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                                                                    EXHIBIT 10.1


                           MONMOUTH COMMUNITY BANCORP
                                STOCK OPTION PLAN


1.       PURPOSE.

         The purpose of this Stock Option Plan (the "Plan") is to advance the
         interests of Monmouth Community Bancorp ("Bancorp") by enhancing the
         ability of Bancorp to: (i) attract and retain employees and directors
         who are in a position to make significant contributions to the success
         of Bancorp; (ii) reward employees and directors for their contributions
         to Bancorp; and (iii) encourage employees and directors to take into
         account the long-term interests of Bancorp through ownership of shares
         of Bancorp's Common Stock, par value $.01 per share (the "Common
         Stock").

         The Plan is intended to accomplish the objectives set forth above by
         enabling Bancorp to grant awards ("Awards") in the form of incentive
         stock options ("ISOs") and nonqualified stock options ("Nonqualified
         Options")(ISOs and Nonqualified Options shall be collectively referred
         to herein as "Options"), as more fully described below.

2.       ADMINISTRATION.

         The Board of Directors of Bancorp (the "Board") shall designate either
         the Board or a duly appointed committee thereof as administrator for
         the Plan (the "Administrator"). The Administrator will determine the
         recipients of Awards, the times at which Awards will be made, the size
         and type or types of Awards to be made to each recipient, and will set
         forth in each such Award the terms, conditions, limitations and
         restrictions applicable to the Award granted. The Administrator will
         have full and exclusive power to interpret the Plan, to adopt rules,
         regulations and guidelines relating to the Plan, to grant waivers of
         Plan restrictions and to make all of the determinations necessary for
         the administration of the Plan. Such determinations and actions of the
         Administrator, and all other determinations and actions of the
         Administrator made or taken under authority granted by any provision of
         the Plan, will be conclusive and binding on all parties.

3.       EFFECTIVE DATE AND TERM OF PLAN.

         Subject to stockholder approval, the Plan will become effective on
         August 1, 2000. The Plan will terminate on July 31, 2010, subject to
         earlier termination of the Plan by the Board pursuant to Section 15
         hereof. No Award may be granted under the Plan after the termination
         date of the Plan, but the expiration of Awards granted prior to the
         termination date may extend beyond that date pursuant to the terms of
         such Awards.

4.       SHARES SUBJECT TO THE PLAN.

         Subject to adjustment as provided in Section 13 hereof, the aggregate
         number of shares of Common Stock reserved for issuance pursuant to
         Awards granted under the Plan shall be five hundred thousand (500,000)
         shares.

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         The shares of Common Stock delivered under the Plan will be authorized
         but unissued shares of Common Stock. No fractional shares of Common
         Stock will be delivered pursuant to Awards granted under the Plan and
         the Administrator shall determine the manner in which fractional share
         value will be treated.

         If any Award is cancelled or terminates without having been exercised
         in full, the number of shares of Common Stock as to which such Award
         was not exercised will be available for future Awards of Common Stock.

5.       ELIGIBILITY AND PARTICIPATION.

         Those eligible to receive Awards under the Plan (each a "Participant"
         and, collectively, the "Participants") will be persons in the employ of
         Bancorp or any subsidiary of Bancorp (each an "Employee" and,
         collectively, the "Employees") and directors of Bancorp who are not
         Employees. A "subsidiary" for purposes of the Plan is a corporation or
         other business organization of which Bancorp owns or controls, or will
         own or control, more than fifty percent (50%) of the total combined
         voting power of all classes of stock or other equity interests therein.

6.       OPTIONS.

         (a)      Nature of Options. An Option is an Award entitling the
                  Participant to purchase a specified number of shares of Common
                  Stock at a specified exercise price. ISOs, as defined in
                  Section 422 of the Internal Revenue Code of 1986, as amended
                  (the "Code"), and Nonqualified Options may be granted under
                  the Plan; provided, however, that ISOs may be granted only to
                  Employees.

         (b)      Exercise Price. The exercise price of each Option shall be
                  equal to the "Fair Market Value" (as defined below) of the
                  Common Stock on the date the Award is granted to the
                  Participant; provided, however, that: (i) in the
                  Administrator's discretion, the exercise price of a
                  Nonqualified Option may be less than the Fair Market Value of
                  the Common Stock on the date of grant; and (ii) with respect
                  to a Participant who owns ten percent (10%) or more of the
                  total combined voting power of all classes of stock of
                  Bancorp, the exercise price of an ISO granted to such
                  Participant shall not be less than one hundred and ten percent
                  (110%) of the Fair Market Value of the Common Stock on the
                  date the ISO is granted.



