<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   Form 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

   For Quarter Ended June 30,1997                            Commission File
                                                              Number 0-16637



                         BROAD NATIONAL BANCORPORATION
--------------------------------------------------------------------------------

             (Exact name of registrant as specified in its charter)

          NEW JERSEY                            22-2395057
------------------------------              -----------------
(State or other jurisdiction of             (I.R.S. Employer
 incorporation or organization)             identification No.)
 
 905 Broad Street, Newark NJ                      07102
------------------------------              -----------------
(Address of principal executive offices)        (Zip Code)
 
Registrant telephone number, including area code (201) 624-2300
                                                  ----------------


                                      N/A
--------------------------------------------------------------------------------
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                                   
             ------     -----                               

Number of shares outstanding of Broad National Bancorporation class of Common
Stock, as of July 31, 1997:

                   Common Stock, $1.00 par value - 4,554,348

                                       1
<PAGE>
 
                         BROAD NATIONAL BANCORPORATION

                    Index to Form 10-Q Financial Information
            For the Three Months and Six Months Ended June 30, 1997
            -------------------------------------------------------
 
                                                              PAGE
                                                              ----
 
PART 1 - FINANCIAL INFORMATION                                  3
------------------------------
                                                                
Consolidated Statements of Condition                            
 as of June 30, 1997 and December 31, 1996                      4
                                                                
Consolidated Statements of Income for the                       
 Three Month and Six Month Periods Ended June 30, 1997          
 and 1996                                                       5
                                                                
Consolidated Statements of Cash Flows for the Six               
 Month Periods Ended June 30, 1997 and 1996                     7
                                                                
Notes to Consolidated Financial Statements                      8
                                                                
Management's Discussion and Analysis of Financial               
 Condition and Results of Operations                           10
                                                                
                                                                
PART 2 - OTHER INFORMATION                                     21
--------------------------                                         

Items 1,2,3 & 5                 Not Applicable or Negative

Item 4                                                         21
 
Item 6                                                         21
 
Signatures                                                     22
 
Exhibit 1  - Computation of Net Income  per Common Share       23
 
Exhibit 2  - Independent Auditor's Review Report of Interim
                   Financial Information                       24
 
Exhibit 27 - Financial Data Schedule                           25
 

                                       2
<PAGE>
 
                         BROAD NATIONAL BANCORPORATION



PART 1 - FINANCIAL INFORMATION

The following consolidated financial statements of Broad National Bancorporation
as of June 30, 1997 and December 31, 1996 as well as the three month and six
month periods ended June 30, 1997 and 1996 have been prepared by Broad National
Bancorporation without audit, and reflect all normal, recurring adjustments and
disclosures which are, in the opinion of management, necessary for a fair
statement of results for the interim periods presented.  These statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission.  Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted.  For further clarification and
understanding, these interim statements should be read in conjunction with the
annual report on Form 10-K of Broad National Bancorporation for the year ended
December 31, 1996.

The results of operations for the periods presented are not necessarily an
indication of the results which can be expected for 1997.

The registrant's independent public accountants, KPMG Peat Marwick LLP, have
performed a limited review of these interim statements in accordance with the
standards for such reviews promulgated by the American Institute of Certified
Public Accountants.  See page 24 for their report on this limited review.

                                       3
<PAGE>
 
                 BROAD NATIONAL BANCORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CONDITION
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
 
                                                                   JUNE 30,         DECEMBER 31,
                                                                     1997               1996
                                                               ---------------  -------------------
                                                                  (Unaudited)
<S>                                                            <C>              <C>
ASSETS
------
CASH AND DUE FROM BANKS                                              $ 39,114             $ 19,782
FEDERAL FUNDS SOLD                                                     53,775               57,075
                                                                     --------             --------
  CASH AND CASH EQUIVALENTS                                            92,889               76,857
SECURITIES HELD-TO-MATURITY
   (aggregate market value $84,390)
    and $89,482, respectively)                                         84,992               90,170
SECURITIES AVAILABLE-FOR-SALE                                          82,767               69,044
LOANS, Net of deferred loan fees                                      307,601              287,116
LESS -
   Allowance for possible loan losses                                   9,037                8,531
--------------------------------------------------------------------------------------------------
     NET LOANS                                                        298,564              278,585
--------------------------------------------------------------------------------------------------
PREMISES AND EQUIPMENT, net                                             8,909                8,888
ACCRUED INTEREST RECEIVABLE                                             3,823                3,351
OTHER ASSETS                                                            8,327                6,720
--------------------------------------------------------------------------------------------------
     TOTAL ASSETS                                                    $580,271             $533,615
--------------------------------------------------------------------------------------------------
 
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
DEPOSITS
 Non-interest bearing demand                                         $102,974             $100,945
 Savings and interest bearing demand                                  233,144              217,250
 Time deposits less than $100,000                                      90,717               85,714
 Time deposits of $100,000 or more                                     90,200               81,164
--------------------------------------------------------------------------------------------------
TOTAL  DEPOSITS                                                       517,035              485,073
SHORT-TERM BORROWINGS                                                   3,506                1,000
ACCRUED TAXES, INTEREST AND OTHER LIABILITIES                           8,874                9,184
TRUST PREFERRED SECURITIES                                             11,500                    0
--------------------------------------------------------------------------------------------------
     TOTAL LIABILITIES                                                540,915              495,257
--------------------------------------------------------------------------------------------------
 
SHAREHOLDERS' EQUITY:
 Common stock, $1 par value, authorized
 10,000,000 shares at 6/30/97 and 5,500,000 at 12/31/96;
 issued  4,677,188 shares                                               4,677                4,677
 Capital surplus                                                       26,591               26,589
 Retained earnings                                                      9,400                7,004
 Common Stock in treasury at cost; 92,500 shares at 6/30/97
 and 5,000 shares at 12/31/96                                          (1,393)                 (58)
 Unrealized gain on securities available-for-sale, net                     81                  146
--------------------------------------------------------------------------------------------------
     TOTAL SHAREHOLDERS' EQUITY                                        39,356               38,358
--------------------------------------------------------------------------------------------------
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                      $580,271             $533,615
--------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
                 BROAD NATIONAL BANCORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
 
