UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-Q
(Mark One)

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

For the quarterly period ended June 30, 1999
                               -------------

                                       OR

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

For the transition period from                               to


                         Commission File Number 0-29770


                            WEST ESSEX BANCORP, INC.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


              UNITED STATES                                      22-3597632
--------------------------------------------------------------------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                            Identification Number)


417 Bloomfield Avenue, Caldwell, New Jersey                         07006
--------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code             973-226-7911
                                                               -------------

      Indicate  by check X whether  the  registrant  (1) has  filed all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. (1) Yes  [ X  ]   No    [  ]
                                          (2) Yes  [ X  ]   No    [  ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

    4,197,233  shares  of  common  stock,  par  value  $0.01  par  share,   were
outstanding as of July 31, 1999.
<PAGE>
                            WEST ESSEX BANCORP, INC.

                                    FORM 10-Q

                       For the Quarter Ended June 30, 1999


                                      INDEX


                                                                           Page
PART I             FINANCIAL INFORMATION                                  Number


         Item 1.  Financial Statements                                         1

               Consolidated  Statements  of Financial  Condition at June
               30, 1999 and December 31, 1998 (Unaudited)
                                                                               2

               Consolidated  Statements  of Income for the Three and Six
               Months Ended June 30, 1999 and 1998 (Unaudited)                 3


               Consolidated  Statements of Comprehensive  Income for the
               Three  and Six  Months  Ended  June  30,  1999  and  1998
               (Unaudited)                                                     4


               Consolidated  Statements  of Cash Flows for the Three and
               Six Months Ended June 30, 1999 and 1998 (Unaudited)           5-6


               Notes to Consolidated Financial Statements                    7-8

         Item 2.  Management's Discussion and Analysis of
                   Financial Condition and Results of Operations            9-20

         Item 3.  Quantitative and Qualitative Disclosure About Market Risk   20

PART II            OTHER INFORMATION


         Item 1.  Legal Proceedings                                           21

         Item 2.  Changes in Securities and Use of Proceeds                   21

         Item 3.  Defaults Upon Senior Securities                             21

         Item 4.  Submission of Matters to a Vote of Security Holders         21

         Item 5.  Other Information                                           21

         Item 6.  Exhibits and Reports on Form 8-K                            21

SIGNATURES                                                                    22
<PAGE>
                            WEST ESSEX BANCORP, INC.
                          PART I. FINANCIAL INFORMATION
                                  June 30, 1999
                   -------------------------------------------


ITEM 1.  FINANCIAL STATEMENTS
         --------------------

Certain information and footnote  disclosures  required under generally accepted
accounting  principles  have  been  condensed  or  omitted  from  the  following
consolidated  financial  statements pursuant to the rules and regulations of the
Securities and Exchange Commission.  West Essex Bancorp,  Inc. (the "Registrant"
or the "Company") believes that the disclosures presented are adequate to assure
that the information  presented is not misleading in any material respect. It is
suggested  that  the  following  consolidated  financial  statements  be read in
conjunction  with the  year-end  consolidated  financial  statements  and  notes
thereto  included in the  Registrant's  Annual  Report on Form 10-K for the year
ended December 31, 1998.

The results of  operations  for the three and six month  periods  ended June 30,
1999,  are not  necessarily  indicative  of the results to be  expected  for the
entire fiscal year.
<PAGE>
<TABLE>
<CAPTION>
                             WEST ESSEX BANCORP, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                            (unaudited)
                                                                     June 30,         December 31,
                                                                      1999                1998
                                                                 -------------      -------------
<S>                                                              <C>                <C>
Assets
Cash and amounts due from depository institutions ..........     $   1,678,439      $   1,547,464
Interest-bearing deposits in other banks ...................         5,401,652         14,823,967
                                                                 -------------      -------------

      Total cash and cash equivalents ......................         7,080,091         16,371,431

Securities available for sale ..............................         3,000,940          8,282,450
Investment securities held to maturity .....................        43,348,966         36,873,165
Mortgage-backed securities held to maturity ................       125,367,113        110,376,072
Loans receivable ...........................................       150,707,549        140,272,203
Real estate owned ..........................................           774,201            582,138
Premises and equipment .....................................         2,839,941          2,947,374
Federal Home Loan Bank of New York stock ...................         3,179,000          2,607,300
Accrued interest receivable ................................         2,097,492          2,004,809
Excess of cost over assets acquired ........................         4,939,732          5,236,116
Other assets ...............................................         3,233,345          3,055,825
                                                                 -------------      -------------

      Total assets .........................................     $ 346,568,370      $ 328,608,883
                                                                 =============      =============

Liabilities and Stockholders' Equity

Liabilities

Deposits ...................................................     $ 235,944,350      $ 238,312,941
Borrowed money .............................................        61,009,699         42,009,880
Advance payments by borrowers for taxes and insurance ......         1,034,195            921,958
Other liabilities ..........................................           738,715            610,050
                                                                 -------------      -------------

      Total liabilities ....................................       298,726,959        281,854,829
                                                                 -------------      -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                             WEST ESSEX BANCORP, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                            (unaudited)
                                            (continued)

                                                                     June 30,        December 31,
                                                                      1999               1998
                                                                 -------------      -------------
<S>                                                              <C>                <C>
Stockholders' Equity

Preferred stock (par value $.01), 1,000,000 shares
  authorized; no shares issued or outstanding ..............              --                 --
Common stock (par value $.01), 9,000,000 shares
  authorized; 4,197,233 shares issued and outstanding ......            41,972             41,972
Additional paid-in capital .................................        17,322,701         17,339,291
Retained earnings - substantially restricted ...............        31,727,588         30,507,475
Common stock acquired by Employee Stock Ownership
  Plan ("ESOP") ............................................        (1,252,553)        (1,326,233)
Accumulated other comprehensive income - Unrealized
  gain on securities available for sale, net of income taxes             1,703            191,549
                                                                 -------------      -------------

      Total stockholders' equity ...........................        47,841,411         46,754,054
                                                                 -------------      -------------

      Total liabilities and stockholders' equity ...........     $ 346,568,370      $ 328,608,883
                                                                 =============      =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                              WEST ESSEX BANCORP, INC. AND SUBSIDIARIES
                                                  CONSOLIDATED STATEMENTS OF INCOME
                                    ------------------------------------------------------------
                                                             (unaudited)

                                                                      Three Months Ended June 30,        Six Months Ended June 30,
                                                                      ----------------------------     -----------------------------
                                                                           1999             1998            1999            1998
                                                                      ------------    ------------     ------------    ------------
<S>                                                                   <C>             <C>              <C>             <C>
Interest income:
     Loans .......................................................    $  2,703,672    $  2,453,770     $  5,514,759    $  4,752,182
     Mortgage-backed securities ..................................       2,016,636       2,045,050        3,800,926       4,162,976
     Investment securities .......................................         833,127         632,570        1,604,722       1,234,720
     Other interest-earning assets ...............................         157,227         210,884          349,586         307,809
                                                                      ------------    ------------     ------------    ------------

             Total interest income ...............................       5,710,662       5,342,274       11,269,993      10,457,687
                                                                      ------------    ------------     ------------    ------------

Interest expense:
     Deposits ....................................................       2,152,753       2,433,730        4,324,253       4,867,077
     Borrowed money ..............................................         851,409         683,632        1,504,752       1,120,260
                                                                      ------------    ------------     ------------    ------------

             Total interest expense ..............................       3,004,162       3,117,362        5,829,005       5,987,337
                                                                      ------------    ------------     ------------    ------------

Net interest income ..............................................       2,706,500       2,224,912        5,440,988       4,470,350
Provision for (recapture of) loan losses .........................            --           (18,580)            --           (40,630)
                                                                      ------------    ------------     ------------    ------------
Net interest income after provision for (recapture of) loan losses       2,706,500       2,243,492        5,440,988       4,510,980
                                                                      ------------    ------------     ------------    ------------

Non-interest income:
     Fees and service charges ....................................          91,131          83,807          184,756         177,969
     Gain on sale of securities available for sale ...............          34,515            --             34,515            --
     Other .......................................................          48,022          36,909          111,171          82,658
                                                                      ------------    ------------     ------------    ------------

