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, 2003

                                       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 _____ .

         Indicate by check mark whether the registrant is an  accelerated  filer
(as defined in Rule 12b-2 of the Exchange Act).

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, 2003
--------------------------                       -----------------------------
     Common Stock                                       27,647,213 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, 2003 and December 31, 2002                                3

           Consolidated Statements of Income for the three and six months
           ended June 30, 2003 and 2002                                       4

           Consolidated Statements of Stockholders' Equity for the
           six months ended June 30, 2003 and 2002                            5

           Consolidated Statements of Cash Flows for the six months
           ended June 30, 2003 and 2002                                       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         18

Item 4.    Controls and Procedures                                           18

PART II.   OTHER INFORMATION                                                 18

           SIGNATURES                                                        20







                                       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,
                                                                                        2003           2002
                                                                                    -----------    -----------

<S>                                                                                 <C>            <C>
ASSETS
Cash and due from banks .........................................................   $    30,055    $    21,695
Federal funds sold ..............................................................        30,300         44,250
                                                                                    -----------    -----------
     Total cash and cash equivalents ............................................        60,355         65,945
Federal Home Loan Bank of New York (FHLB-NY) stock, at cost .....................        21,829         20,835
Investment securities available for sale ........................................       120,980        114,219
Mortgage-backed securities available for sale ...................................       791,102        790,562
Loans held for sale, net ........................................................         7,957            563
Loans receivable, net ...........................................................     1,206,704      1,200,647
Interest and dividends receivable ...............................................        10,301         11,055
Premises and equipment, net .....................................................        16,077         15,882
Core deposit intangibles ........................................................         4,149          4,568
Other assets ....................................................................        31,112         32,758
                                                                                    -----------    -----------
     Total assets ...............................................................   $ 2,270,566    $ 2,257,034
                                                                                    ===========    ===========

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

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Deposits ........................................................................   $ 1,401,422    $ 1,387,986
Borrowed funds ..................................................................       601,583        596,663
Advances by borrowers for taxes and insurance ...................................        10,141          9,615
Other liabilities ...............................................................        15,602         16,570
                                                                                    -----------    -----------
    Total liabilities ...........................................................     2,028,748      2,010,834
                                                                                    -----------    -----------

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 27,619,653 shares issued and outstanding at 6/30/03 and
     43,106,742 and 28,422,028 shares issued and outstanding at 12/31/02 ........           430            430
Paid-in capital .................................................................       203,768        203,229
Retained earnings ...............................................................       169,729        163,681
Accumulated other comprehensive income ..........................................         9,066          9,776
Treasury stock (15,362,435 and 14,586,591 shares at 6/30/03 and 12/31/02,
    respectively) ...............................................................      (156,676)      (145,480)
Common stock acquired by the Employee Stock Ownership Plan (ESOP) ...............        (8,945)        (9,404)
Common stock acquired by the Recognition and Retention Plan (RRP) ...............          (554)        (1,032)
                                                                                    -----------    -----------
     Total stockholders' equity .................................................       216,818        221,200
                                                                                    -----------    -----------
     Total liabilities and stockholders' equity .................................   $ 2,270,566    $ 2,257,034
                                                                                    ===========    ===========
</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,
                                                           ----------------------------    ----------------------------
                                                               2003             2002           2003            2002
                                                           ------------    ------------    ------------    ------------
<S>                                                        <C>             <C>             <C>             <C>
INTEREST INCOME:
  Loans ................................................   $     18,653    $     21,518    $     37,846    $     42,913
  Investment and mortgage-backed securities
    available for sale .................................          8,904          11,214          18,492          20,935
                                                           ------------    ------------    ------------    ------------
     Total interest income .............................         27,557          32,732          56,338          63,848
                                                           ------------    ------------    ------------    ------------

INTEREST EXPENSE:
 Deposits:
   NOW and money market demand .........................          1,128           2,086           2,464           4,181
   Savings .............................................            606             932           1,328           1,770
   Certificates of deposit .............................          3,827           5,330           8,007          11,404
                                                           ------------    ------------    ------------    ------------
     Total interest expense - deposits .................          5,561           8,348          11,799          17,355
 Borrowed funds ........................................          7,431           7,520          14,963          14,596
                                                           ------------    ------------    ------------    ------------
     Total interest expense ............................         12,992          15,868          26,762          31,951
                                                           ------------    ------------    ------------    ------------
     Net interest income ...............................         14,565          16,864          29,576          31,897
Provision for loan losses ..............................             --           1,105              --           1,205
                                                           ------------    ------------    ------------    ------------
     Net interest income after provision for loan losses         14,565          15,759          29,576          30,692
                                                           ------------    ------------    ------------    ------------

NON-INTEREST INCOME:
  Fees and service charges .............................          1,142             859           2,030           2,099
  Net gain (loss) on sales of loans and securities
    available for sale .................................            633          (1,587)          1,526          (1,471)

  Income on Bank Owned Life Insurance (BOLI) ...........            385             404             783             819
  Other, net ...........................................            189             199             433             378
                                                           ------------    ------------    ------------    ------------
     Total non-interest income .........................          2,349            (125)          4,772           1,825
                                                           ------------    ------------    ------------    ------------

NON-INTEREST EXPENSE:
  Compensation and benefits ............................          4,409           4,163           8,720           8,127
  Occupancy ............................................            587             545           1,233           1,103
  Equipment ............................................            409             401             837             839
  Advertising ..........................................            283             358             538             533
  Federal deposit insurance ............................             56              59             114             118
  Amortization of core deposit intangibles .............            209             211             419             423
  Distributions on preferred capital securities ........            472             491             944             989
  General and administrative ...........................          1,143           1,100           2,314           2,234
                                                           ------------    ------------    ------------    ------------
     Total non-interest expense ........................          7,568           7,328          15,119          14,366
                                                           ------------    ------------    ------------    ------------

     Income before income tax expense ..................          9,346           8,306          19,229          18,151

Income tax expense .....................................          3,150           2,746           6,483           5,990
                                                           ------------    ------------    ------------    ------------

     Net income ........................................   $      6,196    $      5,560    $     12,746    $     12,161
                                                           ============    ============    ============    ============

Basic earnings per share ...............................   $       0.23    $       0.19    $       0.48    $       0.42
                                                           ============    ============    ============    ============

