SYNERGY FINANCIAL GROUP, INC.

2002  A N N U A L   R E P O R T

Banking o  Investments o  Insurance

24-Hour Banking
Open 7 Days
Hassle-Free Checking
Online Banking
Visa Check Cards
Online Bill Payment
Savings Accounts
Certificate Accounts
Retirement Accounts
Home Equity Loans
Home Mortgages
Car & Truck Loans
Small Business Banking
Phone Banking
Personal Loans
Investment Property Mortgages
Commercial Mortgages
Home Equity Credit Lines
Credit Card Services
Senior Checking
Save-a-Saurus Kids Club
Car & Truck Leases
Money Market Accounts
Save Deposit Boxes
Club Accounts
Travelers Checks
Direct Deposit
Savings Bonds
Wire Transfers
Money Orders
Business Credit Cards

                               [GRAPHIC OMITTED]
<PAGE>

A N N U A L   R E P O R T

Table of Contents
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                                     <C>
Letter to Shareholders ...................................................................  3

Management's Discussion and Analysis of Financial Condition and Results of Operations ....  4

Appointment of Auditors ..................................................................  9

Stock Price Information...................................................................  9

Report of Independent Certified Public Accountants ....................................... 10

Consolidated Financial Statements:

  Balance Sheets ......................................................................... 11

  Statements of Income ................................................................... 12

  Statement of Changes in Stockholders' Equity............................................ 13

  Statements of Cash Flows ............................................................... 14

Notes to Consolidated Financial Statements................................................ 15

Board of Directors, Officers and Branch Locations ........................................ 29
</TABLE>

                                                                               1
<PAGE>

Dear Shareholder:

2002 was an extraordinary year of unprecedented growth and expansion for Synergy
Financial Group, Inc. Our strategy of providing premier service and convenience,
as well as excellent products to our retail and business customers  continued to
yield outstanding  financial results. On December 31, 2002, the organization had
total assets of $431.3 million,  compared to $297.0 million one year earlier, an
increase of 45.3%.  Total loans  increased  more than $95  million,  from $226.1
million on December 31, 2001 to $321.4 million at the close of 2002, an increase
of 42.2% that was driven by record loan  originations of $186.5  million.  Total
bank deposits  increased 45.1%, to $362.7 million on December 31, 2002, with new
banking  offices  contributing  $43.9  million of this  growth and "same  store"
deposits increasing 27.5%, or $68.8 million.

The organization  significantly expanded its branch network during 2002, opening
six new branch  locations in the Central New Jersey  market area. We also closed
our last  out-of-state  office,  located  in  Memphis,  Tennessee,  and laid the
groundwork  for three  additional  facilities to be added to our branch  network
(two in 2003 and one in 2004).  To complement  our growing  branch  network,  we
expanded  our  full-service   branch  and  telephone  banking  center  hours  to
7-day-a-week  availability.  We also  rolled  out  significant  delivery  system
enhancements    via   our   Visa    Check    Card    and   our    Internet-based
transactional-banking  and bill payment system - Memberlink  Online.  The former
provides  our  personal  checking  account  users  access  to the funds in their
accounts to purchase  goods and  services at merchants  displaying  the familiar
Visa  logo;  the  latter  provides  members  account  access  and  bill  payment
processing  capability  from any location  that provides them with access to the
World Wide Web.

We took another  significant step in 2002, with the offering of shares of common
stock in Synergy Financial Group, Inc. This public offering raised approximately
$14  million  in capital  to  support  our  continued  growth.  In  addition  to
supporting the expansion of our branch  network,  these funds are being utilized
for  general  business   purposes  such  as  originating  loans  and  purchasing
securities.  We also  intend  to  actively  consider  the  acquisition  of local
financial institutions as a means of expanding our banking operation.

With that in mind,  on October  11,  2002  Synergy  announced  the  signing of a
Definitive  Agreement to acquire First Bank of Central Jersey ("First Bank") for
$2.1 million in cash. First Bank was a $54.3 million New Jersey-based  financial
institution  with its main office located in North Brunswick and a branch office
in Monroe.  This transaction closed on January 10, 2003, adding $52.1 million of
deposits  and $22.9  million in loans to our  balance  sheet.  It also  expanded
Synergy's branch office presence in Middlesex County, New Jersey.

The year didn't pass without a fair share of challenges.  Coincident with one of
the worst years in decades on Wall Street, with the Dow Jones Industrial average
experiencing its sharpest decline in 25 years, Synergy Financial Services,  Inc.
suffered  its  second  consecutive  year  of  negative  earnings,  reporting  an
operating loss of $33,743 for the year ended December 31, 2002. This followed an
operating loss of $30,463 in 2001. While disappointing,  these results remain in
line with our business plan  projections,  and in no way alter our commitment to
this operating subsidiary and its vision.

Another  notable  challenge  posed in 2002  originated  at the  state  level - a
dramatic change in the tax rate applicable to the state's savings banks. To help
offset the burden wrought by this action, the company organized and incorporated
Synergy Capital  Investments,  Inc., a Synergy Bank subsidiary.  This New Jersey
corporation,  organized under the New Jersey Business  Corporation  Act, has the
power to invest in  stocks,  bonds,  notes and all types of  equity,  mortgages,
debentures and other investment  securities and to engage in the offering of all
types of  investment-related  services.  Corporations  organized  under  the New
Jersey  Business  Corporation Act are subject to a state income tax rate of 3.6%
(versus the 9% rate for New Jersey savings banks).  Following the  incorporation
of  Synergy  Capital  Investments,  Inc.,  Synergy  Bank  moved  its  investment
portfolio  to this  company in order to minimize the impact of the new state tax
structure.

