SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the quarterly period ended:   September 30, 2004
                                       ------------------

[ ]  Transition  report  pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934

     For the transition period from ________ to ________

                           SEC File Number: 000-50467
                                            ---------


                          SYNERGY FINANCIAL GROUP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           New Jersey                                            52-2413926
-------------------------------                              ----------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)

310 North Avenue East, Cranford, New Jersey                       07016
-------------------------------------------                       -----
  (Address of principal executive offices)                      (Zip Code)

                                 (908) 272-3838
             ------------------------------------------------------
              (Registrant's telephone number, including area code)


         Check whether the registrant:  (1) has filed all reports required to be
filed by Sections 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     No  X
                                                ---    ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Number of shares outstanding of common stock as of November 5, 2004:

$0.10 Par Value Common Stock                               12,452,011
----------------------------                               ----------
          Class                                         Shares Outstanding

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

PART I        FINANCIAL INFORMATION                                                     Page
------        ---------------------                                                     ----
<S>                                                                                    <C>
Item 1.       Financial Statements

              Consolidated Balance Sheets as of September 30, 2004 (unaudited) and
                  December 31, 2003 (audited)..............................................1

              Consolidated Statements of Income for the three and nine months ended
                  September 30, 2004 and 2003 (unaudited)..................................2

              Consolidated Statement of Changes in Stockholders' Equity for the
                  nine months ended September 30, 2004 (unaudited).........................3

              Consolidated Statements of Cash Flows for the nine months ended
                  September 30, 2004 and 2003 (unaudited)..................................4

              Notes to Consolidated Financial Statements (unaudited).......................5

Item 2.       Management's Discussion and Analysis of Financial Condition
                  and Results of Operations...............................................14

Item 3.       Quantitative and Qualitative Disclosures about Market Risk..................26

Item 4.       Controls and Procedures.....................................................27


PART II       OTHER INFORMATION
-------       -----------------

Item 1.       Legal Proceedings...........................................................28

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds.................28

Item 3.       Defaults Upon Senior Securities.............................................29

Item 4.       Submission of Matters to a Vote of Security Holders.........................29

Item 5.       Other Information...........................................................29

Item 6.       Exhibits....................................................................29

Signatures................................................................................30
</TABLE>

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                              September 30,    December 31,
                                                                                  2004             2003
                                                                             -----------       -----------
                                                                               (unaudited)       (audited)
<S>                                                                        <C>               <C>
Assets:
Cash and amounts due from banks                                              $     4,750       $     4,481
Interest-bearing deposits with banks                                               3,750             2,811
                                                                             -----------       -----------
Cash and cash equivalents                                                          8,500             7,292
Investment securities available-for-sale,
   at fair value                                                                 146,151           123,779
Investment securities held-to-maturity (fair
   value of $116,618 and $33,216, respectively)                                  115,888            33,214
Federal Home Loan Bank of New York
   stock, at cost                                                                 10,506             3,644
Loans receivable, net                                                            519,575           434,585
Accrued interest receivable                                                        2,774             2,021
Property and equipment, net                                                       17,083            17,620
Cash surrender value of bank-owned life insurance                                 12,525             2,475
Other assets                                                                       4,778             3,988
                                                                             -----------       -----------
     Total assets                                                            $   837,780       $   628,618
                                                                             ===========       ===========

Liabilities:
Deposits                                                                     $   522,358       $   473,535
Federal Home Loan Bank advances                                                  205,675            72,873
Advance payments by borrowers
   for taxes and insurance                                                         1,496             1,582
Accrued interest payable on advances                                                 395               119
Stock subscriptions payable                                                            -            38,322
Dividend payable                                                                     492                 -
Other liabilities                                                                  1,650             1,259
                                                                             -----------       -----------
     Total liabilities                                                           732,066           587,690
                                                                             -----------       -----------

Commitments and contingencies                                                          -                 -

Stockholders' equity:
Preferred stock; $.10 par value, 5,000,000 shares
   authorized; issued and outstanding - none                                           -                 -
Common stock; $.10 par value, 20,000,000 shares
   authorized; issued September 30, 2004 - 12,452,011,
   December 31, 2003 - 3,344,252                                                   1,245               334
Additional paid-in-capital                                                        86,063            15,008
Retained earnings                                                                 29,913            27,858
Unearned ESOP shares                                                              (6,131)           (1,009)
Unearned RSP compensation                                                         (3,594)           (1,011)
Treasury stock acquired for the RSP                                               (1,503)             (103)
Accumulated other comprehensive
   income (loss), net of taxes                                                      (279)             (149)
                                                                             -----------       -----------
     Total stockholders' equity                                                  105,714            40,928
                                                                             -----------       -----------
     Total liabilities and stockholders' equity                              $   837,780       $   628,618
                                                                             ===========       ===========
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      -1-
<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                        Consolidated Statements of Income
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                    For the Three Months           For the Nine Months
                                                                     Ended September 30,           Ended September 30,
                                                                  ----------------------         ----------------------
                                                                    2004         2003              2004         2003
                                                                  ---------     --------         ---------    ---------
                                                                  (unaudited)  (unaudited)      (unaudited)   (unaudited)
<S>                                                              <C>           <C>              <C>          <C>
Interest income:
   Loans, including fees                                          $   7,278     $  6,351         $  20,647    $  18,882
   Investment securities                                              2,463          882             5,626        3,173
   Other                                                                 42           11                88          104
                                                                  ---------     --------         ---------    ---------
     Total interest income                                            9,783        7,244            26,361       22,159
                                                                  ---------     --------         ---------    ---------
Interest expense:
   Deposits                                                           2,329        2,288             6,615        6,785
   Borrowed funds                                                     1,432          441             2,538        1,266
                                                                  ---------     --------         ---------    ---------
     Total interest expense                                           3,761        2,729             9,153        8,051
                                                                  ---------     --------         ---------    ---------
     Net interest income before provision for loan losses             6,022        4,515            17,208       14,108
                                                                  ---------     --------         ---------    ---------
Provision for loan losses                                               429          253             1,133          723
                                                                  ---------     --------         ---------    ---------
     Net interest income after provision for loan losses              5,593        4,262            16,075       13,385
                                                                  ---------     --------         ---------    ---------
Other income:
   Service charges and other fees on deposit accounts                   556          479             1,604        1,211
   Net gain on sale of loans                                              -           18                 -           18
   Net gain on sale of investments                                       38          148                38          148
   Commissions                                                          153           38               186           89
   Other                                                                205           89               336          352
                                                                  ---------     --------         ---------    ---------
     Total other income                                                 952          772             2,164        1,818
                                                                  ---------     --------         ---------    ---------
Other expenses:
   Salaries and employee benefits                                     2,687        2,021             7,180        5,710
   Premises and equipment                                               939          903             2,854        2,851
   Occupancy                                                            490          458             1,436        1,422
   Professional services                                                156           86               403          362
   Advertising                                                          241          226               603          584
   Other operating                                                      384          105               974          633
                                                                  ---------     --------         ---------    ---------
     Total other expenses                                             4,897        3,799            13,450       11,562
                                                                  ---------     --------         ---------    ---------
     Income before income tax expense                                 1,648        1,235             4,789        3,641
                                                                  ---------     --------         ---------    ---------
Income tax expense                                                      554          496             1,780        1,339
                                                                  ---------     --------         ---------    ---------
     Net income                                                   $   1,094     $    739         $   3,009    $   2,302
                                                                  =========     ========         =========    =========

Per share of common stock:
   Basic earnings per share                                       $    0.10     $   0.23         $    0.28    $    0.71
   Diluted earnings per share                                     $    0.09     $   0.23         $    0.27    $    0.71

Basic weighted average shares outstanding                        11,496,365    3,234,025        10,886,342    3,234,116
Diluted weighted average shares outstanding                      11,743,123    3,266,038        11,113,381    3,239,900
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -2-
<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
            Consolidated Statement of Changes in Stockholders' Equity
                  For the Nine Months Ended September 30, 2004
                                   (Unaudited)
                  (Dollars in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                               Treasury
                                     Common Stock                                               stock      Accumulated
                                     ------------    Additional         Unearned    Unearned   acquired  comprehensive
                                    Shares     Par    paid-in- Retained   ESOP        RSP      for the   income (loss),
                                    issued    value   capital  earnings  shares   compensation   RSP         net         TOTAL
-------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>          <C>     <C>       <C>      <C>        <C>        <C>           <C>       <C>
BALANCE AT JANUARY 1, 2004        3,344,252    $334    $15,008   $27,858  $(1,009)   $(1,011)   $(103)        $(149)    $40,928
    Net income                            -       -          -     3,009       -           -        -             -       3,009
    Other comprehensive
       income, net of
       reclassification
       adjustment and taxes               -       -          -         -       -           -        -          (130)       (130)
-------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income                                                                                                2,879
-------------------------------------------------------------------------------------------------------------------------------
    Net proceeds of stock
       offering and
       issuance of
       common stock               9,107,759     911     68,349         -       -           -        -             -      69,260

    Dividends declared                    -       -          -      (954)      -           -        -             -        (954)

    Common stock acquired by
       ESOP (562,873 shares)              -       -          -         -  (5,628)          -        -             -      (5,628)
    Common stock held
       by ESOP committed
       to be released
       (74,718 shares)                    -       -        257         -     506           -        -             -         763
    Compensation recognized
       under RSP Plan                     -       -          -         -       -         274        -             -         274
    Common stock
       repurchased for RSP Plan
       (149,742 shares)                   -       -          -         -       -           -   (1,808)            -      (1,808)

