UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 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 September 30, 1996 
      
                                      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               0-13440
                       -------------------------------------

                             B.M.J. FINANCIAL CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         NEW JERSEY                                        22-2474875
-------------------------------                         ----------------
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                         Identification No.)

     243 ROUTE 130, BORDENTOWN, NJ                           08505
----------------------------------------                   ----------
(Address of principal executive offices)                   (Zip code)

                                 (609) 298-5500
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common  stock as of the  latest  practicable  date:  7,518,556  shares of common
stock, $1.00 par value, outstanding on October 31, 1996.
<PAGE>

                                      INDEX


PART 1.           FINANCIAL INFORMATION

Consolidated  Balance  Sheet - September 30, 1996  (Unaudited)  and December 31,
     1995


Consolidated  Statement  of  Operations  - Three  months and nine  months  ended
     September 30, 1996 and 1995 (Unaudited)


Consolidated  Statement  of Changes in  Shareholders  Equity - Nine months ended
     September 30, 1996 and 1995 (Unaudited)


Consolidated  Statement of Cash Flows - Nine months ended September 30, 1996 and
     1995 (Unaudited)



Notes to Consolidated Financial Statements (Unaudited)


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



PART 11.          OTHER INFORMATION



SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
                     B.M.J. Financial Corp. and Subsidiaries
                           Consolidated Balance Sheet


(unaudited)                                           September 30,     December 31,
(in thousands, except share data)                          1996             1995
                                                         ---------       ---------
<S>                                                      <C>             <C>
Cash and cash equivalents:
  Cash and due from banks .........................      $  24,720       $  19,905
  Money market investments ........................            140           5,664
                                                         ---------       ---------
     Total cash and cash equivalents ..............         24,860          25,569

Securities available for sale (amortized cost of
     $78,818 in 1996 and $64,025 in 1995) .........         76,887          64,608

Securities held to maturity (fair value of $98,505
      in 1996 and $83,001 in 1995) ................         98,949          82,515

Loans, net of unearned income and less reserve for
      loan losses of $9,334 (1996) and $10,099 ....        427,086         389,265
                                                                             (1995)

Premises and equipment, net .......................          5,910           6,060
Other real estate, net ............................          1,503           1,686
Other assets ......................................         20,027          19,007
                                                         ---------       ---------
     Total assets .................................      $ 655,222       $ 588,710
                                                         =========       =========

Liabilities:
  Deposits:
    Demand deposits (noninterest-bearing) .........      $  72,952       $  81,156
    Savings and interest checking .................        271,299         255,487
    Certificates of deposit of $100,000 or more ...         33,451          13,874
    Other time deposits ...........................        159,488         134,494
                                                         ---------       ---------
       Total deposits .............................        537,190         485,011
                                                         ---------       ---------

  Securities sold under agreements to repurchase ..         14,335          12,569
  Federal funds purchased and other borrowed funds          14,200           7,400
  Other liabilities ...............................         10,828           9,422
  Capital notes and long term debt ................         12,347           8,686
                                                         ---------       ---------
       Total liabilities ..........................        588,900         523,088
                                                         ---------       ---------
<PAGE>
<CAPTION>
                     B.M.J. Financial Corp. and Subsidiaries
                           Consolidated Balance Sheet
                                  (continued)

(unaudited)                                           September 30,     December 31,
(in thousands, except share data)                          1996             1995
                                                         ---------       ---------
<S>                                                      <C>             <C>

  Commitments and contingencies

Shareholders' equity:
  Common stock, par value $1 per share ............
   Authorized 25,000,000 shares;
   issued 7,686,069 shares in 1996
   and 7,614,281 shares in 1995 ...................          7,686           7,614
  Surplus .........................................         37,195          36,520
  Retained earnings ...............................         25,058          21,104
  Unrealized gains (losses) on securities available
       for sale, net of tax .......................         (1,275)            384
  Treasury stock (178,000 shares) at cost .........         (2,342)           --
                                                         ---------       ---------
     Total shareholders' equity ...................         66,322          65,622
                                                         ---------       ---------
     Total liabilities and shareholders' equity ...      $ 655,222       $ 588,710
                                                         =========       =========

                 See notes to consolidated financial statements
                                                           
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                               B.M.J. Financial Corp. and Subsidiaries
                                                Consolidated Statement of Operations

(Unaudited)                                                                   Three months ended              Nine months ended
(In thousands, except per share amounts)                                           Sept. 30,                       Sept. 30,
                                                                        --------------------------      ---------------------------
                                                                            1996            1995            1996            1995
                                                                        ----------      ----------      ----------      ----------
<S>                                                                     <C>             <C>             <C>             <C>
INTEREST INCOME
Interest and fees on loans .........................................    $    9,417      $    8,588      $   27,267      $   24,699
Interest on money market investments:
    Time deposits with other banks .................................          --              --                 0              48
    Interest bearing deposits with other banks .....................             7               4              20              22
    Federal funds sold and repurchase agreements ...................            15              93             164             273
    Other short term investments ...................................            18              99             205             290
Interest on securities available for sale:
    U.S. Treasury securities .......................................            20              46              95             113
    U.S. government agencies and corporations ......................         1,261             257           3,486             274
    States and political subdivisions (tax-exempt) .................            62              96             276             151
Interest on securities held to maturity:
    U.S. Treasury securities .......................................            85             240             256             790
    U.S. government agencies and corporations ......................         1,186           1,230           3,362           3,723
    States and political subdivisions (tax-exempt) .................           103              55             206             184
    Other securities ...............................................            66              43             160              67
                                                                        ----------      ----------      ----------      ----------
        Total interest income ......................................        12,240          10,751          35,497          30,634
                                                                        ----------      ----------      ----------      ----------

INTEREST EXPENSE
Savings and interest checking deposits .............................         1,474           1,499           4,230           4,228
Certificates of deposit of $100,000 or more ........................           449             177           1,054             340
Other time deposits ................................................         2,041           1,749           6,026           4,332
Other debt .........................................................           553             261           1,419             712
                                                                        ----------      ----------      ----------      ----------
        Total interest expense .....................................         4,517           3,686          12,729           9,612
                                                                        ----------      ----------      ----------      ----------
Net interest income ................................................         7,723           7,065          22,768          21,022
Provision for loan losses ..........................................            45            --                95            --
                                                                        ----------      ----------      ----------      ----------
        Net interest income after provision for loan losses ........         7,678           7,065          22,673          21,022
                                                                        ----------      ----------      ----------      ----------
<PAGE>
<CAPTION>
                                               B.M.J. Financial Corp. and Subsidiaries
                                                Consolidated Statement of Operations
                                                            (continued)

(Unaudited)                                                                   Three months ended              Nine months ended
(In thousands, except per share amounts)                                           Sept. 30,                       Sept. 30,
                                                                        --------------------------      ---------------------------
                                                                            1996            1995            1996            1995
                                                                        ----------      ----------      ----------      ----------
<S>                                                                     <C>             <C>             <C>             <C>
NONINTEREST INCOME
Service charges, commissions, and fees .............................         1,091             954           2,860           2,754
Trust income .......................................................           105             106             330             344
Gain on sale of other real estate ..................................          --                17             303             103
                                                                        ----------      ----------      ----------      ----------
        Total noninterest income ...................................         1,196           1,077           3,493           3,201
                                                                        ----------      ----------      ----------      ----------
NONINTEREST EXPENSE
Salaries and employee benefits .....................................         2,424           2,284           7,143           7,182
Net occupancy ......................................................           747             694           2,186           2,158
Other real estate expense ..........................................            43             113             145             403
Other ..............................................................         2,010           2,222           6,207           7,105
                                                                        ----------      ----------      ----------      ----------
        Total noninterest expense ..................................         5,224           5,313          15,681          16,848
                                                                        ----------      ----------      ----------      ----------
Income before income tax expense ...................................         3,650           2,829          10,485           7,375
Income tax expense .................................................         1,271               8           3,702           1,653
                                                                        ----------      ----------      ----------      ----------

