fully understand that this self-directed portion of my participant
account does not share in the overall net earnings, gains, losses, and
appreciation or depreciation in the value of assets held by the plan's other
investment funds, but only in my account's allocable portion of such items from
the directed investment account invested in the common stock. I understand that
the plan's trustee, in complying with this election and in following my
directions for the investment of my account, is not responsible or liable in any
way for the expenses or losses that may be incurred by my account assets
invested in common stock under the Employer Stock Fund.

I further understand that this one time election shall become
irrevocable by me upon execution and submission of this Investment Form. Only
properly signed forms delivered to the plan trustee on or before ________ __,
2007, at noon, will be honored.

The undersigned participant acknowledges that he or she has received
the prospectus of Gateway Community Financial Corp., dated ________ __, 2007,
the prospectus supplement dated ________ __, 2007, regarding the Gloucester
County Federal Savings Bank Employees' Savings and Profit Sharing Plan and Trust
as adopted by Gloucester County Federal Savings Bank and this Investment Form.
The undersigned hereby acknowledges that the shares of common stock to be
purchased with the funds noted above are not savings accounts or deposits and
are not insured by the Federal Deposit Insurance Corporation, Bank Insurance
Fund, the Savings Association Insurance Fund, or any other governmental agency.
Investment in the common stock will expose the undersigned to the investment
risks and potential fluctuations in the market price of the common stock.
Investment in the common stock does not offer any guarantees regarding
maintenance of the principal value of such investment or any projections or
guarantees associated with future value or dividend payments with respect to the
common stock. The undersigned hereby voluntarily makes and consents to this
investment election and voluntarily signed his (her) name as of the date listed
below. If you so elect, you may choose not to make any investment decision at
this time.

I UNDERSTAND THAT BY EXECUTING THIS ORDER I DO NOT WAIVE ANY RIGHTS AFFORDED TO
ME BY THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934.

____________________ __________ ________________________ _________
Witness Date Participant Date

For the Trustee For the Plan Administrator

____________________ __________ ________________________ _________
Date Date

Appendix-B: Change of Investment Allocation Form

Appendix-B
----------

Change of Investment Allocation Form

Gloucester County Federal Savings Bank

CHANGE OF INVESTMENT ALLOCATION
- -------------------------------

1. Member Data

________________________________________________________________________________
Print your full name above (Last, first, middle initial) Social Security Number

________________________________________________________________________________
Street Address City State Zip

2. Instructions

Gloucester County Federal Savings Bank Employees' Savings and Profit Sharing
Plan and Trust is giving members a special opportunity to invest their 401(k)
account balances in a new investment fund - the Employer Stock Fund - which is
comprised primarily of common stock issued by Gateway Community Financial Corp.
in connection with the initial stock offering of Gateway Community Financial
Corp. The percentage of a member's account transferred at the direction of the
member into the Employer Stock Fund will be used to purchase shares of the
common stock during the initial offering of Gateway Community Financial Corp.
Please review the prospectus and the prospectus supplement before making any
decision.

In the event of an oversubscription in the offering so that the total amount you
allocate to the Employer Stock Fund can not be used by the trustee to purchase
the common stock, your account will be reinvested in the other funds of the plan
as previously directed in your last investment election. If no investment
election is provided, your account will be invested in the Money Market Fund.

Investing in the common stock entails some risks, and we encourage you to
discuss this investment decision with your spouse and investment advisor. The
plan trustee and the plan administrator are not authorized to make any
representations about this investment other than what appears in the prospectus
and prospectus supplement, and you should not rely on any information other than
what is contained in the prospectus and prospectus supplement. For a discussion
of certain factors that should be considered by each member in deciding whether
to invest in the common stock, see "Risk Factors" beginning on page __ of the
prospectus. Any shares purchased by the plan pursuant to your election will be
subject to the conditions or restrictions otherwise applicable to the common
stock, as discussed in the prospectus and prospectus supplement.

3. Investment Directions (Applicable to Accumulated Balances Only)

To direct a transfer of all or part of the funds credited to your accounts to
the Employer Stock Fund, you should complete and file this form with Christopher
B. Dudley of Gloucester County Federal Savings Bank no later than ________ __,
2007 at noon. If you need any assistance in completing this form, please contact
Christopher B. Dudley at (856) 589-6600. If you do not complete and return this
form to Christopher B. Dudley by ________ __, 2007 at noon, the funds credited
to your account under the plan will continue to be invested in accordance with
your prior investment direction, or in accordance with the terms of the plan if
no investment direction has been provided by you.