             Total non-interest income ...........................         173,668         120,716          330,442         260,627
                                                                      ------------    ------------     ------------    ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                              WEST ESSEX BANCORP, INC. AND SUBSIDIARIES
                                                  CONSOLIDATED STATEMENTS OF INCOME
                                    ------------------------------------------------------------
                                                             (unaudited)
                                                             (continued)

                                                                      Three Months Ended June 30,        Six Months Ended June 30,
                                                                      ----------------------------     -----------------------------
                                                                           1999             1998            1999            1998
                                                                      ------------    ------------     ------------    ------------
<S>                                                                   <C>             <C>              <C>             <C>

Non-interest expenses:
     Salaries and employee benefits ..............................         768,550         749,572        1,590,295       1,516,703
     Net occupancy expense of premises ...........................          77,888          80,497          180,551         166,075
     Equipment ...................................................         159,479         165,352          328,023         327,978
     Loss on real estate owned ...................................          10,899          24,500           18,655          48,248
     Amortization of intangibles .................................         148,192         148,192          296,384         296,384
     Other .......................................................         572,404         456,587        1,039,460         906,011
                                                                      ------------    ------------     ------------    ------------

             Total non-interest expenses .........................       1,737,412       1,624,700        3,453,368       3,261,399
                                                                      ------------    ------------     ------------    ------------

Income before income taxes .......................................       1,142,756         739,508        2,318,062       1,510,208
Income taxes .....................................................         409,063         257,866          832,790         517,425
                                                                      ------------    ------------     ------------    ------------

Net income .......................................................    $    733,693    $    481,642     $  1,485,272    $    992,783
                                                                      ============    ============     ============    ============

Net income per common share - basic and diluted ..................    $       0.18         N/A (1)     $       0.37         N/A (1)
                                                                      ============    ============     ============    ============
Weighted average number of common shares
  outstanding - basic and diluted ................................       4,069,783         N/A (1)        4,067,936         N/A (1)
                                                                      ============    ============     ============    ============
</TABLE>

(1) West Essex Bank converted to stock form on October 2, 1998.


See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                  WEST ESSEX BANCORP, INC. AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                 (unaudited)

                                                                                 Three Months Ended June 30,
                                                                                ----------------------------
                                                                                     1999            1998
                                                                                 -----------     -----------
<S>                                                                              <C>             <C>
Net income ..................................................................    $   733,693     $   481,642
                                                                                 -----------     -----------
Other comprehensive income -
          Unrealized holding (losses) gains on securities available for sale,
              net of income taxes of $54,915 and $(11,694) respectively .....        (97,711)         20,806

          Reclassification adjustment for realized gains on securities
              available for sale, net of income taxes of $12,418 in 1999 ....        (22,096)           --
                                                                                 -----------     -----------

Total other comprehensive income ............................................       (119,807)         20,806
                                                                                 -----------     -----------

Comprehensive income ........................................................    $   613,886     $   502,448
                                                                                 ===========     ===========
<CAPTION>

                                                                                   Six Months Ended June 30,
                                                                                  ---------------------------
                                                                                      1999            1998
                                                                                  -----------     -----------
<S>                                                                              <C>             <C>
Net income ..................................................................     $ 1,485,272     $   992,783
                                                                                  -----------     -----------
Other comprehensive income -
          Unrealized holding (losses) gains on securities available for sale,
              net of income taxes of $ $94,278 and $(20,263), respectively ..        (167,750)         36,052


          Reclassification adjustment for realized gains on securities
              available for sale, net of income taxes of $12,418 in 1999 ....         (22,096)           --
                                                                                  -----------     -----------

Total other comprehensive income ............................................        (189,846)         36,052
                                                                                  -----------     -----------

Comprehensive income ........................................................     $ 1,295,426     $ 1,028,835
                                                                                  ===========     ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>

                                        WEST ESSEX BANCORP, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                             --------------------------------------------------------------
                                                       (unaudited)
                                                                                           Six Months Ended June 30,
                                                                                       -------------------------------
                                                                                            1999              1998
                                                                                       -------------     -------------
<S>                                                                                    <C>               <C>
Cash flows from operating activities:
      Net income .................................................................     $  1,485,272      $    992,783
      Adjustments to reconcile net income
       to net cash provided by operating activities:
          Depreciation and amortization of premises and equipment ................          119,116           145,588
          Net accretion of premiums, discounts and deferred loan fees ............          (64,228)         (141,237)
          Amortization of intangibles ............................................          296,384           296,384
          Recovery of loan losses ................................................             --             (40,630)
          Provision for losses on real estate owned ..............................             --              40,630
          (Gain) on sale of securities available for sale ........................          (34,515)             --
          (Gain) on sale of real estate owned ....................................             --              (5,386)
          (Increase) in accrued interest receivable ..............................          (92,683)         (101,845)
          (Increase) in other assets .............................................          (70,824)         (411,961)
          Increase in interest payable ...........................................           24,503            60,417
          Increase in other liabilities ..........................................          101,221            14,999
          ESOP shares committed to be released ...................................           68,998              --
                                                                                       ------------      ------------

               Net cash provided by operating activities .........................        1,833,244           849,742
                                                                                       ------------      ------------

Cash flows from investing activities:
      Proceeds from maturities of term deposits ..................................             --           2,000,000
      Purchase of term deposits ..................................................             --          (5,000,000)
      Proceeds from sales of seurities available for sale ........................        5,021,875              --
      Purchase of securities available for sale ..................................             --          (1,000,000)
      Proceeds from maturities and calls of investment securities held to maturity       13,000,000         3,000,000
      Purchases of investment securities held to maturity ........................      (19,344,969)      (12,622,629)
      Principal repayments on mortgage-backed securities held to maturity ........       21,194,105        16,682,350
      Purchases of mortgage-backed securities held to maturity ...................      (36,245,370)       (9,111,005)
      Purchase of loans receivable ...............................................         (831,426)          (61,000)
      Net (increase) in loans receivable .........................................       (9,804,755)      (19,111,446)
      Proceeds from sales of real estate owned ...................................             --             503,458
      Proceeds from other payments received on real estate owned .................             --               4,000
      Additions to premises and equipment ........................................          (11,683)          (64,778)
      Purchase of Federal Home Loan Bank of New York stock .......................         (571,700)         (423,500)
                                                                                       ------------      ------------

               Net cash (used in) investing activities ...........................      (27,593,923)      (25,204,550)
                                                                                       ------------      ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                        WEST ESSEX BANCORP, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                             --------------------------------------------------------------
                                                       (unaudited)
                                                       (continued)
                                                                                           Six Months Ended June 30,
                                                                                       -------------------------------
                                                                                            1999              1998
                                                                                       -------------     -------------
<S>                                                                                    <C>               <C>
Cash flows from financing activities:
      Net (decrease) increase in deposits ........................................       (2,365,650)        1,310,113
      Net change in short-term borrowed money ....................................        9,000,000       (10,600,000)
      Proceeds of long-term borrowed money .......................................       15,000,000        35,000,000
      Repayment of long-term borrowed money ......................................       (5,000,181)       (4,658,778)
      Net increase in advance payments by borrowers for taxes and insurance ......          112,237           140,477
      Cash dividends paid ........................................................         (277,067)             --
                                                                                       ------------      ------------

               Net cash provided by financing activities .........................       16,469,339        21,191,812
                                                                                       ------------      ------------

Net (decrease) in cash and cash equivalents ......................................       (9,291,340)       (3,162,996)
Cash and cash equivalents - beginning ............................................       16,371,431         8,696,118
                                                                                       ------------      ------------

Cash and cash equivalents - ending ...............................................     $  7,080,091      $  5,533,122
                                                                                       ============      ============

Supplemental disclosure of cash flow information:
   Cash paid during the year for:
      Income taxes ...............................................................     $    773,400      $    385,030
                                                                                       ============      ============

      Interest ...................................................................     $  5,804,502      $  5,926,920
                                                                                       ============      ============

Supplemental schedule of noncash investing activities:
      Unrealized (loss) gain on securities
           available or sale, net of income taxes ................................     $   (189,846)     $     36,052
                                                                                       ============      ============

      Loans receivable transferred to real estate owned ..........................     $    192,063      $         --
                                                                                      =============      ============

</TABLE>

See notes to consolidated financial statements.
<PAGE>
                    WEST ESSEX BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   PRINCIPLES OF CONSOLIDATION
--------------------------------

The  consolidated  financial  statements  include  the  accounts  of West  Essex
Bancorp, Inc. (the "Company"), the Company's wholly owned subsidiary, West Essex
Bank (the "Bank") and the Bank's wholly owned  subsidiary,  West Essex Insurance
Agency,  Inc. The Company's business is conducted  principally through the Bank.
All significant  intercompany  accounts and transactions have been eliminated in
consolidation.