NET INCOME .........................................................    $    2,379      $    2,821      $    6,783      $    5,722
                                                                        ==========      ==========      ==========      ==========
Net income per share - Primary .....................................    $     0.31      $     0.37      $     0.89      $     0.74
                                                                        ==========      ==========      ==========      ==========
                     - Fully diluted                                    $     0.31      $     0.36      $     0.88      $     0.74
                                                                        ==========      ==========      ==========      ==========
Weighted average shares outstanding - Primary ......................     7,611,884       7,722,363       7,630,065       7,699,947
                                                                        ==========      ==========      ==========      ==========
                                    - Fully diluted.................     7,672,310       7,918,947       7,704,810       7,911,214
                                                                        ==========      ==========      ==========      ==========



                                          See notes to consolidated financial statements.
                                                                                              

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                            B.M.J. Financial Corp. and Subsidiaries
                               Consolidated Statement of Changes
                                    in Shareholders' Equity


(unaudited)                                                   Nine months ended September 30,
                                                              -------------------------------                                 
(in thousands)                                                        1996          1995
                                                                  --------       --------
<S>                                                               <C>            <C>
SHAREHOLDERS' EQUITY

Balance at beginning of period .............................      $ 65,622       $ 58,346

Net income .................................................         6,783          5,722
Stock issued ...............................................           748            136
Cash dividends .............................................        (2,830)        (1,140)
Repurchase of common stock .................................        (2,342)             0
Unrealized gain (loss), net of tax, on investment securities        (1,659)            69
                                                                  --------       --------

Balance at end of period ...................................      $ 66,322       $ 63,133
                                                                  ========       ========

                        See notes to consolidated financial statements

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                   B.M.J. Financial Corp. and Subsidiaries
                                     Consolidated Statement of Cash Flows

(unaudited)
(in thousands)                                                               Nine months ended September 30,
                                                                             ------------------------------- 
                                                                                    1996           1995
                                                                                  --------       --------
<S>                                                                               <C>            <C>
Cash flows from operating activities:
  Net income ...............................................................      $  6,783       $  5,722
  Adjustments to reconcile net income to net cash from operating activities:
    Depreciation of premises and equipment .................................           576            586
    Provision for loan losses ..............................................            95              0
    Amortization of intangibles ............................................            87             86
    Net accretion of securities available for sale .........................           (98)           (32)
    Net amortization of securities held to maturity ........................            53             52
    Net (increase) decrease in other real estate owned .....................          (191)           124
    (Increase) decrease  in other assets ...................................          (253)            80
    Increase in other liabilities ..........................................         1,408            959
                                                                                  --------       --------
Net cash provided by operating activities ..................................         8,460          7,577
                                                                                  --------       --------

Cash flows from investing activities:
    Proceeds from maturities and sale of securities available for sale .....        33,166          1,517
    Purchase of securities available for sale ..............................       (47,861)       (35,607)
    Proceeds from maturities of securities held to maturity ................         5,791         15,512
    Purchase of securities held to maturity ................................       (22,278)        (3,924)
    Net increase in loans ..................................................       (38,783)       (26,230)
    Proceeds from sale of other real estate ................................         1,241          4,194
    Property and equipment expenditures ....................................          (426)          (876)
                                                                                  --------       --------
Net cash used in investing activities ......................................       (69,150)       (45,414)
                                                                                  --------       --------

Cash flows from financing activities:
  Net increase (decrease) in demand deposits, savings and
      interest checking accounts ...........................................         7,608        (18,044)
  Net increase in certificates of deposit ..................................        44,571         32,712
  Repayments of capital notes and long term debt ...........................        (2,839)             0
  Net increase in other borrowed funds .....................................         6,800          1,050
  Net increase  in securities sold under agreements to repurchase ..........         1,766          6,053
  Proceeds from issuance of debt ...........................................         6,500              0
  Dividends paid ...........................................................        (2,830)        (1,140)
  Proceeds from issuance of stock ..........................................           747            125
  Purchase of treasury stock ...............................................        (2,342)             0
                                                                                  --------       --------
Net cash provided by financing activities ..................................        59,981         20,756
                                                                                  --------       --------
<PAGE>
<CAPTION>
                                   B.M.J. Financial Corp. and Subsidiaries
                                     Consolidated Statement of Cash Flows
                                                 (continued)
(unaudited)
(in thousands)                                                               Nine months ended September 30,
                                                                             ------------------------------- 
                                                                                    1996           1995
                                                                                  --------       --------
<S>                                                                               <C>            <C>
Net change in cash and cash equivalents ....................................          (709)       (17,081)
Cash and cash equivalents at beginning of period ...........................        25,569         44,779
                                                                                  --------       --------
Cash and cash equivalents at end of period .................................      $ 24,860       $ 27,698
                                                                                  ========       ========

Cash paid during the period for:
  Interest .................................................................      $ 12,484       $  8,938
                                                                                  ========       ========
  Income taxes .............................................................      $  1,741       $    965
                                                                                  ========       ========

Noncash investing activities:
  Transfer of loans to other real estate, net ..............................      $    867       $  2,755
                                                                                  ========       ========
  Transfer of insubstance foreclosures to loans upon adoption of FAS 114 ...      $      0       $  2,935
                                                                                  ========       ========

                               See notes to consolidated financial statements.
</TABLE>
<PAGE>
                     B.M.J. FINANCIAL CORP. AND SUBSIDIARIES 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Basis For Financial Statement Presentation

         The  information  in this report is  unaudited,  is subject to year-end
adjustments  and audit,  and is prepared in accordance  with generally  accepted
accounting  principles and  prevailing  practices  within the banking  industry.
However, in the opinion of management, the information reflects all adjustments,
consisting only of normal recurring accruals,  necessary for a fair presentation
of the consolidated  financial data as of and for the three-month and nine-month
periods  ended  September 30, 1996 and 1995.  The results of operations  for the
nine-month period ended September 30, 1996 are not necessarily indicative of the
results to be expected for the entire year ending December 31, 1996.

         The accompanying consolidated financial statements include the accounts
of  B.M.J.  Financial  Corp.  in  addition  to those  of The Bank of  Mid-Jersey
("Mid-Jersey"),  a wholly-owned  subsidiary of B.M.J. Financial Corp. Unless the
context  otherwise  indicates,  the term  "BMJ"  as used  herein  refers  to the
consolidated  B.M.J.  Financial  Corp. and The Bank of Mid- Jersey  entity.  All
significant  intercompany  accounts and transactions  have been  eliminated.  In
preparing the consolidated financial statements,  management is required to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities as of the date
of the financial  statements  and the reported  amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

         Material  estimates  that are  particularly  susceptible to significant
change in the  near-term  relate to the  determination  of the  reserve for loan
losses,  the  valuation  of  other  real  estate  acquired  in  connection  with
foreclosures or in satisfaction of loans,  and the valuation of the deferred tax
asset. In connection with the  determination of the reserves for loan losses and
other real estate,  management  periodically obtains independent  appraisals for
significant properties.