Notwithstanding the election made in Appendix-A for purchases of the Employer
Stock Fund, your purchase of Gateway Community Financial Corp. Stock will be
limited to the amounts available in the following funds. No purchases of the
Employer Stock Fund will be made with insufficient funds in any funds.

I hereby revoke any previous investment direction and now direct that the market
value of the units that I have invested in the following funds, to the extent
permissible, be transferred out of the specified fund and invested in the
Employer Stock Fund as follows:

Dollar
Amount
to be
Fund transferred
---- -----------

S&P 500 Stock Fund.................................... ____
Russell 2000 Stock Fund............................... ____
S&P 500/Growth Stock Fund............................. ____
S&P 500/Value Stock Fund.............................. ____
Stable Value Fund..................................... ____
S&P MidCap Stock Fund................................. ____
Money Market Fund..................................... ____
Government Bond Fund.................................. ____
International Stock Fund.............................. ____
Income Plus Fund...................................... ____
Growth & Income Fund.................................. ____
Growth Fund........................................... ____
Nasdaq 100 Stock Fund................................. ____
Aggregate Bond Index Fund............................. ____
U.S. REIT Index Fund.................................. ____

Note: The total amount transferred may not exceed the total value of your
accounts.

4. Participant Signature and Acknowledgment - Required

By signing this Change of Investment Allocation form, I authorize and direct the
plan administrator and trustee to carry out my instructions. If investing in the
Employer Stock Fund, I acknowledge that I have been provided with and read a
copy of the prospectus and prospectus supplement relating to the issuance of the
common stock. I am aware of the risks involved in the investment in the common
stock, and understand that the trustee and plan administrator are not
responsible for my choice of investment.

MEMBER'S SIGNATURE

I understand that the above directed change(s) will be processed within one to
five days of the form being received by Pentegra. I further understand that if I
do not complete either Section 3, no change will be made to my current
directions for future contributions or accumulated balances, respectively.

_______________________________________ _____________________
Signature of Member Date

Pentegra Services, Inc. is hereby authorized to make the above listed change(s)
to this member's record.

On behalf of the above named member, I certify that the signature above is that
of the participant making this request.

_______________________________________ _____________________
Signature of Gloucester County Federal Savings Bank Date
Authorized Representative

Please complete and return by noon on ________ __, 2007.

Appendix-C: Special Tax Notice Regarding Plan Payments

Appendix-C
----------

SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS

This notice explains how you can continue to defer federal income tax
on your retirement savings in the Gloucester County Federal Savings Bank
Employees' Savings and Profit Sharing Plan and Trust (the "Plan") and contains
important information you will need before you decide how to receive your Plan
benefits.

This notice is provided to you by Gloucester County Federal Savings
Bank (your "Plan Administrator") because all or part of the payment that you
will soon receive from the Plan may be eligible for rollover by you or your Plan
Administrator to a traditional IRA or an eligible employer plan. A rollover is a
payment by you or the Plan Administrator of all or part of your benefit to
another plan or IRA that allows you to continue to postpone taxation of that
benefit until it is paid to you. Your payment cannot be rolled over to a Roth
IRA, a SIMPLE IRA, or a Coverdell Education Savings Account (formerly known as
an education IRA). An "eligible employer plan" includes a plan qualified under
section 401(a) of the Internal Revenue Code, including a 401(k) plan,
profit-sharing plan, defined benefit plan, stock bonus plan, and money purchase
plan; a section 403(a) annuity plan; a section 403(b) tax-sheltered annuity; and
an eligible section 457(b) plan maintained by a governmental employer
(governmental 457 plan).

An eligible employer plan is not legally required to accept a rollover.
Before you decide to roll over your payment to another employer plan, you should
find out whether the plan accepts rollovers and, if so, the types of
distributions it accepts as a rollover. You should also find out about any
documents that are required to be completed before the receiving plan will
accept a rollover. Even if a plan accepts rollovers, it might not accept
rollovers of certain types of distributions, such as after-tax amounts. If this
is the case, and your distribution includes after-tax amounts, you may wish
instead to roll your distribution over to a traditional IRA or split your
rollover amount between the employer plan in which you will participate and a
traditional IRA. If an employer plan accepts your rollover, the plan may
restrict subsequent distributions of the rollover amount or may require your
spouse's consent for any subsequent distribution. A subsequent distribution from
the plan that accepts your rollover may also be subject to different tax
treatment than distributions from this Plan. Check with the administrator of the
plan that is to receive your rollover prior to making the rollover.

