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 .............................  SEPTEMBER 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 NOVEMBER 1, 2003
----------------------------------       ---------------------------------------
            Common Stock                            27,651,463 shares



<PAGE>


                          FIRST SENTINEL BANCORP, INC.

                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                                      PAGE #
PART I.         FINANCIAL INFORMATION
<S>             <C>                                                                                    <C>
Item 1.         Financial Statements (Unaudited)

                Consolidated Statements of Financial Condition as of September 30, 2003 and
                December 31, 2002                                                                       3

                Consolidated Statements of Income for the three and nine months ended September
                30, 2003 and 2002                                                                       4

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

                Consolidated Statements of Cash Flows for the nine months ended September 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
</TABLE>






                                       2

<PAGE>

<TABLE>
<CAPTION>
FIRST SENTINEL BANCORP, INC. AND SUBSIDIARIES
-----------------------------------------------------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data) (Unaudited)
                                                                                         September 30,         December 31,
                                                                                             2003                  2002
                                                                                        ----------------       --------------
<S>                                                                                     <C>                    <C>
ASSETS
Cash and due from banks ............................................................    $        22,472        $      21,695
Federal funds sold .................................................................             33,400               44,250
                                                                                        ----------------       --------------
     Total cash and cash equivalents ...............................................             55,872               65,945
Federal Home Loan Bank of New York (FHLB-NY) stock, at cost ........................             21,328               20,835
Investment securities available for sale ...........................................            123,019              114,219
Mortgage-backed securities available for sale ......................................            781,703              790,562
Loans held for sale, net ...........................................................              2,093                  563
Loans receivable, net ..............................................................          1,200,280            1,200,647
Interest and dividends receivable ..................................................              9,655               11,055
Premises and equipment, net ........................................................             16,063               15,882
Core deposit intangibles ...........................................................              3,939                4,568
Other assets .......................................................................             31,178               32,758
                                                                                        ----------------       --------------
     Total assets ..................................................................    $     2,245,130        $   2,257,034
                                                                                        ================       ==============

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

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Deposits ...........................................................................    $     1,386,215        $   1,387,986
Borrowed funds .....................................................................            591,542              596,663
Advances by borrowers for taxes and insurance ......................................              9,065                9,615
Other liabilities ..................................................................             16,045               16,570
                                                                                        ----------------       --------------
    Total liabilities ..............................................................          2,002,867            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 27,650,963 shares issued and outstanding at 9/30/03 and
     43,106,742 and 28,422,028 shares issued and outstanding at 12/31/02 ...........                430                  430
Paid-in capital ....................................................................            204,014              203,229
Retained earnings ..................................................................            173,436              163,681
Accumulated other comprehensive income .............................................              5,041                9,776
Treasury stock (15,331,125 and 14,586,591 shares at 9/30/03 and 12/31/02,
    respectively) ..................................................................           (156,627)            (145,480)
Common stock acquired by the Employee Stock Ownership Plan (ESOP) ..................             (8,715)              (9,404)
Common stock acquired by the Recognition and Retention Plan (RRP) ..................               (316)              (1,032)
                                                                                        ----------------       --------------
     Total stockholders' equity ....................................................            217,263              221,200
                                                                                        ----------------       --------------
     Total liabilities and stockholders' equity ....................................    $     2,245,130        $   2,257,034
                                                                                        ================       ==============
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.




                                       3
<PAGE>

<TABLE>
<CAPTION>
FIRST SENTINEL BANCORP, INC. AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data) (Unaudited)
                                                                         Three months ended                  Nine months ended
                                                                            September 30,                     September 30,
                                                                    -----------------------------     -----------------------------
                                                                       2003              2002             2003              2002
                                                                    ------------     ------------     ------------     ------------
<S>                                                                 <C>              <C>              <C>              <C>
INTEREST INCOME:

  Loans .........................................................   $     17,805     $     21,302     $     55,651     $     64,215
  Investment and mortgage-backed securities
    available for sale ..........................................          8,618           10,784           27,110           31,719
                                                                    ------------     ------------     ------------     ------------
      Total interest income .....................................         26,423           32,086           82,761           95,934
                                                                    ------------     ------------     ------------     ------------
INTEREST EXPENSE:
  Deposits:
    NOW and money market demand .................................          1,079            1,918            3,543            6,099
    Savings .....................................................            475              952            1,803            2,722
    Certificates of deposit .....................................          3,465            5,050           11,472           16,454
                                                                    ------------     ------------     ------------     ------------
      Total interest expense - deposits .........................          5,019            7,920           16,818           25,275
  Borrowed funds ................................................          6,944            7,691           21,907           22,287
                                                                    ------------     ------------     ------------     ------------
      Total interest expense ....................................         11,963           15,611           38,725           47,562
                                                                    ------------     ------------     ------------     ------------
      Net interest income .......................................         14,460           16,475           44,036           48,372
  Provision for loan losses .....................................             --              105               --            1,310
                                                                    ------------     ------------     ------------     ------------
      Net interest income after provision for loan losses .......         14,460           16,370           44,036           47,062
                                                                    ------------     ------------     ------------     ------------
NON-INTEREST INCOME:
  Fees and service charges ......................................          1,141              992            3,171            3,091
  Net gain (loss) on sales of loans and securities
    available for sale ..........................................            276            1,349            1,802             (122)
  Income on Bank Owned Life Insurance (BOLI) ....................            412              338            1,195            1,157
  Other, net ....................................................             39              158              472              536
                                                                    ------------     ------------     ------------     ------------
  Total non-interest income .....................................          1,868            2,837            6,640            4,662
                                                                    ------------     ------------     ------------     ------------
NON-INTEREST EXPENSE:
  Compensation and benefits .....................................          4,188            4,281           12,908           12,408
  Occupancy .....................................................            596              592            1,829            1,695
  Equipment .....................................................            390              451            1,227            1,290
  Advertising ...................................................            134              221              672              754
  Federal deposit insurance .....................................             57               58              171              176
  Amortization of core deposit intangibles ......................            210              210              629              633
  Distributions on preferred capital securities .................            464              495            1,408            1,484
  General and administrative ....................................          1,099            1,151            3,413            3,385
                                                                    ------------     ------------     ------------     ------------
     Total non-interest expense .................................          7,138            7,459           22,257           21,825
                                                                    ------------     ------------     ------------     ------------
     Income before income tax expense ...........................          9,190           11,748           28,419           29,899
Income tax expense ..............................................          2,983            4,270            9,466           10,260
                                                                    ------------     ------------     ------------     ------------
     Net income .................................................   $      6,207     $      7,478     $     18,953     $     19,639
                                                                    ============     ============     ============     ============
Basic earnings per share ........................................   $       0.23     $       0.26     $       0.71     $       0.68
                                                                    ============     ============     ============     ============
Weighted average shares outstanding - Basic .....................     26,602,051       28,447,507       26,679,996       28,934,681
                                                                    ============     ============     ============     ============
Diluted earnings per share ......................................   $       0.23     $       0.26     $       0.69     $       0.66
                                                                    ============     ============     ============     ============
Weighted average shares outstanding - Diluted ...................     27,358,536       29,185,437       27,410,031       29,717,856
                                                                    ============     ============     ============     ============
</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 nine months
   ended September 30, 2002 ...........        --         --     19,639           --         --         --        --      19,639
Cash dividends declared ($0.265) ......        --         --     (7,993)          --         --         --        --      (7,993)
Net change in unrealized gain/(loss)
   on securities available for sale ...        --         --         --        7,034         --         --        --       7,034
Purchases of treasury stock ...........        --         --         --           --    (26,028)        --        --     (26,028)
Exercise of stock options..............        --         --       (413)          --        636         --        --         223
Tax benefit on stock options and RRP ..        --        331         --           --         --         --        --         331
Purchase and retirement of common
   stock...............................        --       (108)        --           --         --         --        --        (108)
Amortization of RRP ...................        --         --         --           --         --         --       659         659
ESOP expense...........................        --        330         --           --         --        688        --       1,018
                                        ------------------------------------------------------------------------------------------