         Management  believes  that the  reserves  for losses on loans and other
real estate are adequate in relation to the risks and uncertainties  inherent in
those portfolios.  While management uses available  information to determine the
appropriate  recognition  of  losses  on loans and  other  real  estate,  future
additions to the reserves may be necessary based on, among other things, changes
in  economic   conditions,   particularly  in  New  Jersey,   and  the  changing
circumstances of the borrowers. In addition,  various regulatory agencies, as an
integral part of their examinations, periodically review BMJ's reserves for loan
losses. Such agencies may request BMJ to consider  recognizing  additions to the
reserves based on the regulators'  judgments about information available to them
at the time of their examination.

         These  statements  should be read in conjunction  with the notes to the
consolidated  financial statements contained in B.M.J.  Financial Corp.'s Annual
Report on Form 10-K to the Securities and Exchange Commission for the year ended
December 31, 1995, to which reference is hereby made.
<PAGE>
2.       Acquisition

         On  August  29,  1996,  B.M.J.   Financial  Corp.  and  Summit  Bancorp
("Summit") announced the signing of an agreement under which Summit will acquire
BMJ in an exchange of stock.

         The  agreement  contemplates  an exchange of 0.560 of a share of Summit
common  stock for each  share of BMJ  stock.  Summit  will  receive an option to
purchase  up to  19.9% of  BMJ's  common  stock  if  certain  conditions  occur.
Additionally, the agreement allows for BMJ to declare quarterly common dividends
until the  closing  date in an amount  equivalent  to the common  dividend  rate
declared by Summit.

         The transaction is subject to shareholder and regulatory  approvals and
certain other  conditions  and is scheduled to be completed in the first quarter
of   1997.   It  is   anticipated   that  it  will   be   accounted   for  as  a
pooling-of-interests.

3.       Securities

         Investments are classified into three categories:  (1) held to maturity
securities,  which are reported at amortized cost (debt  securities  only);  (2)
trading  securities,  which are reported at fair value with unrealized gains and
losses included in earnings;  and (3) available for sale  securities,  which are
reported at fair value with  unrealized  gains and losses reported as a separate
component of shareholders'  equity net of taxes and excluded from earnings.  BMJ
currently has no securities classified as trading securities.

         Securities  classified as available for sale may be sold prior to their
contractual maturity in response to changing market and interest rate conditions
or as part of an overall asset/liability  strategy. These securities are carried
at their fair value with  unrealized  gains and losses  carried,  net of tax, as
adjustments  to  shareholders'  equity.  Gains  and  losses on  disposition  are
included in earnings using the specific identification method.

         Securities  classified  as held to maturity are comprised of securities
that  BMJ has the  positive  intent  and  ability  to  hold to  maturity.  These
securities  are  carried  at cost,  adjusted  for  amortization  of  premium  or
accretion of discount.  The premium or discount  adjustments  are  recognized as
adjustments to interest income, on a level yield basis. Unrealized losses due to
fluctuations in market value are recognized as security losses when a decline in
value is assessed as being other than temporary.

4.       Loans

         Loans  are  reported  at their  principal  outstanding  balance  net of
charge-offs,  deferred  loan fees and costs on  originated  loans,  and unearned
income.  Interest income is generally recognized when income is earned using the
interest method. Loan origination fees and certain direct loan origination costs
are deferred  and the net amounts are  amortized  as  adjustments  of the loans'
yields.
<PAGE>
5.       Reserve For Loan Losses

         On January 1, 1995,  BMJ adopted FAS No. 114,  "Accounting by Creditors
for  Impairment  of a Loan"  and FAS  No.  118,  "Accounting  by  Creditors  for
Impairment of a Loan--Income  Recognition and  Disclosure." FAS No. 114 provides
guidelines for measuring  impairment losses on loans. A loan is considered to be
impaired,  based on current  information and events,  if it is probable that BMJ
will be unable to collect the scheduled  payments of principal and interest when
due according to the contractual terms of the loan agreement. The measurement of
impaired loans is generally based upon the present value of expected future cash
flows discounted at the loan's  historical  effective  interest rate except that
all  collateral-dependent  loans are measured for  impairment  based on the fair
value of the collateral.

         The adequacy of the reserve for loan losses is  periodically  evaluated
by BMJ in order to maintain the reserve at a level that is  sufficient to absorb
probable loan losses.  Management's evaluation of the adequacy of the reserve is
based on a review of BMJ's historical loss experience,  known and inherent risks
in the loan  portfolio,  including  adverse  circumstances  that may  affect the
ability of the borrower to repay interest and/or principal,  the estimated value
of  collateral,  and an  analysis  of the levels  and  trends of  delinquencies,
charge-offs,  and the risk ratings of the various loan categories.  Such factors
as the level and trend of interest  rates and the  condition of the national and
local economies are also considered.

         The reserve for loan losses is established  through charges to earnings
in the form of a provision  for loan  losses.  Increases  and  decreases  in the
reserve due to changes in the  measurement of the impaired loans are included in
the  provision  for loan losses.  Loans  continue to be  classified  as impaired
unless they are brought fully current and the  collection of scheduled  interest
and principal is considered probable.

         When a loan or portion of a loan is determined to be uncollectible, the
portion  deemed  uncollectible  is charged  against the  reserve and  subsequent
recoveries, if any, are credited to the reserve.

6.       Income Recognition on Impaired and Nonaccrual Loans

         Loans,  including  impaired loans, are generally reported as nonaccrual
if they are past due as to maturity or payment of  principal  or interest  for a
period of more than 90 days,  unless  such  loans  are  well-secured  and in the
process of  collection.  If a loan or a portion of a loan is  partially  charged
off, the loan is classified as nonaccrual.  Loans that are on a current  payment
status or past due less than 90 days may also be  classified  as  nonaccrual  if
repayment  in full of principal  and/or  interest is in doubt.  Loans,  with the
exception of partially charged off loans or loans with any portion classified as
doubtful,  may be placed back on accrual  status when they become  current as to
both principal and interest and when concern as to future collectibility in full
no longer  exists.  The remaining  recorded  balance of a partially  charged off
loan, however,  may be returned to accrual status if the entire contractual loan
balance,  together  with all unpaid  contractual  interest,  is determined to be
fully collectible.
<PAGE>
         While a loan is classified as nonaccrual and the future  collectibility
of the recorded loan balance is doubtful,  collections of interest and principal
are generally applied as a reduction to principal  outstanding.  When the future
collectibility of the recorded loan balance is expected,  interest income may be
recognized  on a cash  basis.  In the  case  where a  nonaccrual  loan  had been
partially  charged  off,  recognition  of interest on a cash basis is limited to
that which  would  have been  recognized  on the  recorded  loan  balance at the
contractual  interest rate. Cash interest  receipts in excess of that amount are
recorded as  recoveries  to the reserve for loan losses until prior  charge-offs
have been fully recovered.

7.       Other Real Estate

         Other real estate acquired through  foreclosure or acceptance of a deed
in lieu of foreclosure is carried at the lower of the recorded investment in the
loan or the fair value less  estimated  costs of  disposal.  When a property  is
acquired,  the  excess of the loan  balance  over the  estimated  fair  value is
charged to the reserve for loan losses. A reserve for other real estate has been
established  to provide for subsequent  write-downs  that may be required to the
carrying value of the property or losses on the sales of properties. The reserve
is established  through charges to other real estate expense.  Operating results
of other real estate owned,  including rental income and operating expenses, are
recorded in other real estate expense.  Gains and losses realized from the sales
of other real  estate are  included in  noninterest  income.  Specific  dates of
disposal  cannot  realistically  be  projected  without  the  existence  of firm
contracts for sale. At this time, contracts for sale exist on certain foreclosed
assets  representing  an  insignificant  portion  of the  carrying  value on the
balance sheet.