If you have additional questions after reading this notice, you can
contact your plan administrator at (856) 589-6600.

SUMMARY

There are two ways you may be able to receive a Plan payment that is
eligible for rollover:

(1) Certain payments can be made directly to a traditional IRA that you
establish or to an eligible employer plan that will accept it and hold it for
your benefit ("DIRECT ROLLOVER"); or

(2) The payment can be PAID TO YOU.

If you choose a DIRECT ROLLOVER:

* Your payment will not be taxed in the current year and no income
tax will be withheld.

* You choose whether your payment will be made directly to your
traditional IRA or to an eligible employer plan that accepts your
rollover. Your payment cannot be rolled over to a Roth IRA, a
SIMPLE IRA, or a Coverdell Education Savings Account because
these are not traditional IRAs.

* The taxable portion of your payment will be taxed later when you
take it out of the traditional IRA or the eligible employer plan.
Depending on the type of plan, the later distribution may be
subject to different tax treatment than it would be if you
received a taxable distribution from this Plan.

If you choose to have a Plan payment that is eligible for rollover PAID
TO YOU:

* You will receive only 80% of the taxable amount of the payment,
because the Plan Administrator is required to withhold 20% of
that amount and send it to the IRS as income tax withholding to
be credited against your taxes.

* The taxable amount of your payment will be taxed in the current
year unless you roll it over. Under limited circumstances, you
may be able to use special tax rules that could reduce the tax
you owe. However, if you receive the payment before age 59 1/2,
you may have to pay an additional 10% tax.

* You can roll over all or part of the payment by paying it to your
traditional IRA or to an eligible employer plan that accepts your
rollover within 60 days after you receive the payment. The amount
rolled over will not be taxed until you take it out of the
traditional IRA or the eligible employer plan.

* If you want to roll over 100% of the payment to a traditional IRA
or an eligible employer plan, you must find other money to
replace the 20% of the taxable portion that was withheld. If you
roll over only the 80% that you received, you will be taxed on
the 20% that was withheld and that is not rolled over.

YOUR RIGHT TO WAIVE THE 30-DAY NOTICE PERIOD. Generally, neither a
direct rollover nor a payment can be made from the Plan until at least 30 days
after your receipt of this notice. Thus, after receiving this notice, you have
at least 30 days to consider whether or not to have your withdrawal directly
rolled over. If you do not wish to wait until this 30-day notice period ends
before your election is processed, you may waive the notice period by making an
affirmative election indicating whether or not you wish to make a direct
rollover. Your withdrawal will then be processed in accordance with your
election as soon as practical after it is received by the Plan Administrator.

MORE INFORMATION

I. PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER

II. DIRECT ROLLOVER

III. PAYMENT PAID TO YOU

IV. SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES

I. PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER

Payments from the Plan may be "eligible rollover distributions." This
means that they can be rolled over to a traditional IRA or to an eligible
employer plan that accepts rollovers. Payments from a plan cannot be rolled over
to a Roth IRA, a SIMPLE IRA, or a Coverdell Education Savings Account. Your Plan
Administrator should be able to tell you what portion of your payment is an
eligible rollover distribution.

The following types of payments cannot be rolled over:

PAYMENTS SPREAD OVER LONG PERIODS. You cannot roll over a payment if it
is part of a series of equal (or almost equal) payments that are made at least
once a year and that will last for:

* your lifetime (or a period measured by your life expectancy), or

* your lifetime and your beneficiary's lifetime (or a period
measured by your joint life expectancies), or

* a period of 10 years or more.

REQUIRED MINIMUM PAYMENTS. Beginning when you reach age 70 1/2 or
retire, whichever is later, a certain portion of your payment cannot be rolled
over because it is a "required minimum payment" that must be paid to you.
Special rules apply if you own more than 5% of your employer.

HARDSHIP DISTRIBUTIONS. A hardship distribution cannot be rolled over.

CORRECTIVE DISTRIBUTIONS. A distribution that is made to correct a
failed nondiscrimination test or because legal limits on certain contributions
were exceeded cannot be rolled over.

LOANS TREATED AS DISTRIBUTIONS. The amount of a plan loan that becomes
a taxable deemed distribution because of a default cannot be rolled over.
However, a loan offset amount is eligible for rollover, as discussed in Part III
below. Ask the Plan Administrator of this Plan if distribution of your loan
qualifies for rollover treatment.

