UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

                                   (Mark One)

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934
      For the fiscal year ended December 31, 2007

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934
      For the transition period from _________ to ________

                        Commission file number 000-49925

                             CENTRAL JERSEY BANCORP
ter)

            New Jersey
             (Exact name of Registrant as specified in its charter)

            New Jersey                                     22-3757709
 -------------------------------                    --------------------------
 (State or other jurisdiction of                       (I.R.S. Employer
  incorporation or organization)                      Identification No.)

  627 Second Avenue, Long Branch, New Jersey                   07740
  ------------------------------------------                ----------
  (Address of principal executive offices)                  (Zip Code)

      Registrant's telephone number, including area code: (732) 571-1300
                                                         -----------------

      Securities registered under Section 12(b) of the Act: None
                                                            ----

      Securities registered under Section 12(g) of the Act:

                          Common Stock, par value $0.01
                     ---------------------------------------
                                (Title of class)

Indicate by check mark if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes |_|  No |X|

<PAGE>

Indicate  by  check  mark if the  Registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. |_|

Indicate by check mark whether the Registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
definitions  of "large  accelerated  filer,"  "accelerated  filer" and  "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

         Large accelerated filer  |_|       Accelerated filer          |X|
         Non-accelerated filer    |_|       Smaller reporting company  |X|

Indicate by check mark whether the  Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_|  No |X|

As of June 30, 2007, the aggregate market value of the Registrant's common stock
held by non-affiliates was approximately $57,220,356.

As of March 7, 2008,  8,716,490  shares of the  Registrant's  common  stock were
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

Part III of this Annual Report on Form 10-K incorporates certain information by
reference from the Registrant's Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held on May 28, 2008. It is anticipated that the
Proxy Statement will be filed with the Securities and Exchange Commission by
April 29, 2008.


                                       ii
<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
                -------------------------------------------------

Certain  information  included  in this  Annual  Report  on Form  10-K and other
filings of the  Registrant  under the  Securities  Act of 1933,  as amended (the
"Securities  Act"),  and the  Securities  Exchange Act of 1934,  as amended (the
"Exchange  Act"),  as well as  information  communicated  orally  or in  writing
between the dates of such  filings,  contains  or may  contain  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Such  statements are subject to certain  risks,  trends
and  uncertainties  that could cause actual  results to differ  materially  from
expected results.  Among these risks, trends and uncertainties are the effect of
governmental  regulation  on  Central  Jersey  Bank,  National  Association,   a
nationally  chartered  commercial  bank  and  wholly-owned   subsidiary  of  the
Registrant, interest rate fluctuations,  regional economic and other conditions,
the  availability of working  capital,  the cost of personnel and technology and
the competitive markets in which Central Jersey Bank, N.A. operates.

In some cases,  forward-looking statements can be identified by terminology such
as  "may,"  "will,"  "should,"  "could,"  "expects,"   "plans,"   "anticipates,"
"believes,"  "estimates,"  "predicts," "potential" or "continue" or the negative
of such terms or other comparable terminology.  Although the Registrant believes
that the  expectations  reflected in the  forward-looking  statements  contained
herein are reasonable, the Registrant cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither the Registrant, nor any
other person,  assumes  responsibility for the accuracy and completeness of such
statements. The Registrant is under no duty to update any of the forward-looking
statements contained herein after the date of this Annual Report on Form 10-K.


                                      iii
<PAGE>

                             CENTRAL JERSEY BANCORP

                               INDEX TO FORM 10-K
                               ------------------

<TABLE>
<CAPTION>
PART I                                                                                            PAGE
------                                                                                            ----
<S>                                                                                                <C>
Item 1.    Business..................................................................................1

Item 1A.   Risk Factors.............................................................................12

Item 1B.   Unresolved Staff Comments................................................................17

Item 2.    Properties...............................................................................17

Item 3.    Legal Proceedings........................................................................18

Item 4.    Submission of Matters to a Vote of Security Holders......................................18

PART II
-------

Item 5.    Market for Registrant's Common Equity, Related Shareholder Matters
           and Issuer Purchases of Equity Securities................................................19

Item 6.    Selected Financial Data..................................................................21

Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations................................................................23

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk...............................47

Item 8.    Financial Statements and Supplementary Data..............................................48

Item 9.    Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure.................................................................48

Item 9A.   Controls and Procedures..................................................................48

Item 9B.   Other Information........................................................................49

PART III
--------

Item 10.*  Directors, Executive Officers and Corporate Governance...................................50

Item 11.*  Executive Compensation...................................................................50

Item 12.*  Security Ownership of Certain Beneficial Owners and Management and
           Related Shareholder Matters..............................................................50
</TABLE>


                                       iv
<PAGE>

<TABLE>
<S>                                                                                                <C>
Item 13.*  Certain Relationships and Related Transactions, and Director Independence................50

Item 14.*  Principal Accountant Fees and Services...................................................50

PART IV
-------

Item 15.   Exhibits and Financial Statement Schedules...............................................51

Signatures .........................................................................................52
</TABLE>

*     The  information  required  under  this  Item  is to be  contained  in the
      Registrant's  Proxy  Statement  for the  Annual  Meeting  of  Shareholders
      scheduled  to be held on May  28,  2008,  and is  incorporated  herein  by
      reference.  It is anticipated  that the Proxy Statement will be filed with
      the Securities and Exchange Commission by April 29, 2008.


                                       v
<PAGE>

                                     PART I

Item 1.    Business
           --------

About Our Company

Central Jersey Bancorp is a bank holding company  headquartered  in Long Branch,
New Jersey. The holding company was incorporated in New Jersey on March 7, 2000,
and  became an active  bank  holding  company  on August 31,  2000  through  the
acquisition of Monmouth  Community  Bank,  National  Association.  On January 1,
2005,  Central  Jersey  Bancorp  completed  its strategic  business  combination
transaction  with Allaire  Community  Bank, a New Jersey  state-chartered  bank,
pursuant to which Allaire  Community Bank became a wholly-owned  bank subsidiary
of Central Jersey Bancorp. On the effective date of the combination, the name of
the holding  company  was changed  from  Monmouth  Community  Bancorp to Central
Jersey Bancorp.

Central Jersey Bancorp maintains an Internet website at  www.cjbna.com.  Through
our website,  shareholders  may access free of charge our annual  report on Form
10-K,  quarterly  reports  on  Form  10-Q,  current  reports  on Form  8-K,  and
amendments  to those  reports,  filed or furnished  pursuant to Section 13(a) or
15(d) of the Exchange Act.  These  documents are available as soon as reasonably
practicable  after Central Jersey Bancorp  electronically  files these documents
with the  Securities  and Exchange  Commission.  We also post on our website our
Corporate Governance Guidelines,  Code of Conduct/Ethics Policy, Chief Executive
and  Chief  Financial  Officer  Code of  Ethics  and  Nominating  and  Corporate
Governance  Committee  Charter.  These  reports are also  available  in print by
contacting  Mr.  James S.  Vaccaro,  Chairman,  President  and  Chief  Executive
Officer,  Central Jersey  Bancorp,  627 Second Avenue,  Long Branch,  New Jersey
07740.

About Our Business

In August of 2005,  Central Jersey Bancorp  combined its two bank  subsidiaries,
Monmouth  Community Bank, N.A. and Allaire Community Bank, into a single banking
entity,  named Central Jersey Bank, National  Association.  Central Jersey Bank,
N.A. offers a full range of retail and commercial  banking services primarily to
customers  located  in  Monmouth  County and Ocean  County,  New  Jersey.  These
services include checking  accounts,  savings  accounts,  money market accounts,
certificates  of  deposit,   installment  loans,  real  estate  mortgage  loans,
commercial loans, wire transfers,  money orders, traveler's checks, safe deposit
boxes, night depositories, federal payroll tax deposits, bond coupon redemption,
bank by mail,  direct  deposit,  automated  teller  services and  telephone  and
internet  banking.  Central Jersey Bank, N.A. has debit card,  merchant card and
international   services  available  to  its  customers  through   correspondent
institutions. Central Jersey Bank, N.A. currently has twelve full-service branch
facilities located in Belmar,  Bradley Beach, Long Branch (2), Manasquan,  Point
Pleasant,  Spring Lake Heights,  Little Silver,  Neptune City,  Ocean Grove, and
Wall  Township  (2),  New Jersey.  A thirteenth  branch,  to be located in Ocean
Township, New Jersey, is expected to open in the Spring of 2008.

Central Jersey Bank, N.A. is a national  association  chartered by the Office of
the Comptroller of the Currency ("OCC"). The deposits of the bank subsidiary are
insured by the Federal Deposit Insurance  Corporation  ("FDIC").  Central Jersey
Bank,  N.A.  provides  a broad  range of  financial  products  and  services  to
individual  consumers,  small  businesses and  professionals in its market area.
When a customer's loan  requirements  exceed Central Jersey Bank, N.A.'s lending
limit,  the bank  subsidiary  may seek to arrange  such loan on a  participation
basis with other financial institutions.  In addition, Central Jersey Bank, N.A.
participates in loans originated by other financial institutions.


                                       1
<PAGE>

Business Strategy

Central Jersey Bancorp's strategy is to provide a competitive range of community
banking services to its market area, in a professional environment,  at fair and
reasonable  interest  rates and fees,  at  convenient  operating  hours,  with a
commitment to prompt,  quality and highly  personalized  service,  which is both
efficient  and  responsive to local  banking  needs.  Service to customers and a
commitment to the community are the basic and distinguishing features offered by
Central Jersey Bank, N.A., Central Jersey Bancorp's bank subsidiary.

Market Area

Central  Jersey  Bank,  N.A.  currently  operates  twelve   full-service  branch
facilities located in Belmar,  Bradley Beach, Long Branch (2), Manasquan,  Point
Pleasant, Spring Lake Heights, Little Silver, Ocean Grove, Neptune City and Wall
Township (2), New Jersey. A thirteenth  branch, to be located in Ocean Township,
New  Jersey,  is  expected  to open in the Spring of 2008.  Except for the Point
Pleasant  branch,  located in Ocean  County,  New Jersey,  each branch is within
Monmouth  County,  New  Jersey,  the  sixth  largest  county in the State of New
Jersey. The individual branch locations provide a great deal of exposure and are
well-situated to conveniently  serve  businesses,  professionals and individuals
throughout Central Jersey Bancorp's market area.

Commercial  activity within Central Jersey  Bancorp's market area includes small
and medium sized businesses,  corporate  offices,  professional  offices,  major
retail centers,  resort and recreational businesses along the nearby oceanfront,
as  well  as   numerous   industrial   establishments   specializing   in  light
manufacturing,  baking  products,  rubber and  plastic  products,  surgical  and
medical devices,  electronics and  telecommunications.  In addition,  the market
area contains a variety of major employers,  including  Monmouth Medical Center,
Jersey Shore University Medical Center and Monmouth University.

Services Offered

Central  Jersey  Bancorp's  bank  subsidiary,  Central  Jersey  Bank,  N.A.,  is
community oriented and offers services and products designed to meet the banking
needs of local individuals,  businesses and  professionals.  Business people and
professionals are offered a broad spectrum of deposit and loan products designed
to satisfy their occupational and personal financial needs. In addition, Central
Jersey Bank,  N.A.  provides a broad array of consumer  banking  services to the
general public residing or working in its market area.

Deposits.  In order to attract and retain stable deposit  relationships with the
commercial  establishments  and other businesses within its market area, Central
Jersey Bank, N.A. offers  competitive  small business cash management  services.
Central  Jersey Bank,  N.A.  believes that the  expertise and  experience of its
management  coupled with the introduction of new  technologies  enables the bank
subsidiary  to maximize  the growth of business  related  deposits.  The primary
deposit services of Central Jersey Bank, N.A. offered to non-business  customers
are comprised of demand deposits,  savings  deposits  (including money markets),
time deposits and individual retirement accounts.

Loans.   Central  Jersey  Bank  N.A.'s  loan  portfolio  consists  primarily  of
variable-rate and short-term fixed rate loans, with a significant  concentration
in commercial purpose transactions.  Central Jersey Bank, N.A. believes that the
familiarity  of its  management  and  the  members  of its  Board  of  Directors
appointed to its Loan Committee with prospective local borrowers enables Central
Jersey  Bank,   N.A.  to  better   evaluate   the   character,   integrity   and
creditworthiness of prospective borrowers.


                                       2
<PAGE>

Residential  Mortgage  Loans.  In order to  effectively  penetrate  the mortgage
market,  Central Jersey Bank, N.A.,  through an unaffiliated third party vendor,
offers a range of residential  mortgage products at competitive  rates.  Central
Jersey Bank,  N.A. closes its originated  residential  mortgages in its name and
then sells its  residential  mortgage  production  to  government  agencies  and
private  investors in order to manage interest rate risk and liquidity.  Central
Jersey Bank, N.A. believes that its policy of closing loans in a time frame that
meets the needs of its borrowers is important to its business.

Commercial  Mortgage/Construction  Loans.  Central Jersey Bank, N.A.  originates
various types of loans secured with real estate,  including  construction loans.
Central  Jersey  Bank,  N.A.'s  loan  officers  work  closely  with real  estate
developers,  individual  builders and attorneys to offer  construction loans and
services  to the  residential  real estate  market as well as to  owner-occupied
commercial   properties  and   investment   properties.   Construction   lending
constitutes a minor portion of the loan portfolio. In some cases, Central Jersey
Bank, N.A. may originate loans larger than its lending or policy limits and will
participate these loans with other financial institutions.

Consumer Lending.  Central Jersey Bank, N.A. offers a full menu of consumer loan
products  that  include  home  equity  loans and lines of  credit,  secured  and
unsecured personal loans and auto loans.  During 2007, the Bank began offering a
service to consumers that would allow a consumer to apply for consumer loans via
the Internet and receive an answer on their loan request in approximately  sixty
seconds.  The ability to complete an  application  on-line allows Central Jersey
Bank, N.A. to compete with the national lenders on a local level.

Small Business Loans.  Central Jersey Bank, N.A.  generally  targets  businesses
with annual  revenues of less than  $25,000,000.  Often,  these  businesses  are
ignored by the larger lending  institutions  and have  experienced  the negative
effects  of  the  bank   consolidations.   Central  Jersey  Bank,   N.A.  offers
responsiveness,  flexibility and local  decision-making for loan applications of
small business owners,  thereby eliminating the delays generally associated with
non-local  management.  Central  Jersey  Bank,  N.A.  participates  in the Small
Business   Administration   (SBA)  programs  through  its  SBA  loan  department
established in the fall of 2007, and in programs  offered through the New Jersey
Economic Development Authority. As an independent community bank, Central Jersey
Bank,  N.A.  serves the special needs of  professionals  in the legal,  medical,
accounting,  insurance, and real estate industries.  Lines of credit, term loans
and time loans are tailored to meet the borrowing  needs of Central Jersey Bank,
N.A.'s customers in the professional community.

Other Services.  To further attract and retain customer  relationships,  Central
Jersey Bank, N.A.  provides an expanded array of financial  services,  including
the following:  the issuance of money orders,  cashier checks,  certified checks
and gift checks, wire transfers, U.S. Savings Bonds sales and redemptions, debit
ATM cards, federal payroll tax deposits,  safe deposit boxes, traveler's checks,
night  depositories,  bond coupon  redemptions,  bank-by-mail,  direct  deposit,
business sweep accounts,  automated teller machines,  online deposit account and
loan account  applications  and telephone and internet  banking.  Central Jersey
Bank, N.A. offers a variety of personal and business credit cards.  These credit
cards are  underwritten  and  managed  by one or more third  party  unaffiliated
banking  organizations.  Central Jersey Bank,  N.A. also maintains coin counting
machines, for the convenience of its customers, in each of its branch offices.

Competition

The banking  business in New Jersey is very  competitive.  Central  Jersey Bank,
N.A.  actively  competes  for  deposits  and loans with  existing New Jersey and
out-of-state  financial  institutions.


                                       3
<PAGE>

Central  Jersey  Bank,  N.A.'s  competition  includes  large  financial  service
companies and other entities,  in addition to traditional  banking  institutions
such as savings banks,  commercial banks, internet banks and credit unions. Such
competition includes community banks, with banking philosophies similar to those
of Central Jersey Bank,  N.A.,  which are located within or near the market area
served by Central Jersey Bank, N.A.

Many of Central Jersey Bank, N.A.'s larger competitors have a greater ability to
finance  wide  ranging  advertising  campaigns  through  their  greater  capital
resources.  Marketing  efforts to attract  prospective  customers depend heavily
upon  referrals from Central  Jersey Bank,  N.A.'s Board of Directors,  advisory
boards,  management and shareholders,  selective  advertising in local media and
direct mail  solicitations.  Central  Jersey  Bank,  N.A.  competes for business
principally  on the  basis  of high  quality,  personal  service  to  customers,
customer access to bank decision makers and competitive interest rates and fees.

In the financial  services  industry in recent years,  intense  market  demands,
technological  and  regulatory  changes and economic  pressures have eroded once
clearly defined financial service industry classifications.  Existing banks have
been  forced to  diversify  their  services,  increase  rates paid on  deposits,
provide competitive pricing on loans and become more cost effective, as a result
of  competition  with  one  another  and with new  types  of  financial  service
companies,  including  non-banking  competitors.  Corresponding  changes  in the
regulatory  framework  have resulted in increasing  homogeneity in the financial
services offered by financial institutions.  Some of the results of these market
dynamics in the financial  services  industry have been a number of new bank and
non-bank  competitors,   increased  merger  activity,   and  increased  customer
awareness of product and service  differences among  competitors.  These factors
may be expected to affect the business prospects of Central Jersey Bank, N.A.

Employees

James S. Vaccaro (Chairman,  President and Chief Executive  Officer),  Robert S.
Vuono (Senior Executive Vice President,  Chief Operating Officer and Secretary),
and Anthony Giordano,  III (Executive Vice President,  Chief Financial  Officer,
Treasurer and Assistant  Secretary)  currently are the executive officers of the
holding company,  Central Jersey Bancorp,  and its banking  subsidiary,  Central
Jersey  Bank,  N.A. Mr.  Vaccaro,  Mr.  Vuono and Mr.  Giordano  III, as well as
officers  Robert K. Wallace  (Executive  Vice  President of Lending),  Thomas J.
Garrity  (Executive Vice President of Lending) and Lisa A. Borghese (Senior Vice
President of Lending),  each have a change of control  agreement.  Including the
aforementioned  officers,  Central  Jersey  Bancorp had a total of 128 full time
equivalent employees as of December 31, 2007.

Holding Company Operations

Central Jersey  Bancorp  serves as the holding  company for Central Jersey Bank,
N.A. The holding company has no assets or liabilities  other than its investment
in Central  Jersey Bank,  N.A and its  participation  in MCBK Capital Trust I, a
special  purpose  business  trust  established  in March 2004 for the purpose of
issuing $5.0 million of preferred capital securities.  See "Item 7. Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operation -
Guaranteed   Preferred   Beneficial  Interest  in  the  Central  Jersey  Bancorp
Subordinated  Debt." The holding  company does not conduct,  nor does management
believe that it will conduct,  any business.  All banking  products and services
are, and will be, provided by Central Jersey Bancorp's bank subsidiary,  Central
Jersey Bank, N.A. Moreover, on March 9, 2004, Monmouth Community Bank, N.A., the
original  banking  subsidiary of Central Jersey  Bancorp,  formed MCB Investment
Company,  a New  Jersey  corporation.  For state tax  purposes,  MCB  Investment
Company  was formed to hold and invest in  investment  securities  in support of
Monmouth


                                       4
<PAGE>

Community Bank, N.A.  Further,  on January 10, 2001,  Allaire  Community Bank, a
former bank subsidiary of Central Jersey Bancorp that was combined with Monmouth
Community Bank,  N.A. to form Central Jersey Bank,  N.A. in August 2005,  formed
Allaire  Investment Co., Inc., a New Jersey  corporation,  for the same purposes
that Monmouth Community Bank, N.A. formed MCB Investment Company. Central Jersey
Bancorp combined the two New Jersey investment subsidiaries effective January 1,
2006. The name of the combined investment subsidiary is CJB Investment Company.

Government Regulation

Central  Jersey  Bancorp and its  subsidiaries,  including  Central Jersey Bank,
N.A.,  operate  within a system of  banking  laws and  regulations  intended  to
protect bank customers and  depositors.  These laws and  regulations  govern the
permissible  operations  and  management,   activities,   reserves,   loans  and
investments of Central Jersey Bancorp and its subsidiaries. In addition, Central
Jersey  Bancorp  is subject to federal  and state  securities  laws and  general
federal laws and regulations. Central Jersey Bancorp and its non-bank subsidiary
also are  subject to the  corporate  laws and  regulations  of their  respective
states of incorporation.  The following  descriptions  summarize the key banking
and other laws and  regulations  to which  Central  Jersey  Bancorp  and Central
Jersey  Bank,  N.A.  are  subject.  These  descriptions  are not  intended to be
complete and are  qualified  in their  entirety by reference to the full text of
the  statutes  and  regulations  discussed.  Future  changes  in these  laws and
regulations,   or  in  the  interpretation  and  application  thereof  by  their
administering agencies, cannot be predicted, but could have a material effect on
the business and results of Central Jersey Bancorp and its subsidiaries.

Central Jersey Bancorp is a bank holding  company under the Federal Bank Holding
Company Act of 1956, as amended by the 1999 financial modernization  legislation
known as the  Gramm-Leach-Bliley  Act, and is subject to the  supervision of the
Board of Governors of the Federal Reserve System.  In general,  the Bank Holding
Company Act limits the business of bank holding  companies to banking,  managing
or  controlling   banks,  and  performing   certain  servicing   activities  for
subsidiaries  and, as a result of the  Gramm-Leach-Bliley  Act amendments to the
Bank  Holding  Company  Act,  permits  bank  holding  companies  that  are  also
designated  as  "financial  holding  companies"  to engage in any  activity,  or
acquire and retain the shares of any company  engaged in any  activity,  that is
either (1)  financial in nature or  incidental  to such  financial  activity (as
determined  by the Federal  Reserve Board in  consultation  with the OCC, or (2)
complementary  to a financial  activity and does not pose a substantial  risk to
the safety and soundness of  depository  institutions  or the  financial  system
generally (as  determined  by the Federal  Reserve  Board).  In order for a bank
holding  company to engage in the broader range of activities that are permitted
by the  Bank  Holding  Company  Act for  bank  holding  companies  that are also
financial holding companies,  upon satisfaction of certain regulatory  criteria,
the bank holding company must file a declaration  with the Federal Reserve Board
that it elects to be a financial  holding  company.  Central Jersey Bancorp does
not intend to seek a financial  holding  company  designation  at this time, and
does not believe  that the  current  decision  not to seek a  financial  holding
company  designation  will adversely affect its ability to compete in its chosen
markets. Central Jersey Bancorp does not believe that seeking such a designation
at this time would  position it to compete more  effectively  in the offering of
its current products and services.

Central Jersey Bank, N.A., the banking subsidiary of Central Jersey Bancorp,  is
a  national  association,  and is  subject to the  regulation,  supervision  and
examination of the OCC. In addition,  as a national  bank,  Central Jersey Bank,
N.A.  was  required to become a member bank of the Federal  Reserve  Bank of New
York, and is subject to examination  and regulation by the Board of Governors of
the Federal  Reserve  System.  The Federal  Reserve Board  regulates


                                       5
<PAGE>

aspects of activities  conducted by Central Jersey Bancorp and its subsidiaries,
as discussed above.

Dividend Restrictions

Central  Jersey Bancorp and its  subsidiaries  are separate legal entities whose
finances are in some ways  interconnected.  Central Jersey  Bancorp's  principal
source of funds to fulfill its guarantee of trust preferred securities issued by
MCBK  Capital  Trust I or to pay cash  dividends  on its common  stock,  if such
dividends  were to be  declared,  is from cash  dividends  paid to it by Central
Jersey Bank, N.A. Certain federal statutes and regulations  limit the payment of
dividends to Central Jersey Bancorp by its bank  subsidiary  without  regulatory
approval.

As a national bank,  Central  Jersey Bank,  N.A. must obtain prior approval from
the OCC to pay a cash  dividend if the total of all cash  dividends  declared by
Central Jersey Bank, N.A. in any calendar year would exceed Central Jersey Bank,
N.A.'s net income for that year,  combined  with its retained net income for the
preceding two calendar  years,  less any  transfers  required by the OCC or to a
fund for retirement of preferred stock. Additionally,  Central Jersey Bank, N.A.
may not declare  dividends in excess of net profits on hand, after deducting the
amount by which the principal  amount of all loans on which interest is past due
for a period of six months or more exceeds the reserve for credit losses.

The  payment of  dividends  is limited  further by  applicable  minimum  capital
requirements.  The  Federal  Reserve  Board and the OCC have  issued  additional
guidelines  and policy  statements,  applicable  to Central  Jersey  Bancorp and
Central Jersey Bank, N.A.,  requiring bank holding  companies and national banks
to  continually  evaluate  the  level of cash  dividends  in  relation  to their
respective operating income,  capital needs, asset quality and overall financial
condition, and limiting dividends to payments out of current operating earnings.

As an insured  depository  institution,  Central Jersey Bank, N.A. is subject to
the Federal  Deposit  Insurance Act which provides that no dividends may be paid
by an insured  depository  institution if it is in arrears in the payment of any
insurance  assessment  due to the FDIC. In addition,  under the Federal  Deposit
Insurance Act, an insured depository institution may not pay any dividend if the
institution  is  undercapitalized  or if the payment of the dividend would cause
the  institution  to become  undercapitalized,  as further  discussed  below.  A
payment  of  dividends  that would have the  effect of  depleting  a  depository
institution's capital base to an inadequate level could constitute an unsafe and
unsound practice subject to a cease and desist order.

Prior to 2008,  Central Jersey Bank, N.A. had never declared any cash dividends.
However,  on January 15, 2008,  Central  Jersey  Bancorp,  the parent company of
Central Jersey Bank,  N.A.,  announced that its Board of Directors  authorized a
common stock repurchase  program,  which is expected to continue through the end
of 2009, or for such shorter or longer period of time as Central  Jersey Bancorp
may determine.  It is contemplated  that during 2008,  Central Jersey Bank, N.A.
will  declare  and pay cash  dividends  to  Central  Jersey  Bancorp in order to
effectuate the common stock repurchase program.

Transactions with Affiliates

Banking laws and regulations impose certain  restrictions on the ability of bank
holding  companies and their non-bank  subsidiaries to borrow from and engage in
other transactions with their subsidiary or affiliated banks.  Generally,  these
restrictions require that any extensions of credit must be secured by designated
amounts of specified collateral and are limited to (1) 10% of the bank's capital
stock and surplus per non-bank  affiliated  borrower,  and (2) 20% of the bank's
capital stock and surplus aggregated as to all non-bank affiliated borrowers. In
addition,


                                       6
<PAGE>

certain transactions with affiliates must be on terms and conditions,  including
credit  standards,  at least as favorable to the institution as those prevailing
for  arms-length  transactions.  Central Jersey Bank, N.A. also must comply with
regulations  which  restrict  loans made to  directors,  executive  officers and
principal shareholders of Central Jersey Bancorp and its subsidiaries.

Liability of Commonly Controlled Institutions and "Source of Strength" Doctrine

The Federal Deposit  Insurance Act contains a  "cross-guarantee"  provision that
could  result in any  insured  depository  institution  owned by Central  Jersey
Bancorp  being  assessed  for losses  incurred  by the FDIC in  connection  with
assistance  provided  to,  or the  failure  of,  any  other  insured  depository
institution  owned by  Central  Jersey  Bancorp.  Also,  under the Bank  Holding
Company Act and  Federal  Reserve  Board  policy,  bank  holding  companies  are
expected to represent a source of  financial  and  managerial  strength to their
bank  subsidiaries,  and to commit  resources  to support bank  subsidiaries  in
circumstances  where banks may not be in a self sufficient  financial  position.
Capital loans by a bank holding  company to a bank subsidiary are subordinate in
right of repayment to deposits  and other bank  indebtedness.  If a bank holding
company  declares  bankruptcy,  any commitment made to a federal bank regulatory
agency by the bank  holding  company to sustain  the  capital of its  subsidiary
banks will be assumed by the  bankruptcy  trustee and  entitled to a priority of
payment.

In addition,  under the National Bank Act, as amended, if the capital stock of a
subsidiary  national  bank is  impaired,  by  losses  or  otherwise,  the OCC is
authorized to require  payment of the  deficiency by assessment  upon the bank's
parent  company,  and to sell the  stock of the bank if such  assessment  is not
satisfied  within  three  months  to  the  extent  necessary  to  eliminate  the
deficiency.

Federal Deposit Insurance Reform Act of 2005

As a result  of the  Federal  Deposit  Insurance  Reform  Act of 2005,  the Bank
Insurance  Fund and Savings  Association  Insurance Fund have been merged into a
new  combined  fund,  called the Deposit  Insurance  Fund.  The Federal  Deposit
Insurance  Reform  Act  also  (1)  increases  deposit  insurance   coverage  for
retirement  accounts to  $250,000,  (2) indexes the current  $100,000  insurance
coverage  limit for standard  accounts and the new $250,000 limit for retirement
accounts to reflect  inflation (with adjustments for inflation every five years,
commencing  January 1, 2011),  (3)  requires the FDIC to assess  annual  deposit
insurance premiums on all banks and savings  institutions,  (4) gives a one-time
insurance   assessment  credit  totaling  $4.7  billion  to  banks  and  savings
institutions  in  existence  on  December  31,  1996  that can be used to offset
premiums  otherwise due, (5) imposes a cap on the level of the Deposit Insurance
Fund and provide for dividends or rebates when the fund grows beyond a specified
threshold,   (6)  adopts  a  historical   basis  concept  for  distributing  the
aforementioned one-time credit and dividends (with each institution's historical
basis  to be  determined  by a  formula  that  looks  back to the  institution's
assessment  base in 1996  and  adds  premiums  paid  since  that  time)  and (7)
authorizes  revisions to the current  risk-based system for assessing  premiums,
including  replacing the current fixed reserve ratio requirement of 1.25% with a
range of between 1.15% and 1.50% of insured deposits.

Capital Adequacy

The Federal  Reserve  Board and the OCC have  substantially  similar  risk-based
capital  and  leverage  ratio  guidelines  for  banking   organizations.   These
guidelines  are  intended to ensure that  banking  organizations  have  adequate
capital given the risk levels of their assets and  off-balance  sheet  financial
instruments.  Under the risk-based capital and leverage ratio guidelines, assets
and  off-balance  sheet items are assigned to broad risk  categories,  each with
appropriate  weights.


                                       7
<PAGE>

The  resulting  capital  ratios  represent  capital  as a  percentage  of  total
risk-weighted  assets and  off-balance  sheet items.  These  risk-based  capital
requirements identify concentration of credit risk, and facilitate management of
those risks.

To derive total risk-weighted  assets, bank assets are given risk-weights of 0%,
20%, 50% and 100%. In addition, certain off-balance sheet items are converted to
asset equivalent  amounts to which an appropriate  risk-weight will apply.  Most
loans are  assigned  to the 100% risk  category,  except  for  performing  first
mortgage  loans  fully  secured  by  residential  property,  which  carry  a 50%
risk-weighting.   Most  investment  securities  (including,  primarily,  general
obligation  claims of  states  or other  political  subdivisions  of the  United
States) are assigned to the 20% category,  except for municipal or state revenue
bonds, which have a 50% risk-weight, and direct obligations of the U.S. Treasury
or  obligations  backed  by the full  faith  and  credit  of the  United  States
government,  which have a 0% risk-weight. In converting off-balance sheet items,
direct credit  substitutes,  including general guarantees and standby letters of
credit  backing  financial   obligations,   are  given  a  100%  risk-weighting.
Transaction-related  contingencies such as bid bonds,  standby letters of credit
backing nonfinancial obligations,  and undrawn commitments (including commercial
credit  lines  with an  initial  maturity  or more  than  one  year)  have a 50%
risk-weighting.   Short-term   commercial   letters   of   credit   have  a  20%
risk-weighting,  and certain short-term  unconditionally  cancelable commitments
have a 0% risk-weighting.

Under the capital guidelines,  a banking organization's total capital is divided
into tiers. "Tier I Capital" consists of common shareholders' equity, qualifying
preferred stock,  and minority  interests in the equity accounts of consolidated
subsidiaries,  less certain goodwill items and other intangible  assets. No more
than 25% of qualifying Tier I Capital may consist of trust preferred securities.
"Tier II  Capital"  consists  of hybrid  capital  instruments,  perpetual  debt,
mandatory  convertible debt securities,  a limited amount of subordinated  debt,
and  preferred  stock that does not  qualify  as Tier I Capital,  plus a limited
amount of loan and lease  loss  allowances  and a limited  amount of  unrealized
holding gains on equity  securities.  "Tier III Capital"  consists of qualifying
unsecured  subordinated  debt. "Total Capital" is the sum of Tier I, Tier II and
Tier III  Capital.  The sum of Tier II and Tier III  Capital  may not exceed the
amount of Tier I Capital.

Under the Federal Reserve Board's risk-based capital guidelines for bank holding
companies,  the required minimum ratio of Total Capital (the sum of Tier I, Tier
II and Tier III Capital) to risk-weighted  assets (including certain off-balance
sheet activities, such as standby letters of credit) is 8%. The required minimum
ratio of Tier I Capital to  risk-weighted  assets is 4%. At December  31,  2007,
Central  Jersey  Bancorp's  ratios  of  Total  Capital  and  Tier 1  Capital  to
risk-weighted assets were 13.73% and 12.74%, respectively.

The Federal  Reserve Board also  requires bank holding  companies to comply with
minimum  leverage  ratio  guidelines.  The leverage ratio is the ratio of a bank
holding  company's Tier I Capital  (excluding  intangibles)  to its total assets
(excluding loan loss reserve,  goodwill,  and certain other  intangibles).  Bank
holding companies  normally must maintain a minimum leverage ratio of 4%, unless
the bank holding company has the highest  supervisory  rating or has implemented
the Federal Reserve Board's risk-adjusted measure for market risk, in which case
its  minimum  leverage  ratio  must  be  3%.  Banking  organizations  undergoing
significant growth or undertaking acquisitions must maintain even higher capital
positions.  At December 31, 2007,  Central Jersey  Bancorp's  leverage ratio was
9.08%.  Central Jersey Bank, N.A. is subject to similar  risk-based and leverage
capital guidelines, as adopted by the OCC.