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         (c)      Fair Market Value. The Fair Market Value of one share of
                  Common Stock on any relevant date shall be determined in
                  accordance with the following provisions:

                  i) If the Common Stock is at the time listed on any stock
                  exchange or similar institution, then the Fair Market Value
                  shall be the closing selling price per share of Common Stock
                  on the date in question on the stock exchange or similar
                  institution determined by the Administrator to be the primary
                  market for the Common Stock, as such price is officially
                  quoted in the composite tape of transactions on such exchange
                  or similar institution. If there is no closing selling price
                  for the Common Stock on the date in question, then the Fair
                  Market Value shall be the closing selling price on the last
                  preceding date for which such quotation exists.

                  ii) If the Common Stock is not at the time listed on any stock
                  exchange or similar institution, but is traded on the National
                  Association of Securities Dealers Automated Quotation System
                  ("NASDAQ") OTC Bulletin Board, then the Fair Market Value
                  shall be the closing selling price per share of Common Stock
                  on the date in question, as such price is reported by the
                  National Association of Securities Dealers on the NASDAQ OTC
                  Bulletin Board or any successor system. If there is no closing
                  selling price of the Common Stock on the date in question,
                  then the Fair Market Value shall be the closing selling price
                  on the last preceding date for which such quotation exists.

                  iii) If the Common Stock is at the time publicly traded, but
                  is not listed on any stock exchange or similar institution or
                  traded on the NASDAQ OTC Bulletin Board, then the Fair Market
                  Value of the Common Stock shall be the closing price of the
                  Common Stock as of the day in question (or, if such day is not
                  a trading day in the principal securities market or markets
                  for the Common Stock, on the nearest preceding trading day),
                  as reported with respect to the market (or the composite of
                  markets, if more than one) in which shares of the Common Stock
                  are then traded, or, if no such closing prices are reported,
                  on the basis of the mean between the high bid and low asked
                  prices that day on the principal market or quotation system on
                  which shares of Common Stock are then quoted, or, if not so
                  quoted, as furnished by a professional securities dealer
                  making a market in the Common Stock.

         (d)      Duration of Options. The term of each Option granted to a
                  Participant pursuant to an Award shall be determined by the
                  Administrator; provided, however, that in no case shall an
                  Option be exercisable more than ten (10) years (five (5) years
                  in the case of an ISO granted to a ten-percent stockholder as
                  described in subpart (b) above) from the date of the Award.

         (e)      Exercise of Options and Conditions. Except as otherwise
                  provided in Sections 13 and 14 hereof, and except as otherwise
                  provided below with respect to ISOs, Options granted pursuant
                  to an Award will become exercisable at such time or times, and
                  subject to such conditions, as the Administrator may specify
                  at the time of the Award. The Options may be subject to such
                  restrictions, conditions and


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                  forfeiture provisions as the Administrator may determine,
                  including, but not limited to, restrictions on transfer,
                  continuous service with Bancorp or any of its subsidiaries,
                  achievement of business objectives, and individual and Bancorp
                  performance. To the extent exercisable, an Option may be
                  exercised either in whole at any time or in part from time to
                  time. With respect to an ISO granted to a Participant, the
                  Fair Market Value of the shares of Common Stock on the date of
                  grant which are exercisable for the first time by a
                  Participant during any calendar year shall not exceed
                  $100,000.

         (f)      Payment for and Delivery of Stock. Full payment for shares of
                  Common Stock being purchased by a Participant upon the
                  exercise of an Option will be made at the time of the exercise
                  of the Option, in whole or in part. Payment of the purchase
                  price will be made in cash or in such other form of
                  consideration as the Administrator may permit.

7.       DIRECTOR'S FEES.

         Subject to the limitations contained in Section 4 hereof on the number
         of shares of Common Stock which may be issued hereunder, the
         Administrator, in its sole discretion, may permit any member of the
         Board to receive all or a portion of a member's annual Board retainer
         fee, Board meeting fees, and Board committee fees in the form of an
         Award of Options granted hereunder. Any member of the Board who desires
         to receive all or any part of such Board fees in an Award of Options
         must provide Bancorp with written notice of the member's election to
         receive payment of Board fees in such form no later than five (5)
         business days prior to the date of payment of such fees.

8.       AWARD AGREEMENTS.

         The grant of any Award under the Plan shall be evidenced by a Stock
         Option Agreement, substantially for the form annexed hereto as Exhibit
         A, which shall describe the specific Award granted and the terms and
         conditions of the Award.

9.       TRANSFERS.

         No Award may be assigned, pledged or transferred, other than by will or
         the laws of descent and distribution, and an Award will be exercisable
         only by the Participant, or in the event of the death or "Disability"
         (as such term is defined in Section 14(b) hereof) of a Participant, by
         the Participant's legal representative.