Weighted average shares outstanding - Basic ............     26,496,125      28,908,094      26,719,615      29,182,305
                                                           ============    ============    ============    ============

Diluted earnings per share .............................   $       0.23    $       0.19    $       0.46    $       0.41
                                                           ============    ============    ============    ============

Weighted average shares outstanding - Diluted ..........     27,223,296      29,780,484      27,436,425      29,988,103
                                                           ============    ============    ============    ============
</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       Stock     by ESOP     by RRP      Equity
                                       -----   --------    --------  -----------  ---------    --------   --------    --------
<S>                                    <C>     <C>         <C>         <C>        <C>          <C>         <C>        <C>
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
                                       =====   ========    ========    =======    =========    ========    =======    ========


Balance at December 31, 2002 .......   $ 430   $203,229    $163,681    $ 9,776    $(145,480)   $ (9,404)   $(1,032)   $221,200
Net income for the six months
   ended June 30, 2003 .............      --         --      12,746         --           --          --         --      12,746
Cash dividends declared ($0.21) ....      --         --      (5,850)        --           --          --         --      (5,850)
Net change in unrealized gain/(loss)
   on securities available for sale       --         --          --       (710)          --          --         --        (710)
Purchases of treasury stock ........      --         --          --         --      (12,429)         --         --     (12,429)
Exercise of stock options ..........      --        (67)       (848)        --        1,233          --         --         318
Tax benefit on stock options and RRP      --        457          --         --           --          --         --         457
Purchase and retirement of common
   stock ...........................      --       (177)         --         --           --          --         --        (177)
Amortization of RRP ................      --         34          --         --           --          --        478         512
ESOP expense .......................      --        292          --         --           --         459         --         751
                                       -----   --------    --------    -------    ---------    --------    -------    --------

Balance at June 30, 2003 ...........   $ 430   $203,768    $169,729    $ 9,066    $(156,676)   $ (8,945)   $  (554)   $216,818
                                       =====   ========    ========    =======    =========    ========    =======    ========
</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,
                                                                                       -----------------------
                                                                                          2003          2002
                                                                                       ---------     ---------
<S>                                                                                    <C>           <C>
Cash flows from operating activities:
   Net income .....................................................................    $  12,746     $  12,161
   ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING
     ACTIVITIES:
   Depreciation of premises and equipment .........................................          713           706
   Amortization of core deposit intangibles .......................................          419           423
   ESOP expense ...................................................................          751           677
   Amortization of RRP ............................................................          512           439
   Net amortization of premiums and accretion of discounts and deferred fees ......        3,427         1,631
   Provision for loan losses ......................................................           --         1,205
   Loans originated for sale ......................................................      (34,814)      (11,938)
   Proceeds from sales of mortgage loans held for sale ............................       27,477        17,074
   Net (gain) loss on sales of loans and securities available for sale ............       (1,526)        1,471
   Net (gain) loss on sales of real estate owned ..................................          (81)           10
   Income on BOLI .................................................................         (783)         (819)
   Decrease (increase) in interest and dividends receivable .......................          754          (741)
   Tax benefit on stock options and RRP ...........................................          457           326
   (Decrease) increase in other liabilities .......................................         (615)          538
   Decrease in other assets .......................................................        2,357         6,266
                                                                                       ---------     ---------
         Net cash provided by operating activities ................................       11,794        29,429
                                                                                       ---------     ---------
Cash flows from investing activities:
   Proceeds from sales/calls/maturities of investment securities available for sale       38,339        19,308
   Purchases of investment securities available for sale ..........................      (43,564)      (36,752)
   Purchase of FHLB-NY stock ......................................................         (994)         (347)
   Proceeds from sales of mortgage-backed securities available for sale ...........       94,612        87,897
   Principal payments on mortgage-backed securities ...............................      202,089       118,097
   Purchases of mortgage-backed securities available for sale .....................     (302,474)     (288,572)
   Principal repayments on loans ..................................................      342,039       322,618
   Origination of loans ...........................................................     (332,118)     (330,728)
   Purchases of mortgage loans ....................................................      (15,353)      (19,315)
   Proceeds from sale of real estate owned ........................................          204            32
   Purchases of premises and equipment ............................................         (908)         (469)
                                                                                       ---------     ---------
          Net cash used in investing activities ...................................      (18,128)     (128,231)
                                                                                       ---------     ---------
Cash flows from financing activities:
   Purchase of treasury stock .....................................................      (12,429)      (10,461)
   Purchase and retirement of common stock ........................................         (177)         (108)
   Stock options exercised ........................................................          318           177
   Cash dividends paid ............................................................       (5,850)       (5,193)
   Net increase in deposits .......................................................       13,436        60,014
   Net increase in short-term borrowed funds ......................................           --            --
   Proceeds from borrowed funds ...................................................       25,000        67,000
   Repayment of  borrowed funds ...................................................      (20,080)      (15,074)
   Net increase in advances by borrowers for taxes and insurance ..................          526         1,095
                                                                                       ---------     ---------
            Net cash provided by financing activities .............................          744        97,450
                                                                                       ---------     ---------
            Net decrease in cash and cash equivalents .............................       (5,590)       (1,352)
Cash and cash equivalents at beginning of period ..................................       65,945        53,875
                                                                                       ---------     ---------
Cash and cash equivalents at end of period ........................................    $  60,355     $  52,523
                                                                                       =========     =========
Supplemental disclosures of cash flow information:

   Cash paid during the period for:
       Interest ...................................................................    $  27,100     $  31,362
       Income taxes ...............................................................        5,300         3,142
   Non cash investing and financing activities for the period:
        Transfer of loans to real estate owned ....................................    $      51     $      --
</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. Certain  disclosures have been omitted or condensed  pursuant
to such rules. These interim financial  statements should be read in conjunction
with the December 31, 2002 Annual Report to Stockholders.

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, 2003 and 2002. The results of operations for the three
and six months ended June 30, 2003,  are not  necessarily  indicative of results
that may be expected for the entire fiscal year ending December 31, 2003.