Banking regulators currently are developing proposed revisions to their existing
capital adequacy regulations and standards, based on policy guidelines issued by
the Basel  Committee  on Banking  Supervision,  an  international  committee  of
central banks and bank regulators from major


                                       8
<PAGE>

industrialized  countries.  Central Jersey Bank, N.A. is analyzing the potential
impact of these proposed revisions on its risk-based capital.

Prompt Corrective Action

The Federal Deposit  Insurance Act requires  federal banking  regulators to take
prompt  corrective  action with respect to depository  institutions  that do not
meet minimum  capital  requirements.  Failure to meet minimum  requirements  can
initiate  certain  mandatory and possibly  additional  discretionary  actions by
regulators that, if undertaken, could have an adverse material effect on Central
Jersey  Bancorp's  financial  condition.  Under  the  Prompt  Corrective  Action
Regulations,  Central Jersey Bank,  N.A. must meet specific  capital  guidelines
that  involve  quantitative  measures  of its  assets,  liabilities  and certain
off-balance sheet items as calculated under regulatory accounting practices.

The Prompt  Corrective  Action  Regulations  define specific capital  categories
based on an institution's  capital ratios. The capital categories,  in declining
order, are "well  capitalized,"  "adequately  capitalized,"  "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." The Federal
Deposit  Insurance Act imposes  progressively  more  restrictive  constraints on
operations,  management  and  capital  distributions,  depending  on the capital
category by which the  institution  is classified.  Institutions  categorized as
"undercapitalized"  or worse may be  subject to  requirements  to file a capital
plan with  their  primary  federal  regulator,  prohibitions  on the  payment of
dividends  and  management  fees,  restrictions  on asset  growth and  executive
compensation,  and increased supervisory  monitoring,  among other things. Other
restrictions  may be  imposed on the  institution  by the  regulatory  agencies,
including  requirements  to raise  additional  capital,  sell assets or sell the
entire institution.  Once an institution becomes "critically  undercapitalized,"
it generally must be placed in  receivership  or  conservatorship  within ninety
days.

The Prompt  Corrective Action  Regulations  provide that an institution is "well
capitalized" if the institution has a total risk-based capital ratio of 10.0% or
greater,  a Tier I risk-based  capital ratio of 6.0% or greater,  and a leverage
ratio of 5.0% or greater.  The institution  also may not be subject to an order,
written  agreement,  and capital directive or prompt corrective action directive
to meet and maintain a specific level for any capital measure. An institution is
"adequately  capitalized" if it has a total risk-based  capital ratio of 8.0% or
greater,  a Tier I risk-based  capital ratio of 4.0% or greater,  and a leverage
ratio  of 4.0% or  greater  (or a  leverage  ratio  of  3.0% or  greater  if the
institution  is rated  composite  1 in its most  recent  report of  examination,
subject to appropriate federal banking agency  guidelines),  and the institution
does not meet the definition of a well-capitalized  institution.  An institution
is deemed  "undercapitalized" if it has a total risk-based capital ratio that is
less than  8.0%,  a Tier I  risk-based  capital  ratio of less than  4.0%,  or a
leverage  ratio of less than 4.0% (or a leverage  ratio of less than 3.0% if the
institution  is rated  composite  1 in its most  recent  report of  examination,
subject to appropriate federal banking agency  guidelines),  and the institution
does not meet the definition of a significantly  undercapitalized  or critically
undercapitalized institution. An institution is "significantly undercapitalized"
if the institution has a total risk-based  capital ratio that is less than 6.0%,
a Tier I risk-based  capital ratio of less than 3.0%,  or a leverage  ratio less
than  3.0% and the  institution  does not meet the  definition  of a  critically
undercapitalized  institution,  and  is  "critically  undercapitalized"  if  the
institution  has a ratio of tangible  equity to total assets that is equal to or
less than 2.0%.

The  appropriate  federal  banking  agency  may,  under  certain  circumstances,
reclassify a well  capitalized  insured  depository  institution  as  adequately
capitalized.  The appropriate  agency is also permitted to require an adequately
capitalized  or  undercapitalized  institution  to comply  with


                                       9
<PAGE>

the supervisory provisions as if the institution were in the next lower category
(but not to treat a  significantly  undercapitalized  institution  as critically
undercapitalized)  based on supervisory  information other than an institution's
capital levels.

At December 31, 2007,  Central Jersey Bank, N.A. was "well capitalized" based on
the ratios and guidelines noted above.  However,  the capital  categories of the
bank are  determined  solely for the purpose of applying  the Prompt  Corrective
Action  Regulations  and may not  constitute an accurate  representation  of its
overall  financial  condition or prospects.  Additional  information  on capital
amounts and ratios of Central Jersey  Bancorp and Central  Jersey Bank,  N.A. is
found in Note (15) to our consolidated financial statements included herein.

Unsafe and Unsound Practices

Notwithstanding  its Prompt  Corrective  Action category  dictated by risk-based
capital ratios,  the Federal Deposit  Insurance Act permits the appropriate bank
regulatory  agency to reclassify an institution  if it determines,  after notice
and a hearing, that the condition of the institution is unsafe or unsound, or if
it deems the institution to be engaging in an unsafe or unsound practice.  Under
the  Financial  Institutions  Supervisory  Act,  the OCC has  the  authority  to
prohibit  national  banks from  engaging in any activity in the conduct of their
business which the OCC believes  constitutes an unsafe or unsound practice.  The
Federal  Reserve  Board  has  similar  authority  with  regard  to bank  holding
companies and their non-bank subsidiaries.

The USA PATRIOT Act

On October  26,  2001,  the  President  signed  into law  certain  comprehensive
anti-terrorism  legislation  known as the USA PATRIOT Act of 2001.  Title III of
the  USA   PATRIOT   Act   substantially   broadened   the  scope  of  the  U.S.
anti-money-laundering   laws  and   regulations  by  imposing   significant  new
compliance and due diligence obligations,  creating new crimes and penalties and
expanding the  extra-territorial  jurisdiction  of the United  States.  The U.S.
Treasury Department has issued a number of implementing  regulations which apply
various  requirements of the USA PATRIOT Act to financial  institutions  such as
Central Jersey Bank, N.A. Those regulations  impose new obligations on financial
institutions  to  maintain  appropriate  policies,  procedures  and  controls to
detect, prevent and report money laundering and terrorist financing.

Failure  of a  financial  institution  to  comply  with  the USA  PATRIOT  Act's
requirements  could have  serious  legal  consequences  for an  institution  and
adversely affect its reputation.  Central Jersey Bancorp has adopted appropriate
policies, procedures and controls to address compliance with the requirements of
the USA PATRIOT Act under the existing  regulations  and will continue to revise
and update its policies,  procedures and controls to reflect changes required by
the USA PATRIOT Act and by the Treasury Department regulations.

Community Reinvestment Act

The Federal  Community  Reinvestment  Act requires  banks to respond to the full
range of credit and banking needs within their communities,  including the needs
of low and  moderate-income  individuals  and areas. A bank's failure to address
the credit and banking needs of all socio-economic levels within its markets may
result in  restrictions  on growth  and  expansion  opportunities  for the bank,
including  restrictions  on  new  branch  openings,  relocation,   formation  of
subsidiaries,  mergers and  acquisitions.  In the latest CRA examination  report
with respect to Central  Jersey Bank,  N.A.,  dated  November 10, 2003,  Central
Jersey Bank, N.A. received a rating of satisfactory.


                                       10
<PAGE>

Consumer Privacy

The  privacy  provisions  of  the   Gramm-Leach-Bliley  Act  generally  prohibit
financial  institutions,  including  Central  Jersey  Bancorp and Central Jersey
Bank, N.A., from disclosing or sharing nonpublic personal financial  information
to third  parties for marketing or other  purposes not related to  transactions,
unless   customers  have  an  opportunity  to  "opt  out"  of  authorizing  such
disclosure,  and have not  elected  to do so.  It has never  been the  policy of
Central Jersey Bancorp to release such information  except as may be required by
law. The Fair Credit  Reporting  Act also  restricts  information  sharing among
affiliates for marketing and other purposes.

Loans to One Borrower

Federal  banking  laws limit the amount a bank may lend to a single  borrower to
15% of the bank's  capital and surplus,  plus an  additional  10% of capital and
surplus if the amount  over the 15% general  limit is fully  secured by adequate
amounts of readily  marketable  capital.  However,  no loan to one  borrower may
exceed 25% of a bank's statutory capital,  notwithstanding collateral pledged to
secure it.  Well-qualified  national  banks  also may be  eligible  for  certain
preferred lending limits within specified loan categories.

Depositor Preference Statute

Under federal law,  depositors,  certain claims for administrative  expenses and
employee  compensation against an insured depository  institution are afforded a
priority over other general  unsecured  claims against the  institution,  in the
event of a "liquidation or other resolution" of the institution by a receiver.

Sarbanes-Oxley Act of 2002

On July 30,  2002,  the  President  of the  United  States  signed  into law the
Sarbanes-Oxley  Act of 2002. The stated goals of Sarbanes-Oxley  Act of 2002 are
to increase  corporate  responsibility,  to provide for enhanced  penalties  for
accounting  and  auditing  improprieties  at publicly  traded  companies  and to
protect  investors  by  improving  the  accuracy  and  reliability  of corporate
disclosures  pursuant to the  securities  laws. The  Sarbanes-Oxley  Act of 2002
generally applies to all companies,  both domestic and foreign, that file or are
required to file periodic  reports with the Securities  and Exchange  Commission
under the Exchange Act.

The  Sarbanes-Oxley Act of 2002 includes very specific  disclosure  requirements
and corporate governance rules,  requires the Securities and Exchange Commission
and self  regulatory  organizations  to adopt extensive  additional  disclosure,
corporate  governance  and other related rules and mandates  further  studies of
certain  issues by the Securities  and Exchange  Commission and the  Comptroller
General.   The  Sarbanes-Oxley  Act  of  2002  represents   significant  federal
involvement in matters  traditionally left to state regulatory systems,  such as
the regulation of the accounting profession, and to state corporate law, such as
the relationship between a board of directors and management and between a board
of directors and its committees.

The Sarbanes-Oxley Act of 2002 addresses, among other matters:

      o     audit committees for all reporting companies;

      o     certification of financial statements by the chief executive officer
            and the chief financial officer;


                                       11
<PAGE>

      o     the forfeiture of bonuses or other incentive-based  compensation and
            profits from the sale of an issuer's  securities  by  directors  and
            senior officers under certain circumstances;

      o     a  prohibition  on insider  trading  during  pension  plan black out
            periods;

      o     disclosure of off-balance sheet transactions;

      o     expedited  filing  requirements  for  certain  periodic  and current
            reports;

      o     disclosure of a code of ethics;

      o     "real time" filing of periodic reports;

      o     the formation of a public accounting oversight board;

      o     auditor independence; and

      o     various  increased  criminal  penalties for violations of securities
            laws.

Overall Impact of New Legislation and Regulations

Various legislative initiatives are from time to time introduced in Congress. It
cannot be  predicted  whether or to what extent the  business  and  condition of
Central Jersey Bancorp and its subsidiaries  will be affected by new legislation
or regulations, and legislation or regulations as yet to be proposed or enacted.

Impact of Monetary Policies

The earnings of Central Jersey Bank, N.A. will be affected by domestic  economic
conditions and the monetary and fiscal policies of the United States  government
and its agencies.  The monetary  policies of the Federal Reserve Board have had,
and will likely continue to have, an important  impact on the operating  results
of banks  through  the  Federal  Reserve  Board's  power to  implement  national
monetary  policy in order,  among other  things,  to curb  inflation or combat a
recession.  The Federal Reserve Board has a major effect upon the levels of bank
loans,  investments  and deposits  through its open market  operations in United
States government  securities and through its regulation of, among other things,
the discount  rate on  borrowing  of member  banks and the reserve  requirements
against  member  bank  deposits.  It is not  possible  to predict the nature and
impact of future changes in monetary and fiscal policies.

Item 1A.   Risk Factors
           ------------

The  following is a discussion  of certain  significant  risk factors that could
potentially adversely affect our financial condition and results of operations.

We compete for deposits and loan  customers with larger  financial  institutions
whose  customer bases are broader and whose lending limits exceed Central Jersey
Bank,  N.A.'s lending limits.  We also compete with similar banks focused on the
same markets and  customers.  Competition  costs money,  and  competition  could
reduce the number of customers using the banking services provided by us.

New Jersey is a  competitive  banking  environment.  Central  Jersey Bank,  N.A.
competes  for  deposits  and for  borrowers  with  larger  and more  established
in-state and  out-of-state  financial  institutions,  including  large financial
service  companies  and other  entities,  in  addition  to  traditional  banking
institutions such as savings and loan  associations,  savings banks,  commercial
banks and credit  unions.  Because  of their  greater  capitalization  and other
resources,  larger institutions may have competitive  advantages  resulting from
their ability to offer more


                                       12
<PAGE>

convenient facilities and higher lending limits.  Lending limits are primarily a
function of a bank's  capital  base.  Accordingly,  larger  banks that have much
larger capital bases than Central Jersey Bank,  N.A.,  have lending limits which
exceed those of Central Jersey Bank, N.A.  Several larger banks with branches in
our market area have lending  limits  which  exceed $1 billion.  At December 31,
2007,  Central Jersey Bank,  N.A.'s legal lending limit was  approximately  $7.2
million.

Central Jersey Bank, N.A. also has community bank competitors with similar goals
and business  territories.  Three currently  existing  community banks commenced
operations  within Central Jersey Bank,  N.A.'s existing market area since 1996,
and two other community banks are expected to commence operations in such market
area in 2008.

We compete by offering personal,  local service and extended hours of operation,
but we may also  compete by  offering  lower  interest  rates and paying more to
attract  deposits.  Because  we operate in a  highly-competitive  market,  it is
likely  that the cost of  competing  for market  share is greater for us than it
would  be for a  small  bank  in a less  competitive  market.  The  cost  of our
competitive efforts may impact profitability, and we can offer no assurance that
any of our  competitive  efforts  will be  successful.  See "Item 1.  Business -
Competition."

Use by other banks of advanced banking technologies creates more competition and
could result in increased costs to us in our effort to remain current.

Larger  and  more  established  banks  may  have  access  to  more  funding  for
technological  research,  development  and  introduction  of  new  technologies,
including internet banking, telephone banking and automated teller machine (ATM)
technologies.  While Central  Jersey Bank,  N.A.  offers access to each of these
technologies to its customers, additional capital investment will be required to
keep our technology current.  Emerging  technologies and innovations in existing
technologies make the continuing need to improve a constant  challenge.  Capital
expenditures for enhanced technologies may not represent long-term  investments,
as these technologies quickly become obsolete. Such expenditures also may reduce
our profitability.

Competition for deposits may impact our profitability.

Deposits  represent a source of funds for loans made by banks,  and  competition
for deposits could result in fewer funds available to make loans and to generate
other interest-earning  opportunities.  Other banks may compete more effectively
for deposits by offering  more  convenient  depositary  locations and by keeping
branches open for longer  hours.  We can pay higher rates of interest to attract
deposits,  but this reduces Central Jersey Bank,  N.A.'s net interest margin. We
also can pay more for  advertising  and other  incentives  to attract  deposits.
However,  any of these efforts could lower our profit margins,  and we can offer
no assurance that they will succeed.

Interest rate fluctuations beyond our control influence our profitability.  As a
result, our financial performance could suffer, despite our best efforts.

Our profitability  depends in large part on the difference  between the interest
Central  Jersey  Bank,  N.A.  pays on funds  available  to it, and the  interest
Central Jersey Bank, N.A. earns on funds it makes available to others. The price
of funds may  depend on many  factors  beyond  our  control,  including  federal
economic,  fiscal and monetary policies, and general economic conditions.  These
factors may be influenced by national and  international  economic and political
trends  and   events,   including   inflation,   recession,   unemployment   and
international  conflicts.  Any of these  events  could  trigger an  increase  in
interest rates, which will increase our cost of funds.


                                       13
<PAGE>

Fluctuations  in interest rates paid by Central  Jersey Bank,  N.A. for funds it
needs could affect our operating  performance  and  condition,  by affecting the
margin or "spread"  between what Central  Jersey Bank,  N.A.  pays for funds and
what it earns by charging  interest to lend funds.  Interest rates were recently
at historically low levels.  The Federal Reserve has decreased the federal funds
rate several  times.  Consequently,  Central Jersey Bank,  N.A. has  experienced
compression of its interest rate spread and net interest margin,  which has had,
and likely will continue to have, a negative effect on profitability.

Our small market area  increases the potential  impact of regional  economic and
other conditions, so that localized problems could have unmitigated consequences
for us.

Our current primary market is coastal Monmouth County,  New Jersey. Our branches
serve only a portion of this market.  Potential  problems directly affecting our
region,  including  regional disasters such as floods, or economic problems such
as office or plant  closings and  layoffs,  could hinder our growth and hurt our
performance,  because we may not have  branches  in  unaffected  areas to offset
localized problems. This could result in losses or make us less profitable.

Our newer relationships with smaller customers, and our smaller overall customer
base size, could result in larger loan loss experience.

To compete with larger  lending  institutions,  we attempt to attract  customers
seeking new banking  relationships.  Customers that are not larger businesses or
high net-worth individuals may have less capacity to repay loans during economic
down-turns or other adverse events.  This fact exposes Central Jersey Bank, N.A.
to the  risk of  non-payment  or late  payment  of loans  and  could  result  in
collection  expenses and loan losses.  Our experienced  lenders and underwriters
take into account these  considerations,  and our strict credit  policies,  loan
approval process and loan monitoring offers additional safeguards. While many of
the loans that we approve may be new to our institution,  the  relationships are
known to our staff and have been  actively  managed by our lenders  during their
tenure  at other  financial  institutions.  However,  until  our loan  portfolio
matures, its quality will be difficult to measure, and even after it matures, we
can offer no assurance that Central Jersey Bank, N.A. will not incur  collection
expenses and loan losses.

Central Jersey Bank, N.A.  participates  in loans  originated by other financial
institutions.  Central Jersey Bank, N.A. reviews the credit risk associated with
its  participation  in such loans under the same credit policies that it applies
to loans it initiates.  The  application of these policies may reduce,  but does
not eliminate, the risk of loan losses.

Regulations and regulatory developments may impact our performance by increasing
our costs of compliance or increasing competition.

Central  Jersey  Bank,  N.A. is subject to extensive  governmental  supervision,
regulation and control. Future legislation and government policy could adversely
affect lending trends and practices,  deposit volume,  the operations of Central
Jersey  Bank,  N.A.  and the  banking  industry  as a whole.  The  statutes  and
regulations  governing financial  institutions have been substantially  modified
during  recent  years,  and likely  will  continue  to be the  subject of future
modification. Changes in the regulations that govern our operations may increase
our costs of compliance,  and may give rise to industry-wide changes which could
result in other cost increases for Central Jersey Bank, N.A.

For example,  many of the recent regulatory  changes have increased  competition
between banks and nonbanks,  which now may offer similar  products and services.
They have also  increased  merger  activity  between  banks  and  nonbanks,  and
elevated  customer  awareness  of  differences  among  competitors  in products,
services and fees. These changes may result in increased


                                       14
<PAGE>

competitive  efforts by Central Jersey Bank, N.A.,  resulting in increased costs
to Central Jersey Bank, N.A.

We compete with larger  financial  institutions  for personnel,  and we may have
difficulties  attracting  and retaining  qualified  employees if larger and more
profitable banks and other financial  institutions  offer more  compensation and
other  benefits  than we do. Also,  we are  dependent on certain key  employees,
whose loss could hinder our development.

Experienced  and  service-oriented  personnel  are  important  to success in the
financial services industry. Our business is managed by a team of executives and
officers with substantial  experience and community contacts in our market area.
We are  particularly  dependent  to a  significant  degree  upon the  skill  and
experience of certain executive officers and skilled employees. In addition, our
current  staff  consists  of  well-trained,  qualified  employees.  We intend to
continue  to  motivate  our  existing  staff  and to  hire  similarly  qualified
candidates;  however,  there can be no assurance  that we will be  successful in
doing so,  especially since larger and more profitable banks and other financial
institutions  generally have greater  resources to offer more  compensation  and
other benefits than we do.

Increased  emphasis on  commercial  lending may expose us to  increased  lending
risks.

At December 31, 2007,  $269.8 million,  or 85.6%, of Central Jersey Bank, N.A.'s
total loans  consisted of  commercial,  industrial  and  commercial  real estate
loans.  These  types of loans  generally  expose a  lender  to  greater  risk of
non-payment  and loss than the  one-to-four  family  residential  mortgage loans
because repayment of the loans often depends on the successful  operation of the
property and the income stream of the borrowers.  Such loans  typically  involve
larger  loan  balances to single  borrowers  or groups of related  borrowers  as
compared to one-to-four-  family  residential  mortgage loans. Also, many of our
borrowers  have  more  than  one  loan  outstanding.  Consequently,  an  adverse
development  with  respect  to one loan or one  credit  relationship  can expose
Central Jersey Bank, N.A. to a significantly greater risk of loss compared to an
adverse development with respect to a one-to-four family residential loan.

We may not be able to continue to grow our business,  which may adversely impact
our results of operations.

During the last five  years,  our total  assets  have grown  substantially  from
$118.0  million at December  31, 2002 to $503.5  million at December  31,  2007,
through  internal  growth and the combination  with Allaire  Community Bank. Our
business strategy calls for continued expansion, but we do not anticipate growth
to continue at this rate. Our ability to continue to grow depends, in part, upon
our  ability to open new branch  locations,  successfully  attract  deposits  to
existing  and  new  branches,   and  identify   favorable  loan  and  investment
opportunities.  In the event that we do not  continue  to grow,  our  results of
operations could be adversely impacted.

Unmanaged growth may adversely impact our financial results.

As part of our expansion strategy,  we plan to open new branches in our existing
and target markets.  However, we may be unable to identify attractive  locations
on terms  favorable  to us or to hire  qualified  management  to operate the new
branches. In addition, the organizational and overhead costs may be greater than
we  anticipated  or we may  not be  able  to  obtain  the  regulatory  approvals
necessary to open new  branches.  New branches may take longer than  expected to
reach profitability,  and we cannot assure that they will become profitable. The
additional  costs of starting new branches may  adversely  impact our  financial
results.


                                       15
<PAGE>

Our ability to manage growth successfully will depend on whether we can continue
to fund this growth while  maintaining cost controls and asset quality,  as well
as on  factors  beyond our  control,  such as  national  and  regional  economic
conditions  and interest  rate trends.  If we are not able to control  costs and
maintain  asset  quality,  such growth could  adversely  impact our earnings and
financial condition.

For our continued growth and possible expansion, we may need to raise additional
capital  in  the  future,  which  may  be  unavailable  or  available  at  terms
unacceptable to us.

Central Jersey Bancorp is required by federal regulatory authorities to maintain
adequate levels of capital to support its operations.  We may at some point need
to raise additional  capital to support continued  growth.  Our ability to raise
additional  capital, if needed, will depend on conditions in the capital markets
at that time,  which are outside Central Jersey  Bancorp's  control,  and on its
financial performance. Accordingly, we cannot assure you of our ability to raise
additional  capital if needed or on terms  acceptable  to us. If Central  Jersey
Bancorp  cannot raise  additional  capital  when needed,  the ability to further
expand its operations could be materially impaired.

If our allowance for loan losses is not  sufficient to cover actual loan losses,
our earnings would decrease.

In an attempt to mitigate any loan losses we may incur, we maintain an allowance
for loan losses based on,  among other  things,  national and regional  economic
conditions,  and historical loss  experience and  delinquency  trends among loan
types.  However,  we cannot  predict  loan losses with  certainty  and we cannot
assure you that charge offs in future  periods will not exceed the allowance for
loan losses.  In addition,  regulatory  agencies,  as an integral  part of their
examination  process,  review our  allowance  for loan  losses  and may  require
additions to the allowance based on their judgment about  information  available
to them at the time of their  examination.  Factors  that require an increase in
our allowance for loan losses could reduce our earnings.

Our hardware and software  systems are  vulnerable to damage that could harm our
business.

We rely upon our existing  information  systems for operating and monitoring all
major aspects of our business,  including deposit and loan information,  as well
as various internal management  functions.  These systems and our operations are
vulnerable to damage or interruption from natural disasters, power loss, network
failure,  improper  operation  by our  employees,  security  breaches,  computer
viruses or intentional attacks by third parties. Any disruption in the operation
of our  information  systems could adversely  impact our  operations,  which may
affect our results of operations and financial condition.

Our  continuing  concentration  of loans in our primary market area may increase
our risk.

Our success depends primarily on the general economic  conditions in central New
Jersey.  Unlike some larger banks that are more geographically  diversified,  we
provide  banking and  financial  services to customers  primarily in central New
Jersey.  The local economic  conditions in central New Jersey have a significant
impact on our  construction  loans,  commercial  mortgage  loans and  commercial
loans,  the ability of the  borrowers  to repay these loans and the value of the
collateral  securing  these loans.  A  significant  decline in general  economic
conditions, caused by inflation, recession, unemployment or other factors beyond
our control,  would impact local economic conditions and could negatively affect
the financial results of our banking operations.


                                       16
<PAGE>

We target our business  development  and  marketing  strategy for loans to serve
primarily the banking and  financial  services  needs of small- to  medium-sized
businesses  in central  New  Jersey.  These  small- to  medium-sized  businesses
generally  have fewer  financial  resources  in terms of  capital  or  borrowing
capacity than larger entities.  If general economic conditions negatively impact
these  businesses,  our results of  operations  and  financial  condition may be
adversely affected.

Recent  developments  in the housing sector and related  markets and the economy
may adversely affect our business and financial results.

Throughout  the course of 2007,  the  housing  market  experienced  a variety of
worsening  economic  conditions,  due  in  large  part  to the  collapse  of the
sub-prime  mortgage market.  While we did not invest in sub-prime  mortgages and
related investments, our lending business is tied, in large part, to the housing
market.  The housing slump may result in reduced demand for the  construction of
new housing,  declining  or flat home prices,  and  increased  delinquencies  on
construction and residential and commercial mortgage loans. These conditions may
also cause a reduction  in loan  demand,  and an increase in our  non-performing
assets,  net charge-offs and provision for loan losses.  These negative economic
conditions could adversely  impact our prospects for growth,  asset and goodwill
valuations and our results of operations.

Item 1B.   Unresolved Staff Comments
           -------------------------

None.

Item 2.    Properties
           ----------

Bank Buildings

The main office and the original  branch of Central Jersey Bank, N.A. is located
in the City of Long Branch,  New Jersey at 627 Second Avenue. On August 1, 2003,
Central Jersey Bank, N.A. purchased the land and building of this branch.

Central Jersey Bank,  N.A. also leases office space or owns the buildings at the
following branch locations:

      o     700 Allaire Road, Spring Lake Heights, New Jersey.

      o     700 Branch Avenue, Little Silver, New Jersey.

      o     61 Main Avenue, Ocean Grove, New Jersey.

      o     444 Ocean Boulevard, Long Branch, New Jersey.

      o     2200 Highway 35, Sea Girt, New Jersey.

      o     155 Main Street, Manasquan, New Jersey.

      o     Shark River Plaza, 300 West Sylvania Avenue, Route 33, Neptune City,
            New Jersey.

      o     2201 Bridge Avenue, Point Pleasant, New Jersey.

      o     501 Main Street, Bradley Beach, New Jersey.

      o     611 Main Street, Belmar, New Jersey

      o     Shop Rite Plaza, 2445 Highway 34, Manasquan, New Jersey.


                                       17
<PAGE>

Effective September 14, 2007, Central Jersey Bank, N.A. closed two of its branch
offices - Route 35, Neptune City and Highway 33, Neptune Township.  The customer
relationships  from both of these branch offices were moved to the branch office
at 300 West Sylvania Avenue, Neptune City.

In addition, Central Jersey Bank, N.A. leases approximately 5,000 square feet of
office,  storage and  conference  space at 6 West End Court,  Long  Branch,  New
Jersey. Central Jersey Bank N.A. is in the process of completing construction on
a 12,000 square foot office building for its new corporate headquarters and full
service branch located on Route 35 and Dow Avenue,  Ocean Township,  New Jersey.
Central Jersey Bank N.A anticipates opening this location in the Spring of 2008.
Central  Jersey  Bank N.A.  also  leases  property  on Hurley  Pond  Road,  Wall
Township, New Jersey.

Item 3.    Legal Proceedings
           -----------------

There are no material legal,  governmental,  administrative or other proceedings
pending against Central Jersey Bancorp or Central Jersey Bank, N.A.

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

None.


                                       18
<PAGE>

                                     PART II

Item 5.    Market for Registrant's  Common Equity,  Related  Stockholder Matters
           ---------------------------------------------------------------------
           and Issuer Purchases of Equity Securities
           -----------------------------------------

Effective February 1, 2007, the common stock of Central Jersey Bancorp commenced
trading on the  NASDAQ  Global  Market  under the ticker  symbol  "CJBK."  Prior
thereto, the common stock of Central Jersey Bancorp traded on the NASDAQ Capital
Market.

The following table sets forth, for the periods indicated, the high and low last
sale  information for Central Jersey  Bancorp's common stock, as reported on the
NASDAQ Capital Market for the period commencing  January 1, 2006 through January
31, 2007, and as reported on the NASDAQ Global Market for the period  commencing
February 1, 2007 through December 31, 2007. Please note that the information set
forth below reflects inter-dealer prices,  without retail mark-up,  mark-down or
commission and may not represent actual  transactions,  and has been adjusted to
reflect 5% stock dividends paid on July 2, 2007 and July 1, 2006.

         Year Ended December 31, 2007                    High        Low
                                                        ------      ------
         First Quarter..............................    $10.51       $8.28
         Second Quarter.............................     10.76        8.08
         Third Quarter..............................      8.65        7.06
         Fourth Quarter.............................      8.10        6.64

         Year Ended December 31, 2006                    High        Low
                                                        ------      ------
         First Quarter..............................    $13.79      $11.17
         Second Quarter.............................     12.18        8.71
         Third Quarter..............................     10.86        8.66
         Fourth Quarter.............................      9.95        8.55

As of March 2,  2008,  the  following  were  market  makers for  Central  Jersey
Bancorp's  common stock:  UBS Securities  LLC;  Citadel  Derivatives  Group LLC;
Citigroup Global Markets Inc.;  Susquehanna  Capital Group;  Sandler, O' Neill &
Partners,  L.P.;  Knight Equity Markets,  L.P.; Keefe,  Bruyette & Woods,  Inc.;
Sterne,  Agee & Leach,  Inc.; NASDAQ Execution  Services LLC;  Automated Trading
Desk; Archipelago Stock Exchange; and Stifel Nicolaus & Co.

As of March 2, 2008,  the  approximate  number of registered  holders of Central
Jersey Bancorp's common stock was 649.

Central  Jersey  Bancorp has not paid any cash dividends on its common stock and
does not presently intend to declare or pay cash dividends.  Our dividend policy
is subject to certain regulatory  considerations and the discretion of our Board
of Directors and depends upon a number of factors,  including operating results,
financial condition and general business conditions. Holders of common stock are
entitled to receive dividends as, if and when declared by our Board of Directors
out of funds legally available therefore,  subject to the restrictions set forth
under the Federal Bank Holding  Company Act. We may pay cash  dividends  without
regulatory  approval if net income  available  to  shareholders  fully funds the
proposed  dividends,  and the expected rate of earnings  retention is consistent
with capital needs, asset quality and overall financial condition.

Central  Jersey Bancorp did not repurchase any shares of its common stock during
the period covered by this report.  However, on January 15, 2008, Central Jersey
Bancorp  announced  that


                                       19
<PAGE>

its Board of Directors  authorized a common stock repurchase  program,  which is
expected to  continue  through  the end of 2009,  or for such  shorter or longer
period of time as Central Jersey Bancorp may determine.  It is contemplated that
during 2008,  Central  Jersey Bank,  N.A. will declare and pay cash dividends to
Central  Jersey  Bancorp  in order to  effectuate  the common  stock  repurchase
program.


                                       20
<PAGE>

Item 6.    Selected Financial Data
           -----------------------

The following selected consolidated  financial data of Central Jersey Bancorp as
of and for the years ended  December  31, 2003 through 2007 are derived from the
audited  consolidated  financial  statements  of  Central  Jersey  Bancorp.  The
selected consolidated  financial data as of and for the years ended December 31,
2007,  2006  and  2005  should  be read in  conjunction  with  the  consolidated
financial statements of Central Jersey Bancorp and the related notes thereto and
management's  discussion  and  analysis  thereof  appearing  elsewhere  in  this
document.

          CENTRAL JERSEY BANCORP - Summarized Statements of Operations

                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                         Year Ended
                                                                         December 31,
                                              -----------------------------------------------------------------

                                                2007           2006          2005        2004(1)        2003(1)
                                              --------       --------      --------      --------      --------
<S>                                           <C>            <C>           <C>           <C>           <C>
Interest and dividend income                  $ 30,488       $ 29,419      $ 24,947      $ 11,551      $  9,111
Interest expense                                13,782         12,456         7,502         3,046         2,612
                                              --------       --------      --------      --------      --------
Net interest income                             16,706         16,963        17,445         8,505         6,499
Provision for loan losses                          165            500           426           260           150
                                              --------       --------      --------      --------      --------
Net interest income after provision for
  loan losses                                   16,541         16,463        17,019         8,245         6,349
                                              --------       --------      --------      --------      --------
Other (loss) income                               (217)         1,740         1,624           849           780
Operating expenses, including salaries
  and  employee benefits, professional
  and application fees, occupancy
  expenses, etc.                                14,370         14,309        14,550         7,098         6,325
                                              --------       --------      --------      --------      --------
Income before provision for income taxes         1,954          3,894         4,093         1,996           804
Income taxes                                     1,110          1,428         1,461           778           322
                                              --------       --------      --------      --------      --------
Net income                                    $    844       $  2,466      $  2,632      $  1,218      $    482
                                              ========       ========      ========      ========      ========

Net income per share (2)
  Basic                                       $   0.10       $   0.28      $   0.30      $   0.29      $   0.11
  Diluted                                     $   0.09       $   0.27      $   0.27      $   0.27      $   0.10
</TABLE>

(1)   Does not include the results of operations of Allaire Community Bank which
      combined with Central Jersey Bancorp on January 1, 2005.