The Plan Administrator of this Plan should be able to tell you if your
payment includes amounts which cannot be rolled over.

II. DIRECT ROLLOVER

A DIRECT ROLLOVER is a direct payment of the amount of your Plan
benefits to a traditional IRA or an eligible employer plan that will accept it.
You can choose a DIRECT ROLLOVER of all or any portion of your payment that is
an eligible rollover distribution, as described in Part I above. You are not
taxed on any taxable portion of your payment for which you choose a DIRECT
ROLLOVER until you later take it out of the traditional IRA or eligible employer
plan. In addition, no income tax withholding is required for any taxable portion
of your Plan benefits for which you choose a DIRECT ROLLOVER. This Plan might
not let you choose a DIRECT ROLLOVER if your distributions for the year are less
than $200.

DIRECT ROLLOVER to a Traditional IRA. You can open a traditional IRA to
receive the direct rollover. If you choose to have your payment made directly to
a traditional IRA, contact an IRA sponsor (usually a financial institution) to
find out how to have your payment made in a direct rollover to a traditional IRA
at that institution. If you are unsure of how to invest your money, you can
temporarily establish a traditional IRA to receive the payment. However, in
choosing a traditional IRA, you may wish to make sure that the traditional IRA
you choose will allow you to move all or a part of your payment to another
traditional IRA at a later date, without penalties or other limitations. See IRS
Publication 590, Individual Retirement Arrangements, for more information on
traditional IRAs (including limits on how often you can roll over between IRAs).

DIRECT ROLLOVER to a Plan. If you are employed by a new employer that
has an eligible employer plan, and you want a direct rollover to that plan, ask
the plan administrator of that plan whether it will accept your rollover. An
eligible employer plan is not legally required to accept a rollover. Even if
your new employer's plan does not accept a rollover, you can choose a DIRECT
ROLLOVER to a traditional IRA. If the employer plan accepts your rollover, the
plan may provide restrictions on the circumstances under which you may later
receive a distribution of the rollover amount or may require spousal consent to
any subsequent distribution. Check with the plan administrator of that plan
before making your decision.

DIRECT ROLLOVER of a Series of Payments. If you receive a payment that
can be rolled over to a traditional IRA or an eligible employer plan that will
accept it, and it is paid in a series of payments for less than 10 years, your
choice to make or not make a DIRECT ROLLOVER for a payment will apply to all
later payments in the series until you change your election. You are free to
change your election for any later payment in the series.

CHANGE IN TAX TREATMENT RESULTING FROM A DIRECT ROLLOVER. The tax
treatment of any payment from the eligible employer plan or traditional IRA
receiving your DIRECT ROLLOVER might be different than if you received your
benefit in a taxable distribution directly from the Plan. For example, if you
were born before January 1, 1936, you might be entitled to ten-year averaging or
capital gain treatment, as explained below. However, if you have your benefit
rolled over to a section 403(b) tax-sheltered annuity, a governmental 457 plan,
or a traditional IRA in a DIRECT ROLLOVER, your benefit will no longer be
eligible for that special treatment. See the sections below entitled "Additional
10% Tax if You Are under Age 59 1/2" and "Special Tax Treatment if You Were Born
before January 1, 1936."

III. PAYMENT PAID TO YOU

If your payment can be rolled over (see Part I above) and the payment
is made to you in cash, it is subject to 20% federal income tax withholding on
the taxable portion (state tax withholding may also apply). The payment is taxed
in the year you receive it unless, within 60 days, you roll it over to a
traditional IRA or an eligible employer plan that accepts rollovers. If you do
not roll it over, special tax rules may apply.

Income Tax Withholding:

MANDATORY WITHHOLDING. If any portion of your payment can be rolled
over under Part I above and you do not elect to make a DIRECT ROLLOVER, the Plan
is required by law to withhold 20% of the taxable amount. This amount is sent to
the IRS as federal income tax withholding. For example,

if you can roll over a taxable payment of $10,000, only $8,000 will be paid to
you because the Plan must withhold $2,000 as income tax. However, when you
prepare your income tax return for the year, unless you make a rollover within
60 days (see "Sixty-Day Rollover Option" below), you must report the full
$10,000 as a taxable payment from the Plan. You must report the $2,000 as tax
withheld, and it will be credited against any income tax you owe for the year.
There will be no income tax withholding if your payments for the year are less
than $200.