                                                                    3 MONTH PERIOD ENDED             6 MONTH PERIOD ENDED
                                                                    --------------------             ---------------------
                                                                         JUNE 30                            JUNE 30
                                                                  1997                  1996             1997       1996
                                                                         (UNAUDITED)                      (UNAUDITED)
<S>                                                       <C>                   <C>                    <C>       <C>
 
INTEREST INCOME
Interest and fees on loans                                             $ 6,617                $6,074   $13,030      $11,863
Interest on securities held - to -  maturity
 Taxable                                                                 1,414                 1,110     2,842        2,015
 Tax exempt                                                                 13                    13        26           30
Interest on securities available - for - sale                            1,255                   988     2,353        1,872
Interest on federal funds sold                                             714                   289     1,444          798
---------------------------------------------------------------------------------------------------------------------------
   TOTAL INTEREST INCOME                                                10,013                 8,474    19,695       16,578
---------------------------------------------------------------------------------------------------------------------------
 
INTEREST EXPENSE:
   Interest on savings & interest bearing
     demand deposits                                                     1,181                 1,250     2,331        2,449
   Interest on time certificates of
     deposit of $100,000 or more                                         1,415                   396     2,624          680
   Interest on other time deposits                                       1,173                   997     2,323        2,109
   Interest on short-term borrowings                                        21                    15        33           33
---------------------------------------------------------------------------------------------------------------------------
   TOTAL INTEREST EXPENSE                                                3,790                 2,658     7,311        5,271
---------------------------------------------------------------------------------------------------------------------------
 
NET INTEREST INCOME                                                      6,223                 5,816    12,384       11,307
---------------------------------------------------------------------------------------------------------------------------
 
PROVISION FOR POSSIBLE LOAN LOSSES                                         450                   225       900          450
---------------------------------------------------------------------------------------------------------------------------
 
INTEREST INCOME AFTER PROVISION FOR
   POSSIBLE LOAN LOSSES                                                  5,773                 5,591    11,484       10,857
---------------------------------------------------------------------------------------------------------------------------
NON-INTEREST  INCOME
  Service charges on deposit accounts                                    1,470                 1,122     3,086        1,977
  Other income                                                             261                   231       533          448
  Gain (Loss) on sale of securities available-for-sale                      52                   (47)       57          (47)
---------------------------------------------------------------------------------------------------------------------------
     TOTAL NON-INTEREST  INCOME                                          1,783                 1,306     3,676        2,378
---------------------------------------------------------------------------------------------------------------------------
 
NON-INTEREST EXPENSES:
  Salaries and wages                                                     2,002                 2,042     4,032        4,073
  Employee benefits                                                        596                   624     1,237        1,158
  Occupancy expense                                                        515                   450       990          924
  Furniture and equipment expense                                          256                   274       515          564
  Data processing fees                                                     274                   255       565          523
  Legal fees                                                               195                   193       387          388
  Professional fees                                                        215                   324       468          465
  Postage, delivery and communication                                      154                   165       326          329
  FDIC and OCC assessments                                                  45                    27        89           55
  Other real estate expense                                                 38                   104       (44)         113
  Other expenses                                                           766                   618     1,181        1,184
---------------------------------------------------------------------------------------------------------------------------
     TOTAL NON-INTEREST  EXPENSES                                        5,056                 5,076     9,746        9,776
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
 
                 BROAD NATIONAL BANCORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                                 (IN THOUSANDS)
<TABLE> 
<CAPTION> 

                                             3 MONTH PERIOD ENDED        6 MONTH PERIOD ENDED
                                             --------------------        -------------------- 
                                                    JUNE 30                   JUNE 30
                                               1997       1996              1997    1996
                                                  (UNAUDITED)                (UNAUDITED)
 
<S>                                            <C>         <C>         <C>         <C>
INCOME BEFORE INCOME TAXES                          2,500       1,821       5,414       3,459
PROVISION FOR INCOME TAXES                            841         694       2,094       1,295
---------------------------------------------------------------------------------------------
NET INCOME                                     $    1,659  $    1,127  $    3,320  $    2,164
--------------------------------------------------------------------------------------------- 
NET INCOME APPLICABLE TO COMMON STOCK          $    1,659  $    1,127  $    3,320  $    2,164
--------------------------------------------------------------------------------------------- 
 
AVERAGE NUMBER OF COMMON SHARES
 OUTSTANDING /1/
    PRIMARY                                     4,780,215   4,746,443   4,793,133   4,531,144
    ASSUMING FULL DILUTION                      4,803,826   4,324,793   4,834,060   4,319,334
--------------------------------------------------------------------------------------------- 
NET INCOME PER COMMON SHARE /1/
 
    PRIMARY EARNINGS PER COMMON SHARE          $     0.35  $     0.24  $     0.69  $     0.48
 
    FULLY DILUTED EARNINGS PER COMMON SHARE    $     0.35  $     0.23  $     0.69  $     0.45
 
</TABLE>


See accompanying notes to consolidated financial statements.





--------------------
/1/    1996 share and per share amounts have been restated to reflect the effect
of the 10% stock dividend distributed October 4, 1996.