(2)   All  per  share  amounts  have  been  restated  to  reflect  the 5%  stock
      distributions  paid on  December  31,  2003,  2002,  2001  and  2000,  the
      six-for-five   stock  split,  in  the  form  of  a  stock  dividend,   for
      shareholders of record on July 15, 2004, the  two-for-one  stock split, in
      the form of a stock dividend, for shareholders of record on June 15, 2005,
      the 5% stock  dividend paid on July 1, 2006 and the 5% stock dividend paid
      on July 2, 2007.


                                       21
<PAGE>

               CENTRAL JERSEY BANCORP - Summarized Balance Sheets

                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                  At
                                                                              December 31,
                                                ------------------------------------------------------------------------

                                                  2007            2006           2005           2004(1)          2003(1)
                                                ---------      ---------       ---------       ---------       ---------
<S>                                             <C>            <C>             <C>             <C>             <C>
Assets:
Cash and due from banks                         $  11,198      $  16,162       $  21,228       $   9,169       $   9,689
Federal funds sold                                  3,679         21,634              --           9,425           4,675
Investment securities held-to-maturity             17,430         20,820          22,567          16,484          15,079
Investment securities available-for-sale,
   at market value                                114,824         95,735         111,175          73,668          68,196
Loans held-for-sale                                   658            242           3,127              --              --
Loans, net                                        311,765        312,093         307,168         139,697         115,805
Premises and equipment                              4,626          5,357           6,006           2,496           2,171
Bank owned life insurance                           3,565          3,447           3,338              --              --
Goodwill                                           26,957         26,957          27,229              --              --
Core deposit intangibles                            1,926          2,478           3,097              --              --
Other assets                                        6,878          7,847           9,628           3,176           2,037
Due from broker                                        --          3,527              --              --           4,961
                                                ---------      ---------       ---------       ---------       ---------
Total assets                                    $ 503,506      $ 516,299       $ 514,563       $ 254,115       $ 222,613
                                                =========      =========       =========       =========       =========

Liabilities and Shareholders' Equity:
Deposits                                        $ 403,290      $ 427,277       $ 407,554       $ 232,853       $ 207,234
Accrued expenses and other liabilities              1,611          1,273           1,885             252             480
Other borrowings                                   24,564         17,099          38,191              --              --
Subordinated debentures                             5,155          5,155           5,155           5,155              --
                                                ---------      ---------       ---------       ---------       ---------
Total liabilities                                 434,620        450,804         452,785         238,260         207,714
                                                ---------      ---------       ---------       ---------       ---------
Shareholders' equity:
Common stock                                           87             87              86              40              20
Additional paid-in capital                         60,791         60,505          59,995          15,216          15,237
Accumulated other comprehensive income
   (loss)                                             848         (1,409)         (2,153)           (619)           (358)
Retained earnings                                   7,160          6,316           3,850           1,218              --
                                                ---------      ---------       ---------       ---------       ---------
Total shareholders' equity                         68,886         65,495          61,778          15,855          14,899
                                                ---------      ---------       ---------       ---------       ---------
Total liabilities and shareholders' equity      $ 503,506      $ 516,299       $ 514,563       $ 254,115       $ 222,613
                                                =========      =========       =========       =========       =========
</TABLE>

(1)   Does not include  the  assets,  liabilities  and  shareholders'  equity of
      Allaire  Community  Bank which  combined  with Central  Jersey  Bancorp on
      January 1, 2005.


                                       22
<PAGE>

Item 7.     Management's  Discussion  and  Analysis of Financial  Condition  and
            --------------------------------------------------------------------
            Results of Operations
            ---------------------

The following  discussion and analysis is intended to provide  information about
Central Jersey  Bancorp's  financial  condition for the years ended December 31,
2007 and 2006 and results of operations  for the years ended  December 31, 2007,
2006 and 2005 The  following  information  should  be read in  conjunction  with
Central Jersey Bancorp's audited consolidated financial statements for the years
ended  December 31, 2007,  2006 and 2005  including the related  notes  thereto,
which begin on page F-1 of this report.

General

Central Jersey Bancorp (formerly  Monmouth  Community Bancorp) is a bank holding
company  headquartered  in Long  Branch,  New Jersey.  The  holding  company was
incorporated  in New Jersey on March 7, 2000,  and became an active bank holding
company on August 31, 2000 through the  acquisition of Central Jersey Bank, N.A.
(formerly  Monmouth  Community Bank,  N.A.). On January 1, 2005,  Central Jersey
Bancorp completed its strategic  business  combination  transaction with Allaire
Community  Bank, a New Jersey  state-chartered  bank,  pursuant to which Allaire
Community Bank became a wholly-owned  bank subsidiary of Central Jersey Bancorp.
On the effective date of the  combination,  the name of the holding  company was
changed from Monmouth Community Bancorp to Central Jersey Bancorp.  In addition,
as a part of the combination,  each outstanding share of common stock of Allaire
Community  Bank was exchanged  for one share of Central  Jersey  Bancorp  common
stock.

Critical Accounting Policies

Note 1 to our consolidated financial statements for the years ended December 31,
2007, 2006 and 2005,  contained elsewhere in this report,  includes a summary of
our significant  accounting policies. We believe our policy, with respect to the
methodology for our  determination of the allowance for loan losses,  involves a
high  degree  of  complexity  and  requires  management  to make  difficult  and
subjective  judgments  which  often  requires  assumptions  or  estimates  about
uncertain  matters.  Changes in these judgments,  assumptions or estimates could
cause  reported  results  to differ  materially.  This  critical  policy and its
application  are  periodically   reviewed  by  Central  Jersey  Bancorp's  Audit
Committee and Board of Directors.

Additional  critical  accounting  policies relate to judgments about other asset
impairments,  including goodwill, investment securities and deferred tax assets.
Central Jersey Bancorp performs an annual analysis to test the aggregate balance
of goodwill for impairment in accordance with Statement of Financial  Accounting
Standards  ("SFAS") No. 142, Goodwill and Other Intangible  Assets. For purposes
of goodwill impairment  evaluation,  Central Jersey Bancorp is identified as the
reporting  unit.  The fair value of goodwill is determined in the same manner as
goodwill  recognized  in a  business  combination  and uses  standard  valuation
methodologies  including a review of  comparable  transactions.  If the carrying
amount of goodwill  pursuant to this  analysis  were to exceed the implied  fair
value of goodwill,  an impairment  loss would be recognized.  No impairment loss
was required to be recognized  for the years ended  December 31, 2007,  2006 and
2005. At each of December 31, 2007 and 2006,  Central  Jersey  Bancorp had $27.0
million of goodwill related to the combination with Allaire Community Bank.

For purposes of reporting cash flows, cash and cash equivalents  include cash on
hand,  amounts due from banks and overnight  federal  funds sold.  Federal funds
sold are generally sold for one-day periods.


                                       23
<PAGE>

Investment  securities  held-to-maturity  are comprised of debt  securities that
Central  Jersey  Bank,  N.A.  has the  positive  intent  and  ability to hold to
maturity.  Such  securities  are stated at cost,  adjusted for  amortization  of
premiums and accretion of discounts  over the estimated  remaining  lives of the
securities  as  an  adjustment  to  the  yield  using  the  level-yield  method.
Securities  to be held for  indefinite  periods of time and not  intended  to be
held-to-maturity,   including   all  equity   securities,   are   classified  as
available-for-sale.   Securities   available-for-sale  include  securities  that
management intends to use as part of its asset/liability management strategy and
that may be sold in response to changes in interest rates,  resultant prepayment
risk and other factors  related to interest rate and resultant  prepayment  risk
changes.  Securities  available-for-sale  are carried at  estimated  fair value.
Unrealized  holding gains and losses on such securities  available-for-sale  are
excluded  from  earnings and reported as a separate  component of  shareholders'
equity.  Gains and  losses  on sales of  securities  are  based on the  specific
identification method and are accounted for on a trade date basis.

On a quarterly basis, Central Jersey Bank, N.A. evaluates investment  securities
for  other-than-temporary   impairment.  For  individual  investment  securities
classified as either available-for-sale or held-to-maturity,  a determination is
made as to  whether a decline in fair value  below the  amortized  cost basis is
other than  temporary.  If the  decline in fair value is judged to be other than
temporary, the cost basis of the individual investment security shall be written
down to fair value as a new cost basis and the amount of the write-down shall be
recognized   in   earnings.   Subsequent   increases   in  the  fair   value  of
available-for-sale  securities  shall be  included  as a separate  component  of
equity;  subsequent  decreases  in fair  value,  if not an  other-than-temporary
impairment, also shall be included as a separate component of equity.

Loans are stated at unpaid principal balances, less unearned income and deferred
loan fees and costs.

Interest on loans is  credited to  operations  based upon the  principal  amount
outstanding.

Loan origination and commitment fees and certain direct loan  origination  costs
are deferred,  and the net amount is amortized  over the  estimated  life of the
loan as an adjustment to the loan's yield using the level-yield method.

A loan is considered  impaired when, based on current information and events, it
is probable that Central Jersey Bank, N.A. will be unable to collect all amounts
due according to the contractual terms of the loan agreement. Impaired loans are
measured  based on the  present  value of expected  future cash flows,  or, as a
practical expedient, at the loan's observable market price, or the fair value of
the  underlying  collateral,  if the loan is  collateral  dependent.  Conforming
residential  mortgage  loans,  home  equity and second  mortgages,  and loans to
individuals  are  excluded  from the  definition  of impaired  loans as they are
characterized  as  smaller  balance,  homogeneous  loans  and  are  collectively
evaluated.

The  accrual  of  income  on  loans,  including  impaired  loans,  is  generally
discontinued when a loan becomes more than 90 days delinquent as to principal or
interest or when other  circumstances  indicate that collection is questionable,
unless the loan is well  secured  and in the  process of  collection.  Income on
non-accrual loans, including impaired loans, is recognized only in the period in
which it is collected, and only if management determines that the loan principal
is fully  collectible.  Loans are  returned to an accrual  status when a loan is
brought  current as to principal  and interest and reasons  indicating  doubtful
collection no longer exists.

A loan is considered past due when a payment has not been received in accordance
with  the  contractual  terms.   Generally,   commercial  loans  are  placed  on
non-accrual  status when they are 90 days past due unless they are well  secured
and in the process of  collection  or,  regardless of the


                                       24
<PAGE>

past due  status of the  loan,  when  management  determines  that the  complete
recovery of principal and interest is in doubt.  Commercial  loans are generally
charged off after an analysis is completed which  indicates that  collectibility
of the full principal balance is in doubt.  Consumer loans are generally charged
off after they become 120 days past due. Mortgage loans are not generally placed
on a non-accrual  status unless the value of the real estate has deteriorated to
the point that a potential  loss of  principal  or interest  exists.  Subsequent
payments are credited to income only if collection of principal is not in doubt.
If principal and interest payments are brought  contractually current and future
collectibility  is  reasonably  assured,  loans are returned to accrual  status.
Mortgage  loans  are  generally  charged  off when the  value of the  underlying
collateral does not cover the outstanding  principal  balance.  Loan origination
and commitment fees less certain costs are deferred and the net amount amortized
as an adjustment to the related loan's yield.  Loans  held-for-sale are recorded
at the lower of aggregate cost or market value.

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

Income taxes are  accounted for under the asset and  liability  method.  Current
income  taxes are  provided  for based upon  amounts  estimated  to be currently
payable, for both federal and state income taxes. Deferred federal and state tax
assets and liabilities  are recognized for the expected future tax  consequences
of existing  differences  between financial  statement and tax basis of existing
assets and liabilities. Deferred tax assets are recognized for future deductible
temporary  differences  and tax loss  carry  forwards  if their  realization  is
"more-likely-than-not." The effect of a change in the tax rate on deferred taxes
is recognized in the period of the enactment date.

Comprehensive  income is  segregated  into net  income  and other  comprehensive
income.  Other comprehensive  income includes items previously recorded directly
to equity, such as unrealized gains and losses on securities available-for-sale.
Comprehensive  income is presented in the Statements of Changes in Shareholders'
Equity.

Central  Jersey Bank,  N.A.'s  operations  are solely in the financial  services
industry and include  providing to its customers  traditional  banking and other
financial  services.  Central  Jersey  Bank,  N.A.  operates  primarily  in  the
geographical region of Central New Jersey.  Management makes operating decisions
and  assesses  performance  based on an ongoing  review of Central  Jersey Bank,
N.A.'s consolidated financial results.  Therefore,  Central Jersey Bancorp has a
single operating segment for financial reporting purposes.


                                       25
<PAGE>

Intangible  assets of Central  Jersey Bank,  N.A.,  consist of goodwill and core
deposit premiums.  Goodwill represents the excess of the purchase price over the
estimated  fair value of  identifiable  net  assets  acquired  through  purchase
acquisitions.  In  accordance  with SFAS No. 142,  goodwill  with an  indefinite
useful life is not  amortized,  but is  evaluated  for  impairment  on an annual
basis.

Core deposit premiums represent the intangible value of depositor  relationships
assumed in purchase  acquisitions and are amortized on an accelerated basis over
a period of ten years.  The amortization of the core deposit premium is recorded
in other operating expenses.

Long-lived assets including  goodwill and certain  identifiable  intangibles are
periodically  evaluated for impairment in value.  Long-lived assets and deferred
costs are typically measured whenever events or circumstances  indicate that the
carrying amount may not be recoverable.  No such events have occurred during the
periods reported.  Certain  identifiable  intangibles and goodwill are evaluated
for impairment at least annually  utilizing the "market  approach" as prescribed
by SFAS No. 142,  Goodwill and Other  Intangible  Assets.  Asset  impairment  is
recorded when required.

The determination of whether deferred tax assets will be realizable is predicted
on  estimates  of  future  taxable   income.   Such  estimates  are  subject  to
management's  judgment.  A valuation  reserve is established  when management is
unable to conclude that it is more likely than not that it will realize deferred
tax assets based on the nature and timing of these items.

Overview

Net income for the year ended December 31, 2007 was $844,000, or $0.10 per basic
share and $0.09 per diluted share, as compared to net income of $2.5 million, or
$0.28 per basic share and $0.27 per diluted  share,  for the year ended December
31, 2006. The modest net income reported for year ended December 31, 2007 is due
to the balance  sheet  restructuring  initiative,  which  resulted in a one-time
pre-tax charge of approximately $1.96 million, as described below.

During 2007,  Central  Jersey  Bancorp  executed a balance  sheet  restructuring
strategy involving  approximately $88.6 million of investment securities held in
the  available-for-sale  investment portfolio.  The restructuring  resulted in a
one-time pre-tax  impairment  charge of approximately  $1.96 million,  which was
reflected in Central Jersey Bancorp's  consolidated financial statements for the
three  months ended March 31, 2007.  Available-for-sale  investment  securities,
consisting  primarily of lower  yielding fixed rate callable  agency  investment
securities  were sold during the second quarter of 2007 and replaced with higher
yielding  investment  securities with a comparable to modestly shorter aggregate
weighted  average life. The market value loss that these  investment  securities
carried at March 31, 2007,  was recorded as an  other-than-temporary  impairment
since Central Jersey Bancorp did not have the intent to hold these securities to
recovery.  The  investment  securities  Central  Jersey  Bancorp  identified  as
impaired were primarily fixed rate government sponsored agency bonds that either
had a below market interest rate coupon or a longer than desired  maturity term.
Central  Jersey  Bancorp  realized  a gain  on the  sale  of  available-for-sale
securities  of  $87,000,   pre-tax,   in  conjunction  with  the  balance  sheet
restructuring during the year ended December 31, 2007.

For the year ended  December  31,  2007,  income tax expense was $1.1 million on
income  before taxes of $2.0  million,  resulting  in an  effective  tax rate of
56.8%,  as compared to income tax expense of $1.4 million on income before taxes
of $3.9 million for the year ended December 31, 2006,  resulting in an effective
tax rate of 36.7%.


                                       26
<PAGE>

The Company's  effective tax rate of 56.8% for the year ended December 31, 2007,
resulted from the fact that the majority of the investment  securities for which
the  previously-mentioned  $1.96  million  other-than-temporary  impairment  was
recorded  were held by CJB  Investment  Company,  a  wholly-owned  subsidiary of
Central  Jersey  Bank,  N.A. A full  valuation  allowance  was  recorded for the
deferred tax assets associated with the impairment of the investment  securities
sold by CJB Investment Company.  The impairment of the investment  securities at
the  investment  company  level was  considered  a capital loss for tax purposes
while the impairment of the investment  securities  held by Central Jersey Bank,
N.A. was considered an ordinary loss for tax purposes.  CJB  Investment  Company
does not, at this time,  have the ability to generate  capital gains and utilize
the capital  losses and thus a full  valuation  allowance  was  required for the
deferred tax assets associated with the investment company's  available-for-sale
securities which were identified as other-than-temporarily impaired.

The net  interest  margin was 3.58% for the year ended  December  31,  2007,  as
compared to 3.67% for the year ended December 31, 2006. The net interest  margin
compression  experienced  during the year ended December 31, 2007, is due to the
competitive  loan and deposit pricing  environment and recent  reductions in the
Prime Rate of interest. The yield on interest-earning  assets increased to 6.54%
for the year ended  December 31,  2007,  as compared to 6.36% for the year ended
December 31, 2006.  The increase was due primarily to the  previously  disclosed
balance  sheet  restructuring  initiative.  The  average  cost of  deposits  and
interest-bearing  liabilities was 3.77% for the year ended December 31, 2007, as
compared to 3.42% for the year ended  December 31, 2006. The increase was due to
the aforementioned  competitive environment for deposits,  which exacerbated the
net interest margin compression.

Effective  September 14, 2007,  Central  Jersey Bancorp closed two of its branch
offices - Highway  35,  Neptune  City and  Highway  33,  Neptune  Township.  The
customer relationships from both of these branch offices were transferred to the
West Sylvania Avenue,  Neptune City branch office. As a result of the closing of
these two branch offices,  Central Jersey Bancorp recorded during the year ended
December 31, 2007 one-time  charges for  abandonment  of leasehold  improvements
totaling $137,000, pre-tax, and lease payment accruals totaling $53,000, pre-tax
(included in net occupancy expense), in accordance with SFAS No. 146, Accounting
for Costs Associated with Exit or Disposal Activities. In addition, for the year
ended  December 31, 2007,  Central  Jersey  Bancorp  recorded  $35,000,  pre-tax
(included in salaries  and  employee  benefits  expense),  in one-time  employee
termination  expenses related to the branch office  consolidations in accordance
with SFAS No. 146.

Per share earnings have been adjusted in all periods to reflect the  two-for-one
stock split, in the form of a stock dividend,  paid to shareholders of record on
June 15, 2005, and for the five percent stock dividends paid on July 1, 2006 and
July 2, 2007.

Total assets of $503.5 million at December 31, 2007 were comprised  primarily of
$132.3 million in investment  securities,  $311.8 million in net loans and $14.9
million in cash and cash  equivalents,  as  compared  to total  assets of $516.3
million at December 31, 2006,  which were comprised  primarily of $116.6 million
in investment securities,  $312.1 million in net loans and $37.8 million in cash
and cash  equivalents.  Total assets at December 31, 2007 were funded  primarily
through deposits  totaling $403.3 million,  a $24.0 million,  or 5.6%,  decrease
from deposits totaling $427.3 million at December 31, 2006.

At December 31, 2007, non-accrual loans totaled $214,000, as compared to $91,000
at December  31,  2006.  There were no loans ninety days or greater past due and
still accruing interest at December 31, 2007 or 2006. There were $88,000 in loan
charge-offs  during the year ended December 31, 2007, as compared to $455,000 in
2006. The decrease in loan  charge-offs  for the


                                       27
<PAGE>

year ended  December 31, 2007 is due primarily to the  charge-off of $409,000 in
unsecured  loans  during the year ended  December 31,  2006.  Subsequent  to the
$409,000 charge-off, Central Jersey Bancorp recorded a recovery related to those
unsecured loans totaling $90,000 on March 7, 2007.

<TABLE>
<CAPTION>
                                                                             At or For the
                                                                        Year Ended December 31,
                                                              -------------------------------------------

     Performance Ratios:                                        2007             2006              2005
                                                                ----             ----              ----
<S>                                                            <C>              <C>               <C>
            Return on average assets                            0.16%            0.48%             0.54%
            Return on average tangible assets                   0.17%            0.51%             0.58%
            Return on average equity                            1.27%            3.88%             4.31%
            Return on average tangible equity                   2.27%            7.32%             8.51%
            Shareholders' equity to total assets               13.68%           12.69%            12.01%
</TABLE>

Results of Operations

General

Central  Jersey  Bancorp's  principal  source of revenue is derived from Central
Jersey  Bank,  N.A.'s  net  interest  income,  which is the  difference  between
interest  income on earning  assets and  interest  expense on deposits and other
borrowings. Interest-earning assets consist principally of loans, securities and
federal funds sold, while the sources used to fund such assets consist primarily
of deposits.  Central  Jersey  Bancorp's  net income is also affected by Central
Jersey Bank, N.A.'s provision for loan losses, other income (loss) and operating
expenses. Other income (loss) consists primarily of service charges and fees and
the impairment of  available-for-sale  securities.  Operating  expenses  consist
primarily of salaries and employee benefits, occupancy costs and other operating
related expenses.

For the years ended December 31, 2007 and 2006

Net Interest Income

Net interest income for Central Jersey Bank, N.A.  totaled $16.7 million for the
year ended  December 31, 2007,  as compared to $17.0  million for the year ended
December 31, 2006. Net interest  income for the year ended December 31, 2007 was
comprised  primarily of $1.5  million in interest on federal  funds sold and due
from  banks,  $23.0  million in interest  and fees on loans and $6.0  million in
interest on  securities,  less  interest  expense on deposits of $12.6  million,
interest  expense  on other  borrowings  of  $746,000  and  interest  expense on
subordinated  debentures of $439,000,  whereas net interest  income for the year
ended  December  31,  2006 was  comprised  primarily  of $804,000 in interest on
federal  funds sold and due from banks,  $23.2  million in interest on loans and
$5.5 million in interest on  securities,  less  interest  expense on deposits of
$10.8 million, interest expense on other borrowings of $1.3 million and interest
expense on subordinated debentures of $429,000.

Average  interest-earning  assets  totaled  $466.4  million  for the year  ended
December  31,   2007,  a  $4.1   million,   or  0.9%,   increase   over  average
interest-earning  assets of $462.3 million for the year ended December 31, 2006.
Interest-earning  assets  for such  periods  were  funded  primarily  by deposit
inflows  and the  proceeds  from  borrowed  funds.  Deposits  for the year ended
December 31, 2007 averaged  $417.4 million,  of which $337.5 million,  or 80.9%,
were interest-bearing. This number represents a 0.5% increase over average total
deposits of $415.3 million for the year ended December 31, 2006, of which $330.9
million,  or 79.7%,  were  interest-bearing.


                                       28
<PAGE>

Subordinated  debentures  and other  borrowings  for the year ended December 31,
2007, averaged $5.2 million and $22.4 million, respectively, as compared to $5.2
million and $28.7 million, respectively, for the year ended December 31, 2006.

The net  interest  margin was 3.58% for the year ended  December  31,  2007,  as
compared to 3.67% for the year ended December 31, 2006. The net interest  margin
compression  experienced  during the year ended December 31, 2007, is due to the
competitive  loan and deposit pricing  environment and recent  reductions in the
Prime Rate of interest. The yield on interest-earning  assets increased to 6.54%
for the year ended  December 31,  2007,  as compared to 6.36% for the year ended
December 31, 2006.  The increase was due primarily to the  previously  disclosed
balance  sheet  restructuring  initiative.  The  average  cost of  deposits  and
interest-bearing  liabilities was 3.77% for the year ended December 31, 2007, as
compared to 3.42% for the year ended  December 31, 2006. The increase was due to
the aforementioned  competitive environment for deposits,  which exacerbated the
net interest margin compression.

The following  table  presents a summary of the principal  components of average
interest-earning  assets  and  average  interest-bearing  liabilities  with  the
related  interest  income and interest  expense for the years ended December 31,
2007, 2006 and 2005. No tax equivalent adjustments were made:

<TABLE>
<CAPTION>
(dollars in thousands)                  Year ended December 31, 2007   Year ended December 31, 2006    Year ended December 31, 2005
                                        ----------------------------   -----------------------------   -----------------------------
                                                            Average                          Average                        Average
                                          Average            Yield/     Average               Yield/   Average               Yield/
                                          Balance  Interest   Cost      Balance    Interest    Cost     Balance    Interest   Cost
                                         --------  --------  -------   ---------   --------   ------   ---------   --------  ------
<S>                                      <C>        <C>         <C>      <C>         <C>          <C>     <C>         <C>       <C>
Interest earning assets:
Federal funds sold                       $ 27,039  $  1,369   5.06%    $  11,441   $    590    5.16%   $   2,129   $     48   2.25%
Loans receivable, gross                   314,195    22,975   7.31%      316,609     23,159    7.31%     278,243     18,726   6.73%
Deposits with banks                         3,739       161   4.31%        4,611        214    4.64%       2,766        191   6.91%
Securities                                121,442     5,983   4.93%      129,655      5,456    4.21%     144,831      5,982   4.13%
                                         --------  --------   ----     ---------   --------    ----    ---------   --------   ----
    Total interest earning assets         466,415    30,488   6.54%      462,316     29,419    6.36%     427,969     24,947   5.83%
Cash and due from banks                     8,956                         14,787                          18,082
Allowance for loan losses                  (3,424)                        (3,328)                         (2,982)
Other assets                               41,244                         40,802                          44,444
                                         --------                      ---------                       ---------
Total assets                             $513,191                      $ 514,577                       $ 487,512
                                         ========                      =========                       =========

Interest bearing liabilities:

Interest bearing demand                  $ 91,159  $  2,864   3.14%    $  85,295   $  2,414    2.83%   $  88,301   $  1,596   1.81%
Money market                               27,641     1,185   4.29%       32,983      1,117    3.39%      24,905        447   1.79%
Savings                                    71,810     1,464   2.04%       71,167      1,231    1.73%      71,282        676   0.95%
Time                                      146,934     7,084   4.82%      141,449      5,998    4.24%     127,744      3,896   3.05%
                                         --------  --------   ----     ---------   --------    ----    ---------   --------   ----
    Total interest bearing deposits       337,544    12,597   3.73%      330,894     10,760    3.25%     312,232      6,615   2.12%
Other borrowings                           22,402       746   3.33%       28,650      1,267    4.42%      18,216        547   3.00%
Subordinated debentures                     5,155       439   8.52%        5,155        429    8.32%       5,155        340   6.60%
                                         --------  --------   ----     ---------   --------    ----    ---------   --------   ----
    Total interest-bearing liabilities    365,101    13,782   3.77%      364,699     12,456    3.42%     335,603      7,502   2.24%
Non-interest bearing demand                79,828                         84,444                          88,435
Other liabilities                           1,915                          1,894                           2,467
Shareholders' equity                       66,347                         63,540                          61,007
                                         --------                      ---------                       ---------
Total liabilities and shareholders'
 equity                                  $513,191                      $ 514,577                       $ 487,512
                                         ========                      =========                       =========

Net interest income                                $ 16,706                        $ 16,963                        $ 17,445
                                                   ========                        ========                        ========

Net interest rate spread(1)                                   2.77%                            2.94%                          3.59%

Net interest margin(2)                                        3.58%                            3.67%                          4.08%


</TABLE>

--------------
(1)   Net interest rate spread  represents the  difference  between the yield on
      interest-earning assets and the cost of interest-bearing liabilities.

(2)   Net interest  margin  represents  net interest  income  divided by average
      interest-earning assets.


                                       29
<PAGE>

Rate/Volume Analysis

The following  table  presents the extent to which changes in interest rates and
changes  in  the  volume  of   interest-earning   assets  and   interest-bearing
liabilities  have  affected  Central  Jersey Bank,  N.A.'s  interest  income and
interest expense during the periods  indicated.  Information is provided in each
category with respect to: (1) changes attributable to changes in volume (changes
in volume multiplied by prior rate); (2) changes attributable to changes in rate
(changes  in rate  multiplied  by prior  volume);  and (3) the net  change.  The
changes  attributable  to the  combined  impact  of  volume  and rate  have been
allocated  proportionately  to the  changes due to volume and the changes due to
rate (in thousands).

<TABLE>
<CAPTION>
                                               Year ended December 31, 2007             Year ended December 31, 2006
                                                        Compared to                              Compared to
                                               Year ended December 31, 2006             Year ended December 31, 2005
                                           -----------------------------------       -----------------------------------

                                            Increase (Decrease)                        Increase (Decrease)
                                             Due to Change in:          Total           Due to Change in:          Total
                                           --------------------        Increase      ----------------------      Increase
                                            Volume         Rate       (Decrease)      Volume         Rate       (Decrease)
                                           -------       -------      ----------      -------       -------     ---------
<S>                                        <C>           <C>           <C>           <C>           <C>           <C>
(in thousands)
Interest Income:
  Loans receivable, gross                  $  (177)      $    (7)      $  (184)      $ 2,719       $ 1,714       $ 4,433
  Securities                                  (362)          890           528          (637)          111          (526)
  Deposits with banks                          (39)          (14)          (53)          100           (77)           23
  Federal funds sold                           789           (11)          778           323           219           542
                                           -----------------------------------       -----------------------------------
   Total interest-earning assets               211           858         1,069         2,505         1,967         4,472

Interest Expense:
  Interest-bearing demand                      173           277           450           (56)          874           818
  Savings deposits                              11           222           233            (1)          556           555
  Money market deposits                       (199)          267            68           180           490           670
  Time deposits                                240           846         1,086           453         1,649         2,102
                                           -----------------------------------       -----------------------------------
Total interest-bearing deposits                225         1,612         1,837           576         3,569         4,145
 Other borrowings                             (244)         (277)         (521)          394           326           720
 Subordinated debentures                        --            10            10            --            89            89
                                           -----------------------------------       -----------------------------------
   Total interest-bearing liabilities          (19)        1,345         1,326           970         3,984         4,954
                                           -----------------------------------       -----------------------------------

Net interest income                        $   230       $  (487)      $  (257)      $ 1,535       $(2,017)      $  (482)
                                           ===================================       ===================================
</TABLE>

Provision for Loan Losses

The provision for loan losses was $165,000 for the year ended December 31, 2007,
as compared to $500,000 for 2006.  The decrease in the provision for loan losses
for the year ended  December  31, 2007 is due  primarily  to the  charge-off  of
$409,000 in unsecured loans during the year ended December 31, 2006.  Subsequent
to the $409,000 charge-off,  Central Jersey Bancorp recorded a recovery on those
unsecured loans totaling $90,000 on March 7, 2007.

Other Income (Loss)

Other income  (loss) was  ($217,000)  for the year ended  December 31, 2007,  as
compared to $1.7 million for the year ended  December 31, 2006. The other (loss)
recorded  for the year ended  December  31,  2007,  is  directly  related to the
previously  disclosed  one-time  balance  sheet  restructuring  charge  of $1.96
million, pre-tax, recorded in the first quarter of 2007.

Operating Expenses

Operating expenses include, among other costs and expenses,  salaries,  costs of
employee benefits,  professional fees and occupancy expenses. Operating expenses
for the year ended  December 31, 2007 were $14.4  million,  as compared to $14.3
million for the prior year. Central


                                       30
<PAGE>

Jersey Bank,  N.A.  incurred  $552,000 in core deposit  intangible  amortization
expense  related to the  combination  with Allaire  Community  Bank for the year
ended December 31, 2007, as compared to $619,000 in 2006.

Effective  September 14, 2007,  Central  Jersey Bancorp closed two of its branch
offices - Highway  35,  Neptune  City and  Highway  33,  Neptune  Township.  The
customer relationships from both of these branch offices were transferred to the
West Sylvania Avenue,  Neptune City branch office. As a result of the closing of
these two branch offices,  Central Jersey Bancorp recorded during the year ended
December 31, 2007 one-time  charges for  abandonment  of leasehold  improvements
totaling $137,000, pre-tax, and lease payment accruals totaling $53,000, pre-tax
(included in net occupancy expense), in accordance with SFAS No. 146, Accounting
for Costs Associated with Exit or Disposal Activities. In addition, for the year
ended  December 31, 2007,  Central  Jersey  Bancorp  recorded  $35,000,  pre-tax
(included in salaries  and  employee  benefits  expense),  in one-time  employee
termination  expenses related to the branch office  consolidations in accordance
with SFAS No. 146.

Full-time  equivalent employees totaled 128 at December 31, 2007, as compared to
147 at December 31, 2006. The table below presents operating expenses,  by major
category, for the years ended December 31, 2007, 2006 and 2005, respectively (in
thousands):

Operating Expenses:                           2007         2006         2005
-------------------                           ----         ----         ----

Salaries and employee benefits             $ 7,146      $ 7,345      $ 7,287
Net occupancy expenses                       1,821        1,687        1,718
Professional fees                              938          759          687
Data processing fees                           884          809          937
Outside service fees                           856          866        1,017
Furniture, fixtures and equipment              626          690          599
Core deposit intangible amortization           552          619          688
Stationery, supplies and printing              251          269          288
Insurance expense                              194          200          192
Telephone                                      161          153          134
Abandonment of leasehold improvements          137           --           --
Advertising                                    134          150          220
Other operating expenses                       670          762          783
                                           -------      -------      -------
      Total                                $14,370      $14,309      $14,550
                                           =======      =======      =======

Income Tax Expense

For the year ended  December  31,  2007,  income tax expense was $1.1 million on
income  before taxes of $2.0  million,  resulting  in an  effective  tax rate of
56.8%,  as compared to income tax expense of $1.4 million on income before taxes
of $3.9 million for the year ended December 31, 2006,  resulting in an effective
tax rate of 36.7%.

