UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
     SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2002

                                       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 No.: 000-23809


                          FIRST SENTINEL BANCORP, INC.
             (exact name of registrant as specified in its charter)


              DELAWARE                                     22-3566151
 (State or other jurisdiction of                    (IRS Employer I.D. No.)
  incorporation or organization)


               1000 WOODBRIDGE CENTER DRIVE, WOODBRIDGE, NJ 07095
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (732) 726-9700

                                 NOT APPLICABLE
       Former Name, Address, and 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 ___.


                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

        CLASS                                  OUTSTANDING AT AUGUST 1, 2002
------------------------                ----------------------------------------
     Common Stock                                    30,005,723 shares


<PAGE>


                          FIRST SENTINEL BANCORP, INC.

                               INDEX TO FORM 10-Q


                                                                          Page #
                                                                          ------
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements (Unaudited)

          Consolidated Statements of Financial Condition as of June 30, 2002
          and December 31, 2001                                               3

          Consolidated Statements of Income for the three and six months
          ended June 30, 2002 and 2001                                        4

          Consolidated Statements of Stockholders' Equity for the six months
          ended June 30, 2002 and 2001                                        5

          Consolidated Statements of Cash Flows for the six months ended
          June 30, 2002 and 2001                                              6

          Notes to Consolidated Financial Statements                          7

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                              10

Item 3.   Quantitative and Qualitative Disclosure About Market Risk          17

PART II.  OTHER INFORMATION.                                                 17

          SIGNATURES                                                         19






                                       2
<PAGE>


FIRST SENTINEL BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data) (Unaudited)

<TABLE>
<CAPTION>
                                                                                         June 30,        December 31,
                                                                                           2002              2001
                                                                                       -----------       -----------
<S>                                                                                    <C>               <C>
ASSETS
Cash and due from banks .........................................................      $    25,848       $    33,875
Federal funds sold ..............................................................           26,675            20,000
                                                                                       -----------       -----------
     Total cash and cash equivalents ............................................           52,523            53,875
Federal Home Loan Bank of New York (FHLB-NY) stock, at cost .....................           20,888            20,541
Investment securities available for sale ........................................          125,432           107,988
Mortgage-backed securities available for sale ...................................          730,809           642,716
Loans held for sale, net ........................................................              372             5,467
Loans receivable, net ...........................................................        1,264,369         1,237,312
Interest and dividends receivable ...............................................           12,780            12,039
Premises and equipment, net .....................................................           15,777            16,014
Core deposit intangibles ........................................................            4,988             5,411
Other assets ....................................................................           28,739            37,556
                                                                                       -----------       -----------
     Total assets ...............................................................      $ 2,256,677       $ 2,138,919
                                                                                       ===========       ===========

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

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Deposits ........................................................................      $ 1,375,278       $ 1,315,264
Borrowed funds ..................................................................          597,740           545,814
Advances by borrowers for taxes and insurance ...................................           10,830             9,735
Other liabilities ...............................................................           13,517            12,979
                                                                                       -----------       -----------
    Total liabilities ...........................................................        1,997,365         1,883,792
                                                                                       -----------       -----------

Company-obligated mandatorily redeemable preferred capital securities of a
    subsidiary trust holding solely junior subordinated debentures of the Company           25,000            25,000
                                                                                       -----------       -----------

STOCKHOLDERS' EQUITY
Preferred Stock; authorized 10,000,000 shares; none issued and outstanding ......               --                --
Common Stock, $.01 par value, 85,000,000 shares authorized;
     43,106,742 and 30,200,723 shares issued and outstanding at 6/30/02 and
     43,106,742 and 30,940,117 shares issued and outstanding at 12/31/01 ........              430               430
Paid-in capital .................................................................          202,294           201,858
Retained earnings ...............................................................          155,092           148,463
Accumulated other comprehensive income ..........................................            8,345             2,178
Treasury stock (12,819,375 and 12,088,836 shares at 6/30/02 and 12/31/01,
     respectively) ..............................................................         (120,516)         (110,571)
Common stock acquired by the Employee Stock Ownership Plan (ESOP) ...............           (9,862)          (10,321)
Common stock acquired by the Recognition and Retention Plan (RRP) ...............           (1,471)           (1,910)
                                                                                       -----------       -----------
     Total stockholders' equity .................................................          234,312           230,127
                                                                                       -----------       -----------
     Total liabilities and stockholders' equity .................................      $ 2,256,677       $ 2,138,919
                                                                                       ===========       ===========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.




                                       3
<PAGE>


FIRST SENTINEL BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data) (Unaudited)

<TABLE>
<CAPTION>
                                                                Three months ended             Six months ended
                                                                     June 30,                       June 30,
                                                           ----------------------------   ----------------------------
                                                                2002            2001          2002            2001
                                                           ------------    ------------   ------------    ------------
<S>                                                        <C>             <C>            <C>             <C>
INTEREST INCOME:
  Loans ................................................   $     21,518    $     22,470   $     42,913    $     44,932
  Investment and mortgage-backed securities
    available for sale .................................         11,214          10,832         20,935          22,640
                                                           ------------    ------------   ------------    ------------
     Total interest income .............................         32,732          33,302         63,848          67,572
                                                           ------------    ------------   ------------    ------------
INTEREST EXPENSE:
 Deposits:
   NOW and money market demand .........................          2,086           2,462          4,181           4,784
   Savings .............................................            932             936          1,770           1,829
   Certificates of deposit .............................          5,330           8,891         11,404          18,056
                                                           ------------    ------------   ------------    ------------
     Total interest expense - deposits .................          8,348          12,289         17,355          24,669
 Borrowed funds ........................................          7,520           6,193         14,596          13,638
                                                           ------------    ------------   ------------    ------------
     Total interest expense ............................         15,868          18,482         31,951          38,307
                                                           ------------    ------------   ------------    ------------
     Net interest income ...............................         16,864          14,820         31,897          29,265
Provision for loan losses ..............................          1,105             150          1,205             350
                                                           ------------    ------------   ------------    ------------
     Net interest income after provision for loan losses         15,759          14,670         30,692          28,915
                                                           ------------    ------------   ------------    ------------
NON-INTEREST INCOME:
  Fees and service charges .............................            859             626          2,099           1,263
  Net (loss) gain on sales of loans and securities
    available for sale .................................         (1,587)            219         (1,471)            478
  Income on Bank Owned Life Insurance (BOLI) ...........            404              70            819              70
  Other income .........................................            199             106            378             213
                                                           ------------    ------------   ------------    ------------
     Total non-interest income .........................           (125)          1,021          1,825           2,024
                                                           ------------    ------------   ------------    ------------
NON-INTEREST EXPENSE:
  Compensation and benefits ............................          4,163           3,796          8,127           7,664
  Occupancy ............................................            545             560          1,103           1,139
  Equipment ............................................            401             413            839             853
  Advertising ..........................................            358             352            533             649
  Federal deposit insurance ............................             59              57            118             117
  Amortization of core deposit intangibles .............            211             212            423             424
  Distributions on preferred capital securities ........            491              --            989              --
  General and administrative ...........................          1,100           1,119          2,234           2,203
                                                           ------------    ------------   ------------    ------------
     Total non-interest expense ........................          7,328           6,509         14,366          13,049
                                                           ------------    ------------   ------------    ------------
     Income before income tax expense ..................          8,306           9,182         18,151          17,890