    Common stock awarded
       through RSP plan
       (281,436 shares)                   -       -      2,857         -       -      (2,857)       -             -           -

    Common stock issued
       by RSP (41,573 shares)             -       -       (408)        -       -           -      408             -           -

BALANCE AT SEPTEMBER 30, 2004    12,452,011  $1,245    $86,063   $29,913 $(6,131)    $(3,594) $(1,503)        $(279)   $105,714
===============================================================================================================================
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -3-
<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                           For the Nine Months
                                                                           Ended September 30,
                                                                        --------------------------
                                                                          2004              2003
                                                                        --------         ---------
                                                                       (unaudited)      (unaudited)
<S>                                                                   <C>              <C>
Operating activities
   Net income .......................................................   $   3,009    $   2,302
Adjustments to reconcile net income to net cash
     provided by operating activities:
   Depreciation and amortization ....................................       1,086        1,162
   Provision for loan losses ...........................................    1,133          723
   Deferred income taxes ...............................................      (83)        (801)
   Amortization of deferred loan fees ..................................       (9)           2
   Amortization of premiums on investment securities ...................    1,099        1,416
   Net (gains) on sale of investment securities ........................      (38)        (148)
   Mortgage loans originated for sale ..................................        -        2,307
   Mortgage loan sales .................................................        -       (2,325)
   Release of ESOP shares ..............................................      763          183
   Compensation under RSP plan .........................................      274          119
   Increase in accrued interest receivable .............................     (753)        (338)
   Increase in other assets ............................................     (707)      (1,477)
   Increase (decrease) in other liabilities ............................      391        1,952
   Increase in cash surrender value of bank-owned life insurance .......      (50)        (144)
   Increase (decrease) in accrued interest payable on advances .........      276          (46)
                                                                        ---------    ---------
Net cash provided by operating activities ...........................       6,391        4,887
                                                                        ---------    ---------
Investing activities
   Purchase of investment securities held-to-maturity ...............     (93,010)     (12,603)
   Purchase of investment securities available-for-sale .............     (63,482)    (107,139)
   Maturity and principal repayments of investment
     securities held-to-maturity ....................................       9,650       15,539
   Maturity and principal repayments of investment
     securities available-for-sale ..................................      39,721       43,526
   Purchase of property and equipment ...............................        (549)      (1,095)
   Purchase of FHLB Stock ...........................................      (6,862)      (2,614)
   Purchase of bank-owned life insurance ............................     (10,000)           -
   Proceeds from the sale of investment securities available for sale         885        9,029
   Loan originations, net of principal repayments ...................     (59,462)     (59,126)
   Purchase of loans ................................................     (26,653)           -
   Cash consideration paid to acquire First Bank of Central Jersey ..           -       (2,269)
   Cash and equivalents acquired from First Bank of Central Jersey ..           -        7,773
                                                                        ---------    ---------
         Net cash used in investing activities ......................    (209,762)    (108,979)
                                                                        ---------    ---------
Financing activities
   Net increase in deposits .........................................      48,823       56,737
   Net advances from FHLB ...........................................     132,801       47,475
   Increase in advance payments by borrowers
     for taxes and insurance ........................................         (86)         (86)
   Dividends payable ................................................        (462)           -
   Decrease in stock subscriptions payable ..........................     (38,322)           -
   Net proceeds from issuance of common stock .......................      69,261            -
   Purchase of common stock for ESOP ................................      (5,628)           -
   Purchase of treasury stock for the RSP Plan ......................      (1,808)        (103)
                                                                        ---------    ---------
   Net cash provided by financing activities ........................     204,579      104,023
                                                                        ---------    ---------
         Net increase (decrease) in cash and cash equivalents .......       1,208          (69)
Cash and cash equivalents at beginning of year ......................       7,292        7,886
                                                                        ---------    ---------
Cash and cash equivalents at end of period ..........................   $   8,500    $   7,817
                                                                        =========    =========

Supplemental disclosure of cash flow information
   Cash paid during the period for income taxes .....................   $   1,866    $     957
                                                                        =========    =========
   Interest paid on deposits and borrowed funds .....................   $   8,876    $   8,097
                                                                        =========    =========
</TABLE>
        The accompanying notes are an integral part of these statements.

                                      -4-
<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


1. BASIS OF FINANCIAL STATEMENT PRESENTATION

The  accounting   policies  followed  by  Synergy  Financial  Group,  Inc.  (the
"Company")  conform to accounting  principles  generally  accepted in the United
States of America and to predominant practice within the banking industry.

The consolidated  financial  statements  include the accounts of the Company and
its wholly-owned subsidiaries,  Synergy Bank, and its subsidiary Synergy Capital
Investments,   Inc,  and  Synergy  Financial  Services,   Inc.  All  significant
inter-company accounts and transactions have been eliminated in consolidation.

The accompanying  unaudited  condensed  consolidated  financial  statements were
prepared in accordance  with  instructions  to Form 10-Q, and therefore,  do not
include  information  or  footnotes  necessary  for a complete  presentation  of
financial position,  results of operations,  changes in equity and cash flows in
conformity with accounting principles generally accepted in the United States of
America.  However,  all normal  recurring  adjustments  that,  in the opinion of
management,  are necessary for a fair presentation of the consolidated financial
statements  have been included.  These  financial  statements  should be read in
conjunction  with  the  audited   consolidated   financial  statements  and  the
accompanying  notes thereto included in the Company's Annual Report on Form 10-K
for the period  ended  December  31,  2003.  The  results for the three and nine
months ended  September 30, 2004 are not  necessarily  indicative of the results
that may be expected  for the fiscal year ending  December 31, 2004 or any other
period.

In preparing the financial statements,  management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities,  the
disclosure  of  contingent  assets and  liabilities  at the date of the  balance
sheets,  and the reported  amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

The principal  estimates that are susceptible to significant  change in the near
term relate to the allowance for loan and lease  losses.  The  evaluation of the
adequacy of the allowance for loan and lease losses  includes an analysis of the
individual loans and overall risk characteristics and size of the different loan
portfolios, and takes into consideration current economic and market conditions,
the capability of specific  borrowers to pay specific loan obligations,  as well
as current loan  collateral  values.  However,  actual losses on specific loans,
which also are encompassed in the analysis, may vary from estimated losses.

Statement of Financial  Accounting  Standards (SFAS) No. 131,  Disclosures About
Segments of an Enterprise and Related Information, establishes standards for the
way business  enterprises  report information about operating segments in annual
financial statements.  The Bank has one operating segment and, accordingly,  has
one reportable  segment,  "Community  Banking." All of the Bank's activities are
interrelated,  and each activity is dependent and assessed  based on how each of
the activities of the Bank supports the others. For example,  commercial lending
is  dependent  upon the ability of the Bank to fund itself with retail  deposits
and other borrowings and to manage interest rate and credit risk. This situation
is also similar for  consumer,  residential,  multi-family  and  non-residential
mortgage lending.  Accordingly,  all significant  operating  decisions are based
upon analysis of the Bank as one operating segment.

                                      -5-

<PAGE>
                SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)

2. REORGANIZATION AND STOCK CONVERSION

The Company completed its second-step conversion from the mutual holding company
form of organization to a full stock  corporation (the  "Conversion") on January
20, 2004.  Upon  closing,  Synergy,  MHC and the former  Mid-Tier  Stock Holding
Company were eliminated.

The Company  sold  7,035,918  shares of its common  stock in the  Conversion  at
$10.00 per share.  In  addition,  each share of common  stock held by the public
stockholders  of its former  Mid-Tier  Stock Holding  Company was converted into
3.7231  shares of common  stock of the  Company,  resulting  in an  aggregate of
5,416,093  exchange  shares.  Cash  was  issued  in lieu of  fractional  shares.
Accordingly,  the  Company  now has  12,452,011  total  shares of  common  stock
outstanding  following  the  Conversion,  which was the adjusted  maximum of the
estimated valuation range.


3. EARNINGS PER SHARE

Basic  earnings  per share is computed by dividing  income  available  to common
stockholders by the weighted average number of common shares outstanding for the
period.  Diluted  earnings per share reflects the potential  dilution that could
occur if  securities  or other  contracts  to issue  common stock (such as stock
options)  were  exercised  or resulted in the  issuance of common  stock.  These
potentially  dilutive  shares would then be included in the  weighted  number of
shares outstanding for the period using the treasury stock method. Shares issued
and shares  re-acquired  during any period are  weighted  for the portion of the
period that they were outstanding.

The  computation  of both basic and  diluted  earnings  per share  includes  the
Employee  Stock   Ownership  Plan  ("ESOP")  shares   previously   allocated  to
participants  and shares committed to be released for allocation to participants
and  Restricted  Stock  Plans  ("RSP")  shares  that  have  vested  or have been
allocated to participants.  ESOP and RSP shares that have been purchased but not
committed to be released have not been considered in computing basic and diluted
earnings per share.