The Company's  effective tax rate of 56.8% for the year ended December 31, 2007,
resulted from the fact that the majority of the investment  securities for which
the  previously-mentioned  $1.96  million  other-than-temporary  impairment  was
recorded  were held by CJB  Investment  Company,  a  wholly-owned  subsidiary of
Central  Jersey  Bank,  N.A. A full  valuation  allowance  was  recorded for the
deferred tax assets associated with the impairment of the investment  securities
sold by CJB Investment Company.  The impairment of the investment  securities at
the  investment  company  level was  considered  a capital loss for tax purposes
while the impairment of the investment  securities  held by Central Jersey Bank,
N.A. was considered an ordinary loss for


                                       31
<PAGE>

tax purposes. CJB Investment Company does not, at this time, have the ability to
generate  capital gains and utilize the capital losses and thus a full valuation
allowance  was  required  for  the  deferred  tax  assets  associated  with  the
investment  company's  available-for-sale  securities  which were  identified as
other-than-temporarily impaired.

For the years ended December 31, 2006 and 2005

Net Interest Income

Net interest income for Central Jersey Bank, N.A. was $17.0 million for the year
ended  December  31,  2006,  as  compared  to $17.4  million  for the year ended
December 31, 2005. Net interest  income for the year ended December 31, 2006 was
comprised  primarily of $804,000 in interest on federal  funds sold and due from
banks,  $23.2 million in interest and fees on loans and $5.5 million in interest
on  securities,  less interest  expense on deposits of $10.8  million,  interest
expense on borrowed funds of $1.3 million and interest  expense on  subordinated
debentures of $429,000,  whereas net interest income for the year ended December
31, 2005 was  comprised  primarily of $239,000 in interest on federal funds sold
and due from  banks,  $18.7  million in  interest  on loans and $6.0  million in
interest on  securities,  less  interest  expense on  deposits of $6.6  million,
interest  expense  on  borrowed  funds  of  $547,000  and  interest  expense  on
subordinated debentures of $340,000.

Average  interest-earning assets were $462.3 million for the year ended December
31,  2006,  an 8.0%  increase  over  average  interest-earning  assets of $428.0
million  for  the  year  ended  December  31,  2005.  The  increase  in  average
interest-earning  assets was primarily due to an increase in the average balance
of gross loans,  which  increased to $316.6  million for the year ended December
31, 2006 from $278.2  million  for the prior year.  Interest-earning  assets for
such periods  were funded  primarily  by deposit  inflows and the proceeds  from
borrowed  funds.  Deposits for the year ended December 31, 2006 averaged  $415.3
million, of which $330.9 million, or 79.7%, were  interest-bearing.  This number
represents a 3.7% increase over average total deposits of $400.7 million for the
year  ended  December  31,  2005,  of  which  $312.2  million,  or  77.9%,  were
interest-bearing.  Subordinated  debt and other  borrowings  as of December  31,
2006, averaged $5.2 million and $28.7 million, respectively, as compared to $5.2
million and $18.2 million, respectively, for the year ended December 31, 2005.

Net interest  margin,  which represents  net-interest  income as a percentage of
average interest-earning assets, was 3.67% for the year ended December 31, 2006,
as compared to 4.08% for the year ended  December  31,  2005.  The net  interest
margin  compression  was due primarily to an increase in interest  rates paid on
deposits  and  borrowed  funds,  as  evidenced  by the cost of  interest-bearing
liabilities,  which  increased to 3.42% for the year ended December 31, 2006, as
compared  to  2.24%  for  the  year  ended  December  31,  2005.  The  yield  on
interest-earning  assets only increased to 6.36% for the year ended December 31,
2006, as compared to 5.83% for the year ended December 31, 2005. During the year
ended December 31, 2006,  Central Jersey  Bancorp's  liabilities  re-priced more
quickly than its  interest-earning  assets, thus the inverted yield curve, where
short-term rates are higher than long-term rates,  combined with the competitive
environment for deposits, has exacerbated the net interest margin compression.

Provision for Loan Losses

The provision for loan losses was $500,000 for the year ended December 31, 2006,
as compared to $426,000 for 2005. The increase was due primarily to the decision
to record a provision for $409,000 in unsecured  loans that were  charged-off as
of December 31, 2006.  The repayment of these loans,  which were made to several
individuals referred by Mr. Solomon Dwek, has been


                                       32
<PAGE>

adversely  impacted by the May 2006  action  commenced  by PNC Bank  against Mr.
Dwek. Mr. Dwek allegedly  defrauded PNC Bank by depositing a $25.0 million check
drawn on a closed  account  with PNC Bank.  In  response to Mr.  Dwek's  alleged
fraud,  PNC Bank commenced an action against Mr. Dwek, which resulted in a court
order freezing Mr. Dwek's assets.  Recently, a U.S. Bankruptcy judge granted Mr.
Dwek's  request to place his estate and properties  into a voluntary  bankruptcy
reorganization.  Subsequent  to the  $409,000  charge-off  at December 31, 2006,
Central Jersey Bancorp agreed to settle this matter with the unsecured borrowers
for a lump sum  payment of  $90,000,  which was  received  on March 7, 2007.  In
exchange for the $90,000  payment,  Central Jersey Bancorp agreed to release the
unsecured borrowers from all present and future claims  specifically  related to
these loans.  Central Jersey Bancorp retained its rights to pursue collection on
these loans from Mr. Dwek or any Mr. Dwek related entity.

Other Income

Other income was $1.7 million for the year ended  December 31, 2006, as compared
to $1.6 million for the year ended  December 31, 2005,  an increase of $116,000,
or  7.1%.  The  increase  was  due  primarily  to the  gain  on  sale  of  loans
held-for-sale  which was  $213,000  for the year ended  December  31,  2006,  as
compared to $105,000 for the year ended December 31, 2005.

Operating Expenses

Operating expenses include, among other costs and expenses,  salaries,  costs of
employee benefits,  professional fees and occupancy expenses. Operating expenses
for the year  ended  December  31,  2006 were  $14.3  million,  as  compared  to
operating  expenses of $14.6  million for the prior year.  Central  Jersey Bank,
N.A. incurred $619,000 in core deposit intangible  amortization  expense related
to the combination  with Allaire  Community Bank for the year ended December 31,
2006 as compared to $688,000 in 2005. Full-time equivalent employees totaled 147
at December 31, 2006 as compared to 152 at December 31, 2005. For the year ended
December 31, 2005,  Central  Jersey Bank,  N.A.'s  provision for loan losses was
$426 thousand, as compared to $260 thousand for the prior year.

Income Tax Expense

For the year ended  December  31,  2006,  income tax expense was $1.4 million on
income  before taxes of $3.9  million,  resulting  in an  effective  tax rate of
36.7%,  as compared to income tax expense of $1.5 million on income before taxes
of $4.1 million for the year ended December 31, 2005,  resulting in an effective
tax rate of 35.7%.

Financial Condition

Cash and Cash Equivalents

Cash and cash  equivalents  consist of cash on hand, due from banks, and federal
funds sold. At December 31, 2007, cash and cash  equivalents were $14.9 million,
as compared to $37.8 million at December 31, 2006, a decrease of $22.9  million,
or 60.6%.  The  decrease was due  primarily  to timing of cash flows  related to
Central Jersey Bank, N.A.'s business activities.

Intangible Assets

Intangible assets of Central Jersey Bancorp consist of goodwill and core deposit
premiums.  Goodwill  represents  the  excess  of the  purchase  price  over  the
estimated  fair value of  identifiable  net  assets  acquired  through  purchase
acquisitions.  In  accordance  with SFAS No. 142,  goodwill  with an  indefinite
useful life is not  amortized,  but is  evaluated  for  impairment  on an annual
basis.


                                       33
<PAGE>

For each of the years ended  December 31, 2007 and 2006,  Central Jersey Bancorp
had $27.0 million of goodwill related to the combination with Allaire  Community
Bank.

Core deposit premiums represent the intangible value of depositor  relationships
assumed in purchase  acquisitions and are amortized on an accelerated basis over
a period of ten years.  The amortization of the core deposit premium is recorded
as a component of operating expenses.  For the years ended December 31, 2007 and
2006, Central Jersey Bancorp had $1.9 million and $2.5 million, respectively, of
core deposit intangible related to the combination with Allaire Community Bank.

Investment Securities Portfolio

At  December  31,  2007,  Central  Jersey  Bank,  N.A.'s  investment  securities
portfolio  consisted  of  obligations  of  United  States  Government  sponsored
agencies and  mortgaged-backed  securities of United States Government sponsored
agencies.  Investment  securities  held-to-maturity  totaling  $17.4  million at
December  31, 2007,  represented  a decrease of $3.4 million from the year ended
December   31,   2006   total   of   $20.8   million.    Investment   securities
available-for-sale  had a market  value of $114.8  million at December 31, 2007,
representing  an increase of $19.1  million  over the December 31, 2006 total of
$95.7 million. The increase in investment  securities  available-for-sale is due
to the purchase of mortgage-backed securities during the year ended December 31,
2007.

The following table  summarizes the maturity and weighted average yields in each
of Central Jersey Bank, N.A.'s investment  securities portfolios at December 31,
2007:

<TABLE>
<CAPTION>
                                                                  Over              Over
Maturities and weighted average yields:        Within            1 to 5            5 to 10          Over 10
(dollars in thousands)                         1 Year             Years             Years             Years              Total
                                             -----------       -----------       -----------       -----------       -----------
<S>                                          <C>               <C>               <C>               <C>               <C>
Securities held-to-maturity:
Mortgage-backed securities
   Amortized cost                            $        --       $     1,653       $     1,543       $     3,544       $     6,740
   Weighted average yield                             --              4.17%             4.53%             4.96%             4.66%
Obligations of U.S. Government agencies
   Amortized cost                                  1,998             4,373             2,419             1,900            10,690
   Weighted average yield                           4.00%             5.05%             4.42%             4.70%             4.65%
                                             -----------------------------------------------------------------------------------
Total securities held-to-maturity
   Amortized cost                            $     1,998       $     6,026       $     3,962       $     5,444       $    17,430
   Weighted average yield                           4.00%             4.81%             4.46%             4.87%             4.65%
                                             ===================================================================================

Securities available-for-sale:

Mortgage-backed securities
   Market value                              $     1,991       $     2,625       $    21,982       $    84,216       $   110,814
   Weighted average yield                           4.32%             5.00%             5.09%             5.52%             5.40%
Other debt securities
   Market value                                    4,010                --                --                --             4,010
   Weighted average yield                           3.55%               --                --                --              3.55%
                                             -----------------------------------------------------------------------------------
Total securities available-for-sale
   Market value                              $     6,001       $     2,625       $    21,982       $    84,216       $   114,824
   Weighted average yield                           3.81%             5.00%             5.09%             5.52%             5.34%
                                             ===================================================================================
</TABLE>

Other-Than-Temporary Impairment

During 2007,  Central  Jersey  Bancorp  executed a balance  sheet  restructuring
strategy involving  approximately $88.6 million of investment securities held in
the  available-for-sale  investment portfolio.  The restructuring  resulted in a
one-time pre-tax  impairment  charge of approximately  $1.96 million,  which was
reflected in Central Jersey Bancorp's  consolidated financial statements


                                       34
<PAGE>

for the  three  months  ended  March  31,  2007.  Available-for-sale  investment
securities,  consisting  primarily of lower yielding fixed rate callable  agency
investment  securities  were sold during the second quarter of 2007 and replaced
with higher yielding investment securities with a comparable to modestly shorter
aggregate  weighted  average life.  The market value loss that these  investment
securities  carried at March 31, 2007,  was recorded as an  other-than-temporary
impairment  since Central  Jersey  Bancorp did not have the intent to hold these
securities  to  recovery.  The  investment  securities  Central  Jersey  Bancorp
identified as impaired were primarily  fixed rate  government  sponsored  agency
bonds that  either had a below  market  interest  rate  coupon or a longer  than
desired  maturity term.  Central  Jersey Bancorp  realized a gain on the sale of
available-for-sale  securities  of $87,000,  pre-tax,  in  conjunction  with the
balance sheet restructuring during the year ended December 31, 2007.

Investment Policy

The Board of Directors has adopted an investment policy to govern the investment
function of Central Jersey Bank, N.A., which includes the purchase of investment
securities for the  held-to-maturity and  available-for-sale  portfolios and the
sale of investment securities from the available-for-sale portfolio.

      The basic objectives of the investment function are:

      o     to keep  Central  Jersey Bank,  N.A.'s  funds fully  employed at the
            maximum after-tax return;

      o     to minimize exposure to credit risk; and

      o     to provide liquidity required by current circumstances.

As used in our  investment  policy and in other policies of Central Jersey Bank,
N.A.,  the term  "liquidity"  refers to the expected  cash flow from  performing
assets and  secondary to  borrowings  secured by  performing  assets.  These two
sources of liquidity are expected to fund the operations of Central Jersey Bank,
N.A.  For this reason,  unless  otherwise  indicated,  the term  "liquidity"  in
Central Jersey Bank, N.A.'s policies does not refer to proceeds from the sale of
assets, except for the sale of assets available-for-sale.

      Investment management therefore emphasizes:

      o     preservation of principal;

      o     strong cash-flow characteristics;

      o     ready availability of credit information;

      o     appropriateness  of size both as to Central Jersey Bank, N.A. and as
            to an obligor's outstanding debt;

      o     eligibility  as collateral for  public-agency  deposits and customer
            repurchase-agreement accounts; and

      o     broad marketability, as an indicator of quality.

The purpose of bonds in the  held-to-maturity  portfolio is to provide  earnings
consistent   with  the   safety   factors   of   quality,   maturity   and  risk
diversification.  This  purpose is reflected in the  accounting  principle  that
carrying  a  debt  security  at  amortized  cost  is  appropriate  only  if  the
ALCO/Investment  Committee  of  Central  Jersey  Bank,  N.A.  has the intent and
ability to hold that security to maturity.  Management  should be indifferent to
price fluctuations unrelated to the continuing ability of an investment security
to contribute to recurring  income.  For purposes of our investment  policy,  an
investment  security  shall be deemed to have  matured  if it is sold (1)


                                       35
<PAGE>

within  three  months  of  maturity  or a call date if  exercise  of the call is
probable;  or (2) after collection of at least 85% of the principal  outstanding
at acquisition.

Debt securities  that are not positively  expected to be  held-to-maturity,  but
rather for indefinite periods of time, and equity securities, shall be booked to
the available-for-sale portfolio, which shall be monitored daily and reported at
fair value with  unrealized  holding gains and losses excluded from earnings and
reported as a tax-effected  net amount in a separate  component of shareholders'
equity.  However,  in calculating  and reporting  regulatory  capital,  only net
unrealized  losses on  marketable  equity  securities is deducted from Tier 1 or
core capital.

Loan Portfolio

Central  Jersey Bank,  N.A.'s primary policy goal is to establish a sound credit
portfolio that  contributes,  in  combination  with other earning  assets,  to a
satisfactory  return on assets,  return on  shareholders'  equity and capital to
asset ratio.

Central  Jersey  Bank,   N.A.   conducts  both  commercial  and  retail  lending
activities.  The loan approval process at Central Jersey Bank, N.A. is driven by
the  aggregate  indebtedness  of the  borrower and related  entities.  Executive
officers with lending  authority and loan officers have various  individual  and
collective loan approval authorities up to $500,000.  All credit  accommodations
exceeding  $500,000 are referred to Central  Jersey Bank,  N.A.'s Loan Committee
for review and approval. The Loan Committee is comprised of internal and outside
directors and the senior  commercial  loan  officer.  A loan officer with a loan
application  for more  than  $500,000  (or from a  borrowing  relationship  with
aggregate  debt in excess of  $500,000)  presents  a  complete  analysis  of the
proposed  credit  accommodation  to the members of the Loan  Committee for their
consideration.

      The analysis includes, among other things, the following:

      o     a description of the borrower;

      o     the loan purpose and use of proceeds;

      o     the requested loan amount;

      o     the recommended term;

      o     the recommended interest rate;

      o     primary, secondary and tertiary sources of repayment;

      o     proposed risk rating;

      o     full collateral description;

      o     fees (if any);

      o     full borrower  financial  analysis,  including  comparative  balance
            sheets, income statements and statements of cash flows; and

      o     inherent   strengths  and   weaknesses   of  the  requested   credit
            accommodation.

A similar analysis is prepared for those loan requests  aggregating in excess of
$100,000 but less than the $500,000 threshold.

Central  Jersey  Bank,   N.A.   utilizes  a   comprehensive   approach  to  loan
underwriting.  The primary quantitative determinants in the underwriting process
include overall  creditworthiness of the borrower,  cash flow from operations in
relation  to debt  service  requirements  and the  ability  to secure the credit
accommodation with collateral of adequate value.

For commercial  loans,  the  collateral is somewhat  dependent on the loan type.
Commercial lines of credit, term loans and time notes are typically secured by a
general  lien on business  assets and


                                       36
<PAGE>

qualified  (typically  less than 90 days)  accounts  receivable  (based  upon an
acceptable  advance  rate).   Commercial  mortgage  loans  are  secured  by  the
underlying  property with an acceptable equity margin.  Personal guarantees from
the principals of a business are generally required. In general,  Central Jersey
Bank, N.A. requires that income available to service debt repayment requirements
be equal to at least 125% of those requirements.

Commercial loans are often subject to cyclical  economic risks of the underlying
business(es) of the borrower.  Such risks are generally  reduced during the loan
approval  process.  For example,  Central Jersey Bank, N.A. requires that a loan
amount be less than the value of the  collateral  securing the loan and that the
standard cash flow analysis of the commercial borrower shows an ample margin for
debt service even with significant  business  contraction.  Commercial  mortgage
underwriting  also requires that  available  funds for debt service  exceed debt
service requirements.

Retail or consumer loan credit  accommodations  include home equity loans,  home
equity  lines of credit,  direct  automobile  loans and  secured  and  unsecured
personal loans. Underwriting criteria for home equity products include a loan to
value not to exceed 80% and a debt  service to income  ratio not to exceed  45%.
Such  criteria  provide  Central  Jersey Bank,  N.A. with  underwriting  comfort
without placing the institution in a position of competitive disadvantage.

There are a number of risks  associated  with the  granting of  consumer  loans.
While income and equity or  collateral  values are primary  determinants  of the
loan approval  process for consumer loans,  Central Jersey Bank, N.A. also gives
much consideration to employment and debt payment history of the borrower(s). As
with the commercial underwriting process,  consumer loans require both an income
cushion and a collateral  cushion.  Such criteria  provide for a margin should a
borrower's  income  diminish or the collateral  securing the loan  depreciate in
value.

The granting of a loan, by definition,  contains inherent risks.  Central Jersey
Bank, N.A.  attempts to mitigate risks through sound credit  underwriting.  Each
loan that Central Jersey Bank,  N.A.  approves  undergoes  credit  scrutiny that
results in a  quantification  of risk and then the  assignment of a risk rating.
Individual risk ratings carry with them a required  reserve that is used to fund
Central  Jersey  Bank,  N.A.'s  allowance  for loan losses.  The  inherent  risk
associated  with each loan is a function  of loan type,  collateral,  cash flow,
credit rating, general economic conditions and interest rates.

Central Jersey Bank,  N.A. is limited by regulation as to the total amount which
may be  committed  and loaned to a borrower  and its related  entities.  Central
Jersey Bank,  N.A.'s legal lending  limit is equal to 15% of its capital  funds,
including capital stock,  surplus,  retained earnings and the allowance for loan
losses.  Central  Jersey Bank,  N.A. may lend an  additional  10% of its capital
funds to a borrower and its related entities if the additional loan or extension
of credit is fully  secured by  readily  marketable  collateral  having a market
value at least  equal to the  amount  borrowed.  The  additional  limitation  is
separate from, and in addition to, the general limitation of 15%.


                                       37
<PAGE>

The following table summarizes net loans outstanding by loan category and amount
at December 31, 2007, 2006, 2005, 2004 and 2003.

<TABLE>
<CAPTION>
(in thousands)                          2007          2006          2005          2004          2003
                                        ----          ----          ----          ----          ----
------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>           <C>           <C>           <C>
Commercial and industrial loans       $ 29,384      $ 35,476      $ 32,708      $ 22,392      $ 20,380

Real estate loans - commercial         240,370       237,234       232,570        96,291        77,799

1-4 family real estate loans             3,822         4,182         4,858            --            --

Home equity and second mortgages        37,832        35,573        38,153        22,014        17,734

Consumer loans                           3,765         2,857         2,054           638         1,270
------------------------------------------------------------------------------------------------------

Total loans                           $315,173      $315,322      $310,343      $141,335      $117,183

Less allowance for loan losses           3,408         3,229         3,175         1,638         1,378
------------------------------------------------------------------------------------------------------

Net loans                             $311,765      $312,093      $307,168      $139,697      $115,805
======================================================================================================

Loans held-for-sale                   $    658      $    242      $  3,127      $      0      $      0
======================================================================================================
</TABLE>

Loans, net of the allowance for loan losses,  totaled $311.8 million at December
31, 2007, a decrease of $300,000,  or 0.1%,  from the $312.1 million  balance at
December  31,  2006.  The  decrease in loan  balances is  reflective  of general
economic  conditions   resulting  in  a  slowdown  in  loan  origination  volume
throughout the banking industry.

For the year ended  December  31,  2007,  commercial  and  industrial  loans and
commercial real estate loans decreased by $2.9 million to $269.8 million,  which
represents a 1.1%  decrease  from the balance of $272.7  million at December 31,
2006.

During 2007, home equity and second mortgages increased by $2.2 million to $37.8
million at December 31, 2007,  which represents a 6.2% increase over the balance
of $35.6 million at December 31, 2006.

The following  table  summarizes the maturities of loans by category and whether
such loans are at a fixed or floating rate at December 31, 2007.

<TABLE>
<CAPTION>
                                                                              December 31, 2007
                                                 ----------------------------------------------------------------------------------

Maturity and repricing data for loans:             Within     Over 1 to 3     Over 3 to 5   Over 5 to 15     Over 15
(in thousands)                                     1 Year         Years          Years          Years          Years        Total
                                                 ----------------------------------------------------------------------------------
<S>                                              <C>            <C>            <C>            <C>            <C>          <C>
Loans secured by 1-4 family residential properties

    Fixed rate                                   $   1,723      $   1,669      $   4,623      $   8,889      $   4,315    $  21,219

    Adjustable rate                                 14,932            421          2,146             --             --       17,499

All other loans secured by real estate

    Fixed rate                                      16,348         47,344         41,342         31,347         31,146      167,527

    Adjustable rate                                 79,235          6,314         23,379             --             --      108,928

                                                 ----------------------------------------------------------------------------------
Total                                            $ 112,238      $  55,748      $  71,490      $  40,236      $  35,461    $ 315,173
                                                 ==================================================================================
</TABLE>


                                       38
<PAGE>

Non-Performing Loans

A loan is considered to be non-performing  if it (1) is on a non-accrual  basis,
(2) is past due ninety days or more and still accruing interest, or (3) has been
renegotiated to provide a reduction or deferral of interest or principal because
of a weakening in the financial position of the borrower.  A loan, which is past
due ninety days or more and still accruing  interest,  remains on accrual status
only where it is both  adequately  secured as to principal and is in the process
of  collection.  Central  Jersey Bank,  N.A. had  non-performing  loans totaling
$214,000  and  $91,000  at  December  31,  2007 and 2006,  respectively.  If the
non-accrual  loans had  performed  in  accordance  with  their  original  terms,
interest income would have increased by $4,359,  $477 and $6,365,  for the years
ended  December 31,  2007,  2006 and 2005,  respectively.  At December 31, 2007,
there are no commitments to lend  additional  funds to borrowers whose loans are
on non-accrual.

Potential Problem Loans

In addition to  non-performing  loans,  Central  Jersey Bank,  N.A.  maintains a
"watch list" of loans which are subject to heightened scrutiny and more frequent
review  by  management.  Loans  may be placed on the  "watch  list"  because  of
documentation  deficiencies,  or because  management has identified  "structural
weaknesses" which potentially could cause such loans to become non-performing in
future periods.

As of  December  31,  2007 and 2006,  there were no loans  identified  as having
structural  weaknesses  on the "watch  list." The total  balance of loans on the
"watch  list" at  December  31,  2007 and 2006  totaled  $6.0  million  and $5.0
million, respectively.

Allowance for Loan Losses and Related Provision

The allowance for loan losses is a valuation account that reflects an evaluation
of the probable losses in the loan portfolio.  The determination of the adequacy
of the  allowance  for loan  losses is a critical  accounting  policy of Central
Jersey Bank,  N.A., due to the inherently  subjective  nature of the evaluation.
Credit losses  primarily arise from Central Jersey Bank,  N.A.'s loan portfolio,
but also may be derived from other credit-related sources, including commitments
to  extend  credit.  Additions  are  made  to  the  allowance  through  periodic
provisions which are charged to expense.  All losses of principal are charged to
the  allowance  when  incurred  or when a  determination  is made that a loss is
expected. Subsequent recoveries, if any, are credited to the allowance.

As part of our evaluation of the adequacy of our allowance for loan losses, each
quarter  we prepare an  analysis.  This  analysis  categorizes  the entire  loan
portfolio  by  certain  risk  characteristics  such  as loan  type  (commercial,
commercial  real  estate,  one- to  four-family,  consumer,  etc.) and loan risk
rating.

Loan risk ratings for every loan are determined by credit  officers who consider
various  factors,  including  the  borrower's  current  financial  condition and
payment status,  historical loan performance,  underlying collateral, as well as
internal  loan review and  regulatory  ratings.  Any loans with known  potential
losses are categorized and reserved for separately.

The loss factors  applied to each loan risk rating are inherently  subjective in
nature, and, in Central Jersey Bank, N.A.'s  circumstances,  even more so due to
the lack of any meaningful charge-off  experience.  Loss factors are assigned to
loan risk rating categories on the basis of our assessment of the potential risk
inherent in each loan type. Key factors we consider in determining  loss factors
for each loan type include the current real estate market conditions,


                                       39
<PAGE>

changes in the trend of  delinquencies  and  non-performing  loans,  the current
state of the local and national  economy,  loan portfolio  growth and changes in
composition  and  concentrations  within the  portfolio.  The loss  factors  are
evaluated by management on a quarterly basis and any adjustments are approved by
the Board of Directors of Central Jersey Bancorp. There have been no significant
changes in loss factors in 2007 as compared to 2006.

We establish the provision for loan losses after  considering  the allowance for
loan loss worksheet,  the amount of the allowance for loan losses in relation to
the total loan balance,  loan portfolio growth, loan delinquency trends and peer
group  analysis.  Central  Jersey  Bank,  N.A.'s  allowance  for loan  losses is
allocated on an individual loan basis. We have applied this process consistently
and have made minimal changes in the estimation  methods and assumptions that we
have used.

Our primary lending emphasis is the origination of commercial real estate loans,
commercial and industrial loans, and to a lesser extent,  home equity and second
mortgages.  As a result of our strategic plans and lending  emphasis,  we have a
loan  concentration  in  commercial  loans at December  31,  2007 and 2006,  the
majority of which are secured by real property located in New Jersey.

Based  on the  composition  of our loan  portfolio  and the  growth  in our loan
portfolio over the past five years, we believe the primary risks inherent in our
portfolio are possible  increases in interest  rates, a possible  decline in the
economy, generally, and a possible decline in real estate market values. Any one
or a  combination  of these  events  may  adversely  affect  our loan  portfolio
resulting in increased delinquencies and loan losses.

The provision for loan losses was $165,000 for the year ended December 31, 2007,
as compared to $500,000 for 2006. The decrease in loan  charge-offs for the year
ended  December  31,  2007 is due  primarily  to the  charge-off  of $409,000 in
unsecured  loans  during the year ended  December 31,  2006.  Subsequent  to the
$409,000  charge-off,  Central  Jersey  Bancorp  recorded  a  recovery  on those
unsecured loans totaling $90,000 on March 7, 2007.

Loan  portfolio  composition  remained  consistent in 2007, as compared to 2006,
with commercial loans  comprising  85.6% of total loans  outstanding at December
31, 2007, as compared to 86.5% at December 31, 2006. In addition, Central Jersey
Bank, N.A. had  non-accrual or impaired loans totaling  $214,000 at December 31,
2007,  as compared  to $91,000 at December  31,  2006.  Gross loans  outstanding
totaled  $315.2  million at December 31, 2007, as compared to $315.3  million at
December  31,  2006, a decrease of $100,000,  or 0.3%.  The  allowance  for loan
losses was $3.41  million at December 31, 2007,  as compared to $3.23 million at
December 31, 2006.


                                       40
<PAGE>

The following table  summarizes  Central Jersey Bank,  N.A.'s allowance for loan
losses for the years ended December 31, 2007, 2006, 2005, 2004 and 2003.

<TABLE>
<CAPTION>
(in thousands)                                           2007          2006            2005           2004          2003
                                                       -------        -------        -------        -------       -------
-------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>            <C>            <C>           <C>
Balance, beginning of year                             $ 3,229        $ 3,175        $ 1,638        $ 1,378       $ 1,228

Provision charged to expense                               165            500            426            260           150

Charge-offs                                                (88)          (455)           (92)            --            --

Allaire Community Bank combination                          --             --          1,203             --            --

Recoveries                                                 102              9             --             --            --

-------------------------------------------------------------------------------------------------------------------------
Balance, end of year                                   $ 3,408        $ 3,229        $ 3,175        $ 1,638       $ 1,378

=========================================================================================================================
Ratio of allowance for loan losses to total loans         1.08%          1.02%          1.02%          1.16%         1.10%

Ratio of net recoveries (charge-offs) to average
loans outstanding                                         0.03%         (0.14%)        (0.03%)         0.00%         0.00%
</TABLE>

The following table sets forth Central Jersey Bank,  N.A.'s percent of allowance
for loan  losses to total  allowance  and the percent of loans to total loans in
each of the categories listed at the dates indicated (dollars in thousands):

<TABLE>
<CAPTION>
                        December 31, 2007                   December 31, 2006                   December 31, 2005

                             Percent                             Percent                            Percent
                               of        Percent                   of        Percent                   of       Percent
                            allowance    of loans               allowance   of loans                allowance   of loans
                            to total     to total               to total    to total                to total    to total
   Loan Type      Amount    allowance     loans       Amount    allowance     loans      Amount     allowance     loans
   ---------      ------    ---------     -----       ------    ---------     -----      ------     ---------     -----
<S>              <C>           <C>         <C>       <C>           <C>         <C>       <C>           <C>         <C>
Commercial       $ 2,999       88.0%       85.6%     $ 2,811       87.1%       86.5%     $ 2,749       86.6%       85.5%

Consumer             409       12.0%       14.4%         418       12.9%       13.5%         426       13.4%       14.5%
                 -------      -----       -----      -------      -----       -----      -------      -----       -----

Total            $ 3,408      100.0%      100.0%     $ 3,229      100.0%      100.0%     $ 3,175      100.0%      100.0%
                 =======      =====       =====      =======      =====       =====      =======      =====       =====

<CAPTION>
                        December 31, 2004                   December 31, 2003

                            Percent                               Percent
                              of          Percent                   of         Percent
                           allowance     of loans                allowance    of loans
                           to total      to total                to total     to total
   Loan Type      Amount   allowance       loans      Amount     allowance      loans
   ---------      ------   ---------       -----      ------     ---------      -----
<S>              <C>           <C>         <C>       <C>           <C>          <C>
Commercial       $ 1,403       85.7%       84.0%     $ 1,151       83.5%        83.8%

Consumer             235       14.3%       16.0%         227       16.5%        16.2%
                 -------    -------     -------      -------    -------      -------

Total            $ 1,638      100.0%      100.0%     $ 1,378      100.0%       100.0%
                 =======    =======     =======      =======    =======      =======
</TABLE>

Deposits

One of Central Jersey Bank,  N.A.'s primary  strategies is the  accumulation and
retention of core  deposits.  Core  deposits are defined as all deposits  except
certificates of deposits with balances in excess of $100,000.

Total  deposits  were $403.3  million at December  31, 2007, a decrease of $24.0
million, or 5.6%, from the year ended December 31, 2006 total of $427.3 million.
Core deposits as a percentage of total deposits were 84.8% at December 31, 2007,
as compared to 84.7% at December 31, 2006.


                                       41
<PAGE>

The  following  table  represents  categories  of Central  Jersey  Bank,  N.A.'s
deposits at December 31, 2007, 2006 and 2005.