2.   BASIS OF PRESENTATION
--------------------------

The accompanying  unaudited  consolidated  financial statements were prepared in
accordance  with  instructions  for  Form  10-Q and  regulations  S-X and do not
include  information  or  footnotes  necessary  for a complete  presentation  of
financial  condition,  results of operations,  and cash flows in conformity with
generally accepted accounting principles. However, in the opinion of management,
all adjustments  (consisting of normal  recurring  adjustments)  necessary for a
fair presentation of the consolidated  financial  statements have been included.
The results of  operations  for the three and six months ended June 30, 1999 are
not  necessarily  indicative of the results which may be expected for the entire
fiscal year.


3.   REORGANIZATION TO MUTUAL HOLDING COMPANY FORM OF ORGANIZATION
------------------------------------------------------------------

The Company is a business  corporation formed at the direction of the Bank under
the laws of the United  States on October 2, 1998.  On October 2, 1998:  (i) the
Bank reorganized  from a federally  chartered mutual savings bank to a federally
chartered stock savings bank in the mutual holding company form of organization;
(ii) the Bank issued all of its  outstanding  capital stock to the Company;  and
(iii) the Company  consummated its initial public offering of common stock,  par
value $.01 per share (the "Common  Stock"),  by selling at a price of $10.00 per
share,  1,772,898 shares of common stock to certain eligible  accountholders  of
the Bank who had subscribed for such shares and by issuing  2,350,121  shares of
Common Stock to West Essex Bancorp,  M.H.C.,  a mutual holding company formed at
the direction of the Bank (collectively,  the "Reorganization and Offering") and
by contributing  74,214 shares of Common stock to West Essex Bancorp  Charitable
Foundation (the  "Foundation").  The Reorganizaiton and Offering resulted in net
proceeds of $16.7 million,  after expenses of $1.0 million. Net proceeds of $8.4
million  were  invested in the Bank to increase the Bank's  tangible  capital to
10.0% of the Bank's total  adjusted  assets.  The Company also  established  the
Foundation,  dedicated to the communities served by the Bank. In connection with
the Reorganization and Offering,  the Common Stock contributed by the Company to
the Foundation, at a value of $742,140, was charged to expense.

In addition to the  9,000,000  authorized  shares of Common  Stock,  the Company
authorized  1,000,000  shares of  preferred  stock with a par value of $0.01 per
share (the "Preferred Stock"). The Board of Directors is authorized,  subject to
any  limitations  by law, to provide for the issuance of the shares of Preferred
Stock in  series,  to  establish  from  time to time the  number of shares to be
included in each such series, and to fix the designation,  powers,  preferences,
and rights of the shares of each such series and any qualifications, limitations
or restriction  thereof.  As of June 30, 1999, there were no shares of Preferred
Stock issued.
<PAGE>
                    WEST ESSEX BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.   CAPITAL TRANSACTIONS
-------------------------

On April 21, 1999, the Company's  shareholders  approved the West Essex Bancorp,
Inc. 1999 Stock-Based Incentive Plan (the "Plan").  Under the Plan, up to 73,884
shares of Company  common  stock may be  awarded,  and options to purchase up to
184,711  shares  of  Company  common  stock may be  granted,  to  employees  and
directors of the Company. Pursuant to the Plan, on April 30, 1999, 65,756 shares
of Company stock were awarded  (47,286  shares to employees and 18,470 shares to
directors) and options to purchase  176,048 shares (129,193 options to employees
and 46,855  options to directors)  at an exercise  price of $9.50 per share (the
market value of a share of Company common stock at the grant date) were granted.

5.  NET INCOME PER COMMON SHARE
-------------------------------

Basic net income per common  share is  calculated  by dividing net income by the
weighted average number of shares of common stock outstanding,  adjusted for the
unallocated  portion of shares held by the ESOP in accordance  with the American
Institute of Certified Public  Accountants'  Statement of Position 93-6. Diluted
net income per share is calculated by adjusting the weighted  average  number of
shares of common stock  outstanding  to include the effect of  potential  common
shares, if dilutive,  using the treasury stock method.  During the three and six
months  ended  June  30,  1999,   potentially   dilutive  securities   including
outstanding  stock  options and  unearned  stock  awards,  neither of which were
dilutive during such periods.
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         -----------------------------------------------------------
         AND RESULTS OF OPERATIONS
         -------------------------

Forward-Looking Statements

         This report  contains  certain  forward-looking  statements  within the
meaning  of  Section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"),  and Section 21F of the Securities  Exchange Act of 1934, as
amended (the "Exchange Act"). West Essex Bancorp,  Inc. (the "Company")  intends
such forward-looking  statements to be covered by the safe harbor provisions for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for  purposes  of these  safe  harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and describe  future plans,  strategies  and  expectations  of the Company,  are
generally  identified  by  use  of  the  words  "believe,"  "expect,"  "intend,"
"anticipate,"  "estimate,"  "project,"  or similar  expressions.  The  Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain.  Factors which could have a material adverse effect on the
operations of the Company and its subsidiaries  include, but are not limited to,
changes in interest rates, general economic  conditions,  legislative/regulatory
changes, monetary and fiscal polices of the U.S. Government,  including policies
of the U.S.  Treasury and the Federal Reserve Board,  the quality or composition
of the loan or investment portfolios,  demand for loan products,  deposit flows,
competition,  demand for  financial  services in the  Company's  market area and
accounting  principles and guidelines.  These risks and uncertainties  should be
considered in evaluating  forward-looking  statements and undue reliance  should
not be placed on such statements. Further information concerning the Company and
its business,  including  additional  factors that could  materially  affect the
Company's  financial  results,  is included in the  Company's  filings  with the
Securities and Exchange Commission (the "SEC").

         The  Company  does  not  undertake  - and  specifically  disclaims  any
obligation - to publicly  release the results of any revisions which may be made
to any  forward-looking  statements to reflect events or circumstances after the
date  of  such  statements  or to  reflect  the  occurrence  of  anticipated  or
unanticipated events.

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

General

         The Company became the federally  chartered  stock holding  company for
West Essex Bank (the  "Bank"),  a  federally  chartered  stock  savings  bank on
October 2, 1998. The Company, the Bank and West Essex Bancorp,  M.H.C., a mutual
holding  company and majority owner of the Company,  are regulated by the Office
of Thrift  Supervision  (the "OTS").  The  Company's  and the Bank's  results of
operations  are  dependent  primarily  on  net  interest  income,  which  is the
difference between the income earned on interest-earning  assets,  primarily the
loan and investment  portfolios,  and the cost of funds,  consisting of interest
paid on deposits and borrowings.  Results of operations are also affected by the
provision  for  loan  losses  and  non-interest  expense.  Non-interest  expense
principally  consists of salaries and employee  benefits,  office  occupancy and
equipment  expense,  amortization of intangibles,  advertising,  federal deposit
insurance premiums, expenses of real estate owned and other expenses. Results of
operations are also  significantly  affected by general economic and competitive
conditions,  particularly  changes in interest  rates,  government  policies and
actions of regulatory authorities.
<PAGE>
Management Strategy