STOCK-BASED COMPENSATION
The  Company  applies  the  "intrinsic  value  based  method"  as  described  in
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees,"  and  related  interpretations  in  accounting  for its  stock-based
compensation.  No employee  compensation  cost for stock options is reflected in
net income,  as all options  granted under the Company's  stock option plans had
exercise  prices  greater  than or equal to the market  value of the  underlying
common  stock on the  date of  grant.  Stock  awarded  to  employees  under  the
Company's  Recognition  and  Retention  Plan is expensed by the Company over the
awards' vesting period based upon the fair market value of the stock on the date
of the  grant.  The  following  table  illustrates  the effect on net income and
earnings  per  share if the  Company  had  applied  the fair  value  recognition
provisions  for  stock-based  compensation  pursuant to  Statement  of Financial
Accounting   Standards   ("SFAS")   No.   123,   "Accounting   for   Stock-based
Compensation," amended by SFAS No. 148, "Accounting for Stock-based Compensation
- Transition and Disclosures" (in thousands, except per share data):

<TABLE>
<CAPTION>
                                          Three months ended June 30,     Six months ended June 30,
                                          --------------------------      ------------------------
                                              2003           2002            2003           2002
                                           ----------    -----------      ----------    ----------
<S>                                        <C>           <C>              <C>           <C>
Net income, as reported                    $    6,196    $     5,560      $   12,746    $   12,161
Add:
   Stock-based employee compensation
     expense included in reported net
     income, net of related tax effects
    (RRP awards)                                  178            142             333           285
Deduct:
   Total stock-based employee
     compensation expense determined
       under fair value based method
       for all options and RRP awards,
       net of related tax effects                 182            332             344           664
                                           ----------    -----------      ----------    ----------
Pro forma net income                            6,192          5,370          12,735        11,782
                                           ==========    ===========      ==========    ==========

Net income per common share:
   Basic - as reported                     $     0.23    $      0.19      $     0.48    $     0.42
                                           ==========    ===========      ==========    ==========
   Basic - pro forma                       $     0.23    $      0.19      $     0.48    $     0.40
                                           ==========    ===========      ==========    ==========
   Diluted - as reported                   $     0.23    $      0.19      $     0.46    $     0.41
                                           ==========    ===========      ==========    ==========
   Diluted - proforma                      $     0.23    $      0.18      $     0.46    $     0.39
                                           ==========    ===========      ==========    ==========
</TABLE>



                                        7
<PAGE>


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 June 30,    Six months ended June 30,
                                           --------------------------    --------------------------
                                               2003           2002           2003           2002
                                           -----------    -----------    -----------    -----------
<S>                                        <C>            <C>            <C>            <C>
Net income                                 $     6,196    $     5,560    $    12,746    $    12,161
                                           ===========    ===========    ===========    ===========

Basic weighted-average common shares
     outstanding                            26,496,125     28,908,094     26,719,615     29,182,305
Plus: Dilutive stock options and awards        727,171        872,390        716,810        805,798
                                           -----------    -----------    -----------    -----------
Diluted weighted-average common
     shares outstanding                     27,223,296     29,780,484     27,436,425     29,988,103
                                           ===========    ===========    ===========    ===========

Net income per common share:
   Basic                                   $      0.23    $      0.19    $      0.48    $      0.42
                                           ===========    ===========    ===========    ===========
   Diluted                                 $      0.23    $      0.19    $      0.46    $      0.41
                                           ===========    ===========    ===========    ===========
</TABLE>

(2)  DIVIDENDS

Based upon current  operating  results,  the Company declared a cash dividend of
$0.105 per share on April 28, 2003,  payable May 30, 2003,  to  stockholders  of
record on May 16, 2003.

(3)  COMMITMENTS AND CONTINGENCIES

At June 30, 2003,  the Company had the following  commitments:  (i) to originate
loans of  $121.6  million;  (ii)  unused  home  equity  lines of credit of $71.0
million;  (iii) unused commercial lines of credit of $16.5 million;  (iv) unused
construction  lines of  credit  of $87.7  million;  and (v)  letters  of  credit
outstanding totaling $1.6 million.  Further,  certificates of deposits which are
scheduled to mature and/or rollover in one year or less,  totaled $419.8 million
at June 30, 2003.

(4)  ALLOWANCE FOR LOAN LOSSES

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

                                        Six months ended June 30,
                                        -----------------------
                                           2003          2002
                                        --------       --------
Balance at beginning of period          $ 12,830       $ 12,932
Provision charged to operations               --          1,205
Charge offs, net of recoveries               (37)        (1,390)
                                        --------       --------
Balance at end of period                $ 12,793       $ 12,747
                                        ========       ========





                                       8
<PAGE>


(5)  COMPREHENSIVE INCOME

Total  comprehensive  income,  consisting  of net  income  and the net change in
unrealized  gain/(loss)  on securities  available for sale, was $4.0 million and
$12.4  million for the three months ended June 30, 2003 and 2002,  respectively.
For the six months ended June 30, 2003 and 2002,  comprehensive  income  totaled
$12.0 million and $18.3 million, respectively.

(6)  RECENT ACCOUNTING PRONOUNCEMENTS

Statement of Financial  Accounting  Standards ("SFAS") No. 150,  "Accounting for
Certain  Financial  Instruments  with  Characteristics  of both  Liabilities and
Equity," was issued in May 2003.  SFAS No. 150 requires  instruments  within its
scope to be classified as a liability (or, in some cases, as an asset). SFAS No.
150 is generally  effective for financial  instruments  entered into or modified
after May 31, 2003,  and  otherwise  is effective at the  beginning of the first
interim  period  beginning  after June 15, 2003 (i.e.  July 1, 2003 for calendar
year  entities).  The  adoption of SFAS No. 150 on July 1, 2003  resulted in the
reclassification  of $25  million in  Company-obligated  mandatorily  redeemable
preferred   capital   securities  to   interest-bearing   liabilities   and  the
reclassification of related costs to interest expense from non-interest expense.

SFAS No. 149, "Amendment of Statement 133 on Derivative  Instruments and Hedging
Activities,"  was issued on April 30, 2003.  The Statement  amends and clarifies
accounting for derivative instruments,  including certain derivative instruments
embedded in other contracts, and for hedging activities under SFAS No. 133. This
Statement is effective  for  contracts  entered into or modified  after June 30,
2003.  The  adoption  of SFAS No. 149 did not have a  significant  effect on the
Company's consolidated financial statements.