         In prior  years,  BMJ  classified  as other real estate  certain  loans
meeting the insubstance  foreclosure criteria. Upon the adoption of FAS 114, BMJ
reclassified  to  loans  insubstance  foreclosed  assets  that  were  not in its
possession. Prior periods have been reclassified for comparative purposes.

8.       Income Taxes

         BMJ files a consolidated  Federal income tax return,  and the amount of
income tax expense or benefit is computed and allocated among  subsidiaries on a
separate return basis. BMJ utilizes the asset and liability method of accounting
for income taxes as required by Statement of Financial  Accounting Standards No.
109, "Accounting for Income Taxes" ("FAS 109"). Under this method,  deferred tax
assets  and  liabilities   are  recognized  for  the  future  tax   consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and liabilities  and their  respective tax bases.  Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which temporary  differences,  which are inherent
in the tax filing  process,  are expected to be recovered or settled.  Under FAS
109,  the effect on deferred tax assets and  liabilities  of a change in the tax
rates is recognized in income in the period that includes the enacted date.
<PAGE>

                     B.M.J. Financial Corp. and Subsidiaries
           Management's Discussion and Analysis of Financial Condition
                            and Results of Operations


The  following  discussion  and  analysis  addresses  material  changes in BMJ's
financial  condition  between  December  31,  1995 and  September  30,  1996 and
material  changes in its results of operations  with respect to the  three-month
and nine-month periods ended September 30, 1996 and 1995.

Earnings Performance

         BMJ reported net income for the third quarter ended  September 30, 1996
of $2.4  million,  compared to net income for the third  quarter of 1995 of $2.8
million.  For the  nine-months  ended  September  30, 1996,  net income was $6.8
million  compared  to net income of $5.7  million for the  comparable  period of
1995.

         On a per share  basis,  net  income  for the third  quarter of 1996 was
$0.31,  compared to net income of $0.36 for the third  quarter of 1995.  For the
nine-month  period ended  September 30, 1996, net income was $0.88,  compared to
net income of $0.74 for the nine-month period ended September 30, 1995.

         Net interest  income for the third  quarter  ended  September  30, 1996
amounted  $7.7 million  compared to $7.1 million for the third  quarter of 1995.
For the nine-month period ended September 30, 1996, net interest income amounted
to $22.8 million versus $21.0 million for the nine-month  period ended September
30, 1995. BMJ's taxable  equivalent net interest margin remained strong at 5.24%
for the nine-month period ended September 30, 1996.

         BMJ's pre-tax  income for the third  quarter  ended  September 30, 1996
totaled  $3.7  million,  an increase  of 29.0% over the  pre-tax  income of $2.8
million reported for the third quarter of 1995. For the nine-month  period ended
September 30, 1996,  pre-tax income  amounted to $10.5  million,  an increase of
42.2% over the pre-tax income of $7.4 million  reported for the comparable  1995
period.

         Income tax expense for the quarter ended September 30, 1996 amounted to
$1.3 million,  compared to $8 thousand for the third quarter of 1995. Income tax
expense for the nine-month  period ended September 30, 1996 totaled $3.7 million
compared to $1.7 million for the comparable period of 1995.

         As a result of significant tax loss carryback refund claims  previously
filed by the Company,  BMJ had been under  examination  by the Internal  Revenue
Service  ("IRS")  for the  taxable  years 1989  through  1993.  During the third
quarter of 1995,  BMJ received the Revenue  Agent's Report ("RAR") for the years
under  audit and  agreed to the  examiner's  findings.  BMJ then  evaluated  its
reserves  for income taxes based on  acceptance  of the RAR. As a result of this
review,  income tax expense for the  three-month  and  nine-month  periods ended
September  30, 1995 was reduced by $1.0  million,  representing  the reversal of
previously  accrued  income taxes.  BMJ believes  that its remaining  income tax
reserves are adequate to cover tax liabilities for all open years.

         Total  noninterest  expenses for the third  quarter of 1996 amounted to
$5.2  million,  compared to total  noninterest  expenses of $5.3 million for the
1995 third quarter.  For the nine-month  period ended September 30, 1996,  total
noninterest  expenses  amounted to $15.7 million,  compared to total noninterest
expenses of $16.8 million for the first nine months of 1995.
<PAGE>
         Net Interest Income

         Net   interest   income   is   interest   earned  on  loans  and  other
interest-earning  assets  minus  interest  paid on deposits  and other  borrowed
funds.  Interest rate  fluctuations  as well as changes in the volume and mix of
interest-earning  assets and interest-bearing  liabilities combine to affect net
interest income.

         BMJ's net  interest  income was $7.7  million for the third  quarter of
1996 compared to $7.1 million for the third quarter of 1995. For the nine months
ended  September 30, 1996,  net interest  income was $22.8  million  compared to
$21.0 million for the comparable 1995 period.

         The  financial  summary  in Table 1 details  yields  and rates of major
interest-earning  assets and  interest-bearing  liabilities  for the  nine-month
periods  ended  September 30, 1996 and 1995.  Among other things,  Table 1 shows
that the  cost of  interest-bearing  deposits  increased  to 3.41%  for the nine
months ended September 30, 1996 compared to 3.07% for the  corresponding  period
ended September 30, 1995. BMJ's net interest margin was 5.24% for the nine-month
period  ended  September  30,  1996  compared to 5.58% for the  comparable  1995
period.  This  decrease  of 34 basis  points  in BMJ's  net  interest  margin is
primarily due to the increase in cost of interest-bearing  liabilities outpacing
the increase in yields on  interest-earning  assets  reflecting an  increasingly
competitive market for customer deposits.

         The  impact of the  narrower  margin in 1996 was  somewhat  offset by a
$77.1  million  increase in BMJ's  average  interest-earning  assets from $514.4
million to $591.5 million.  The improvement in the amount of net interest income
in the third quarter and first nine months of 1996 compared with the  comparable
periods of 1995 is also partly attributable to the continuing reduction in BMJ's
level of nonperforming  assets whereby the proceeds from sales of properties are
invested in interest-earning assets. BMJ's nonperforming assets at September 30,
1996 totaled $6.7 million, down from $7.7 million at December 31, 1995.

         Noninterest Expense

         Noninterest  expense for the quarter ended  September 30, 1996 was $5.2
million,  compared  to total  noninterest  expense of $5.3  million for the 1995
third  quarter.  For the  nine-month  period ended  September  30,  1996,  total
noninterest expense amounted to $15.7 million as compared with total noninterest
expense of $16.8 million for the first nine months of 1995.  For the  nine-month
period ended September 30, 1996,  BMJ's  efficiency ratio improved to 58.7% from
68.2% for the comparable 1995 period.

         Other real estate  expense  decreased  to $43  thousand for the quarter
ended  September 30, 1996,  compared to $113 thousand for the 1995 third quarter
and decreased to $145  thousand for the  nine-month  period ended  September 30,
1996  compared to $403 thousand for the 1995 period.  Other real estate  expense
includes the costs to maintain repossessed properties such as real estate taxes,
insurance and general maintenance  expenses.  During the nine-month period ended
September  30,  1996,  BMJ was able to reduce the net  balance of its other real
estate to a net balance of $1.5  million at September  30, 1996  compared to the
net balance of $2.7 million at September 30, 1995 primarily  through the sale of
properties.
<PAGE>
         The other (or miscellaneous)  noninterest expense category totaled $2.0
million for the quarter  ended  September  30, 1996 compared to $2.2 million for
the third quarter of 1995. For the nine-month  period ended  September 30, 1996,
other noninterest  expense totaled $6.2 million compared to $7.1 million for the
nine-month   period  ended  September  30,  1995.  The  most   significant  item
contributing to the 1996 decrease in this category  compared to 1995 amounts was
the reduction in BMJ's premium for FDIC insurance.