         The Company's current  strategic plan is to maintain  profitability and
its  well-capitalized  position to take advantage of future  expansion or growth
opportunities,  while managing growth,  maintaining  asset quality,  controlling
expenses and  reducing  exposure to credit and  interest  rate risk.  Management
seeks to accomplish  these goals by: (1) emphasizing its retail banking services
through  its  network of branch  offices,  which  includes  the  origination  of
one-to-four  family  mortgage  loans,  as well as commercial  real estate,  home
equity,  multi-family,  construction  and development and consumer loans, in the
communities it serves as market conditions  permit;  (2) enhancing  earnings and
offsetting the effects of the extreme  competition  for real estate loans in the
Bank's   market  area   primarily   through  the  purchase  of   adjustable-rate
mortgage-backed securities, which provide a source of liquidity, low credit risk
and low administrative cost as well as helping to manage interest rate risk; and
(3) continuing to monitor interest rate risk. Management has aggressively sought
to increase loan  originations  in recent years and was successful in increasing
loans  receivable,  net,  from $82.1  million  at  December  31,  1996 to $112.7
million,  $140.3 million and $150.7  million at December 31, 1997,  December 31,
1998 and June 30, 1999,  respectively.  Management  was successful in increasing
its loan originations primarily by increasing the amount of advertising the Bank
does in its primary market area,  paying fees to mortgage  brokers who send loan
applicants  to the Bank to whom the Bank  originates  loans and  providing  cash
incentives  to its mortgage  origination  staff to increase  loan  originations.
Competition,  however, has remained intense in the Bank's market area, which has
resulted in the Company's  total  securities  portfolio  representing  a greater
percentage  of total  assets  than its loan  portfolio  in each of the last five
years.  Management  believes that continuing to seek lending  opportunities,  as
well as  investing  in  mortgage-backed  securities,  the  majority of which are
adjustable-rate,  enables the Company to  effectively  control its interest rate
risk while at the same time  enabling it to maintain a balance of high  quality,
diversified  investments,  provide collateral for short and long-term borrowings
and lessen exposure to credit risk.

Management of Interest Rate Risk and Market Risk Analysis

         The  principal  objectives  of  interest  rate  risk  management  is to
evaluate the interest  rate risk  included in certain  balance  sheet  accounts;
determine the level of risk appropriate given the Company's  business  strategy,
operating  environment,  capital  and  liquidity  requirements  and  performance
objectives; and manage the risk consistent with the Board of Directors' approved
guidelines.   Through  such   management,   the  Company  seeks  to  reduce  the
vulnerability  of its  operations  to changes in  interest  rates.  The Board of
Directors has established an Asset/Liability Committee, which is responsible for
reviewing   asset/liability  policies  and  interest  rate  risk  position.  The
Asset/Liability  Committee meets at least on a quarterly  basis,  reports trends
and interest  rate risk  position to the Board of Directors and reviews with the
Board its  activities  and  strategies,  the effect of those  strategies  on net
interest margin,  the market value of the portfolio,  and the effect the changes
in interest rates will have on the portfolio and exposure limits.  The extent of
the  movement of  interest  rates is an  uncertainty  that could have a negative
impact on the earnings of the Company.

         In recent years the Company has used the following strategies to manage
interest rate risk: (i) emphasizing the origination of long-term mortgage loans,
and  (ii)  offsetting  the  effects  of  holding  fixed-rate  mortgage  loans by
purchasing adjustable-rate mortgage-backed securities.
<PAGE>
         The Bank continues to seek opportunities to originate for its portfolio
one-to-four  family  residential  mortgage loans, as well as other loans, in its
primary market area of Essex, Morris and Bergen Counties,  New Jersey. The total
loan  portfolio had decreased as a percent of the total assets from 1993 through
1996 when loan originations,  primarily due to intense competition in the Bank's
market  area  for loan  originations,  began to  decrease.  Further,  due to the
relatively low interest rate  environment  that has existed in recent years, the
Bank has originated primarily fixed-rate  one-to-four family mortgage loans. The
purchase of adjustable-rate  mortgage-backed securities, as well as various debt
obligations of federal, state and local governments,  has enabled the Company to
effectively  manage its interest  rate risk.  At June 30, 1999,  the Company had
$125.4 million or 36.2% of total assets in mortgage-backed securities classified
as  held-to-maturity,  and $46.3  million or 13.4% of total assets in investment
securities,  of which $3.0  million or 0.9% of total assets were  classified  as
available-for-sale.  At the same date, loans  receivable,  net,  totalled $150.7
million or 43.5% of total assets.


Comparison of Financial Condition at June 30, 1999 and December 31, 1998

         Total assets were $346.6  million at June 30, 1999,  compared to $328.6
million at  December  31,  1998,  an  increase of $18.0  million,  or 5.5%.  The
increase in assets was funded primarily by an increase in Federal Home Loan Bank
of New York ("FHLB") borrowings of $19.0 million.

         Cash and cash equivalents, primarily interest-bearing deposits with the
FHLB, decreased $9.3 million to $7.1 million at June 30, 1999 from $16.4 million
at December 31, 1998. The decrease in cash and cash equivalents was used to fund
additional investments in securities.

         In the aggregate, mortgage-backed securities and investment securities,
including  available-for-sale  and  held to  maturity  issues,  totalled  $171.2
million at June 30, 1999, an increase of $15.7  million,  or 10.1%,  from $155.5
million at December 31,  1998.  Such  increase was funded by the  aforementioned
$9.3 million decrease in cash and cash equivalents and $19.0 million increase in
borrowed money.  Mortgage-backed  securities, all of which are held to maturity,
increased  $15.0  million  due to  purchases  exceeding  repayments.  Investment
securities held to maturity  increased $6.5 million,  primarily due to purchases
exceeding  maturities.  Securities  available for sale decreased by $5.3 million
primarily due to a $5.0 million sale.

         Loans  receivable  increased by $10.4 million to $150.7 million at June
30, 1999 from $140.3 million at December 31, 1998 due primarily to  originations
exceeding  repayments.  The  increase in loans was funded by the  aforementioned
increase in FHLB borrowings.

         Deposits  totalled  $235.9 million at June 30, 1999, a decrease of $2.4
million or 1.0%, from the $238.3 million balance at December 31, 1998.

         Borrowed  money  increased  $19.0  million to $61.0 million at June 30,
1999, as compared to $42.0 million at December 31, 1998. Based on the lower cost
of  wholesale  funds  as  compared  to  comparable   maturity  retail  deposits,
management  chose to fund the asset growth  discussed above with additional FHLB
borrowings.  During  the six  months  ended  June 30,  1999,  $15.0  million  in
borrowings  with five to ten year  maturities  and an average  interest  rate of
5.54% were incurred.

         Stockholders' equity increased $1.1 million, or 2.3%, to $47.8 million,
primarily due to the retention of net income.
<PAGE>
Comparison  of  Operating  Results for the Three  Months Ended June 30, 1999 and
1998

         Net Income.  Net income increased $252,000 or 52.3% to $734,000 for the
three  months  ended June 30,  1999  compared  with  $482,000  for the same 1998
period.  The increase in net income  during the 1999 period  resulted  primarily
from a $482,000  increase in net interest income,  which was partially offset by
increases in  non-interest  expenses and income taxes of $113,000 and  $151,000,
respectively.

         Interest Income.  Total interest income  increased  $368,000 or 6.9% to
$5.7  million for the three months ended June 30, 1999 from $5.3 million for the
same 1998  period.  The increase  was the result of a $30.6  million,  or 10.1%,
increase in average interest-earning assets between the periods, which more than
offset a 20 basis point  decline in yield.  The increase in the average  balance
was the result of loan  originations  and securities  purchased  during the past
twelve months funded by the net proceeds of the Company's  initial  public stock
offering and increased  borrowed money.  The decrease in yield was the result of
lower rates obtained on loans originated and securities purchased since June 30,
1998.

         Interest income on loans increased by $250,000 or 10.2% to $2.7 million
during the three months ended June 30, 1999 when  compared with $2.5 million for
the same 1998  period.  The  increase  during the 1999 period  resulted  from an
increase  of  $21.2  million,   or  16.8%,  in  the  average  balance  of  loans
outstanding,  which was  sufficient to offset a 44 basis point decrease to 7.34%
in the yield earned on the loan portfolio. The increased average balance was the
result of strong  lending  volume.  The  decreased  yield is the result of lower
rates obtained on originations as well as downward  interest rate adjustments on
the Bank's adjustable-rate mortgage loans.