                                       6
<PAGE>
 
                 BROAD NATIONAL BANCORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                             SIX MONTH PERIOD ENDED JUNE 30
                                                                  1997         1996
                                                                  ----         ----
                                                                     (Unaudited)
<S>                                                             <C>         <C>
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                       $  3,320   $  2,164
Adjustments to reconcile net income to net cash
 provided by (used in) operating activities:
  Depreciation and amortization                                       628        567
  Amortization of securities premium net                              365       (387)
  Amortization of deferred points and fees
    and deferral of loan origination costs                           (220)      (156)
  Provision for possible loan losses                                  900        450
  Deferred tax (benefit) expense                                   (1,110)      (371)
  Decrease in accrued taxes
   interest, and other liabilities                                   (310)    (9,622)
 (Gain) Loss on sale of securities available-for-sale                 (57)        47
 (Gain)Loss on sale of other real estate owned                       (115)        96
 Increase in accrued interest receivable                             (472)      (535)
  Other Net                                                          (764)       557
-------------------------------------------------------------------------------------
  Net cash provided by (used in) operating activities            $  2,165   $ (7,190)
-------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from the sale of other real estate owned              $    419   $    292
  Net increase in loan balances                                   (20,660)   (13,194)
  Proceeds from maturities of securities
   held-to-maturity                                                11,718      4,707
  Proceeds from maturities of securities
   available-for-sale                                               5,554     10,448
  Proceeds from the sale of securities available-for-sale          15,035     14,703
  Purchase of securities held-to-maturity                          (6,716)   (26,479)
  Purchase of securities available-for-sale                       (34,543)   (29,878)
  Capital expenditures                                               (649)      (449)
-------------------------------------------------------------------------------------
  Net cash (used in) investing activities                        $(29,842)  $(39,850)
-------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase in certificates of deposit                        $ 14,039   $ 26,561
  Net increase in demand deposit, savings
   and interest bearing demand accounts                            17,923      2,169
  Net increase in short-term borrowings                             2,506        218
  Issuance of common stock                                              0         98
  Redemption of preferred stock                                         0        (47)
  Issuance of Trust Preferred securities                           11,500          0
  Purchase of Treasury Stock                                       (1,335)         0
  Dividends paid                                                     (924)      (595)
-------------------------------------------------------------------------------------
  Net cash provided by  financing activities                     $ 43,709   $ 28,404
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS               16,032   $(18,636)
CASH AND CASH EQUIVALENTS, beginning of period                     76,857     87,110
-------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of period                         $ 92,889   $ 68,474
-------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year for
   Interest                                                      $  7,104   $  5,752
   Taxes                                                         $  3,185   $  1,639
-------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>

                                       7
<PAGE>
 
                 BROAD NATIONAL BANCORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 1997
                                  (Unaudited)



(1)  Principles of consolidation -

  The consolidated financial statements include the accounts of Broad National
  Bancorporation, its wholly owned subsidiaries, BNB Capital Trust and Broad
  National Bank (the "Bank") and the Bank's wholly owned subsidiaries BNB
  Investment Corporation, Broad National Realty Corporation and Bronatoreo, Inc.
  All intercompany accounts and transactions have been eliminated.

  As used in this report, the term "Company" relates to Broad National
  Bancorporation and its subsidiaries on a consolidated basis; the term
  "Bancorporation" relates to Broad National Bancorporation (parent company
  only); and the term "Bank" relates to Broad National Bank and its subsidiaries
  on a consolidated basis.


(2)  Net income per share -

  Primary net income per common share is computed by dividing net income by the
  weighted average number of common shares outstanding during each period
  adjusted for dilutive stock options.  Fully diluted per common share amounts
  are computed by dividing net income by the weighted average number of common
  shares outstanding adjusted for shares issuable upon conversion of preferred
  stock and dilutive stock options.  Share and per share data for 1996 have been
  restated to reflect the effect of a 10% stock dividend distributed October 4,
  1996.

(3)  Stock buy back program -

  On November 21, 1996, the Board of Directors of the Company authorized the
  repurchase of up to 100,000 of its outstanding common shares.  Additionally,
  on June 19, 1997, the Board of Directors of the Company authorized the
  purchase, through open market transactions, of up to an additional $4,000,000
  market value of the Company's common stock.  Management was given discretion
  to determine the number and pricing of the shares to be purchased, as well as,
  the timing of any purchases.

  At June 30, 1997, the Company had repurchased 92,500 shares of common stock at
  a cost of $1,393,125.


(4)  9.5% Cumulative Trust Preferred Securities -

  On June 30, 1997, $11.5 million of 9.5% Cumulative Trust Preferred Securities
  were issued by BNB Capital Trust, a Delaware statutory business trust formed
  by the Company. The net proceeds from this issuance were invested in the
  Company in exchange for the Company's junior subordinated debentures. The
  Company intends to use these net proceeds, which qualify as Tier 1 capital
  under regulatory capital guidelines, for general corporate purposes.

                                       8
<PAGE>
 
(5) Reclassification -

  Certain amounts in the consolidated financial statements presented for  prior
  periods have been reclassified to conform with the 1997 presentation.

                                       9
<PAGE>
 
                 BROAD NATIONAL BANCORPORATION AND SUBSIDIARIES


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

SIX MONTHS ENDED JUNE 30, 1997
------------------------------



                                    SUMMARY
                                    -------

The Company reported net income of $1,659,000 or $0.35 per fully diluted common
share for the second quarter of 1997 compared to net income of $1,127,000 or
$0.23 per fully diluted common share for the second quarter of 1996.

For the first six months of 1997, the Company reported net income of $3,320,000
or $0.69 per fully diluted common share, compared to net income of $2,164,000 or
$0.45 per fully diluted common share for the first six months of 1996.

Per share data for 1996 has been restated to reflect the effect of a 10% stock
dividend distributed October 4, 1996.

As compared to December 31, 1996, total assets increased $46.7 million or 8.7%
to $580.3 million at June 30, 1997; loans, net of deferred fees, increased $20.5
million or 7.1% to $307.6 million and deposits increased $32.0 million or 6.6%
to $517.0 million.

Total shareholders' equity increased $998,000 during the first six months of
1997 as the result of net income of $3,320,000 offset by dividends declared to
shareholders of $924,000, the repurchase of 87,500 shares of stock as treasury
shares at a cost of $1,335,000 and a net decrease of $65,000 in the net
unrealized gain on securities available -for - sale, due to the change in the
interest rate environment.

The Company's annualized return on average assets and annualized return on
average shareholders' equity were 1.22% and 17.1%, respectively, for the first
six months of 1997, compared to annualized returns of .92% and 12.4%,
respectively, for the comparable 1996 period.

                                       10
<PAGE>
 
RESULTS OF OPERATIONS
---------------------

Net Interest Income
-------------------


Net interest income, the primary source of earnings for the Company, is the
difference between interest and fees earned on loans and other earning assets,
and interest paid on deposits and other interest bearing liabilities.  Earning
assets include loans, investment securities and federal funds sold.  Interest
bearing liabilities include savings, interest bearing demand and time deposits,
and short-term borrowings.