Income tax expense .....................................          2,746           2,956          5,990           5,748
                                                           ------------    ------------   ------------    ------------
     Net income ........................................   $      5,560    $      6,226   $     12,161    $     12,142
                                                           ============    ============   ============    ============
Basic earnings per share ...............................   $       0.19    $       0.20   $       0.42    $       0.39
                                                           ============    ============   ============    ============
Weighted average shares outstanding - Basic ............     28,908,094      30,491,412     29,182,305      30,799,334
                                                           ============    ============   ============    ============

Basic earnings per share ...............................   $       0.19    $       0.20   $       0.41    $       0.39
                                                           ============    ============   ============    ============
Weighted average shares outstanding - Diluted ..........     29,780,484      31,129,560     29,988,103      31,433,921
                                                           ============    ============   ============    ============
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.




                                       4
<PAGE>


FIRST SENTINEL BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 (Dollars in thousands) (Unaudited)

<TABLE>
<CAPTION>
                                                                     Accumulated
                                                                        Other                  Common     Common      Total
                                                                       Compre-                 Stock       Stock     Stock-
                                      Common    Paid In    Retained    hensive     Treasury   Acquired   Acquired    holders'
                                      Stock     Capital    Earnings  Income(Loss)    Stock     by ESOP    by RRP     Equity
                                      ---------------------------------------------------------------------------------------
<S>                                    <C>     <C>         <C>         <C>        <C>         <C>         <C>        <C>
Balance at December 31, 2000 .......   $430    $201,264    $132,537   $(8,534)    $(89,508)   $(11,238)   $(2,788)   $222,163
Net income for the six months
   ended June 30, 2001 .............     --          --      12,142        --           --          --         --      12,142
Cash dividends declared ($0.15) ....     --          --      (4,865)       --           --          --         --      (4,865)
Net change in unrealized gain/(loss)
   on securities available for sale      --          --          --     8,917           --          --         --       8,917
Purchases of treasury stock ........     --          --          --        --      (17,378)         --         --     (17,378)
Exercise of stock options ..........     --          --        (227)       --        1,144          --         --         917
Tax benefit on stock options and RRP     --         150          --        --           --          --         --         150
Purchase and retirement of common
   stock ...........................     --         (56)         --        --           --          --         --         (56)
Amortization of RRP ................     --          --          --        --           --          --        439         439
ESOP expense .......................     --         156          --        --           --         458         --         614
                                      ---------------------------------------------------------------------------------------

Balance at June 30, 2001 ...........   $430    $201,514    $139,587    $  383    $(105,742)   $(10,780)   $(2,349)   $223,043
                                      =======================================================================================


Balance at December 31, 2001 .......   $430    $201,858    $148,463    $2,178    $(110,571)   $(10,321)   $(1,910)   $230,127
Net income for the six months
   ended June 30, 2002 .............     --          --      12,161        --           --          --         --      12,161
Cash dividends declared ($0.17) ....     --          --      (5,193)       --           --          --         --      (5,193)
Net change in unrealized gain/(loss)
   on securities available for sale      --          --          --     6,167           --          --         --       6,167
Purchases of treasury stock ........     --          --          --        --      (10,461)         --         --     (10,461)
Exercise of stock options ..........     --          --        (339)       --          516          --         --         177
Tax benefit on stock options and RRP     --         326          --        --           --          --         --         326
Purchase and retirement of common
   stock ...........................     --        (108)         --        --           --          --         --        (108)
Amortization of RRP ................     --          --          --        --           --          --        439         439
ESOP expense .......................     --         218          --        --           --         459         --         677
                                      ---------------------------------------------------------------------------------------

Balance at June 30, 2002 ...........   $430    $202,294    $155,092    $8,345    $(120,516)   $ (9,862)   $(1,471)   $234,312
                                      =======================================================================================
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.





                                       5
<PAGE>


FIRST SENTINEL BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands) (Unaudited)

<TABLE>
<CAPTION>
                                                                                             Six months ended
                                                                                                 June 30,
                                                                                         -------------------------
                                                                                            2002            2001
                                                                                         ---------       ---------
<S>                                                                                      <C>             <C>
Cash flows from operating activities:
   Net income .....................................................................      $  12,161       $  12,142
   ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING
   ACTIVITIES:
   Depreciation of premises and equipment .........................................            706             661
   Amortization of core deposit intangibles .......................................            423             424
   ESOP expense ...................................................................            677             614
   Amortization of RRP ............................................................            439             439
   Net amortization of premiums and accretion of discounts and deferred fees ......          1,631           1,130
   Provision for loan losses ......................................................          1,205             350
   Loans originated for sale ......................................................        (11,938)        (26,960)
   Proceeds from sales of mortgage loans held for sale ............................         17,074          24,707
   Net loss (gain) on sales of loans and securities available for sale ............          1,471            (478)
   Net loss (gain) on sales of real estate owned ..................................             10             (42)
   Net loss on sales of premises and equipment ....................................             --             105
   (Increase) decrease in interest and dividends receivable .......................           (741)          1,065
   Tax benefit on stock options and RRP ...........................................            326             150
   Increase (decrease) in other liabilities .......................................            538            (879)
   Decrease in other assets .......................................................          5,447             856
                                                                                         ---------       ---------
         Net cash provided by operating activities ................................         29,429          14,284
                                                                                         ---------       ---------
Cash flows from investing activities:
   Proceeds from sales/calls/maturities of investment securities available for sale         19,308         126,170
   Purchases of investment securities available for sale ..........................        (36,752)        (34,193)
   Purchase of FHLB-NY stock ......................................................           (347)           (774)
   Proceeds from sales of mortgage-backed securities available for sale ...........         87,897         165,426
   Principal payments on mortgage-backed securities ...............................        118,097          52,269
   Purchases of mortgage-backed securities available for sale .....................       (288,572)       (299,997)
   Principal repayments on loans ..................................................        322,618         177,280
   Origination of loans ...........................................................       (330,728)       (198,041)
   Purchases of mortgage loans ....................................................        (19,315)         (6,975)
   Purchase of BOLI ...............................................................             --         (25,000)
   Proceeds from sale of real estate owned ........................................             32              73
   Proceeds from sales of premises and equipment ..................................             --             183
   Purchases of premises and equipment ............................................           (469)           (465)
                                                                                         ---------       ---------
          Net cash used in investing activities ...................................       (128,231)        (44,044)
                                                                                         ---------       ---------
Cash flows from financing activities:
   Purchase of treasury stock .....................................................        (10,461)        (17,378)
   Purchase and retirement of common stock ........................................           (108)            (56)
   Stock options exercised ........................................................            177             917
   Cash dividends paid ............................................................         (5,193)         (4,865)
   Net increase in deposits .......................................................         60,014          49,468
   Net increase in short-term borrowed funds ......................................             --          37,450
   Proceeds from borrowed funds ...................................................         67,000         210,000
   Repayment of  borrowed funds ...................................................        (15,074)       (250,069)
   Net increase in advances by borrowers for taxes and insurance ..................          1,095           1,252
                                                                                         ---------       ---------
            Net cash provided by financing activities .............................         97,450          26,719
                                                                                         ---------       ---------
            Net decrease in cash and cash equivalents .............................         (1,352)         (3,041)
Cash and cash equivalents at beginning of period ..................................         53,875          35,119
                                                                                         ---------       ---------
Cash and cash equivalents at end of period ........................................      $  52,523       $  32,078
                                                                                         =========       =========
Supplemental disclosures of cash flow information:

   Cash paid during the period for:
       Interest ...................................................................      $  31,362       $  39,292
       Income taxes ...............................................................          3,142           3,351
   Non cash investing and financing activities for the period:
        Transfer of loans to real estate owned ....................................      $      --       $     305
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.




                                       6
<PAGE>


                  FIRST SENTINEL BANCORP, INC. AND SUBSIDIARIES

              Notes to Unaudited Consolidated Financial Statements

(1)  BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of  America  for  interim  financial  information  and in  conformity  with  the
instructions  to Form 10-Q and Article 10 of Regulation  S-X for First  Sentinel
Bancorp,   Inc.  ("First  Sentinel"  or  the  "Company")  and  its  wholly-owned
subsidiaries,  First  Savings  Bank,  ("First  Savings"  or  the  "Bank")  Pulse
Investment,  Inc., Pulse Insurance Services,  Inc. and Pulse Real Estate,  Inc.,
and the Bank's wholly-owned subsidiaries, FSB Financial LLC, and 1000 Woodbridge
Center Drive, Inc.

In the  opinion  of  management,  all  adjustments  (consisting  of only  normal
recurring accruals) necessary to present fairly the financial condition, results
of operations, and changes in cash flows have been made at and for the three and
six months ended June 30, 2002 and 2001. The results of operations for the three
and six months ended June 30, 2002,  are not  necessarily  indicative of results
that may be expected for the entire fiscal year ending December 31, 2002.  These
interim financial statements should be read in conjunction with the December 31,
2001 Annual Report to Stockholders.

(2)  EARNINGS PER SHARE

Basic  earnings  per share is  calculated  by  dividing  net income by the daily
average  number  of common  shares  outstanding  during  the  period.  Potential
dilutive common shares are not included in the calculation.

Diluted  earnings per share is computed  similarly  to basic  earnings per share
except that the  denominator  is increased  to include the number of  additional
common shares that would have been outstanding if all potential  dilutive common
shares were issued utilizing the treasury stock method.

Calculation of Basic and Diluted Earnings Per Share
--------------------------------------------------------
(dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                             Three months ended            Six months ended
                                                  June 30,                     June 30,
                                          -------------------------   -------------------------
                                              2002          2001          2002          2001
                                          -----------   -----------   -----------   -----------
<S>                                       <C>           <C>           <C>           <C>
Net income                                $     5,560   $     6,226   $    12,161   $    12,142
                                          ===========   ===========   ===========   ===========
Basic weighted-average common shares
     outstanding                           28,908,094    30,491,412    29,182,305    30,799,334
Plus: Dilutive stock options and awards       872,390       638,148       805,798       634,587
                                          -----------   -----------   -----------   -----------
Diluted weighted-average common
     shares outstanding                    29,780,484    31,129,560    29,988,103    31,433,921
                                          ===========   ===========   ===========   ===========
Net income per common share:
   Basic                                  $      0.19   $      0.20   $      0.42   $      0.39
                                          ===========   ===========   ===========   ===========
   Diluted                                $      0.19   $      0.20   $      0.41   $      0.39
                                          ===========   ===========   ===========   ===========
</TABLE>

(3)  DIVIDENDS

Based upon current  operating  results,  the Company  declared cash dividends of
$0.095 per share on May 1, 2002, payable May 31, 2002, to stockholders of record
on May 17, 2002.



                                       7
<PAGE>


(4)  COMMITMENTS AND CONTINGENCIES

At June 30, 2002,  the Company had the following  commitments:  (i) to originate
loans of $49.7  million;  (ii)  unused  home  equity  lines of  credit  of $63.2
million;  (iii) unused commercial lines of credit of $15.9 million;  (iv) unused
construction  lines of  credit  of $56.8  million;  and (v)  letters  of  credit
outstanding totaling $2.0 million. Further,  certificates of deposits, which are
scheduled to mature and/or rollover in one year or less,  totaled $471.2 million
at June 30, 2002.

(5)  ALLOWANCE FOR LOAN LOSSES

The following  table  presents the activity in the allowance for loan losses (in
thousands):

                                                Six months ended June 30,
                                                -------------------------
                                                    2002           2001
                                                 --------       --------
Balance at beginning of period                   $ 12,932       $ 12,341
Provision charged to operations                     1,205            350
Charge offs, net of recoveries                     (1,390)            (6)
                                                 --------       --------
Balance at end of period                         $ 12,747       $ 12,685
                                                 ========       ========

(6)  COMPREHENSIVE INCOME

Total  comprehensive  income,  consisting  of net  income  and the net change in
unrealized  gain/(loss) on securities  available for sale, was $12.4 million and
$7.2 million for the three  months  ended June 30, 2002 and 2001,  respectively.
For the six months ended June 30, 2002 and 2001,  comprehensive  income  totaled
$18.3 million and $21.1 million, respectively.