         Interest   on   mortgage-backed    securities,   all   of   which   are
held-to-maturity,  decreased  $28,000 or 1.4%, to $2.02 million during the three
months ended June 30, 1999 when  compared  with $2.05  million for the same 1998
period.  The decrease  during the 1999 period  resulted  from a decrease of $1.4
million,  or 1.1%, in the average  balance of  mortgage-backed  securities and 2
basis points, to 6.58%, in yield. The decreased average balance is the result of
repayments of mortgage-backed securities exceeding purchases.

         Interest    earned   on   investment    securities,    including   both
available-for-sale and held-to-maturity issues, increased by $200,000, or 31.6%,
to  $833,000  during the three  months  ended June 30,  1999,  when  compared to
$633,000  during the same 1998  period,  primarily  due to an  increase of $13.7
million, or 36.9%, in the average balance of such assets, which more than offset
a 26 basis point decrease to 6.54% in the yield earned.  The increase in average
balance was the result of purchases of securities exceeding calls and maturities
thereof.  During  the  twelve  months  ended  June 30,  1999,  $27.9  million of
investment securities, which carried above-market interest rates, were called in
advance of their stated maturities.  The decrease in yield was the result of the
lower rates  available on securities  purchased and the calls of higher yielding
issues.

         Interest on other interest-earning  assets decreased $54,000, or 25.6%,
to $157,000  during the three months ended June 30, 1999 as compared to $211,000
for the same 1998 period.  The decrease was due to decreases of 36 basis points,
to 5.37%,  in yield and $3.0 million,  or 20.5%,  in the average balance of such
assets.
<PAGE>
         Interest Expense.  Interest expense on deposits decreased $281,000,  or
11.5%, to $2.2 million during the three months ended June 30, 1999 when compared
to $2.4  million  during  the same 1998  period.  Such  decrease  was  primarily
attributable  to a  decrease  of 42  basis  points,  to  3.87%,  in the  cost of
interest-bearing  deposits,  along with a $4.9 million, or 2.2%, decrease in the
average  balance  thereof.  The decrease in cost is due to lower  interest rates
paid on deposits.  The average cost of certificates of deposit was 5.00% for the
three  months ended June 30, 1999 as compared to 5.44% for the same 1998 period.
The average cost of  non-certificate  deposits decreased to 1.87 % for the three
months ended June 30, 1999 as compared to 2.31% for the same prior year period.

         Interest expense on borrowed money increased by $167,000,  or 24.4%, to
$851,000 during the three months ended June 30, 1999 when compared with $684,000
during the same 1998 period,  primarily due to an increase of $12.9 million,  or
27.6%, in the average balance of borrowings outstanding from the FHLB, which was
sufficient to offset a 14 basis point  decrease to 5.72% in the cost of borrowed
money. During the three months ended June 30, 1999, the Bank repaid $4.7 million
in borrowings having an average interest rate of 6.47% and obtained $5.0 million
in borrowings with five to ten year maturities with an average  interest rate of
5.69% and $9.0 in short-term borrowings with an average interest rate of 5.29%.

         Net Interest Income.  Net interest income  increased  $482,000 or 21.7%
during the three months ended June 30, 1999,  when  compared  with the same 1998
period.  Such  increase  was due to an  increase  in total  interest  income  of
$368,000,  along with a decrease  in total  interest  expense of  $114,000.  The
Bank's net interest  rate spread  increased to 2.61% in 1999 from 2.53% in 1998.
The increase in the interest  rate spread  resulted  from a decrease of 28 basis
points in the cost of interest-bearing liabilities,  which more than offset a 20
basis point decrease in the yield on interest-earning assets. Additionally,  net
interest  income  improved  due to the  additional  income  generated by a $30.6
million increase in average  interest-earning assets, which more than offset the
additional cost incurred by a $7.9 million increase in average  interest-bearing
liabilities.

         Provision for Loan Losses. During the three months ended June 30, 1999,
the Bank did not record a provision  for loan losses as the existing  balance of
the allowance for loan losses was considered  adequate.  During the three months
ended June 30, 1998,  the Bank  recorded a recapture of the  provision  for loan
losses of $19,000. The recapture was the result of the adjustment of the balance
of the allowance for loan losses, based upon management's quarterly analysis, to
$1.84 million at June 30, 1998 from $1.89  million at December 31, 1997.  During
the three months ended June 30, 1999, there was a $316,000 charge-off related to
the final  resolution of a $694,000  construction  loan and no loan  recoveries.
There were no loan charge-offs or recoveries  during the three months ended June
30, 1998. The allowance for loan losses is based on  management's  evaluation of
the risk  inherent  in its loan  portfolio  and gives due  consideration  to the
changes in general market  conditions and in the nature and volume of the Bank's
loan activity.  The Bank intends to continue to provide for loan losses based on
its periodic review of the loan portfolio and general market conditions. At June
30, 1999 and 1998,  loans delinquent  ninety days or more totalled  $847,000 and
$2.1 million, respectively, representing 0.55% and 1.57%, respectively, of total
loans.  At June 30, 1999,  the  allowance for loan losses stood at $1.4 million,
representing  0.92% of total loans and 165.4% of loans delinquent ninety days or
more.  At December  31,  1998,  the  allowance  for loan  losses  stood at $1.72
million,  representing 1.20% of total loans and 82.4% of loans delinquent ninety
days or more.  At June 30, 1998,  the  allowance  for loan losses stood at $1.84
million,  representing 1.36% of total loans and 87.6% of loans delinquent ninety
days or more.  The Bank  monitors its loan  portfolio on a continuing  basis and
intends to continue to provide  for loan losses  based on its ongoing  review of
the loan portfolio and general market conditions.
<PAGE>
         The Bank has established a standardized  process to assess the adequacy
of the allowance for loan losses and to identify the risks  inherent in the loan
portfolio.  The process  incorporates  credit reviews and give  consideration to
areas of exposure such as concentrations of credit,  local economic  conditions,
trends in delinquencies,  collateral coverage, the composition of the performing
and  non-performing  loan  portfolios,  and  other  risks  inherent  in the loan
portfolio.

         Specific allocations of the allowance for loan losses are identified by
individual loan based upon a detailed  credit review of each such loan.  General
loan loss  allowances  are allocated to pools of loans  categorized  by type and
assigned allowance  percentages which take into effect past charge-off  history,
industry averages and current trends and risks.  Finally, an unallocated portion
of the allowance is  maintained to account for the general  inherent risk in the
loan  portfolio,  known  circumstances  which are not addressed in the allocated
portion of the allowance (such as the increased  dependence on outside  mortgage
brokers for originations), and the necessary imprecision in the determination of
the allocation portion of the allowance.

         Management believes that, based on information currently available, the
allowance  for loan losses is  sufficient  to cover losses  inherent in the loan
portfolio at this time. However, no assurance can be given that the level of the
allowance  for loan losses will be  sufficient  to cover  future  possible  loan
losses or that future  adjustments  to the allowance for loan losses will not be
necessary  if  economic  and  other  conditions  differ  substantially  from the
economic and other conditions  considered by management to determine the current
level of the allowance for loan losses.  Management  may in the future  increase
the level of the  allowance  for loan losses as a percentage  of total loans and
non-performing  loans in the event it  increases  the level of  commercial  real
estate,  multifamily,  or  consumer  lending as a  percentage  of the total loan
portfolio.  In addition,  various  regulatory  agencies,  as an integral part of
their examination  process,  periodically  review the allowance for loan losses.
Such agencies may require the Bank to provide  additions to the allowance  based
upon judgments different from those of management.

         The  allowance  for  loan  losses   includes   specific,   general  and
unallocated allowances of $115,000, $894,000 and $391,000, respectively, at June
30, 1999,  as compared to  $492,000,  $817,000 and  $408,000,  respectively,  at
December 31, 1998. The $377,000 decrease in the specific allowance from December
31, 1998, is the result of the final resolution of the  aforementioned  $694,000
impaired  construction loan, which was assigned a specific allowance of $347,000
at December 31, 1998.

         Non-Interest  Income.  Non-interest income increased $53,000, or 43.8%,
to $174,000 during the three months ended June 30, 1999 from $121,000 during the
same 1998  period.  The 1999  amount  includes  a $35,000  gain on the sale of a
security available for sale.