VOLUNTARY WITHHOLDING. If any portion of your payment is taxable but
cannot be rolled over under Part I above, the mandatory withholding rules
described above do not apply. In this case, you may elect not to have
withholding apply to that portion. If you do nothing, an amount will be taken
out of this portion of your payment for federal income tax withholding. To elect
out of withholding, ask the Plan Administrator for the election form and related
information.

SIXTY-DAY ROLLOVER OPTION. If you receive a payment that can be rolled
over under Part I above, you can still decide to roll over all or part of it to
a traditional IRA or to an eligible employer plan that accepts rollovers. If you
decide to roll over, you must contribute the amount of the payment you received
to a traditional IRA or eligible employer plan within 60 days after you receive
the payment. The portion of your payment that is rolled over will not be taxed
until you take it out of the traditional IRA or the eligible employer plan.

You can roll over up to 100% of your payment that can be rolled over
under Part I above, including an amount equal to the 20% of the taxable portion
that was withheld. If you choose to roll over 100%, you must find other money
within the 60-day period to contribute to the traditional IRA or the eligible
employer plan, to replace the 20% that was withheld. On the other hand, if you
roll over only the 80% of the taxable portion that you received, you will be
taxed on the 20% that was withheld.

EXAMPLE: The taxable portion of your payment that can be rolled over
under Part I above is $10,000, and you choose to have it paid to you. You will
receive $8,000, and $2,000 will be sent to the IRS as income tax withholding.
Within 60 days after receiving the $8,000, you may roll over the entire $10,000
to a traditional IRA or an eligible employer plan. To do this, you roll over the
$8,000 you received from the Plan, and you will have to find $2,000 from other
sources (your savings, a loan, etc.). In this case, the entire $10,000 is not
taxed until you take it out of the traditional IRA or an eligible employer plan.
If you roll over the entire $10,000, when you file your income tax return you
may get a refund of part or all of the $2,000 withheld.

If, on the other hand, you roll over only $8,000, the $2,000 you did
not roll over is taxed in the year it was withheld. When you file your income
tax return, you may get a refund of part of the $2,000 withheld. (However, any
refund is likely to be larger if you roll over the entire $10,000.)

ADDITIONAL 10% TAX IF YOU ARE UNDER AGE 59 1/2. If you receive a
payment before you reach age 59 1/2 and you do not roll it over, then, in
addition to the regular income tax, you may have to pay an extra tax equal to
10% of the taxable portion of the payment. The additional 10% tax generally does
not apply to (1) payments that are paid after you separate from service with
your employer during or after the year you reach age 55, (2) payments that are
paid because you retire due to disability, (3) payments that are paid as equal
(or almost equal) payments over your life or life expectancy (or your and your
beneficiary's lives or life expectancies), (4) dividends paid with respect to
stock by an employee stock ownership plan (ESOP) as described in Code section
404(k), (5) payments that are paid directly to the government to satisfy a
federal tax levy, (6) payments that are paid to an alternate payee under a
qualified

domestic relations order, or (7) payments that do not exceed the amount of your
deductible medical expenses. See IRS Form 5329 for more information on the
additional 10% tax.

SPECIAL TAX TREATMENT IF YOU WERE BORN BEFORE JANUARY 1, 1936. If you
receive a payment from a plan qualified under section 401(a) or a section 403(a)
annuity plan that can be rolled over under Part I and you do not roll it over to
a traditional IRA or an eligible employer plan, the payment will be taxed in the
year you receive it. However, if the payment qualifies as a "lump sum
distribution," it may be eligible for special tax treatment. (See also "Employer
Stock or Securities", below.) A lump sum distribution is a payment, within one
year, of your entire balance under the Plan (and certain other similar plans of
the employer) that is payable to you after you have reached age 59 1/2 or
because you have separated from service with your employer (or, in the case of a
self-employed individual, after you have reached age 59 1/2 or have become
disabled). For a payment to be treated as a lump sum distribution, you must have
been a participant in the Plan for at least five years before the year in which
you received the distribution. The special tax treatment for lump sum
distributions that may be available to you is described below.

TEN-YEAR AVERAGING. If you receive a lump sum distribution and you were
born before January 1, 1936, you can make a one-time election to figure the tax
on the payment by using "10-year averaging" (using 1986 tax rates). Ten-year
averaging often reduces the tax you owe.