(7)  RECENT ACCOUNTING PRONOUNCEMENTS

In  July,  2002,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 146,  "Accounting for
Costs  Associated  with Exit or  Disposal  Activities."  The  standard  requires
companies to recognize costs  associated  with exit or disposal  activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan.  The  Statement  is  to be  applied  prospectively  to  exit  or  disposal
activities  initiated after December 31, 2002. The adoption of this Statement is
not expected to have a significant impact on the Company's financial statements.

In April, 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical  Corrections."
The Statement,  among other things,  rescinds SFAS No. 4,  "Reporting  Gains and
Losses from  Extinguishments  of Debt."  Under SFAS No. 4, gains and losses from
the  extinguishment  of debt were required to be classified as an  extraordinary
item, if material.  Under SFAS No. 145, gains or losses from the  extinguishment
of debt are to be classified as a component of operating income,  rather than an
extraordinary  item.  SFAS No. 145 is effective for fiscal years beginning after
May 15, 2002, with early adoption of the provisions related to the rescission of
SFAS No. 4 encouraged.  Upon adoption,  companies must  reclassify  prior period
amounts  previously  classified as an  extraordinary  item.  Management does not
anticipate  that the initial  adoption  of SFAS No. 145 will have a  significant
impact on the Company's consolidated financial statements.

On October 3, 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived  Assets." While SFAS No. 144 supersedes  SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of,"  it  retains  many  of the  fundamental  provisions  of  that
Statement.  The Statement is effective for fiscal years beginning after December
15, 2001. The initial adoption of SFAS No. 144 did not have a significant impact
on the Company's consolidated financial statements.



                                       8
<PAGE>


In August,  2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which addresses financial accounting and reporting for obligations
associated with the retirement of tangible  long-lived assets and the associated
asset retirement  costs.  SFAS No. 143 requires an enterprise to record the fair
value of an asset retirement obligation as a liability in the period in which it
incurs a legal obligation  associated with the retirement of tangible long-lived
assets.  The  Company is required  to adopt the  provisions  of SFAS No. 143 for
fiscal years beginning after June 15, 2002. The Company does not anticipate that
SFAS No. 143 will  significantly  impact the  Company's  consolidated  financial
statements.

On July 20, 2001, the FASB issued SFAS No. 142,  "Goodwill and Other  Intangible
Assets."  SFAS No.  142  requires  that  goodwill  and  intangible  assets  with
indefinite  useful  lives no longer be  amortized,  but  instead  be tested  for
impairment at least annually in accordance  with the provisions of SFAS No. 142.
SFAS No. 142 also requires that intangible  assets with definite useful lives be
amortized  over  their  respective  estimated  useful  lives to their  estimated
residual values, and periodically reviewed for impairment.

The  Company  adopted  the  provisions  of SFAS No. 142 on January 1, 2002.  The
Company  currently has no recorded goodwill and the adoption of SFAS No. 142 did
not  significantly  impact  the  Company's  accounting  for  currently  recorded
intangible  assets,  primarily core deposit  intangibles.  At June 30, 2002, the
Company  had  gross  core  deposit  intangibles   totaling  $12.6  million  with
accumulated   amortization  of  $7.6  million.   Amortization  of  core  deposit
intangibles  for the three and six months  ended June 30, 2002 was  $211,000 and
$423,000,  respectively.  Annual  amortization  for the year ended  December 31,
2002,  and for each of the  subsequent  five years is projected  to  approximate
$847,000 per year.






                                       9
<PAGE>


FIRST SENTINEL BANCORP, INC.

Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL.

Statements   contained  in  this  report  that  are  not  historical   fact  are
forward-looking  statements,  as that term is defined in the Private  Securities
Litigation  Reform  Act  of  1995.  Such  statements  may  be  characterized  as
management's  intentions,  hopes,  beliefs,  expectations  or predictions of the
future. It is important to note that such forward-looking statements are subject
to risks and uncertainties  that could cause actual results to differ materially
from those  projected  in such  forward-looking  statements.  Factors that could
cause future results to vary materially from current  expectations  include, but
are not limited to, changes in interest rates, economic conditions,  deposit and
loan growth,  real estate values,  loan loss provisions,  competition,  customer
retention,  changes  in  accounting  principles,   policies  or  guidelines  and
legislative and regulatory changes.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES.

"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operation," as well as disclosures  found elsewhere in this Form 10-Q, are based
upon the Company's consolidated  financial statements,  which have been prepared
in accordance with accounting principles generally accepted in the United States
of America.  The preparation of these financial  statements requires the Company
to make  estimates  and  judgments  that affect the reported  amounts of assets,
liabilities, revenues and expenses. Note 1 to the Company's Audited Consolidated
Financial Statements for the year ended December 31, 2001 included in our Annual
Report on Form 10-K for the year ended December 31, 2001, as supplemented by the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 and
this  report,  contains  a  summary  of  the  Company's  significant  accounting
policies.   Management  believes  the  Company's  policy  with  respect  to  the
methodology  for the  determination  of the allowance for loan losses involves a
higher  degree of  complexity  and requires  management  to make  difficult  and
subjective  judgments which often require  assumptions or estimates about highly
uncertain  matters.  Changes in these judgments,  assumptions or estimates could
materially   impact  results  of  operations.   This  critical  policy  and  its
application is  periodically  reviewed with the Audit Committee and the Board of
Directors.

The  allowance  for loan  losses is based upon  management's  evaluation  of the
adequacy of the  allowance,  including an assessment of known and inherent risks
in the portfolio,  giving  consideration to the size and composition of the loan
portfolio,  actual  loan  loss  experience,  level  of  delinquencies,  detailed
analysis of individual loans for which full  collectibility  may not be assured,
the existence and estimated net realizable  value of any  underlying  collateral
and guarantees  securing the loans, and current economic and market  conditions.
Although  management  uses  the best  information  available,  the  level of the
allowance for loan losses  remains an estimate  which is subject to  significant
judgment and short-term change. Various regulatory agencies, as an integral part
of their examination  process,  periodically  review the Company's allowance for
loan losses. Such agencies may require the Company to make additional provisions
for loan losses  based upon  information  available to them at the time of their
examination.  Furthermore,  the majority of the  Company's  loans are secured by
real estate in the State of New Jersey.  Accordingly,  the  collectibility  of a
substantial  portion of the carrying  value of the Company's  loan  portfolio is
susceptible to changes in local market conditions and may be adversely  affected
should real estate values  decline or the Central New Jersey area  experience an
adverse economic shock.  Future adjustments to the allowance for loan losses may
be necessary due to economic, operating,  regulatory and other conditions beyond
the Company's control.