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted  earnings  per share  computation  for the three  months ended
September 30, 2004 (dollars in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                     Weighted
                                                        Income    average shares        Per
                                                      (numerator)  (denominator)   share amount
                                                      -----------  -------------   ------------
<S>                                                   <C>           <C>             <C>
    Basic earnings per share:
       Income available to common stockholders         $   1,094     11,496,365      $    0.10
       Effect of dilutive common stock equivalents                      246,758           0.01
                                                       ---------     ----------      ---------

    Diluted earnings per share:
       Income available to common stockholders         $   1,094     11,743,123      $    0.09
                                                       =========     ==========      =========
</TABLE>

                                      -6-

<PAGE>
                SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted  earnings  per share  computation  for the nine  months  ended
September 30, 2004 (dollars in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                     Weighted
                                                        Income    average shares        Per
                                                      (numerator)  (denominator)   share amount
                                                      -----------  -------------   ------------
<S>                                                   <C>           <C>             <C>
    Basic earnings per share:
       Income available to common stockholders          $   3,009    10,886,342       $    0.28
       Effect of dilutive common stock equivalents                      227,039            0.01
                                                        ---------    ----------       ---------
    Diluted earnings per share:
       Income available to common stockholders          $   3,009    11,113,381       $    0.27
                                                        =========    ==========       =========
</TABLE>

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted  earnings  per share  computation  for the three  months ended
September 30, 2003 (dollars in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                     Weighted
                                                        Income    average shares        Per
                                                      (numerator)  (denominator)   share amount
                                                      -----------  -------------   ------------
<S>                                                   <C>           <C>             <C>
    Basic earnings per share:
       Income available to common stockholders          $     739     3,234,025       $    0.23
       Effect of dilutive common stock equivalents                       32,013              -
                                                        ---------     ---------       ---------
    Diluted earnings per share:
       Income available to common stockholders          $     739     3,266,038       $    0.23
                                                        =========     =========       =========
</TABLE>

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted  earnings  per share  computation  for the nine  months  ended
September 30, 2003 (dollars in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                     Weighted
                                                        Income    average shares        Per
                                                      (numerator)  (denominator)   share amount
                                                      -----------  -------------   ------------
<S>                                                   <C>           <C>             <C>
    Basic earnings per share:
       Income available to common stockholders          $   2,302      3,234,116      $    0.71
       Effect of dilutive common stock equivalents                         5,784              -
                                                        ---------      ---------      ---------
    Diluted earnings per share:
       Income available to common stockholders          $   2,302      3,239,900      $    0.71
                                                        =========      =========      =========
</TABLE>
                                      -7-

<PAGE>
                SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


4. STOCK-BASED COMPENSATION

At the annual  meeting held on August 25,  2004,  and  reconvened  on August 31,
2004,  stockholders of Synergy Financial Group, Inc. approved the Company's 2004
Stock  Option Plan and the 2004  Restricted  Stock Plan.  A total of 703,591 and
281,436  shares of common stock have been made  available for granting under the
2004 Stock  Option and 2004  Restricted  Stock Plans,  respectively.  During the
quarter,  the Company  granted  694,569 options to purchase common shares of the
Company and issued 277,283 shares of restricted stock.

The Company's Stock Option Plan and the Restricted  Stock Plan are accounted for
in accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and released  Interpretations.
Accordingly,  no  compensation  expense has been recognized for the stock option
plans. Expense for the Restricted Stock Plans in the amount of the fair value of
the common  stock at the date of grant is  recognized  ratable  over the vesting
period. Prior to April 22, 2003, the Company did not have a Stock Option Plan or
a Restricted Stock Plan.

Had an expense for the Company's Stock Option Plans been determined based on the
fair value at the grant date for the Company's stock options consistent with the
method outlined in SFAS No. 123, the Company's net income and earnings per share
for all expenses  related to stock options and stock  granted in its  Restricted
Stock Plans  would have been  reduced to the pro forma  amounts  that follow (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                                 For the Three Months         For Nine Months
                                                                  ended September 30,       ended September 30,
                                                                  -------------------       -------------------
                                                                   2004        2003           2004        2003
                                                                ---------    ---------     --------     ---------
                                                                (unaudited) (unaudited)    (unaudited) (unaudited)
                                                                -----------------------    -----------------------
<S>                                                            <C>          <C>           <C>          <C>
    Net income, as reported                                     $   1,094    $     739     $  3,009     $   2,302
    Add expense recognized for the Restricted Stock Plans,
       net of related tax effect                                       99           36          176            72
    Less total Stock Option Plan and Restricted Stock Plan
       expense, determined under the fair value method,
       net of related tax effect                                     (226)         (84)        (405)         (167)
                                                                ---------    ---------     --------     ---------
    Net income, pro forma                                       $     967    $     691     $  2,780     $   2,207
                                                                =========    =========     ========     =========

    Basic earnings per share:
       As reported                                              $    0.10    $    0.23     $   0.28     $   0.71
       Pro forma                                                $    0.08    $    0.21     $   0.26     $   0.68
    Diluted earnings per share:
       As reported                                              $    0.09    $    0.23     $   0.27     $   0.71
       Pro forma                                                $    0.08    $    0.21     $   0.25     $   0.68
</TABLE>

                                      -8-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  (unaudited)

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes  options price model. The following  weighted average  assumptions
were utilized for grants in 2003:  dividend yield of 0.00%;  expected volatility
of 29.44 %; risk-free  interest rate of 3.01%; and, expected life of five years.
The following  weighted  average  assumptions  were utilized for grants in 2004:
dividend yield of 1.60%; expected volatility of 32.85%;  risk-free interest rate
of 3.33%; and, expected life of five years.

The Company has established an Employee Stock  Ownership Plan ("ESOP")  covering
eligible employees with one year of service, as defined by the ESOP. The Company
accounts for the ESOP in  accordance  with the  American  Institute of Certified
Public Accountants'  Statement of Position (SOP) No. 93-6, Employers' Accounting
for Employee Stock  Ownership  Plans.  SOP No. 93-6 addresses the accounting for
shares of stock issued to employees by an ESOP.  SOP No. 93-6  requires that the
employer  record  compensation  expense in the amount equal to the fair value of
shares committed to be released from the ESOP to employees.


Compensation  expense for the ESOP is recorded at an amount  equal to the shares
allocated by the ESOP  multiplied by the average fair market value of the shares
during the year. The Company  recognizes  compensation  expense ratably over the
year for the ESOP  shares  to be  allocated  based  upon the  Company's  current
estimate  of the number of shares  expected to be  allocated  by the ESOP during
each calendar year. The difference between the average fair market value and the
cost of the  shares  allocated  by the  ESOP is  recorded  as an  adjustment  to
additional paid-in-capital.


5. RECENT ACCOUNTING PRONOUNCEMENTS

The SEC recently released Staff Accounting  Bulletin (SAB) No. 105,  Application
of Accounting  Principles to Loan  Commitments.  SAB 105 provides guidance about
the  measurement of loan  commitments  recognized at fair value under  Financial
Accounting  Standards Board (FASB) Statement No. 133,  Accounting for Derivative
Instruments  and Hedging  Activities.  SAB No. 105 also  requires  companies  to
disclose their accounting  policy for those loan commitments  including  methods
and assumptions used to estimate fair value and associated  hedging  strategies.
SAB No. 105 is effective for all loan  commitments  accounted for as derivatives
that are entered into after  September 30, 2004.  The adoption of SAB No. 105 is
not expected to have a material effect on the Company's  consolidated  financial
statements.

On September 30, 2004, the FASB issued a proposed Statement, Share-Based Payment
an  Amendment  of FASB  Statements  No. 123 and APB No. 25, that  addresses  the
accounting for share-based payment  transactions in which an enterprise receives
employee  services in exchange for (a) equity  instruments  of the enterprise or
(b)  liabilities  that are based on the fair  value of the  enterprise's  equity
instruments  or that may be settled by the issuance of such equity  instruments.
Under  the FASB  proposal,  all  forms of  share-based  payments  to  employees,
including  employee stock  options,  would be treated the same as other forms of
compensation  by  recognizing  the  related  cost in the income  statement.  The
expense of the award  would  generally  be  measured  at fair value at the grant
date.  Current  accounting  guidance  requires  that  the  expense  relating  to
so-called  fixed plan employee  stock options only be disclosed in the footnotes
to the financial statements.  The proposed Statement would eliminate the ability
to account for share-based  compensation  transactions using APB Opinion No. 25,
Accounting  for Stock Issued to Employees.  The Company is currently  evaluating
this proposed statement and its effects on its results of operations.

                                      -9-

<PAGE>
                SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)

In  January  2003,  the FASB  issued  Interpretation  No. 46,  Consolidation  of
Variable  Interest  Entities (FIN 46). In general,  a variable  interest  entity
(VIE) is a corporation, partnership, trust or any other legal structure used for
business  purposes  that either (a) does not have equity  investors  with voting
rights or (b) has equity  investors  that do not  provide  sufficient  financial
resources for the entity to support its activities. FIN 46 requires certain VIEs
to be consolidated  by the primary  beneficiary if the investors do not have the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated  financial support from other parties.  For public  companies,  the
consolidation  requirements of FIN 46 applied  immediately to interest  entities
created after September 15, 2003. In December 2003, the FASB issued FIN 46R with
respect to VIEs,  which among other things revised the  implementation  date for
small  business  filers to the first fiscal year or interim  period ending after
December 15, 2004, with the exception of Special Purpose  Entities  (SPEs).  The
Bank  currently  has no SPEs.  The  adoption  of this  statement  did not have a
material  impact on the  financial  condition  or results of  operations  of the
Company.