The table on the following page sets forth the Company's consolidated average
balance of assets, liabilities, and shareholders' equity as well as the amount
of interest income or interest expense and the average rate for each category of
interest-earning assets and interest-bearing liabilities.  Non-accrual loans are
included in average loans, and interest on loans includes loan fees which were
not material.  Non-taxable income from investment securities and loans is
presented on a tax-equivalent basis assuming a 34% tax rate.



                       NOTES TO NET INTEREST INCOME TABLE

(1)  Interest income for investments in states and political subdivisions
     include tax equivalent adjustments at 34% tax rate.

(2)  Average rates reflect the tax equivalent adjusted yields on nontaxable
     investments and loans.

(3)  Represents the difference between interest earned and interest paid,
     divided by total interest-earning assets.

(4)  Annualized

                                       11
<PAGE>
 
                                         NET INTEREST INCOME
                                        Six Months Ended June 30
                                        (Dollars in Thousands)
<TABLE>
<CAPTION>
 
                                                     1997                              1996
                                                     ----                              ----
                                          Average   Interest  Average       Average   Interest  Average
                                          Balance   and Fees  Rate (4)      Balance   and Fees  Rate (4)
                                          --------  --------  --------      --------  --------  --------
<S>                                       <C>       <C>       <C>           <C>       <C>       <C>
ASSETS                                                                    
                                                                          
Federal Funds Sold                        $ 53,934   $ 1,444     5.33%     $ 30,340   $   798      5.20%
                                          --------   -------    -----      --------  --------     -----
                                                                          
                                                                          
Investment Securities (1)                                                 
  Securities held - to - maturity           89,764     2,881     6.42        67,995     2,058      6.05
  Securities available - for - sale         75,815     2,353     6.21        63,780     1,872      5.87
                                          --------   -------    -----        ------   -------     -----
Total Investment Securities                165,579     5,234     6.32 (2)   131,775     3,930      5.97 (2)
                                          --------   -------    -----       -------  --------     -----
                                                                          
                                                                          
Loans                                                                     
  Mortgage                                 172,031     7,638     8.88       163,432     6,947      8.50
  Installment                               41,335     1,873     9.14        35,411     1,647      9.35
  Commercial                                80,082     3,518     8.86        73,904     3,226      8.78
  State and political subdivisions (1)          10         1    20.00         1,058        65     12.29
                                          --------   -------    -----        ------   -------     -----
                                                                          
Total Loans                                293,458    13,030     8.95       273,805    11,885      8.73
                                          --------   -------    -----      --------  --------     -----
                                                                          
Total interest earning assets              512,971   $19,708     7.75% (2)  435,920   $16,613      7.66% (2) 
                                           -------   -------     ----       -------   -------     -----
                                                                          
Less - Allowance for possible loan losses    8,863                            7,556   
All other assets                            44,950                           45,975   
                                           -------                           ------   
                                                                          
                                                                          
Total Assets                              $549,058                         $474,339   
                                          --------                         --------   
                                                                          
LIABILITIES AND SHAREHOLDERS' EQUITY                                      
                                                                          
Interest Bearing Deposits                                                 
  Savings and interest bearing            $214,115     2,331     2.20%     $224,661    $2,449      2.19%      
   demand deposits                                                                                    
  Time Deposits                                                                                          
       Under $100,000                       92,520     2,323     5.06        83,876     2,109      5.06      
       Over $100,000                        94,727     2,624     5.59        27,571       680      4.96      
                                          --------   -------    -----       -------    ------     -----      
                                                                                                             
Total interest bearing deposits            401,362     7,278     3.66       336,108     5,238      3.13      
                                                                                                             
Short term borrowings                        1,332        33     4.93         1,301        33      5.02      
                                          --------   -------    -----       -------    ------     -----      
                                                                                                            
Total Interest Bearing Liabilities         402,694   $ 7,311     3.66%      337,409    $5,271      3.14%     
                                          --------   -------    -----       -------    ------     -----     
                                                                                                            
Other liabilities                            8,624                            7,781                    
Demand deposits                             98,582                           93,997                    
Shareholders' equity                        39,158                           35,152                           
                                          --------                         --------                           
                                                                                                       
Total liabilities and shareholders'       $549,058                         $474,339
 equity                                   --------                         --------
                                                                          
                                                                          
NET INTEREST INCOME; NET INTEREST SPREAD             $12,397     4.09%                $11,342      4.52%
NET INTEREST MARGIN                                              4.87% (3)                         5.23% (3)

</TABLE>

                                       12
<PAGE>
 
Rate/Volume Analysis Of Net Interest Income
-------------------------------------------

The effect of changes in average balance and rate from the corresponding prior
period on interest income, interest expense and net interest income for the six
months ended June 30, 1997 is set forth below.  The effect of a change in
average balance has been determined by applying the average rate for the earlier
period to the change in average balance for the later period, as compared with
the earlier period.  The effect of a change in the average rate has been
determined by applying the average balance for the earlier period to the change
in average rate for the later period, as compared with the earlier period.  The
variances attributable to simultaneous balance and rate changes have been
allocated in proportion to the relationship of the dollar amount of change in
each category.