ASSETS.  Total  assets  grew to $2.3  billion at June 30,  2002,  an increase of
$117.8 million,  or 5.5%, from December 31, 2001. The change in assets consisted
primarily of increases in  investment  and  mortgage-backed  securities  ("MBS")
available for sale and loans receivable, partially offset by a decrease in other
assets.



                                       10
<PAGE>


Net loans, including loans held for sale, totaled $1.3 billion at June 30, 2002,
an increase of $22.0 million, or 1.8%, from December 31, 2001. Of the total loan
portfolio at June 30, 2002, 1-4 family  mortgage  loans  comprised  69.8%,  home
equity  loans  represented  8.9%,  commercial  real  estate,   multi-family  and
construction loans comprised 20.0%, and other consumer loans accounted for 1.3%.

Total loan  originations  for the six months  ended June 30,  2002,  were $342.7
million, compared to $225.0 million for the same period in 2001. Fixed-rate, 1-4
family first  mortgage  loan  originations  totaled $82.5  million,  or 24.1% of
production, while adjustable-rate, 1-4 family first mortgage loans accounted for
$111.1  million,  or 32.4%,  of total  originations  for the first six months of
2002.  Also  during the first six months of 2002,  consumer  loan  originations,
including home equity loans and credit lines, totaled $56.0 million, or 16.3% of
total originations.  During the same period,  construction lending totaled $50.3
million,  or  14.7%  of  total  originations,   while  commercial  real  estate,
commercial and multi-family loan originations  totaled $42.7 million,  or 12.5%.
In addition,  the Company purchased $19.3 million of primarily  adjustable-rate,
single-family first mortgage loans through  correspondents during the six months
ended June 30, 2002.  Purchased  loans are  re-underwritten  by the Bank and are
extended at rates higher than those currently offered by the Bank.

Repayment of principal on loans totaled  $322.6 million for the six months ended
June 30,  2002,  compared  to $177.3  million  for the same  period in 2001.  In
addition,  the Company sold $17.0  million of primarily  fixed-rate,  1-4 family
mortgage  loans during the first half of 2002 as part of its  on-going  interest
rate risk management  process.  While management intends to continue to actively
seek to originate loans,  the future levels of loan  originations and repayments
will be  significantly  influenced by external  interest rates,  competition and
other economic factors outside of the control of the Bank.

MBS available for sale increased  $88.1 million,  or 13.7%, to $730.8 million at
June 30,  2002,  from $642.7  million at December  31,  2001.  The  increase was
primarily  due to  purchases of $288.6  million  exceeding  sales and  principal
repayments of $87.9 million and $118.1 million,  respectively, for the six month
period ended June 30, 2002.  Purchases consisted primarily of MBS issued by U.S.
government-sponsored  agencies.  At  June  30,  2002,  approximately  64% of the
Company's MBS had adjustable rates.

Investment  securities  available for sale increased $17.4 million, or 16.2%, to
$125.4  million as of June 30, 2002,  from $108.0  million at December 31, 2001.
For the six months  ended June 30,  2002,  purchases  of  investment  securities
available  for sale totaled $36.8  million,  while sales,  calls and  maturities
totaled $19.3 million.  Purchases  consisted primarily of debt securities issued
by U.S. corporations and  government-sponsored  agencies. At June 30, 2002, U.S.
government and agency obligations totaled $52.5 million, or 41.8%, of investment
securities available for sale, while state and political obligations contributed
another  $14.1  million,  or  11.3%.  Corporate  obligations  represented  $57.2
million,  or 45.6%,  and equity  securities  accounted  for the  remaining  $1.6
million, or 1.3%, of investment  securities available for sale at June 30, 2002.
With the  exception  of WorldCom,  Inc.  bonds which have been written down to a
carrying value of $300,000 and placed on non-accrual,  all corporate obligations
held at June 30, 2002,  are  investment  grade with the largest  exposure to any
single creditor totaling $4.2 million.

Other  assets  decreased  $8.8 million to $28.7  million at June 30, 2002,  from
$37.6 million at December 31, 2001. The decrease was primarily  attributable  to
the  receipt in 2002 of incomes  taxes  receivable  which  were  outstanding  at
December 31, 2001.

LIABILITIES. Total deposits increased $60.0 million, or 4.6%, to $1.4 billion at
June 30, 2002. This growth took place in core deposits,  consisting of checking,
savings and money market accounts. Core deposits grew by $89.0 million to $749.8
million,  and  accounted  for 54.5% of total  deposits  at June 30,  2002.  This
compares  with a  core/total  deposits  ratio of 50.3% at December  31, 2001 and
47.8% at June 30, 2001.  Certificates of deposit decreased by $29.0 million,  or
4.4%,  compared  with  year-end  2001,  with  decreases  occurring  primarily in
one-year and shorter maturity categories.

Borrowed funds increased  $51.9 million,  or 9.5%, to $597.7 million at June 30,
2002,  from $545.8  million at December 31, 2001, in order to fund MBS purchases
and take advantage of historically low interest rates on longer-term borrowings.
Advances by borrowers for taxes and insurance  increased $1.1 million, or



                                       11
<PAGE>


11.3%,  to $10.8  million at June 30,  2002,  from $9.7  million at December 31,
2001, primarily as a result of growth in the Company's residential mortgage loan
portfolio.

CAPITAL. The Company's  stockholders' equity increased $4.2 million, or 1.8%, to
$234.3  million at June 30, 2002,  from $230.1 million at December 31, 2001. The
increase  in equity  was a result of net  income  of $12.2  million  for the six
months ended June 30, 2002,  an increase in net  unrealized  gains on securities
available for sale of $6.2 million, the amortization of stock-based compensation
and benefit plans and related tax benefits of $1.4 million and proceeds from the
exercise of stock options totaling $177,000.  This increase was partially offset
by the  repurchase  of $10.6  million  of the  Company's  common  stock and cash
dividends  declared of $5.2  million.  In May 2002,  the Company  announced  the
commencement of a 5% stock repurchase  program.  The Company  repurchased 42,000
shares and 787,856 shares,  respectively,  during the three and six months ended
June 30, 2002, at an average cost per share of $14.12 and $13.29,  respectively.
Stated and tangible book value per share at June 30, 2002, were $7.76 and $7.59,
respectively.