<TABLE>
<CAPTION>
                                                       December 31,    December 31,   December 31,
                                                       ------------    ------------   ------------
      (in thousands)                                       2007            2006           2005
                                                           ----            ----           ----
<S>                                                      <C>             <C>             <C>
      Demand deposits, non-interest bearing              $ 73,955        $ 83,482        $ 91,297

      Savings, N.O.W. and money market accounts           187,354         202,650         173,993

      Certificates of deposit of less than $100,000        80,587          75,842          67,813

      Certificates of deposit of $100,000 or more          61,394          65,303          74,451
                                                         --------        --------        --------

      Total deposits                                     $403,290        $427,277        $407,554
                                                         ========        ========        ========
</TABLE>

The following table represents categories of Central Jersey Bank, N.A.'s average
deposit  balances  and  weighted  average  interest  rates for the  years  ended
December 31, 2007, 2006 and 2005 (in thousands):

<TABLE>
<CAPTION>
                                                         December 31,                  December 31,             December 31,
                                                         ------------                  ------------             ------------
                                                             2007                          2006                     2005
                                                             ----                          ----                     ----
                                                                     Weighted                   Weighted                  Weighted
                                                       Average        Average       Average      Average     Average       Average
                                                       Balance          Rate        Balance        Rate      Balance         Rate
                                                       --------         ----        --------       ----     --------         ----
<S>                                                    <C>              <C>         <C>            <C>      <C>              <C>
Demand deposits, non-interest bearing                  $ 79,828           --%       $ 84,444         --%    $ 88,435           --%

Savings, N.O.W. and money market accounts               190,610         2.89%        189,445       2.51%     184,488         1.47%

Certificates of deposit of less than $100,000            81,497         4.78%         72,960       4.11%      60,040         3.04%

Certificates of deposit of $100,000 or more              65,437         4.88%         68,489       4.42%      67,704         3.05%
                                                       --------         ----        --------       ----     --------         ----

Total deposits                                         $417,372         3.02%       $415,338       2.59%    $400,667         1.65%
                                                       ========         ====        ========       ====     ========         ====
</TABLE>

At December  31, 2007,  Central  Jersey  Bank,  N.A. had $142.0  million in time
deposits maturing as follows (in thousands):

<TABLE>
<CAPTION>
                                                                Over 1
                                    3 months     Over 3 to      year to        Over 3
                                     or less     12 months      3 years         years         Total
                                    ----------------------------------------------------------------
<S>                                 <C>           <C>           <C>           <C>           <C>
Less than $100,000                  $ 33,876      $ 44,464      $  2,057      $    190      $ 80,587

Equal to or more than $100,000        21,651        32,510         7,233            --        61,394
                                    ----------------------------------------------------------------

Total                               $ 55,527      $ 76,974      $  9,290      $    190      $141,981
                                    ================================================================
</TABLE>

Liquidity and Capital Resources

Liquidity  defines the ability of Central Jersey Bank, N.A. to generate funds to
support asset growth, meet deposit  withdrawals,  maintain reserve  requirements
and otherwise  operate on an ongoing basis.  An important  component of a bank's
asset and liability  management  structure is the level of liquidity,  which are
net liquid assets  available to meet the needs of its  customers and  regulatory
requirements.  The  liquidity  needs of  Central  Jersey  Bank,  N.A.  have been
primarily met by cash on hand, loan and investment amortizations and borrowings.
Central  Jersey  Bank,  N.A.  invests  funds not needed for  operations  (excess
liquidity)  primarily in daily federal funds sold.  During 2007,  Central Jersey
Bank, N.A.  continued to maintain a large secondary source of liquidity known as
Investment Securities available-for-sale. The market value of that portfolio was
$114.8 million and $95.7 million at December 31, 2007 and 2006, respectively.


                                       42
<PAGE>

It has been Central Jersey Bank,  N.A.'s  experience  that its core deposit base
(which  is  defined  as  transaction  accounts  and term  deposits  of less than
$100,000) is primarily relationship-driven. Non-core deposits (which are defined
as term deposits of $100,000 or greater) are much more interest rate  sensitive.
In any event, adequate sources of reasonably priced on-balance sheet funds, such
as  overnight  federal  funds sold,  due from banks and  short-term  investments
maturing in less than one year,  must be continually  accessible for contingency
purposes.  This is  accomplished  primarily by the daily  monitoring  of certain
accounts for  sufficient  balances to meet future loan  commitments,  as well as
measuring Central Jersey Bank, N.A.'s liquidity position on a monthly basis.

Supplemental  sources  of  liquidity  include  large  certificates  of  deposit,
wholesale and retail  repurchase  agreements,  and federal funds  purchased from
correspondent  banks.  Correspondent  banks,  which are typically referred to as
"banker's  banks,"  offer  essential  services  such as cash letter  processing,
investment services,  loan participation  support,  wire transfer operations and
other  traditional  banking  services.  Brokered  deposits,  which are  deposits
obtained, directly or indirectly, from or through the mediation or assistance of
a deposit  broker,  may be  utilized as  supplemental  sources of  liquidity  in
accordance  with Central Jersey Bank,  N.A.'s balance sheet  management  policy.
Contingent  liquidity  sources  may include  off-balance  sheet  funds,  such as
advances from both the Federal Home Loan Bank and the Federal  Reserve Bank, and
federal  funds  purchase  lines with  "upstream"  correspondents.  An additional
source of liquidity is made  available by  curtailing  loan activity and instead
using  the  available  cash to fund  short-term  investments  such as  overnight
federal funds sold or other approved investments maturing in less than one year.
In addition,  future  expansion of Central  Jersey Bank,  N.A.'s retail  banking
network is expected to create  additional  sources of liquidity from new deposit
customer relationships.

Central Jersey Bank, N.A. is subject to various regulatory capital  requirements
administered  by  federal  banking  agencies.  Failure to meet  minimum  capital
requirements   can  initiate   certain   mandatory   and   possibly   additional
discretionary,  actions by regulators  that, if undertaken,  could have a direct
material  effect on Central  Jersey Bank,  N.A.'s  financial  statements.  Under
capital adequacy  guidelines and the regulatory  framework for prompt corrective
action,  Central Jersey Bank,  N.A. must meet specific  capital  guidelines that
involve quantitative measures of Central Jersey Bank, N.A.'s assets, liabilities
and certain  off-balance-sheet  items as calculated under regulatory  accounting
practices.  Central Jersey Bank, N.A.'s capital amounts and  classification  are
also subject to qualitative  judgments by the regulators about components,  risk
weightings and other factors. See "Item 1. Business-Government Regulation."

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  Central Jersey Bank,  N.A. to maintain  minimum amounts and ratios (set
forth in the  following  table)  of Total  Capital  and Tier 1  Capital  to risk
weighted assets and of Tier 1 Capital to average assets (leverage  ratio). As of
December  31,  2007,   Central  Jersey  Bank,  N.A.  met  all  capital  adequacy
requirements to which it is subject.

As of December 31, 2007, the most recent  notification  from the OCC categorized
Central Jersey Bank, N.A. as "well capitalized"  under the regulatory  framework
for prompt  corrective  action.  There are no  conditions  or events  since that
notification that we believe have changed Central Jersey Bank, N.A.'s category.

The  following is a summary of Central  Jersey Bank,  N.A.'s and Central  Jersey
Bancorp's  actual capital  ratios as of December 31, 2007 and 2006,  compared to
the  minimum   capital   adequacy   requirements   and  the   requirements   for
classification as a "well-capitalized" institution:


                                       43
<PAGE>

<TABLE>
<CAPTION>
                                                Tier I                       Tier I
                                              Capital to                   Capital to               Total Capital to
                                         Average Assets Ratio            Risk Weighted                Risk Weighted
                                           (Leverage Ratio)               Asset Ratio                  Asset Ratio
                                           2007        2006          2007            2006           2007        2006
                                        -------------------------------------------------------------------------------
<S>                                        <C>         <C>           <C>             <C>            <C>         <C>
Central Jersey Bancorp                     9.08%       8.38%         12.74%          11.71%         13.73%      12.62%
Central Jersey Bank, N.A.                  9.34%       8.47%         12.94%          11.81%         13.93%      12.72%

(a) "Adequately capitalized"
institution (under federal
regulations)                               4.00%       4.00%         4.00%           4.00%          8.00%        8.00%

(b) "Well capitalized" institution
(under federal regulations)                5.00%       5.00%         6.00%           6.00%          10.00%      10.00%
</TABLE>

Guaranteed  Preferred Beneficial Interest in Central Jersey Bancorp Subordinated
Debt

In March 2004, MCBK Capital Trust I, a special purpose business trust of Central
Jersey  Bancorp,  issued  an  aggregate  of  $5.0  million  of  trust  preferred
securities to ALESCO Preferred Funding III, a pooled investment vehicle. Sandler
O'Neill  &  Partners,  L.P.  acted as  placement  agent in  connection  with the
offering  of the  trust  preferred  securities.  The  securities  issued by MCBK
Capital Trust I are fully  guaranteed by Central  Jersey Bancorp with respect to
distributions  and amounts  payable upon  liquidation,  redemption or repayment.
These  securities have a floating  interest rate equal to the three-month  LIBOR
plus 285 basis points, which resets quarterly. The securities mature on April 7,
2034 and may be called at par by Central  Jersey Bancorp any time after April 7,
2009.  These  securities  were  placed  in a  private  transaction  exempt  from
registration under the Securities Act.

The entire proceeds to MCBK Capital Trust I from the sale of the trust preferred
securities  were used by MCBK Capital  Trust I in order to purchase $5.1 million
of  subordinated  debentures  from  Central  Jersey  Bancorp.  The  subordinated
debentures  bear a variable  interest rate equal to LIBOR plus 285 basis points.
Although  the  subordinated  debentures  are  treated as debt of Central  Jersey
Bancorp,  they currently qualify as Tier I Capital  investments,  subject to the
25% limitation under risk-based capital  guidelines of the Federal Reserve.  The
portion of the trust preferred securities that exceeds this limitation qualifies
as Tier II Capital of Central Jersey Bancorp. At December 31, 2007, $5.0 million
of the trust  preferred  securities  qualified  for treatment as Tier I Capital.
Central Jersey  Bancorp is using the proceeds it received from the  subordinated
debentures to support the general balance sheet growth of Central Jersey Bancorp
and to maintain Central Jersey Bank, N.A.'s required regulatory capital ratios.

On March 1, 2005,  the  Federal  Reserve  adopted a final  rule that  allows the
continued inclusion of outstanding and prospective  issuances of trust preferred
securities in the Tier I Capital of bank holding companies,  subject to stricter
quantitative  limits and  qualitative  standards.  The new  quantitative  limits
become  effective  after a five-year  transition  period  ending March 31, 2009.
Under the final rules,  trust  preferred  securities and other  restricted  core
capital  elements  are limited to 25% of all core capital  elements.  Amounts of
restricted  core  capital  elements in excess of these limits may be included in
Tier II Capital.  At December 31, 2007, the only restricted core capital element
owned by Central Jersey Bancorp is trust  preferred  securities.  Central Jersey
Bancorp  believes  that its trust  preferred  issues  qualify as Tier I Capital.
However,  in the event that the trust preferred  issues do not qualify as Tier I
Capital, Central Jersey Bank, N.A. would remain well capitalized.


                                       44
<PAGE>

Recent Accounting Pronouncements

In March 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No.
156, Accounting for Servicing of Financial Assets. Prior thereto,  SFAS No. 140,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of  Liabilities,  established,  among  other  things,  the  accounting  for  all
separately recognized servicing assets and servicing  liabilities.  SFAS No. 156
amends SFAS No. 140 to require that all separately  recognized  servicing assets
and servicing  liabilities be initially  measured at fair value, if practicable.
SFAS No. 156  permits,  but does not  require,  the  subsequent  measurement  of
separately  recognized servicing assets and servicing liabilities at fair value.
Under SFAS No. 156, an entity can elect  subsequent  fair value  measurement  to
account  for  its   separately   recognized   servicing   assets  and  servicing
liabilities.  By electing  that option,  an entity may  simplify its  accounting
because  SFAS No. 156 permits  income  statement  recognition  of the  potential
offsetting  changes  in fair  value  of those  servicing  assets  and  servicing
liabilities and derivative  instruments in the same accounting period.  SFAS No.
156 was effective in the first fiscal year  beginning  after  September 15, 2006
with earlier adoption  permitted.  Central Jersey Bancorp's adoption of SFAS No.
156 on  January  1,  2007 did not have a  material  impact  on its  consolidated
financial statements.

In July  2006,  the FASB  issued  FASB  Interpretation  No. 48,  Accounting  for
Uncertainty  in Income  Taxes  ("FIN  48").  FIN 48  establishes  a  recognition
threshold and measurement for income tax positions recognized in an enterprise's
financial  statements in  accordance  with SFAS No. 109,  Accounting  for Income
Taxes. FIN 48 also prescribes a two-step  evaluation  process for tax positions.
The first step is recognition and the second is measurement. For recognition, an
enterprise judgmentally determines whether it is more-likely-than-not that a tax
position will be sustained  upon  examination,  including  resolution of related
appeals or litigation processes,  based on the technical merits of the position.
If the tax position meets the  more-likely-than-not  recognition threshold it is
measured and recognized in the financial statements as the largest amount of tax
benefit  that is greater  than 50% likely of being  realized.  If a tax position
does not meet the  more-likely-than-not  recognition  threshold,  the benefit of
that position is not recognized in the financial statements.

Tax positions that meet the  more-likely-than-not  recognition  threshold at the
effective date of FIN 48 may be recognized,  or continue to be recognized,  upon
adoption  of  this  Interpretation.   The  cumulative  effect  of  applying  the
provisions of FIN 48 shall be reported as an  adjustment to the opening  balance
of retained earnings for that fiscal year. FIN 48 was effective for fiscal years
beginning after December 15, 2006.  Central Jersey Bancorp's  adoption of FIN 48
on January 1, 2007 did not have a material impact on its consolidated  financial
statements.  As  of  January  1,  2007,  there  were  no  amounts  recorded  for
unrecognized  tax  benefits  or  for  the  payment  of  interest  or  penalties.
Furthermore,  no amounts were accrued for the year ended  December 31, 2007. The
tax years that remain subject to examination are 2006, 2005 and 2004 for federal
and  state  tax  purposes  and 2003 for state tax  purposes  only.  Accruals  of
interest and penalties  related to unrecognized  tax benefits,  when applicable,
are recognized in income tax expense.

In September 2006, the FASB issued SFAS No. 157, Fair Value  Measurements.  This
Statement  defines fair value,  establishes a framework for measuring fair value
in  U.S.  generally  accepted  accounting  principles  ("GAAP"),   and  enhances
disclosures  about fair value  measurements.  This Statement  applies when other
accounting  pronouncements require fair value measurements;  it does not require
new  fair  value  measurements.   This  Statement  is  effective  for  financial
statements  issued for fiscal years  beginning  after  November  15,  2007,  and
interim periods within those years. Earlier application is encouraged,  provided
the  entity  has  not  yet  issued  financial  statements,  including  financial
statements for any interim period for that fiscal year. Central


                                       45
<PAGE>

Jersey Bancorp's  adoption of SFAS No. 157 did not have a material impact on its
consolidated financial statements.

In September 2006, the Emerging Issues Task Force ("EITF") of the FASB discussed
public comments received on two issues: (1) EITF Issue No. 06-4,  Accounting for
Deferred  Compensation  and  Post-Retirement   Benefit  Aspects  of  Endorsement
Split-Dollar Life Insurance  Arrangements,  and (2) EITF Issue 06-5,  Accounting
for Purchases of Life Insurance - Determining  the Amount that could be Realized
in Accordance  with FASB Technical  Bulletin 85-4  (Accounting  for Purchases of
Life Insurance). On September 7, the EITF agreed to clarify certain points based
on  public  comments.  The EITF  reached a  consensus  that an  employer  should
recognize  a  liability  for  future  benefits  under SFAS No.  106,  Employers'
Accounting for Postretirement  Benefits Other Than Pensions,  or APB Opinion No.
12,  Omnibus  Opinion - 1967,  for an  endorsement  split-dollar  life insurance
arrangement subject to the EITF Issue No. 06-4. This liability is to be based on
the  substantive  agreement  with the  employee.  The consensus is effective for
fiscal years beginning  after December 15, 2007.  Early adoption is permitted as
of the  beginning of an entity's  fiscal year.  Entities  should  recognize  the
effects  of  applying  the  consensus  on this  issue as a change in  accounting
principle  through a  cumulative-effect  adjustment  to retained  earnings or to
other components of equity or net assets in the statement of financial  position
as of the beginning of the year of adoption.  Retrospective  application  to all
prior periods is permitted.  Central Jersey Bancorp's  adoption of EITF 06-4 did
not have a material impact on its consolidated financial statements.

In  February  2007,  the FASB issued  SFAS No.  159,  The Fair Value  Option for
Financial Assets and Financial Liabilities. Under this Statement, Central Jersey
Bancorp may elect to report  financial  instruments  and certain  other items at
fair value on a  contract-by-contract  basis with  changes in value  reported in
earnings. This election is irrevocable.  SFAS No. 159 provides an opportunity to
mitigate  volatility  in reported  earnings  that is caused by measuring  hedged
assets  and  liabilities  that  were  previously  required  to  use a  different
accounting method than the related hedging contracts when the complex provisions
of SFAS No. 133,  Accounting for Derivative  Instruments and Hedging Activities,
are not met.

SFAS No. 159 is effective for years beginning  after November 15, 2007.  Central
Jersey Bancorp adopted SFAS No. 159 effective January 1, 2008, however,  decided
not to elect the fair value option permitted by SFAS No. 159.

Impact of Inflation

The consolidated  financial  statements and related  financial data presented in
this  report have been  prepared  in  accordance  with GAAP,  which  require the
measurement of financial  position and operating  results in terms of historical
dollars without  considering  changes in the relative  purchasing power of money
over time due to inflation.  The primary impact of inflation on the operation of
Central Jersey  Bancorp and Central Jersey Bank,  N.A. is reflected in increased
operating costs. Unlike most industrial  companies,  virtually all of the assets
and liabilities of a financial  institution are monetary in nature. As a result,
the  effects of general  levels of  inflation  are  primarily  reflected  in the
interest  rate paid in  liabilities  and  earned  on  interest  earning  assets.
Interest  rates do not  necessarily  move in the same magnitude as the prices of
goods and services.  We believe that  continuation  of our efforts to manage the
rates,  liquidity  and interest  sensitivity  of our assets and  liabilities  is
necessary to generate an acceptable return on assets.


                                       46
<PAGE>

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk
            ----------------------------------------------------------

Qualitative Analysis

Interest rate risk is the exposure of a bank's  current and future  earnings and
capital  arising from the adverse  movements in interest  rates.  Central Jersey
Bank,  N.A.'s  most  significant  risk  exposure  is  interest  rate  risk.  The
guidelines  of Central  Jersey Bank,  N.A.'s  interest  rate risk policy seek to
limit the  exposure  to changes in  interest  rates that  affect the  underlying
economic value of assets and liabilities, earnings and capital.

The ALCO/Investment  Committee of Central Jersey Bank, N.A. meets on a quarterly
basis to review the impact of interest rate changes on net interest income,  net
interest  margin and economic  value of equity.  Members of the  ALCO/Investment
Committee  include  Central  Jersey  Bancorp's  President  and  Chief  Executive
Officer,  Chief Operating  Officer,  Chief  Financial  Officer and Chief Lending
Officer.  The  ALCO/Investment  Committee  reviews a variety of strategies  that
project  changes in asset or  liability  mix and the impact of those  changes on
projected net interest income.

Central  Jersey Bank,  N.A.'s  strategy for  liabilities  has been to maintain a
stable  core-funding  base by focusing on core deposit  account  acquisition and
increasing  products  and  services per  household.  Time deposit  accounts as a
percentage  of total  deposits  were 35.2% at December 31, 2007,  as compared to
33.0% at December 31, 2006. Time deposits are generally short term in nature. As
of December 31, 2007,  93.3% of all time deposits had  maturities of one year or
less,  as compared to 85.7% at December 31, 2006.  Central  Jersey Bank,  N.A.'s
ability to retain maturing time deposit  accounts is the result of a strategy to
remain  competitive  priced within the marketplace.  Central Jersey Bank, N.A.'s
pricing  strategy may vary depending upon funding needs and Central Jersey Bank,
N.A.'s ability to fund  operations  through  alternative  sources,  primarily by
accessing  short term lines of credit  with the  Federal  Home Loan Bank  during
periods of pricing dislocation.

Quantitative Analysis

Central  Jersey Bank,  N.A.  measures  sensitivity  to changes in interest rates
through the use of balance  sheet and income  simulation  models.  The  analyses
capture  changes  in net  interest  income  using  flat rates as a base case and
rising and declining interest rate forecasts. Central Jersey Bank, N.A. measures
changes in net interest  income for the  forecast  period,  generally  twelve to
twenty-four months, within set limits for acceptable change.

The following  table sets forth the results of the projected net interest income
simulation  model for the twelve month period  commencing  December 31, 2007 and
ending December 31, 2008:

                                              Net Interest Income
                                              -------------------
Change in Interest Rates
In Basis Points (Rate Shock)    Amounts ($)         Change ($)       Change (%)
--------------------------------------------------------------------------------

+200                            $ 16,880             $   (99)         (0.58%)
+100                              16,945                 (34)         (0.20%)
Base Case                         16,979                  --             --
-100                              16,900                 (79)         (0.47%)
-200                            $ 16,492             $  (487)         (2.87%)


                                       47
<PAGE>

The preceding table indicates that for the year ending December 31, 2008, in the
event of an  immediate  200 basis point  parallel  increase  in interest  rates,
Central Jersey Bank, N.A. would  experience a (0.58%),  or $99,000,  decrease in
net interest income for that period.  In the event of a 200 basis point decrease
in interest  rates,  Central Jersey Bank,  N.A. would  experience a (2.87%),  or
$487,000, decrease in net interest income for the year ending December 31, 2008.

Item 8.     Financial Statements and Supplementary Data
            -------------------------------------------

The consolidated financial statements and supplementary data of Central Jersey
Bancorp called for by this item are submitted under a separate section of this
report. Reference is made to the Index of Consolidated Financial Statements
contained on page F-1 herein.

Item 9.     Changes in and  Disagreements  With  Accountants  on Accounting  and
            --------------------------------------------------------------------
            Financial Disclosure
            --------------------

None.

Item 9A.    Controls and Procedures
            -----------------------

As required by Rule 13a-15 under the  Exchange  Act, as of the end of the period
covered by this Annual Report on Form 10-K,  Central Jersey Bancorp  carried out
an evaluation of the effectiveness of the design and operation of Central Jersey
Bancorp's  disclosure  controls and procedures.  This evaluation was carried out
under the supervision  and with the  participation  of Central Jersey  Bancorp's
management,  including  Central Jersey Bancorp's  Chairman,  President and Chief
Executive  Officer and Central  Jersey  Bancorp's  Executive  Vice President and
Chief Financial Officer,  who concluded that Central Jersey Bancorp's disclosure
controls and procedures are effective.  There has been no significant  change in
Central Jersey Bancorp's  internal  controls during the last fiscal quarter that
has materially affected,  or is reasonably likely to materially affect,  Central
Jersey Bancorp's internal control over financial reporting.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that  information  required to be disclosed in Central Jersey
Bancorp's  reports  filed or  submitted  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported,  within the time periods  specified in the
Securities and Exchange  Commission's rules and forms.  Disclosure  controls and
procedures  include,  without  limitation,  controls and procedures  designed to
ensure that  information  required to be disclosed in Central  Jersey  Bancorp's
reports  filed  under  the  Exchange  Act is  accumulated  and  communicated  to
management,  including  Central Jersey Bancorp's  Chairman,  President and Chief
Executive Officer and Executive Vice President and Chief Financial  Officer,  as
appropriate, to allow timely decisions regarding required disclosure.

     Management's Annual Report on Internal Control Over Financial Reporting
     -----------------------------------------------------------------------

The management of Central Jersey Bancorp is  responsible  for  establishing  and
maintaining adequate internal control over financial  reporting.  Central Jersey
Bancorp's  internal control system is a process  designed to provide  reasonable
assurance  to the  company's  management  and Board of Directors  regarding  the
preparation and fair presentation of published financial statements.

Central Jersey  Bancorp's  internal  control over financial  reporting  includes
policies and  procedures  that pertain to the  maintenance  of records  that, in
reasonable detail,  accurately and fairly reflect  transactions and dispositions
of assets;  provide  reasonable  assurances  that


                                       48
<PAGE>

transactions  are  recorded as  necessary  to permit  preparation  of  financial
statements in accordance with GAAP, and that receipts and expenditures are being
made only in accordance with  authorizations  of management and the directors of
Central Jersey Bancorp; and provide reasonable assurance regarding prevention or
timely  detection of  unauthorized  acquisition,  use or  disposition of Central
Jersey  Bancorp's  assets that could have a material effect on our  consolidated
financial statements.

All  internal  control  systems,  no matter  how well  designed,  have  inherent
limitations.  Therefore,  even those  systems  determined  to be  effective  can
provide  only   reasonable   assurance  with  respect  to  financial   statement
preparation   and   presentation.   Also,   projections  of  any  evaluation  of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.

Management  assessed the  effectiveness  of Central  Jersey  Bancorp's  internal
control  over  financial  reporting  as of  December  31,  2007.  In making this
assessment,  we used the  criteria  set  forth by the  Committee  of  Sponsoring
Organizations  of  the  Treadway   Commission  in  Internal   Control-Integrated
Framework  (COSO).  Based on the  assessment  management  believes  that,  as of
December 31, 2007,  Central  Jersey  Bancorp's  internal  control over financial
reporting is effective based on those criteria.

     Attestation Report of the Independent Registered Public Accounting Firm
     -----------------------------------------------------------------------

Central Jersey  Bancorp's  independent  registered  public  accounting firm that
audited the consolidated  financial statements has issued an audit report on the
effectiveness  of Central  Jersey  Bancorp's  internal  control  over  financial
reporting as of December 31, 2007. This report appears on page F-3.

Item 9B.    Other Information
            -----------------

None


                                       49
<PAGE>

                                    PART III

Item 10.    Directors, Executive Officers and Corporate Governance
            ------------------------------------------------------

The  information  required  under  this  Item with  respect  to  Central  Jersey
Bancorp's  directors and executive  officers will be contained in Central Jersey
Bancorp's Proxy Statement for the Annual Meeting of Shareholders scheduled to be
held on May 28, 2008, under the captions "Election of Directors," "Section 16(a)
Beneficial  Ownership  Reporting  Compliance"  and "Executive  Officers," and is
incorporated herein by reference.

Item 11.    Executive Compensation
            ----------------------

The information required under this Item with respect to executive  compensation
will be contained in Central  Jersey  Bancorp's  Proxy  Statement for the Annual
Meeting of Shareholders scheduled to be held on May 28, 2008, under the captions
"Executive Compensation" and "Director Compensation," and is incorporated herein
by reference.

Item 12.    Security  Ownership of Certain  Beneficial Owners and Management and
            --------------------------------------------------------------------
            Related Stockholder Matters
            ---------------------------

The  information  required  by this Item will be  contained  in  Central  Jersey
Bancorp's Proxy Statement for the Annual Meeting of Shareholders scheduled to be
held on May 28, 2008,  under the captions  "Securities  Authorized  for Issuance
under Equity  Compensation  Plans" and "Security Ownership of Certain Beneficial
Owners and Management," and is incorporated herein by reference.

Item 13.    Certain    Relationships,    Related   Transactions   and   Director
            --------------------------------------------------------------------
            Independence
            ------------

The  information  required  by this item will be  contained  in  Central  Jersey
Bancorp's Proxy Statement for the Annual Meeting of Shareholders scheduled to be
held on May 28, 2008, under the caption "Certain Relationships and Related Party
Transactions"  and  "Director   Independence"  and  is  incorporated  herein  by
reference.

Item 14.    Principal Accountant Fees and Services
            --------------------------------------

The  information  required  by this item will be  contained  in  Central  Jersey
Bancorp's Proxy Statement for the Annual Meeting of Shareholders scheduled to be
held on May 28, 2008,  under the captions  "Audit Fees," "Audit  Related  Fees,"
"Tax  Fees,"  "All  Other  Fees,"  and  "Policy  on  Pre-Approval  of Audit  and
Permissible Non-Audit Services," and is incorporated herein by reference.


                                       50
<PAGE>

                                     PART IV

Item 15.    Exhibits and Financial Statement Schedules
            ------------------------------------------

            (a)   Exhibits
                  --------

                  Reference  is made to the Index of Exhibits  beginning on page
                  E-1 herein.

            (b)   Financial Statement Schedules:
                  ------------------------------

                  Reference  is  made to the  Index  of  Consolidated  Financial
                  Statements on page F-1 herein.  No schedules are included with
                  the  consolidated  financial  statements  because the required
                  information   is   inapplicable   or  is   presented   in  the
                  consolidated financial statements or notes thereto.


                                       51
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,  thereunto
duly authorized.

                                         CENTRAL JERSEY BANCORP


Date: March 14, 2008                  By:    /s/ James S. Vaccaro
                                         ---------------------------------------
                                         James S. Vaccaro
                                         Chairman, President and Chief Executive
                                         Officer

KNOW ALL MEN BY THESE PRESENTS,  that each person whose signature  appears below
constitutes  and appoints James S. Vaccaro and Robert S. Vuono and each of them,
his or her true and  lawful  attorneys-in-fact  and agents for him or her and in
his or her name, place an stead, in any and all capacities,  to sign any and all
amendments  to this Annual Report on Form 10-K,  and to file the same,  with all
exhibits  thereto,  and  other  documents  in  connection  therewith,  with  the
Securities and Exchange  Commission,  granting unto said  attorneys-in-fact  and
agents full power and  authority  to do and perform each and every act and thing
requisite and  necessary to be done in and about the  premises,  as fully to all
intents and purposes as they might or could do in person,  hereby  ratifying and
confirming all that said  attorneys-in-fact  and agents may lawfully do or cause
to be done by virtue hereof.

In accordance  with Section 13 or 15(d) of the Exchange Act, the  Registrant has
caused this report to be signed by the following  persons in the  capacities and
on the dates stated.

<TABLE>
<CAPTION>
          Signatures                                   Title                                    Date
          ----------                                   -----                                    ----
<S>                                  <C>                                                   <C>
     /s/ James S. Vaccaro            Chairman, President and Chief Executive               March 14, 2008
-----------------------------        Officer (Principal Executive Officer) and
       James S. Vaccaro              Director

     /s/ Robert S. Vuono             Senior Executive Vice President, Chief                March 14, 2008
-----------------------------        Operating Officer, Secretary and Director
       Robert S. Vuono

  /s/ Anthony Giordano, III          Executive Vice President,  Chief Financial            March 14, 2008
-----------------------------        Officer, Treasurer and Assistant Secretary
    Anthony Giordano, III            (Principal Financial and Accounting Officer)
</TABLE>


                                       52
<PAGE>

          Signatures                      Title                        Date
          ----------                      -----                        ----

      /s/ James G. Aaron                Director                  March 14, 2008
-------------------------------
        James G. Aaron

      /s/ Mark R. Aikins                Director                  March 14, 2008
-------------------------------
        Mark R. Aikins

  /s/ Nicholas A. Alexander             Director                  March 14, 2008
-------------------------------
    Nicholas A. Alexander

    /s/ John A. Brockriede              Director                  March 14, 2008
-------------------------------
      John A. Brockriede

                                        Director                  March 14, 2008
     /s/ George S. Callas
-------------------------------
       George S. Callas

      /s/ James P. Dugan                Director                  March 14, 2008
-------------------------------
        James P. Dugan

     /s/ M. Claire French               Director                  March 14, 2008
-------------------------------
       M. Claire French

    /s/ William H. Jewett               Director                  March 14, 2008
-------------------------------
      William H. Jewett

   /s/ Paul A. Larson, Jr.              Director                  March 14, 2008
-------------------------------
     Paul A. Larson, Jr.

      /s/ John F. McCann                Director                  March 14, 2008
-------------------------------
        John F. McCann

     /s/ Carmen M. Penta                Director                  March 14, 2008
-------------------------------
       Carmen M. Penta

      /s/ Mark G. Solow                 Director                  March 14, 2008
-------------------------------
        Mark G. Solow


                                       53
<PAGE>

                             CENTRAL JERSEY BANCORP
                                 AND SUBSIDIARY

                        Consolidated Financial Statements

                                    Contents

                                December 31, 2007

<TABLE>
<S>                                                                                                       <C>
Reports of Independent Registered Public Accounting Firm .................................................F-2
Consolidated Statements of Financial Condition at December 31, 2007 and 2006..............................F-4
Consolidated Statements of Income for the years ended December 31, 2007, 2006
     and 2005.............................................................................................F-5
Consolidated Statements of Changes in Shareholders' Equity for the years
     ended December 31, 2007, 2006 and 2005...............................................................F-6
Consolidated Statement of Cash Flows for the years ended
     December 31, 2007, 2006 and 2005.....................................................................F-7
Notes to Consolidated Financial Statements................................................................F-8
</TABLE>


                                      F-1
<PAGE>

             Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Central Jersey Bancorp:

We have audited the accompanying  consolidated statements of financial condition
of Central  Jersey  Bancorp and subsidiary as of December 31, 2007 and 2006, and
the related consolidated  statements of income, changes in shareholders' equity,
and cash flows for each of the years in the three-year period ended December 31,
2007. These consolidated  financial statements are the responsibility of Central
Jersey  Bancorp's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of Central  Jersey
Bancorp  and  subsidiary  as of December  31, 2007 and 2006,  and the results of
their  operations  and their cash flows for each of the years in the  three-year
period ended  December 31, 2007,  in  conformity  with U.S.  generally  accepted
accounting principles.

We also have audited in  accordance  with the  standards  of the Public  Company
Accounting  Oversight Board (United States),  Central Jersey Bancorp's  internal
control over  financial  reporting  as of December  31, 2007,  based on criteria
established in Internal  Control - Integrated  Framework issued by the Committee
of Sponsoring  Organizations of the Treadway  Commission  (COSO), and our report
dated March 14, 2008 expressed an unqualified  opinion on the  effectiveness  of
the Company's internal control over financial reporting.


/s/ KPMG LLP
Short Hills, New Jersey
March 14, 2008


                                      F-2
<PAGE>

             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------

                  On Internal Control Over Financial Reporting
                  --------------------------------------------

The Board of Directors and Shareholders

Central Jersey Bancorp:

We have audited Central Jersey Bancorp and subsidiary's (the Company)-  internal
control over  financial  reporting  as of December  31, 2007,  based on criteria
established in Internal Control-Integrated  Framework issued by the Committee of
Sponsoring  Organizations of the Treadway  Commission (COSO).  Management of the
Company is responsible for maintaining effective internal control over financial
reporting and for its assessment of the  effectiveness  of internal control over
financial  reporting  included  on  page  48,  Item  9A,  Control  Procedures  -
Management's   Report  on  Internal  Control  Over  Financial   Reporting.   Our
responsibility  is to express an opinion on the  effectiveness  of the Company's
internal control over financial reporting based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain  reasonable  assurance  about whether  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects. Our audit included obtaining an understanding of internal control over
financial  reporting,  assessing  the risk that a material  weakness  exists and
testing  and  evaluating  the design and  operating  effectiveness  of  internal
control  based on the assessed  risk.  Our audit also included  performing  such
other  procedures as we considered  necessary in the  circumstances.  We believe
that our audit provides a reasonable basis for our opinion.