Balance at September 30, 2002..........      $430   $202,411   $159,696       $9,212  $(135,963)   $(9,633)  $(1,251)   $224,902
                                        ==========================================================================================


Balance at December 31, 2002 ..........      $430   $203,229   $163,681       $9,776  $(145,480)   $(9,404)  $(1,032)   $221,200
Net income for the nine months
   ended September 30, 2003 ...........        --         --     18,953           --         --         --        --      18,953
Cash dividends declared ($0.315) ......        --         --     (8,345)          --         --         --        --      (8,345)
Net change in unrealized gain/(loss)
   on securities available for sale ...        --         --         --       (4,735)        --         --        --      (4,735)
Purchases of treasury stock ...........        --         --         --           --    (12,429)        --        --     (12,429)
Exercise of stock options..............        --        (63)      (853)          --      1,282         --        --         366
Tax benefit on stock options and RRP ..        --        460         --           --         --         --        --         460
Purchase and retirement of common
   stock...............................        --       (177)        --           --         --         --        --        (177)
Amortization of RRP ...................        --         51         --           --         --         --       716         767
ESOP expense...........................        --        514         --           --         --        689        --       1,203
                                        ------------------------------------------------------------------------------------------

Balance at September 30, 2003..........      $430   $204,014   $173,436       $5,041  $(156,627)   $(8,715)    $(316)   $217,263
                                        ==========================================================================================
</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>
                                                                                                            Nine months ended
                                                                                                              September 30,
                                                                                                       ----------------------------
                                                                                                           2003            2002
                                                                                                       ------------    ------------
<S>                                                                                                    <C>             <C>
Cash flows from operating activities:
   Net income                                                                                          $     18,953    $     19,639
   ADJUSTMENTS  TO  RECONCILE  NET  INCOME  TO NET CASH  PROVIDED  BY  OPERATING ACTIVITIES:
   Depreciation of premises and equipment.........................................................            1,059           1,066
   Amortization of core deposit intangibles.......................................................              629             633
   ESOP expense ..................................................................................            1,203           1,018
   Amortization of RRP ...........................................................................              767             659
   Net amortization of premiums and accretion of discounts and deferred fees.... .................            5,413           2,815
   Provision for loan losses .....................................................................                -           1,310
   Loans originated for sale .....................................................................          (48,512)        (15,782)
   Proceeds from sales of mortgage loans held for sale ...........................................           47,056          19,327
   Net (gain) loss on sales of loans and securities available for sale............................           (1,802)            122
   Net (gain) loss on sales of real estate owned..................................................              (79)             10
   Income on BOLI.................................................................................           (1,195)         (1,157)
   Decrease in interest and dividends receivable..................................................            1,400             767
   Tax benefit on stock options and RRP...........................................................              460             331
   Increase in other liabilities..................................................................            2,010           6,626
   Decrease in other assets ......................................................................            2,703           3,267
                                                                                                       ------------    ------------
         Net cash provided by operating activities ...............................................           30,065          40,651
                                                                                                       ------------    ------------
Cash flows from investing activities:
   Proceeds from sales/calls/maturities of investment securities available for sale ..............           59,687          44,779
   Purchases of investment securities available for sale .........................................          (67,709)        (54,051)
   Purchase of FHLB-NY stock .....................................................................             (493)           (595)
   Proceeds from sales of mortgage-backed securities available for sale ..........................          127,442         152,433
   Principal payments on mortgage-backed securities ..............................................          335,451         181,962
   Purchases of mortgage-backed securities available for sale ....................................         (466,367)       (419,561)
   Principal repayments on loans .................................................................          553,152         472,697
   Origination of loans ..........................................................................         (530,934)       (446,978)
   Purchases of mortgage loans ...................................................................          (21,335)        (26,483)
   Proceeds from sale of real estate owned .......................................................              235             129
   Purchases of premises and equipment ...........................................................           (1,240)           (636)
                                                                                                       ------------    ------------
          Net cash used in investing activities ..................................................          (12,111)        (96,304)
                                                                                                       ------------    ------------
Cash flows from financing activities:
   Purchase of treasury stock ....................................................................          (12,429)        (26,028)
   Purchase and retirement of common stock .......................................................             (177)           (108)
   Stock options exercised .......................................................................              366             223
   Cash dividends paid ...........................................................................           (8,345)         (7,993)
   Net (decrease) increase in deposits ...........................................................           (1,771)         61,803
   Proceeds from borrowed funds ..................................................................           55,000         117,000
   Repayment of  borrowed funds ..................................................................          (60,121)        (61,112)
   Net (decrease) increase in advances by borrowers for taxes and insurance.... ..................             (550)            181
                                                                                                       ------------    ------------
            Net cash (used in) provided by financing activities ..................................          (28,027)         83,966
                                                                                                       ------------    ------------
            Net (decrease) increase in cash and cash equivalents .................................          (10,073)         28,313
Cash and cash equivalents at beginning of period .................................................           65,945          53,875
                                                                                                       ------------    ------------
Cash and cash equivalents at end of period .......................................................     $     55,872    $     82,188
                                                                                                       ============    ============
Supplemental disclosures of cash flow information:
   Cash paid during the period for:
       Interest ..................................................................................     $     39,541    $     47,505
       Income taxes ..............................................................................            5,300           3,147
   Non cash investing and financing activities for the period:
        Transfer of loans to real estate owned ...................................................     $         84    $        197
</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
nine months ended September 30, 2003 and 2002. The results of operations for the
three and nine months ended September 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                 Nine months ended
                                                         September 30,                     September 30,
                                               --------------------------------   --------------------------------
                                                    2003              2002             2003              2002
                                               --------------    --------------   --------------    --------------
<S>                                            <C>               <C>              <C>               <C>
Net income, as reported                        $        6,207    $        7,478   $       18,953    $       19,639
Add:

   Stock-based employee compensation
     expense included in reported net
     income, net of related tax effects
     (RRP awards)                                         166               143              499               428
Deduct:

   Total stock-based  employee
     compensation expense determined
     under fair value based method for all
     options and RRP awards, net of
     related tax effects                                  173               332              517               996
                                               --------------    --------------   --------------    --------------
Pro forma net income                           $        6,200    $        7,289   $       18,935    $       19,071
                                               ==============    ==============   ==============    ==============

Net income per common share:
   Basic - as reported                         $         0.23    $         0.26   $         0.71    $         0.68
                                               ==============    ==============   ==============    ==============
   Basic - pro forma                           $         0.23    $         0.26   $         0.71    $         0.66
                                               ==============    ==============   ==============    ==============
   Diluted - as reported                       $         0.23    $         0.26   $         0.69    $         0.66
                                               ==============    ==============   ==============    ==============
   Diluted - pro forma                         $         0.23    $         0.25   $         0.69    $         0.64
                                               ==============    ==============   ==============    ==============
</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                 Nine months ended
                                                         September 30,                     September 30,
                                               --------------------------------   --------------------------------
                                                    2003              2002             2003              2002
                                               --------------    --------------   --------------    --------------
<S>                                            <C>               <C>              <C>               <C>
Net income                                     $        6,207    $        7,478   $       18,953    $       19,639
                                               ==============    ==============   ==============    ==============

Basic weighted-average common shares
     outstanding                                   26,602,051        28,447,507       26,679,996        28,934,681
Plus: Dilutive stock options and awards               756,485           737,930          730,035           783,175
                                               --------------    --------------   --------------    --------------
Diluted weighted-average common
     shares outstanding                            27,358,536        29,185,437       27,410,031        29,717,856
                                               ==============    ==============   ==============    ==============

Net income per common share:
   Basic                                       $         0.23    $         0.26   $         0.71    $         0.68
                                               ==============    ==============   ==============    ==============
   Diluted                                     $         0.23    $         0.26   $         0.69    $         0.66
                                               ==============    ==============   ==============    ==============
</TABLE>



(2)  DIVIDENDS

Based upon current  operating  results,  the Company declared a cash dividend of
$0.105 per share on July 23, 2003,  payable August 29, 2003, to  stockholders of
record on August 15, 2003.

(3)  COMMITMENTS AND CONTINGENCIES

At  September  30,  2003,  the Company  had the  following  commitments:  (i) to
originate  loans of $150.1  million;  (ii) unused home equity lines of credit of
$74.2 million;  (iii) unused  commercial lines of credit of $14.7 million;  (iv)
unused construction lines of credit of $87.1 million;  and (v) letters of credit
outstanding totaling $1.5 million.  Further,  certificates of deposits which are
scheduled to mature and/or rollover in one year or less,  totaled $409.1 million
at September 30, 2003.


(4)  ALLOWANCE FOR LOAN LOSSES


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

<TABLE>
<CAPTION>
                                               NINE MONTHS ENDED SEPTEMBER 30,
                                             ----------------------------------
                                                  2003                 2002
                                             --------------       -------------
<S>                                      <C>                   <C>
Balance at beginning of period               $      12,830        $      12,932
Provision charged to operations                         --                1,310
Charge-offs, net of recoveries                         (46)              (1,405)
                                             -------------        -------------
Balance at end of period                     $      12,784        $      12,837
                                             =============        =============
</TABLE>



                                       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 $2.0 million and
$8.3  million  for  the  three  months  ended   September  30,  2003  and  2002,
respectively.   For  the  nine  months  ended   September  30,  2003  and  2002,
comprehensive income totaled $14.2 million and $26.7 million, respectively.

(6)  RECENT ACCOUNTING PRONOUNCEMENTS

Financial Accounting Standards Board ("FASB")  Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable  Interest  Entities," was issued in January 2003. FIN
46 applies  immediately to enterprises that hold a variable interest in variable
interest entities created after January 31, 2003. It applies in the first fiscal
year or interim period  beginning after June 15, 2003 to enterprises that hold a
variable interest in variable interest entities created before February 1, 2003.
FIN 46 applies  to public  enterprises  as of the  beginning  of the  applicable
interim or annual period, and it applies to nonpublic  enterprises no later than
the end of the  applicable  annual period.  FIN 46 may be applied  prospectively
with a cumulative-effect  adjustment as of the date on which it is first applied
or by restating  previously  issued  financial  statements for one or more years
with a  cumulative-effect  adjustment  as of the  beginning  of the  first  year
restated.  FIN 46 provides guidance on the identification of entities controlled
through  means  other  than  voting  rights.  FIN 46  specifies  how a  business
enterprise  should  evaluate  its  interest  in a  variable  interest  entity to
determine whether to consolidate that entity. A variable interest entity must be
consolidated  by its  primary  beneficiary  if the entity  does not  effectively
disperse risks among the parties involved.