         In August 1995,  the Federal  Deposit  Insurance  Corporation  ("FDIC")
approved  a  reduction  in the  premium  banks pay for  deposit  insurance.  For
well-capitalized institutions, the premium was reduced from $0.23 for every $100
of deposits to $0.04 for every $100 of deposits.  BMJ's subsidiary,  The Bank of
Mid-Jersey, is qualified as a well-capitalized institution. Following the FDIC's
confirmation  that the Bank Insurance Fund had met its designated level of $1.25
per every $100 of insured  deposits,  it was announced that no premiums would be
assessed  during 1996.  As a result,  BMJ's other  noninterest  expenses for the
nine-month  period ended  September 30, 1996 include no FDIC  insurance  premium
expenses compared to $492 thousand for the first nine months of 1995.

Balance Sheet Analysis

         Total assets of BMJ amounted to $655.2  million at September  30, 1996,
increasing  from $588.7 million at December 31, 1995. This increase is primarily
attributable  to an  increased  level of total  deposits at  September  30, 1996
versus December 31, 1995. Total deposits of $537.2 million at September 30, 1996
represents a 10.8%  increase  from the $485.0 of total  deposits at December 31,
1995. Through ongoing direct marketing programs and competitively priced deposit
products,  it is BMJ's  intention to increase  its share of the retail  deposits
market.

         During 1996,  BMJ continued to maintain its strong  capital  ratios and
balance  sheet  condition.  Shareholders'  equity  amounted to $66.3  million at
September 30, 1996 compared to $65.6 million at December 31, 1995.

         In addition,  asset quality continued to improve as total nonperforming
assets at September 30, 1996  amounted to $6.7 million  compared to $7.7 million
at December 31, 1995.

         The following  discussion addresses the major components of the balance
sheet.

         Securities Available for Sale

         Securities  which  may be sold  in  response  to  changing  market  and
interest rate conditions or as part of BMJ's asset/liability management strategy
have been classified as securities  available for sale. The securities available
for sale  portfolio  amounted to $76.9 million at September 30, 1996 compared to
$64.6 million at December 31, 1995. The securities  available for sale portfolio
is carried at fair value.

         Table 1 details the  composition of the  securities  available for sale
portfolio.  In addition,  Table 1 provides information concerning average yields
and balances of the  securities  available for sale portfolio for the nine-month
periods ended September 30, 1996 and 1995.
<PAGE>
         Securities Held to Maturity

         Securities  held to maturity are comprised of  securities  that BMJ has
the  positive  intent and  ability to hold to  maturity.  These  securities  are
carried at cost,  adjusted for amortization of premium or accretion of discount.
The premium or discount  adjustments  are  recognized as adjustments to interest
income,  on a level yield basis.  Gains or losses on disposition are computed by
the  specific  identification  method and are  included in  noninterest  income.
Unrealized losses due to fluctuations in market value are recognized as security
losses when a decline in value is assessed as being other than temporary.

         The securities held to maturity  portfolio amounted to $98.9 million at
September  30, 1996  compared to $82.5  million at December  31,  1995.  Table 1
provides  information  concerning  average yields and balances of the securities
available for sale portfolio for the nine-month periods ended September 30, 1996
and 1995.
<PAGE>
<TABLE>
<CAPTION>
                                                               Table 1
                                                          Financial Summary
                             Averages Balances, Rates Paid and Yields (yields on a tax-equivalent basis)

(in thousands)                                       Nine months ended September 30, 1996       Nine months ended September 30, 1995
                                                     ------------------------------------       ------------------------------------
                                                                      Yields     Interest                         Yields   Interest
                                                     Average            or       Income/          Average          or      Income/
                                                     Balance          Rates      Expense          Balance         Rates    Expense
                                                   ---------           ----     --------         --------          ----      -------
<S>                                                <C>                 <C>      <C>              <C>               <C>       <C>
INTEREST-EARNING ASSETS Money market investments:
    Time deposits with other banks                 $      -               -%    $      -         $  1,094          5.87%     $    48
    Interest bearing deposits with other banks           532           5.01           20              545          5.40           22
    Federal funds sold and repurchase agreements       4,142           5.27          164            6,150          5.93          273
    Other short term investments                       5,165           5.29          205            6,491          5.97          290
                                                   ---------           ----     --------         --------          ----      -------
        Total money market investments                 9,839           5.27          389           14,280          5.93          633

Securities available for sale:
    U.S. Treasury securities                           2,264           5.59           95            3,253          4.64          113
    U.S. government agencies and corporations         68,184           6.81        3,486            5,577          6.57          274
    States and political subdivisions                  9,256           6.02          418            4,784          6.40          229
    Other securities                                       -              -            -                -             -            -
                                                   ---------           ----     --------         --------          ----      -------
        Total securities available for sale           79,704           6.68        3,999           13,614          6.05          616

Securities held to maturity:
    U.S. Treasury securities                           5,092           6.70          256           18,584          5.68          790
    U.S. government agencies and corporations         75,085           5.96        3,362           88,760          5.61        3,723
    States and political subdivisions                  6,215           6.69          312            4,372          8.50          278
    Other securities                                   3,425           6.22          160            1,322          6.78           67
                                                   ---------           ----     --------         --------          ----      -------
        Total securities held to maturity             89,817           6.07        4,090          113,038          5.75        4,858
Loans, net of unearned income                        412,105           8.89       27,513          373,512          8.94       24,964
                                                   ---------           ----     --------         --------          ----      -------
        Total interest-earning assets              $ 591,465           8.11%    $ 35,991         $514,444          8.08%     $31,071
                                                   =========           ====     ========         ========          ====      =======
FUNDING SOURCES
Deposits:
    Savings and interest checking                  $ 261,011           2.16%    $  4,230         $257,393          2.20%     $ 4,228
    Certificates of deposit of $100,000 or more       25,989           5.40        1,054            8,423          5.40          340
    Other time deposits                              155,468           5.16        6,026          121,416          4.77        4.332
                                                   ---------           ----     --------         --------          ----      -------
        Total interest-bearing deposits              442,468           3.41       11,310          387,232          3.07        8,900

Securities sold under agreements to repurchase        15,537           4.29          500           15,118          4.86          550
Other borrowed funds                                   8,664           5.64          367              176          4.56            6
Other debt                                            11,121           6.61          552            2,792          7.45          156
                                                   ---------           ----     --------         --------          ----      -------
        Total interest-bearing liabilities           477,790           3.55       12,729          405,318          3.17        9,612
Portion of noninterest-bearing funding sources       113,675              -           -           109,126             -            -
                                                  ----------           -----    --------        ---------          ----     --------
        Total funding sources                      $ 591,465           2.87%    $ 12,729         $514,444          2.50%    $  9,612
                                                   =========           ====     ========         ========          ====      =======
Net interest margin and net interest income                            5.24%    $ 23,262                           5.58%    $ 21,459
                                                                       ====     ========                           ====     ========
</TABLE>
<PAGE>
Loan Portfolio

         BMJ's loan  portfolio  amounted to $436.4 million at September 30, 1996
increasing from $399.4 million at December 31, 1995.