The Bank adopted EITF 03-1, The Meaning of Other than  Temporary  Impairment and
Its  Application  to Certain  Investments,  as of December 31,  2003.  EITF 03-1
includes certain disclosures regarding quantitative and qualitative  disclosures
for investment  securities  accounted for under FAS 115,  Accounting for Certain
Investments  in Debt and Equity  Securities,  that are  impaired  at the balance
sheet date,  but an  other-than-temporary  impairment  has not been  recognized.
Paragraphs  10-20 of EITF Issue  No.03-1  give  guidance on how to evaluate  and
recognize an impairment loss that is other than temporary. On September 15, 2004
the FASB  issued a proposed  staff  position  EITF Issue  03-1-a to address  the
implementation   guidance  to  evaluate  and  recognize   other  than  temporary
impairment.  On September 30, 2004,  the FASB issued a staff position EITF Issue
03-1-1 which delayed the effective date of paragraphs  10-20 of EITF Issue 03-1.
The Company is in the process of determining the impact that this EITF will have
on its financial statements.

                                      -10-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  (unaudited)


6. INVESTMENT SECURITIES

The amortized cost,  gross  unrealized  gains and losses,  and fair value of the
Company's  investment  securities available for sale and held to maturity are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                   September 30, 2004 (unaudited)
                                     ----------------------------------------------------------
                                                         Gross          Gross
                                     Amortized        unrealized     unrealized        Fair
                                         cost            gains         losses          value
                                     ----------------------------------------------------------
<S>                                <C>              <C>            <C>           <C>
   Available-for-sale
     U.S. government obligations     $     3,004      $       1      $      50     $     2,955
     Mortgage-backed securities
       FHLMC                              89,020            242            485          88,777
       FNMA                               53,536            183            292          53,427
     Equity securities                     1,029              5             42             992
                                     -----------      ---------      ---------     -----------
         Total                       $   146,589      $     431      $     869     $   146,151
                                     ===========      =========      =========     ===========
</TABLE>

<TABLE>
<CAPTION>
                                                   September 30, 2004 (unaudited)
                                     ----------------------------------------------------------
                                                         Gross          Gross
                                       Amortized      unrealized     unrealized        Fair
                                         cost            gains         losses          value
                                     ----------------------------------------------------------
<S>                                <C>              <C>             <C>          <C>
   Held-to-maturity
     Mortgage-backed securities
       FHLMC                         $    49,866      $     346       $    227     $    49,985
       FNMA                               61,514            692            137          62,069
       GNMA                                4,498             56              -           4,554
     Other debt securities                    10              -              -              10
                                     -----------      ---------       --------     -----------
         Total                       $   115,888      $   1,094       $    364     $   116,618
                                     ===========      =========       ========     ===========
</TABLE>

<TABLE>
<CAPTION>
                                                          December 31, 2003
                                     ----------------------------------------------------------
                                                         Gross          Gross
                                       Amortized      unrealized     unrealized        Fair
                                         cost            gains         losses          value
                                     ----------------------------------------------------------
<S>                                 <C>              <C>             <C>          <C>
   Available-for-sale
     U.S. government obligations     $     3,527      $       9       $    (69)    $     3,467
     Mortgage-backed securities
       FHLMC                              64,136            282           (320)         64,098
       FNMA                               55,332            241           (324)         55,249
     Equity securities                     1,017              3            (55)            965
                                     -----------      ---------       --------     -----------
         Total                       $   124,012      $     535       $   (768)    $   123,779
                                     ===========      =========       ========     ===========
</TABLE>

                                      -11-
<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  (unaudited)

<TABLE>
<CAPTION>
                                                         December 31, 2003
                                     ---------------------------------------------------------
                                                         Gross          Gross
                                       Amortized      unrealized     unrealized        Fair
                                         cost            gains         losses          value
                                     ---------------------------------------------------------
<S>                                 <C>              <C>             <C>          <C>
   Held-to-maturity
     Mortgage-backed securities
       FHLMC                         $     5,623      $      20       $    (84)    $     5,559
       FNMA                               20,285             69            (98)         20,256
       GNMA                                7,296             95              -           7,391
     Other debt securities                    10              -              -              10
                                     -----------      ---------       --------     -----------
         Total                       $    33,214      $     184       $   (182)    $    33,216
                                     ===========      =========       ========     ===========
</TABLE>

7. LOANS RECEIVABLE

Major groupings of loans are as follows (in thousands):

                                                 September 30,      December 31,
                                                     2004               2003
                                                 -------------------------------
   Mortgages
     Residential, 1-4 family                    $   246,073        $   226,085
     Residential, multi-family                       43,477             33,971
     Non-residential                                 88,415             56,694
   Automobile                                       132,203            109,277
   Commercial                                         9,623              7,838
   Credit card                                           46                 71
   Other loans                                        3,618              3,745
                                                -----------        -----------

   Loans receivable                                 523,455            437,681
   Deferred loan fees and costs                         250                178
   Allowance for loan and lease losses               (4,130)            (3,274)
                                                -----------        -----------
   Loans receivable, net                        $   519,575        $   434,585
                                                ===========        ===========

A summary  of the  activity  in the  allowance  for loan and lease  losses is as
follows (in thousands):

                                                        Nine Months Ended
                                                 -------------------------------
                                                 September 30,     September 30,
                                                    2004               2003
                                                 -------------------------------

   Balance, beginning of period                 $     3,274        $     2,231
   Provision for loan and lease losses                1,133                723
   Acquisition of First Bank of Central Jersey            -                824
   Recoveries                                           321                351
   Loans charged-off                                   (598)            (1,071)
                                                -----------        -----------
   Balance, end of period                       $     4,130        $     3,058
                                                ===========        ===========

                                      -12-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  (unaudited)


8. DEPOSITS

Deposits are summarized as follows (in thousands):

                                                 September 30,      December 31,
                                                     2004               2003
                                                --------------------------------

     Checking accounts                          $    48,905        $    45,259
     Interest-bearing checking                        3,861                708
     Money market accounts                          165,986            139,121
     Savings and club accounts                       69,276             72,061
     Certificate of deposit accounts                234,330            216,386
                                                -----------        -----------
                                                $   522,358        $   473,535
                                                ===========        ===========


9. FEDERAL HOME LOAN BANK ("FHLB") OF NEW YORK ADVANCES

1.   Short-term FHLB Advances
     ------------------------

Short-term  FHLB advances  generally have  maturities of less than one year. The
details  of  these   advances  are  presented   below  (in   thousands,   except
percentages):

                                                          At or For The
                                                  ------------------------------
                                                    Nine Months    Twelve Months
                                                       Ended           Ended
                                                   September 30,   December 31,
                                                       2004            2003
                                                  ------------------------------

Average balance outstanding                       $    37,040       $    35,413
Maximum amount outstanding
   at any month end during the period                  48,975            69,300
Balance outstanding at period end                      42,475            38,299
Weighted average interest rate during the period        2.13%             1.21%
Weighted average interest rate at period end            2.00%             1.17%


2.   Long-term FHLB Advances
     -----------------------

At September 30, 2004,  long-term  advances from the FHLB totaled  $163,200,000.
Advances  consist of  fixed-rate  advances  that will mature  within one to nine
years. The advances are  collateralized by FHLB stock and certain first mortgage
loans and  mortgage-backed  securities.  These  advances had a weighted  average
interest rate of 3.20%.

                                      -13-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  (unaudited)


As of  September  30,  2004  long-term  FHLB  advances  mature  as  follows  (in
thousands):

   2004                                        $    13,185
   2005                                             37,565
   2006                                             35,150
   2007                                             38,000
   2008                                             29,600
   Thereafter                                        9,700
                                               -----------
                                               $   163,200
                                               ===========

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


General

         Management's discussion and analysis of financial condition and results
of  operations  is  intended  to  provide   assistance  in   understanding   our
consolidated  financial condition and results of operations.  The information in
this section should be read with the consolidated  interim financial  statements
and the notes thereto included in this Form 10-Q.

         Our results of operations  are primarily  dependent on our net interest
income.  Net interest  income is a function of the balances of interest  earning
assets  outstanding in any one period, the yields earned on those assets and the
interest paid on deposits and borrowed funds that were  outstanding in that same
period.  To a lesser extent,  our results of operations are also affected by the
relative  levels  of our  other  income  and other  expenses.  Our other  income
consists primarily of fees and service charges and gains (losses) on the sale of
loans  and  investments.  The  other  expenses  consist  primarily  of  employee
compensation  and benefits,  occupancy and equipment  expenses,  data processing
costs,  marketing  costs,  professional  fees,  office  supplies,  telephone and
postage costs. Our results of operations are also significantly  impacted by the
amount of  provisions  for loan and lease losses which,  in turn,  are dependent
upon,  among  other  things,  the size and  makeup of the loan  portfolio,  loan
quality and loan trends.


Forward-Looking Statements

         This report  contains  certain  forward-looking  statements  within the
meaning  of  Section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"), and Section 21 E of the Securities  Exchange Act of 1934, as
amended  (the  "Exchange  Act").   The  Company  intends  such   forward-looking
statements  to be  covered by the safe  harbor  provisions  for  forward-looking
statements  contained  in the  Private  Securities  Reform  Act of 1995,  and is
including  this  statement  for the  purpose  of these safe  harbor  provisions.
Forward-looking statements,  which are based on certain assumptions and describe
future  plans,  strategies  and  expectations  of  the  Company,  are  generally
identified  by use of the words  "believe,"  "expect,"  "intend,"  "anticipate,"
"estimate," "project," or similar expressions.  The Company's ability to predict
results  or the  actual  effect  of future  plans or  strategies  is  inherently
uncertain.  Factors which could have a material adverse effect on the operations
of the Company and its subsidiaries  include, but are not limited to, changes in
interest rates,  general economic  conditions,  legislative/regulatory  changes,
monetary and fiscal policies of the U.S.  Government,  including policies of the
U.S.  Treasury and the Federal Reserve Board,  the quality or composition of the
loan  or  investment  portfolios,  demand  for  loan  products,  deposit  flows,
competition,

                                      -14-

<PAGE>

demand for  financial  services  in the  Company's  market  area and  accounting
principles and guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements.  Further  information  concerning the Company and its business,
including   additional  factors  that  could  materially  effect  the  Company's
financial results,  is included in the Company's filings with the Securities and
Exchange Commission (the "SEC").