On October 9, 2003,  the effective  date was deferred until the end of the first
interim or annual period ending after December 15, 2003,  for certain  interests
held by a public  entity in certain  variable  interest  entities  or  potential
variable  interest entities created before February 1, 2003. The adoption of FIN
46 is not expected to have a significant  effect on the  Company's  consolidated
financial statements.

In May  2003,  the FASB  issued  Statement  of  Financial  Accounting  Standards
("SFAS")  No.  150,   "Accounting  for  Certain   Financial   Instruments   with
Characteristics  of both  Liabilities  and  Equity."  SFAS No.  150  established
standards for how entities  classify and measure certain  financial  instruments
with  characteristics of both liabilities and equity. The provisions of SFAS No.
150 were effective for financial  instruments entered into or modified after May
31, 2003,  and  otherwise  were  effective at the beginning of the first interim
period  beginning after June 15, 2003. In the Company's  earnings release issued
October  22,  2003,  the  "Preferred  capital  securities"  were  reported  as a
liability in the Company's consolidated  statements of financial condition,  and
the distributions on these trust preferred securities on and after July 1, 2003,
were included as interest  expense in accordance with the provisions of SFAS No.
150 in effect at that date. Subsequent to the earnings release, but prior to the
filing of these financial  statements,  the FASB voted to defer indefinitely the
provisions  of SFAS No. 150 with respect to the  financial  reporting  for trust
preferred securities. Accordingly $464,000 of distributions on preferred capital
securities for the three months ended September 30, 2003,  which were classified
as interest expense in the October 22, 2003, earnings release have been reported
in these  financial  statements  as  non-interest  expense.  Also,  these  trust
preferred  securities  are reported in the mezzanine  (between  liabilities  and
equity) in the accompanying consolidated statements of financial condition. This
reporting  is  consistent  with the  Company's  previous  quarterly  and  annual
financial reporting.

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. AND SUBSIDIARIES

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,   projections  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
Operations," 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 Reports on Form 10-Q for the quarters ended March 31, 2003,
June 30, 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 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  decreased  $11.9  million from December 31, 2002, to $2.2
billion at  September  30,  2003.  The change in assets  consisted  primarily of
decreases in federal funds sold and mortgage-backed securities ("MBS") available
for sale,  partially offset by increases in investment  securities available for
sale and loans held for sale.

Federal  funds sold  decreased  $10.9  million to $33.4 million at September 30,
2003,  from $44.3  million at December 31, 2002,  as balances were deployed into
higher-yielding assets and used to reduce outstanding borrowings.

MBS available for sale decreased $8.9 million to $781.7 million at September 30,
2003,  from  $790.6  million at December  31,  2002.  For the nine months  ended
September 30, 2003,  purchases of MBS available for sale totaled $466.4 million,
while  principal  repayments  totaled  $335.5  million and sales totaled  $126.1
million.   During  the  nine


                                       10
<PAGE>

months  ended  September  30,  2003,  the  Company  experienced  high  levels of
principal  repayments  on MBS,  reflecting  the  historically  low interest rate
environment and resultant  strong mortgage loan refinance  activity.  Prepayment
levels are expected to decline during the fourth quarter of 2003, as longer-term
interest rates have risen and refinance activity has slowed.

Investment  securities  available for sale increased  $8.8 million,  or 7.7%, to
$123.0  million as of September  30, 2003,  from $114.2  million at December 31,
2002.  For the nine months ended  September  30, 2003,  purchases of  investment
securities  available for sale totaled  $67.7  million,  while sales,  calls and
maturities  totaled  $59.3  million.   Purchases  consisted  primarily  of  debt
securities issued by U.S.  corporations and  government-sponsored  agencies.  At
September  30,  2003,  U.S.  government  and agency  obligations  totaled  $78.2
million, or 63.6%, of investment  securities available for sale, while state and
municipal obligations  accounted for another $13.7 million, or 11.1%.  Corporate
obligations represented $27.6 million, or 22.4%, and equity securities accounted
for the remaining $3.5 million, or 2.9%, of investment  securities available for
sale at September  30, 2003.  All  corporate  obligations  held at September 30,
2003,  are  investment  grade with the largest  exposure to any single  creditor
totaling $3.0 million.

Net loans,  including loans held for sale,  increased $1.2 million from December
31, 2002, to $1.2 billion at September 30, 2003. Of the total loan  portfolio at
September 30, 2003, 1-4 family mortgage loans comprised 65.0%, home equity loans
represented 9.2%,  commercial real estate,  multi-family and construction  loans
comprised 24.8%, and other consumer loans accounted for 1.0%.

Total loan  originations  for the nine months ended  September  30,  2003,  were
$579.4  million,  compared  to  $462.8  million  for the  same  period  in 2002.
Fixed-rate,  1-4 family first mortgage loan originations totaled $209.7 million,
or 36.2% of production,  while adjustable-rate,  1-4 family first mortgage loans
accounted for $108.4 million, or 18.7%, of total originations for the first nine
months of 2003.  Also  during  the first  nine  months  of 2003,  consumer  loan
originations,  consisting  primarily  of home  equity  loans and  credit  lines,
totaled $129.9 million, or 22.4% of total originations.  During the same period,
construction  lending  totaled $98.7  million,  or 17.0% of total  originations,
while  commercial real estate,  commercial and  multi-family  loan  originations
totaled $32.9 million, or 5.7%. In addition, the Company purchased $21.3 million
of  primarily  adjustable-rate,   single-family  first  mortgage  loans  through
correspondents  during the nine months ended September 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 $553.2 million for the nine months ended
September 30, 2003,  compared to $472.7  million for the same period in 2002. In
addition, the Company sold $47.0 million of primarily 30-year,  fixed-rate,  1-4
family  mortgage  loans  during  the  first  nine  months 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.  At September  30, 2003,  the loan  pipeline,  consisting  of loan
applications in the process of approval, totaled $150.1 million, including $46.7
million of accepted construction and non-residential loan commitments.