         The  following  table  provides  a  comparative  analysis  of the  loan
portfolio composition:
<TABLE>
<CAPTION>

(in thousands)                                 September 30,       December 31,
                                                   1996                1995
                                                 --------            -------- 
<S>                                              <C>                 <C>
Commercial, financial and agricultural           $ 33,482            $ 24,869
Real estate - mortgage                            311,959             295,535
Real estate - construction                         24,889              32,439
Consumer                                           66,090              46,521
                                                 --------            -------- 
                                                 $436,420            $399,364
                                                 ========            ========
</TABLE>
         Substantially  all  of  BMJ's  lending  activity  is to  customers,  or
collateralized by property, located within Mercer, Burlington and Ocean counties
in New Jersey. Of the portfolio as a whole, at September 30, 1996, approximately
76% of BMJ's loans are  collateralized  by real estate and approximately 18% are
residential loans.

Nonperforming Assets

         Nonperforming  assets,  as  summarized  in the table below,  consist of
nonperforming loans, impaired loans and net other real estate owned.
<TABLE>
<CAPTION>
(in thousands)                                September 30,         December 31,
                                                   1996                1995 
                                                 -------             -------
<S>                                              <C>                 <C>                                                            
Nonperforming Loans:                             
Loans past due 90 days or
     more and accruing                           $   205             $     -
Nonaccrual loans                                   3,410               6,041
Restructured loans                                 1,589                   -
                                                 -------             -------
    Total nonperforming loans                      5,204               6,041
                                                 -------             -------

Other Real Estate:
Other real estate                                  1,650               1,963
Loss reserve                                        (147)               (277)
                                                 -------             -------
    Total other real estate, net                   1,503               1,686
                                                 -------             ------- 
Total Nonperforming Assets                       $ 6,707             $ 7,727
                                                 =======             ======= 
</TABLE>
<PAGE>
         Nonperforming loans include nonaccrual loans, impaired loans, and loans
90 days or greater past due and still accruing.  Loans are generally reported as
nonaccrual  if they are past due as to  maturity  or  payment  of  principal  or
interest  for a period of more than 90 days,  unless such loans are well secured
and in the process of collection.  If a loan or a portion of a loan is partially
charged off, the loan is classified as  nonaccrual.  Loans that are on a current
payment  status  or past  due  less  than  90 days  may  also be  classified  as
nonaccrual if repayment in full of principal and/or interest is determined to be
in jeopardy.  Loans,  with the exception of partially charged off loans or loans
with any portion  classified as doubtful,  may be placed back on accrual  status
when they become  current as to both  principal and interest and when concern as
to  future  collectibility  in full no longer  exists.  The  remaining  recorded
balance of a  partially  charged off loan,  however,  may be returned to accrual
status  if the  entire  contractual  loan  balance,  together  with  all  unpaid
contractual interest, is determined to be fully collectible. Nonperforming loans
as a percentage of total loans were 1.2% as of September 30, 1996 and 1.5% as of
December 31, 1995. The decline in nonaccrual  loans is attributable to increased
collections, transfers to other real estate and charge-offs.

         Potential  problem  loans  consist  of  loans  which  are  included  in
performing  loans at September 30, 1996, but for which potential credit problems
of the  borrowers  have caused  management to have concerns as to the ability of
such borrowers to comply with present  repayment  terms.  At September 30, 1996,
such potential problem loans amounted to approximately  $1.1 million.  Depending
on the state of the economy and the impact thereof on BMJ's  borrowers,  as well
as other future events, these loans and others not currently so identified could
be classified as nonperforming loans in the future.

         On January 1, 1995,  BMJ adopted FAS No. 114,  "Accounting be Creditors
for  Impairment  of a Loan"  and FAS  No.  118.  "Accounting  by  Creditors  for
Impairment of a Loan - Income Recognition and Disclosure".  FAS No. 114 provides
guidelines for measuring  impairment losses on loans. A loan is considered to be
impaired,  based on current  information and events,  if it is probable that BMJ
will be unable to collect the scheduled  payments of principal and interest when
due according to the contractual terms of the loan agreement. The measurement of
impaired loans is generally based upon the present value of expected future cash
flows discounted at the loan's  historical  effective  interest rate except that
all  collateral-dependent  loans are measured for  impairment  based on the fair
value of the  collateral.  If the loan valuation is less than the recorded value
of the loan, an impairment  reserve must be established for the difference.  The
impairment  reserve is  established  by either an  allocation of the reserve for
loan losses or by a provision for loan losses.

         At September  30, 1996,  BMJ's  recorded  investment in loans for which
impairment  has been  recognized  in  accordance  with FAS 114  amounted to $5.8
million.  The  reserve  for loan losses of $9.3  million at  September  30, 1996
includes  reserves of $1.3 million  applicable  to such impaired  loans.  All of
these loans were valued using the fair value of collateral method. The remaining
reserve for loan  losses,  totaling  $8.0  million at  September  30,  1996,  is
available to absorb losses in BMJ's entire loan portfolio. During the nine-month
period ended  September 30, 1996,  the average  recorded  investment in impaired
loans was  approximately  $6.6  million.  Interest  income  recognized  on total
impaired  loans  during the  nine-month  period  ended  September  30,  1996 was
approximately $254 thousand.

         Other real estate consists of properties  acquired through  foreclosure
or deed in lieu of  foreclosure.  A  reserve  for  other  real  estate  has been
established  to maintain  the  portfolio at the lower of cost or fair value less
estimated disposition costs.
<PAGE>
         Reserve for Loan Losses

         At September 30, 1996, the reserve for loan losses totaled $9.3 million
compared to $10.1  million at December  31,  1995.  The ratio of the reserve for
loan  losses to total loans at  September  30,  1996 was 2.14%  versus  2.53% at
December  31,  1995.  The table below  provides a summary of the activity in the
loan loss reserve plus  additional  key ratios for assessing the adequacy of the
reserve for loan losses at September 30, 1996.
<TABLE>
<CAPTION>
                                                                  Nine months ended
                                                             -----------------------------
(in thousands)                                               September 30     September 30 
                                                                 1996             1995
                                                              ---------        ---------
<S>                                                           <C>              <C>
Reserve balance, beginning of year .....................      $  10,099        $  12,485
Gross charge-offs ......................................         (1,812)          (1,142)
Less: recoveries .......................................            952            1,460
                                                              ---------        ---------
Net charge-offs (recoveries) ...........................            860             (318)
Provision charged to operations ........................             95             --
                                                              ---------        ---------
Reserve balance, end of period .........................      $   9,334        $  12,803
                                                              =========        =========

Loans, end of period ...................................      $ 436,420        $ 381,207
Average loans outstanding ..............................      $ 412,105        $ 373,512
Ratio of net charge-offs to average loans outstanding ..            .21%            (.09%)
Ratio of reserve for loan losses to nonperforming loans          179.36%          203.22%
Ratio of reserve for loan losses to loans, end of period           2.14%            3.36%
</TABLE>

         Management  has  adopted  a  reserve  methodology  consistent  with the
provisions of FAS 114 for the assessment of all loans including residential real
estate  mortgages and consumer loans.  This  methodology  assigns reserves based
upon credit risk ratings for specific  loans and general  reserves for all other
loans.  The general reserves are based on historical  charge-off  experience but
are  subject to certain  minimums  based upon BMJ's  assessment  of the  current
economic environment.