         The  Company  does  not  undertake  - and  specifically  disclaims  any
obligation - to release  publicly the results of any revisions which may be made
to any  forward-looking  statements to reflect events or circumstances after the
date  of  such  statements  or to  reflect  the  occurrence  of  anticipated  or
unanticipated events.

Critical Accounting Policies, Judgments and Estimates

       The  accounting  and reporting  policies of the Company  conform with the
accounting  principals  generally  accepted in the United  States of America and
general practices within the financial services industry. The preparation of the
financial statements in conformity with accounting principles generally accepted
in the United  States of  America  requires  management  to make  estimates  and
assumptions that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.

       Allowance  for Loan and Lease  Losses.  The Company  recognizes  that the
determination  of the  allowance  for loan and lease  losses  involves  a higher
degree  of  judgment  and  complexity  than  its  other  significant  accounting
policies.  The balance in the  allowance for loan and lease losses is determined
based on management's review and evaluation of the loan portfolio in relation to
past  loss  experience,  the  size and  composition  of the  portfolio,  current
economic  events  and  conditions,   and  other  pertinent  factors,   including
management's assumptions as to future delinquencies,  recoveries and losses. All
of these factors may be susceptible to significant  change. To the extent actual
outcomes differ from management's estimates,  additional provisions for loan and
lease  losses may be required  that would  adversely  impact  earnings in future
periods.

       Intangible  Assets.  Intangible  assets,  such as  goodwill  and the core
deposit intangible associated with the January 2003 acquisition of First Bank of
Central Jersey,  are subject to annual  impairment tests and, in the case of the
core deposit intangible,  amortization of the asset through a charge to expense.
To the extent the  outcome of the  impairment  tests  differ  from the  carrying
value,  additional  charges to expense  could be required to reduce the carrying
value, which would adversely impact earnings in future periods.

       Income  Taxes.  Under the  liability  method,  deferred  tax  assets  and
liabilities  are  determined  based  on the  difference  between  the  financial
statement  and tax basis of assets  and  liabilities.  Deferred  tax  assets are
subject to  management's  judgment  based upon  available  evidence  that future
realization is more likely than not. If management  determines  that the Company
may be unable  to  realize  all or part of the net  deferred  tax  assets in the
future,  a direct  charge to income tax  expense  may be  required to reduce the
recorded value of the net deferred tax assets to the expected realizable amount,
thereby impacting earnings.

Comparison of Financial Condition at September 30, 2004 and December 31, 2003

       Assets.  Total assets  reached  $837.8  million on September 30, 2004, an
increase of 33.3%, or $209.2 million,  from $628.6 million on December 31, 2003.
This growth is attributable  to increases in the investment  securities and loan
portfolios during the nine month period.

                                      -15-

<PAGE>

       Between December 31, 2003 and September 30, 2004,  investment  securities
increased $105.0 million, or 66.9%, from $157.0 million to $262.0 million.  This
increase  primarily reflects $156.5 million in purchases offset by $49.3 million
in maturities and principal repayments,  along with $1.1 million in net discount
and premium amortization,  and security sale proceeds of $885,000.  The security
sale  generated  a net  gain of  $38,000.  Additionally,  there  was a  $205,000
decrease in the unrealized  market value  associated with investment  securities
designated available-for-sale.

       Net  loans  increased  19.6 %, or $85.0  million,  to $519.6  million  at
September  30,  2004,  from $434.6  million at December  31,  2003.  This growth
includes $59.5 million in originations,  net of principal repayments,  and $26.7
million in purchases,  offset by  amortization of the premium on purchased loans
and an  increase  in  provisions  for loan and lease  losses.  The  majority  of
purchased loans were in our market area. The most significant  growth during the
nine months ended  September 30, 2004 was in  non-residential  and  multi-family
mortgage loans of $41.2 million, or 45.5%.

       On September 30, 2004,  total loans of $523.7  million were  comprised of
25.1% in single-family  real estate loans,  21.6% in home equity loans, 24.8% in
non-residential  and  multi-family  mortgage loans,  25.9% in consumer loans and
1.8% in commercial loans. At the end of the second quarter of 2004, Synergy Bank
expanded its lending product line to include commercial and industrial loans via
the addition of two experienced  lenders who were previously employed by a local
commercial  bank. As a result,  the Company expects to experience an increase in
this loan category in future periods.

       The  allowance  for loan and lease losses was $4.1  million,  or 0.79% of
total loans,  at  September  30, 2004 as compared to $3.3  million,  or 0.75% of
total loans,  at December 31, 2003. This reflects a provision for loan and lease
losses of $1.1 million for the nine month period,  offset by net  charge-offs of
$277,000. Non-performing assets to total assets decreased to 0.02%, at September
30, 2004 from 0.06% at December 31, 2003.

       During the quarter ended  September 30, 2004, the Company  invested $10.0
million in bank-owned life insurance.  The return on this investment is utilized
to fund  the  cost  of  officer  benefit  plans.  The  Company's  investment  in
bank-owned  life insurance  totaled $12.5 million on September 30, 2004 compared
to $2.5 million on December 31, 2003.

       Liabilities.  Total  liabilities  increased $144.4 million,  or 24.6%, to
$732.1  million at September 30, 2004 from $587.7  million at December 31, 2003.
The increase in total liabilities  resulted  primarily from an increase of $48.8
million, or 10.3%, in deposits and a $132.8 million, or 182.2%, increase in FHLB
advances,  offset by the  elimination  of $38.3  million in stock  subscriptions
payable.  The balance of the change is attributable to increases associated with
escrow  payments  for taxes and  insurance,  accrued  interest  payable  and the
establishment  of an  obligation  as a result of the September 29, 2004 dividend
declaration.

       Deposits  reached  $522.4  million at September  30, 2004, an increase of
$48.8 million,  or 10.3%, from the $473.5 million reported at December 31, 2003.
Core  deposits,  consisting  of  checking,  savings and money  market  accounts,
represented  55.1% of total  deposits at September  30,  2004,  up from 54.3% at
December 31, 2003.  The majority of deposit  growth  consisted of an increase in
money market deposit  accounts of $26.9 million,  or 19.3%,  for the nine months
ended September 30, 2004.

                                      -16-
<PAGE>

       The  increase in FHLB of New York  advances was to fund both the purchase
of investment  securities  and the  origination  of loans during this period.  A
significant  portion of the  increase was  attributable  to the funding of $50.0
million in  investment  securities  purchased at the close of the quarter  ended
June 30,  2004.  It is  projected  that the deposit  flow from  existing and new
branches will be used to fund the Bank's loan demand and pay down the balance of
FHLB advances.

       Equity.  Stockholders'  equity  totaled  $105.7  million on September 30,
2004, an increase of 158.3 %, or $64.8  million,  from $40.9 million on December
31, 2003. The increase in stockholders'  equity is largely attributable to $69.2
million in net proceeds from the completion of a second-step stock conversion on
January 20, 2004 and $3.0  million in earnings for the  nine-month  period ended
September  30,  2004.  This was offset by a $5.1  million  increase  in unearned
Employee Stock Ownership Plan shares, a $1.4 million increase in treasury shares
associated  with the 2003  Restricted  Stock Plan, a $1.0  million  reduction in
retained  earnings  associated  with the payment of dividends  and a decrease in
accumulated  other  comprehensive  income,  net  of  tax  effect,  of  $131,000.
Additionally,  there was a $2.6  million net  increase in unearned  compensation
associated with restricted  stock plans to reflect  shareholder  approval of the
2004 Restricted Stock Plan on August 31, 2004.

                                      -17-

<PAGE>

Average Balance Sheet.  The following  table sets forth certain  information for
the three months ended September 30, 2004 and 2003. The average yields and costs
are  derived by dividing  income or expense by the average  balance of assets or
liabilities,  respectively,  for the periods  presented.  Average  balances  are
derived from daily  average  balances.  The table does not include the allowance
for  loan  and  lease  losses  in the  average  balances  of  loans  receivable.
Management  does not believe  that this causes any material  differences  in the
information presented.