LIABILITIES.  Total  deposits  decreased $1.8 million from December 31, 2002, to
$1.4  billion at September  30, 2003.  Core  deposits,  consisting  of checking,
savings and money market  accounts,  grew by $46.1  million,  or 5.9%, to $831.4
million,  and accounted for 60.0% of total deposits at September 30, 2003.  This
compares with a core to total  deposits  ratio of 56.6% at December 31, 2002 and
55.1% at September 30, 2002. Certificates of deposit decreased by $47.9 million,
or 7.9%,  compared with year-end  2002,  with decreases  occurring  primarily in
one-year and shorter maturity categories.

Borrowed  funds  decreased  by $5.1  million,  or 0.9%,  to  $591.5  million  at
September 30, 2003, from $596.7 million at December 31, 2002.

CAPITAL. The Company's  stockholders' equity decreased $3.9 million, or 1.8%, to
$217.3 million at September 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 $8.3 million and a decrease
in net  unrealized  gains on  securities  available  for  sale of $4.7  million,
partially  offset  by net  income of $19.0  million  for the nine  months  ended
September 30, 2003, the  amortization  of stock-based  compensation  and benefit
plans and related tax benefits of $2.4  million,  and proceeds from the exercise
of stock options totaling  $366,000.  In February 2003, the Company authorized a
5% stock repurchase  program.  The Company repurchased 871,000 shares during the
nine


                                       11
<PAGE>

months ended  September 30, 2003, at an average cost per share of $14.26.  There
were no share  repurchases in the quarter ended  September 30, 2003.  Stated and
tangible  book  value per share at  September  30,  2003,  were $7.86 and $7.71,
respectively.

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

<TABLE>
<CAPTION>
                                Required                   Actual                  Excess of Actual
                          ----------------------    ----------------------         Over Regulatory
                             Amount      Ratio         Amount      Ratio               Requirements
                          ----------- ----------    ----------- ----------       ---------------------
<S>                          <C>        <C>           <C>          <C>                  <C>
Leverage Capital             $89,543    4.00%         $198,201     8.85%                $108,658
Risk-based Capital:
Tier 1                        44,357    4.00           198,201    17.87                  153,844
Total                         88,714    8.00           210,985    19.03                  122,271
</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  ("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  nine  months of 2003 were
principal  repayments and  prepayments of loans and MBS totaling  $553.2 million
and $335.5 million,  respectively.  Other  significant  sources of funds for the
nine months ended  September 30, 2003, were proceeds from sales of MBS available
for sale totaling  $127.4  million,  sales,  calls and  maturities of investment
securities  available  for sale of $59.7  million,  proceeds  from the  sales of
mortgage loans  totaling  $47.1 million and new borrowings of $55.0 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 September 30,
2003, the Company had unpledged investment securities and MBS available for sale
with a market value of $410.3 million.

The  Company's  primary uses of funds for the first nine months of 2003 were the
origination of loans  totaling  $579.4  million,  purchases of MBS available for
sale totaling $466.4 million,  purchases of investment  securities available for
sale totaling $67.7 million and repayments of borrowings totaling $60.1 million.
Other significant uses of funds during the nine months ended September 30, 2003,
were $21.3 million in purchases of mortgage loans,  $12.6 million in repurchases
of the Company's common stock and $8.3 million in cash dividends paid.

COMPARISON  OF OPERATING  RESULTS FOR THE THREE AND NINE MONTHS ENDED  SEPTEMBER
30, 2003 AND 2002.

RESULTS OF OPERATIONS.  Net income for the three and nine months ended September
30,  2003,  totaled  $6.2 million and $19.0  million,  respectively,  versus net
income of $7.5 million and $19.6 million, for the comparable 2002 periods.  This
represented  decreases  of  $1.3  million,  or  17.0%  and  $686,000,  or  3.5%,
respectively,  for the three and nine months ended September 30, 2003,  compared
with 2002. For the quarter ended September 30, 2003,  basic and diluted earnings
per share  were  $0.23,  representing  decreases  of 11.2% and 11.5%  over third
quarter 2002 basic and diluted  earnings per share of $0.26. For the nine months
ended  September 30, 2003,  basic and diluted  earnings per share were $0.71 and
$0.69,  respectively,  representing  increases  of 4.7% and 4.6% over  basic and
diluted earnings per share of $0.68 and $0.66, respectively,  for the first nine
months of 2002.

Annualized return on average equity was 11.54% and 11.66% for the three and nine
months ended September 30, 2003,  respectively,  compared with 13.01% and 11.34%
for the comparable 2002 periods.  Annualized  return on average assets was 1.11%
and 1.12% for the three and nine months ended September 30, 2003,  respectively,
compared with 1.33% and 1.18% for the three and nine months ended  September 30,
2002, respectively.



                                       12
<PAGE>

CONSOLIDATED AVERAGE STATEMENTS OF FINANCIAL CONDITION
 (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED SEPTEMBER 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 ....................   $   30,079       $    72       0.96%      $   63,510       $   271         1.71%

   Investment securities available for
     sale (1).............................      139,706         1,616       4.63          135,742         1,692         4.99
   Mortgage-backed securities available
     for sale.............................      755,581         6,930       3.67          698,613         8,821         5.05
                                             ----------       -------                  ----------       -------
     Total investments ...................      925,366         8,618       3.73          897,865        10,784         4.80
                                             ----------       -------                  ----------       -------

   Mortgage loans.........................    1,108,842        16,128       5.82        1,143,387        19,284         6.75
   Home equity loans......................       60,802           982       6.46           68,032         1,246         7.33
   Home equity lines of credit............       49,320           533       4.32           44,162           575         5.21
   Other loans............................       10,916           162       5.94           15,004           197         5.25
                                             ----------       -------                  ----------       -------
     Total loans .........................    1,229,880        17,805       5.79        1,270,585        21,302         6.71
                                             ----------       -------                  ----------       -------