                                       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, 2002 included in our Annual
Report on Form 10-K for the year ended December 31, 2002, as supplemented by the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 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  provision  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  fair  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 $13.5 million from December 31, 2002, to $2.3 billion
at June 30, 2003. The change in assets consisted primarily of increases in loans
and investment  securities available for sale, partially offset by a decrease in
cash and cash equivalents.

Net loans, including loans held for sale, totaled $1.2 billion at June 30, 2003,
an increase of $13.5 million, or 1.1%, from December 31, 2002. Of the total loan
portfolio at June 30, 2003, 1-4 family  mortgage  loans  comprised  66.0%,  home
equity  loans  represented  9.0%,  commercial  real  estate,   multi-family  and
construction loans comprised 24.3%, and other consumer loans accounted for 0.7%.



                                       10
<PAGE>


Total loan  originations  for the six months  ended June 30,  2003,  were $366.9
million, compared to $342.7 million for the same period in 2002. Fixed-rate, 1-4
family first  mortgage loan  originations  totaled $129.0  million,  or 35.2% of
production, while adjustable-rate, 1-4 family first mortgage loans accounted for
$58.1 million, or 15.9%, of total originations for the first six months of 2003.
Also during the first six months of 2003, consumer loan originations, consisting
primarily of home equity loans and credit lines, totaled $88.9 million, or 24.2%
of total  originations.  During the same period,  construction  lending  totaled
$72.7 million,  or 19.8% of total  originations,  while  commercial real estate,
commercial and multi-family loan originations totaled $18.2 million, or 5.0%. In
addition,  the Company  purchased  $15.4  million of primarily  adjustable-rate,
single-family first mortgage loans through  correspondents during the six months
ended June 30, 2003.  Purchased loans are re-underwritten by the Company and are
extended at rates higher than those currently offered by the Company.

Repayment of principal on loans totaled  $342.0 million for the six months ended
June 30,  2003,  compared  to $322.6  million  for the same  period in 2002.  In
addition, the Company sold $27.4 million of primarily 30-year,  fixed-rate,  1-4
family  mortgage  loans  during the first  half of 2003 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 Company.

Investment  securities  available for sale increased  $6.8 million,  or 5.9%, to
$121.0  million as of June 30, 2003,  from $114.2  million at December 31, 2002.
For the six months  ended June 30,  2003,  purchases  of  investment  securities
available  for sale totaled $43.6  million,  while sales,  calls and  maturities
totaled $38.0 million.  Purchases  consisted primarily of debt securities issued
by U.S. corporations and  government-sponsored  agencies. At June 30, 2003, U.S.
government and agency obligations totaled $75.7 million, or 62.6%, of investment
securities available for sale, while state and municipal  obligations  accounted
for another $13.9 million,  or 11.5%.  Corporate  obligations  represented $28.3
million,  or 23.4%,  and equity  securities  accounted  for the  remaining  $3.1
million, or 2.5%, of investment  securities available for sale at June 30, 2003.
All corporate  obligations  held at June 30, 2003, are investment grade with the
largest exposure to any single creditor totaling $3.4 million.

Cash and cash  equivalents  decreased  $5.6 million to $60.4 million at June 30,
2003,  from $65.9  million at December 31, 2002,  as funds were  deployed in the
aforementioned earning asset growth.

LIABILITIES.  Total deposits increased $13.4 million, or 1.0%, from December 31,
2002, to $1.4 billion at June 30, 2003.  Core deposits,  consisting of checking,
savings and money market  accounts,  grew by $44.3  million,  or 5.6%, to $829.5
million,  and  accounted  for 59.2% of total  deposits  at June 30,  2003.  This
compares  with a  core/total  deposits  ratio of 56.6% at December  31, 2002 and
54.5% at June 30, 2002.  Certificates of deposit decreased by $30.8 million,  or
5.1%,  compared  with  year-end  2002,  with  decreases  occurring  primarily in
one-year and shorter maturity categories.

Borrowed funds increased by $4.9 million, or 0.8%, to $601.6 million at June 30,
2003, from $596.7 million at December 31, 2002.

CAPITAL. The Company's  stockholders' equity decreased $4.4 million, or 2.0%, to
$216.8  million at June 30, 2003,  from $221.2 million at December 31, 2002. The
decrease  in  equity  was a result of the  repurchase  of $12.6  million  of the
Company's common stock,  cash dividends  declared of $5.9 million and a decrease
in net unrealized gains on securities available for sale of $710,000,  partially
offset by net income of $12.7  million for the six months  ended June 30,  2003,
the  amortization of stock-based  compensation and benefit plans and related tax
benefits of $1.7  million,  and  proceeds  from the  exercise  of stock  options
totaling  $318,000.  In  February  2003,  the  Company  authorized  a  5%  stock
repurchase  program.  The Company  repurchased  5,000 shares and 871,000 shares,
respectively, during the three and six months ended June 30, 2003, at an average
cost per share of $15.30 and  $14.26,  respectively.  Stated and  tangible  book
value per share at June 30, 2003, were $7.84 and $7.69, respectively.




                                       11
<PAGE>


The Federal Deposit  Insurance  Corporation  requires that the Bank meet minimum
leverage,  Tier 1 and Total Risk-based Capital  requirements.  At June 30, 2003,
the Bank exceeded all regulatory  capital  requirements,  as follows (dollars in
thousands):

                            Required              Actual        Excess of Actual
                       -----------------    -----------------   Over Regulatory
                        Amount     Ratio     Amount     Ratio     Requirements
                       --------    -----    --------    -----   ----------------

Leverage Capital       $ 91,088     4.00%   $190,631     8.37%     $ 99,543
Risk-based Capital:
Tier 1                   43,668     4.00%    190,631    17.46%      146,963
Total                    87,336     8.00%    203,424    18.63%      116,088

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  ("MBS");  sales  of  loans,  MBS  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 MBS 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 2003 were
principal  repayments and  prepayments of loans and MBS totaling  $342.0 million
and $202.1 million, respectively. Other significant sources of funds for the six
months ended June 30, 2003,  were  proceeds from sales of MBS available for sale
totaling $94.6  million,  sales,  calls and maturities of investment  securities
available for sale of $38.3  million,  proceeds from the sales of mortgage loans
totaling $27.5 million and net deposit  growth of $13.4  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, 2003, the
Company had unpledged  investment  securities  and MBS available for sale with a
market value of $429.9 million.