<TABLE>
<CAPTION>
                                                    ---------------------------------------------------------------------------
                                                                       For the Three Months Ended September 30,
                                                    ---------------------------------------------------------------------------
                                                                     2004                                     2003
                                                        Average                 Average         Average               Average
                                                        Balance    Interest   Yield/Cost         Balance    Interest Yield/Cost
                                                        -------    --------   ----------         -------    -------------------
<S>                                                  <C>         <C>            <C>           <C>         <C>         <C>
Interest-earning assets:
 Loans receivable, net(1)                              $501,801    $7,278        5.80%          $383,377    $6,351      6.63%
 Securities(2)                                          274,567     2,463        3.59            146,194       882      2.41
 Other interest-earning assets(3)                         9,991        42        1.68              9,438        11      0.47
                                                       --------    ------                       --------    ------
     Total interest-earning assets                      786,359     9,783        4.98            539,009     7,244      5.38
Non-interest-earning assets                              37,726                                   26,453
                                                       --------                                 --------
     Total assets                                      $824,085                                 $565,462
                                                       ========                                 ========
Interest-bearing liabilities:
 Checking accounts                                      $51,422       $10        0.08            $49,420        $3      0.02
 Savings and club accounts                               70,759        89        0.50             73,460        65      0.35
 Money market accounts                                  167,494       719        1.72             82,645       270      1.31
 Certificates of deposit                                227,993     1,511        2.65            244,930     1,950      3.18
 FHLB advances                                          198,409     1,432        2.89             75,475       441      2.34
 Stock subscriptions payable                                  -         -        0.00                  -         -      0.00
                                                       --------    ------                       --------    ------
     Total interest-bearing liabilities                 716,077     3,761        2.10            525,930     2,729      2.08
                                                                   ------                                   ------
Non-interest-bearing liabilities                          2,814                                    1,956
                                                       --------                                 --------
     Total liabilities                                  718,891                                  527,886
Stockholders' equity                                    105,194                                   37,576
                                                       --------                                 --------
     Total liabilities and stockholders' equity        $824,085                                 $565,462
                                                       ========                                 ========
Net interest income                                                $6,022                                   $4,515
Interest rate spread(4)                                                           2.88%                                 3.30%
                                                                                ======                                ======
Net yield on interest-earning assets(5)                                           3.06%                                 3.35%
                                                                                ======                                ======
Ratio of average interest-earning assets to
   average interest-bearing liabilities                                         109.81%                               102.49%
                                                                                ======                                ======
</TABLE>
_______________________________
(1)  Non-accruing  loans have been included in loans receivable,  and the effect
     of such inclusion was not material.
(2)  Includes  U.S.  government  obligations,   mortgage-backed  securities  and
     interest-bearing deposits in banks.
(3)  Includes  FHLB  stock  at cost  and  term  deposits  with  other  financial
     institutions.
(4)  Interest rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(5)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                      -18-

<PAGE>

Average  Balance  Sheet.  (continued)  The  following  table sets forth  certain
information  for the nine months ended  September 30, 2004 and 2003. The average
yields and costs are  derived  by  dividing  income or  expense  by the  average
balance  of assets or  liabilities,  respectively,  for the  periods  presented.
Average  balances are derived from daily  average  balances.  The table does not
include the allowance for loan and lease losses in the average balances of loans
receivable.   Management   does  not  believe  that  this  causes  any  material
differences in the information presented.

<TABLE>
<CAPTION>
                                                  -----------------------------------------------------------------------
                                                                        For the Nine Months Ended September 30,
                                                  -----------------------------------------------------------------------
                                                                   2004                               2003
                                                        Average                Average      Average             Average
                                                        Balance  Interest     Yield/Cost    Balance Interest   Yield/Cost
                                                        -------  --------     ----------    ----------------   ----------
<S>                                                  <C>        <C>            <C>       <C>       <C>         <C>
Interest-earning assets:
 Loans receivable, net(1)                              $467,935   $20,647        5.88%     $359,319  $18,882     7.01%
 Securities(2)                                          224,445     5,626        3.34       137,567    3,157     3.06
 Other interest-earning assets(3)                         6,263        88        1.87         5,424      120     2.95
                                                       --------   -------                  --------  -------
     Total interest-earning assets                      698,643    26,361        5.03       502,310   22,159     5.88
Non-interest-earning assets                              32,070                              25,445
                                                       --------                            --------
     Total assets                                      $730,713                            $527,755
                                                       ========                            ========
Interest-bearing liabilities:
 Checking accounts                                     $ 49,105   $    14        0.04      $ 50,643  $    57     0.15
 Savings and club accounts                               71,054       265        0.50        72,321      413     0.76
 Money market accounts                                  156,924     1,996        1.70        66,807      670     1.34
 Certificates of deposit                                222,666     4,340        2.60       240,700    5,645     3.13
 FHLB advances                                          122,407     2,515        2.74        60,053    1,266     2.81
 Stock subscriptions payable                              7,569        23        0.41             -        -     0.00
                                                       --------   -------                  --------  -------
     Total interest-bearing liabilities                 629,725     9,153        1.94       490,524    8,051     2.19
                                                                  -------                            -------
Non-interest-bearing liabilities                          2,735                               3,456
                                                       --------                            --------
     Total liabilities                                  632,460                             493,980
Stockholders' equity                                     98,253                              33,775
                                                       --------                            --------
     Total liabilities and stockholders' equity        $730,713                            $527,755
                                                       ========                            ========
Net interest income                                               $17,208                            $14,108
                                                                  =======                            =======
Interest rate spread(4)                                                          3.09%                           3.69%
                                                                               ======                          ======
Net yield on interest-earning assets(5)                                          4.93%                           5.62%
                                                                               ======                          ======
Ratio of average interest-earning assets to
   average interest-bearing liabilities                                        110.94%                         102.40%
                                                                               ======                          ======
</TABLE>
_______________________________
(1)  Non-accruing  loans have been included in loans receivable,  and the effect
     of such inclusion was not material.
(2)  Includes  U.S.  government  obligations,   mortgage-backed  securities  and
     interest-bearing deposits in banks.
(3)  Includes  FHLB  stock  at cost  and  term  deposits  with  other  financial
     institutions.
(4)  Interest rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(5)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                      -19-

<PAGE>

Comparison  of Operating  Results for Three Months Ended  September 30, 2004 and
2003

         Net Income. Net income increased by $355,000,  to $1.1 million, for the
three months ended  September  30, 2004 compared to $739,000 for the same period
in 2003, a 48.1%  increase.  The increase was  attributable  primarily to a $1.5
million increase in net interest income and a $180,000 increase in other income,
offset by a $176,000  increase in the  provisions  for loan and lease losses,  a
$1.1 million  increase in other  expenses  and a $58,000  increase in income tax
expense as a result of higher earnings.

         Net Interest Income.  Net interest income grew $1.5 million,  or 33.4%,
to $6.0 million for the three months ended  September  30, 2004 compared to $4.5
million for the same period in 2003.  Total  interest  income  increased by $2.5
million,  to $9.8 million,  for the three months ended September 30, 2004, while
total interest expense increased by $1.0 million, to $3.8 million, for the three
months ended September 30, 2004.

         The 35.1%  increase in total  interest  income was  primarily  due to a
$247.4 million,  or 45.9%,  increase in the average balance of  interest-earning
assets, offset by a 40 basis point decrease in the average yield earned on these
investments  when compared to the same period of the prior year. The increase in
interest-earning assets was a direct result of management's growth strategy. The
decrease  in the  average  yield  was  primarily  attributable  to lower  market
interest rates on loans  originated to replace  higher  yielding loans that were
satisfied by the borrowers.

         The 37.8% increase in total interest expense resulted  primarily from a
$190.1 million,  or 36.2%,  increase in the average balance of  interest-bearing
liabilities  with a 2 basis point  increase  in the  average  cost of funds when
compared to the same period of the prior year.  The increase in the average cost
of  interest-bearing  liabilities  was primarily  attributable  to higher market
interest rates, as well as a significant increase in higher cost borrowings. The
majority of the increase in the average balance of interest-bearing  liabilities
for the 2004 period was comprised of a $122.9  million,  or 162.9%,  increase in
the  average  balance of advances  from the Federal  Home Loan Bank and an $84.8
million,  or 102.7%,  increase in the average  balance of money market  accounts
over the same period of the prior year.

         Provision for Loan and Lease Losses.  We maintain an allowance for loan
and lease losses  through  provisions for loan and lease losses that are charged
to earnings.  The  provision is made to adjust the total  allowance for loan and
lease losses to an amount that represents  management's  best estimate of losses
known and inherent in the loan portfolio at the balance sheet date that are both
probable and reasonable to estimate. In estimating the known and inherent losses
in the loan  portfolio  that are  both  probable  and  reasonable  to  estimate,
management  considers  factors such as an internal  analysis of credit  quality,
general levels of loan  delinquencies,  collateral values, the Bank's historical
loan and lease loss experience, changes in loan concentrations by loan category,
peer group information and economic and market trends affecting our market area.
The  provision  established  for loan  and  lease  losses  each  month  reflects
management's  assessment  of  these  factors  in  relation  to the  level of the
allowance at such time. Management allocates the allowance to various categories
based on its classified  assets,  historical  loan and lease loss experience and
its  assessment  of the  risk  characteristics  of each  loan  category  and the
relative  balances at month end of each loan category.  Management's  assessment
did not change either in estimation method or assumptions during either period.

         The  provision  for loan and lease losses  increased  by  $176,000,  or
69.5%,  to $429,000 for the three months ended September 30, 2004, from $253,000
for the  same  period  in 2003.  Total  charge-offs  amounted  to  $212,000  and
recoveries amounted to $113,000, resulting in a net charge-off amount of $99,000
for the

                                      -20-

<PAGE>

three  months  ended  September  30,  2004.  This  represents  a decrease in net
charge-offs of $66,000 over the same period in 2003.

         Other Income.  Other income increased  $180,000,  or 23.3%, to $952,000
for the three months ended  September 30, 2004 compared to $772,000 for the same
period in 2003. This is primarily the result of an additional $108,000 in income
from the expanded  investment in  bank-owned  life  insurance,  and increases of
$114,000 and $77,000 in commission  income, and fees and charges associated with
deposit accounts,  respectively. This was offset by a $129,000 decrease in gains
realized on asset sales during the prior year period.