The Federal Deposit  Insurance  Corporation  requires that the Bank meet minimum
leverage,  Tier 1 and Total Risk-based Capital  requirements.  At June 30, 2002,
the Bank exceeded all regulatory  capital  requirements,  as follows (dollars in
thousands):

<TABLE>
<CAPTION>
                              Required                   Actual
                        ----------------------    ----------------------    Excess of Actual
                                       % of                      % of       Over Regulatory
                           Amount     Assets         Amount     Assets        Requirements
                        ----------- ----------    ----------- ----------    ----------------
<S>                        <C>          <C>         <C>           <C>           <C>
Leverage Capital           $89,046      4.00%       $198,693      8.93%         $109,647
Risk-based Capital:
Tier 1                      44,155      4.00%        198,693     18.00%          154,538
Total                       88,310      8.00%        211,440     19.15%          123,130
</TABLE>

LIQUIDITY  AND CAPITAL  RESOURCES.  The Company's  primary  sources of funds are
deposits;   proceeds  from   principal  and  interest   payments  on  loans  and
mortgage-backed  securities;  sales of  loans,  mortgage-backed  securities  and
investments available for sale; maturities or calls of investment securities and
short-term investments;  and advances from the FHLB-NY and other borrowed funds.
While  maturities  and  scheduled  amortization  of  loans  and  mortgage-backed
securities  are a predictable  source of funds,  deposit cash flows and mortgage
prepayments are greatly influenced by general interest rates,  competition,  and
economic conditions.

The most  significant  sources  of funds for the  first six  months of 2002 were
principal  repayments and prepayments of loans and  mortgage-backed  securities,
totaling  $322.6 million and $118.1  million,  respectively.  Other  significant
sources of funds for the six months  ended June 30,  2002,  were  proceeds  from
sales of MBS available for sale totaling $88.0 million,  deposit growth of $60.0
million,  a net  increase  in  borrowings  of $51.9  million,  sales,  calls and
maturities of investment  securities  available for sale of $19.3  million,  and
proceeds from the sales of mortgage loans totaling $17.1 million.  If necessary,
the Company  has  additional  borrowing  capacity  with  FHLB-NY,  including  an
available overnight line of credit of up to $50.0 million. At June 30, 2002, the
Company had unpledged  investment  securities  and MBS available for sale with a
market value of $399.9 million.

The primary investing activities of the Company for the first six months of 2002
were  the   origination  of  loans  totaling   $342.7   million,   purchases  of
mortgage-backed  securities  available for sale  totaling  $288.6  million,  and
purchases of investment  securities  available for sale totaling  $36.8 million.
Other  significant uses of funds during the six months ended June 30, 2002, were
$19.3 million in purchases of mortgage  loans,  $10.6 million in  repurchases of
the Company's common stock and $5.2 million in cash dividends paid.



                                       12
<PAGE>


COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002
AND 2001.

RESULTS OF  OPERATIONS.  Net income for the three and six months  ended June 30,
2002, totaled $5.6 million and $12.2 million, respectively, versus net income of
$6.2 million and $12.1 million,  respectively  for the comparable  2001 periods.
For the quarter ended June 30, 2002,  basic and diluted  earnings per share were
$0.19 compared with second quarter 2001 basic and diluted  earnings per share of
$0.20.  For the six months ended June 30, 2002,  basic and diluted  earnings per
share were  $0.42 and  $0.41,  respectively,  compared  with  basic and  diluted
earnings per share of $0.39 for the first six months of 2001.

Second quarter 2002 earnings were adversely  affected by two unforeseen  events,
both of which  were  apparently  precipitated  by alleged  acts of fraud  and/or
misrepresentation.  As previously  reported on Form 8-K, the Company recorded an
impairment charge totaling $1.2 million,  or $.04 per diluted share, net of tax,
related to WorldCom,  Inc. corporate bonds. In addition,  the Company recorded a
$1.1 million  provision to the allowance for loan losses,  the majority of which
was due to a $1.4 million writedown of a $6.9 million  participation  loan to an
insurance  premium financing  company.  This loan, which is the only of its kind
within the loan portfolio, was placed on non-accrual status during the quarter.

Annualized  return on average  equity was 9.60% and 10.51% for the three and six
months ended June 30, 2002,  respectively,  compared  with 11.01% and 10.72% for
the comparable 2001 periods.  Annualized  return on average assets was 0.99% and
1.10% for the three and six months ended June 30, 2002,  respectively,  compared
with  1.27%  and  1.24%  for the  three  and six  months  ended  June 30,  2001,
respectively.

INTEREST  INCOME.  Interest income  decreased by $570,000,  or 1.7%, and by $3.7
million,   or  5.5%,  for  the  three  and  six  months  ended  June  30,  2002,
respectively, from the same periods in 2001.

Interest  on loans  decreased  $952,000  and  $2.0  million,  or 4.2% and  4.5%,
respectively,  to $21.5  million and $42.9  million for the three and six months
ended June 30, 2002,  compared to $22.5  million and $44.9  million for the same
periods in 2001.  The average  balance of the loan portfolio for the three month
period ended June 30, 2002,  increased  $67.7 million to $1.3 billion from 2001,
while the average yield on the portfolio decreased to 6.72% for the three months
ended June 30, 2002, from 7.41% for the same period in 2001. The average balance
of the loan  portfolio  for the six month period ended June 30, 2002,  increased
$69.0  million  to $1.3  billion  from  2001,  while  the  average  yield on the
portfolio  decreased to 6.75% for the six months ended June 30, 2002, from 7.47%
for the same period in 2001.

Interest on securities  increased $382,000,  or 3.5% and decreased $1.7 million,
or 7.5%,  to $11.2  million and $20.9 million for the three and six months ended
June 30,  2002,  as  compared to $10.8  million  and $22.6  million for the same
periods  in 2001.  The  average  balance of the  investment,  FHLB stock and MBS
available for sale portfolios  totaled $895.5 million,  with an annualized yield
of 5.01% for the three  months  ended June 30,  2002,  compared  with an average
balance of $683.8 million with an annualized yield of 6.34% for the three months
ended June 30, 2001. The average balance of the  investment,  FHLB stock and MBS
available for sale portfolios  totaled $864.3 million,  with an annualized yield
of 4.84% for the six  months  ended  June 30,  2002,  compared  with an  average
balance of $710.8  million with an annualized  yield of 6.37% for the six months
ended June 30, 2001.

INTEREST  EXPENSE.  Interest expense decreased $2.6 million to $15.9 million for
the three  months ended June 30,  2002,  compared to $18.5  million for the same
period  in 2001.  For the six  months  ended  June 30,  2002,  interest  expense
decreased  $6.4 million to $32.0 million versus $38.3 million for the comparable
2001 period.

