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, 2002

                                                        OR

[_]   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(D)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission File No.: 000-23809


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

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

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

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

                                 NOT APPLICABLE
       Former Name, Address, and Fiscal year, if changed since last report


      Indicate by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes    _X_      No ___


                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

              CLASS                           OUTSTANDING AT NOVEMBER 1, 2002
-------------------------------------      -------------------------------------
           Common Stock                              29,014,576 shares

<PAGE>


                          FIRST SENTINEL BANCORP, INC.

                               INDEX TO FORM 10-Q


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

Item 1.    Financial Statements (Unaudited)

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

           Consolidated Statements of Income for the three and nine
           months ended September 30, 2002 and 2001                            4

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

           Consolidated  Statements  of Cash  Flows  for  the  nine
           months ended September 30, 2002 and 2001                            6

           Notes to Consolidated Financial Statements                          7

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

Item 3.    Quantitative and Qualitative Disclosure About Market Risk          17

Item 4.    Controls and Procedures                                            17

PART II.   OTHER INFORMATION                                                  17

           SIGNATURES                                                         19

           CERTIFICATIONS                                                     20



                                       2
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                         September 30,   December 31,
                                                                                             2002            2001
                                                                                          ----------      ----------
<S>                                                                                       <C>             <C>
ASSETS
Cash and due from banks ............................................................      $   26,338      $   33,875
Federal funds sold .................................................................          55,850          20,000
                                                                                          ----------      ----------
  Total cash and cash equivalents ..................................................          82,188          53,875
Federal Home Loan Bank of New York (FHLB-NY)
  stock, at cost ...................................................................          21,136          20,541
Investment securities available for sale ...........................................         118,208         107,988
Mortgage-backed securities available for sale ......................................         734,249         642,716
Loans held for sale, net ...........................................................           1,963           5,467
Loans receivable, net ..............................................................       1,237,109       1,237,312
Interest and dividends receivable ..................................................          11,272          12,039
Premises and equipment, net ........................................................          15,584          16,014
Core deposit intangibles ...........................................................           4,778           5,411
Other assets .......................................................................          31,705          37,556
                                                                                          ----------      ----------
  Total assets .....................................................................      $2,258,192      $2,138,919
                                                                                          ==========      ==========

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

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Deposits ...........................................................................      $1,377,067      $1,315,264
Borrowed funds .....................................................................         601,702         545,814
Advances by borrowers for taxes and insurance ......................................           9,916           9,735
Other liabilities ..................................................................          19,605          12,979
                                                                                          ----------      ----------
  Total liabilities ................................................................       2,008,290       1,883,792
                                                                                          ----------      ----------
Company-obligated mandatorily redeemable preferred capital securities of a
  subsidiary trust holding solely junior subordinated debentures of the Company ....          25,000          25,000
                                                                                          ----------      ----------

STOCKHOLDERS' EQUITY
Preferred Stock; authorized 10,000,000 shares; none issued and outstanding .........              --              --
Common Stock, $.01 par value, 85,000,000 shares authorized; 43,106,742 and
  29,099,576 shares issued and outstanding at 9/30/02 and
  43,106,742 and 30,940,117 shares issued and outstanding at 12/31/01 ..............             430             430
Paid-in capital ....................................................................         202,411         201,858
Retained earnings ..................................................................         159,696         148,463
Accumulated other comprehensive income .............................................           9,212           2,178
Treasury stock (13,920,522 and 12,088,836 shares at 9/30/02 and 12/31/01,
  respectively) ....................................................................        (135,963)       (110,571)
Common stock acquired by the Employee Stock Ownership Plan (ESOP) ..................          (9,633)        (10,321)
Common stock acquired by the Recognition and Retention Plan (RRP) ..................          (1,251)         (1,910)
                                                                                          ----------      ----------
  Total stockholders' equity .......................................................         224,902         230,127
                                                                                          ----------      ----------
  Total liabilities and stockholders' equity .......................................      $2,258,192      $2,138,919
                                                                                          ==========      ==========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       3
<PAGE>


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

<TABLE>
<CAPTION>
                                                                Three months ended                Nine months ended
                                                                   September 30,                    September 30,
                                                            --------------------------      ---------------------------
                                                                2002           2001             2002            2001
                                                            -----------    -----------      -----------     -----------
<S>                                                         <C>            <C>              <C>             <C>
INTEREST INCOME:
  Loans ................................................    $    21,302    $    22,518      $    64,215     $    67,450
  Investment and mortgage-backed securities
    available for sale .................................         10,784         10,802           31,719          33,442
                                                            -----------    -----------      -----------     -----------
     Total interest income .............................         32,086         33,320           95,934         100,892
                                                            -----------    -----------      -----------     -----------

INTEREST EXPENSE:
 Deposits:
   NOW and money market demand .........................          1,918          2,644            6,099           7,428
   Savings .............................................            952            994            2,722           2,823
   Certificates of deposit .............................          5,050          8,264           16,454          26,320
                                                            -----------    -----------      -----------     -----------
     Total interest expense - deposits .................          7,920         11,902           25,275          36,571
 Borrowed funds ........................................          7,691          6,856           22,287          20,494
                                                            -----------    -----------      -----------     -----------
     Total interest expense ............................         15,611         18,758           47,562          57,065
                                                            -----------    -----------      -----------     -----------
     Net interest income ...............................         16,475         14,562           48,372          43,827
Provision for loan losses ..............................            105            150            1,310             500
                                                            -----------    -----------      -----------     -----------
     Net interest income after provision for loan losses         16,370         14,412           47,062          43,327
                                                            -----------    -----------      -----------     -----------

NON-INTEREST INCOME:
  Fees and service charges .............................            992            598            3,091           1,861
  Net gain (loss) on sales of loans and securities
    available for sale .................................          1,349            147             (122)            625
  Income on Bank Owned Life Insurance (BOLI) ...........            338            373            1,157             443
  Other income .........................................            158            261              536             474
                                                            -----------      -----------    -----------     -----------
     Total non-interest income .........................          2,837          1,379            4,662           3,403
                                                            -----------      -----------    -----------     -----------