   Total interest-earning assets..........    2,155,246        26,423       4.90%       2,168,450        32,086         5.92%
                                                              -------       ----                        -------         ----
   Non-interest earning assets ...........       86,205                                    80,644
                                             ----------                                ----------
        Total assets                         $2,241,451                                $2,249,094
                                             ==========                                ==========
LIABILITIES AND STOCKHOLDERS'
  EQUITY
  Interest-bearing liabilities:
   NOW and money market accounts .........   $  528,522       $ 1,079       0.82%      $  474,220       $ 1,918         1.62%
   Savings accounts ......................      224,665           475       0.85          205,308           952         1.85
   Certificates of deposit ...............      562,432         3,465       2.46          622,209         5,050         3.25
                                             ----------       -------                  ----------       -------
     Total interest-bearing deposits .....    1,315,619         5,019       1.53        1,301,737         7,920         2.43

   Borrowed funds ........................      583,146         6,944       4.76          601,758         7,691         5.11
                                             ----------       -------                  ----------       -------
   Total interest-bearing liabilities.....    1,898,765        11,963       2.52        1,903,495        15,611         3.28
                                                              -------       ----                        -------         ----
   Non-interest bearing deposits .........       76,263                                    69,186
   Other liabilities .....................       51,297                                    46,456
                                             ----------                                ----------
        Total liabilities ................    2,026,325                                 2,019,137
   Stockholders' equity ..................      215,126                                   229,957
                                             ----------                                ----------
        Total liabilities and stockholders'
            equity .......................   $2,241,451                                $2,249,094
                                             ==========                                ==========
Net interest income/interest rate spread .                    $14,460       2.38%                       $16,475         2.64%
                                                              =======       ====                        =======         ====
Net interest-earning assets/net interest
   margin.................................   $  256,481                     2.68%      $  264,955                       3.04%
                                             ==========                     ====       ==========                       ====
Ratio of interest-earning assets
   to interest-bearing liabilities .......         1.14 X                                    1.14 X
                                             ==========                                ==========
</TABLE>

(1) Includes FHLB-NY stock.


                                       13
<PAGE>




CONSOLIDATED AVERAGE STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED SEPTEMBER 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                        $   37,705       $   318         1.12%   $    61,104       $   780         1.70%
   Investment securities available for
     sale (1).............................      135,828         4,851         4.76        139,926         5,568         5.31
   Mortgage-backed securities available
     for sale.............................      760,239        21,941         3.85        674,433        25,371         5.02
                                             ----------       -------                  ----------       -------
     Total investments                          933,772        27,110         3.87        875,463        31,719         4.83
                                             ----------       -------                  ----------       -------
   Mortgage loans.........................    1,107,076        50,358         6.06      1,140,913        57,783         6.75
   Home equity loans......................       62,016         3,102         6.67         70,172         3,849         7.31
   Home equity lines of credit............       48,574         1,645         4.52         42,166         1,681         5.32
   Other loans............................       13,170           546         5.53         17,752           902         6.77
                                             ----------       -------                  ----------       -------
     Total loans                              1,230,836        55,651         6.03      1,271,003        64,215         6.74
                                             ----------       -------                  ----------       -------
   Total interest-earning assets..........    2,164,608        82,761         5.10%     2,146,466        95,934         5.96%
                                                              -------         ----                      -------         ----
   Non-interest earning assets                   93,937                                    72,352
                                             ----------                                ----------
        Total assets                         $2,258,545                                $2,218,818
                                             ==========                                ==========

LIABILITIES AND STOCKHOLDERS'
   EQUITY
   Interest-bearing liabilities:
   NOW and money market accounts .........   $  510,196       $ 3,543         0.93%    $  460,318       $ 6,099         1.77%
   Savings accounts ......................      228,385         1,803         1.05        197,346         2,722         1.84
   Certificates of deposit ...............      579,024        11,472         2.64        634,429        16,454         3.46
                                             ----------       -------                  ----------       -------
     Total interest-bearing deposits .....    1,317,605        16,818         1.70      1,292,093        25,275         2.61

   Borrowed funds ........................      598,842        21,907         4.88        584,928        22,287         5.08
                                             ----------       -------                  ----------       -------
   Total interest-bearing liabilities.....    1,916,447        38,725         2.69      1,877,021        47,562         3.38
                                                              -------         ----                      -------         ----
   Non-interest bearing deposits .........       75,359                                    65,910
   Other liabilities .....................       50,051                                    44,962
                                             ----------                                ----------
        Total liabilities ................    2,041,857                                 1,987,893
   Stockholders' equity ..................      216,688                                   230,925
                                             ----------                                ----------
        Total liabilities and stockholders'
            equity .......................   $2,258,545                                $2,218,818
                                             ==========                                ==========
Net interest income/interest rate spread .                    $44,036         2.41%                     $48,372         2.58%
                                                              =======         ====                      =======         ====
Net interest-earning assets/net interest
   margin.................................   $  248,161                       2.71%    $  269,445                       3.00%
                                             ==========                       ====     ==========                       ====
Ratio of interest-earning assets
   to interest-bearing liabilities .......         1.13 X                                    1.14 X
                                             ==========                                ==========
</TABLE>

(1) Includes FHLB-NY stock.


                                       14
<PAGE>

INTEREST  INCOME.  Interest income  decreased $5.7 million,  or 17.7%, and $13.2
million,  or 13.7%,  to $26.4  million and $82.8  million for the three and nine
months ended  September  30, 2003,  respectively,  from $32.1  million and $95.9
million  for 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 $3.5 million,  or 16.4%, and $8.6 million, or 13.3%,
to $17.8 million and $55.7 million for the three and nine months ended September
30, 2003, respectively, compared to $21.3 million and $64.2 million for the same
periods in 2002.  The average  balance of the loan portfolio for the three month
period ended  September 30, 2003,  decreased  $40.7 million to $1.2 billion from
the same period in 2002,  while the average yield on the portfolio  decreased to
5.79% for the three months  ended  September  30, 2003,  from 6.71% for the same
period in 2002.  The average  balance of the loan  portfolio  for the nine month
period ended  September 30, 2003,  decreased  $40.2 million to $1.2 billion from
the same period in 2002,  while the average yield on the portfolio  decreased to
6.03% for the nine months  ended  September  30,  2003,  from 6.74% for the same
period in 2002.