Interest expense on deposits  decreased $3.9 million and $7.3 million,  or 32.1%
and 30.0%, respectively, to $8.3 million and $17.4 million for the three and six
months ended June 30, 2002,  compared to $12.3 million and $24.7 million for the
same  periods  in 2001.  The  decrease  was  primarily  attributable  to reduced
interest paid on certificates of deposit. The average balance of certificates of
deposit  declined by $29.1  million,  or 4.4%,  to $633.2  million for the three
months ended June 30, 2002, compared with the same period in 2001,



                                       13
<PAGE>


while the average rate paid on certificates decreased 200 basis points to 3.37%.
The average  balance of certificates  of deposit  declined by $18.1 million,  or
2.7%,  to $640.5  million for the six months ended June 30, 2002,  compared with
the same period in 2001,  while the average rate paid on certificates  decreased
192 basis points to 3.56%.  The average balance of core deposits,  consisting of
checking,  savings and money market accounts,  totaled $737.4 million and $711.0
million for the three and six months ended June 30, 2002, respectively, compared
to $586.9 and $575.3  million for the same  respective  periods in 2001.  Within
these core accounts,  non-interest  bearing deposits  averaged $68.1 million and
$64.3  million for the  respective  three and six month  periods  ended June 30,
2002, up from $52.2 million and $50.7 million for the comparable 2001 periods.

Interest on  borrowed  funds for the three and six months  ended June 30,  2002,
increased $1.3 million and $958,000,  or 21.4% and 7.0%,  respectively,  to $7.5
million and $14.6  million,  compared to $6.2 million and $13.6  million for the
same  respective  periods in 2001. The average balance of borrowed funds for the
three  months  ended June 30, 2002,  increased  to $596.5  million,  from $446.1
million for the same period in 2001. The average  interest rate paid on borrowed
funds was 5.04% for the three months ended June 30,  2002,  compared  with 5.55%
for the same period in 2001.  The average  balance of borrowed funds for the six
months ended June 30, 2002, increased to $576.5 million, from $473.6 million for
the same period in 2001.  The average  interest rate paid on borrowed  funds was
5.06% for the six months ended June 30, 2002,  compared  with 5.76% for the same
period in 2001.

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest income before
provision for loan losses increased $2.0 million and $2.6 million,  or 13.8% and
9.0%,  respectively,  to $16.9  million and $31.9  million for the three and six
months ended June 30, 2002,  compared to $14.8 million and $29.3 million for the
same periods in 2001. The increase was due to the changes in interest income and
interest expense described previously.

The interest rate spread increased 15 basis points to 2.67% for the three months
ended June 30, 2002,  compared  with 2.52% for the same period in 2001.  For the
three months ended June 30, the average  earning asset yield was 6.02% for 2002,
and 7.02%  for 2001,  while the  average  cost of  interest-bearing  liabilities
declined to 3.34% for 2002,  from 4.50% for 2001.  For the six months ended June
30, 2002,  the interest rate spread  increased 11 basis points to 2.55% compared
with 2.44% for the same  period in 2001.  The  average  earning  asset yield was
5.98% for the first half of 2002,  compared  with 7.06% for the first six months
of 2001,  while the average cost of  interest-bearing  liabilities was 3.43% and
4.62% for the same respective periods.

The net  interest  margin was 3.10% and 2.99% for the three and six months ended
June 30, 2002, respectively, compared with 3.12% and 3.06% for the three and six
months ended June 30, 2001, respectively.

PROVISION  FOR LOAN LOSSES.  The provision for loan losses for the three and six
months ended June 30, 2002,  increased $955,000 and $855,000,  respectively,  to
$1.1  million and $1.2  million,  compared to $150,000 and $350,000 for the same
periods in 2001. Total  non-performing  assets increased to $7.8 million at June
30,  2002,  from $1.9  million at December 31, 2001 and $2.8 million at June 30,
2001.  The increase in  non-performing  assets and the provision for loan losses
was primarily due to a $6.9 million  participation  loan to an insurance premium
financing  company  placed in default  during the second  quarter.  The  Company
recorded a $1.4 million charge against the allowance for loan losses relating to
this loan.  The  remaining  $5.6 million  balance on the  partially  charged-off
participation  loan was included in  non-accrual  loans at June 30, 2002.  Based
upon information currently available,  the Company expects the remaining balance
to be repaid during the third quarter. Provisions for loan losses are made based
on  management's  evaluation  of risks  inherent in the loan  portfolio,  giving
consideration  to  on-going  credit  evaluations  and changes in the balance and
composition of the loan portfolio. The allowance for loan losses as a percentage
of total  loans was 1.00% at June 30, 2002 and 1.03% at December  31,  2001.  In
management's  opinion, the allowance for loan losses,  totaling $12.7 million at
June 30,  2002,  adequately  addresses  the  risks  inherent  in the  portfolio.
Management  will  continue to review the need for additions to its allowance for
loan losses based upon its quarterly review of the loan portfolio,  the level of
delinquencies, and general market and economic conditions.



                                       14
<PAGE>


The  following  table  sets  forth  ratios  regarding   non-accrual   loans  and
investments,  and loans which are 90 days or more  delinquent,  but on which the
Company is accruing  interest at the dates indicated.  The Company  discontinues
accruing  interest on delinquent loans when collection of interest is considered
doubtful,  generally  when 90 days or more  delinquent  and  when  loan-to-value
ratios  exceed  55%,  at which time all  accrued  but  uncollected  interest  is
reversed.

<TABLE>
<CAPTION>
(dollars in thousands)                           June 30,   Mar. 31,   Dec. 31,   Sept. 30,   June 30,
                                                   2002       2002       2001       2001       2001
                                                  --------------------------------------------------
<S>                                               <C>        <C>        <C>        <C>        <C>
Non-accrual mortgage loans ....................   $1,875     $1,681     $1,787     $1,904     $1,828
Non-accrual other loans .......................    5,552         --         --         --         --
                                                  --------------------------------------------------
   Total non-accrual loans ....................    7,427      1,681      1,787      1,904      1,828
Loans 90 days or more delinquent and
     still accruing ...........................       80        256         62        263        413
Restructured loans ............................       --         --         --         --         --
                                                  --------------------------------------------------
Total non-performing loans ....................    7,507      1,937      1,849      2,167      2,241
Non-accrual investments (WorldCom, Inc. .......
     corporate bonds) .........................      300         --         --         --         --
Total foreclosed real estate, net of related
     allowance ................................       --         42         42         79        531
                                                  --------------------------------------------------
Total non-performing assets ...................   $7,807     $1,979     $1,891     $2,246     $2,772
                                                  ==================================================
Non-performing loans to loans receivable, net .    0.59%      0.15%      0.15%      0.18%      0.18%
Non-performing assets to total assets .........    0.35%      0.09%      0.09%      0.11%      0.14%
</TABLE>