                                          
<TABLE>
<CAPTION>                             Increase (Decrease) Due to a
                                             Change in the
                                      ------------------------------
                                      Average Balance   Average Rate    Total
                                      ----------------  -------------  -------
                                           (Dollars in Thousands)              
<S>                                   <C>               <C>            <C>
Interest Earned on:                 
  Loans                                    $  861            $284       $1,145
  Investment securities                     1,068             236        1,304
  Federal funds sold                          627              19          646
                                           ------            ----       ------
  Total interest income                    $2,556            $539       $3,095
                                           ------            ----       ------
Interest paid on:                                                    
  Savings and interest                                               
   bearing demand deposits                 $ (205)           $ 87       $ (118)
  Time deposits:                                                     
          Under $100,000                      214               -          214
          Over  $100,000                    1,858              86        1,944
Short term borrowings                           1              (1)           -
                                           ------            ----       ------
Total Interest expense                     $1,868            $172       $2,040
                                           ------            ----       ------
Change in net interest income              $  688            $367       $1,055
                                           ------            ----       ------
 Percent increase in net interest   
    income over the prior period                                         9.30%
                                                                         -----
</TABLE> 

Total tax equivalent interest income of $19,708,000 for the first six months of
1997 represents an increase of $3,095,000 or 18.6% over total tax equivalent
interest income of $16,613,000 for the comparable 1996 period.  This improvement
is primarily due to an increase of $77,051,000 in the average balance of total
interest earning assets for the first six months of 1997 as compared to the
first six months of 1996.  This increase in the average balance of total 
interest earning assets resulted in a $2,556,000 increase in total tax
equivalent interest income. Additionally, an increase of 9 basis points in the
average rate earned on total interest earning assets contributed $539,000 to the
increase in total tax equivalent interest income. The mix of interest earning
assets changed for the first six months of 1997 as compared to the first six
months of 1996. Higher yielding loans declined to 57.2% of total average
interest earning assets for the first half of 1997 from 62.8% of total average
interest earning assets for the comparable 1996 period. Relatively lower
yielding federal funds sold and investment securities represented a combined
42.8% of total average interest earning assets for the first half of 1997 as
compared to 37.2% of total average interest earning assets for the first half of
1996. This shift in the mix of interest earning assets is primarily attributable
to the investment of short term public fund time deposits greater than $100,000
into relatively more liquid federal funds sold and investment securities.

Total interest expense of $7,311,000 for the first six months of 1997 was
$2,040,000 or 38.7% higher than the comparable prior year period.  An increase
of $65,285,000 in the average balance of total interest bearing liabilities is
the primary reason for this increase, resulting in an additional $1,868,000 of
interest expense for the first six months of 1997 as compared to the first six
months of 1996.  The most significant growth in the average balance of total
interest bearing liabilities occurred in time deposits over $100,000, which
average balance was $67,156,000 higher for the first 

                                       13
<PAGE>
 
half of 1997 than for the first half of 1996. This growth originated from new or
expanded relationships with municipal units within markets served by the Bank.

Tax equivalent net interest income for the first six months of 1997 was
$1,055,000 or 9.3% higher than for the first six months of 1996.  This increase
is primarily attributable to the increase in the average balance of interest
earning assets. However, the change in the mix of interest earning assets, with
a larger percentage of interest earning assets in relatively lower yielding
investments and federal funds sold, contributed to the decline in the net
interest margin for the first six months of 1997 as compared to the first half
of 1996.

PROVISION FOR POSSIBLE LOAN LOSSES
----------------------------------

In determining the provision for possible loan losses, management considers
historical loan loss experience, changes in composition and volume of the loan
portfolio, the level and composition of non-performing loans, the adequacy of
the allowance for possible loan losses, and prevailing economic conditions.  The
provision for possible loan losses was $900,000 for the first six months  of
1997 compared to $450,000 for the comparable 1996 period.  The increase in the
provision for possible loan losses is attributable to the increase in loans
outstanding, as well as an increase in loans charged off during the first six
months of 1997 as compared to the first six months of 1996.   Actual net loan
charge-offs for the first six months of 1997 were $394,000 or 0.27% (annualized)
of average total loans, as compared to net loan charge-offs of $48,000 or 0.04%
(annualized) of average total loans for the comparable 1996 period.

NON-INTEREST INCOME AND NON-INTEREST EXPENSES
---------------------------------------------

Total non-interest income of $3,676,000 for the first six months of 1997 was
$1,298,000 or 54.6% higher than the comparable 1996 period. This increase is
primarily attributable to service charges on deposit accounts which were
$1,109,000 or 56.1% higher for the first six months of 1997 as compared to the
first six months of 1996.  This increase results from a more consistent
collection of fee income for services provided.  This improvement in service
charge income is not necessarily indicative of the results which can be expected
for the remainder of 1997. At current levels, service charge income for the
remaining six months of 1997 is not anticipated to match service charge income
of $3,393,000 recorded during the last six months of 1996.  Non-interest income
for the first six months of 1997 includes a gain of $57,000 from the sale of
securities available-for-sale, which represents an improvement of $104,000 from
the loss of $47,000 recorded from the sale of securities available-for-sale
during the first six months of 1996.

Total non-interest expense of $9,746,000 for the first six months of 1997 was
$30,000 lower than the comparable 1996 period.  A significant factor
contributing to this relatively flat performance for non interest expense is a
non recurring gain of $123,000 from the sale during the first half of 1997 of a
property classified as other real estate owned.  This represents an improvement
of $157,000 in other real estate expense for the first six months of 1997 as
compared to the first six months of 1996.

FINANCIAL CONDITION
-------------------

Loans

Total loans, net of deferred loan fees, were $307,601,000 at June 30, 1997 which
represents an increase of $20,485,000 or 7.1% from the December 31, 1996 balance
of $287,116,000. The most significant components of the increase in loan
balances were an increase of $11,031,000 or 8.8% in commercial mortgages and an
increase of $4,663,000 or 24.7% in consumer loans.  For the first six months of
1997, average loans of $293,458,000 represented 57.2% of total average interest
earning assets, as compared to 62.8% of total average interest earning assets
for the first six months of 1996.

                                       14
<PAGE>
 
Allowance for Possible Loan Losses


The following table summarizes the activity in the allowance for possible loan
losses for the periods presented.  Also presented are certain key ratios
regarding the allowance.
 
                                               Six Months          Six Months
                                                  Ended               Ended
                                              June 30,1997        June 30,1996
                                              ------------        ------------
                                                     (Dollars In Thousands)

Balance, beginning of period                    $  8,531             $  7,402  
Provision charged to operations                      900                  450  
Loans charged off                                   (733)                (519) 
Recoveries of charged-off loans                      339                  471  
                                                --------             --------  
Balance, end of period                          $  9,037             $  7,804  
                                                --------             --------  
                                                                               
Average gross loans outstanding                                                
 during period.........................         $293,458             $273,805  
                                                --------             --------  
Total gross loans at period end........         $307,601             $280,882  
                                                --------             --------  
Net loans charged-off.                          $    394             $     48  
                                                --------             --------
Ratio of net loans charged-off to                                              
  average loans outstanding                                           
    during period (annualized).........             0.27%                0.04% 
                                                --------             --------  
Allowance for possible loan losses as                                          
  a percentage of total gross loans....             2.94%                2.78% 
                                                --------             -------- 

The amount of allowance applicable to non-classified loans was $6,422,000 and
$5,819,000 at June 30, 1997 and December 31, 1996, respectively.