         BMJ's gross  charge-offs  during the nine-month  period ended September
30, 1996 totaled $1.8  million.  Subsequent  to the  charge-off of a loan, it is
BMJ's  policy to continue  to  vigorously  pursue the  collection  of  principal
outstanding  as  well as past  due  interest.  Collection  efforts  resulted  in
recoveries  of  $952  thousand  on  previously   charged-off  loans  during  the
nine-month  period ended  September  30, 1996 compared with $1.5 million for the
first nine months of 1995.
<PAGE>
         The  distribution  of the reserve for loan losses and the percentage of
loans in each  category to total loans at September 30, 1996 is  illustrated  in
the following table. The allocated reserve includes both the specific reserve as
calculated  under FAS 114 and the general reserve as calculated  under Statement
of Financial Accounting Standards No. 5, "Accounting for Contingencies".
<TABLE>
<CAPTION>
                    Allocation of the Reserve for Loan Losses
                               September 30, 1996

(in thousands)                                                 % of Loans
                                                 Reserve     in Each Category
                                                 Amount       to Total Loans
                                                 ------       --------------
<S>                                              <C>            <C>
Domestic:
     Commercial, financial and agricultural .... $1,028            7.67%
     Real estate  -  mortgage ..................  6,186           71.48
     Real estate  -  construction ..............    960            5.70
     Consumer ..................................    420           15.15
Unallocated ....................................    740              --
                                                 ------           ----- 
                                                 $9,334          100.00%
                                                 ======          ======
</TABLE>

Note:  This  distribution  is made  for  analytical  purposes  only.  The  total
allowance is available to absorb losses from any segment of the portfolio.

         Deposits

         BMJ's  deposit  base  is  the  principal  source  of  funds  supporting
interest-earning  assets.  Maintaining  a strong core deposit base is key to the
development  of  long-term  customer   relationships  which,  in  turn,  present
opportunities  for BMJ to cross-sell its services.  To meet the  requirements of
its  diverse  customer  base,  BMJ  offers  a full  range of  deposit  products,
including  interest-bearing  and  noninterest-bearing  demand deposits,  savings
deposits, insured retail money market accounts and certificates of deposit.

         BMJ's total deposits  increased to $537.2 million at September 30, 1996
compared to $485.0 million at December 31, 1995.

         Table 1 provides  information  concerning average rates and balances of
BMJ's  interest-bearing  deposits for the nine-month periods ended September 30,
1996 and  1995.  Among  other  things,  Table 1 shows  that as a  result  of the
increasing interest rate environment during 1996, the average rate paid on BMJ's
average  interest-bearing deposit balances increased to 3.41% for the nine-month
period ended September 30, 1996 from 3.07% for the comparable 1995 period.
<PAGE>
         Federal Funds Purchased and Other Borrowed Funds

         Federal Funds  purchased and other borrowed funds at September 30, 1996
includes  Federal  funds  purchased of $3.7 million and a short-term  advance of
$10.5  million  from the Federal  Home Loan Bank.  These  borrowings  provide an
additional  source  of funds to  support  BMJ's  securities  portfolio  and loan
portfolio  growth. As indicated in Table 1, the average balance of Federal funds
purchased  and  other  borrowed  funds  increased  from  $176  thousand  for the
nine-month period ended September 30, 1995 to an average balance of $8.7 million
for the comparable  1996 period.  The average cost increased by 108 basis points
during 1996 to 5.64% compared to 4.56% in 1995 due to the higher level of market
interest rates in 1996.

         Capital

         BMJ and Summit Bancorp ("Summit") announced the signing of an agreement
on August 29, 1996 under which Summit will acquire BMJ in an exchange of stock.

         The  agreement  contemplates  an exchange of 0.560 of a share of Summit
common  stock for each  share of BMJ  stock.  Summit  will  receive an option to
purchase  up to  19.9% of  BMJ's  common  stock  if  certain  conditions  occur.
Additionally, the agreement allows for BMJ to declare quarterly common dividends
until the  closing  date in an amount  equivalent  to the common  dividend  rate
declared by Summit.

         The transaction is subject to shareholder and regulatory  approvals and
certain other  conditions  and is scheduled to be completed in the first quarter
of   1997.   It  is   anticipated   that  it  will   be   accounted   for  as  a
pooling-of-interests.

         BMJ's capital  management  objectives  are to maintain a strong capital
base while also  maximizing  shareholder  value.  The following  table  provides
selected  shareholders'  equity  ratios at  September  30, 1996 and December 31,
1995.
<TABLE>
<CAPTION>
(in thousands)                                   September 30,      December 31,
                                                     1996              1995
                                                     ----              ----
<S>                                              <C>                <C>
Shareholders' equity                             $ 66,322           $ 65,622
Shareholders' equity to assets ratio                10.12%             11.15%
Book value per share                             $   8.83           $   8.62
</TABLE>

         The decrease in BMJ's equity ratio from December 31, 1995 resulted from
the  repurchase  of common  stock,  payment of cash  dividends  as well as asset
growth. In January 1996, the Board of Directors  authorized the repurchase of up
to 5% of BMJ's common stock at  management's  discretion,  either on a privately
negotiated  basis or on the open  market.  As of  September  30,  1996,  BMJ had
repurchased 178,000 shares under this  authorization.  As a result of the Summit
agreement, no additional share repurchases are expected to be made.
<PAGE>
         The  Federal  Reserve  Board  ("FRB")  has  issued  risk-based  capital
guidelines  applicable  to member banks and bank holding  companies and the FDIC
has issued  comparable  guidelines  applicable  to state  nonmember  banks.  The
guidelines,  which establish a risk-adjusted  ratio relating to the total amount
of assets and off-balance  sheet exposures (as such assets and off-balance sheet
items are  weighted to reflect  the risk  inherent  therein),  require a minimum
total risk-based capital ratio of 8.00%, with at least half of the total capital
in the  form  of  Tier 1  capital.  The  risk-based  capital  ratios  of BMJ and
Mid-Jersey were as follows on the dates shown:
<TABLE>
<CAPTION>
                                             September 30, 1996                        December 31, 1995
                                    -----------------------------------        -----------------------------------
                                         Total               Tier 1                Total                 Tier 1
                                      Risk-Based            Risk-Based           Risk-Based            Risk-Based
                                    Capital Ratio         Capital Ratio        Capital Ratio         Capital Ratio
<S>                                     <C>                   <C>                 <C>                   <C>
B.M.J.Financial Corp.                   15.09%                13.83%              16.05%                14.19%
The Bank of Mid-Jersey                  14.02%                12.76%              14.17%                12.90%
</TABLE>

         The FRB and  FDIC  have  also  adopted  leverage  capital  requirements
specifying  the  minimum  acceptable  ratios of Tier 1 capital to total  assets.
Under these requirements,  the most sound,  well-run institutions engaged in the
least risky  operations are required to maintain  minimum  leverage ratios of at
least 3%; all other  institutions  are  required  to maintain  higher  levels of
capital depending on their condition.

         The leverage  ratios of BMJ and Mid-Jersey were as follows on the dates
shown:
<TABLE>
<CAPTION>
                             Leverage Ratio at        Leverage Ratio at
                             September 30, 1996       December 31, 1995
                             ------------------       -----------------
<S>                                 <C>                    <C>
B.M.J.Financial Corp.               10.14%                 10.87%
The Bank of Mid-Jersey               9.48%                 10.18%
</TABLE>

         Failure to satisfy any minimum capital requirement applicable to BMJ or
Mid-Jersey  could subject BMJ or  Mid-Jersey,  as the case may be, to regulatory
actions by the FRB.