NON-INTEREST EXPENSE:
  Compensation and benefits ............................          4,281          3,819           12,408          11,483
  Occupancy ............................................            592            562            1,695           1,701
  Equipment ............................................            451            404            1,290           1,257
  Advertising ..........................................            221            208              754             857
  Federal deposit insurance ............................             58             59              176             176
  Amortization of core deposit intangibles .............            210            211              633             635
  Distributions on preferred capital securities ........            495             --            1,484              --
  General and administrative ...........................          1,151          1,004            3,385           3,207
                                                            -----------    -----------      -----------     -----------
     Total non-interest expense ........................          7,459          6,267           21,825          19,316
                                                            -----------    -----------      -----------     -----------
     Income before income tax expense ..................         11,748          9,524           29,899          27,414

Income tax expense .....................................          4,270          2,955           10,260           8,703
                                                            -----------    -----------      -----------     -----------

     Net income ........................................    $     7,478    $     6,569      $    19,639     $    18,711
                                                            ===========    ===========      ===========     ===========

Basic earnings per share ...............................    $      0.26    $      0.22      $      0.68     $      0.61
                                                            ===========    ===========      ===========     ===========

Weighted average shares outstanding - Basic ............     28,447,507     29,843,217       28,934,681      30,477,126
                                                            ===========    ===========      ===========     ===========

Diluted earnings per share .............................           0.26    $      0.21             0.66     $      0.60
                                                            ===========    ===========      ===========     ===========

Weighted average shares outstanding - Diluted ..........     29,185,437     30,591,551       29,717,856      31,149,629
                                                            ===========    ===========      ===========     ===========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.


                                       4
<PAGE>


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

<TABLE>
<CAPTION>
                                                                         Accumulated
                                                                             Other                  Common     Common       Total
                                                                            Compre-                  Stock      Stock       Stock-
                                          Common   Paid In     Retained     hensive    Treasury    Acquired    Acquired    holders'
                                           Stock   Capital     Earnings   Income(Loss)   Stock      by ESOP     by RRP      Equity
                                          ------------------------------------------------------------------------------------------
<S>                                         <C>    <C>         <C>           <C>       <C>          <C>         <C>        <C>
Balance at December 31, 2000 ............   $430   $201,264    $132,537     $(8,534)   $ (89,508)   $(11,238)   $(2,788)   $222,163
Net income for the nine months
   ended September 30, 2001 .............     --         --      18,711          --           --          --         --      18,711
Cash dividends declared ($0.225) ........     --         --      (7,215)         --           --          --         --      (7,215)
Net change in unrealized gain/(loss)
   on securities available for sale .....     --         --          --      13,751           --          --         --      13,751
Purchases of treasury stock .............     --         --          --          --      (18,324)         --         --     (18,324)
Exercise of stock options ...............     --         --        (232)         --        1,153          --         --         921
Tax benefit on stock options and RRP ....     --        150          --          --           --          --         --         150
Purchase and retirement of common
   stock ................................     --        (56)         --          --           --          --         --         (56)
Amortization of RRP .....................     --         --          --          --           --          --        659         659
ESOP expense ............................     --        223          --          --           --         688         --         911
                                          ------------------------------------------------------------------------------------------

Balance at September 30, 2001 ...........   $430   $201,581    $143,801      $5,217    $(106,679)   $(10,550)   $(2,129)  $ 231,671
                                          =========================================================================================

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
   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
                                          ==========================================================================================
</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,
                                                                                            -----------------------
                                                                                               2002          2001
                                                                                            ---------     ---------
<S>                                                                                         <C>           <C>
Cash flows from operating activities:
   Net income ..........................................................................    $  19,639     $  18,711
   ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
   Depreciation of premises and equipment ..............................................        1,066           974
   Amortization of core deposit intangibles ............................................          633           635
   ESOP expense ........................................................................        1,018           911
   Amortization of RRP .................................................................          659           659
   Net amortization of premiums and accretion of discounts and deferred fees ...........        2,815         1,437
   Provision for loan losses ...........................................................        1,310           500
   Loans originated for sale ...........................................................      (15,782)      (38,693)
   Proceeds from sales of mortgage loans held for sale .................................       19,327        37,787
   Net loss (gain) on sales of loans and securities available for sale .................          122          (625)
   Net loss (gain) on sales of real estate owned .......................................           10           (85)
   Net loss on sales of premises and equipment .........................................           --           102
   Decrease in interest and dividends receivable .......................................          767         1,813
   Tax benefit on stock options and RRP ................................................         (331)         (150)
   Increase in other liabilities .......................................................        7,288           241
   Decrease in other assets ............................................................        2,110         1,908
                                                                                            ---------     ---------
         Net cash provided by operating activities .....................................       40,651        26,125
                                                                                            ---------     ---------
Cash flows from investing activities:
   Proceeds from sales/calls/maturities of investment securities available for sale ....       44,779       179,940
   Purchases of investment securities available for sale ...............................      (54,051)      (43,326)
   Purchase of FHLB-NY stock ...........................................................         (595)         (774)
   Proceeds from sales of mortgage-backed securities available for sale ................      152,433       202,623
   Principal payments on mortgage-backed securities ....................................      181,962        96,900
   Purchases of mortgage-backed securities available for sale ..........................     (419,561)     (427,431)
   Principal repayments on loans .......................................................      472,697       278,717
   Origination of loans ................................................................     (446,978)     (299,926)
   Purchases of mortgage loans .........................................................      (26,483)      (14,153)
   Purchase of BOLI ....................................................................           --       (25,000)
   Proceeds from sale of real estate owned .............................................          129           565
   Proceeds from sales of premises and equipment .......................................           --           186
   Purchases of premises and equipment .................................................         (636)         (645)
                                                                                            ---------     ---------
          Net cash used in investing activities ........................................      (96,304)      (52,324)
                                                                                            ---------     ---------
Cash flows from financing activities:
   Purchase of treasury stock ..........................................................      (26,028)      (18,324)
   Purchase and retirement of common stock .............................................         (108)          (56)
   Stock options exercised .............................................................          223           921
   Cash dividends paid .................................................................       (7,993)       (7,215)
   Net increase in deposits ............................................................       61,803        75,612
   Net increase in short-term borrowed funds ...........................................           --            --
   Proceeds from borrowed funds ........................................................      117,000       285,000
   Repayment of borrowed funds .........................................................      (61,112)     (275,104)
   Net increase in advances by borrowers for taxes and insurance .......................          181           896
                                                                                            ---------     ---------
            Net cash provided by financing activities ..................................       83,966        61,730
                                                                                            ---------     ---------
            Net increase in cash and cash equivalents ..................................       28,313        35,531
Cash and cash equivalents at beginning of period .......................................       53,875        35,119
                                                                                            ---------     ---------
Cash and cash equivalents at end of period .............................................    $  82,188     $  70,650
                                                                                            =========     =========
Supplemental disclosures of cash flow information:
   Cash paid during the period for:
       Interest ........................................................................    $  47,505     $  58,035
       Income taxes ....................................................................        3,147         6,107
   Non cash investing and financing activities for the period:
        Transfer of loans to real estate owned .........................................    $     197     $     305
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.