Interest on securities  decreased  $2.2 million,  or 20.1% and $4.6 million,  or
14.5%,  to $8.6  million and $27.1  million for the three and nine months  ended
September  30, 2003,  compared to $10.8  million and $31.7  million for the same
periods  in 2002.  The  average  balance of the  investment,  FHLB stock and MBS
available for sale portfolios  totaled $925.4 million,  with an annualized yield
of 3.73% for the three months ended September 30, 2003, compared with an average
balance of $897.9 million with an annualized yield of 4.80% for the three months
ended September 30, 2002. For the first nine months of 2003, the average balance
of the  investment,  FHLB stock and MBS  available for sale  portfolios  totaled
$933.8  million,  with an  annualized  yield of 3.87%,  compared  to an  average
balance of $875.5 million with an annualized  yield of 4.83% for the nine months
ended  September  30, 2002.  Income for the quarter  ended  September  30, 2003,
included  the  regular  quarterly  dividend  from the  FHLB-NY  in the amount of
$277,000.  The FHLB-NY has informed shareholders that it will suspend the fourth
quarter 2003 dividend payment.

INTEREST EXPENSE.  Interest expense  decreased $3.6 million,  or 23.4%, to $12.0
million for the three months ended September 30, 2003, compared to $15.6 million
for the same  period in 2002.  For the nine months  ended  September  30,  2003,
interest expense decreased $8.8 million, or 18.6%, to $38.7 million versus $47.6
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 $2.9 million,  or 36.6%, to $5.0 million
for the three months ended September 30, 2003,  compared to $7.9 million for the
same  period in 2002.  The average  balance of  interest-bearing  core  deposits
increased  $73.7 million,  or 10.8%,  for the quarter ended  September 30, 2003,
compared  with the same  period in 2002,  while the  average  rate paid on these
deposits  decreased  86 basis  points to  0.83%.  Average  non-interest  bearing
deposits grew $7.1 million,  or 10.2%, to $76.3 million for the third quarter of
2003 compared with 2002. The average balance of certificates of deposit declined
$59.8 million,  or 9.6%, for the three months ended September 30, 2003, compared
with the same  period in 2002,  while  the  average  rate  paid on  certificates
decreased 79 basis points to 2.46%.

For the first nine months of 2003,  interest expense on deposits  decreased $8.5
million,  or 33.5%,  to $16.8  million,  compared to $25.3  million for the same
period in 2002. For the  year-to-date,  the average balance of  interest-bearing
core deposits increased $80.9 million,  or 12.3%,  compared with the same period
in 2002, while the average rate paid on these deposits decreased 82 basis points
to 0.97%.  Average non-interest bearing deposits grew $9.4 million, or 14.3%, to
$75.4 million for the first nine months of 2003 compared with the same period in
2002. The average balance of certificates of deposit declined $55.4 million,  or
8.7%,  for the nine months  ended  September  30, 2003,  compared  with the same
period in 2002,  while the average rate paid on certificates  decreased 82 basis
points to 2.64%. Interest rates paid on new and renewing certificates of deposit
are projected to continue to reprice  downward  throughout the fourth quarter of
2003 and to stabilize somewhat thereafter.

Interest on borrowed  funds for the three and nine months  ended  September  30,
2003, decreased $747,000 and $380,000,  respectively,  to $6.9 million and $21.9
million,  compared  to $7.7  million and $22.3  million for the same  respective
periods in 2002.  The  average  balance of borrowed  funds for the three  months
ended September 30, 2003,  decreased to $583.1 million,  from $601.8 million for
the same period in 2002.  The average  interest rate paid on


                                       15
<PAGE>

borrowed funds was 4.76% for the three months ended September 30, 2003, compared
with 5.11% for the same period in 2002.  The average  balance of borrowed  funds
for the nine months ended September 30, 2003, increased to $598.8 million,  from
$584.9  million for the same period in 2002.  The average  interest rate paid on
borrowed funds was 4.88% for the nine months ended September 30, 2003,  compared
with  5.08% for the same  period in 2002.  During  the first  half of 2003,  the
Company modified $75 million in borrowings with the FHLB-NY, extending terms and
reducing the interest rates.  The Company had $71.0 million in borrowings with a
weighted  average  interest rate of 4.10%  scheduled to mature in the subsequent
twelve months at September 30, 2003. The Company  expects that these  borrowings
will favorably reprice based on current market conditions.

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest income before
provision for loan losses decreased $2.0 million and $4.3 million,  or 12.2% and
9.0%,  respectively,  to $14.4  million and $44.0 million for the three and nine
months ended September 30, 2003, compared to $16.5 million and $48.4 million for
the same periods in 2002. The decrease was due to the changes in interest income
and interest expense described previously.

The interest rate spread decreased 26 basis points to 2.38% for the three months
ended  September 30, 2003,  compared with 2.64% for the same period in 2002. For
the three months ended September 30, the average earning asset yield declined to
4.90% for 2003, from 5.92% for 2002, while the average cost of  interest-bearing
liabilities declined to 2.52% for 2003, from 3.28% for 2002. For the nine months
ended September 30, 2003, the interest rate spread  decreased 17 basis points to
2.41% compared with 2.58% for the same period in 2002. The average earning asset
yield was 5.10% for the first nine months of 2003,  compared  with 5.96% for the
first  nine  months  of  2002,  while  the  average  cost  of   interest-bearing
liabilities fell to 2.69% from 3.38% for the same respective periods.