A company's  internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion Central Jersey Bancorp and subsidiary maintained, in all material
respects, effective internal control over financial reporting as of December 31,
2007, based on criteria  established in Internal  Control--Integrated  Framework
issued by the Committee of Sponsoring  Organizations of the Treadway  Commission
(COSO).

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight  Board (United  States),  the  consolidated  statements of
financial  position of Central  Jersey Bancorp and subsidiary as of December 31,
2007 and 2006,  and the related  consolidated  statements of income,  changes in
shareholders'  equity,  and cash  flows for each of the years in the  three-year
period ended December 31, 2007, and our report dated March 14, 2008 expressed an
unqualified opinion on those consolidated financial statements.


/s/ KPMG LLP
Short Hills, New Jersey
March 14, 2008


                                      F-3
<PAGE>

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           DECEMBER 31, 2007 AND 2006
                (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
ASSETS                                                                       2007             2006
------                                                                   -----------      -----------
<S>                                                                      <C>              <C>
Cash and due from banks                                                  $    11,198      $    16,162
Federal funds sold                                                             3,679           21,634
                                                                         -----------      -----------
     Cash and cash equivalents                                                14,877           37,796
Investment securities available-for-sale, at market value                    114,824           95,735
Investment securities held-to-maturity (market value of $17,379 and
     $20,454 at December 31, 2007 and 2006, respectively)                     17,430           20,820
Federal Reserve Bank Stock                                                     1,960            1,952
Federal Home Loan Bank Stock                                                     550              542
Loans held-for-sale                                                              658              242

Loans                                                                        315,173          315,322
     Less: Allowance for loan losses                                           3,408            3,229
                                                                         -----------      -----------
          Loans, net                                                         311,765          312,093

Accrued interest receivable                                                    2,218            2,613
Premises and equipment                                                         4,626            5,357
Bank owned life insurance                                                      3,565            3,447
Goodwill                                                                      26,957           26,957
Core deposit intangible                                                        1,926            2,478
Due from broker                                                                   --            3,527
Other assets                                                                   2,150            2,740
                                                                         -----------      -----------
          Total assets                                                   $   503,506      $   516,299
                                                                         ===========      ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Deposits:
     Non-interest bearing                                                $    73,955      $    83,482
     Interest bearing                                                        329,335          343,795
                                                                         -----------      -----------
                                                                             403,290          427,277

Borrowings                                                                    24,564           17,099
Subordinated debentures                                                        5,155            5,155
Accrued expenses and other liabilities                                         1,611            1,273
                                                                         -----------      -----------
          Total liabilities                                                  434,620          450,804
                                                                         -----------      -----------

Shareholders' equity:
Common stock, par value $0.01 per share. Authorized
     100,000,000 shares and issued and outstanding
     8,745,990 and 8,667,281 shares at December 31, 2007 and
     2006, respectively                                                           87               87
Additional paid-in capital                                                    60,791           60,501
Accumulated other comprehensive income (loss), net of tax expense
(benefit)                                                                        848           (1,409)
Retained earnings                                                              7,160            6,316
                                                                         -----------      -----------
          Total shareholders' equity                                          68,886           65,495
                                                                         -----------      -----------
          Total liabilities and shareholders' equity                     $   503,506      $   516,299
                                                                         ===========      ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

                        CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                       2007              2006            2005
                                                                   -----------       -----------      -----------
<S>                                                                <C>               <C>              <C>
Interest and dividend income:
     Interest and fees on loans                                    $    22,975       $    23,159      $    18,726
     Interest on securities available-for-sale                           5,100             4,465            4,891
     Interest on federal funds sold and due from banks                   1,530               804              239
     Interest on securities held-to-maturity                               883               991            1,091
                                                                   -----------       -----------      -----------
          Total interest and dividend income                            30,488            29,419           24,947

Interest expense:
     Interest expense on deposits                                       12,597            10,760            6,615
     Interest expense on other borrowings                                  746             1,267              547
     Interest expense on subordinated debentures                           439               429              340
                                                                   -----------       -----------      -----------
          Total interest expense                                        13,782            12,456            7,502

                                                                   -----------       -----------      -----------
          Net interest income                                           16,706            16,963           17,445

Provision for loan losses                                                  165               500              426
                                                                   -----------       -----------      -----------
          Net interest income after provision for loan losses           16,541            16,463           17,019
                                                                   -----------       -----------      -----------

Other income:
     Impairment on available-for-sale securities                        (1,957)               --               --
     Service charges on deposit accounts                                 1,479             1,412            1,401
     Income on bank owned life insurance                                   118               109              112
     Gain on sale of available-for-sale securities                          87                --               --
     Gain on the sale of loans held-for-sale                                56               213              105
     Other service charges, commissions and fees                            --                 6                6
                                                                   -----------       -----------      -----------
          Total other (loss) income                                       (217)            1,740            1,624
                                                                   -----------       -----------      -----------

Operating expenses:
     Salaries and employee benefits                                      7,146             7,345            7,287
     Net occupancy expenses                                              1,821             1,687            1,718
     Professional fees                                                     938               759              687
     Data processing fees                                                  884               809              937
     Outside service fees                                                  856               866            1,017
     Furniture, fixtures and equipment                                     626               690              599
     Core deposit intangible amortization                                  552               619              688
     Stationery, supplies and printing                                     251               269              288
     Insurance                                                             194               200              192
     Telephone                                                             161               153              134
     Abandonment of leasehold improvements                                 137               --                --
     Advertising                                                           134               150              220
     Other operating expenses                                              670               762              783
                                                                   -----------       -----------      -----------
          Total other expenses                                          14,370            14,309           14,550
                                                                   -----------       -----------      -----------

Income before provision for income taxes                                 1,954             3,894            4,093
Income taxes                                                             1,110             1,428            1,461
                                                                   -----------       -----------      -----------
     Net income                                                    $       844       $     2,466      $     2,632
                                                                   ===========       ===========      ===========

Basic earnings per share                                           $      0.10       $      0.28      $      0.31
                                                                   ===========       ===========      ===========
Diluted earnings per share                                         $      0.09       $      0.27      $      0.28
                                                                   ===========       ===========      ===========
Average basic shares outstanding                                     8,710,865         8,655,137        8,549,322
                                                                   ===========       ===========      ===========
Average diluted shares outstanding                                   9,132,772         9,156,428        9,354,568
                                                                   ===========       ===========      ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                           Accumulated
                                                             Additional       other
                                                 Common        paid-in    comprehensive     Retained
                                                 stock         capital    (loss) income     earnings        Total
-------------------------------------------------------------------------------------------------------------------
<S>                                            <C>            <C>            <C>            <C>            <C>
Balance at December 31, 2004                   $     40       $ 15,216       $   (619)      $  1,218       $ 15,855
-------------------------------------------------------------------------------------------------------------------
Comprehensive income:

Net income                                           --             --             --          2,632          2,632
Unrealized loss on securities
 available-for-sale, net of tax of ($881)            --             --         (1,534)            --         (1,534)
                                                                                                           --------
Total comprehensive income                                                                                    1,098
Allaire Community Bank combination                   40         44,375             --             --         44,415
Exercise of stock options - 54,329
 shares (including tax benefit $148)                  2            408             --             --            410
-------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2005                   $     82       $ 59,999       $ (2,153)      $  3,850       $ 61,778
-------------------------------------------------------------------------------------------------------------------
Comprehensive income:

Net income                                           --             --             --          2,466          2,466
Unrealized gain on securities
 available-for-sale, net of tax of $437              --             --            744             --            744
                                                                                                           --------
Total comprehensive income                                                                                    3,210
Exercise of stock options - 113,150
 shares (including tax benefit $250)                  5            719             --             --            724

Common stock retired - 22,599                                     (217)            --             --           (217)
-------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2006                   $     87       $ 60,501       $ (1,409)      $  6,316       $ 65,495
-------------------------------------------------------------------------------------------------------------------
Comprehensive income:

Net income                                           --             --             --            844            844
Unrealized gain on securities
 available-for-sale, net of tax of $686              --             --            896             --            896
Reclassification adjustment for gains
 included in net income net of tax ($37)             --             --             50             --             50
Impairment on securities
 available-for-sale, net of tax of ($646)            --             --          1,311             --          1,311
                                                                                                           --------
Total comprehensive income                                                                                    3,101
Exercise of stock options - 79,223
 shares (including tax benefit $15)                  --            294             --             --            294

Cash paid for fractional shares                      --             (4)            --             --             (4)
-------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2007                   $     87       $ 60,791       $    848       $  7,160       $ 68,886
===================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                          2007           2006            2005
                                                                                       -----------------------------------------
<S>                                                                                    <C>             <C>             <C>
Cash flows from operating activities:
     Net income                                                                        $     844       $   2,466       $   2,632
Adjustments to reconcile net income to net cash provided by (used in)
  operating activities:

     Increase in cash surrender value of life insurance                                     (118)           (109)           (112)
     Deferred taxes                                                                         (815)           (478)           (189)
     Tax benefit of stock option exercises                                                   (15)           (250)           (148)
     Provision for loan losses                                                               165             500             426
     Net discount accretion (premium amortization) on held-to-maturity securities            (11)             (8)              7
     Net premium amortization on available-for-sale securities                                35             163             246
     Depreciation and amortization                                                           705             842             736
     Decrease (increase) in accrued interest receivable                                      395              23            (242)
     Core deposit intangible amortization                                                    552             619             688
     Impairment on available-for-sale securities                                           1,957              --              --
     Abandonment of leasehold improvements                                                   137              --              --
     Gain on sale of securities available-for-sale                                           (87)             --              --
     Gain on the sale of loans held-for-sale                                                 (56)           (213)           (105)
     Origination of loans held-for-sale                                                  (19,825)        (25,390)        (11,591)
     Proceeds from sale of loans held-for-sale                                            19,465          28,488           8,569
     Decrease (increase) in other assets                                                   1,374           2,071          (4,658)
     Increase (decrease) in accrued expenses and other liabilities                           353            (612)           (119)
                                                                                       -----------------------------------------
          Net cash provided by (used in) operating activities                              5,055           8,112          (3,860)
                                                                                       -----------------------------------------

Cash flows from investing activities:

     Purchase of investment securities available-for-sale                               (115,585)           (474)             --
     Maturities of and paydowns on investment securities held-to-maturity                  3,401           1,755           2,995
     Proceeds from sales, maturities of and paydowns on investment securities
       available-for-sale                                                                 96,848          16,932          16,707
     Decrease (increase)  in due from broker                                               3,527          (3,527)             --
     Net decrease (increase) in loans                                                        163          (5,425)        (48,052)
     Cash/cash equivalents acquired in Allaire Community Bank combination                     --              --           6,886
     Purchases of premises and equipment, net                                               (111)           (193)           (710)
                                                                                       -----------------------------------------
          Net cash (used in)  provided by investing activities                           (11,757)          9,068         (22,174)
                                                                                       -----------------------------------------

Cash flows from financing activities:

     Proceeds from stock options exercised, net                                              309             757             558
     Net (decrease) increase in non-interest bearing deposits                             (9,527)         (7,815)         22,163
     Net (decrease)  increase in interest bearing deposits                               (14,460)         27,538         (17,341)
     Net increase (decrease) in other borrowings                                           7,465         (21,092)         23,288
     Cash paid for fractional shares                                                          (4)             --              --
                                                                                       -----------------------------------------
          Net cash (used in) provided by financing activities                            (16,217)           (612)         28,668
                                                                                       -----------------------------------------

          (Decrease) increase in cash and cash equivalents                               (22,919)         16,568           2,634

Cash and cash equivalents at beginning of period                                          37,796          21,228          18,594
                                                                                       -----------------------------------------
Cash and cash equivalents at end of period                                             $  14,877       $  37,796       $  21,228
                                                                                       =========================================

Cash paid during the period for:
     Interest                                                                          $  13,766       $  12,413       $   7,597
     Taxes                                                                             $   1,612       $   1,508       $   1,860
Non cash investing activities:
     Fair value of assets acquired in Allaire Community Bank combination               $      --       $      --       $ 201,820
     Goodwill and core deposit intangible resulting from Allaire Community
         Bank combination                                                              $      --       $      --       $  31,014
     Liabilities assumed in Allaire Community Bank combination                         $      --       $      --       $ 186,528
     Common stock issued  in Allaire Community Bank combination                        $      --       $      --       $  39,803
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

Central Jersey Bancorp and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007, 2006 and 2005

(1) Summary of Significant Accounting Policies

Business

Effective August 31, 2000, Central Jersey Bancorp,  a newly formed  corporation,
acquired  all of the shares of Central  Jersey Bank,  N.A.  Each share of $5 par
value common stock of Central  Jersey Bank,  N.A. was exchanged for one share of
$0.01 par value common stock of Central Jersey Bancorp.  The  reorganization was
accounted for as if it were a pooling of interests.  Central  Jersey Bancorp and
Central Jersey Bank, N.A. are collectively referred to herein as the "Company."

On January 1, 2005,  Central  Jersey  Bancorp  completed its strategic  business
combination   transaction   with   Allaire   Community   Bank,   a  New   Jersey
state-chartered  bank,  pursuant  to  which  Allaire  Community  Bank  became  a
wholly-owned bank subsidiary of Central Jersey Bancorp. On the effective date of
the  combination,  the name of the holding  company was  changed  from  Monmouth
Community  Bancorp to Central  Jersey  Bancorp.  In August 2005,  Central Jersey
Bancorp combined its two bank  subsidiaries,  Monmouth  Community Bank, N.A. and
Allaire Community Bank, into a single banking entity, named Central Jersey Bank,
N.A.  Central Jersey Bancorp  currently owns one operating  subsidiary,  Central
Jersey Bank, N.A.

The  Company  provides a full range of banking  services  to  customers  located
primarily in Monmouth and Ocean Counties, New Jersey. Central Jersey Bancorp and
Central  Jersey Bank,  N.A.  are subject,  as  applicable,  to federal  statutes
applicable to banks and bank holding  companies.  In 2001,  Central Jersey Bank,
N.A.  converted from a state  chartered  institution  to a nationally  chartered
institution  regulated by the Office of Comptroller of the Currency (the "OCC").
Central  Jersey  Bank,  N.A.'s  deposits  are  insured  by the  Federal  Deposit
Insurance  Corporation  (the  "FDIC").  Central  Jersey  Bancorp  is  subject to
regulation, supervision and examination by the Federal Reserve Bank of New York.

Central  Jersey Bancorp paid a 5% stock dividend on July 1, 2007. As of December
31, 2007, there were 8,745,990  issued and outstanding  shares of Central Jersey
Bancorp common stock. Central Jersey Bancorp paid a 5% stock dividend on July 1,
2006.  As of December  31, 2006,  there were  8,667,281  issued and  outstanding
shares of Central Jersey Bancorp common stock. Central Jersey Bancorp effected a
two-for-one  stock split, in the form of a stock dividend,  for  shareholders of
record  on June 15,  2005.  All prior  period  amounts  have been  retroactively
restated to reflect the aforementioned stock splits and stock distributions.

Basis of Financial Statement Presentation

The  accompanying  consolidated  financial  statements  include the  accounts of
Central  Jersey Bancorp and its  wholly-owned  bank  subsidiary,  Central Jersey
Bank, N.A. All significant  inter-company  accounts and  transactions  have been
eliminated  in  consolidation.  The  consolidated  financial  statements  of the
Company have been prepared in conformity with U.S. generally accepted accounting
principles  ("GAAP").  In preparing  the  financial  statements,  management  is
required to make estimates and assumptions  that affect the reported  amounts of
assets  and  liabilities  as of the  dates  of the  consolidated  statements  of
financial condition and results of operations for the periods indicated.  Actual
results could differ significantly from those estimates.


                                      F-8
<PAGE>

Material  estimates that are particularly  susceptible to significant  change in
the near term relate to the  determination  of the  allowance for loan losses as
well as the other-than-temporary impairment of investment securities.

While  management uses available  information to recognize  estimated  losses on
loans,  such  estimates  may be  adjusted  to account  for  changes in  economic
conditions.  In addition,  various regulatory  agencies,  as an integral part of
their examination process,  periodically review the Company's allowance for loan
losses.  Such agencies may require the Company to increase such allowance based,
in their  judgment,  on the  information  available to them at the time of their
examination.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents  include cash on
hand,  amounts due from banks and overnight  federal  funds sold.  Federal funds
sold are generally sold for one-day periods.

Investment Securities

Investment securities held-to-maturity are comprised of debt securities that the
Company has the positive intent and ability to hold to maturity. Such securities
are stated at cost,  adjusted  for  amortization  of premiums  and  accretion of
discounts over the estimated  remaining lives of the securities as an adjustment
to the yield using the level-yield method.  Securities to be held for indefinite
periods of time and not intended to be  held-to-maturity,  including  all equity
securities, are classified as available-for-sale.  Securities available-for-sale
include securities that management intends to use as part of its asset/liability
management  strategy  and that may be sold in  response  to changes in  interest
rates,  resultant prepayment risk and other factors related to interest rate and
resultant prepayment risk changes. Securities  available-for-sale are carried at
fair   value.   Unrealized   holding   gains  and  losses  on  such   securities
available-for-sale  are  excluded  from  earnings  and  reported  as a  separate
component of shareholders'  equity.  Gains and losses on sales of securities are
based on the specific  identification  method and are  accounted  for on a trade
date basis.

On  a  quarterly  basis,  the  Company  evaluates   investment   securities  for
other-than-temporary impairment. For individual investment securities classified
as either available-for-sale or held-to-maturity,  a determination is made as to
whether a decline in fair  value  below the  amortized  cost basis is other than
temporary.  If the  decline in fair value is judged to be other than  temporary,
the cost basis of the  individual  investment  security shall be written down to
fair  value  as a new cost  basis  and the  amount  of the  write-down  shall be
recognized   in   earnings.   Subsequent   increases   in  the  fair   value  of
available-for-sale  securities  shall be  included  as a separate  component  of
equity;  subsequent  decreases  in fair  value,  if not an  other-than-temporary
impairment,  also shall be included  as a separate  component  of  shareholders'
equity.

Loans Held-for-Sale

Loans held-for-sale are carried at the lower of aggregate cost or fair value.


                                      F-9
<PAGE>

Loans

Loans are stated at unpaid principal balances,  adjusted for unearned income and
deferred loan fees and costs.

Interest on loans is  credited to  operations  based upon the  principal  amount
outstanding.

Loan origination and commitment fees and certain direct loan  origination  costs
are deferred,  and the net amount is amortized  over the  estimated  life of the
loan as an adjustment to the loan's yield using the level-yield method.

An impaired  loan is defined as a loan for which,  based on current  information
and  events,  it is  probable  that the  Company  will be unable to collect  all
amounts due according to the contractual  terms of the loan agreement.  Impaired
loans are measured based on the present value of expected future cash flows, or,
as a practical  expedient,  at the loan's  observable  market price, or the fair
value of the underlying  collateral,  if the loan is collateral  dependent.  The
accrual of income on loans,  including impaired loans, is generally discontinued
when a loan becomes more than ninety days delinquent as to principal or interest
or when other circumstances indicate that collection is questionable, unless the
loan is well  secured and in the process of  collection.  Income on  non-accrual
loans, including impaired loans, is recognized only in the period in which it is
collected,  and only if management  determines  that the loan principal is fully
collectible.  Loans are  returned  to an accrual  status  when a loan is brought
current as to principal and interest and reasons indicating  doubtful collection
no longer  exists.  Residential  mortgages and consumer loans are deemed smaller
balance homogenous loans which are evaluated  collectively for impairment as one
and are therefore, excluded from the population of impaired loans.

A loan is considered past due when a payment has not been received in accordance
with  the  contractual  terms.   Generally,   commercial  loans  are  placed  on
non-accrual  status when they are 90 days past due unless they are well  secured
and in the process of  collection  or,  regardless of the past due status of the
loan,  when management  determines  that the complete  recovery of principal and
interest  is in doubt.  Commercial  loans  are  generally  charged  off after an
analysis is completed which indicates that  collectibility of the full principal
balance is in doubt.  Consumer loans are generally charged off after they become
120 days past due.  Commercial  mortgage  loans  are not  generally  placed on a
non-accrual  status unless the value of the real estate has  deteriorated to the
point that a potential loss of principal or interest exists. Subsequent payments
are  credited to income only if  collection  of  principal  is not in doubt.  If
principal  and interest  payments are brought  contractually  current and future
collectibility  is  reasonably  assured,  loans are returned to accrual  status.
Commercial  mortgage  loans  are  generally  charged  off when the  value of the
underlying  collateral does not cover the outstanding  principal  balance.  Loan
origination  and  commitment  fees less  certain  costs are deferred and the net
amount  amortized as an adjustment to the related  loan's yield.  Loans held for
sale are recorded at the lower of aggregate cost or market value.

The  allowance  for loan  losses is based upon  management's  evaluation  of the
adequacy of the  allowance,  including an assessment  of: (a) known and inherent
risks in the loan portfolio, (b) the size and composition of the loan portfolio,
(c)  actual  loan  loss  experience,  (d) the  level of  delinquencies,  (e) the
individual  loans for which  full  collectibility  may not be  assured,  (f) the
existence and estimated net realizable  value of any  underlying  collateral and
guarantees  securing  the  loans,  and  (g)  the  current  economic  and  market
conditions.  Although management uses the best information available,  the level
of the  allowance  for loan  losses  remains  an  estimate  that is  subject  to
significant judgment and short-term change.  Various regulatory agencies,  as an
integral part of their examination  process,  periodically  review the Company's
allowance  for loan  losses.


                                      F-10
<PAGE>

Such  agencies may require the Company to make  additional  provisions  for loan
losses  based  upon  information   available  to  them  at  the  time  of  their
examination.  Furthermore,  the majority of the  Company's  loans are secured by
real estate in the State of New Jersey.  Accordingly,  the  collectibility  of a
substantial  portion of the carrying  value of the Company's  loan  portfolio is
susceptible to changes in local market conditions and may be adversely  affected
should real estate values  decline or the Central New Jersey area  experience an
adverse economic  climate.  Future  adjustments to the allowance for loan losses
may be necessary due to economic,  operating,  regulatory  and other  conditions
beyond the Company's  control.  Management  believes that the allowance for loan
losses is adequate.

The  provision  for loan losses  charged to operating  expense is  determined by
management  and is based  upon a  periodic  review of the loan  portfolio,  past
experience,  the economy, and other factors that may affect a borrower's ability
to repay a loan.  The  provision is based on  management's  estimates and actual
losses may vary from these estimates. Estimates are reviewed and adjustments, as
they become necessary, are reported in the periods in which they become known.

Premises and Equipment

Premises and  equipment  are stated at cost less  accumulated  depreciation  and
amortization.  Depreciation  is charged to operations on a  straight-line  basis
over the  estimated  useful  lives of the  assets  or, in the case of  leasehold
improvements,  the lease period, if shorter.  Depreciable lives range from three
to ten years for furniture, fixtures and equipment and five to fifteen years for
leasehold improvements. Gains or losses on dispositions are reflected in current
operations. Maintenance and repairs are charged to expense as incurred.

Bank-Owned Life Insurance

Bank-owned life insurance is recorded at its realizable value. The change in the
net asset value is included as a component of non-interest income.

401(k) Plan

The Company has a 401(k) plan covering  substantially all of its employees.  The
Company may  contribute  an amount equal to 100% of the first 3% of the employee
deferral and then 50% of the next 2% of the  employee  deferral.  The  Company's
matching  contribution,  if any, is  determined by the Board of Directors in its
sole discretion.

Income Taxes

Income taxes are  accounted for under the asset and  liability  method.  Current
income  taxes are  provided  for based upon  amounts  estimated  to be currently
payable, for both federal and state income taxes. Deferred federal and state tax
assets and liabilities  are recognized for the expected future tax  consequences
of existing  differences  between financial  statement and tax bases of existing
assets and liabilities. Deferred tax assets are recognized for future deductible
temporary  differences and tax loss  carryforwards if their realization is "more
likely  than not." The effect of a change in the tax rate on  deferred  taxes is
recognized in the period of the enactment date.

Comprehensive Income

Comprehensive  income is  segregated  into net  income  and other  comprehensive
income.  Other comprehensive  income includes items previously recorded directly
to equity, such as unrealized


                                      F-11
<PAGE>

gains and losses on  securities  available-for-sale,  net of tax.  Comprehensive
income is presented in the Statements of Changes in Shareholders' Equity.

Segment Reporting

The  Company's  operations  are solely in the  financial  services  industry and
include  providing  to its  customers  traditional  banking and other  financial
services.  The Company operates primarily in the geographical  region of Central
New Jersey.  Management makes operating decisions and assesses performance based
on an ongoing review of the Company's consolidated financial results. Therefore,
the Company has a single operating segment for financial reporting purposes.

Net Income Per Share

Basic and diluted net income per share for the year ended  December 31, 2007 was
calculated by dividing the net income of $844,000 by the weighted average number
of  shares  outstanding  of  8,710,865  (as to the basic  net  income  per share
determination)   and   9,132,772  (as  to  the  diluted  net  income  per  share
determination).  Basic and  diluted  net  income  per  share for the year  ended
December 31, 2006 was  calculated  by dividing the net income of $2.5 million by
the weighted average number of shares  outstanding of 8,655,137 (as to the basic
net income per share  determination) and 9,156,428 (as to the diluted net income
per share determination).  Basic and diluted net income per share for year ended
December 31, 2005 was  calculated  by dividing the net income of $2.6 million by
the weighted average number of shares  outstanding of 8,549,322 (as to the basic
net income per share  determination) and 9,354,568 (as to the diluted net income
per share  determination).  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
average  number of shares  outstanding  for the period using the treasury  stock
method.  Shares issued and shares  reacquired during the period are weighted for
the portion of the period that they were outstanding.

The following table reconciles shares outstanding for basic and diluted earnings
per share for the years ended December 31, 2007, 2006 and 2005:

                                                     Year ended
                                                     December 31,
                                           2007          2006           2005
                                        ---------------------------------------
Average basic shares outstanding        8,710,865      8,655,137      8,549,322
Add effect of dilutive securities:
       Stock options                      421,907        500,991        805,246
                                        ---------------------------------------
Average diluted shares outstanding      9,132,772      9,156,428      9,354,568
                                        =======================================

Options to purchase  111,132 shares of common stock and 157,937 shares of common
stock at a  weighted  average  price of $10.39  per  share and $9.00 per  share,
respectively,  were  outstanding  and were not  included in the  computation  of
diluted  earnings per share for the year ended  December  31, 2007,  because the
option exercise price was greater than the average market price for the period.

Options to purchase  111,132 shares of common stock and 161,629 shares of common
stock at a  weighted  average  price of $10.39  per  share and $9.00 per  share,
respectively,  were  outstanding  and were not  included in the  computation  of
diluted  earnings per share for the year ended  December  31, 2006,  because the
option exercise price was greater than the average market price for the period.


                                      F-12
<PAGE>

Intangible Assets

Intangible  assets of the Company consist of goodwill and core deposit premiums.
Goodwill  represents  the excess of the purchase  price over the estimated  fair
value of identifiable  net assets acquired  through  purchase  acquisitions.  In
accordance with Statement of Financial  Accounting  Standards  ("SFAS") No. 142,
Goodwill and Other Intangible Assets, goodwill with an indefinite useful life is
not amortized, but is evaluated for impairment on an annual basis.

Core deposit premiums represent the intangible value of depositor  relationships
assumed in purchase  acquisitions and are amortized on an accelerated basis over
a period of ten years.  The amortization of the core deposit premium is recorded
as a component of operating expenses.

Impairment

Long-lived assets including  goodwill and certain  identifiable  intangibles are
periodically  evaluated for impairment in value.  Long-lived assets and deferred
costs are typically measured whenever events or circumstances  indicate that the
carrying amount may not be recoverable.  No such events have occurred during the
periods reported.  Certain  identifiable  intangibles and goodwill are evaluated
for impairment at least annually  utilizing the "market  approach" as prescribed
by SFAS No. 142,  Goodwill and Other  Intangible  Assets.  Asset  impairment  is
recorded when required.

Stock Based Compensation

Effective  January 1, 2006,  the Company began  recording  compensation  expense
associated  with stock options in accordance  with SFAS No. 123(R),  Share-Based
Payment.  Prior to  January 1,  2006,  the  Company  accounted  for  stock-based
compensation  related to stock options  under the  recognition  and  measurement
principles of Accounting Principle Board Opinion No. 25; therefore,  the Company
measured  compensation  expense for its stock option  plans using the  intrinsic
value  method,  that is, the excess,  if any,  of the fair  market  value of the
Company's stock at the grant date over the amount required to be paid to acquire
the stock, and provided the disclosures required by SFAS No. 123(R) and SFAS No.
148,  Accounting  for  Stock-Based  Compensation.  The  Company  has adopted the
modified  prospective  transition  method provided by SFAS No. 123(R),  and as a
result, has not retroactively adjusted results from prior periods.

As a result of the  adoption of SFAS No.  123(R),  the  Company has  incurred no
compensation  expense related to the Company's stock  compensation plans for the
years ended  December 31, 2007 and 2006, as no stock options were granted during
2007 or 2006 and all stock options were fully vested prior to January 1, 2006.


                                      F-13
<PAGE>

For  stock  options  granted  prior  to the  adoption  of SFAS No.  123(R),  the
following table  illustrates the pro forma effect on net income and earnings per
share as if the Company had  accounted for all employee  stock  options  granted
prior to January 1, 2006 under the fair value  based  accounting  method of SFAS
No. 123(R) (in thousands except per share data):

                                                           2005
-----------------------------------------------------------------
Net Income:
    As reported                                         $   2,632
Deduct: Total stock-based employee
    compensation expense determined under the
    fair value based method for all awards, net of
    related tax effects                                       882
                                                        ---------
    Pro forma                                           $   1,750

Net income per share - basic:
    As reported                                         $    0.31
    Pro forma                                           $    0.20

Net income per share - diluted:
    As reported                                         $    0.28
    Pro forma                                           $    0.19

There were no new employee or director stock option grants during 2007 and 2006.

Effective  January 1, 2005,  Central Jersey Bancorp,  formerly known as Monmouth
Community Bancorp ("MCB"),  and Allaire Community Bank consummated a combination
in the  form of a  merger  which  resulted  in the  accelerated  vesting  of MCB
options.  The Company accounted for the accelerated vesting of MCB stock options
in accordance with FIN 44, Accounting for Certain  Transactions  involving Stock
Compensation, an interpretation of APB Opinion No. 25.

Stock Appreciation Rights

On January 31, 2006, the Company  granted under its 2005 Equity  Incentive Plan,
165,375 Stock Appreciation Rights ("SARS") (93,712 were granted to employees and
71,663 were granted to directors),  each with an exercise price of $9.87.  These
SARS can only be  settled  in cash.  The SARS vest over a four year  period  and
expire February 1, 2016.

The fair value of SARS  granted was  estimated  on  December  31, 2007 using the
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions used: stock price $7.95,  dividend yield of 0%; expected  volatility
of 41.17%;  risk free interest rate of 3.45%; and expected lives of seven years.
These SARS had a fair value of  approximately  $3.35 per share at  December  31,
2007.  The Company  recorded,  as a component of salaries and employee  benefits
expense,  share based  payment  expense of  approximately  $80,000,  net of tax,
related to the granting of SARS during the year ended  December 31, 2007.  As of
December  31,  2007,  total  unvested  compensation  expense  was  approximately
$279,000 (pre-tax) and will vest over 25 months.

The fair value of SARS  granted was  estimated  on  December  31, 2006 using the
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions used: stock price $7.90,  dividend yield of 0%; expected  volatility
of 41.17%;  risk free interest rate of 4.70%; and expected lives of seven years.
These SARS had a fair value of  approximately  $3.51 per share at  December  31,
2006.  The Company  recorded,  as a component of salaries and employee  benefits
expense,


                                      F-14
<PAGE>

share based payment expense of approximately $80,000, net of tax, related to the
granting of SARS during the year ended  December  31,  2006.  As of December 31,
2006, total unvested  compensation expense was approximately  $433,000 (pre-tax)
and will vest over 37 months.

A summary of the status of the Company's  SARS as of December 31, 2007 and 2006,
is presented below:

<TABLE>
<CAPTION>
                                            December 31, 2007               December 31, 2006
------------------------------------------------------------------------------------------------------
                                                         Weighted                         Weighted
                                                         average                           average
                                                         exercise                         exercise
                                           SARS           price              SARS           price
------------------------------------------------------------------------------------------------------
<S>                                       <C>          <C>                  <C>           <C>
Outstanding at beginning of year          159,862      $      9.87               --                --

Granted                                        --               --          165,375       $      9.87

Forfeited                                      --               --           (5,513)      $      9.87

Exercised                                      --               --               --                --
======================================================================================================

Outstanding at period end                 159,862      $      9.87          159,862       $      9.87
======================================================================================================

SARS exercisable at period end                 --               --               --                --

Weighted average fair value of
     SARs granted                     $      3.35                       $      3.51
======================================================================================================
</TABLE>

Reclassifications

Certain  reclassifications have been made to the prior period amounts to conform
to the current period presentation.

(2) Strategic Business Combination

On January 1, 2005,  Central  Jersey  Bancorp  completed its strategic  business
combination   transaction   with   Allaire   Community   Bank,   a  New   Jersey
state-chartered  bank,  pursuant  to  which  Allaire  Community  Bank  became  a
wholly-owned bank subsidiary of Central Jersey Bancorp. On the effective date of
the  combination,  the name of the holding  company was  changed  from  Monmouth
Community  Bancorp  to  Central  Jersey  Bancorp.  In  addition,  as part of the
combination,  each outstanding  share of common stock of Allaire  Community Bank
was exchanged for one share of Central Jersey Bancorp common stock.

The  combination  was  accounted  for as a purchase and the excess cost over the
fair value of net assets  acquired  ("goodwill")  in the  transaction  was $26.9
million.  Under the provisions of SFAS No. 142,  goodwill is not being amortized
in connection with this  transaction and the goodwill will not be deductible for
income tax purposes. The Company also recorded a core deposit intangible of $3.8
million in  connection  with the  combination,  which is being  amortized  on an
accelerated  basis over 10 years.  The  amortization  of premiums and  discounts
resulting from the fair value  adjustments of assets and  liabilities may have a
material impact on the Company's results of operations in future periods.