There are other limits on the special tax treatment for lump sum
distributions. For example, you can generally elect this special tax treatment
only once in your lifetime, and the election applies to all lump sum
distributions that you receive in that same year. You may not elect this special
tax treatment if you rolled amounts into this Plan from a 403(b) tax-sheltered
annuity contract, a governmental 457 plan, or from an IRA not originally
attributable to a qualified employer plan. If you have previously rolled over a
distribution from this Plan (or certain other similar plans of the employer),
you cannot use this special averaging treatment for later payments from the
Plan. If you roll over your payment to a traditional IRA, governmental 457 plan,
or 403(b) tax-sheltered annuity, you will not be able to use special tax
treatment for later payments from that IRA, plan, or annuity. Also, if you roll
over only a portion of your payment to a traditional IRA, governmental 457 plan,
or 403(b) tax-sheltered annuity, this special tax treatment is not available for
the rest of the payment. See IRS Form 4972 for additional information on lump
sum distributions and how you elect the special tax treatment.

EMPLOYER STOCK OR SECURITIES. There is a special rule for a payment
from the Plan that includes employer stock (or other employer securities). To
use this special rule, 1) the payment must qualify as a lump sum distribution,
as described above, except that you do not need five years of plan
participation, or 2) the employer stock included in the payment must be
attributable to "after-tax" employee contributions, if any. Under this special
rule, you may have the option of not paying tax on the "net unrealized
appreciation" of the stock until you sell the stock. Net unrealized appreciation
generally is the increase in the value of the employer stock while it was held
by the Plan. For example, if employer stock was contributed to your Plan account
when the stock was worth $1,000 but the stock was worth $1,200 when you received
it, you would not have to pay tax on the $200 increase in value until you later
sold the stock.

You may instead elect not to have the special rule apply to the net
unrealized appreciation. In this case, your net unrealized appreciation will be
taxed in the year you receive the stock, unless you roll over the stock. The
stock can be rolled over to a traditional IRA or another eligible employer plan,
either in a direct rollover or a rollover that you make yourself. Generally, you
will no longer be able to use the

special rule for net unrealized appreciation if you roll the stock over to a
traditional IRA or another eligible employer plan.

If you receive only employer stock in a payment that can be rolled
over, no amount will be withheld from the payment. If you receive cash or
property other than employer stock, as well as employer stock, in a payment that
can be rolled over, the 20% withholding amount will be based on the entire
taxable amount paid to you (including the value of the employer stock determined
by excluding the net unrealized appreciation). However, the amount withheld will
be limited to the cash or property (excluding employer stock) paid to you.

If you receive employer stock in a payment that qualifies as a lump sum
distribution, the special tax treatment for lump sum distributions described
above (such as 10-year averaging) also may apply. See IRS Form 4972 for
additional information on these rules.

REPAYMENT OF PLAN LOANS. If your employment ends and you have an
outstanding loan from your Plan, your employer may reduce (or "offset") your
balance in the Plan by the amount of the loan you have not repaid. The amount of
your loan offset is treated as a distribution to you at the time of the offset
and will be taxed unless you roll over an amount equal to the amount of your
loan offset to another qualified employer plan or a traditional IRA within 60
days of the date of the offset. If the amount of your loan offset is the only
amount you receive or is treated as having received, no amount will be withheld
from it. If you receive other payments of cash or property from the Plan, the
20% withholding amount will be based on the entire amount paid to you, including
the amount of the loan offset. The amount withheld will be limited to the amount
of other cash or property paid to you (other than any employer securities). The
amount of a defaulted plan loan that is a taxable deemed distribution cannot be
rolled over.

IV. SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES

In general, the rules summarized above that apply to payments to
employees also apply to payments to surviving spouses of employees and to
spouses or former spouses who are "alternate payees." You are an alternate payee
if your interest in the Plan results from a "qualified domestic relations
order," which is an order issued by a court, usually in connection with a
divorce or legal separation.

If you are a surviving spouse or an alternate payee, you may choose to
have a payment that can be rolled over, as described in Part I above, paid in a
DIRECT ROLLOVER to a traditional IRA or to an eligible employer plan or paid to
you. If you have the payment paid to you, you can keep it or roll it over
yourself to a traditional IRA or to an eligible employer plan. Thus, you have
the same choices as the employee.

If you are a beneficiary other than a surviving spouse or an alternate
payee, you cannot choose a direct rollover, and you cannot roll over the payment
yourself.

If you are a surviving spouse, an alternate payee, or another
beneficiary, your payment is generally not subject to the additional 10% tax
described in Part III above, even if you are younger than age 59 1/2.

If you are a surviving spouse, an alternate payee, or another
beneficiary, you may be able to use the special tax treatment for lump sum
distributions and the special rule for payments that include employer stock, as
described in Part III above. If you receive a payment because of the employee's
death, you may be able to treat the payment as a lump sum distribution if the
employee met the appropriate age requirements, whether or not the employee had 5
years of participation in the Plan.