The net interest  margin declined 36 basis points to 2.68% for the third quarter
of 2003,  from 3.04% for the quarter ended September 30, 2002, and was unchanged
from 2.68% for the second  quarter of 2003. For the  year-to-date,  net interest
margin  declined  29 basis  points to 2.71%,  compared  with  3.00% for the nine
months ended  September 30, 2002. The Company  believes the net interest  margin
has  stabilized.  Based on the  reduction  in  mortgage  refinance  applications
received  since  August,   such  cash  inflows  and  related   deferred  expense
recognition and premium  amortization are expected to slow in the fourth quarter
of 2003.

PROVISION  FOR LOAN  LOSSES.  The Company  did not record a  provision  for loan
losses during the three and nine months ended  September  30, 2003,  compared to
$105,000 and $1.3 million for the same periods in 2002,  as a result of a static
loan portfolio size and  improvements  in asset  quality.  Total  non-performing
assets  decreased  to $911,000  at  September  30,  2003,  from $1.8  million at
December 31, 2002 and $3.1 million at September 30, 2002. The allowance for loan
losses as a percentage  of total loans was 1.05% at September 30, 2003 and 1.06%
at December 31, 2002. In  management's  opinion,  the allowance for loan losses,
totaling  $12.8  million at September 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.



                                       16
<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)                                 Sept. 30     June 30,   Mar. 31,   Dec. 31,   Sept. 30
                                                              2003         2003       2003      2002        2002
                                                            ------------------------------------------------------
<S>                                                           <C>         <C>        <C>        <C>        <C>
Non-accrual mortgage loans .........................          $841        $1,291     $1,082     $1,511     $2,297
Non-accrual other loans ............................             6             6         43         30         --
                                                            ------------------------------------------------------
   Total non-accrual loans .........................           847         1,297      1,125      1,541      2,297
Loans 90 days or more delinquent and
     still accruing ................................            64            64        294        223        440
                                                            ------------------------------------------------------
Total non-performing loans .........................           911         1,361      1,419      1,764      2,737
Non-accrual investments (WorldCom, Inc.
     corporate bonds) ..............................            --            --         --         --        300
Total foreclosed real estate, net of related
     allowance......................................            --            50         --         72        100
                                                            ------------------------------------------------------
Total non-performing assets ........................          $911        $1,411     $1,419     $1,836     $3,137
                                                            ======================================================
Non-performing loans to loans receivable, net ......         0.07%         0.11%      0.12%      0.15%      0.22%
Non-performing assets to total assets ..............         0.04%         0.06%      0.06%      0.08%      0.14%
</TABLE>

NON-INTEREST  INCOME.  Non-interest income decreased $969,000,  to $1.9 million,
for the three months ended  September  30, 2003,  compared to the same period in
2002.  For the  nine  months  ended  September  30,  2003,  non-interest  income
increased  $2.0 million,  to $6.6 million,  compared to the same period in 2002.
Net gains on sales of loans and  securities  totaling  $276,000 and $1.8 million
were  realized  during  the three and nine  months  ended  September  30,  2003,
respectively,  compared  with a net  gain  of  $1.3  million  and a net  loss of
$122,000, respectively, for the comparable 2002 periods. In the third quarter of
2002 and in the first half of 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.  Prior year results were also impacted by
a $1.8 million pre-tax  impairment charge recorded on WorldCom,  Inc.  corporate
bonds in the second quarter of 2002.

In addition,  fee and service charge income  increased  $149,000 and $80,000 for
the three and nine months ended September 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 and service charge levels implemented
in July of 2002, as well as prepayment fees received upon the early  termination
of certain commercial real estate loans.

NON-INTEREST  EXPENSE.  Non-interest expense for the three and nine months ended
September 30, 2003, decreased $321,000, or 4.3% and increased $432,000, or 2.0%,
to $7.1 million and $22.3 million, respectively, compared to the same periods in
2002. The decrease for the quarter was primarily  attributable  to reductions in
advertising and compensation and benefits expense.

For the nine months ended  September 30, 2003, the increase was primarily due to
an increase in  compensation  and  benefits  expense  resulting  from  increased
healthcare,  pension  and ESOP  costs.  Effective  August 1, 2003,  the  Company
adopted  changes to its pension plan which  reduced the  retirement  benefit and
closed the plan to new participants  hired on or after that date. As a result of
this  amendment,  pension  expense  for the second  half of 2003 is  expected to
decline by $236,000 compared with the first half of the year.

INCOME TAXES.  The Company's  effective tax rate declined to 32.5% and 33.3% for
the three and nine months ended September 30, 2003, respectively,  compared with
36.3% and 34.3% for the same periods in 2002. Third quarter 2002 taxes reflected
the impact of New  Jersey's  Business  Tax Reform Act,  which  passed on July 2,
2002, retroactive to January 1, 2002.


                                       17
<PAGE>

BRANCH  SALE.  On September 4, 2003,  the Bank  announced  that it had signed an
agreement  to sell its  Lawrenceville,  NJ branch  to  Yardville  National  Bank
("Yardville").   Under  the  terms  of  the  agreement,  Yardville  will  assume
approximately  $40.0 million in deposit  liabilities  from the Bank. The Company
estimates that the transaction  will result in the recognition of a pre-tax gain
of approximately $2.5 million,  or approximately $0.06 per share, net of related
taxes, during the fourth quarter of 2003.


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 (September 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 September  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.
          None.

Item 5.   OTHER INFORMATION.
          None.




                                       18
<PAGE>



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, Inc.     (a)
                             Inc.
                 3.2         Bylaws of First Sentinel Bancorp, Inc.                           (b)
                  4          Stock certificate of First Sentinel Bancorp, Inc.                (a)
                 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.

        b.) REPORTS ON FORM 8 - K

       On July 23,  2003,  the  Company  furnished a Current  Report on Form 8-K
       reporting its earnings for the three and six months ended June 30, 2003.

       On September  12, 2003,  the Company  filed a Current  Report on Form 8-K
       announcing  that its  subsidiary,  First Savings Bank, had agreed to sell
       its Lawrenceville,  NJ branch to Yardville National Bank, a subsidiary of
       Yardville National Bancorp.





                                       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:  November 14, 2003             By: /S/ CHRISTOPHER MARTIN
                                         ----------------------
                                         Christopher Martin
                                         President and Chief Executive Officer

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





                                       20