                                      F-15
<PAGE>

The following  table presents data with respect to the fair values of assets and
liabilities  acquired  in  the  combination  with  Allaire  Community  Bank  (in
thousands):

                                                             January 1, 2005
                                                             ---------------
                  Assets:
                     Cash and due from banks                   $     6,886
                     Securities                                     65,960
                     Loans, net                                    119,753
                     Fixed assets                                    3,536
                     Other assets                                    2,458
                     Bank owned life insurance                       3,227
                     Core deposit intangible                         3,785
                     Goodwill                                       27,229
                                                               -----------
                  Total assets                                 $   232,834
                                                               ===========
                  Liabilities:
                     Deposits                                  $   169,879
                     Borrowings                                     14,903
                     Other liabilities                               1,752
                                                               -----------
                  Total liabilities                                186,534
                                                               -----------
                  Net assets acquired                          $    46,300
                                                               ===========

The net deferred tax asset  resulting from  adjustments of net assets  acquired,
including the creation of the core deposit intangible, amounted to $72,000.

The computation of the purchase  price,  the allocation of the purchase price to
net assets of Allaire  Community  Bank  based on their  respective  values as of
January  1,  2005 and the  resulting  amount of  goodwill  are  presented  below
(dollars in thousands, except per share amounts):

<TABLE>
<S>                                                                                                <C>
Common shares outstanding of Allaire Community Bank                                                  1,996,140
Percentage exchanged for Central Jersey Bancorp common stock                                               100%
                                                                                                   -----------
Allaire common shares exchanged for Central Jersey Bancorp common stock                              1,996,140
Exchange ratio                                                                                            1.00
                                                                                                   -----------
Central Jersey Bancorp common stock issued                                                           1,996,140
Market price per share of Central Jersey Bancorp common stock                                      $     19.94
                                                                                                   -----------
Total purchase price of Allaire Community Bank                                                          39,803
Total common stockholders' equity of Allaire Community Bank                                             16,031
                                                                                                   -----------
Excess of purchase price over carrying value of assets acquired                                    $    23,772
Purchase accounting adjustments related to assets and liabilities acquired:
  Transaction costs                                                                                      1,677
    Tax effect of transaction costs (at 34%)                                                              (578)
  Securities held-to-maturity                                                                              219
  Securities available-for-sale                                                                            291
  Loans                                                                                                   (388)
  Lease termination cost                                                                                   766
  Buildings                                                                                               (350)
  Time deposits                                                                                            (16)
  Collateralized borrowings                                                                                  3
  Stock options                                                                                          4,700
    Tax effect of fair value adjustments (at 34%)                                                         (866)
  Core deposit intangible                                                                               (3,785)
    Tax effect of core deposit intangible (at 34%)                                                       1,512
                                                                                                   -----------
Goodwill                                                                                           $    26,957
                                                                                                   ===========
</TABLE>


                                      F-16
<PAGE>

(3) Cash and Due from Banks

As of December  31,  2007,  the Company was not required to maintain any reserve
balances.

(4) Investment Securities

The  amortized  cost,  gross  unrealized  gains and losses,  and market value of
investment  securities  held-to-maturity  and securities  available-for-sale  at
December 31, 2007 and 2006 are as follows (in thousands):

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                          2007
-----------------------------------------------------------------------------------------------------------------------
                                                                              Gross           Gross
                                                             Amortized      unrealized      unrealized         Market
                                                                cost          gains           losses           value
-----------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>              <C>            <C>
Investment securities held-to-maturity:
Obligations of U.S. Government
     sponsored agencies                                     $   10,690      $       13       $     38       $    10,665

Mortgage-backed securities of U.S. Government
     sponsored agencies                                          6,740              27             53             6,714
-----------------------------------------------------------------------------------------------------------------------
Total                                                       $   17,430      $       40       $     91       $    17,379
=======================================================================================================================
Investment securities available-for-sale:

Mortgage-backed securities of U.S. Government
     sponsored agencies                                        109,452           1,400             38           110,814
Other debt securities                                            4,010              --             --             4,010
-----------------------------------------------------------------------------------------------------------------------
Total                                                       $  113,462      $    1,400       $     38       $   114,824
=======================================================================================================================

<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                          2006
-----------------------------------------------------------------------------------------------------------------------
                                                                              Gross           Gross
                                                             Amortized      unrealized      unrealized         Market
                                                                cost          gains           losses           value
-----------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>              <C>            <C>
Investment securities held-to-maturity:
Obligations of U.S. Government
     sponsored agencies                                     $   12,673      $       --       $    192       $    12,481

Mortgage-backed securities of U.S. Government
     sponsored agencies                                          8,147              15            189             7,973
-----------------------------------------------------------------------------------------------------------------------
Total                                                       $   20,820      $       15       $    381       $    20,454
=======================================================================================================================
Investment securities available-for-sale:
Obligations of U.S. Government
     sponsored agencies                                     $   73,782      $       23       $  1,414       $    72,391

Mortgage-backed securities of U.S. Government
     sponsored agencies                                         23,642              --            876            22,766
Other debt securities                                              578               2             --               580
-----------------------------------------------------------------------------------------------------------------------
Total                                                       $   98,002      $       25       $  2,290       $    95,737
=======================================================================================================================
</TABLE>


                                      F-17
<PAGE>

The amortized  cost and market value of investment  securities  held-to-maturity
and investment securities available-for-sale at December 31, 2007 by contractual
maturity are shown below (in  thousands).  Expected  maturities will differ from
contractual  maturities  because  issuers  may have the  right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                                             Amortized          Market
                                                                                cost            value
      --------------------------------------------------------------------------------------------------
<S>                                                                         <C>              <C>
      Investment securities held-to-maturity:
      Due in one year or less                                               $     1,998      $     1,986
      Due after one year through fifth year                                       6,026            5,993
      Due after fifth year through tenth year                                     3,962            3,944
      Due after tenth year                                                        5,444            5,456
      --------------------------------------------------------------------------------------------------
      Total                                                                 $    17,430      $    17,379
      ==================================================================================================
      Investment securities available-for-sale:
      Due in one year or less                                               $     6,011      $     6,001
      Due after one year through fifth year                                       2,653            2,625
      Due after fifth year through tenth year                                    21,583           21,982
      Due after tenth year                                                       83,215           84,216
      --------------------------------------------------------------------------------------------------
      Total                                                                 $   113,462      $   114,824
      ==================================================================================================
</TABLE>

Proceeds from the sale of investment securities  available-for-sale  during 2007
were $88.6  million,  resulting  in gross gains and gross  losses of $87,000 and
$1.96  million,  respectively.  There were no sales of investment  securities in
2006 or 2005.

During 2007, the Company recorded an  other-than-temporary  impairment charge of
$1.96 million, pre-tax, related to a reduction in the market value of investment
securities   available-for-sale.   Prior  to  the  charge,  the  impairment  was
considered  temporary  and was  recorded  as an  unrealized  loss on  investment
securities  available-for-sale  and  reflected as a reduction of equity,  net of
tax, through accumulated other comprehensive income.

At December  31,  2007 and 2006,  there were $86.9  million and $107.3  million,
respectively,  of investment  securities  pledged as  collateral  for short term
borrowings, to secure public funds or for any other purposes required by law.

Gross  unrealized  losses on both  investment  securities  held-to-maturity  and
investment securities  available-for-sale  and their fair values,  aggregated by
security  category and length of time that individual  securities have been in a
continuous  unrealized  loss  position,  at December 31, 2007 and 2006,  were as
follows (in thousands):

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                          Less than 12 months         12 months or more                  Total
                                       --------------------------------------------------------------------------------
            2007                       Unrealized       Market     Unrealized       Market     Unrealized       Market
   Investment securities                 losses         value        losses         value        losses         value
-----------------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>           <C>           <C>           <C>           <C>
U.S. Government sponsored agencies      $     25      $  6,516      $     13      $  2,235      $     38      $  8,751
Mortgage-backed securities                     1           190            90        10,034            91        10,224
-----------------------------------------------------------------------------------------------------------------------
Total                                   $     26      $  6,706      $    103      $ 12,269      $    129      $ 18,975
=======================================================================================================================

<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                          Less than 12 months          12 months or more                 Total
                                       --------------------------------------------------------------------------------
            2006                       Unrealized       Market     Unrealized       Market     Unrealized       Market
   Investment securities                 losses         value        losses         value        losses         value
-----------------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>           <C>           <C>           <C>           <C>
U.S. Government sponsored agencies      $      2      $    485      $  1,604      $ 82,470      $  1,606      $ 82,955
Mortgage-backed securities                    --            --         1,065        29,538         1,065        29,538
-----------------------------------------------------------------------------------------------------------------------
Total                                   $      2      $    485      $  2,669      $112,008      $  2,671      $112,493
=======================================================================================================================
</TABLE>


                                      F-18
<PAGE>

U.S.  Government  sponsored agencies - The unrealized losses in U.S.  Government
sponsored  agencies were caused by general  interest rate  increases.  Since the
decrease in market value is  attributable  to changes in interest  rates and not
credit quality, and because the Company has the ability and intent to hold these
securities  until a market price recovery or maturity,  these securities are not
considered other-than-temporarily impaired.

Mortgage-backed securities - The unrealized losses on mortgage-backed securities
were  caused by general  interest  rate  increases.  Fannie Mae and  Freddie Mac
guarantee the contractual cash flows of these investment  securities.  Since the
decrease in market value is  attributable  to changes in interest  rates and not
credit quality, and because the Company has the ability and intent to hold these
securities  until  a  market  price  recovery  or  maturity,   these  investment
securities are not considered other-than-temporarily impaired.

(5) Loans

Loans at December 31, 2007 and 2006 are summarized as follows (in thousands):

                                                        2007              2006
--------------------------------------------------------------------------------

Commercial and industrial loans                       $ 29,371          $ 35,476
Real estate loans - commercial                         240,256           237,015
1-4 family real estate loans                             3,822             4,182
Home equity and second mortgages                        37,832            35,573
Consumer loans                                           3,654             2,857
--------------------------------------------------------------------------------
Subtotal                                               314,935           315,103
Net deferred fees                                          238               219
Less allowance for loan losses                           3,408             3,229
--------------------------------------------------------------------------------
Net loans                                             $311,765          $312,093
================================================================================
Loans held-for-sale                                   $    658          $    242
================================================================================

A substantial portion of the Company's loans are secured by real estate and made
to borrowers  located in New Jersey,  primarily in Monmouth and Ocean  Counties.
Accordingly,  as with most financial  institutions in the Company's market area,
the ultimate  collectibility  of a  substantial  portion of the  Company's  loan
portfolio is susceptible to changes in market conditions in the market area.

Activity in the allowance for loan losses for the years ended December 31, 2007,
2006 and 2005 is summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                         2007          2006            2005
---------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>            <C>
Balance, beginning of year                             $ 3,229        $ 3,175        $ 1,638
Allaire Community Bank combination                          --             --          1,203
Provision charged to expense                               165            500            426
Charge-offs                                                (88)          (455)           (92)
Recoveries                                                 102              9             --
---------------------------------------------------------------------------------------------
Balance, end of year                                   $ 3,408        $ 3,229        $ 3,175
=============================================================================================
Ratio of allowance for loan losses to total loans         1.08%          1.02%          1.02%
=============================================================================================
</TABLE>

At December 31, 2007, 2006 and 2005, the Company had non-accrual  loans totaling
$214,000, $91,000 and $79,000,  respectively,  and no impaired loans. There were
no loans ninety days or greater past due and still accruing interest at December
31, 2007,  2006 or 2005.  If the  non-


                                      F-19
<PAGE>

accrual loans had performed in accordance  with their original  terms,  interest
income  would have  increased  by $4,359,  $477 and $6,365,  for the years ended
December 31, 2007, 2006 and 2005, respectively. At December 31, 2007, there were
no  commitments  to  lend   additional   funds  to  borrowers  whose  loans  are
non-accrual.

In the ordinary  course of business to meet the financial needs of the Company's
customers,  the Company is party to financial instruments with off-balance sheet
risk. These financial instruments include unused lines of credit and involve, to
varying degrees,  elements of credit risk in excess of the amount  recognized in
the consolidated financial statements. The contract or notional amounts of these
instruments  express the extent of involvement  the Company has in each category
of financial instruments.

The Company's exposure to credit loss from  nonperformance by the other party to
the  above-mentioned  financial  instruments is  represented by the  contractual
amount of those instruments. The Company uses the same credit policies in making
commitments  and  conditional  obligations  as  it  does  for  on-balance  sheet
instruments.  The  contract or notional  amount of financial  instruments  which
represent  credit  risk  at  December  31,  2007  and  2006  is as  follows  (in
thousands):

                                                            2007        2006
     --------------------------------------------------------------------------
     Standby letters of credit                            $  1,361    $  1,478
     Outstanding loan and credit line commitments         $ 77,689    $ 62,705
     --------------------------------------------------------------------------

Standby  letters of credit are  conditional  commitments  issued by the  Company
which guarantee  performance by a customer to a third party. The credit risk and
underwriting  procedures  involved in issuing  letters of credit are essentially
the same as that involved in extending  loan  facilities  to  customers.  All of
Central  Jersey  Bank,  N.A.'s   outstanding   standby  letters  of  credit  are
performance  standby  letters  within  the  scope  of the  Financial  Accounting
Standards   Board  ("FASB")   Interpretation   No.  45.  These  are  irrevocable
undertakings by Central Jersey Bank, N.A., as guarantor, to make payments in the
event a specified third party fails to perform under a non-financial contractual
obligation.  Most of Central Jersey Bank, N.A.'s performance  standby letters of
credit arise in connection with lending relationships and have terms of one year
or less. The maximum  potential  future payments Central Jersey Bank, N.A. could
be required to make equals the face amount of the letters of credit shown above.
Central Jersey Bank, N.A.'s liability for performance  standby letters of credit
was immaterial at December 31, 2007 and 2006.

Outstanding  loan  commitments  represent the unused portion of loan commitments
available to  individuals  and companies as long as there is no violation of any
condition  established in the contract.  Outstanding loan commitments  generally
have a fixed  expiration  date of one year or less,  except for home equity loan
commitments  which  generally  have an  expiration  date of up to 15 years.  The
Company evaluates each customer's  creditworthiness on a case-by-case basis. The
amount of collateral  obtained,  if any, upon  extension of credit is based upon
management's credit evaluation of the customer.  Various types of collateral may
be held, including property and marketable securities.  The credit risk involved
in these  financial  instruments  is  essentially  the same as that  involved in
extending loan facilities to customers.

At December 31, 2007 and 2006, loans to officers,  directors and related parties
amounted to approximately  $4.1 million and $4.5 million,  respectively.  During
the years ended December 31, 2007 and 2006, $757,000 and $93,000,  respectively,
in new loans to officers,  directors  and related  parties were  originated  and
repayments totaled approximately $1.2 million and $289,000, respectively.


                                      F-20
<PAGE>

(6) Premises and Equipment

Premises and  equipment at December 31, 2007 and 2006 are  summarized as follows
(in thousands):

                                                        2007            2006
      --------------------------------------------------------------------------
      Land                                           $   1,074       $   1,074
      Buildings and improvements                         1,367           1,374
      Leasehold improvements                             2,985           3,615
      Equipment                                          3,985           3,899
      Auto                                                  50              50
      --------------------------------------------------------------------------
                                                         9,461          10,012
      Accumulated depreciation and amortization         (4,835)         (4,655)
      --------------------------------------------------------------------------
                                                     $   4,626       $   5,357
      ==========================================================================

Depreciation  and  amortization  expense  amounted  to  $705,000,  $842,000  and
$736,000 in 2007, 2006 and 2005, respectively. As a result of the closing of two
branch offices during the third quarter of 2007, the Company recorded during the
year ended  December  31, 2007  one-time  charges for  abandonment  of leasehold
improvements  totaling  $137,000,  pre-tax,  and lease payment accruals totaling
$53,000,  pre-tax (included in net occupancy  expense),  in accordance with SFAS
No. 146, Accounting for Costs Associated with Exit or Disposal Activities.

(7) Intangible Assets

Intangible  assets at December 31, 2007 and 2006 are  summarized  as follows (in
thousands):

                                                            2007           2006
      --------------------------------------------------------------------------
      Goodwill                                            $ 26,957      $ 26,957
      Core deposit intangible                                1,926         2,478
      --------------------------------------------------------------------------
      Total                                               $ 28,883      $ 29,435
      ==========================================================================

Amortization expense of intangible assets for the years ended December 31, 2007,
2006 and 2005 is as follows (in thousands):

                                                  2007        2006          2005
--------------------------------------------------------------------------------
Core deposit intangible amortization            $   552     $   619      $   688
================================================================================

Scheduled  amortization  of core deposit  intangibles  for each of the next five
years is as follows (in thousands):

          ------------------------------------------------------
          2008                                         $     482
          2009                                               413
          2010                                               344
          2011                                               275
          2012                                               206


                                      F-21
<PAGE>

(8) Deposits

Interest-bearing deposits at December 31, 2007 and 2006 consist of the following
(in thousands):

                                                         2007          2006
      -----------------------------------------------------------------------
      Savings, N.O.W. and money market accounts        $187,354      $202,650
      Certificates of deposit less than $100,000         80,587        75,842
      Certificates of deposit of $100,000 or more        61,394        65,303
      -----------------------------------------------------------------------
      Total                                            $329,335      $343,795
      =======================================================================

At December 31, 2007,  certificates of deposit mature as follows:  2008 - $132.5
million;  2009 - $8.9  million;  2010 - $344,000;  2011 -  $176,000;  and 2012 -
$14,000.

Interest  expense on deposits for the years ended  December  31, 2007,  2006 and
2005 is summarized as follows (in thousands):

                                                   2007        2006         2005
--------------------------------------------------------------------------------
Savings, N.O.W. and money market accounts         $5,513      $4,762      $2,719
Certificates of deposit                            7,084       5,998       3,896
--------------------------------------------------------------------------------

(9) Borrowings

Borrowed  funds at  December  31,  2007 and 2006 are  summarized  as follows (in
thousands):

                                                         2007             2006
      --------------------------------------------------------------------------
      Other borrowings                                 $24,564           $17,099
      --------------------------------------------------------------------------
      Total                                            $24,564           $17,099
      ==========================================================================

Borrowings were $24.6 million at December 31, 2007, as compared to $17.1 million
at December 31, 2006.  These  borrowings,  which are short term in nature,  were
used to fund  interest-earning  assets during the years ended  December 31, 2007
and 2006. Borrowings typically include wholesale borrowing  arrangements as well
as  arrangements  with deposit  customers of Central Jersey Bank,  N.A. to sweep
funds into  short-term  borrowings.  Central Jersey Bank,  N.A. uses  investment
securities to pledge as collateral  for the repurchase  agreements.  At December
31, 2007 and 2006, Central Jersey Bank, N.A. had unused lines of credit with the
FHLB of $8.9 million and $51.6 million, respectively.

(10) Subordinated Debentures

In March 2004, MCBK Capital Trust I, a special purpose business trust of Central
Jersey  Bancorp,  issued  an  aggregate  of  $5.0  million  of  trust  preferred
securities to ALESCO Preferred Funding III, a pooled investment vehicle. Sandler
O'Neill  &  Partners,  L.P.  acted as  placement  agent in  connection  with the
offering  of the  trust  preferred  securities.  The  securities  issued by MCBK
Capital Trust I are fully  guaranteed by Central  Jersey Bancorp with respect to
distributions  and amounts  payable upon  liquidation,  redemption or repayment.
These  securities have a floating  interest rate equal to the three-month  LIBOR
plus 285 basis points, which resets quarterly. The securities mature on April 7,
2034 and may be called at par by Central  Jersey Bancorp any time after April 7,
2009.  These  securities  were  placed  in a  private  transaction  exempt  from
registration under the Securities Act of 1933, as amended.


                                      F-22
<PAGE>

The entire proceeds to MCBK Capital Trust I from the sale of the trust preferred
securities  were used by MCBK Capital  Trust I in order to purchase $5.1 million
of  subordinated  debentures  from  Central  Jersey  Bancorp.  The  subordinated
debentures  bear a variable  interest rate equal to LIBOR plus 285 basis points.
Although  the  subordinated  debentures  are  treated as debt of Central  Jersey
Bancorp,  they currently qualify as Tier I Capital  investments,  subject to the
25% limitation under risk-based capital  guidelines of the Federal Reserve.  The
portion of the trust preferred securities that exceeds this limitation qualifies
as Tier II Capital of Central Jersey Bancorp. At December 31, 2007, $5.0 million
of the trust  preferred  securities  qualified  for treatment as Tier I Capital.
Central Jersey  Bancorp is using the proceeds it received from the  subordinated
debentures to support the general balance sheet growth of Central Jersey Bancorp
and to maintain Central Jersey Bank, N.A.'s required regulatory capital ratios.

On March 1, 2005,  the  Federal  Reserve  adopted a final  rule that  allows the
continued inclusion of outstanding and prospective  issuances of trust preferred
securities in the Tier I Capital of bank holding companies,  subject to stricter
quantitative  limits and  qualitative  standards.  The new  quantitative  limits
become  effective  after a five-year  transition  period  ending March 31, 2009.
Under the final rules,  trust  preferred  securities and other  restricted  core
capital  elements  are limited to 25% of all core capital  elements.  Amounts of
restricted  core  capital  elements in excess of these limits may be included in
Tier II Capital.  At December 31, 2007, the only restricted core capital element
owned by Central Jersey Bancorp is trust  preferred  securities.  Central Jersey
Bancorp  believes  that its trust  preferred  issues  qualify as Tier I Capital.
However,  in the event that the trust preferred  issues do not qualify as Tier I
Capital, Central Jersey Bank, N.A. would remain well capitalized.

(11) Other-Than-Temporary Impairment

During 2007,  Central  Jersey  Bancorp  executed a balance  sheet  restructuring
strategy involving  approximately $88.6 million of investment securities held in
the  available-for-sale  investment portfolio.  The restructuring  resulted in a
one-time pre-tax  impairment  charge of approximately  $1.96 million,  which was
reflected in Central Jersey Bancorp's  consolidated financial statements for the
three  months ended March 31, 2007.  Available-for-sale  investment  securities,
consisting  primarily of lower  yielding fixed rate callable  agency  investment
securities  were sold during the second quarter of 2007 and replaced with higher
yielding  investment  securities with a comparable to modestly shorter aggregate
weighted  average life. The market value loss that these  investment  securities
carried at March 31, 2007,  was recorded as an  other-than-temporary  impairment
since Central Jersey Bancorp did not have the intent to hold these securities to
recovery.  The  investment  securities  the Company  identified as impaired were
primarily fixed rate government  sponsored  agency bonds that either had a below
market  interest  rate coupon or a longer than desired  maturity  term.  Central
Jersey Bancorp realized a gain on the sale of  available-for-sale  securities of
$87,000, pre-tax, in conjunction with the balance sheet restructuring during the
year ended December 31, 2007.

The Company's  effective tax rate of 56.8% for the year ended December 31, 2007,
resulted from the fact that the majority of the investment  securities for which
the  previously-mentioned  $1.96  million  other-than-temporary  impairment  was
recorded  were held by CJB  Investment  Company,  a  wholly-owned  subsidiary of
Central  Jersey  Bank,  N.A. A full  valuation  allowance  was  recorded for the
deferred tax assets associated with the impairment of the investment  securities
sold by CJB Investment Company.  The impairment of the investment  securities at
the  investment  company  level was  considered  a capital loss for tax purposes
while the impairment of the investment  securities  held by Central Jersey Bank,
N.A. was considered an ordinary loss for tax purposes.  CJB  Investment  Company
does not, at this time,  have the ability to generate


                                      F-23
<PAGE>

capital gains and utilize the capital losses and thus a full valuation allowance
was  required  for the  deferred  tax  assets  associated  with  the  investment
company's    available-for-sale    securities    which   were    identified   as
other-than-temporarily impaired.

(12) Income Taxes

Components of income tax expense for the years ended December 31, 2007, 2006 and
2005 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                          2007          2006          2005
--------------------------------------------------------------------------------------------
<S>                                                     <C>           <C>           <C>
Current income tax expense:
          Federal                                       $ 1,640       $ 1,640       $ 1,451
          State                                             285           266           199
--------------------------------------------------------------------------------------------
                                                          1,925         1,906         1,650
--------------------------------------------------------------------------------------------
Deferred income tax expense (benefit)
          Federal                                          (614)         (386)         (145)
          State                                            (201)          (92)          (44)
--------------------------------------------------------------------------------------------
                                                           (815)         (478)         (189)
--------------------------------------------------------------------------------------------
                                                        $ 1,110       $ 1,428       $ 1,461
============================================================================================
</TABLE>

A reconciliation  between the reported income taxes and income taxes which would
be  computed  by applying  the normal  federal  income tax rate of 34% to income
before taxes follows (in thousands):

<TABLE>
<CAPTION>
                                                           2007          2006          2005
--------------------------------------------------------------------------------------------
<S>                                                     <C>           <C>           <C>
Federal income tax                                      $   664       $ 1,324       $ 1,392
State income tax effect, net of federal tax effect           56           114           102
Bank-owned life insurance                                   (40)          (37)          (38)
Valuation reserve                                           417            --            --
Meals and entertainment                                       6             5             4
Other                                                         7            22             1
--------------------------------------------------------------------------------------------
Provision charged to expense                            $ 1,110       $ 1,428       $ 1,461
============================================================================================
</TABLE>


                                      F-24
<PAGE>

The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 2007 and
2006 are as follows (in thousands):

                                                            2007          2006
--------------------------------------------------------------------------------
Deferred tax assets:
Allowance for loan losses                                 $ 1,344       $ 1,273
Impaired investment securities                                702            --
New Jersey NOL carry forwards                                  52            36
Allowance for uncollected interest                            120            38
Unrealized loss - securities available-for-sale                --           855
Net purchase accounting adjustments                           240           169
Depreciation                                                  371            82
AMA                                                             4             4
Stock options / SARS                                          102            51
Other                                                           3             3
--------------------------------------------------------------------------------
Gross deferred tax asset                                    2,938         2,511
Less: valuation reserve                                      (515)          (36)
--------------------------------------------------------------------------------
Deferred tax assets, net                                    2,423         2,475
--------------------------------------------------------------------------------
Deferred tax liabilities:
Deferred loan costs                                            95            95
Discount accretion                                             --            11
Unrealized gain  - securities available-for-sale              514            --
--------------------------------------------------------------------------------
Gross deferred tax liabilities                                609           106
--------------------------------------------------------------------------------
Net deferred tax assets                                   $ 1,814       $ 2,369
================================================================================

Based upon  current  facts  concerning  taxes paid in the  carryback  period and
projections of future taxable income,  management has determined that it is more
likely  than not that the  deferred  tax  assets  will be  realized,  except for
certain  New  Jersey net  operating  losses by Central  Jersey  Bancorp  and the
impairment of investment  securities,  for which management has reserved against
these deferred tax assets.  However,  there can be no assurances about the level
of future earnings.

As of January 1, 2007,  there were no  amounts  recorded  for  unrecognized  tax
benefits or for the payment of interest or  penalties.  Furthermore,  no amounts
were accrued for the year ended  December  31,  2007.  The tax years that remain
subject  to  examination  are  2006,  2005 and 2004 for  federal  and  state tax
purposes  and 2003 for  state  tax  purposes  only.  Accruals  of  interest  and
penalties related to unrecognized tax benefits, when applicable,  are recognized
in income tax expense.

(13) Branch Office Closings

Effective  September 14, 2007,  Central  Jersey Bancorp closed two of its branch
offices - Highway  35,  Neptune  City and  Highway  33,  Neptune  Township.  The
customer relationships from both of these branch offices were transferred to the
West Sylvania,  Neptune City branch office.  As a result of the closing of these
two branch offices, the Company recorded during the year ended December 31, 2007
one-time charges for abandonment of leasehold  improvements  totaling  $137,000,
pre-tax,  and lease payment accruals totaling $53,000,  pre-tax (included in net
occupancy  expense),  in  accordance  with SFAS No.  146,  Accounting  for Costs
Associated  with Exit or Disposal  Activities.  In addition,  for the year ended
December 31, 2007, the Company recorded  $35,000,  pre-tax (included in salaries
and  employee  benefits  expense),  in one-time  employee  termination  expenses
related to the branch office consolidations in accordance with SFAS No. 146.


                                      F-25
<PAGE>

(14) Commitments and Contingencies

At December 31,  2007,  the Company was  obligated  under  non-cancelable  lease
agreements for 12 premises.  The leases provide for increased rentals based upon
increases  in real estate  taxes and the cost of living  index.  Minimum  rental
payments under the terms of these leases are as follows (in thousands):

                2008                          $1,128
                2009                           1,014
                2010                             819
                2011                             699
                2012 and thereafter            2,782

                ------------------------------------
                Total                         $6,442
                ====================================

Total rent expense was $846,000,  $769,000 and $785,000 in 2007,  2006 and 2005,
respectively.

Litigation

Central  Jersey Bank,  N.A.  may, in the ordinary  course of business,  become a
party to litigation  involving  collection  matters,  contract  claims and other
legal proceedings relating to the conduct of its business.  Central Jersey Bank,
N.A. may also have various commitments and contingent  liabilities which are not
reflected in the accompanying consolidated balance sheets.

Related Party Transactions

The Company leases administrative office space at 6 West End Court, Long Branch,
New Jersey.  Certain members of the Board of Directors of Central Jersey Bancorp
hold an ownership interest in the leased property. The negotiations with respect
to the leased  space were  conducted at  arms-length  and the lease amount to be
paid by Central Jersey Bank, N.A. was determined by an independent  appraiser to
be at fair market  value.  Total  lease  payments  for 2007,  2006 and 2005 were
$61,000, $55,000 and $55,000, respectively.

(15) Regulatory Matters

Subject to applicable  law, the Board of Directors of Central Jersey Bank,  N.A.
may  provide  for the payment of cash  dividends.  Prior  approval of the OCC is
required  to the extent that the total of all cash  dividends  to be declared by
Central Jersey Bank, N.A. in any calendar year exceeds net profits,  as defined,
for that year  combined  with its retained net profits  from the  preceding  two
calendar years less any transfers to capital surplus.

Central  Jersey  Bank,  N.A. and Central  Jersey  Bancorp are subject to various
regulatory  capital  requirements  administered  by  federal  banking  agencies.
Failure to meet minimum requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken, could have a
direct  material  effect on the Company's  financial  statements.  Under capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
Central Jersey Bank, N.A. and Central Jersey Bancorp must meet specific  capital
guidelines that involve quantitative measures of Central Jersey Bank, N.A.'s and
Central Jersey Bancorp's assets, liabilities and certain off-balance sheet items
as calculated under  regulatory  accounting  practices.  The capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors.


                                      F-26
<PAGE>

The prompt  corrective  action  regulations  define specific capital  categories
based on an institution's  capital ratios. The capital categories,  in declining
order, are "well  capitalized,"  "adequately  capitalized,"  "undercapitalized,"
"significantly   undercapitalized"   and   "critically   undercapitalized."   An
institution  categorized  as  "undercapitalized"  or worse is subject to certain
restrictions,  including the requirement to file a capital plan with its primary
federal regulator, prohibitions on the payment of dividends and management fees,
restrictions   on  asset  growth  and  executive   compensation   and  increased
supervisory monitoring, among other things. Other restrictions may be imposed on
the institution by the applicable regulatory agencies, including requirements to
raise additional capital,  sell assets or sell the entire  institution.  Once an
institution becomes "critically  undercapitalized,"  it must generally be placed
in receivership or conservatorship  within ninety days. An institution is deemed
to be  "critically  undercapitalized"  if it has a  tangible  equity  ratio,  as
defined, of 2% or less.

To be considered  "well  capitalized,"  an  institution  must  generally  have a
leverage  ratio  (Tier 1  capital  to total  assets)  of at  least  5%, a Tier 1
risk-based capital ratio of at least 6%, and a total risk-based capital ratio of
at least 10%.  Management  believes  that,  as of  December  31,  2007 and 2006,
Central Jersey Bank,  N.A. and Central Jersey Bancorp meet all capital  adequacy
requirements  of  their   regulators.   Further,   the  most  recent  regulatory
notification categorized Central Jersey Bank, N.A. and Central Jersey Bancorp as
well-capitalized under the prompt corrective action regulations.