HOW TO OBTAIN ADDITIONAL INFORMATION

This notice summarizes only the federal (not state or local) tax rules
that might apply to your payment. The rules described above are complex and
contain many conditions and exceptions that are not included in this notice.
Therefore, you may want to consult with the Plan Administrator or a professional
tax advisor before you take a payment of your benefits from your Plan. Also, you
can find more specific information on the tax treatment of payments from
qualified employer plans in IRS Publication 575, Pension and Annuity Income, and
IRS Publication 590, Individual Retirement Arrangements. These publications are
available from your local IRS office, on the IRS's Internet Web Site at
www.irs.gov, or by calling 1-800-TAX-FORMS.

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

Legal Fees and Expenses............................... $125,000
Accounting Fees and Expenses.......................... 80,000
Appraisal Fees and Expenses........................... 47,500
Business Plan Fees and Expenses....................... 45,000
Underwriter's Fees and Expenses....................... 354,000
Nasdaq Listing Fees................................... 100,000
Records Management Agent Fees and Expenses............ 50,000
Transfer and Exchange Agent Fees...................... 17,000
Printing, Postage and Mailing Expenses................ 65,000
Stock Certificate Expenses............................ 4,000
OTS Filing Fees....................................... 6,400
NASD Filing Fee....................................... 4,000
SEC Filing Fee........................................ 1,100
--------
Total......................................... $899,000*
========

* Estimated, at adjusted maximum of offering range.

Item 14. Indemnification of Directors and Officers

Section 545.121 of the Office of Thrift Supervision (OTS) regulations
provides indemnification for directors and officers. Indemnification provisions
are contained in the charter and bylaws of the Registrant and are described
below.

(a) Any person against whom any action is brought or threatened
because that person is or was a director or officer of the
Registrant shall be indemnified by the Registrant for:

(i) Any amount for which that person becomes liable under a
judgment in such action; and

(ii) Reasonable costs and expenses, including reasonable
attorneys' fees, actually paid or incurred by that person in
defending or settling such action, or in enforcing his or
her rights under this section if he or she attains a
favorable judgment in such enforcement action.

(b) Indemnification shall be made to such person under paragraph (b)
of this Section only if:

(i) Final judgment on the merits is in his or her favor; or

(ii) In case of:

II-1

a. Settlement,

b. Final judgment against him or her, or

c. Final judgment in his or her favor, other than on the
merits, if a majority of the disinterested directors of
the Registrant determine that he or she was acting in
good faith within the scope of his or her employment or
authority as he or she could reasonably have perceived
it under the circumstances and for a purpose he or she
could reasonably have believed under the circumstances
was in the best interest of the Registrant. However, no
indemnification shall be made unless the Registrant
gives the Office at least 60 days notice of its
intention to make such indemnification. Such notice
shall state the facts on which the action arose, the
terms of any settlement, and any disposition of the
action by a court. Such notice, a copy thereof, and a
certified copy of the resolution containing the
required determination by the board of directors shall
be sent to the Regional Director, who shall promptly
acknowledge receipt thereof. The notice period shall
run from the date of such receipt. No such
indemnification shall be made if the OTS advises the
savings bank in writing, within such notice period, of
its objection thereto.

(i) "Action" means any judicial or administrative proceeding, or
threatened proceeding, whether civil, criminal, or
otherwise, including any appeal or other proceeding for
review;

(ii) "Court" includes, without limitation, any court to which or
in which any appeal or any proceeding for review is brought;

(iii) "Final Judgment" means a judgment, decree, or order which
is not appealable or as to which the period for appeal has
expired with no appeal taken;

(iv) "Settlement" includes the entry of a judgment by consent or
confession or a plea of guilty or of nolo contendere.

Item 15. Recent Sales of Unregistered Securities.

Not Applicable

II-2

Item 16. Exhibits and Financial Statement Schedules.