         Other  Expenses.  Other expenses  increased $1.1 million,  or 28.9%, to
$4.9  million for the three  months ended  September  30, 2004  compared to $3.8
million for the same period in 2003. The increase was primarily  attributable to
wage and benefits  associated with the Company's growth strategy,  as well as to
equity-based employee compensation plans.

         Income Tax Expense.  Income tax expense increased by $58,000, or 11.6%,
during the three  months  ended  September  30,  2004 when  compared to the same
period in 2003, reflecting higher taxable income for the 2004 period.


Comparison  of Operating  Results for Nine Months Ended  September  30, 2004 and
2003

         Net Income. Net income increased by $708,000,  to $3.0 million, for the
nine  months  ended  September  30, 2004  compared to $2.3  million for the same
period in 2003, a 30.8% increase.  The increase was primarily  attributable to a
$3.1 million  increase in net interest  income and a $346,000  increase in other
income,  offset by a  $410,000  increase  in the  provisions  for loan and lease
losses,  a $1.9 million  increase in other  expenses and a $441,000  increase in
income tax expense as a result of higher earnings.

         Net Interest  Income.  Net interest income during the nine months ended
September 30, 2004 was $17.2 million  compared to $14.1 million  during the same
period last year, an increase of 21.2%.  Total interest income increased by $4.2
million,  to $26.4  million,  while total  interest  expense  increased  by $1.1
million,  to $9.2  million,  for the nine months ended  September  30, 2004 when
compared to the same period of the prior year. This increase was attributable to
management's  growth  strategy  including the investing of the proceeds from the
additional capital raised in the second-step stock conversion.

         The 19.0%  increase in total  interest  income was  primarily  due to a
$196.3 million,  or 39.1%,  increase in the average balance of  interest-earning
assets,  offset by an 85 basis point  decrease in the  average  yield  earned on
these  investments  when  compared  to the same  period of the prior  year.  The
increase in  interest-earning  assets was a direct result of management's growth
strategy which included  investing the capital raised in the  second-step  stock
conversion.  The decrease in the average  yield was  primarily  attributable  to
lower market interest rates on loans originated to replace higher yielding loans
that were satisfied by the borrowers.

         The 13.7% increase in total interest expense resulted  primarily from a
$139.2 million,  or 28.4%,  increase in the average balance of  interest-bearing
liabilities,  offset by a 25 basis point  decrease in the average  cost of funds
when compared to the same period of the prior year. The majority of the increase
in the average balance of  interest-bearing  liabilities for the 2004 period was
comprised  of a $90.1  million,  or 134.9%,  increase in the average  balance of
money market  accounts and a $62.4 million,  or 103.8%,  increase

                                      -21-

<PAGE>

in the average balance of advances from the Federal Home Loan Bank. The decrease
in the average cost of interest-bearing  liabilities was primarily  attributable
to pricing strategies and lower market interest rates.

         Provision for Loan and Lease  Losses.  The provision for loan and lease
losses  increased by $410,000,  or 56.7%,  to $1.1 million,  for the nine months
ended  September  30,  2004 from  $723,000  for the same  period in 2003.  Total
charge-offs  amounted to $598,000 and recoveries  amounted to $321,000 for a net
charge-off amount of $277,000 for the nine months ended September 30, 2004. This
represents a decrease in net  charge-offs  of $443,000 when compared to the same
period in 2003. The positive trend is directly  correlated with the aging of the
indirect  automobile  loans  associated  with the  former  First Bank of Central
Jersey.

         Other Income.  Other income during the nine months ended  September 30,
2004 totaled $2.2 million  compared to $1.8 million for the same period in 2003.
This represents an increase of $346,000, or 19.1%. The increase was attributable
to a $393,000  increase  in charges and fees on deposit  accounts  and a $96,000
increase in commission  income generated by annuity sales,  offset by a $128,000
decline in income associated with loan and investment security sales.

         Other Expenses.  During the nine months ended September 30, 2004, other
expenses  totaled $13.4 million compared to $11.6 million for the same period in
2003,  an  increase  of $1.9  million,  or 16.3%.  The  increase  was  primarily
attributable to wage and benefits associated with the Company's growth strategy,
as well as to equity-based employee compensation plans.

         Income Tax Expense. Income tax expense increased by $441,000, or 32.9%,
during the nine months ended September 30, 2004 when compared to the same period
in 2003, reflecting higher taxable income for the 2004 period.

                                      -22-

<PAGE>

Liquidity

       The Bank maintains liquid assets at levels it considers  adequate to meet
liquidity needs. The liquidity of the Bank reflects its ability to provide funds
to meet loan requests,  accommodate possible outflows in deposits,  fund current
and  planned   expenditures   and  take   advantage  of  interest   rate  market
opportunities  in  connection  with asset and liability  management  objectives.
Funding of loan  requests,  providing for liability  outflows and  management of
interest rate  fluctuations  require  continuous  analysis in order to match the
maturities  of earning  assets with specific  types of deposits and  borrowings.
Bank  liquidity  is  normally  considered  in terms of the nature and mix of the
Bank's sources and uses of funds.

       The  Bank's  primary   sources  of  liquidity  are  deposits,   scheduled
amortization  and  prepayment  of  loans  and  mortgage-backed   securities.  In
addition,  the Bank invests excess funds in overnight federal funds investments,
which  provide  liquidity.  Its cash and cash  equivalents,  defined as cash and
deposits in other  financial  institutions  with  original  maturities  of three
months or less,  totaled $8.5 million at September 30, 2004. To a lesser extent,
the  earnings  and funds  provided  from  operating  activities  are a source of
liquidity.

       Liquidity  management is both a daily and long-term  function of business
management.  While scheduled  principal  repayments on loans and mortgage-backed
securities are a relatively  predictable source of funds, deposit flows and loan
and securities  prepayments  are greatly  influenced by general  interest rates,
economic  conditions  and  competition.  If the Bank  requires  funds beyond its
ability to generate them internally,  it has the ability to obtain advances from
the FHLB of New York, which provides an additional source of funds. At September
30,  2004,  the  Bank's  borrowing  limit  with the FHLB of New York was  $203.8
million,  excluding  repurchase  agreement advances.  At September 30, 2004, the
Bank had $205.7 million of borrowings  outstanding,  including  $99.7 million in
repurchase agreement advances.

       Management is not aware of any trends,  events or uncertainties that will
have  or are  reasonably  likely  to have a  material  effect  on the  Company's
liquidity,  capital or operations nor is it aware of any current  recommendation
by regulatory authorities,  which, if implemented,  would have a material effect
on liquidity,  capital or operations. The total amount of the Bank's commitments
to extend  credit for mortgage and consumer  loans as of September  30, 2004 was
$49.8 million,  excluding  commitments on unused lines of credit,  which totaled
$23.8 million.

       Management  intends to expand the Bank's branch  network  either  through
opening or acquiring  branch offices.  It currently plans to open six additional
new branch  locations over the next two years. The Bank also intends to actively
consider the  acquisition of local  financial  institutions as part of expanding
its banking operations.  It does not, however, have any current  understandings,
agreements or arrangements for the expansion of its business, other than opening
new branch office locations.

                                      -23-

<PAGE>

The following table discloses the Bank's contractual obligations as of September
30, 2004:

                                Total    Less Than  1-3 Years  4-5 Years  After
                                          1 Year                         5 Years
                              ---------- ---------- --------- --------- --------
FHLB advances (1)              $205,675    $93,225   $73,150    $36,600  $2,700
Rental under operating leases     4,458        188     1,608        839   1,823
                               --------    -------   -------    -------  ------
Total                          $210,133    $93,413   $74,758    $37,439  $4,523
                               ========    =======   =======    =======  ======

________________
(1) At September 30, 2004, the Bank had $205.7 million of borrowings,  including
$99.7 million in repurchase  agreement  advances,  outstanding with the FHLB. At
September  30,  2004,  its  borrowing  limit with the FHLB was  $203.8  million,
excluding repurchase agreement advances.