         Non-Interest Expenses.  Non-interest expenses increased by $113,000, or
7.0%, to $1.74 million during the three months ended June 30, 1999 when compared
with $1.62 million during the same 1998 period.  Salaries and employee benefits,
the largest component of non-interest  expenses,  increased $19,000, or 2.5%, to
$769,000  during the three months ended June 30, 1999 from  $750,000  during the
prior year quarter.  Other expenses  increased  $115,000,  or 25.1%, to $572,000
during the three months ended June 30, 1999 from $457,000  during the prior year
quarter due primarily to the  additional  costs  incurred as a result of being a
public  company.  All other elements of  non-interest  expense  remained  little
changed at $396,000 and $419,000 during the three months ended June 30, 1999 and
1998, respectively.
<PAGE>
         Income Taxes. Income tax expense totalled $409,000,  or 35.8% of income
before income taxes,  during the three months ended June 30, 1999 as compared to
$258,000,  or 34.9% of income before income taxes,  during the  comparable  1998
period.


Comparison of Operating Results for the Six Months Ended June 30, 1999 and 1998

         Net Income.  Net income increased $492,000 or 49.6% to $1.5 million for
the six months  ended June 30, 1999  compared  with  $993,000  for the same 1998
period.  The increase in net income  during the 1999 period  resulted  primarily
from a $971,000  increase in net interest income,  which was partially offset by
increases in  non-interest  expenses and income taxes of $192,000 and  $315,000,
respectively.

         Interest Income. Total interest income increased $812,000,  or 7.8%, to
$11.3  million for the six months ended June 30, 1999 from $10.5 million for the
same 1998  period.  The increase  was the result of a $34.0  million,  or 11.6%,
increase in average interest-earning assets between the periods, which more than
offset a 25 basis point  decline in yield.  The increase in the average  balance
was the result of loan  originations  and securities  purchased  during the past
twelve months funded by the net proceeds of the Company's  initial  public stock
offering and increased  borrowed money.  The decrease in yield was the result of
lower rates obtained on loans originated and securities purchased since June 30,
1998.

         Interest  income on loans  increased  by  $763,000,  or 16.1%,  to $5.5
million  during  the six  months  ended June 30,  1999 when  compared  with $4.8
million for the same 1998 period.  The increase  during the 1999 period resulted
from an increase of $24.6  million,  or 20.4%,  in the average  balance of loans
outstanding,  which was  sufficient to offset a 28 basis point decrease to 7.59%
in the yield earned on the loan portfolio. The increased average balance was the
result of strong  lending  volume.  The  decreased  yield is the result of lower
rates obtained on originations as well as downward  interest rate adjustments on
the Bank's adjustable-rate mortgage loans.

         Interest   on   mortgage-backed    securities,   all   of   which   are
held-to-maturity,  decreased  $362,000 or 8.7%,  to $3.8 million  during the six
months  ended June 30, 1999 when  compared  with $4.2  million for the same 1998
period.  The decrease  during the 1999 period  resulted  from  decreases of $7.4
million,  or 5.9%, in the average balance of  mortgage-backed  securities and 20
basis points, to 6.45%, in yield. The decreased average balance is the result of
repayments of mortgage-backed  securities exceeding  purchases.  The decrease in
yield is the result of repayments on higher  yielding  securities  and the lower
interest rates  obtained on securities  purchased  since June 30, 1998,  many of
which were adjustable rate issues with customarily low initial interest rates.

         Interest    earned   on   investment    securities,    including   both
available-for-sale and held-to-maturity issues, increased by $370,000, or 30.0%,
to $1.6 million during the six months ended June 30, 1999, when compared to $1.2
million  during the same 1998  period,  primarily  due to an  increase  of $13.3
million, or 37.9%, in the average balance of such assets, which more than offset
a 41 basis point decrease to 6.64% in the yield earned.  The increase in average
balance was the result of purchases of securities exceeding calls and maturities
thereof.  During  the  twelve  months  ended  June 30,  1999,  $27.9  million of
investment securities, which carried above-market interest rates, were called in
advance of their stated maturities.  The decrease in yield was the result of the
lower rates  available on securities  purchased and the calls of higher yielding
issues.
<PAGE>
         Interest on other interest-earning assets increased $42,000 or 13.6% to
$350,000  during the six months  ended June 30, 1999 as compared to $308,000 for
the same 1998 period.  The increase was due to an increase of $3.5  million,  or
30.6%, in the average balance of such assets,  which was more than sufficient to
offset a 69 basis point decline in yield.

         Interest Expense.  Interest expense on deposits  decreased  $543,000 or
11.2% to $4.3 million during the six months ended June 30, 1999 when compared to
$4.9  million  during  the  same  1998  period.   Such  decrease  was  primarily
attributable  to a  decrease  of 39  basis  points,  to  3.89%,  in the  cost of
interest-bearing  deposits,  along with a $4.9 million, or 2.2%, decrease in the
average  balance  thereof.  The decrease in cost is due to lower  interest rates
paid on deposits.  The average cost of certificates of deposit was 5.01% for the
six months  ended June 30, 1999 as  compared to 5.43% for the same 1998  period.
The average  cost of  non-certificate  deposits  decreased to 1.91 % for the six
months ended June 30, 1999 as compared to 2.34% for the same prior year period.

         Interest expense on borrowed money increased by $384,000,  or 34.3%, to
$1.5 million  during the six months ended June 30, 1999 when  compared with $1.1
million  during the same 1998  period,  primarily  due to an  increase  of $15.1
million,  or 39.4%,  in the average balance of borrowings  outstanding  from the
FHLB,  which was  sufficient to offset a 21 basis point decrease to 5.62% in the
cost of borrowed  money.  During the six months  ended June 30,  1999,  the Bank
repaid $5.0 million in borrowings  having an average  interest rate of 5.54% and
obtained $15.0 million in borrowings  with five to ten year  maturities  with an
average interest rate of 5.54% and $9.0 million in short-term borrowings with an
average rate of 5.29%.

         Net Interest Income. Net interest income increased $971,000,  or 21.7%,
during the six months  ended June 30,  1999,  when  compared  with the same 1998
period.  Such  increase  was due to an  increase  in total  interest  income  of
$812,000,  along with a decrease  in total  interest  expense of  $159,000.  The
Bank's net interest  rate spread  increased to 2.68% in 1999 from 2.65% in 1998.
The increase in the interest  rate spread  resulted  from a decrease of 28 basis
points in the cost of  interest-bearing  liabilities which more than offset a 25
basis point decrease in the yield on interest-earning assets. Additionally,  net
interest  income  improved  due to the  additional  income  generated by a $34.0
million increase in average  interest-earning assets, which more than offset the
additional cost incurred by a $10.2 million increase in average interest-bearing
liabilities.

         Provision  for Loan Losses.  During the six months ended June 30, 1999,
the Bank did not record a provision  for loan losses as the existing  balance of
the allowance  for loan losses was  considered  adequate.  During the six months
ended June 30, 1998,  the Bank  recorded a recapture of the  provision  for loan
losses of $41,000. The recapture was the result of the adjustment of the balance
of the allowance for loan losses, based upon management's quarterly analysis, to
$1.84 million at June 30, 1998 from $1.89  million at December 31, 1997.  During
the six months ended June 30, 1999, there was a $316,000  charge-off  related to
the final  resolution of a $694,000  construction  loan and no loan  recoveries.
There were no loan  charge-offs  or recoveries  during the six months ended June
30, 1998. The allowance for loan losses is based on  management's  evaluation of
the risk  inherent  in its loan  portfolio  and gives due  consideration  to the
changes in general market  conditions and in the nature and volume of the Bank's
<PAGE>
loan activity.  The Bank intends to continue to provide for loan losses based on
its periodic review of the loan portfolio and general market conditions. At June
30, 1999 and 1998,  loans delinquent  ninety days or more totalled  $847,000 and
$2.1 million, respectively, representing 0.55% and 1.57%, respectively, of total
loans.  At June 30, 1999,  the  allowance for loan losses stood at $1.4 million,
representing  0.92% of total loans and 165.4% of loans delinquent ninety days or
more.  At December  31,  1998,  the  allowance  for loan  losses  stood at $1.72
million,  representing 1.20% of total loans and 82.4% of loans delinquent ninety
days or more.  At June 30, 1998,  the  allowance  for loan losses stood at $1.84
million,  representing 1.36% of total loans and 87.6% of loans delinquent ninety
days or more.  The Bank  monitors its loan  portfolio on a continuing  basis and
intends to continue to provide  for loan losses  based on its ongoing  review of
the loan portfolio and general market conditions.