NON-INTEREST  INCOME.  Non-interest  income  decreased $1.1 million to a loss of
$125,000 for the three  months  ended June 30, 2002,  compared to income of $1.0
million for the same  period in 2001.  For the six months  ended June 30,  2002,
non-interest  income totaled $1.8 million  compared to $2.0 million for the same
period  in  2001.  The  decrease  was  attributable  to a $1.8  million  pre-tax
impairment  charge  recorded on WorldCom,  Inc.  corporate  bonds,  resulting in
losses on sales of loans and securities of $1.6 million and $1.5 million for the
three and six months ended June 30, 2002, respectively,  compared with net gains
of $219,000 and $478,000 for the respective 2001 periods.  Partially  offsetting
the WorldCom writedown,  the Company recorded increased income on BOLI purchased
in June 2001,  which totaled  $404,000 and $819,000 for the three and six months
ended June 30, 2002, compared with $70,000 for each of the same periods in 2001.
In addition, fee income increased by $233,000 and $836,000 for the three and six
months  ended June 30,  2002,  respectively,  compared  with the same periods in
2001.  During the first  quarter of 2002,  the  Company  received  approximately
$600,000 in  prepayment  penalty  income upon the early  termination  of a $14.9
million commercial real estate loan.

NON-INTEREST  EXPENSE.  Non-interest  expense for the three and six months ended
June 30,  2002,  increased  $819,000  and $1.3  million,  or  12.6%  and  10.1%,
respectively,  to $7.3 million and $14.4  million,  compared to $6.5 million and
$13.0  million  for the  same  periods  in  2001.  The  increase  was  primarily
attributable to the  distributions  on preferred  capital  securities  issued in
November 2001, totaling $491,000 and $989,000 for the three and six months ended
June 30, 2002, respectively.

In addition,  compensation and benefits increased $367,000 and $463,000, or 9.7%
and 6.0%,  respectively,  to $4.2 million and $8.1 million for the three and six
months ended June 30, 2002,  primarily as a result of increased  healthcare  and
other benefit costs.

For the six months ended June 30, 2002, these increases were partially offset by
reduced advertising costs attributable to certain non-recurring expenses related
to the Company's  100th  Anniversary  Celebration  which were  recognized in the
first quarter of 2001.

The Company's annualized  non-interest expense,  excluding  amortization of core
deposit intangibles and distributions on preferred capital  securities,  divided
by average  assets was 1.18% for the three and six months  ended June 30,  2002,
compared  to 1.28% for both the three and six months  ended June 30,  2001.  The
Company's  efficiency  ratio,  calculated  as  non-interest  expense  (excluding
distributions  on  preferred  capital  securities)  divided  by  the  sum of net
interest income plus non-interest income, excluding net gains or



                                       15
<PAGE>


losses  on the sale of loans and  securities,  was 37.3% and 38.0% for the three
and six months ended June 30, 2002, respectively,  compared with 41.7% and 42.4%
for the comparable 2001 periods.

STATE TAX  LEGISLATION.  On July 2,  2002,  the State of New  Jersey  passed the
Business Tax Reform Act,  which is  retroactive  to January 1, 2002. The Company
expects this  legislation  to contribute to an increase in its annual  effective
tax rate to 34.3% for 2002,  compared to its 2001  effective  tax rate of 31.2%.
The Company  anticipates making an adjustment to income tax expense in the third
quarter of 2002.






                                       16
<PAGE>


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

There  have  been  no  material  changes  to  information   required   regarding
quantitative and qualitative  disclosures  about market risk from the end of the
preceding  fiscal  year  to  the  date  of the  most  recent  interim  financial
statements (June 30, 2002).


                           PART II. OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS.
          There are  various  claims and  lawsuits  in which the  Registrant  is
          periodically involved incidental to the Registrant's  business. In the
          opinion of  management,  no material loss is expected from any of such
          pending claims and lawsuits.

Item 2.   CHANGES IN SECURITIES.
            None.

Item 3.   DEFAULTS UPON SENIOR SECURITIES.
               Not applicable.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
          The  Annual  Meeting of  Stockholders  was held on May 21,  2002.  The
          following proposals were voted on by the stockholders:

<TABLE>
<CAPTION>
                                                                       Withhold/    Broker
                                                 For        Against     Abstain    Non-Votes
                                                 ---        -------    ---------   ---------
<S>                                           <C>           <C>         <C>           <C>
         1.  Election of directors
                   Joseph Chadwick            24,459,858         --     190,683       --
                   Walter K. Timpson          24,441,894         --     208,647       --

         2.  The ratification of KPMG
             LLP as the independent
             auditors of the Company for
             the year ended December 31,
             2002.                            24,360,355    249,002      41,184       --
</TABLE>

Item 5.   OTHER INFORMATION.
          None.







                                       17
<PAGE>


Item 6. EXHIBITS AND REPORTS ON FORM 8-K.

          a.)  Exhibits

<TABLE>
<CAPTION>
          ------------------ ------------------------------------------------------------ -------------
               Exhibit
               Number                                Description                           Reference
          ------------------ ------------------------------------------------------------ -------------
<S>              <C>         <C>                                                          <C>
                 3.1         Certificate of Incorporation of First Sentinel Bancorp, Inc.      *
                 3.2         Bylaws of First Sentinel Bancorp, Inc.                            *
                  4          Stock certificate of First Sentinel Bancorp, Inc.                 *
                 10          First Savings Bank Non-Employee Director Retirement Plan     Filed herein
                 11          Statement re: Computation of Ratios                             Page 7
                 99          Statements furnished pursuant to Section 906 of the          Filed herein
                             Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
          ------------------ ------------------------------------------------------------ -------------
</TABLE>

          b.)  Reports on Form 8 - K

        On May 21, 2002, the Company filed a report on Form 8-K pursuant to Item
        5, in connection with its receipt of  notification  from the lead lender
        of expected default on the Company's $6.9 million participation interest
        in a loan.

* -  Incorporated  herein by reference into this document from the  Registration
     Statement on Form S-1 and exhibits thereto of First Sentinel Bancorp,  Inc.
     (formerly  First Source Bancorp,  Inc.),  and any amendments or supplements
     thereto  filed with the SEC on December 19, 1997 and amended on February 9,
     1998, SEC File No. 333-42757.







                                       18
<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.


                          FIRST SENTINEL BANCORP, INC.




Date:  August 14, 2002            By:  /s/ JOHN P. MULKERIN
                                       --------------------
                                       John P. Mulkerin
                                       President and Chief Executive Officer


Date:  August 14, 2002            By:  /s/ THOMAS M. LYONS
                                       -------------------
                                       Thomas M. Lyons
                                       Senior Vice President and Chief Financial
                                       Officer







                                       19