                                       6
<PAGE>


                  FIRST SENTINEL BANCORP, INC. AND SUBSIDIARIES

              Notes to Unaudited Consolidated Financial Statements

(1)   BASIS OF PRESENTATION

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

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

(2)   EARNINGS PER SHARE

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

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

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

<TABLE>
<CAPTION>
                                               Three months ended            Nine months ended
                                                  September 30,                September 30,
                                           --------------------------    --------------------------
                                               2002           2001           2002           2001
                                           -----------    -----------    -----------    -----------
<S>                                        <C>            <C>            <C>            <C>
Net income                                 $     7,478    $     6,569    $    19,639    $    18,711
                                           ===========    ===========    ===========    ===========

Basic weighted-average common shares
  outstanding                               28,447,507     29,843,217     28,934,681     30,477,126
Plus: Dilutive stock options and awards        737,930        748,334        783,175        672,503
                                           -----------    -----------    -----------    -----------
Diluted weighted-average common
  shares outstanding                        29,185,437     30,591,551     29,717,856     31,149,629
                                           ===========    ===========    ===========    ===========

Net income per common share:
  Basic                                    $      0.26    $      0.22    $      0.68    $      0.61
                                           ===========    ===========    ===========    ===========
  Diluted                                  $      0.26    $      0.21    $      0.66    $      0.60
                                           ===========    ===========    ===========    ===========
</TABLE>

(3)   DIVIDENDS

Based upon current  operating  results,  the Company  declared cash dividends of
$0.095 per share on July 24, 2002,  payable August 30, 2002, to  stockholders of
record on August 16, 2002.

                                       7
<PAGE>


(4)   COMMITMENTS AND CONTINGENCIES

At  September  30,  2002,  the Company  had the  following  commitments:  (i) to
originate  loans of $100.9  million;  (ii) unused home equity lines of credit of
$65.0 million;  (iii) unused  commercial lines of credit of $14.7 million;  (iv)
unused construction lines of credit of $61.6 million;  and (v) letters of credit
outstanding totaling $1.9 million. Further,  certificates of deposits, which are
scheduled to mature and/or rollover in one year or less,  totaled $465.5 million
at September 30, 2002.

(5)   ALLOWANCE FOR LOAN LOSSES

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

                                                        Nine months ended
                                                          September 30,
                                                  -----------------------------
                                                      2002             2001
                                                  ------------     ------------
Balance at beginning of period                    $     12,932     $     12,341
Provision charged to operations                          1,310              500
Charge offs, net of recoveries                          (1,405)             (34)
                                                  ------------     ------------
Balance at end of period                          $     12,837     $     12,807
                                                  ============     ============

(6)   COMPREHENSIVE INCOME

Total  comprehensive  income,  consisting  of net  income  and the net change in
unrealized  gain/(loss)  on securities  available for sale, was $8.3 million and
$11.4  million  for  the  three  months  ended  September  30,  2002  and  2001,
respectively.   For  the  nine  months  ended   September  30,  2002  and  2001,
comprehensive income totaled $26.7 million and $32.5 million, respectively.

(7)   RECENT ACCOUNTING PRONOUNCEMENTS

In October,  2002, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial Accounting  Standards ("SFAS") No. 147,  "Acquisitions of
Certain Financial  Institutions - an amendment to FASB Statements No. 72 and 144
and FASB Interpretation No. 9." This Statement removes acquisitions of financial
institutions  from the scope of both SFAS No.  72 and  Interpretation  No. 9 and
requires that those  transactions  be accounted for in accordance  with SFAS No.
141,  "Business  Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." The  provisions of SFAS No. 147 that relate to the  application  of the
purchase   method  of  accounting   apply  to  all   acquisitions  of  financial
institutions, except transactions between two or more mutual enterprises.

SFAS No. 147 clarifies that a branch  acquisition that meets the definition of a
business  should be  accounted  for as a  business  combination,  otherwise  the
transaction  should be accounted for as an  acquisition  of net assets that does
not result in the  recognition  of goodwill.  The provisions of SFAS No. 147 are
effective  October 1, 2002.  The Company has  previously  purchased  deposits of
another  financial  institution  and  recorded a core deposit  intangible.  This
Statement will have no effect on the accounting or  amortization of the recorded
intangible asset.