10.      RIGHTS OF A STOCKHOLDER.

         The receipt of an Award will not give a Participant rights as a
         shareholder of Bancorp. The Participant will obtain such rights,
         subject to any limitations imposed by the Plan or the instrument
         evidencing the Award, upon actual receipt of shares of Common Stock.



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11.      CONDITIONS ON DELIVERY OF STOCK.

         Bancorp will not be obligated to deliver any shares of Common Stock
         pursuant to the Plan or to remove any restrictions or legends from
         shares of Common Stock previously delivered under the Plan until (a) in
         the opinion of Bancorp's counsel, all applicable federal and state laws
         and regulations have been complied with, and (b) all other legal
         matters in connection with the issuance and delivery of such shares of
         Common Stock have been approved by Bancorp's counsel. If the sale of
         shares of Common Stock has not been registered under the Securities Act
         of 1933, as amended (the "Act"), and qualified under the appropriate
         "blue sky" laws, Bancorp may require, as a condition to exercise of an
         Option, such representations and agreements as counsel for Bancorp may
         consider appropriate to avoid violation of such Act and laws and may
         require that the certificates evidencing such shares of Common Stock
         bear an appropriate legend restricting transfer.

         If an Option is exercised by a Participant's legal representative,
         Bancorp will be under no obligation to deliver shares of Common Stock
         pursuant to such exercise until Bancorp is satisfied as to the
         authority of such representative.

12.      TAX WITHHOLDING.

         Bancorp will have the right to deduct from any compensatory payment due
         the Participant taxes that are required to be withheld and to condition
         the obligation to deliver shares of Common Stock under the Plan upon
         the Participant's paying Bancorp such amount as Bancorp may request to
         satisfy any liability for applicable withholding taxes.

13.      ADJUSTMENT OF AWARD.

         (a)      In the event of changes in the Common Stock of Bancorp by
                  reason of any stock dividend, spin-off, split-up,
                  recapitalization, merger, consolidation, business combination
                  or exchange of shares and the like, the Administrator shall
                  make proportionate adjustments to the maximum number and kind
                  of shares reserved for issuance or with respect to which
                  Awards may be granted as provided in Section 4 hereof and to
                  the number, kind and price of shares covered by outstanding
                  Awards.

         (b)      In the event of (i) a consolidation or merger of Bancorp with
                  or into another entity, whether or not Bancorp is the
                  surviving entity (excluding any parent, subsidiary or
                  affiliated entity of Bancorp), (ii) a transaction or series of
                  transactions which results in the acquisition of substantially
                  all of Bancorp's outstanding Common Stock by a single person,
                  entity or group of persons or entities acting in concert
                  (excluding any parent, subsidiary or affiliated entity of
                  Bancorp), (iii) the sale or transfer of all or substantially
                  all of the assets of Bancorp, or (iv) a reorganization of
                  Bancorp, the Administrator, or the board of directors of any
                  corporation assuming the obligations of Bancorp, shall, as to
                  outstanding Options, (A) provide that such Options shall be
                  assumed, or equivalent Options shall be substituted, by the
                  acquiring or succeeding


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                  corporation (or an affiliate thereof); (B) upon written notice
                  to the Option holders, provide that all unexercised and/or
                  unvested Options will terminate immediately prior to the
                  consummation of such merger, consolidation, acquisition,
                  reorganization, sale or transfer unless exercised by the Award
                  holder, to the extent then exercisable, within a specified
                  number of days following the date of such notice; (C) provide
                  for the termination of outstanding Options through the
                  payment, in cash or shares of Common Stock or other securities
                  of Bancorp or of any other entity, of an amount equal to the
                  difference between (I) the value of the consideration per
                  share received by Bancorp's stockholders in the merger,
                  consolidation, acquisition, reorganization, sale or transfer
                  (the "Merger Consideration") times the number of shares of
                  Common Stock subject to such outstanding Options to the extent
                  vested, and (II) the aggregate exercise price of such
                  outstanding Options; or (D) provide for any combination of the
                  foregoing. In any such case, the Administrator may, in its
                  sole discretion, accelerate any vesting or installment periods
                  and exercise dates.

         (c)      In the event of the dissolution or liquidation of Bancorp
                  (except a dissolution or liquidation relating to a corporate
                  transaction referred to in (b) above), the outstanding Options
                  shall terminate as of a date fixed by the Administrator;
                  provided, however, that not less than thirty (30) days written
                  notice of the date so fixed shall be given to each Participant
                  who shall have the right during such period to exercise the
                  Participant's Options as to all or any part of the vested
                  shares of Common Stock covered thereby.