Asset Quality

Non-performing assets consist of (i)non-performing loans, which include non-
accrual loans and loans past due 90 days or more as to interest or principal
payments but not placed on non-accrual status; (ii) loans that have been
renegotiated due to a weakening in the financial position of the borrower
(restructured loans) and (iii) other real estate owned ("OREO"), net of
reserves.

                                       15
<PAGE>
 
The following table reflects the components of non-performing assets at June 30,
1997 and December 31, 1996:
<TABLE>
<CAPTION>
 
                                   June 30, 1997   December 31, 1996
                                   --------------  ------------------
                                         (Dollars In Thousands)
<S>                                <C>             <C>
 
Past due 90 days or more:
  Mortgage.......................        $   572             $ 1,068
  Commercial.....................            411                 247
  Installment....................             61                  34
                                         -------             -------
     Total.......................        $ 1,044             $ 1,349
                                         -------             -------
 
Non-accrual loans:
  Mortgage.......................        $ 1,927             $ 2,800
  Commercial.....................          3,571               5,584
  Installment....................              0                   0
                                         -------             -------
     Total.......................        $ 5,498             $ 8,384
                                         -------             -------
Total non-performing loans.......        $ 6,542             $ 9,733
 Restructured loans (excluding
 amounts classified as
 non-performing loans)                     3,845               3,934
 
Other real estate owned,
  net of reserve.................            862                 841
                                         -------             -------
Total non-performing assets......        $11,249             $14,508
                                         -------             -------
 
Non-performing loans as a
   percent of total gross loans             2.13%               3.39%
                                         -------             -------
Non-performing loans as a
   percent of total assets.......           1.13%               1.82%
                                         -------             -------
Non-performing assets as a
  percent of loans and other
  real estate owned..............           3.65%               5.03%
                                         -------             -------
Allowance for possible loan
  losses.........................        $ 9,037             $ 8,531
                                         -------             -------
Allowance for possible loan
  losses as a percent of
  non-performing loans...........         138.14%              87.65%
                                         -------             -------
</TABLE>

In addition to the non-performing and restructured loans as of June 30, 1997 and
December 31, 1996, the Company had classified an additional $3,724,000 and
$3,088,000, respectively, as substandard loans.  A loan loss reserve has been
allocated to such loans in accordance with the Company's policies.

At June 30, 1997, the recorded investment in loans that are considered to be
impaired under SFAS 114 was $9,761,000 as compared to $10,109,000 at December
31, 1996. The related allowance for credit losses was $470,000 as of June 30,
1997 as compared to $500,000 as of December 31, 1996.  The impaired loan
portfolio is primarily collateral dependent, as defined by SFAS 114.  The change
in the allowance for impaired loans during the first six months of 1997
represented a recovery of $30,000.  The average recorded investment in impaired
loans during the first six months of 1997 was approximately $9,935,000.  For the
first six months of 1997, the Company recognized cash basis interest income on
these impaired loans of $131,289.

                                       16
<PAGE>
 
The level of non-performing loans and assets is heavily dependent upon local
economic conditions.  The June 30, 1997 total non-performing assets of
$11,249,000 represents a decrease of $3,259,000 or 22.5% over the total at
December 31, 1996.  The major components of this decrease include a $1,560,000
loan which, after performing in accordance with the contractual terms of the
loan for a period in excess of six months, was returned to accrual status;
$609,000 in charge-offs and $655,000 in payoffs/paydowns. There can be no
assurance that non-performing assets will not increase in the future.

Investment Securities and Federal Funds Sold

Federal funds sold of $53,775,000 at June 30, 1997 represent a decrease of
$3,300,000 from the balance at December 31, 1996.  Average Federal Funds sold of
$53,934,000 during the first six months of 1997 represented 10.5% of total
average interest earning assets, as compared to 7.0% during the first six months
of 1996.

Total average investment securities of $165,579,000 for the first six months of
1997 represent 32.3% of total average interest-earning assets, as compared to
30.2% for the comparable 1996 period.

Total investment securities, which include securities classified as held-to-
maturity and available-for-sale, of $167,759,000 at June 30, 1997 represent an
increase of $8,545,000 or 5.4% over the balance at December 31, 1996. During the
first half of 1997, securities available-for-sale of $15,035,000 were sold and a
net gain of $57,000 was realized as compared to sales of $14,703,000 and a loss
of $47,000 for the first half of 1996.  The proceeds from these sales were
reinvested in higher yielding securities in an effort to improve the overall
yield of the investment portfolio.

Deposits

The June 30, 1997 total deposit balance of $517,035,000 represents an increase
of $31,962,000 or 6.6% over total deposits of $485,073,000 at December 31, 1996.
The most significant factors contributing to this increase were time deposits of
$100,000 or more, interest bearing public fund deposits, and a special
promotional time deposit account. Time deposits of $100,000 or more were
$9,036,000 higher at June 30, 1997 than at December 31, 1996. The majority of
this increase came from an increase of $4,868,000 in municipal deposits.
Interest bearing public fund deposits, which are included in the savings and
interest bearing demand deposit category in the Statement of Condition, were
$12,602,000 higher at June 30, 1997 than at December 31, 1996.  A special
fifteen month time deposit promotion provided $8,000,000 in balances, accounting
for the increase in time deposits less than $100,000.

Short Term Borrowings

Short-term borrowings represent federal funds purchased and securities sold
under agreements to repurchase.  The majority of these instruments have terms
ranging from one to thirty days.  These balances increased $2,506,000 to
$3,506,000 at June 30, 1997 from the December 31, 1996 balance of $1,000,000.