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

                                       8
<PAGE>


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

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

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

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

The  Company  adopted  the  provisions  of SFAS No. 142 on January 1, 2002.  The
Company  currently has no recorded goodwill and the adoption of SFAS No. 142 did
not  significantly  impact  the  Company's  accounting  for  currently  recorded
intangible assets,  primarily core deposit  intangibles.  At September 30, 2002,
the Company had gross core  deposit  intangibles  totaling  $12.6  million  with
accumulated   amortization  of  $7.8  million.   Amortization  of  core  deposit
intangibles  for the three and nine months ended September 30, 2002 was $210,000
and $633,000, respectively.  Annual amortization for the year ended December 31,
2002,  and for each of the  subsequent  five years is projected  to  approximate
$845,000 per year.

                                       9
<PAGE>


FIRST SENTINEL BANCORP, INC.

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

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

CRITICAL  ACCOUNTING  POLICIES  AND  ESTIMATES.   "Management's  Discussion  and
Analysis  of  Financial   Condition  and  Results  of  Operation,"  as  well  as
disclosures  found  elsewhere  in this Form 10-Q,  are based upon the  Company's
consolidated  financial statements,  which have been prepared in accordance with
accounting  principles  generally accepted in the United States of America.  The
preparation of these financial statements requires the Company to make estimates
and judgments that affect the reported amounts of assets, liabilities,  revenues
and expenses.  Note 1 to the Company's Audited Consolidated Financial Statements
for the year ended  December 31, 2001 included in our Annual Report on Form 10-K
for the year ended December 31, 2001, as supplemented by the Company's Quarterly
Reports on Form 10-Q for the quarters  ended March 31,  2002,  June 30, 2002 and
this  report,  contains  a  summary  of  the  Company's  significant  accounting
policies.   Management  believes  the  Company's  policy  with  respect  to  the
methodology  for the  determination  of the allowance for loan losses involves a
higher  degree of  complexity  and requires  management  to make  difficult  and
subjective  judgments which often require  assumptions or estimates about highly
uncertain  matters.  Changes in these judgments,  assumptions or estimates could
materially   impact  results  of  operations.   This  critical  policy  and  its
application is  periodically  reviewed with the Audit Committee and the Board of
Directors.

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

ASSETS.  Total assets grew to $2.3 billion at September 30, 2002, an increase of
$119.3 million,  or 5.6%, from December 31, 2001. The change in assets consisted
primarily of increases in  investment  and  mortgage-backed  securities  ("MBS")
available for sale and cash and cash equivalents,  partially offset by decreases
in loans held for sale and other assets.

MBS available for sale increased  $91.5 million,  or 14.2%, to $734.2 million at
September 30, 2002,  from $642.7  million at December 31, 2001. The increase was
primarily  due to  purchases of $419.6  million  exceeding  sales and  principal
repayments  of $150.4  million and $182.0  million,  respectively,  for the nine
month period ended  September  30, 2002.  Purchases  consisted  primarily of MBS
issued by U.S.


                                       10
<PAGE>


government-sponsored  agencies. At September 30, 2002,  approximately 66% of the
Company's MBS had adjustable rates.

Investment  securities  available for sale increased $10.2 million,  or 9.5%, to
$118.2  million as of September  30, 2002,  from $108.0  million at December 31,
2001.  For the nine months ended  September  30, 2002,  purchases of  investment
securities  available for sale totaled  $54.1  million,  while sales,  calls and
maturities  totaled  $47.0  million.   Purchases  consisted  primarily  of  debt
securities issued by U.S.  corporations and  government-sponsored  agencies.  At
September  30,  2002,  U.S.  government  and agency  obligations  totaled  $58.5
million, or 49.5%, of investment  securities available for sale, while state and
political  obligations  contributed another $12.6 million,  or 10.7%.  Corporate
obligations represented $44.6 million, or 37.7%, and equity securities accounted
for the remaining $2.5 million, or 2.1%, of investment  securities available for
sale at September 30, 2002. With the exception of WorldCom,  Inc.  bonds,  which
have  been  written  down  to  a  carrying  value  of  $300,000  and  placed  on
non-accrual,   all  corporate  obligations  held  at  September  30,  2002,  are
investment grade with the largest exposure to any single creditor  totaling $4.9
million.

Cash and cash equivalents increased $28.3 million, or 52.6%, to $82.2 million at
September 30, 2002,  from $53.9 million at December 31, 2001, as a result of the
rapid rate of prepayments on loans and MBS  attributable to the historically low
interest  rate  environment.   The  Company's  intent  is  to  prudently  deploy
investable  funds in a manner which does not expose it to  significant  interest
rate risk.

Net loans,  including loans held for sale, totaled $1.2 billion at September 30,
2002, a decrease of $3.7 million,  or 0.3%, from December 31, 2001. Of the total
loan portfolio at September 30, 2002, 1-4 family mortgage loans comprised 69.3%,
home equity loans  represented  9.0%,  commercial real estate,  multi-family and
construction loans comprised 20.7%, and other consumer loans accounted for 1.0%.

Total loan  originations  for the nine months ended  September  30,  2002,  were
$462.8  million,  compared  to  $338.6  million  for the  same  period  in 2001.
Fixed-rate,  1-4 family first mortgage loan originations totaled $105.3 million,
or 22.8% of production,  while adjustable-rate,  1-4 family first mortgage loans
accounted for $139.9 million, or 30.2%, of total originations for the first nine
months of 2002.  Also  during  the first  nine  months  of 2002,  consumer  loan
originations,  including  home  equity  loans and credit  lines,  totaled  $89.1
million,  or 19.3% of total originations.  During the same period,  construction
lending totaled $74.7 million, or 16.2% of total originations,  while commercial
real  estate,  commercial  and  multi-family  loan  originations  totaled  $53.7
million, or 11.6%. In addition, the Company purchased $26.5 million of primarily
adjustable-rate,  single-family  first  mortgage  loans  through  correspondents
during  the  nine  months  ended   September  30,  2002.   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 $472.7 million for the nine months ended
September 30, 2002,  compared to $278.7  million for the same period in 2001. In
addition,  the Company sold $19.3  million of primarily  fixed-rate,  1-4 family
mortgage  loans  during  the first nine  months of 2002 as part of its  on-going
interest rate risk management  process.  While management intends to continue to
actively seek to originate  loans,  the future levels of loan  originations  and
repayments  will  be  significantly   influenced  by  external  interest  rates,
competition and other economic factors outside of the Company's control.