14.      TERMINATION OF SERVICE.

         Upon a Participant's termination of service with Bancorp, any
         outstanding Option shall be subject to the terms and conditions set
         forth below, unless otherwise determined by the Administrator in its
         sole discretion:

         (a)      In the event a Participant's employment with Bancorp
                  terminates for any reason, including retirement, the unvested
                  portion of each Option granted to the Participant shall
                  terminate without any consideration upon the date of such
                  termination of employment. With the exception set forth in
                  subsection (d) below, the vested portion of each Option
                  granted to the Participant shall terminate thirty (30) days
                  after the date the Participant's employment is terminated, to
                  the extent not exercised during that thirty (30) day period.

         (b)      In the event a Participant's employment with or service to
                  Bancorp terminates by reason of the Participant's death or
                  Disability, such Participant, or his or her personal
                  representative, may exercise all vested Options until the
                  earlier to occur of (i) the expiration of the period thirty
                  (30) days after the date of such death or Disability or (ii)
                  the date on which such Option would lapse; provided, further,
                  that the Administrator may extend the termination date of the
                  Option for up to ninety (90) days from the date it would
                  otherwise terminate pursuant to this subsection (b). In
                  addition, as of the date of death or Disability, any remaining
                  unvested Options or part thereof, shall be forfeited to
                  Bancorp without any


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                  consideration. For purposes of the Plan, a Participant shall
                  suffer a "Disability" if (i) he or she is unable to perform
                  the functions, duties and responsibilities which he or she had
                  been performing for Bancorp for a period of six (6)
                  consecutive months due to physical or mental reasons, (ii) it
                  is determined by a licensed physician acceptable to Bancorp
                  that it is likely such inability will continue after the
                  conclusion of the six (6) month period, and (iii) as a result
                  of such physical or mental ailment, the Participant's
                  employment with Bancorp shall cease.

         (c)      In the event a Participant who is not an Employee ceases to
                  serve as a director of Bancorp for any reason, the unvested
                  portion of each Option granted to the Participant shall
                  terminate without any consideration upon the date of such
                  cessation. With the exception set forth in subsection (d)
                  below, the vested portion of each Option granted to the
                  Participant shall terminate thirty (30) days after the date
                  the Participant's service on the Board ceases, to the extent
                  not exercised during that thirty (30) day period.

         (d)      In the event a Participant's employment with or service to
                  Bancorp terminates for Misconduct (as defined below), the
                  vested and unvested portion of each Option granted to the
                  Participant shall terminate without any consideration upon the
                  date of such termination. For purposes of the Plan,
                  "Misconduct" by a Participant shall mean the commission of any
                  act of fraud, embezzlement or dishonesty by the Participant,
                  any unauthorized use or disclosure by the Participant of
                  confidential information or trade secrets of Bancorp (or any
                  parent, subsidiary or affiliate thereof), or any other
                  intentional misconduct by the Participant adversely affecting
                  the business affairs of Bancorp (or any parent, subsidiary or
                  affiliate thereof) in a material manner. The foregoing
                  definition shall not be deemed to be inclusive of all of the
                  acts or omissions which Bancorp (or any parent, subsidiary or
                  affiliate thereof) may consider as grounds for the dismissal
                  or discharge of a Participant or any other individual in the
                  service of Bancorp (or any parent, subsidiary or affiliate
                  thereof).

15.      AMENDMENTS AND TERMINATION.

         The Administrator will have the authority to make such amendments to
         any terms and conditions applicable to outstanding Awards as are
         consistent with this Plan; provided, that except for adjustments under
         Section 13 hereof, no such action will modify such Award in a manner
         adverse to the Participant without the Participant's consent except as
         such modification is provided for or contemplated in the terms of the
         Award.

         The Board may amend, suspend or terminate the Plan, except that no
         action may, without the consent of a Participant, alter or impair any
         Award previously granted to the Participant under the Plan.


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16.      REQUIREMENT FOR PARTICIPATION.

         Any grant of an Award hereunder to any Participant shall be contingent
         upon (i) such Participant executing a Stock Option Agreement and (ii)
         such Participant countersigning a Notice of Grant of Stock Option,
         substantially in the form attached hereto as Exhibit B.

17.      SUCCESSORS AND ASSIGNS.

         The provisions of the Plan shall be binding upon all successors and
         assigns of any Participant, including, without limitation, the estate
         of any Participant and the executors, administrators, or trustees of
         such estate, and any receiver, trustee in bankruptcy or representative
         of the creditors of any Participant.

18.      MISCELLANEOUS.

         (a)      This Plan shall be governed by and construed in accordance
                  with the laws of the State of New Jersey.

         (b)      Any and all funds received by Bancorp under the Plan may be
                  used for any corporate purpose.

         (c)      Nothing contained in the Plan or any Award granted under the
                  Plan shall confer upon a Participant any right to continue in
                  the employment of Bancorp or any parent, subsidiary or
                  affiliate thereof, or interfere in any way with the right of
                  Bancorp, its parent or its subsidiaries or affiliates, to
                  terminate the employment relationship at any time.



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