Trust Preferred Securities

On June 30, 1997, $11,500,000 of 9.5% Cumulative Trust Preferred Securities were
issued by BNB Capital Trust, a Delaware statutory business trust formed by the
Company.  The net proceeds from this issuance were invested in the Company in
exchange for the Company's junior subordinated debentures.  The Company may use
these proceeds to repurchase stock and for other general corporate purposes as
well as to meet debt service obligations of the Company pursuant to the junior
subordinated debentures.  Pending such use, the net proceeds may be temporarily
invested in short - term obligations with yields substantially less than the
cost of the Trust Preferred Securities.  Such investment in short - term
obligations could adversely impact the Company's net interest income and net
interest margin in future periods.

                                       17
<PAGE>
 
Liquidity of the Bank

Many different measurements of liquidity are used in the banking industry.  The
ratios of cash and cash equivalents (including federal funds sold) and short-
term securities to total assets and net loans to total deposits are among some
of the more commonly used indicators.  These measurements are set forth below as
of June 30, 1997 and December 31, 1996.
<TABLE>
<CAPTION>
 
                                June 30, 1997   December 31, 1996
                                --------------  ------------------
<S>                             <C>             <C>
Cash and cash equivalents
  and securities maturing in
  one year to total assets           16.8%             14.9%
Net loans to total deposits          57.7%             57.4%
 
</TABLE>

To assist in the management of its liquidity, the bank has available $26,000,000
in lines of credit for federal funds. However, none of these lines were in use
during the first six months of 1997.

Although customer demand for funds, in the form of loans or deposit withdrawals,
is largely dependent on general economic factors outside of the Bank's control,
management believes that its present liquidity structure is adequate to meet
such needs.

Liquidity of Bancorporation

Bancorporation's ability to meet its cash requirements, including interest and
dividend payments, is generally dependent upon the declaration and payment of
dividends by the Bank to Bancorporation.  Under Federal law, the approval of the
Comptroller of the Currency is required for the payment of dividends in any
calendar year by Broad National Bank to Broad National Bancorporation if the
total of all dividends declared in any calendar year exceeds the net income for
that year combined with the retained net income for the preceding two calendar
years.  As of December 31, 1996, retained earnings of the Bank of $6,942,000
were available for payment of dividends to the parent company without regulatory
approval.  Additionally, at June 30, 1997 Bancorporation had $11,223,000 of cash
for the purpose of paying operating costs, interest and dividends.  However, a
change in circumstances, such as changes in regulatory requirements or in the
Bank's financial condition, could result in the Bank's inability to pay
dividends to Bancorporation or could result in Bancorporation being required by
regulatory authorities to utilize its funds to increase the Bank's capital.  In
such event, Bancorporation may not have sufficient cash for operations or to
make dividend payments and may be required to seek other sources of capital and
liquidity, if available.

INTEREST RATE SENSITIVITY

Management of interest rate sensitivity involves matching the maturity and
repricing dates of interest-earning assets with interest-bearing liabilities in
an effort to reduce the impact of fluctuating net interest margins and to
promote consistent growth of net interest income during periods of changing
interest rates.

Interest rate risk arises from mismatches (i.e., the interest sensitivity gap)
between the dollar amount of repricing or maturing assets and liabilities, and
is measured in terms of the ratio of the interest rate sensitivity gap to total
assets. More assets repricing or maturing than liabilities over a given time
period is considered asset-sensitive and is reflected as a positive gap, and
more liabilities repricing or maturing than assets over a given time period is
considered liability-sensitive and is reflected as a negative gap.  An asset-
sensitive position (i.e., a positive gap) will generally enhance earnings in a
rising interest rate environment and will negatively impact earnings in a
falling interest rate environment, while a liability-sensitive position (i.e, a
negative gap) will generally enhance earnings in a falling interest rate

                                       18
<PAGE>
 
environment and negatively impact earnings in a rising interest rate
environment.  Fluctuations in interest rates are not predictable or
controllable.  At June 30, 1997, the Company had a one year cumulative negative
gap of 22.5%.  This negative one year gap position may, as noted above, have a
negative impact on earnings in a rising interest rate environment.

The calculation of these interest sensitivity gap positions involve certain
assumptions as to the repricing period of interest earning assets and interest
bearing liabilities.  These gap positions are significantly impacted by
assumptions made as to the repricing of, among other items, NOW accounts,
savings accounts, and money market accounts. Consequently, the actual impact of
changes in interest rates may differ from that indicated above.

The Company also uses simulation modeling techniques which apply alternative
interest rate scenarios to forecasts of future business activity.  The results
of such simulation modeling techniques may differ from the implications derived
from the interest sensitivity gap analysis.

Capital Adequacy

At June 30, 1997, the Company had total capital equal to 15.15% of risk-based
assets which included tier one capital equal to 13.89% of risk-based assets.
These compare to minimum regulatory capital requirements of 8% and 4%,
respectively.  At June 30, 1997, the Company had tier one capital equal to 8.86%
of adjusted total assets.  This compares to a minimum regulatory capital
requirement of 4% to 5%.

At June 30, 1997, the Bank had total capital equal to 12.07% of risk-based
assets, which included tier one capital equal to 10.80% of risk-based assets.
These compare to minimum regulatory capital requirements of 8% and 4%,
respectively.  At June 30, 1997, the Company had tier one capital equal to 6.88%
of adjusted total assets.  This compares to a minimum regulatory capital
requirement of 4% to 5%.



Recent Accounting Developments

Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
128") establishes standards for computing and presenting earnings per share
(EPS) and applies to entities with publicly held common stock or potential
common stock.  SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS and requires dual presentation of basic and diluted
EPS on the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS
computation.  SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods; earlier application
is not permitted and requires restatement of all prior-period EPS data
presented.

The pro forma basic EPS for the three month and six month periods ended June 30,
1997 were $0.36 and $0.72 per share, respectively.  The pro forma basic EPS for
the three month and six month periods ended June 30, 1996 were $0.24 and $0.49
per share, respectively.  The diluted EPS is not expected to be materially
different from the fully diluted earnings per share disclosed in the income
statement.


Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income ("SFAS 130") establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of general - purpose financial statements.  SFAS 130 requires that
all items that are required to be 

                                       19
<PAGE>
 
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. SFAS 130 does not require a specific format for that
financial statement but requires that an enterprise display an amount
representing total comprehensive income for the period in that financial
statement. SFAS 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid in capital in the equity section of a statement of
financial position. SFAS 130 is effective for fiscal years beginning after
December 15, 1997. Reclassification of financial statements for earlier periods
provided for comparative purposes is required.



            *               *              *               *



Except for the historical information contained herein, the matters discussed in
this Form 10-Q are forward looking statements that involve risks and
uncertainties, including risks and uncertainties associated with quarterly
fluctuations in results, the impact of changes in interest rates on the Bank's
net interest income, the quality of the Bank's loans and other assets and the
credit risk associated with lending activities, the fluctuations in the general
economic and real estate climate in the Bank's primary market area of New
Jersey, the impact of competition from other banking institutions and financial
service providers and the increasing consolidation of the banking industry, the
enforcement of federal and state bank regulations and the effect of changes in
such regulations, and other risks and uncertainties detailed from time to time
in the Company's SEC reports. Actual results may vary materially from those
expressed in any forward-looking statements herein.

                                       20
<PAGE>
 
                         BROAD NATIONAL BANCORPORATION



PART 2 - OTHER INFORMATION
--------------------------


4.   Submission of Matters to a Vote of Security Holders

       (a)  The annual shareholders meeting of Broad National Bancorporation was
            reconvened on May 13, 1997.

       (b)  An amendment to the Corporation's Certificate of Incorporation to
            expand the limitations on shareholder's preemptive rights was
            approved by holders of shares of common stock as follows:

            For        3,155,334
                       ---------
            Against      461,487
                       ---------
            Abstain       38,368
                       ---------
 
            There were 654,393 broker non-votes with respect to approval of the
            amendment to the Corporation's Certificate of Incorporation to
            expand the limitations on shareholder's preemptive rights.


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

       (a)  Exhibits
 
            Statements re: computation of per share earnings is part of this
            Form 10-Q as Exhibit I.

       (b)  Reports on Form 8-K
 
            On June 24, 1997, the Company filed a form 8-K Item 5 (date of
            earliest event - June 19, 1997), to announce that on June 19, 1997,
            the Board of Directors of the Company authorized the purchase,
            through open market transactions, of up to $4,000,000 market value
            of the Company's common stock. Management was given discretion to
            determine the number and pricing of the shares to be purchased, as
            well as, the timing of any such purchases. The Company will purchase
            its shares through Ryan, Beck & Co. or other broker dealers at
            prices for the common stock prevailing from time to time in NASDAQ's
            National Market.

                                       21
<PAGE>
 
                         BROAD NATIONAL BANCORPORATION


                                   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.



                         BROAD NATIONAL BANCORPORATION
                         -----------------------------
                                  (registrant)



Date: August 13, 1997                          /s/ Donald M. Karp
                                               --------------------         
                                               Donald M. Karp
                                               Chairman and CEO



 
                                               /s/ James Boyle     
                                               ------------------
                                               James Boyle
                                               Treasurer

                                       22
<PAGE>
 
                         BROAD NATIONAL BANCORPORATION
                      Computation of Net Income Per Share
                                  (Unaudited)
<TABLE>
<CAPTION>
 
 
                                            THREE-MONTH PERIOD            SIX-MONTH PERIOD
                                                ENDED JUNE 30               ENDED JUNE 30
                                               1997      1996/1/        1997           1996/1/
                                               ----      -------        ----           -------
<S>                                         <C>         <C>         <C>            <C>
        PRIMARY:
        --------
 
Average number of common shares
   outstanding                               4,602,053   4,653,248      4,632,287         4,445,361
Assumed exercise of options outstanding        178,162      93,195        160,846            85,784
                                            ----------  ----------     ----------        ----------
Average number of common shares and
   common share equivalents outstanding      4,780,215   4,746,443      4,793,133         4,531,144
                                            ----------  ----------     ----------        ----------
 
Net Income available to common
    shareholders                            $1,658,537  $1,127,062     $3,319,687        $2,163,712
 
Primary earnings per common share           $     0.35  $     0.24     $     0.69        $    0 .48
                                            ==========  ==========     ==========        ==========
 
 
       FULLY DILUTED:
       --------------
 
Average number of common shares
   outstanding                               4,602,053   4,653,248      4,632,287         4,445,361
Assumed exercise of options outstanding        201,773      93,195        201,773            85,784
Assumed conversion of preferred shares               0      10,830              0           220,123
                                            ----------  ----------     ----------        ----------
Adjusted average number of common shares     4,803,826   4,757,272      4,834,060         4,751,267
                                            ----------  ----------     ----------        ----------
 
Net Income                                  $1,658,537  $1,127,062     $3,319,687        $2,163,712
                                            ----------  ----------     ----------        ----------
 
Fully diluted earnings per common share     $     0.35  $     0.23     $     0.69        $     0.45
                                            ==========  ==========     ==========        ==========
 
</TABLE>



----------
/1/   Restated to reflect the effect of the 10% stock dividend distributed
      October 4, 1996.

                                       23
<PAGE>
 
                          Independent Auditors' Report
                          ----------------------------

The Board of Directors
Broad National Bancorporation:

We have reviewed the accompanying consolidated condensed statement of condition
of Broad National Bancorporation and subsidiaries (the Company) as of June 30,
1997, and the related consolidated condensed statements of income, and cash
flows for the three-month and six month periods ended June 30, 1997 and 1996.
These consolidated condensed financial statements are the responsibility of the
Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants.  A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters.  It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated condensed financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of condition of the Company as of December
31, 1996, and the related consolidated statements of income, changes in
shareholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated January 15, 1997, we expressed an unqualified
opinion on those consolidated financial statements.  In our opinion, the
information set forth in the accompanying consolidated statement of condition as
of December 31, 1996, is fairly presented, in all material respects, in relation
to the consolidated statement of condition from which it has been derived.



/s/ KPMG Peat Marwick LLP



Short Hills, New Jersey
August 13, 1997

                                       24