         The Bank has established a standardized  process to assess the adequacy
of the allowance for loan losses and to identify the risks  inherent in the loan
portfolio.  The process  incorporates  credit reviews and give  consideration to
areas of exposure such as concentrations of credit,  local economic  conditions,
trends in delinquencies,  collateral coverage, the composition of the performing
and  non-performing  loan  portfolios,  and  other  risks  inherent  in the loan
portfolio.

         Specific allocations of the allowance for loan losses are identified by
individual loan based upon a detailed  credit review of each such loan.  General
loan loss  allowances  are allocated to pools of loans  categorized  by type and
assigned allowance  percentages which take into effect past charge-off  history,
industry averages and current trends and risks.  Finally, an unallocated portion
of the allowance is  maintained to account for the general  inherent risk in the
loan  portfolio,  known  circumstances  which are not addressed in the allocated
portion of the allowance (such as the increased  dependence on outside  mortgage
brokers for originations), and the necessary imprecision in the determination of
the allocation portion of the allowance.

         Management believes that, based on information currently available, the
allowance  for loan losses is  sufficient  to cover losses  inherent in the loan
portfolio at this time. However, no assurance can be given that the level of the
allowance  for loan losses will be  sufficient  to cover  future  possible  loan
losses or that future  adjustments  to the allowance for loan losses will not be
necessary  if  economic  and  other  conditions  differ  substantially  from the
economic and other conditions  considered by management to determine the current
level of the allowance for loan losses.  Management  may in the future  increase
the level of the  allowance  for loan losses as a percentage  of total loans and
non-performing  loans in the event it  increases  the level of  commercial  real
estate,  multifamily,  or  consumer  lending as a  percentage  of the total loan
portfolio.  In addition,  various  regulatory  agencies,  as an integral part of
their examination  process,  periodically  review the allowance for loan losses.
Such agencies may require the Bank to provide  additions to the allowance  based
upon judgments different from those of management.

         The  allowance  for  loan  losses   includes   specific,   general  and
unallocated allowances of $115,000, $894,000 and $391,000, respectively, at June
30, 1999,  as compared to  $492,000,  $817,000 and  $408,000,  respectively,  at
December 31, 1998. The $377,000 decrease in the specific allowance from December
31, 1998, is the result of the final resolution of the  aforementioned  $694,000
impaired  construction loan, which was assigned a specific allowance of $347,000
at December 31, 1998.
<PAGE>
         Non-Interest Income.  Non-interest income increased $69,000 or 26.4% to
$330,000 during the six months ended June 30, 1999 from $261,000 during the same
1998 period.  The 1999 amount  includes a $35,000 gain on the sale of a security
available for sale.

         Non-Interest Expenses.  Non-interest expenses increased by $192,000, or
5.9%, to $3.45  million  during the six months ended June 30, 1999 when compared
with $3.26 million during the same 1998 period.  Salaries and employee benefits,
the largest component of non-interest  expenses,  increased $74,000, or 4.9%, to
$1.6 million  during the six months ended June 30, 1999 from $1.5 million during
the prior year period.  Other expenses  increased  $133,000,  or 14.7%, to $1.04
million  during the six months ended June 30,  1999,  from  $906,000  during the
comparable prior year period,  primarily due to the additional costs incurred as
the result of being a public company. All other elements of non-interest expense
remained  little  changed at $824,000 and  $839,000  during the six months ended
June 30, 1999 and 1998, respectively.

         Income Taxes. Income tax expense totalled $833,000,  or 35.9% of income
before  income  taxes,  during the six months ended June 30, 1999 as compared to
$517,000,  or 34.3% of income before income taxes,  during the  comparable  1998
period.

Liquidity and Capital Resources

         The  Company's and Bank's  primary  sources of funds on a long-term and
short-term  basis  are  deposits,  principal  and  interest  payments  on loans,
mortgage-backed and investment securities and FHLB borrowings. The Bank uses the
funds generated to support its lending and investment  activities as well as any
other demands for  liquidity  such as deposit  outflows.  While  maturities  and
scheduled amortization of loans are predictable sources of funds, deposit flows,
mortgage  prepayments  and the exercise of call features on debt  securities are
greatly   influenced  by  general  interest  rates,   economic   conditions  and
competition.  The Bank has  continued to maintain the required  levels of liquid
assets as defined by OTS regulations.  This requirement of the OTS, which may be
varied at the  direction  of the OTS  depending  upon  economic  conditions  and
deposit flows, is based upon a percentage of deposits and short-term borrowings.
The  Bank's  currently  required  liquidity  ratio  is 4.0%.  At June 30,  1999,
December 31, 1998 and December 31, 1997, the Bank's regulatory  liquidity ratios
were 5.83%, 7.38% and 9.44%, respectively.

         At June 30,  1999,  the Bank  exceeded  all of its  regulatory  capital
requirements with a tangible capital level of $34.8 million,  or 10.3%, of total
adjusted  assets,  which is above the required  level of $5.2 million,  or 1.5%;
core capital of $34.8  million,  or 10.3%,  of total adjusted  assets,  which is
above the required  level of $13.6 million,  or 4.0%; and risk-based  capital of
$36.2 million,  or 27.4%, of risk-weighted  assets,  which is above the required
level of $10.6 million, or 8.0%.

         The  Company's  most liquid  assets are cash and cash  equivalents  and
securities  available  for sale.  The levels of these  assets are  dependent  on
operating,  financing, lending and investing activities during any given period.
At June 30, 1999, cash and cash  equivalents  and securities  available for sale
totalled $10.1 million, or 2.9% of total assets.

         The Bank has other sources of liquidity if a need for additional  funds
arises, including FHLB borrowings.  At June 30, 1999, the Bank had $61.0 million
in borrowings  outstanding from the FHLB.  Depending on market  conditions,  the
pricing of deposit products and FHLB  borrowings,  the Bank may continue to rely
on FHLB borrowings to fund asset growth.
<PAGE>
         On  August  3,  1999,  the  Company  announced  that  it  had  received
regulatory approval to repurchase up to 277,067 shares of its outstanding common
stock from  shareholders  other than West Essex  Bancorp,  MHC. This  repurchase
would represent 15% of the shares sold in the minority stock offering.

         At June 30, 1999,  the Bank had  commitments  to originate and purchase
loans and fund unused  outstanding  lines of credit and undisbursed  proceeds of
construction  mortgages  totalling $11.2 million.  The Bank  anticipates that it
will  have  sufficient   funds  available  to  meet  its  current   commitments.
Certificate accounts,  including Individual  Retirement Account accounts,  which
are  scheduled  to mature in less  than one year  from June 30,  1999,  totalled
$121.3  million.  The  Bank  expects  that  substantially  all of  the  maturing
certificate accounts will be retained by the Bank.

         The initial impact of the  Reorganization and Offering on the liquidity
and capital  resources of the Company was to  substantially  increase the liquid
assets  of the  Company  and the  capital  base on which the  Company  operates.
Subsequently,  a substantial  majority of the Offering  proceeds was invested in
readily marketable investment grade securities. The additional capital resulting
from the  offerings  increased the capital bases of the Company and the Bank. At
June 30,  1999,  the  Company  and the  Bank had  total  equity,  determined  in
accordance with generally accepted accounting  principles,  of $47.8 million and
$39.7 million,  respectively, or 13.8% and 11.6%, respectively, of total assets.
The Bank's regulatory  tangible capital at that date, which excludes  intangible
assets of $4.9 million and unrealized  securities  gains, net of deferred income
taxes,  of $2,000,  was $34.8 million,  or 10.3%,  of adjusted total assets.  An
institution with a ratio of tangible capital to adjusted total assets of greater
than or equal to 5.0% is  considered  to be  "well-capitalized"  pursuant to OTS
regulations.

