Ocean Shore Holding Co. (NASDAQ: OSHC) today announced net income of $341,000, or $0.04 per basic and diluted share, for the quarter ended September 30, 2008, as compared to $811,000, or $0.10 per basic and diluted share, for the quarter ended September 30, 2007. The decline in net income was primarily due to a $1.3 million pre-tax, non-cash charge for other than temporary impairment (“OTTI”) of certain investment securities.

Net income for the nine months ended September 30, 2008 was $2,160,000, or $0.27 per share basic and diluted, as compared to $1,931,000, or $0.24 per share basic and $0.23 per share diluted, for the same period in 2007, and also reflect the impact of the OTTI charge.

Ocean Shore Holding Co. (the "Company") is the holding company for Ocean City Home Bank (the "Bank"), a federal savings bank headquartered in Ocean City, New Jersey. The Bank operates a total of nine full-service banking offices in eastern New Jersey.

“I am pleased to report continuing strong operating results,” said Steven E. Brady, President and CEO. “Net interest income after the provision for loan losses was up 27% in the third quarter and 24% year to date over last year. We have now had six consecutive quarters of growth in net interest income after the provision for loan losses. Asset quality remains excellent, with nonperforming assets at only 0.06%. Our only disappointment this quarter is the need to take an OTTI charge on certain investment securities. Our investment portfolio is less than 10% of our total assets and only two securities in our portfolio have had significant declines in value as a result of recent market conditions. These securities are backed primarily by trust preferred securities issued by other banks, not sub-prime mortgages or other so-called toxic securities. Current mark-to-market accounting rules – which have received much criticism in the current financial crisis – require us to write down the value of these securities even if we have the ability to hold them to maturity and expect to recover most, if not all, our investment.”

“We have followed the efforts of the U.S. Treasury very closely and support its efforts to help provide capital to the U.S. financial system through the Capital Purchase Program. However, after carefully evaluating the program, we have determined not to participate. Because our capital ratios are strong, we have concluded that if the Company is going to raise additional capital, it is in the best interests of our shareholders to accomplish that through a second step conversion, which we are currently pursuing.”

Total Assets and Deposits Grow

Total assets grew $66.2 million, or 10.5%, to $695.7 million at September 30, 2008 from December 31, 2007. Loans receivable, net, increased $51.0 million, or 9.7%, to $579.0 million on steady loan activity, and investment and mortgage-backed securities increased $6.9 million, or 11.8%, to $65.9 million. The increase in loans receivable was primarily due to growth in real estate loans of $54.2 million and consumer loans of $0.4 million, offset by a decline in construction loans of $2.7 million and commercial loans of $1.0 million.

Deposits grew $45.5 million, or 10.9%, to $460.7 million at September 30, 2008 from December 31, 2007. Total borrowings increased $19.0 million, or 13.2%, to $162.7 million. The proceeds from the additional borrowings were used to fund the growth in the loan portfolio, as loan growth outpaced deposit growth.

Asset Quality Remains Excellent

The Company’s asset quality continues to be excellent. Non-performing assets totaled only $406,000 at September 30, 2008. The Company experienced no charge-off activity in the nine months of 2008, compared to $5,000 in the same period last year. The allowance for loan losses remained essentially unchanged at 0.45% of total net loans at September 30, 2008 compared to 0.44% at December 31, 2007 and 0.46% of total net loans at September 30, 2007.

Net Interest Income Increases Over Prior Periods

Net interest income increased $1.1 million, or 28.8%, to $4.9 million for the third quarter of 2008 compared to $3.8 million in the third quarter of 2007. Net interest margin increased 39 basis points in the quarter ended September 30, 2008 to 3.15% from 2.76% for the quarter ended September 30, 2007. Interest income for the third quarter grew due to an increase in average interest-earning assets of $70.1 million, which added $844,000 in additional interest income. Offsetting the growth in interest-earning assets was a decrease in the average yield of 14 basis points to 5.88%. Interest expense for the third quarter decreased $246,000 due to a 49 basis point decrease in the average cost of interest-bearing liabilities to 3.15%, which was partially offset by an increase in average interest-bearing liabilities of $48.3 million. On a linked-quarter basis, net interest margin increased 15 basis points to 3.15% in the third quarter of 2008 from 3.00% for the second quarter of 2008.

Net interest income increased $2.7 million for the first nine months of 2008, or 24.6%, to $13.8 million compared to the same period in the prior year. Net interest margin increased 26 basis points to 3.02% from 2.76% due to a 34 basis points decrease in the cost of interest-bearing liabilities, offset by an 8 basis points decrease in the yield on interest-earning assets.

OTTI Charge

During the third quarter, the Company recorded an other-than-temporary impairment charge of $1.3 million to reduce the carrying amount of its investment in a pooled trust preferred security to $700,000 at September 30, 2008. This security is held in the Company’s available for sale portfolio. Prior to recording this charge, the unrealized loss had been reflected as a reduction to stockholders’ equity through other comprehensive income. Therefore, recording this charge has no effect on stockholders’ equity. The decision to record this non-cash other-than-temporary impairment charge was due to the significant decline in the market value of this security, which resulted from a sharp decline in trading activity, and information that there is the possibility of a temporary suspension or reduction of distributions by the pool.

Other Income and Expenses

Other income increased $53,000, or 7.8%, in the third quarter and $110,000, or 5.7%, year to date over the same periods last year primarily as a result of increases in service charges and fees. Other expenses increased $357,000, or 11.3%, in the third quarter and $606,000, or 6.2%, year to date over the same periods last year primarily as a result of increases in employee compensation expenses and occupancy expenses.

This press release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services and other factors that may be described in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

Ocean Shore Holding Co.
Steven E. Brady, President and CEO
or
Donald F. Morgenweck, CFO
609-399-0012