         As a result of BMJ's  strong  capital  ratios  and  continued  earnings
progress,  the payment of quarterly dividends to shareholders was resumed during
1995 at the level of $.05 per  share.  During the  fourth  quarter of 1995,  BMJ
announced a 50% increase in the amount of the  quarterly  cash dividend to $.075
per share.  In April,  BMJ announced a quarterly cash dividend of $.10 per share
that was paid on July 1, 1996.  On August 29, BMJ  announced  a  quarterly  cash
dividend of $0.20 per share to shareholders of record on September 15, 1996 that
was paid on October 1, 1996.
<PAGE>
         The  primary  source  of  funds  for  payment  of  dividends  by BMJ is
dividends received from Mid-Jersey.  The amount of dividends that Mid-Jersey may
declare in any year is subject to certain regulatory limitations. Mid-Jersey may
not  declare   dividends  if  such  declaration   would  leave  it  inadequately
capitalized.  Generally,  dividends  declared  by a bank are  limited to its net
profit, as defined by the regulatory  agencies,  for that year combined with its
retained net income from the preceding two years. At January 1, 1996, the amount
of retained earnings of Mid-Jersey available for declaration of dividends to BMJ
was $19.0 million.

Liquidity and Asset/Liability Management

         Liquidity  refers to BMJ's  ability to maintain a cash flow adequate to
fund operations and meet obligations on a timely and cost effective basis. Asset
liquidity is  represented  by the ease with which  assets can be converted  into
cash.  BMJ  continually  evaluates  its funding  needs and manages its liquidity
position by maintaining  adequate levels of liquid assets, such as cash and cash
equivalents  and  securities  available for sale.  BMJ's funding needs change as
loans grow,  deposits mature and payments on obligations  are made.  Because the
characteristics of BMJ's assets and liabilities change,  liquidity management is
a dynamic  process.  Among those  factors  affecting  liquidity  management  are
pricing and maturity of loans,  deposits and other  assets and  liabilities.  In
addition,  liquidity  management  is  affected  by changes  in the  relationship
between short-term and long-term interest rates.

         At September  30, 1996,  BMJ had a total of $101.7  million or 15.5% of
total assets in cash and cash  equivalents,  and securities  available for sale,
representing  its primary sources of liquidity,  as compared to $90.2 million or
15.3% of assets at December 31, 1995.  Another source of asset  liquidity is the
cash flows provided by maturities  and periodic  repayments of principal of both
the securities held to maturity portfolio and the loan portfolio.

         Liabilities  also  provide a source  of  liquidity  for BMJ.  Wholesale
certificates  of deposit (none of which were brokered  deposits) and  repurchase
agreements comprised 8.1% of total liabilities at September 30, 1996 and 5.1% of
total liabilities at December 31, 1995. Management believes there is substantial
room to increase these funding sources if necessary to meet its liquidity needs.
The Bank of Mid-Jersey  joined the Federal Home Loan Bank system during 1995 and
has established a line of credit of approximately $71.9 million with the Federal
Home  Loan  Bank of New  York to  further  support  and  enhance  liquidity.  At
September 30, 1996,  approximately  $26.5 million was  outstanding  against this
line of credit.  In addition,  Mid-Jersey  currently  has a $5.0 million line of
credit  with a  correspondent  bank to cover  short  term  funding  needs in the
federal funds market.

         As shown in the  Consolidated  Statement  of Cash Flows,  cash and cash
equivalents  decreased by $709  thousand to $24.9 million at September 30, 1996.
This  decrease  reflected  net  cash  of  $8.5  million  provided  by  operating
activities and $60.0 million of net cash provided by financing activities offset
by $69.2  million of net cash used in investing  activities.  Cash  generated by
operating  activities  reflected  BMJ's net income of $6.8 million  adjusted for
noncash  charges and credits.  Cash provided by financing  activities  primarily
reflected  the net  increases in  certificates  of deposit  partly offset by the
purchase of treasury  stock and  repayments of capital notes and long term debt.
Cash  used  in  investing  activities  was  primarily  for the  purchase  of the
securities  available for sale and the net increase in loans,  offset in part by
the proceeds from  maturities of securities  available for sale and the proceeds
from maturities of securities held to maturity.
<PAGE>
         At September 30, 1996, B.M.J.  Financial Corp., the parent company, had
a total of $2.1  million  in cash  and cash  equivalents  and  $3.8  million  in
available-for-sale  securities,  which  serve as the  parent  company's  primary
sources of liquidity.  The parent  company does not maintain  lines of credit or
other borrowing arrangements.  B.M.J. Financial Corp. has the capacity to borrow
funds from the Federal Reserve  discount window to meet liquidity needs that are
not funded through subsidiary dividends or income.

         BMJ's principal asset/liability management objectives are to manage the
sensitivity of net interest  spreads to potential  changes in interest rates and
to enhance  profitability  in ways that  should  provide  sufficient  reward for
understood and controlled risk. Specific  asset/liability  strategies are chosen
to achieve an appropriate  trade-off between average spreads and the variability
of spreads. The BMJ Asset/Liability Management Committee meets weekly to monitor
consolidated  risk  at the  corporate  level  and  to  monitor  compliance  with
established  liquidity  and interest  rate  sensitivity  policy  parameters on a
consolidated  and  subsidiary  bank  basis.  Funding  positions  are kept within
established  policy  limits  designed  to  maintain  reasonable  risk levels and
adequate liquidity.

         In order to measure the effects of interest rate  fluctuations on BMJ's
net interest  margin,  management  simulates the  potential  effects of changing
interest rates through computer modeling. These simulations determine the impact
on net interest  income of various  interest  rate  scenarios  and balance sheet
trends and strategies. These simulations incorporate the dynamics of the balance
sheet as well as the interrelationships between various categories of short-term
interest  rates and the impact the yield curve level has on asset and  liability
pricing.  Net interest  income  sensitivity to balance sheet trends and interest
rate  movements is  quantified,  and  appropriate  strategies  are developed and
implemented.

         As a financial institution,  BMJ entails a degree of interest rate risk
as a provider of banking services to its customers.  BMJ does not use derivative
interest rate contracts,  such as interest rate swaps, caps or floors, to manage
interest rate risk. In the event BMJ's computer model  indicates an unacceptable
level of risk,  BMJ could  undertake a number of actions  that would reduce this
risk,  including  the sale of a  portion  of its  available-for-sale  securities
portfolio.
<PAGE>

                           PART II. OTHER INFORMATION 


Item 1.  Legal Proceedings.
                  Not Applicable

Item 2.  Changes in Securities
                  Not Applicable

Item 3.  Defaults Upon Senior Securities.
                  Not Applicable

Item 4.  Submission of Matters to a Vote of Security Holders.
                  Not Applicable

Item 5.  Other Information.
                  Not Applicable

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

                  (a) Exhibits

                      11.  Statement Regarding Computation of Per Share Earnings
                      27.  Financial Data Schedule

                  (b) Reports on Form 8-K

                      BMJ filed a current report on Form 8-K with the Securities
                      and Exchange  Commission on September 16, 1996. The report
                      included as exhibits  thereto  the  Agreement  and Plan of
                      Merger,  dated August 28, 1996,  between B.M.J.  Financial
                      Corp. And Summit Bancorp; the B.M.J. Financial Corp. Stock
                      Option  Agreement,  dated August 29, 1996,  by and between
                      B.M.J.  Financial  Corp.  And Summit  Bancorp;  and a News
                      Release dated August 29, 1996 announcing the agreement and
                      plan of merger.
<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.


                                             B.M.J. Financial Corp.
                                                (Registrant)



Date  11/04/96                         By       /s/E. Jack Elias
                                                ----------------
                                                   E. Jack Elias 
                                                   President




Date  11/04/96                                  /s/Joseph M. Reardon
                                                --------------------
                                                   Joseph M. Reardon 
                                                   Chief Financial Officer