Other assets decreased $5.9 million to $31.7 million at September 30, 2002, from
$37.6 million at December 31, 2001. The decrease was primarily  attributable  to
the  receipt in 2002 of incomes  taxes  receivable  which  were  outstanding  at
December 31, 2001.

LIABILITIES. Total deposits increased $61.8 million, or 4.7%, to $1.4 billion at
September 30, 2002.  Core  deposits,  consisting of checking,  savings and money
market  accounts,  grew by $97.6  million,  or  14.8%,  to $758.4  million,  and
accounted for 55.1% of total deposits at September 30, 2002.  This compares with
a  core/total  deposits  ratio of 50.3%  at  December  31,  2001,  and  48.7% at
September 30, 2001. Certificates of deposit decreased by $35.8 million, or 5.5%,
compared with year-end 2001, with decreases  occurring primarily in one-year and
shorter maturity categories.

                                       11
<PAGE>


Borrowed funds increased a net of $55.9 million,  or 10.2%, to $601.7 million at
September 30, 2002,  from $545.8  million at December 31, 2001, in order to fund
MBS  purchases  and  take  advantage  of  historically  low  interest  rates  on
longer-term borrowings.

Other  liabilities  increased  $6.6  million,  or  51.1%,  to $19.6  million  at
September  30, 2002,  from $13.0  million at December  31, 2001,  primarily as a
result of increased  income tax accruals caused by an increase in the New Jersey
Savings  Institution  tax rate and the timing of required  estimated  income tax
payments.

CAPITAL. The Company's  stockholders' equity decreased $5.2 million, or 2.3%, to
$224.9 million at September 30, 2002,  from $230.1 million at December 31, 2001.
The decrease in equity was a result of the  repurchase  of $26.1  million of the
Company's common stock and cash dividends declared of $8.0 million. In May 2002,
the Company  announced the  commencement of a 5% stock repurchase  program.  The
Company  repurchased  1.1 million shares and 1.9 million  shares,  respectively,
during the three and nine months ended  September  30, 2002,  at an average cost
per share of $13.98 and $13.70, respectively. Stated and tangible book value per
share at September 30, 2002,  were $7.73 and $7.56,  respectively.  The decrease
resulting from stock  repurchases and dividend  payments was partially offset by
net income of $19.6  million for the nine months ended  September  30, 2002,  an
increase  in net  unrealized  gains  on  securities  available  for sale of $7.0
million,  the  amortization  of stock-based  compensation  and benefit plans and
related tax  benefits of $2.0  million and  proceeds  from the exercise of stock
options totaling $223,000.

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

                         Required               Actual
                    ------------------    ------------------    Excess of Actual
                                % of                  % of      Over Regulatory
                      Amount   Assets       Amount   Assets       Requirements
                    --------- --------    --------- --------    ----------------

Leverage Capital     $89,724    4.00%     $192,802    8.56%         $102,358
Risk-based Capital:
Tier 1                43,320    4.00%      192,802   17.74%          148,762
Total                 86,639    8.00%      204,919   18.92%          118,280


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

The most  significant  sources of funds for the first  nine  months of 2002 were
principal  repayments and prepayments of loans and  mortgage-backed  securities,
totaling  $472.7 million and $182.0  million,  respectively.  Other  significant
sources of funds for the nine months ended  September  30, 2002,  were  proceeds
from sales of MBS available for sale totaling $152.4 million,  deposit growth of
$61.8 million,  a net increase in borrowings of $55.9 million,  sales, calls and
maturities of investment  securities  available for sale of $44.8  million,  and
proceeds from the sales of mortgage loans totaling $19.3 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,
2002, the Company had unpledged investment securities and MBS available for sale
with a market value of $369.7 million.

The  primary  investing  activities  of the Company for the first nine months of
2002  were the  origination  of loans  totaling  $462.8  million,  purchases  of
mortgage-backed  securities  available for sale  totaling  $419.6  million,  and
purchases of investment  securities  available for sale totaling  $54.1 million.
Other significant

                                       12
<PAGE>


uses of funds  during the nine  months  ended  September  30,  2002,  were $26.5
million in purchases of mortgage  loans,  $26.0  million in  repurchases  of the
Company's common stock and $8.0 million in cash dividends paid.


COMPARISON  OF OPERATING  RESULTS FOR THE THREE AND NINE MONTHS ENDED  SEPTEMBER
30, 2002 AND 2001.

RESULTS OF OPERATIONS.  Net income for the three and nine months ended September
30, 2002, totaled $7.5 million and $19.6 million, respectively. This represented
increases of $909,000 and $928,000,  or 13.8% and 5.0%,  respectively,  over net
income of $6.6 million and $18.7 million for the  comparable  2001 periods.  For
the quarter ended September 30, 2002,  basic and diluted earnings per share were
$0.26,  representing  increases  of 19.4% and  19.3%,  respectively,  over third
quarter  2001  basic  and  diluted  earnings  per  share  of  $0.22  and  $0.21,
respectively.  For the nine months ended  September 30, 2002,  basic and diluted
earnings per share were $0.68 and $0.66, respectively, representing increases of
10.6% and 10.0%,  respectively,  over basic and  diluted  earnings  per share of
$0.61 and $0.60, respectively, for the first nine months of 2001.

Annualized return on average equity was 13.01% and 11.34% for the three and nine
months ended September 30, 2002,  respectively,  compared with 11.50% and 10.98%
for the comparable 2001 periods.  Annualized  return on average assets was 1.33%
and 1.18% for the three and nine months ended September 30, 2002,  respectively,
compared with 1.29% and 1.25% for the three and nine months ended  September 30,
2001, respectively.