The primary investing activities of the Company for the first six months of 2003
were  the  origination  of  loans  totaling  $366.9  million,  purchases  of MBS
available  for  sale  totaling  $302.5  million,  and  purchases  of  investment
securities available for sale totaling $43.6 million.  Other significant uses of
funds during the six months ended June 30, 2003, were $15.4 million in purchases
of mortgage  loans,  $12.6 million in repurchases of the Company's  common stock
and $5.9 million in cash dividends paid.


COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003
AND 2002.

RESULTS OF  OPERATIONS.  Net income for the three and six months  ended June 30,
2003, totaled $6.2 million and $12.7 million, respectively, versus net income of
$5.6  million  and  $12.2  million,  for  the  comparable  2002  periods.   This
represented increases of $636,000, or 11.4% and $585,000, or 4.8%, respectively,
for the three and six months ended June 30, 2003,  compared  with 2002.  For the
quarter  ended June 30, 2003,  basic and diluted  earnings per share were $0.23,
representing  increases  of 21.6% and 21.9% over second  quarter  2002 basic and
diluted  earnings  per share of $0.19.  For the six months  ended June 30, 2003,
basic and  diluted  earnings  per share  were  $0.48  and  $0.46,  respectively,
representing  increases  of 14.5% and 14.6% over basic and diluted  earnings per
share of $0.42 and $0.41, respectively, for the first six months of 2002.

Annualized  return on average equity was 11.46% and 11.72% for the three and six
months ended June 30, 2003, respectively, compared with 9.60% and 10.51% for the
comparable 2002 periods. Annualized return on average assets was 1.09% and 1.12%
for the three and six months ended June 30, 2003,  respectively,  compared  with
0.99% and 1.10% for the three and six months ended June 30, 2002, respectively.

Prior year results were adversely affected by two events precipitated by alleged
acts of fraud and/or  misrepresentation.  In June 2002, 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



                                       12
<PAGE>


losses in the second  quarter of 2002,  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. Both of these items were fully resolved in 2002.

CONSOLIDATED AVERAGE STATEMENTS OF FINANCIAL CONDITION
 (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                         Three Months Ended June 30,
                                               -------------------------------------------------------------------------------
                                                                2003                                    2002
                                               --------------------------------------   --------------------------------------
                                                Average                      Average     Average                      Average
                                                Balance       Interest     Yield/Cost    Balance       Interest     Yield/Cost
                                               ----------    ----------    ----------   ----------    ----------    ----------
<S>                                            <C>           <C>              <C>       <C>           <C>              <C>
ASSETS
  Interest-earning assets:
   Federal funds sold .....................    $   48,682    $      145       1.19%     $   65,440    $      280       1.71%
   Investment securities available for
     sale (1) .............................       136,160         1,591       4.67         146,419         1,945       5.31
   Mortgage-backed securities available
     for sale .............................       753,728         7,168       3.80         683,610         8,989       5.26
                                               ----------    ----------                 ----------    ----------
     Total investments ....................       938,570         8,904       3.79         895,469        11,214       5.01

   Mortgage loans .........................     1,108,597        16,878       6.09       1,150,478        19,340       6.72
   Home equity loans ......................        62,354         1,047       6.72          70,602         1,291       7.31
   Home equity lines of credit ............        48,124           549       4.56          41,732           560       5.37
   Other loans ............................        13,537           179       5.29          18,339           327       7.13
                                               ----------    ----------                 ----------    ----------
     Total loans ..........................     1,232,612        18,653       6.05       1,281,151        21,518       6.72
                                               ----------    ----------                 ----------    ----------

  Total interest-earning assets ...........     2,171,182        27,557       5.08%      2,176,620        32,732       6.01%
                                                             ----------       ----                    ----------       ----
  Non-interest earning assets .............       102,679                                   62,023
                                               ----------                               ----------
        Total assets ......................    $2,273,861                               $2,238,643
                                               ==========                               ==========

LIABILITIES AND STOCKHOLDERS'
  EQUITY
  Interest-bearing liabilities:
   NOW and money market accounts ..........    $  510,958    $    1,128       0.88%     $  467,196    $    2,086       1.79%
   Savings accounts .......................       234,916           606       1.03         202,113           932       1.84
   Certificates of deposit ................       579,438         3,827       2.64         633,188         5,330       3.37
                                               ----------    ----------                 ----------    ----------

     Total interest-bearing deposits ......     1,325,312         5,561       1.68       1,302,497         8,348       2.56

   Borrowed funds .........................       611,707         7,431       4.86         596,457         7,520       5.04
                                               ----------    ----------                 ----------    ----------
  Total interest-bearing liabilities ......     1,937,019        12,992       2.68       1,898,954        15,868       3.34
                                                             ----------       ----                    ----------       ----
  Non-interest bearing deposits ...........        76,732                                   68,059
  Other liabilities .......................        43,906                                   39,901
                                               ----------                               ----------
        Total liabilities .................     2,057,657                                2,006,914
  Stockholders' equity ....................       216,204                                  231,729
                                               ----------                               ----------
        Total liabilities and stockholders'
            equity ........................    $2,273,861                               $2,238,643
                                               ==========    ----------       ----      ==========    ----------       ----
Net interest income/interest rate spread ..                  $   14,565       2.40%                   $   16,864       2.67%
                                                             ==========       ====                    ==========       ====
Net interest-earning assets/net interest
   margin .................................    $  234,163                     2.68%     $  277,666                     3.10%
                                               ==========                     ====      ==========                     ====
Ratio of interest-earning assets
   to interest-bearing liabilities ........          1.12X                                    1.15X
                                               ==========                               ==========
</TABLE>

(1) Includes FHLB-NY stock.