Year 2000 Compliance

         As the year 2000  approaches,  an important  business issue has emerged
regarding how existing  application  software programs and operating systems can
accommodate this date value.  Many existing  application  software  products use
two-digit  date fields to designate a year.  As the century date change  occurs,
date  sensitive  systems may recognize the Year 2000 as 1900 or not at all. This
inability  to  recognize  or  properly  treat the Year 2000 may cause  erroneous
results, ranging from system malfunctions to incorrect or incomplete processing.

         The Company has been  identifying  and remediating  potential  problems
which are  associated  with the "Year 2000" issues since early 1998. The Company
has fully  remedied its in house  accounting  system,  loan tracking  system and
other software  programs  identified as mission critical by the Company.  All of
the  hardware  associated  with these  systems  has been  checked by the Company
internally,  as well as by an independent computer company, and found to be Year
2000 compliant.

         The Company also realizes that its ability to be Year 2000 compliant is
dependent  upon  the  cooperation  of its  vendors.  The  Company  has  received
representations  from its primary  third party  vendors that they have or are in
the  process  of  resolving  any  Year  2000  problems  in  their  software  and
anticipates  that all of its  major  vendors  will have  resolved  any Year 2000
problems  in their  software  within  the next three  months.  The  Company  has
completed its end to end testing with its primary  third party  service  bureau.
The testing was completed on two consecutive  Sundays in March of this year. All
offices and  departments  of the Company were  present to test their  respective
areas.  All of the  testing  was  completed  by each  office and area  without a
problem.  The Company has also  received  certification  from its primary  third
party service bureau that it has passed end to end testing. In addition,  all of
the ATM machines owned by the Company have had their  software  upgraded and are
now also Year 2000 compliant.
<PAGE>
Year 2000 Plan Costs

         The Company  believes that its costs  related to Year 2000  remediation
will be  approximately  $185,000.  To date, the Company has spent  approximately
$112,000 of this amount on various hardware and software upgrades.  There can be
no assurances,  however,  that the Company's internal actions or the performance
by third party  vendors will be effective to remedy all potential  problems.  To
the extent the Company's systems are affected by third party vendors,  there can
be no assurance that potential  systems  interruptions  or the cost necessary to
update  software  would not have a  material  adverse  effect  on the  Company's
business,  financial  condition,  results of operations and business  prospects.
Further,  any Year 2000 failure on the part of the Company's  customers or third
party vendors could result in additional expense or loss to the Company.

Year 2000 Risks and Contingency Plan

         Because the Company depends  substantially  on its computer systems and
those of third  parties,  the failure of these systems to be Year 2000 compliant
could cause  substantial  disruption of the Company's  business and could have a
material adverse  financial impact on the Company.  Failure to resolve Year 2000
issues presents the following risks to the Company,  which it believes  reflects
its most reasonably likely worst-case scenario: the Company could lose customers
to  other  financial  institutions,  resulting  in a  loss  of  revenue,  if the
Company's  third-party  service  bureau is unable to properly  process  customer
transactions;  governmental agencies,  such as the Federal Home Loan Bank of New
York, and correspondent institutions could fail to provide funds to the Company,
which could materially  impair the Company's  liquidity and affect the Company's
ability to fund loans and deposit withdrawals; concern on the part of depositors
that Year 2000 issues  could impair  access to their  deposit  account  balances
could result in the Company  experiencing  deposit  outflows before December 31,
1999; and the Company could incur increased  personnel costs if additional staff
is required to perform  functions that inoperative  systems would have otherwise
performed.

         Management  believes  that it is  impossible  to estimate the potential
lost  revenue due to the Year 2000  issue,  as the extent and  longevity  of any
potential  problem  cannot  be  predicted.  Because  substantially  all  of  the
Company's loan portfolio consists of loans to individuals rather than commercial
enterprises,   management  believes  that  Year  2000  issues  will  not  impair
materially the ability of the Company's borrowers to repay their debt.

         There  can be no  assurances  that the  Company's  Year  2000 plan will
effectively  address the Year 2000 issue,  that the  Company's  estimates of the
timing and costs of completing the plan will  ultimately be accurate or that the
impact of any  failure of the  Company or its  third-party  vendors  and service
providers to be Year 2000 compliant  will not have a material  adverse effect on
the Company's business, financial condition or results of operations.

         The Company has a business  resumption  contingency  plan for Year 2000
compliance  that  calls  for the  Company  to resort  to  manual  processing  of
transactions  until the  computer  systems  resume  operation.  Internally,  the
Company will continue to make changes to its contingency  plan as  circumstances
may warrant.
<PAGE>
Year 2000 Liquidity Concerns

         The Company  will make every  effort to  maintain  an ample  reserve of
currency  to  accommodate  the  needs of its  customers  at  year-end.  This may
necessitate the utilization of short-term  investments which will mature late in
the fourth quarter of the year. Excess funds may also be placed in various types
of overnight  investments which will allow the Company immediate access to these
funds. The utilization of short-term investments including overnight investments
during  the late  third and fourth  quarters  may have an adverse  effect on the
financial operations of the Company.

Year 2000 Legal Concerns

         The  Company  may  also  face a legal  risk in the  form of  contingent
liability in conjunction  with Year 2000 issues.  The likelihood and severity of
this risk is  materially  dependent on both the Company's own efforts and on the
actions  of other  parties  over  which the  Company  has  little or no  control
including the  telecommunication  and electric power industries.  The likelihood
and severity of the Company's contingent Year 2000 liability are also materially
dependent  on the extent  and  success of the  timely  remediation  and  testing
efforts of a large number of third parties. Whether the Company may incur a Year
2000 liability is at this time an unknown. The Company is attempting to purchase
Year 2000 liability coverage in hopes of protecting itself against the potential
of litigation.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         ----------------------------------------------------------

         There  have  been  no  material   changes  in   information   regarding
quantitative and qualitative  disclosures about market risk from the information
presented as of December 31, 1998, in the Company's  Annual Report on Form 10-K,
to June 30, 1999.
<PAGE>
                            WEST ESSEX BANCORP, INC.
                           PART II . OTHER INFORMATION
                                  June 30, 1999

ITEM 1. LEGAL PROCEEDINGS
        -----------------
         The Company and the Bank are parties to various litigation which arises
         primarily  in  the  ordinary  course  of  business.  Included  in  this
         litigation is a case before the Superior Court of New Jersey related to
         condominium  construction loans.  Currently,  the plaintiffs have three
         loans with the Bank totalling  $262,497 in the aggregate,  two of which
         are delinquent.  Two other plaintiffs  defaulted on their loans and the
         properties  have been  foreclosed on by the Bank and are currently held
         as Real  Estate  Owned.  In the  opinion of  management,  the  ultimate
         disposition of such litigation should not have a material effect on the
         consolidated financial position or operations of the Company.


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
        -----------------------------------------
         None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES
        -------------------------------
         None.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        ---------------------------------------------------
         The 1999 Annual Meeting of Stockholders was held on April 21, 1999. The
         results of the matters  submitted to the  stockholders are incorporated
         herein  by  reference  from  Part II,  Item 4 of the Form  10-Q for the
         quarter ended March 31, 1999 filed on May 17, 1999.


ITEM 5. OTHER INFORMATION
        -----------------
         None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
        --------------------------------
         (a)   Exhibits:

                  3.1   Charter of West Essex Bancorp, Inc.  *
                  3.2   Bylaws of West Essex Bancorp, Inc.  *
                  4.0   Form of Common Stock Certificate   *
                  11.0  Statement regarding computation of per share earnings.
                  27.0  Financial Data Schedule

        *    Incorporated  herein  by  reference  into  this  document  from the
             Exhibits  to Form S-1  Registration  Statement  and any  amendments
             thereto, Registration No. 333-56729.

         (b) Reports on Form 8-K:

                  None
<PAGE>



                                   SIGNATURES
                                   ----------




Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.







                                     WEST ESSEX BANCORP, INC.


Date: August 13, 1999                By    /s/Leopold W. Montanaro
                                           -----------------------
                                           Leopold W. Montanaro
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)



Date: August 13, 1999                By:    /s/Dennis A. Petrello
                                            ---------------------
                                            Dennis A. Petrello
                                            Executive Vice President and
                                            and Chief Financial Officer
                                            (Principal Financial and
                                            Accounting Officer)