Earnings for the nine months ended September 30, 2002,  were adversely  affected
by two second quarter events, both of which were precipitated by alleged acts of
fraud  and/or  misrepresentation.  The  Company  recorded an  impairment  charge
totaling  $1.2  million,  or $.04 per  diluted  share,  net of tax,  related  to
WorldCom, Inc. corporate bonds. In addition, the Company recorded a $1.1 million
provision to the  allowance  for loan losses  during the quarter  ended June 30,
2002,  the  majority  of which  was due to a $1.4  million  writedown  of a $6.9
million  participation  loan to an  insurance  premium  financing  company.  The
remaining  balance on this loan,  which was the one only of its kind  within the
loan portfolio, was received in settlement of the credit in August, 2002.

INTEREST INCOME. Interest income decreased by $1.2 million, or 3.7%, and by $5.0
million,  or 4.9%,  for the three and nine  months  ended  September  30,  2002,
respectively, from the same periods in 2001.

Interest on loans  decreased  $1.2 million and $3.2  million,  or 5.4% and 4.8%,
respectively,  to $21.3  million and $64.2 million for the three and nine months
ended  September  30, 2002,  compared to $22.5 million and $67.5 million for the
same periods in 2001.  The average  balance of the loan  portfolio for the three
month period ended  September  30, 2002,  increased  $38.2 million from 2001, to
$1.3 billion,  while the average  yield on the portfolio  decreased to 6.71% for
the three months  ended  September  30, 2002,  from 7.31% for the same period in
2001. The average  balance of the loan portfolio for the nine month period ended
September 30, 2002,  increased  $58.8 million from 2001, to $1.3 billion,  while
the average yield on the portfolio  decreased to 6.74% for the nine months ended
September 30, 2002, from 7.42% for the same period in 2001.

Interest on securities  decreased  $18,000 and $1.7  million,  or 0.2% and 5.2%,
respectively,  to $10.8  million and $31.7 million for the three and nine months
ended  September  30, 2002,  compared to $10.8 million and $33.4 million for the
same periods in 2001. The average balance of the  investment,  FHLB-NY stock and
MBS available for sale  portfolios  totaled $897.9  million,  with an annualized
yield of 4.80% for the three months ended  September 30, 2002,  compared with an
average  balance of $738.4  million  with an  annualized  yield of 5.85% for the
three months ended  September 30, 2001. The average  balance of the  investment,
FHLB-NY stock and MBS available for sale portfolios totaled $875.5 million, with
an  annualized  yield of 4.83% for the nine months  ended  September  30,  2002,
compared with an average  balance of $720.0 million with an annualized  yield of
6.19% for the nine months ended September 30, 2001.

                                       13
<PAGE>


INTEREST  EXPENSE.  Interest expense decreased $3.1 million to $15.6 million for
the three months ended  September  30, 2002,  compared to $18.8  million for the
same period in 2001.  For the nine months ended  September  30,  2002,  interest
expense  decreased  $9.5 million to $47.6  million  versus $57.1 million for the
comparable 2001 period.

For the three  months  ended  September  30, 2002  interest  expense on deposits
decreased $4.0 million, or 33.5%, to $7.9 million, compared to $11.9 million for
the same period in 2001.  Interest  expense on certificates of deposit  declined
$3.2 million,  or 38.9%,  for the third quarter of 2002 compared with 2001.  The
average balance of certificates of deposit  declined by $40.3 million,  or 6.1%,
to $622.2 million for the three months ended  September 30, 2002,  compared with
the same period in 2001,  while the average rate paid on certificates  decreased
174 basis points to 3.25%. Interest expense on core deposits decreased $768,000,
or 21.1%,  for the quarter  ended  September  30, 2002,  compared  with the same
period in 2001. Average  interest-bearing  core deposits grew $118.5 million, or
21.1%, while the average rate paid on interest-bearing core deposits declined 90
basis points to 1.69%. Average non-interest-bearing deposits grew $15.1 million,
or 28.0%, to $69.2 million for the third quarter of 2002, compared with 2001.

Partially  offsetting  reduced  deposit  interest  expense,   interest  paid  on
borrowings  increased $835,000,  or 12.2%, to $7.7 million for the quarter ended
September 30, 2002,  compared with 2001.  The average  balance of borrowed funds
for the three months ended September 30, 2002, increased to $601.8 million, from
$511.2  million for the same period in 2001.  The average  interest rate paid on
borrowed funds was 5.11% for the three months ended September 30, 2002, compared
with 5.36% for the same period in 2001.

For the nine months  ended  September  30,  2002,  interest  expense on deposits
decreased $11.3 million,  or 30.9%, to $25.3 million,  compared to $36.6 million
for the same  period  in 2001.  Interest  expense  on  certificates  of  deposit
declined $9.9 million,  or 37.5%,  for the nine months ended September 30, 2002,
compared with the same period of 2001. The average  balance of  certificates  of
deposit  declined  by $25.5  million,  or 3.9%,  to $634.4  million for the nine
months ended  September 30, 2002,  compared with the same period in 2001,  while
the  average  rate paid on  certificates  decreased  186 basis  points to 3.46%.
Interest expense on core deposits decreased $1.4 million, or 14.0%, for the nine
months ended September 30, 2002,  compared with the same period in 2001. Average
interest-bearing  core deposits grew $120.9 million, or 22.5%, while the average
rate paid on  interest-bearing  core deposits declined 76 basis points to 1.79%.
Average  non-interest-bearing  deposits grew $14.1 million,  or 27.2%,  to $65.9
million for the first nine months of 2002,  compared  with the first nine months
of 2001.

Partially  offsetting  reduced  deposit  interest  expense,   interest  paid  on
borrowings increased $1.8 million, or 8.7%, to $22.3 million for the nine months
ended September 30, 2002, compared to $20.5 million for the same period in 2001.
The average  balance of borrowed  funds for the nine months ended  September 30,
2002,  increased to $584.9  million,  from $486.1 million for the same period in
2001.  The average  interest rate paid on borrowed  funds was 5.08% for the nine
months  ended  September  30, 2002,  compared  with 5.62% for the same period in
2001.