                                       13
<PAGE>




CONSOLIDATED AVERAGE STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                           Six Months Ended June 30,
                                               -------------------------------------------------------------------------------
                                                                2003                                    2002
                                               --------------------------------------   --------------------------------------
                                                Average                      Average     Average                      Average
                                                Balance       Interest     Yield/Cost    Balance       Interest     Yield/Cost
                                               ----------    ----------    ----------   ----------    ----------    ----------
<S>                                            <C>           <C>              <C>      <C>            <C>              <C>
ASSETS
  Interest-earning assets:
   Federal funds sold .....................    $   41,518    $      246       1.19%    $   59,901     $      509      1.70%
   Investment securities available for
     sale (1) .............................       133,889         3,235       4.83        142,018          3,876      5.46
   Mortgage-backed securities available
     for sale .............................       762,568        15,011       3.94        662,343         16,550      5.00
                                               ----------    ----------                ----------     ----------
     Total investments ....................       937,975        18,492       3.94        864,262         20,935      4.84

   Mortgage loans .........................     1,106,193        34,230       6.19      1,139,676         38,499      6.76
   Home equity loans ......................        62,623         2,120       6.77         71,242          2,603      7.31
   Home equity lines of credit ............        48,201         1,112       4.61         41,168          1,106      5.37
   Other loans ............................        14,297           384       5.37         19,126            705      7.37
                                               ----------    ----------                ----------     ----------
     Total loans ..........................     1,231,314        37,846       6.15      1,271,212         42,913      6.75
                                               ----------    ----------                ----------     ----------

  Total interest-earning assets ...........     2,169,289        56,338       5.19%     2,135,474         63,848      5.98%
                                                             ----------       ----                    ----------      ----
  Non-interest earning assets .............        97,803                                  68,206
                                               ----------                              ----------
        Total assets ......................    $2,267,092                              $2,203,680
                                               ==========                              ==========

LIABILITIES AND STOCKHOLDERS'
  EQUITY
  Interest-bearing liabilities:
   NOW and money market accounts ..........    $  501,033    $    2,464       0.98%    $  453,367     $    4,181      1.84%
   Savings accounts .......................       230,245         1,328       1.15        193,365          1,770      1.83
   Certificates of deposit ................       587,320         8,007       2.73        640,539         11,404      3.56
                                               ----------    ----------                ----------     ----------
     Total interest-bearing deposits ......     1,318,598        11,799       1.79      1,287,271         17,355      2.70

   Borrowed funds .........................       606,690        14,963       4.93        576,513         14,596      5.06
                                               ----------    ----------                ----------     ----------
  Total interest-bearing liabilities ......     1,925,288        26,762       2.78      1,863,784         31,951      3.43
                                                             ----------       ----                    ----------      ----
  Non-interest bearing deposits ...........        74,907                                  64,272
  Other liabilities .......................        49,428                                  44,215
                                               ----------                             -----------
        Total liabilities .................     2,049,623                               1,972,271
  Stockholders' equity ....................       217,469                                 231,409
                                               ----------                             -----------
        Total liabilities and stockholders'
            equity ........................    $2,267,092                              $2,203,680
                                               ==========    ----------       ----    ====== ====     ----------      ----
Net interest income/interest rate spread ..                  $   29,576       2.41%                   $   31,897      2.55%
                                                             ==========       ====                    ==========      ====
Net interest-earning assets/net interest
   margin .................................    $  244,001                     2.73%    $  271,690                     2.99%
                                               ==========                     ====     ==========                     ====
Ratio of interest-earning assets
   to interest-bearing liabilities ........          1.13X                                   1.15X
                                               ==========                              ==========
</TABLE>

(1) Includes FHLB-NY stock.




                                       14
<PAGE>


INTEREST  INCOME.  Interest income  decreased $5.2 million,  or 15.8%,  and $7.5
million,  or  11.8%,  for  the  three  and  six  months  ended  June  30,  2003,
respectively,  from the same periods in 2002. The decline in interest income was
primarily  attributable  to  the  historically  low  interest  rate  environment
experienced over the past year.

Interest on loans decreased $2.9 million,  or 13.3%, and $5.1 million, or 11.8%,
to $18.7  million and $37.8  million for the three and six months ended June 30,
2003,  respectively,  compared to $21.5  million and $42.9  million for the same
periods in 2002.  The average  balance of the loan portfolio for the three month
period ended June 30, 2003,  decreased  $48.5 million to $1.2 billion from 2002,
while the average yield on the portfolio decreased to 6.05% for the three months
ended June 30, 2003, from 6.72% for the same period in 2002. The average balance
of the loan  portfolio  for the six month period ended June 30, 2003,  decreased
$39.9  million  to $1.2  billion  from  2002,  while  the  average  yield on the
portfolio  decreased to 6.15% for the six months ended June 30, 2003, from 6.75%
for the same period in 2002.

Interest on securities  decreased  $2.3 million,  or 20.6% and $2.4 million,  or
11.7%, to $8.9 million and $18.5 million for the three and six months ended June
30, 2003,  compared to $11.2  million and $20.9  million for the same periods in
2002. The average  balance of the  investment,  FHLB stock and MBS available for
sale portfolios  totaled $938.6 million,  with an annualized  yield of 3.79% for
the three months ended June 30, 2003, compared with an average balance of $895.5
million  with an  annualized  yield of 5.01% for the three months ended June 30,
2002. For the first half of 2003, the average  balance of the  investment,  FHLB
stock and MBS available for sale  portfolios  totaled  $938.0  million,  with an
annualized yield of 3.94%, compared to an average balance of $864.3 million with
an annualized yield of 4.84% for the six months ended June 30, 2002. The Company
has adopted  what it believes is a prudent  strategy in the current low interest
rate  environment  of reducing the duration of the  securities  portfolio  while
carefully managing the risk of extending maturities should rates begin to rise.

INTEREST EXPENSE.  Interest expense  decreased $2.9 million,  or 18.1%, to $13.0
million for the three months ended June 30, 2003,  compared to $15.9 million for
the same  period in 2002.  For the six  months  ended  June 30,  2003,  interest
expense decreased $5.2 million,  or 16.2%, to $26.8 million versus $32.0 million
for the comparable 2002 period.  The decrease in interest  expense was primarily
attributable  to reductions in rates paid on time and core deposits,  as well as
growth in  lower-costing  core  accounts and managed  run-off in higher  costing
certificates of deposit.