     The following  table  discloses  the Bank's  commercial  commitments  as of
September 30, 2004:

<TABLE>
<CAPTION>
                                    Total    Less Than  1-3 Years  4-5 Years  After
                                              1 Year                         5 Years
                                  ---------- ---------- --------- --------- --------
<S>                                <C>       <C>          <C>      <C>      <C>
Lines of Credit (1)                 $23,811   $     3      $ 164    $ 126    $23,518
Other commitments to extend credit   49,774    49,774          -        -          -
                                    -------   -------      -----    -----    -------
Total                               $73,585   $49,777      $ 164    $ 126    $23,518
                                    =======   =======      =====    =====    =======
</TABLE>

________________
(1)  Represents amounts committed to customers.

                                      -24-

<PAGE>

Regulatory Capital Requirements

         The Bank is subject to federal  regulations that impose certain minimum
capital requirements. Quantitative measures, established by regulation to ensure
capital  adequacy,  require the Bank to maintain  amounts and ratios of tangible
and core  capital to adjusted  total assets and of total  risk-based  capital to
risk-weighted assets. On September 30, 2004, the Bank was in compliance with all
of its  regulatory  capital  requirements.  The  following  table sets forth the
Bank's  capital  position  and  relativity  to  regulatory  requirements  as  of
September 30, 2004:

<TABLE>
<CAPTION>
                                                                                    OTS Requirements
                                                          ------------------------------------------------------------------------
                                                                                                               Regulatory
                                                                                       Minimum           for classification as
                                                              Bank actual          capital adequacy        well-capitalized
                                                              -----------          ----------------        ----------------
                                                          Amount      Ratio        Amount     Ratio        Amount      Ratio
                                                          ------      -----        ------     -----        ------      -----
<S>                                                    <C>          <C>         <C>          <C>        <C>          <C>
Total risk-based capital (to risk-weighted assets)       $91,991      17.51%      $42,029      8.00%      $52,537      10.00%
Tier 1 capital (to risk-weighted assets)                  87,860      16.72%        N/A         N/A        31,522       6.00%
Tier 1 capital (to adjusted total assets)                 87,860      10.64%       33,041      4.00%       41,301       5.00%
Tangible capital (to adjusted total assets)               87,860      10.64%       12,390      1.50%        N/A          N/A

</TABLE>


Impact of Inflation and Changes Prices

         The consolidated financial statements of the Company and notes thereto,
presented  elsewhere  herein,  have been prepared in accordance  with  Generally
Accepted  Accounting  Principles,  which  require the  measurement  of financial
position  and  operating   results  in  terms  of  historical   dollars  without
considering the change in the relative  purchasing  power of money over time and
due to inflation.  The impact of inflation is reflected in the increased cost of
the Company's  operations,  primarily those at the Bank.  Unlike most industrial
companies, nearly all the assets and liabilities of the Bank are financial. As a
result,  interest rates have a greater impact on the Bank's  performance than do
the effects of general levels of inflation.  Interest  rates do not  necessarily
move in the same  direction  or to the same  extent  as the  prices of goods and
services.

                                      -25-

<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Management of Interest Rate Risk and Market Risk

Qualitative Analysis. Because the majority of the Bank's interest-earning assets
and  interest-bearing  liabilities are sensitive to changes in interest rates, a
significant  form of market risk for the Bank is interest  rate risk, or changes
in interest  rates.  The Bank is vulnerable to an increase in interest  rates to
the extent that  interest-bearing  liabilities  mature or re-price  more rapidly
than interest-earning assets. Our assets include long-term, fixed-rate loans and
investments, while our primary sources of funds are deposits and borrowings with
substantially shorter maturities.  Although having interest-bearing  liabilities
that  re-price  more  frequently  than  interest-earning   assets  is  generally
beneficial to net interest  income during a period of declining  interest rates,
this type of asset/liability mismatch is generally detrimental during periods of
rising interest rates.

The Board of Directors has  established  an Asset and Liability  Management  and
Budget Committee that consists of Directors Scott (Chairman),  De Perez,  Fiore,
Kasper and Putvinski.  The Committee  meets  quarterly with management to review
current  investments:  average lives,  durations and  re-pricing  frequencies of
loans and  securities;  loan and  deposit  pricing  and  production  volumes and
alternative  funding  sources;  interest  rate  risk  analysis;   liquidity  and
borrowing needs; and a variety of other assets and liability  management topics.
The  executive  session of the  Committee is held monthly  with  Director  Fiore
presiding and senior management in attendance.  The results of the quarterly and
monthly  meetings of the Committee are reported to the full Board at its regular
meetings. In addition, the Committee generally meets during October and November
each year with the goal of developing an annual  business and operating plan for
presentation to the full Board.

To reduce the effect of interest rate changes on net interest  income,  the Bank
has  adopted  various  strategies  to  enable  it to  improve  the  matching  of
interest-earning asset maturities to interest-bearing  liability maturities. The
main elements of these strategies include seeking to:

     o    originate loans with adjustable-rate features or fixed-rate loans with
          short maturities, such as home equity and consumer loans;
     o    lengthen the maturities of time deposits and borrowings  when it would
          be cost  effective  through the  aggressive  pricing and  promotion of
          certificates of deposits and utilization of FHLB advances;
     o    increase core deposits (i.e.,  transaction and savings accounts) which
          tend to be less interest rate sensitive; and
     o    purchase  intermediate and adjustable-rate  investment securities that
          provide a stable  cash flow,  thereby  providing  investable  funds in
          varying interest rate cycles.

Quantitative  Analysis.  Management  actively  monitors its  interest  rate risk
exposure.   The  Bank's   objective  is  to  maintain  a  consistent   level  of
profitability  within  acceptable  risk  tolerances  across  a  broad  range  of
potential  interest  rate  environments.  The Bank  uses the  Office  of  Thrift
Supervision  Net Portfolio Value (NPV) Model to monitor its exposure to interest
rate risk, which calculates  changes in net portfolio value.  Reports  generated
from  assumptions  provided and modified by management are reviewed by the Asset
and  Liability  Management  Committee  and  reported  to the Board of  Directors
quarterly. The Interest Rate Sensitivity of Net Portfolio Value Report shows the
degree  to which  balance  sheet  line  items  and the net  portfolio  value are
potentially affected by a 100 to 300 basis point (1/100th of a percentage point)
upward and downward shift (shock) in the Treasury yield curve.

Management of the Company  believes  that there has not been a material  adverse
change in market risk during the three- and nine-month  periods ended  September
30, 2004.


                                      -26-

<PAGE>

Item 4. Controls and Procedures

         Evaluation  of  disclosure  controls  and  procedures.  Based  on their
evaluation of the Company's  disclosure  controls and  procedures (as defined in
Rule 13a-15(e) under the Securities  Exchange Act of 1934 (the "Exchange Act")),
the Company's  principal  executive officer and principal financial officer have
concluded that as of the end of the period  covered by this Quarterly  Report on
Form 10-Q such  disclosure  controls and procedures are effective to ensure that
information  required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded,  processed,  summarized and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and forms.

         Changes in internal  controls.  During the quarter under report,  there
was no change in the Company's  internal  control over financial  reporting that
has  materially  affected,  or is reasonable  likely to materially  affect,  the
Company's internal control over financial reporting.

                                      -27-

<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.
        -----------------

         The Company and its subsidiaries,  from time to time, may be a party to
routine  litigation,  which  arises in the normal  course of  business,  such as
claims to enforce  liens,  condemnation  proceedings  on properties in which the
Bank, the  wholly-owned  subsidiary of the Company,  holds  security  interests,
claims  involving  the making and  servicing  of real  property  loans and other
issues incident to its business.  There were no lawsuits  pending or known to be
contemplated  at  September  30,  2004 that would be expected to have a material
effect on the Company's operations or income.

Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds.
        ------------------------------------------------------------

                      ISSUER PURCHASES OF EQUITY SECURITIES

<TABLE>
<CAPTION>
--------------------- --------------- ---------------- ------------------------- ----------------------------

           Period       (a) Total       (b) Average      (c) Total Number of       (d) Maximum Number (or
                        Number of     Price Paid per      Shares (or Units)       Approximate Dollar Value)
                        Shares (or    Share (or Unit)    Purchased as Part of     of Shares (or Units) that
                          Units)                          Publicly Announced     May Yet Be Purchased Under
                        Purchased                         Plans or Programs         the Plans or Programs
--------------------- --------------- ---------------- ------------------------- ----------------------------
<S>                   <C>              <C>                 <C>                          <C>
July 1-31, 2004             -                -                    -                        120,428
--------------------- --------------- ---------------- ------------------------- ----------------------------
August 1-31, 2004         6,670            10.15                  -                        113,758
--------------------- --------------- ---------------- ------------------------- ----------------------------
September 1-30, 2004      94,031           10.39                  -                        19,727
--------------------- --------------- ---------------- ------------------------- ----------------------------
Total                    100,701           10.33                  -
--------------------- --------------- ---------------- ------------------------- ----------------------------
</TABLE>

---------------
1    On June 4, 2003,  Synergy Financial Group,  Inc. (the "Company")  announced
     its  plans  to  purchase   shares  of  its  common  stock  in  open  market
     transactions for use by the Company's 2003 Restricted Stock Plan.
2    Currently  there is no expiration  date for the repurchase of the Company's
     stock.
3    There has been no expiration  of any plan during the period  covered by the
     table above.
4    The Company has determined not to terminate any plan prior to expiration.

                                      -28-

<PAGE>

Item 3. Defaults Upon Senior Securities.
        -------------------------------

         None.

Item 4. Submission of Matters to a Vote of SecurityHolders.
        --------------------------------------------------

         None.

Item 5. Other Information.
        -----------------

         None.

Item 6. Exhibits.
        --------

         a) Exhibits:

           31 Certification pursuant to ss.302 of the Sarbanes-Oxley Act of 2002
           32 Certification pursuant to ss.906 of the Sarbanes-Oxley Act of 2002

                                      -29-

<PAGE>

                                   SIGNATURES



          Pursuant to the requirements of Sections 13 or 15(d) 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.

                                     SYNERGY FINANCIAL GROUP, INC.



Date: November 15, 2004              By:   /s/John S. Fiore
                                           -------------------------------------
                                           John S. Fiore
                                           President and Chief Executive Officer
                                           (Duly Authorized Representative)

          Pursuant to the  requirement of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                                   <C>
/s/John S. Fiore                        /s/Ralph A. Fernandez
-------------------------------------   -------------------------------------------------
John S. Fiore                           Ralph A. Fernandez
President and Chief Executive Officer   Senior Vice President and Chief Financial Officer
(Principal Executive Officer)           (Principal Financial and Accounting Officer)

Date: November 15, 2004                 Date: November 15, 2004

</TABLE>

                                      -30-