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest income before
provision for loan losses increased $1.9 million and $4.5 million,  or 13.1% and
10.4%,  respectively,  to $16.5 million and $48.4 million for the three and nine
months ended September 30, 2002, compared to $14.6 million and $43.8 million for
the same periods in 2001. The increase was due to the changes in interest income
and interest expense described previously.

The interest rate spread increased 20 basis points to 2.64% for the three months
ended  September 30, 2002,  compared with 2.44% for the same period in 2001. The
average  earning  asset  yield was 5.92%  and 6.76% for the three  months  ended
September  30,2002,   and  2001,   respectively,   while  the  average  cost  of
interest-bearing  liabilities  declined to 3.28% for 2002,  from 4.32% for 2001.
For the nine months ended September 30, 2002, the interest rate spread increased
14 basis points to 2.58%  compared  with 2.44% for the same period in 2001.  The
average  earning  asset  yield  was 5.96%  for the  first  nine  months of 2002,
compared with 6.96% for the first nine months of 2001, while the average cost of
interest-bearing  liabilities  was  3.38%  and  4.52%  for the  same  respective
periods.

                                       14
<PAGE>


The net interest  margin was 3.04% and 3.00% for the three and nine months ended
September  30, 2002,  respectively,  compared with 2.96% and 3.02% for the three
and nine months ended September 30, 2001, respectively.

PROVISION FOR LOAN LOSSES.  The provision for loan losses for the three and nine
months ended  September  30, 2002,  decreased  $45,000 and  increased  $810,000,
respectively,  to $105,000 and $1.3  million,  compared to $150,000 and $500,000
for the same periods in 2001. Total  non-performing  assets totaled $3.1 million
at September 30, 2002,  compared with $1.9 million at December 31, 2001 and $2.2
million at September 30, 2001. Included in non-performing loans at September 30,
2002,  were  $847,000 in four  single-family  construction  mortgages to several
related entities.  These projects are substantially complete, have loan-to-value
ratios less than 70% and are backed by personal  guarantees.  The loans are past
maturity  and the Company has  initiated  foreclosure  proceedings.  The Company
anticipates  full  collection of these loans.  The increase in the  year-to-date
provision for loan losses was primarily due to a $1.4 million charge against the
allowance for loan losses recorded  during the second quarter of 2002,  relating
to a participation  loan to an insurance premium  financier.  The remaining $5.6
million balance on the partially charged-off  participation loan was received in
settlement  of the credit in August  2002.  Provisions  for loan losses are made
based on management's evaluation of risks inherent in the loan portfolio, giving
consideration  to  on-going  credit  evaluations  and changes in the balance and
composition of the loan portfolio. The allowance for loan losses as a percentage
of total  loans was 1.03% at  September  30,  2002 and  December  31,  2001.  In
management's  opinion, the allowance for loan losses,  totaling $12.8 million at
September 30, 2002,  adequately  addresses the risks  inherent in the portfolio.
Management  will  continue to review the need for additions to its allowance for
loan losses based upon its quarterly review of the loan portfolio,  the level of
delinquencies, and general market and economic conditions.

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,
                                                      2002       2002       2002       2001       2001
                                                    ----------------------------------------------------
<S>                                                  <C>        <C>        <C>        <C>        <C>
Non-accrual mortgage loans ......................    $2,297     $1,875     $1,681     $1,787     $1,904
Non-accrual other loans .........................        --      5,552         --         --         --
                                                    ----------------------------------------------------
   Total non-accrual loans ......................     2,297      7,427      1,681      1,787      1,904
Loans 90 days or more delinquent and
   still accruing ...............................       440         80        256         62        263
Restructured loans ..............................        --         --         --         --         --
                                                    ----------------------------------------------------
Total non-performing loans ......................     2,737      7,507      1,937      1,849      2,167
Non-accrual investments (WorldCom, Inc. .........
   corporate bonds) .............................       300        300         --         --         --
Total foreclosed real estate, net of related
   allowance ....................................       100         --         42         42         79
                                                    ----------------------------------------------------
Total non-performing assets .....................    $3,137     $7,807     $1,979     $1,891     $2,246
                                                    ====================================================
Non-performing loans to loans receivable, net ...      0.22%      0.59%      0.15%      0.15%      0.18%
Non-performing assets to total assets ...........      0.14%      0.35%      0.09%      0.09%      0.11%
</TABLE>

NON-INTEREST INCOME.  Non-interest income increased $1.5 million to $2.8 million
for the three months ended September 30, 2002,  compared to $1.4 million for the
same period in 2001.  Net gains on sales of loans and  securities  increased  by
$1.2  million  as  the  Company   realized  gains  on  sales  of   higher-coupon
mortgage-backed   securities  with   undesirable   prepayment   performance  and
projections.  Also,  fees and service  charges  increased  by  $394,000  for the
quarter  ended  September  30, 2002,  versus the  comparable  2001  period.  The
increase was a result of  prepayment  penalties on  commercial  mortgage  loans,
growth in the  assessable  customer base and the  implementation  of new fee and
service charge levels following a periodic review of current fee structures.

                                       15
<PAGE>


For the nine months ended September 30, 2002, non-interest income increased $1.3
million,  or 37.0%, to $4.7 million compared to $3.4 million for the same period
in 2001.  Fees and service  charges  increased  $1.2 million for the nine months
ended September 30, 2002, and included a $600,000 prepayment penalty realized in
the first quarter on a large commercial  mortgage loan. In addition,  Bank Owned
Life Insurance purchased in June 2001,  contributed $1.2 million to non-interest
income for the nine months ended September 30, 2002,  compared with $443,000 for
the same  period in 2001.  Partially  offsetting  these  increases,  the Company
recognized  net losses on sales of loans and securities of $122,000 for the nine
months ended  September  30, 2002,  compared  with net gains of $625,000 for the
same period in 2001. Included in the 2002 net securities loss was a $1.8 million
pre-tax  impairment charge on WorldCom,  Inc.  corporate bonds recognized during
the second quarter of 2002.