Interest expense on deposits  decreased $2.8 million,  or 33.4%, to $5.6 million
for the three months ended June 30, 2003,  compared to $8.3 million for the same
period in 2002. The average balance of interest-bearing  core deposits increased
$76.6 million,  or 11.4%, for the quarter ended June 30, 2003, compared with the
same period in 2002, while the average rate paid on these deposits  decreased 87
basis points to 0.93%.  Average non-interest bearing deposits grew $8.7 million,
or 12.7%,  to $76.7  million for the second  quarter of 2003 compared with 2002.
The average balance of certificates of deposit declined $53.8 million,  or 8.5%,
for the three months ended June 30, 2003, compared with the same period in 2002,
while the average rate paid on certificates decreased 73 basis points to 2.64%.

For the first half of 2003, interest expense on deposits decreased $5.6 million,
or 32.0%,  to $11.8  million,  compared to $17.4  million for the same period in
2002.  For the  year-to-date,  the  average  balance  of  interest-bearing  core
deposits  increased  $84.5 million,  or 13.1%,  compared with the same period in
2002, while the average rate paid on these deposits decreased 80 basis points to
1.04%.  Average  non-interest  bearing deposits grew $10.6 million, or 16.5%, to
$74.9  million for the first half of 2003 compared with the same period in 2002.
The average balance of certificates of deposit declined $53.2 million,  or 8.3%,
for the six months ended June 30, 2003,  compared  with the same period in 2002,
while the average rate paid on certificates decreased 83 basis points to 2.73%.

Interest on  borrowed  funds for the three and six months  ended June 30,  2003,
decreased  $89,000 and  increased  $367,000,  respectively,  to $7.4 million and
$15.0  million,  compared  to $7.5  million  and  $14.6  million  for  the  same
respective  periods in 2002. The average balance of borrowed funds for the three
months ended June 30, 2003, increased to $611.7 million, from $596.5 million for
the same period in 2002.  The average  interest rate paid on borrowed  funds was
4.86% for the three months ended June 30, 2003, compared with 5.04% for the same
period in 2002.  The average  balance of borrowed funds for the six months ended
June 30, 2003,  increased to $606.7  million,  from $576.5  million for the same
period in 2002.  The average  interest rate paid on borrowed funds was 4.93% for
the six months ended June 30, 2003,  compared  with 5.06% for the same period in
2002.  During the three and six months ended June 30, 2003, the Company modified
$25 million and $75  million,  respectively,  in  borrowings  with the  FHLB-NY,
extending  terms and reducing the interest  rates. At June 30, 2003, the Company
had an additional  $50 million in borrowings  with a weighted  average  interest
rate of 4.77% scheduled to mature in 2003.



                                       15
<PAGE>


NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest income before
provision  for  loan  losses   decreased  $2.3  million,   or  13.6%  and  7.3%,
respectively,  to $14.6  million and $29.6  million for the three and six months
ended June 30, 2003,  compared to $16.9  million and $31.9  million for the same
periods in 2002.  The  increase  was due to the changes in  interest  income and
interest expense described previously.

The interest rate spread decreased 27 basis points to 2.40% for the three months
ended June 30, 2003,  compared  with 2.67% for the same period in 2002.  For the
three months ended June 30, the average  earning  asset yield  declined to 5.08%
for 2003,  from  6.01% for 2002,  while  the  average  cost of  interest-bearing
liabilities  declined to 2.68% for 2003, from 3.34% for 2002. For the six months
ended June 30, 2003, the interest rate spread decreased 14 basis points to 2.41%
compared with 2.55% for the same period in 2002. The average earning asset yield
was 5.19%  for the first  half of 2003,  compared  with  5.98% for the first six
months of 2002, while the average cost of  interest-bearing  liabilities fell to
2.78% from 3.43% for the same respective periods.

The net interest margin declined 42 basis points to 2.68% for the second quarter
of 2003,  from 3.10% for the quarter ended June 30, 2002,  and nine basis points
sequentially,  from 2.77% for the first quarter of 2003.  For the  year-to-date,
net interest margin  declined 26 basis points to 2.73%,  compared with 2.99% for
the six months ended June 30, 2002.

PROVISION  FOR LOAN  LOSSES.  The Company  did not record a  provision  for loan
losses  during the three and six months  ended June 30,  2003,  compared to $1.1
million  and  $1.2  million  for the same  periods  in  2002,  as a result  of a
reduction  in loan  portfolio  size and  improvements  in asset  quality.  Total
non-performing  assets  decreased to $1.4  million at June 30,  2003,  from $1.8
million at December 31, 2002 and $7.8 million at June 30,  2002.  The  allowance
for loan  losses as a  percentage  of total loans was 1.04% at June 30, 2003 and
December 31, 2002.  In  management's  opinion,  the  allowance  for loan losses,
totaling $12.8 million at June 30, 2003, 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.

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,
                                                   2003      2003       2002       2002       2002
                                                 -------    -------   -------    --------    -------
<S>                                              <C>        <C>        <C>        <C>        <C>
Non-accrual mortgage loans ..................    $1,291     $1,082     $1,511     $2,297     $1,875
Non-accrual other loans .....................         6         43         30         --      5,552
                                                 ------     ------     ------     ------     ------
   Total non-accrual loans ..................     1,297      1,125      1,541      2,297      7,427
Loans 90 days or more delinquent and
     still accruing .........................        64        294        223        440         80
                                                 ------     ------     ------     ------     ------
Total non-performing loans ..................     1,361      1,419      1,764      2,737      7,507
Non-accrual investments (WorldCom, Inc.
     corporate bonds) .......................        --         --         --        300        300
Total foreclosed real estate, net of related
     allowance ..............................        50         --         72        100         --
                                                 ------     ------     ------     ------     ------
Total non-performing assets .................    $1,411     $1,419     $1,836     $3,137     $7,807
                                                 ======     ======     ======     ======     ======
Non-performing loans to loans receivable, net      0.11%      0.12%      0.15%      0.22%      0.59%
Non-performing assets to total assets .......      0.06%      0.06%      0.08%      0.14%      0.35%
</TABLE>

NON-INTEREST  INCOME.  Non-interest  income  increased  $2.5  million,  to  $2.3
million,  for the three months ended June 30, 2003,  compared to the same period
in 2002. For the six months ended June 30, 2003,  non-interest  income increased
$2.9 million, to $4.8 million, compared to the same period in 2002. Net gains on
sales of loans and securities  totaling  $633,000 and $1.5 million were realized
during the three and six months ended June 30, 2003, respectively, compared with
net losses of $1.6 million and $1.5 million,  respectively,  for the  comparable
2002  periods.   In  2003,  the  Company   recognized  gains  on  the  sales  of
higher-coupon MBS that demonstrated a significant  propensity to prepay, as well
as several  corporate  debt  obligations  that had attained  their price target.
Prior year results included a $1.8 million pre-tax impairment charge recorded on
WorldCom, Inc. corporate bonds.