The  following is a summary of Central  Jersey Bank,  N.A.'s and Central  Jersey
Bancorp's  actual  capital  amounts and ratios as of December 31, 2007 and 2006,
compared to the minimum capital  adequacy  requirements and the requirements for
classification as a "well-capitalized" institution (dollars in thousands):

<TABLE>
<CAPTION>
                                                      Tier I                        Tier I
                                                    Capital to                    Capital to                  Total Capital to
                                               Average Assets Ratio             Risk Weighted                   Risk Weighted
                                                 (Leverage Ratio)                Asset Ratio                     Asset Ratio
                                               2007           2006            2007           2006           2007            2006
                                        -----------------------------------------------------------------------------------------
<S>                                            <C>            <C>            <C>            <C>            <C>              <C>
Central Jersey Bank, N.A.                      9.34%          8.47%          12.94%         11.81%         13.93%           12.72%

"Adequately capitalized" institution
(under federal regulations)                    4.00%          4.00%           4.00%          4.00%          8.00%            8.00%

"Well capitalized" institution (under
federal regulations)                           5.00%          5.00%           6.00%          6.00%         10.00%           10.00%

<CAPTION>
                                                      Tier I                        Tier I
                                                    Capital to                    Capital to                  Total Capital to
                                               Average Assets Ratio             Risk Weighted                   Risk Weighted
                                                 (Leverage Ratio)                Asset Ratio                     Asset Ratio
                                              2007           2006           2007           2006           2007            2006
                                        -----------------------------------------------------------------------------------------
<S>                                        <C>            <C>            <C>             <C>            <C>            <C>
Central Jersey Bank, N.A.                  $ 44,696       $ 41,547       $  44,696       $ 41,547       $ 48,104       $   44,776

"Adequately capitalized" institution
(under federal regulations)                  19,143         19,625          13,817         14,077         27,634           28,154

"Well capitalized" institution (under
federal regulations)                         23,929         24,531          20,726         21,116         34,543           35,194
</TABLE>


                                      F-27
<PAGE>

<TABLE>
<CAPTION>
                                                   Tier I                       Tier I
                                                 Capital to                    Capital to                 Total Capital to
                                            Average Assets Ratio             Risk Weighted                  Risk Weighted
                                              (Leverage Ratio)                Asset Ratio                    Asset Ratio
                                             2007         2006           2007             2006           2007             2006
                                        -----------------------------------------------------------------------------------------
<S>                                          <C>          <C>            <C>             <C>             <C>            <C>
Central Jersey Bancorp                       9.08%        8.38%          12.74%          11.71%          13.73%         12.62%

"Adequately capitalized" institution
(under federal regulations)                  4.00%        4.00%           4.00%           4.00%           8.00%          8.00%

"Well capitalized" institution (under
federal regulations)                         5.00%        5.00%           6.00%           6.00%          10.00%         10.00%

<CAPTION>
                                                   Tier I                       Tier I
                                                 Capital to                    Capital to                 Total Capital to
                                            Average Assets Ratio             Risk Weighted                  Risk Weighted
                                              (Leverage Ratio)                Asset Ratio                    Asset Ratio
                                           2007          2006           2007            2006           2007            2006
                                        -----------------------------------------------------------------------------------------
<S>                                      <C>          <C>            <C>             <C>             <C>            <C>
Central Jersey Bancorp                   $ 43,835     $ 41,110       $  43,835       $  41,110       $  47,243      $  44,339

"Adequately capitalized" institution
(under federal regulations)                19,305       19,616          13,766          14,048          27,531         28,097

"Well capitalized" institution (under
federal regulations)                       24,131       24,520          20,649          21,073          34,414         35,121
</TABLE>

(16) Benefit Plans

Stock Option Plan

In 2000, the Company established an Employee and Director Stock Option Plan (the
"Plan").  As of December 31, 2007,  stock options to purchase in aggregate up to
1,343,186  shares of the Company's common stock were  outstanding.  During 2007,
2006 and 2005, no options were granted.  Effective  January 1, 2005, as a result
of the combination with Allaire Community Bank, all outstanding  options granted
under the Plan became fully vested. The Company does not anticipate granting any
further stock options under the Plan.


                                      F-28
<PAGE>

In addition, as a result of the combination with Allaire Community Bank, options
to purchase 801,728 shares of Allaire Community Bank common stock were converted
into options to purchase  801,728 shares of Central Jersey Bancorp common stock,
all of which are fully vested.  A summary of the status of the  Company's  stock
options  as of and for the  years  ended  December  31,  2007,  2006 and 2005 is
presented below:

<TABLE>
<CAPTION>
                                                      2007                        2006                       2005
--------------------------------------------------------------------------------------------------------------------------
                                                            Weighted                    Weighted                  Weighted
                                                             average                     average                   average
                                                            exercise                    exercise                  exercise
                                             Shares           price       Shares          price       Shares        price
--------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>         <C>             <C>           <C>         <C>
Outstanding at beginning of year            1,429,803       $   4.94    1,584,142       $   5.00      857,270     $   6.21

--------------------------------------------------------------------------------------------------------------------------
Allaire Community Bank
     combination                                   --             --           --             --      801,728         3.58
Granted                                            --             --           --             --           --           --

Forfeited                                      (7,394)          6.54      (41,189)          8.87         (908)        6.62

Exercised                                     (79,223)          3.52     (113,150)          4.35      (73,948)        3.56
==========================================================================================================================

Outstanding at end of year                  1,343,186           5.01    1,429,803           4.94    1,584,142         5.00
==========================================================================================================================

Options exercisable at year end             1,343,186           5.01    1,429,803           4.94    1,584,142         5.00

Weighted average fair value of
     options granted during the year                        $     --                    $     --                  $     --
==========================================================================================================================
</TABLE>

No  additional  compensation  expense is  projected  for  future  years on stock
options outstanding at December 31, 2007.

The following table summarizes  information  about stock options  outstanding at
December 31, 2007:

<TABLE>
<CAPTION>
                                 Options Outstanding and Exercisable
                                          December 31, 2007
---------------------------------------------------------------------------------------------------
                                                          Weighted
                                                           average                      Range of
             Number                                       remaining                    exercise
          outstanding             Exercisable          contractual life                  prices
---------------------------------------------------------------------------------------------------
<S>                                 <C>                    <C>                       <C>
            163,407                 163,407                29 Months                 $2.86 -  2.86
            356,668                 356,668                35 Months                 $3.11 -  3.81
            375,947                 375,947                42 Months                 $4.01 -  4.11
            113,487                 113,487                62 Months                 $5.22 -  5.22
            333,677                 333,677                78 Months                 $7.93 - 10.39
</TABLE>

The aggregate  intrinsic  value for stock options  outstanding and stock options
exercisable  at December 31, 2007 is $3.9 million for both,  based upon a market
price of $7.95 per  share and a  weighted  average  exercise  price of $5.01 per
share.  The aggregate  intrinsic value of stock options  exercised  during 2007,
2006 and 2005 was $355,000, $701,000 and $566,000,  respectively.  There were no
stock options granted during 2007, 2006 or 2005.


                                      F-29
<PAGE>

401(k) Plan

The Company has a 401(k) plan covering  substantially all of its employees.  The
Company may  contribute  an amount equal to 100% of the first 3% of the employee
deferral and then 50% of the next 2% of the  employee  deferral.  The  Company's
matching  contribution,  if any, is  determined by the Board of Directors in its
sole discretion.  The Company's  aggregate  contributions to the 401(k) Plan for
2007, 2006 and 2005 were $147,000, $163,000 and $152,000, respectively.

(17) Fair Value of Financial Instruments

The following fair value estimates, methods and assumptions were used to measure
the fair value of each class of financial  instruments for which it is practical
to estimate such value:

Cash and Cash Equivalents

As cash and cash  equivalents are short-term in nature,  the carrying amount was
considered to be a reasonable estimate of fair value.

Investment Securities

To  determine  fair  value,  investment  securities  were  valued  based upon an
independent  pricing  service,  if  available.  If a quoted market price was not
available,  fair values were  estimated  using quoted  market prices for similar
securities.

Loans and Loans Held-for-Sale

Fair values were  estimated  for  portfolios  of  performing  loans with similar
characteristics.  The fair value of other performing loan types was estimated by
discounting total future cash flows using market discount rates that reflect the
credit and interest rate risk inherent in the loan.

Commitments to Extend Credit

The majority of Central Jersey Bank,  N.A.'s  commitments to extend credit carry
current market rates if converted to loans. Therefore,  the estimated fair value
is  approximated  by  the  recorded  deferred  fee  amounts.  Such  amounts  are
immaterial  to  the  consolidated  financial  statements  of  the  Company  and,
therefore, are not separately disclosed.

Deposit Liabilities

The fair value of demand,  savings,  N.O.W.  and money  market  deposits  is the
amount  payable  on demand at  December  31,  2007 and 2006.  The fair  value of
certificates  of deposit was based on the discounted  value of contractual  cash
flows. The discount rate was estimated utilizing the rates currently offered for
deposits of similar remaining maturities.

Subordinated Debentures

The fair value of the  subordinated  debentures is assumed to  approximate  book
value since the securities are variable rate.

Borrowings

The fair value of  borrowings  is assumed to  approximate  book value  since the
borrowings are variable rate.


                                      F-30
<PAGE>

Limitations

Fair  value  estimates  were made at  December  31,  2007 and 2006,  based  upon
pertinent  market data and relevant  information on each  financial  instrument.
These estimates do not include any premium or discount that could result from an
offer to sell the Company's entire holdings of a particular financial instrument
or  category  thereof  at one time.  Since no market  exists  for a  substantial
portion  of the  Company's  financial  instruments,  fair value  estimates  were
necessarily  based on judgments with respect to future loss experience,  current
economic conditions, risk assessments of various financial instruments involving
a myriad of individual borrowers, and other factors. Given the subjective nature
of these  estimates,  the  uncertainties  surrounding  them and other matters of
significant  judgment that must be applied,  these fair value estimations cannot
be  calculated  with  precision.   Modifications  in  such   assumptions   could
meaningfully alter these estimates.  Since these fair value  approximations were
made solely for the balance sheet financial instruments at December 31, 2007 and
2006, no attempt was made to estimate the value of anticipated  future  business
or the value of  non-financial  statement  assets or  liabilities.  Furthermore,
certain tax implications  related to the realization of the unrealized gains and
losses could have a  substantial  impact on these fair value  estimates and have
not been incorporated into the estimates.

The estimated fair values of the Company's financial instruments at December 31,
2007 and 2006 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                               2007                       2006
                                                               ----                       ----
                                                        Book          Fair          Book         Fair
                                                        value         value         value        value
                                                        -----         -----         -----        -----
<S>                                                   <C>           <C>           <C>           <C>
Financial Assets:
Cash and cash equivalents                             $ 14,877      $ 14,877      $ 37,796      $ 37,796

Investment securities available-for-sale               114,824       114,824        95,735        95,735

Investment securities held-to-maturity                  17,430        17,379        20,820        20,454

Loans, net                                             311,765       312,292       312,093       322,596

Loans held-for-sale                                        658           658           242           242
Due from broker                                             --            --         3,527         3,527

Financial Liabilities:
Deposits                                               403,290       403,519       427,277       447,756

Other borrowings                                        24,564        24,564        17,099        17,099

Subordinated debentures                               $  5,155      $  5,153      $  5,155      $  5,155
========================================================================================================
</TABLE>


                                      F-31
<PAGE>

(18) Condensed  Financial  Statements of Central Jersey Bancorp  (Central Jersey
Bancorp only)

The following information with respect to Central Jersey Bancorp (parent company
only) should be read in conjunction with the notes to the consolidated financial
statements (in thousands):

<TABLE>
<CAPTION>
          Balance Sheets                                          2007          2006
          ------------------------------------------------------------------------------
<S>                                                            <C>           <C>
          Assets:
          Investment in subsidiary                             $   73,535    $   72,252
          ------------------------------------------------------------------------------
               Total assets                                        73,535        72,252
          ------------------------------------------------------------------------------

          Liabilities:
          Other liabilities                                           342           193
          Subordinated debentures                                   5,155         5,155
          ------------------------------------------------------------------------------
               Total liabilities                                    5,497         5,348
          ------------------------------------------------------------------------------

          Shareholders' Equity:
          Common stock                                                 87            87
          Additional paid-in capital                               60,791        60,501
          Retained earnings                                         7,160         6,316

          ------------------------------------------------------------------------------
               Total shareholders' equity                      $   68,038    $   66,904
          ------------------------------------------------------------------------------

          ------------------------------------------------------------------------------
               Total liabilities and shareholders' equity      $   73,535    $   72,252
          ==============================================================================

<CAPTION>
          Statements of Income                                      2007        2006          2005
          --------------------------------------------------------------------------------------------
<S>                                                             <C>          <C>           <C>
          Equity in undistributed earnings of the bank          $    1,283   $    2,895    $    2,972
              subsidiary
          Interest expense on subordinated debt                       (439)        (429)         (340)
          --------------------------------------------------------------------------------------------
          Net income                                            $      844   $    2,466    $    2,632
          ============================================================================================
</TABLE>


                                      F-32
<PAGE>

<TABLE>
<CAPTION>
          Statements of Cash Flows                                                   2007            2006            2005
          ----------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>             <C>             <C>
          Cash Flow From Operating Activities
          ----------------------------------------------------------------------------------------------------------------
          Net income                                                            $     844       $   2,466       $   2,632
          Less equity in undistributed earnings of the bank
              subsidiary                                                           (1,283)         (2,895)         (2,972)
          Increase (decrease)  in other liabilities                                   149             (78)             78
          ----------------------------------------------------------------------------------------------------------------
          Net cash used in operating activities                                      (290)           (507)           (262)
          ----------------------------------------------------------------------------------------------------------------

          ----------------------------------------------------------------------------------------------------------------
          Cash Flow From Financing Activities
          ----------------------------------------------------------------------------------------------------------------
          Proceeds from issuance of common stock, net                                 290             507             262
          Fractional shares paid in cash                                               --              --              --
          Proceeds from issuance of subordinated debt                                  --              --              --
          ----------------------------------------------------------------------------------------------------------------
          Net cash provided by financing activities                                   290             507             262
          ----------------------------------------------------------------------------------------------------------------

          ----------------------------------------------------------------------------------------------------------------
          Cash and cash equivalents at beginning of period                             --              --              --
          ----------------------------------------------------------------------------------------------------------------
          Cash and cash equivalents at the end of period                        $      --       $      --       $      --
          ================================================================================================================

Non cash investing activities:
     Fair value of assets acquired in Allaire Community Bank combination        $      --       $      --       $ 201,820
     Goodwill and core deposit intangible resulting from Allaire Community
      Bank combination                                                          $      --       $      --       $  31,014
     Liabilities assumed in Allaire Community Bank combination                  $      --       $      --       $ 186,528
     Common stock issued in Allaire Community Bank combination                  $      --       $      --       $  39,803
</TABLE>

(19) Recent Accounting Pronouncements

In March  2006,  the FASB  issued  SFAS No. 156,  Accounting  for  Servicing  of
Financial  Assets.  Prior  thereto,  SFAS No. 140,  Accounting for Transfers and
Servicing of Financial Assets and  Extinguishments of Liabilities,  established,
among other things,  the  accounting  for all  separately  recognized  servicing
assets and  servicing  liabilities.  SFAS No. 156 amends SFAS No. 140 to require
that all separately  recognized  servicing  assets and servicing  liabilities be
initially measured at fair value, if practicable. SFAS No. 156 permits, but does
not require,  the  subsequent  measurement  of separately  recognized  servicing
assets and servicing  liabilities  at fair value.  Under SFAS No. 156, an entity
can elect  subsequent  fair  value  measurement  to account  for its  separately
recognized servicing assets and servicing liabilities.  By electing that option,
an entity may  simplify  its  accounting  because  SFAS No. 156  permits  income
statement recognition of the potential offsetting changes in fair value of those
servicing  assets and servicing  liabilities  and derivative  instruments in the
same  accounting  period.  SFAS No. 156 was  effective  in the first fiscal year
beginning  after  September 15, 2006 with earlier  adoption  permitted.  Central
Jersey  Bancorp's  adoption  of SFAS No.  156 on  January 1, 2007 did not have a
material impact on its consolidated financial statements.

In July  2006,  the FASB  issued  FASB  Interpretation  No. 48,  Accounting  for
Uncertainty  in Income  Taxes  ("FIN  48").  FIN 48  establishes  a  recognition
threshold and measurement for income tax positions recognized in an enterprise's
financial  statements in  accordance  with SFAS No. 109,  Accounting  for Income
Taxes. FIN 48 also prescribes a two-step  evaluation  process for tax positions.
The first step is recognition and the second is measurement. For recognition, an
enterprise judgmentally determines whether it is more-likely-than-not that a tax
position will be sustained  upon  examination,  including  resolution of related
appeals or litigation processes,  based on the technical merits of the position.
If the tax position meets the  more-likely-than-not  recognition threshold it is
measured and recognized in the financial statements as the largest


                                      F-33
<PAGE>

amount of tax benefit  that is greater than 50% likely of being  realized.  If a
tax position does not meet the  more-likely-than-not  recognition threshold, the
benefit of that position is not recognized in the financial statements.

Tax positions that meet the  more-likely-than-not  recognition  threshold at the
effective date of FIN 48 may be recognized,  or continue to be recognized,  upon
adoption  of  this  Interpretation.   The  cumulative  effect  of  applying  the
provisions of FIN 48 shall be reported as an  adjustment to the opening  balance
of retained earnings for that fiscal year. FIN 48 was effective for fiscal years
beginning after December 15, 2006.  Central Jersey Bancorp's  adoption of FIN 48
on January 1, 2007 did not have a material impact on its consolidated  financial
statements.  As  of  January  1,  2007,  there  were  no  amounts  recorded  for
unrecognized  tax  benefits  or  for  the  payment  of  interest  or  penalties.
Furthermore,  no amounts were accrued for the year ended  December 31, 2007. The
tax years that remain subject to examination are 2006, 2005 and 2004 for federal
and  state  tax  purposes  and 2003 for state tax  purposes  only.  Accruals  of
interest and penalties  related to unrecognized  tax benefits,  when applicable,
are recognized in income tax expense.

In September 2006, the FASB issued SFAS No. 157, Fair Value  Measurements.  This
Statement  defines fair value,  establishes a framework for measuring fair value
in GAAP, and enhances disclosures about fair value measurements.  This Statement
applies when other accounting pronouncements require fair value measurements; it
does not require new fair value  measurements.  This  Statement is effective for
financial  statements issued for fiscal years beginning after November 15, 2007,
and interim  periods  within those years.  Earlier  application  is  encouraged,
provided the entity has not yet issued financial statements, including financial
statements for any interim period for that fiscal year. Central Jersey Bancorp's
adoption  of SFAS No.  157 did not have a  material  impact on its  consolidated
financial statements.

In September 2006, the Emerging Issues Task Force ("EITF") of the FASB discussed
public comments received on two issues: (1) EITF Issue No. 06-4,  Accounting for
Deferred  Compensation  and  Post-Retirement   Benefit  Aspects  of  Endorsement
Split-Dollar Life Insurance  Arrangements,  and (2) EITF Issue 06-5,  Accounting
for Purchases of Life Insurance -- Determining the Amount that could be Realized
in Accordance  with FASB Technical  Bulletin 85-4  (Accounting  for Purchases of
Life Insurance). On September 7, the EITF agreed to clarify certain points based
on  public  comments.  The EITF  reached a  consensus  that an  employer  should
recognize  a  liability  for  future  benefits  under SFAS No.  106,  Employers'
Accounting for Postretirement  Benefits Other Than Pensions,  or APB Opinion No.
12,  Omnibus  Opinion - 1967,  for an  endorsement  split-dollar  life insurance
arrangement subject to the EITF Issue No. 06-4. This liability is to be based on
the  substantive  agreement  with the  employee.  The consensus is effective for
fiscal years beginning  after December 15, 2007.  Early adoption is permitted as
of the  beginning of an entity's  fiscal year.  Entities  should  recognize  the
effects  of  applying  the  consensus  on this  issue as a change in  accounting
principle  through a  cumulative-effect  adjustment  to retained  earnings or to
other components of equity or net assets in the statement of financial  position
as of the beginning of the year of adoption.  Retrospective  application  to all
prior periods is permitted.  Central Jersey Bancorp's  adoption of EITF 06-4 did
not have a material impact on its consolidated financial statements.

In  February  2007,  the FASB issued  SFAS No.  159,  The Fair Value  Option for
Financial Assets and Financial Liabilities. Under this Statement, Central Jersey
Bancorp may elect to report  financial  instruments  and certain  other items at
fair value on a  contract-by-contract  basis with  changes in value  reported in
earnings. This election is irrevocable.  SFAS No. 159 provides an opportunity to
mitigate  volatility  in reported  earnings  that is caused by measuring  hedged
assets  and  liabilities  that  were  previously  required  to  use a  different
accounting method than the related


                                      F-34
<PAGE>

hedging  contracts when the complex  provisions of SFAS No. 133,  Accounting for
Derivative  Instruments  and Hedging  Activities,  are not met.

SFAS No. 159 is effective for years beginning  after November 15, 2007.  Central
Jersey Bancorp adopted SFAS No. 159 effective January 1, 2008, however,  decided
not to elect the fair value option permitted by SFAS No. 159.

(20) Selected Quarterly Financial Data (Unaudited)

The following tables are a summary of certain  quarterly  financial data for the
years ended December 31, 2007 and 2006, respectively.

<TABLE>
<CAPTION>
                                                                  2007 Quarter Ended
                                         -----------------------------------------------------------------------
                                            March 31            June 30         September 30        December 31
                                         -------------       -------------      -------------      -------------
                                                    (dollars in thousands, except per share data)
<S>                                      <C>                 <C>                <C>                <C>
Interest income                          $       7,398       $       7,729      $       7,792      $       7,569
Interest expense                                 3,371               3,587              3,544              3,280
                                         -------------       -------------      -------------      -------------
      Net interest income                        4,027               4,142              4,248              4,289
Provision for loan losses                          125                  40                 --                 --
                                         -------------       -------------      -------------      -------------

      Net interest income after
          provision for loan losses              3,902               4,102              4,248              4,289

Non-interest (loss) income                      (1,568)                509                417                425
Non-interest expense                             3,651               3,445              3,703              3,571
                                         -------------       -------------      -------------      -------------

(Loss) income before income taxes               (1,317)              1,166                962              1,143
      Income tax (benefit)/expense                 (55)                431                331                403
                                         -------------       -------------      -------------      -------------
Net (loss) income                        $      (1,262)      $         735      $         631      $         740
                                         =============       =============      =============      =============
(Loss) earnings per share:

Basic                                    $       (0.14)      $        0.09      $        0.07      $        0.08
                                         =============       =============      =============      =============
Diluted                                  $       (0.14)      $        0.08      $        0.07      $        0.08
                                         =============       =============      =============      =============

Weighted average shares
    outstanding:

Basic                                        8,668,330           8,685,424          8,744,383          8,745,323
                                         =============       =============      =============      =============
Diluted                                      8,668,330           9,155,322          9,154,818          9,139,034
                                         =============       =============      =============      =============
</TABLE>


                                      F-35
<PAGE>

<TABLE>
<CAPTION>
                                                                2006 Quarter Ended
                                         ------------------------------------------------------------------
                                           March 31           June 30        September 30       December 31
                                         ------------      ------------      ------------      ------------
                                                    (dollars in thousands, except per share data)
<S>                                      <C>               <C>               <C>               <C>
Interest income                          $      7,064      $      7,321      $      7,444      $      7,590
Interest expense                                2,799             2,979             3,225             3,453
                                         ------------      ------------      ------------      ------------
      Net interest income                       4,265             4,342             4,219             4,137
Provision for loan losses                          51                97               318                34
                                         ------------      ------------      ------------      ------------

      Net interest income after
          provision for loan losses             4,214             4,245             3,901             4,103

Non-interest income                               480               423               422               415
Non-interest expense                            3,541             3,594             3,647             3,527
                                         ------------      ------------      ------------      ------------

Income before income taxes                      1,153             1,074               676               991
      Income taxes                                428               399               239               362
                                         ------------      ------------      ------------      ------------
Net income                               $        725      $        675      $        437      $        629
                                         ============      ============      ============      ============

Earnings per share:

Basic                                    $       0.08      $       0.08      $       0.05      $       0.07
                                         ============      ============      ============      ============
Diluted                                  $       0.08      $       0.07      $       0.05      $       0.07
                                         ============      ============      ============      ============

Weighted average shares
    outstanding:

Basic                                       8,610,316         8,675,672         8,675,672         8,667,281
                                         ============      ============      ============      ============
Diluted                                     9,252,069         9,175,796         9,156,902         9,130,682
                                         ============      ============      ============      ============
</TABLE>


                                      F-36
<PAGE>

                                INDEX OF EXHIBITS

Exhibit No.                        Description of Exhibit
-----------                        ----------------------

2.1             Plan of Acquisition of all of the outstanding  stock of Monmouth
                Community  Bank by Central  Jersey  Bancorp  (formerly  Monmouth
                Community Bancorp) (the "Registrant"),  entered into as of March
                16,  2000  by  Monmouth   Community   Bank  and  the  Registrant
                (Incorporated  by reference  to Exhibit 2.1 to the  Registrant's
                Registration   Statement   on  Form   SB-2   (Registration   No.
                333-87352), effective July 23, 2002).

2.2             Agreement and Plan of Acquisition, dated as of June 30, 2004, by
                and  between  the   Registrant   and  Allaire   Community   Bank
                ("Allaire"):  Upon the request of the  Securities  and  Exchange
                Commission, the Registrant agrees to furnish a copy of Exhibit A
                - Voting Agreement of Allaire  Stockholders and Voting Agreement
                of the Registrant's Shareholders;  Exhibit B - Allaire Affiliate
                Agreement,  Exhibit C - Opinion of Giordano,  Halleran & Ciesla,
                P.C., as counsel to the  Registrant,  and Exhibit D - Opinion of
                Frieri  Conroy & Lombardo,  LLC, as counsel to Allaire,  and the
                following  Schedules:  Schedule  1.10(a)  -  Composition  of the
                Registrant's Board of Directors;  Schedule 1.10(b) - Composition
                of Allaire and  Monmouth  Community  Bank  Boards of  Directors;
                Schedule 1.10(c) - Executive Officers of the Registrant, Allaire
                and Monmouth  Community Bank;  Schedule  3.02(a) - Stock Options
                (Allaire);  Schedule 3.02(b) - Subsidiaries (Allaire);  Schedule
                3.08 - Absence of Changes or Events  (Allaire);  Schedule 3.09 -
                Loan  Portfolio  (Allaire);  Schedule  3.10 - Legal  Proceedings
                (Allaire);  Schedule 3.11 - Tax Information (Allaire);  Schedule
                3.12(a) - Employee Benefit Plans  (Allaire);  Schedule 3.12(b) -
                Defined Benefit Plans (Allaire);  Schedule 3.12(h) - Payments or
                Obligations  (Allaire);  Schedule  3.12(m) - Grantor  or "Rabbi"
                Trusts  (Allaire);   Schedule  3.12(n)  -  Retirement   Benefits
                (Allaire);   Schedule   3.13(c)  -  Buildings   and   Structures
                (Allaire);  Schedule 3.14(a) - Real Estate  (Allaire);  Schedule
                3.14(b)  -  Leases   (Allaire);   Schedule  3.16(a)  -  Material
                Contracts (Allaire);  Schedule 3.16(c) - Certain Other Contracts
                (Allaire);  Schedule  3.16(d) - Effect on Contracts and Consents
                (Allaire);  Schedule 3.18 - Registration  Obligations (Allaire);
                Schedule 3.20 - Insurance (Allaire);  Schedule 3.21(b) - Benefit
                or  Compensation  Plans  (Allaire);  Schedule  3.21(d)  -  Labor
                Relations (Allaire);  Schedule 3.22 - Compliance with Applicable
                Laws  (Allaire);  Schedule 3.23 - Transactions  with  Management
                (Allaire);  Schedule 3.25 - Deposits (Allaire); Schedule 4.02(a)
                - Stock Options  (Registrant);  Schedule  4.02(b) - Subsidiaries
                (Registrant);  Schedule  4.08 -  Absence  of  Changes  or Events
                (Registrant);  Schedule  4.09  -  Loan  Portfolio  (Registrant);
                Schedule 4.10 - Legal Proceedings (Registrant);  Schedule 4.11 -
                Tax  Information  (Registrant);   Schedule  4.12(a)  -  Employee
                Benefit Plans  (Registrant);  Schedule 4.12(b) - Defined Benefit
                Plans  (Registrant);  Schedule 4.12(g) - Payments or Obligations
                (Registrant);  Schedule  4.12(l) -  Grantor  or  "Rabbi"  Trusts


                                      E-1
<PAGE>

                (Registrant);    Schedule   4.12(m)   -   Retirement    Benefits
                (Registrant);  Schedule  4.13(c)  -  Buildings  and  Structures;
                (Registrant)  Schedule  4.14(a)  and  4.14(b) - Real  Estate and
                Leases  (Registrant);  Schedule  4.16(a)  -  Material  Contracts
                (Registrant);   Schedule   4.16(c)  -  Certain  Other  Contracts
                (Registrant);   Schedule  4.16(d)  -  Effect  on  Contracts  and
                Consents (Registrant);  Schedule 4.18 - Registration Obligations
                (Registrant);  Schedule 4.20 - Insurance (Registrant);  Schedule
                4.21(b) - Benefit or Compensation Plans  (Registrant);  Schedule
                4.21(d)  -  Labor  Relations   (Registrant);   Schedule  4.22  -
                Compliance with Applicable  Laws  (Registrant);  Schedule 4.23 -
                Transactions  with  Management  (Registrant);  Schedule  4.25  -
                Deposits  (Registrant);  Schedule  6.18(a) - Notice of Deadlines
                (Allaire);   and   Schedule   6.18(b)  -  Notice  of   Deadlines
                (Registrant)  (Incorporated  by  reference to Exhibit 2.2 to the
                Registrant's  Quarterly  Report on Form  10-QSB for the  quarter
                ended June 30, 2004).

3.1             Certificate of Incorporation  of the Registrant,  as amended and
                restated  on  January  4, 2005  (Incorporated  by  reference  to
                Exhibit 3.1 to the Registrant's Annual Report on Form 10-KSB for
                the year ended December 31, 2004).

3.2             By-laws of the Registrant, as amended and restated on January 1,
                2005   (Incorporated   by   reference  to  Exhibit  3.2  to  the
                Registrant's  Annual  Report on Form  10-KSB  for the year ended
                December 31, 2004).

4.              Specimen certificate representing the Registrant's common stock,
                par value $0.01 per share  (Incorporated by reference to Exhibit
                4 to Amendment No. 1 to the Registrant's  Registration Statement
                on Form SB-2  (Registration No.  333-87352),  effective July 23,
                2002).

10.1            Registrant's  Stock  Option Plan  (Incorporated  by reference to
                Exhibit 10.1 to the Registrant's  Registration Statement on Form
                SB-2 (Registration No. 333-87352), effective July 23, 2002).

10.2            Indenture between Registrant and Wilmington Trust Company, dated
                March 25, 2004  (Incorporated  by reference to Exhibit  10.10 to
                the Registrant's Annual Report on Form 10-KSB for the year ended
                December 31, 2003).

10.3            Amended and Restated  Declaration of Trust of MCBK Capital Trust
                I, dated March 25, 2004  (Incorporated  by  reference to Exhibit
                10.11 to the  Registrant's  Annual Report on Form 10-KSB for the
                year ended December 31, 2003).

10.4            Guarantee  Agreement by Registrant and Wilmington Trust Company,
                dated March 25, 2004 (Incorporated by reference to Exhibit 12 to
                the Registrant's Annual Report on Form 10-KSB for the year ended
                December 31, 2003).

10.5*           Change of Control Agreement, dated as of August 1, 2006, between
                the Registrant and Robert S. Vuono (Incorporated by reference to
                Exhibit 10.12 to the  Registrant's  Current  Report on Form 8-K,
                dated August 1, 2006).


                                      E-2
<PAGE>

10.5.1*         Amendment  No. 1 to Change  of  Control  Agreement,  dated as of
                February 21, 2007, between the Registrant and Robert S. Vuono.

10.6*           Change  of  Control  Agreement,  dated as of  January  1,  2005,
                between the  Registrant and Robert K. Wallace  (Incorporated  by
                reference to Exhibit 10.8 to the  Registrant's  Annual Report on
                Form 10-KSB for the year ended December 31, 2004).

10.7*           Severance  Agreement,  dated as of January 1, 2005,  between the
                Registrant  and Carl F.  Chirico  (Incorporated  by reference to
                Exhibit 10.9 to the  Registrant's  Annual  Report on Form 10-KSB
                for the year ended December 31, 2004).

10.8*           Change of Control Agreement, dated as of August 1, 2006, between
                the Registrant and James S. Vaccaro  (Incorporated  by reference
                to Exhibit 10.10 to the Registrant's Current Report on Form 8-K,
                dated August 1, 2006).

10.8.1*         Amendment  No. 1 to Change  of  Control  Agreement,  dated as of
                February 21, 2007,  between the Registrant and James S. Vaccaro.
                (Incorporated by reference to Exhibit 10.8.1 to the Registrant's
                Annual  Report  on Form  10-K for the year  ended  December  31,
                2007).

10.9*           Change of Control Agreement, dated as of August 1, 2006, between
                the  Registrant  and  Anthony  Giordano,  III  (Incorporated  by
                reference to Exhibit 10.11 to the Registrant's Current Report on
                Form 8-K, dated August 1, 2006).  (Incorporated  by reference to
                Exhibit 10.9 to the Registrant's  Annual Report on Form 10-K for
                the year ended December 31, 2007).

10.9.1*         Amendment  No. 1 to Change  of  Control  Agreement,  dated as of
                February 21, 2007,  between the Registrant and Anthony Giordano,
                III.  (Incorporated  by  reference  to  Exhibit  10.9.1  to  the
                Registrant's  Annual  Report  on Form  10-K for the  year  ended
                December 31, 2007).

10.10*          Change of Control  Agreement,  dated as of  February  21,  2007,
                between the Registrant and Thomas J. Garrity.  (Incorporated  by
                reference to Exhibit 10.10 to the Registrant's  Annual Report on
                Form 10-K for the year ended December 31, 2007).

10.11*          Change of Control  Agreement,  dated as of  February  21,  2007,
                between the Registrant and Lisa A.  Borghese.  (Incorporated  by
                reference to Exhibit 10.11 to the Registrant's  Annual Report on
                Form 10-K for the year ended December 31, 2007).

10.12           Registrant's   2005  Equity  Incentive  Plan   (Incorporated  by
                reference to exhibit 10.10 to the Registrant's  Quarterly Report
                on Form 10-Q for the quarter ended March 31, 2005).


                                      E-3
<PAGE>

14.1            Chief  Executive  and Senior  Financial  Officer  Code of Ethics
                (Incorporated  by reference to Exhibit 14.1 to the  Registrant's
                Annual  Report on Form  10-KSB for the year ended  December  31,
                2003).

21.1            Subsidiaries of the Registrant.

23.1            Consent  of  KPMG  LLP,  as  to  the  Registrant's  consolidated
                financial statements for the years ended December 31, 2006, 2005
                and 2004.

31.1            Section 302 Certification of Chief Executive Officer.

31.2            Section 302 Certification of Chief Financial Officer.

32.1            Certification  of Chief Executive  Officer pursuant to 18 U.S.C.
                Section 1350.

32.2            Certification  of Chief Financial  Officer pursuant to 18 U.S.C.
                Section 1350.

-------------------
*Constitutes a management contract.


                                      E-4