NON-INTEREST  EXPENSE.  Non-interest expense for the three and nine months ended
September 30, 2002, increased $1.2 million and $2.5 million, or 19.0% and 13.0%,
respectively,  to $7.5 million and $21.8  million,  compared to $6.3 million and
$19.3  million  for the  same  periods  in  2001.  The  increase  was  primarily
attributable to the  distributions  on preferred  capital  securities  issued in
November 2001,  totaling $495,000 and $1.5 million for the three and nine months
ended September 30, 2002, respectively.

In addition, compensation and benefits increased $462,000 and $925,000, or 12.1%
and 8.1%, respectively, to $4.3 million and $12.4 million for the three and nine
months ended September 30, 2002, as a result of normal salary increases, as well
as increased  healthcare and other benefit costs,  including  growth in non-cash
compensation  expense  associated  with the Company's  ESOP as a result of stock
price  appreciation.  For the  nine  months  ended  September  30,  2002,  these
increases were partially  offset by reduced  advertising  costs  attributable to
certain  non-recurring  expenses  related  to the  Company's  100th  Anniversary
Celebration which were recognized in the first quarter of 2001.

The Company's annualized  non-interest expense,  excluding  amortization of core
deposit intangibles and distributions on preferred capital  securities,  divided
by  average  assets  was 1.20% and  1.18%  for the three and nine  months  ended
September 30, 2002, respectively, compared to 1.19% and 1.25%, for the three and
nine months ended  September 30, 2001,  respectively.  The Company's  efficiency
ratio, calculated as non-interest expense (excluding  distributions on preferred
capital  securities) divided by the sum of net interest income plus non-interest
income,  excluding net gains or losses on the sale of loans and securities,  was
38.8%  and  38.3%  for the  three and nine  months  ended  September  30,  2002,
respectively, compared with 39.7% and 41.5% for the comparable 2001 periods.

STATE TAX  LEGISLATION.  On July 2,  2002,  the State of New  Jersey  passed the
Business  Tax  Reform  Act,  which is  retroactive  to  January  1,  2002.  This
legislation  has resulted in an increase to the Company's  effective tax rate to
36.3% for the third quarter of 2002,  compared to its 2001 annual  effective tax
rate of 31.7%.  The Company  projects an annual  effective tax rate of 34.3% for
2002.

                                       16
<PAGE>


Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

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

Item 4.   CONTROLS AND PROCEDURES.

     a.)  EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

          John P. Mulkerin, 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-14(c) under the Securities Exchange
          Act of 1934,  as amended)  as of  November  1, 2002.  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 submit under the
          Exchange Act is recorded,  processed,  summarized  and reported as and
          when required.

     b.)  CHANGES IN INTERNAL CONTROLS.

          There were no significant changes in the Company's disclosure controls
          and procedures or internal  controls for financial  reporting or other
          factors that could  significantly  affect those controls subsequent to
          November  1,  2002,   and  the  Company   identified  no   significant
          deficiencies or material weaknesses  requiring  corrective action with
          respect to those controls.

                           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.

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

     a.)  EXHIBITS

          ======================================================================
           Exhibit
           Number                           Description                Reference
          ----------------------------------------------------------------------
             3.1    Certificate of Incorporation of                       *
                    First Sentinel Bancorp, Inc.

             3.2    Bylaws of First Sentinel Bancorp, Inc.                *

              4     Stock certificate of First Sentinel Bancorp, Inc.     *

             11     Statement re: Computation of Ratios                 Page 7

             99     Statements furnished pursuant to Section 906         Filed
                    of the Sarbanes-Oxley Act of 2002, 18 U.S.C.        herein
                    Section 1350
          ======================================================================

                                       17
<PAGE>


     b.)  REPORTS ON FORM 8 - K

          On September 27, 2002, the Company filed a report on Form 8-K pursuant
          to Item 5, in connection  with the  announcement  of President and CEO
          John P. Mulkerin's planned retirement effective December 31, 2002, and
          the naming of Christopher Martin as successor.

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

                                       18
<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                             FIRST SENTINEL BANCORP, INC.



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


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

                                       19
<PAGE>


                                 CERTIFICATIONS

I, John P. Mulkerin, certify that:

1.   I have  reviewed  this  quarterly  report  on Form  10-Q of First  Sentinel
     Bancorp, Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)   designed such  disclosure  controls and  procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during the  periods in which this  quarterly  report is being
     prepared;

b)   evaluated the  effectiveness  of the registrant's  disclosure  controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

c)   presented in this quarterly report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of the registrant's board of directors (or persons performing the
     equivalent function):

a)   all  significant  deficiencies  in the  design  or  operation  of  internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

b)   any fraud,  whether or not  material,  that  involves  management  or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: November 14, 2002                                  /s/ John P. Mulkerin
      -----------------                                  --------------------
                                                         John P. Mulkerin
                                                         Chief Executive Officer

                                       20
<PAGE>


I, Thomas M. Lyons, certify that:

1.   I have  reviewed  this  quarterly  report  on Form  10-Q of First  Sentinel
     Bancorp, Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)   designed such  disclosure  controls and  procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during the  periods in which this  quarterly  report is being
     prepared;

b)   evaluated the  effectiveness  of the registrant's  disclosure  controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

c)   presented in this quarterly report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of the registrant's board of directors (or persons performing the
     equivalent function):

a)   all  significant  deficiencies  in the  design  or  operation  of  internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

b)   any fraud,  whether or not  material,  that  involves  management  or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: November 14, 2002                                  /s/ Thomas M. Lyons
      -----------------                                  -------------------
                                                         Thomas M. Lyons
                                                         Chief Financial Officer

                                       21
<PAGE>
                                 EXHIBIT INDEX

Exhibit No.         Description
-----------         ------------------------------------------------------------
99                  Statements furnished pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350