                                       16
<PAGE>


In addition,  fee and service  charge  income  increased  $283,000 and decreased
$69,000 for the three and six months ended June 30, 2003, respectively, compared
with the same  periods  in 2002.  Current  year fee and  service  charge  income
benefited from core deposit growth and increased fee levels  implemented in July
of 2002.  Prior year income  included  approximately  $600,000 in prepayment fee
income  attributable to a single large commercial real estate loan earned during
the first quarter of 2002.

NON-INTEREST  EXPENSE.  Non-interest  expense for the three and six months ended
June 30, 2003, increased $240,000 and $753,000, or 3.3% and 5.2%,  respectively,
to $7.6 million and $15.1  million,  compared to $7.3 million and $14.4  million
for the same  periods  in 2002.  The  increase  was  primarily  attributable  to
compensation and benefits  expense,  which increased  $246,000 and $593,000,  or
5.9% and 7.3%, respectively,  to $4.4 million and $8.7 million for the three and
six months ended June 30, 2003,  primarily as a result of increased  healthcare,
pension  and ESOP  costs.  Effective  August 1, 2003,  the  Company  has adopted
changes to its pension plan which will reduce the  retirement  benefit and close
the plan to new  participants  hired on or after that date.  As a result of this
amendment,  pension expense for the remainder of 2003 is projected to decline by
$236,000 compared with the first half of the year.








                                       17
<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, 2003).

Item 4.  CONTROLS AND PROCEDURES.

        a.) Evaluation of disclosure controls and procedures.
            -------------------------------------------------
            Christopher  Martin,  the Company's  Chief  Executive  Officer,  and
            Thomas M. Lyons, the Company's Chief Financial Officer, conducted an
            evaluation of the effectiveness of the Company's disclosure controls
            and procedures  (as defined in Rule  13a-15(e)  under the Securities
            Exchange Act of 1934,  as amended) as of June 30,  2003.  Based upon
            their evaluation,  they each found the Company's disclosure controls
            and procedures were adequate to ensure that information  required to
            be disclosed in the reports that the Company files and submits under
            the Exchange Act is recorded, processed,  summarized and reported as
            and when required.

        b.) Changes in internal controls.
            -----------------------------
            There  were  no  changes  in the  Company's  internal  control  over
            financial  reporting that occurred during the period covered by this
            report that have materially  affected,  or are reasonably  likely to
            materially  affect,  the Company's  internal  control over financial
            reporting.

                           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 April 28, 2003.  The
          following proposals were voted on by the stockholders:

                                                                       Withhold/
                                               For         Against      Abstain
                                               ---         -------     ---------
          1.   Election of directors
                 Christopher Martin         22,198,062       --         187,269
                 Keith H. McLaughlin        22,200,779       --         184,552
                 Philip T. Ruegger, Jr.     22,198,537       --         186,794

          2.   The approval of the First
               Sentinel Bancorp, Inc.
               2003 Key Employee Equity
               Compensation Plan            21,201,276    1,090,242      93,813

          3.   The ratification of KPMG
               LLP as the independent
               auditors of the Company
               for the year ended
               December 31, 2003.           22,089,797      270,679      24,855




                                       18
<PAGE>


Item 5.   OTHER INFORMATION.
          None.

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

          a.)  Exhibits
               --------

<TABLE>
<CAPTION>
          ----------------------------------------------------------------------------------------
               Exhibit
               Number                            Description                          Reference
          ----------------------------------------------------------------------------------------
<S>                      <C>                                                         <C>
                 3.1     Certificate of Incorporation of First Sentinel Bancorp,         (a)
                         Inc.
                 3.2     Bylaws of First Sentinel Bancorp, Inc.                          (b)
                  4      Stock certificate of First Sentinel Bancorp, Inc.               (a)
                 10      First Sentinel Bancorp, Inc. 2003 Key Employee Equity           (c)
                         Compensation Plan
                 11      Statement re: Computation of Ratios                            Page 8
                31.1     Certification of Chief Executive Officer                    Filed herein
                31.2     Certification of Chief Financial Officer                    Filed herein
                32.1     Statement of Chief Executive Officer furnished pursuant to   Furnished
                         Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.       herein
                         Section 1350*
                32.2     Statement of Chief Financial Officer furnished pursuant to   Furnished
                         Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.       herein
                         Section 1350*
          ----------------------------------------------------------------------------------------
</TABLE>

* Pursuant to SEC rules,  this  exhibit will not be deemed filed for purposes of
Section 18 of the Exchange Act or otherwise be subject to the  liability of that
section.

(a)  Previously filed and  incorporated  herein by reference to 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.

(b)  Previously filed and  incorporated  herein by reference to the December 31,
     2002 Annual Report on Form 10-K of First Sentinel Bancorp,  Inc. filed with
     the SEC on March 31, 2003, SEC File No. 000-23809.

(c)  Previously  filed  and  incorporated  herein  by  reference  to  the  Proxy
     Statement for the 2003 Annual  Meeting of  Stockholders  of First  Sentinel
     Bancorp, Inc. filed with the SEC on March 28, 2003, SEC File No. 000-23809.



          b.)  Reports on Form 8 - K
               ---------------------

          On April 25, 2003, the Company  furnished a Current Report on Form 8-K
          reporting its earnings for the three months ended March 31, 2003.

          On April 28,  2003,  the  Company  filed a Current  Report on Form 8-K
          including the text of a financial  presentation regarding the state of
          the  Company   made  at  the  April  28,  2003,   Annual   Meeting  of
          Stockholders.




                                       19
<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, 2003              By:   /s/ CHRISTOPHER MARTIN
                                          ----------------------
                                          Christopher Martin
                                          President and Chief Executive Officer


Date:  August 14, 2003              By:   /s/ THOMAS M. LYONS
                                          -------------------
                                          Thomas M. Lyons
                                          Executive Vice President and
                                          Chief Financial Officer









                                       20