The exhibits and financial statement schedules filed as part of this
Registration Statement are as follows:

(a) Exhibits:

1 Form of Sales Agency Agreement with Sandler O'Neill & Partners, L.P.*
2 Plan of Stock Issuance
3.1 Charter of Gateway Community Financial Corp.
3.2 Bylaws of Gateway Community Financial Corp.
4 Specimen Stock Certificate of Gateway Community Financial Corp.
5 Opinion of Malizia Spidi & Fisch, PC regarding legality of securities registered
8.1 Federal Tax Opinion of Malizia Spidi & Fisch, PC
8.2 State Tax Opinion of S.R. Snodgrass, A.C.
10.1 Employment Agreement with Robert C. Ahrens
10.2 Employment Agreement with Bruce E. Haines
10.3 Employment Agreement with Timothy P. Hand
10.4 Executive Incentive Retirement Plan Agreement
10.5 Director Fee Continuation Agreement
23.1 Consent of S.R. Snodgrass, A.C.
23.2 Consent of Feldman Financial Advisors, Inc.
23.3 Consent of Malizia Spidi & Fisch, PC (contained in its opinions filed as Exhibits 5 and 8.1)
24 Power of Attorney (set forth on the signature page)
99.1 Letter of Feldman Financial Advisors, Inc. as to the value of subscription rights
99.2 Conversion Valuation Appraisal Report prepared by Feldman Financial Advisors, Inc.*
99.3 Marketing Materials*
99.4 Stock Order Form*

- --------------
* To be filed by amendment.

(b) Financial Statement Schedules:

No financial statement schedules are filed because the
required information is not applicable or is included in the
consolidated financial statements or the notes thereto.

II-3

Item 17. Undertakings

The undersigned registrant hereby undertakes:

(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 ("Securities Act");

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
and

(iii) Include any additional or changed material information
on the plan of distribution.

(2) For determining liability under the Securities Act, the undersigned
registrant shall treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at that
time to be the initial bona fide offering.

(3) The undersigned registrant shall file a post-effective amendment to
remove from registration any of the securities that remain unsold at the end of
the offering.

(4) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement, certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.

(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Sewell, New Jersey on
March 21, 2007.

GATEWAY COMMUNITY FINANCIAL CORP.

By: /s/Robert C. Ahrens
-------------------------------------
Robert C. Ahrens
President and Chief Executive Officer
Duly Authorized Representative)

We the undersigned directors and officers of Gateway Community
Financial Corp. do hereby severally constitute and appoint Robert C. Ahrens our
true and lawful attorney and agent, to do any and all things and acts in our
names in the capacities indicated below and to execute all instruments for us
and in our names in the capacities indicated below which he may deem necessary
or advisable to enable Gateway Community Financial Corp. to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission, in connection with the registration
statement on Form S-1 relating to the offering of Gateway Community Financial
Corp. common stock, including specifically but not limited to, power and
authority to sign for us or any of us, in our names in the capacities indicated
below, the registration statement and any and all amendments (including
post-effective amendments) thereto; and we hereby ratify and confirm all that he
shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on March 21, 2007.

/s/Robert C. Ahrens /s/John S. Gligor, Sr.
- ----------------------------------------------- ---------------------------
Robert C. Ahrens John S. Gligor, Sr.
President, Chief Executive Officer and Director Chairman of the Board
(Principal Executive Officer)

/s/Walter N. Friedrich /s/Robert A. Jones
- ----------------------------------------------- ---------------------------
Walter N. Friedrich Robert A. Jones
Vice Chairman of the Board Director

/s/Dennis L. King /s/Kristin T. McIlvaine
- ----------------------------------------------- ---------------------------
Dennis L. King Kristin T. McIlvaine
Director Director

/s/Scott P. Newman /s/Frank D. Wilson
- ----------------------------------------------- ---------------------------
Scott P. Newman Frank D. Wilson
Director Director

/s/Francis J. Walsh
- -----------------------------------------------
Francis J. Walsh
Chief Financial Officer
(Principal Financial and Accounting Officer)

You should rely only on the information contained in this document. We have not
authorized anyone to provide you with information that is different. This
document does not constitute an offer to sell, or the solicitation of an offer
to buy, any of the securities offered hereby to any person in any jurisdiction
in which the offer or solicitation would be unlawful. The affairs of Gateway
Community Financial Corp. and its subsidiaries may change after the date of this
prospectus. Delivery of this document and the sales of shares made hereunder
does not mean otherwise.

Gateway Community Financial Corp.
Holding Company for Gloucester County Federal Savings Bank

Up to __________ Shares of Common Stock
(Subject to Increase to Up to __________ Shares)

PROSPECTUS

Sandler O'Neill & Partners, L.P.

____________, 2007

Until the later of ______________ __, 2007, or 25 days after commencement of the
syndicated community offering, if any, whichever is later, all dealers effecting
transactions in these securities, whether or not participating in this offering,
may be required to deliver a prospectus. This is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.