Indeed,  the  year  was not  only  exciting  and  challenging,  but  financially
rewarding,   as  well.  The  price  of  our  stock,   which  is  traded  on  the
over-the-counter market under the symbol "SYNF," rose dramatically following our
initial public offering,  reflecting what we believe to be a strong  endorsement
of our Company's goals and objectives by the investing  community.  During 2003,
we will  continue to pursue  these  goals and  objectives,  focusing  effort and
energy on tremendous  opportunities  to bring banking,  investment and insurance
services to our expanding New Jersey markets.

The service  provided by our experienced and motivated staff and the convenience
provided by our 7-day-a-week availability via multiple delivery channels set the
stage for what we anticipate to be a value-filled,  viable model to enhance your
Synergy investment.

I take this opportunity to express my appreciation to our Board of Directors and
staff for their hard work,  dedication and vision, to our shareholders for their
belief in our vision,  and to all of you who use our many products and services.
Each of you has a vital role in our success, both now and in the future.

Sincerely,

/s/John S. Fiore

John S. Fiore
President and Chief Executive Officer

                                                                               3
<PAGE>

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

General

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

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

The Management's  Discussion and Analysis section of this Annual Report contains
certain  forward-looking  statements  (as  defined  in  the  Private  Securities
Litigation Reform Act of 1995).  These  forward-looking  statements  project our
future operations, which involve risks and uncertainties. Our actual results may
differ  significantly  from  the  results  discussed  in  these  forward-looking
statements.  Our  results  of  operations  are  affected  by  general  economic,
regulatory and competitive conditions,  including changes in prevailing interest
rates  and the  policies  of  regulatory  agencies  and state  and  federal  tax
authorities.

Business

Synergy  Financial  Group,  Inc.  (hereafter  referred to as the "Company") is a
federally-chartered  corporation incorporated in 2001 that was organized for the
purpose  of  acquiring  all of the  capital  stock of  Synergy  Bank  (hereafter
referred to as the "Bank") issued upon its reorganization from the mutual to the
stock form of ownership in 2001. Synergy Financial Group, Inc. also holds all of
the stock of Synergy Financial Services, Inc. (hereafter referred as to "SFSI"),
a New Jersey  corporation.  On  September  17,  2002,  the  Company  completed a
minority stock offering and issuance of 43.5% of its outstanding common stock to
eligible  depositors  of the Bank.  A total of  1,454,750  shares were sold,  at
$10.00 per share,  to  eligible  depositors  of Synergy  Bank and to an Employee
Stock  Ownership  Plan  ("ESOP")  established  by the Company in a  subscription
offering.  The majority of shares,  56.5%, continue to be owned by Synergy, MHC,
the Company's mutual holding company parent, which owned 100% of the outstanding
stock of the  Company  prior  to the  minority  offering.  The  Company's  stock
commenced  trading on the OTC Electronic  Bulletin Board under the symbol "SYNF"
on September 18, 2002.

The Company is a savings and loan holding company, which, under existing law, is
generally not restricted as to the types of business  activities in which it may
engage,  provided that the Bank continues to be a qualified  thrift lender.  The
Company's  primary  business is  providing  financial  services  through its two
wholly-owned operating subsidiaries, the Bank and SFSI.

Under  regulations  of the Office of Thrift  Supervision  ("OTS")  the Bank is a
qualified  thrift  lender  if its  ratio  of  qualified  thrift  investments  to
portfolio  assets ("QTL  Ratio") is 65% or more,  on a monthly  average basis in
nine of every twelve  months.  At December  31,  2002,  the Bank's QTL Ratio was
99.4%,  and the Bank has  maintained  more than 65% of its  portfolio  assets in
qualified thrift investments in at least nine of the preceding twelve months.

The Company neither owns nor leases any property,  but instead uses the premises
and equipment of the Bank. At the present time,  the Company does not employ any
persons other than certain  officers of the Bank, who do not receive  additional
compensation as officers of the Company.  The Company utilizes the support staff
of the Bank from time to time, as needed.  Additional  employees may be hired as
deemed appropriate by the Company management.

The Bank's principal  business has been, and continues to be, gathering deposits
from customers within its market area, and investing those deposits primarily in
residential  one-to-four  family  mortgages,  multi-family  and  non-residential
loans, consumer credits, mortgage-backed securities, and obligations of the U.S.
Government and Government  Sponsored  Entities ("GSE").  The Bank's revenues are
derived  principally  from interest on its loan and securities  portfolios.  The
Bank's primary sources of funds are: deposits;  loan  amortization,  prepayments
and maturities; amortization,  prepayments and maturities of mortgage-backed and
investment  securities;  borrowings;  and,  to a  lesser  extent,  the  sale  of
fixed-rate  mortgage loans to the secondary market.  The Bank is a member of the
Federal Home Loan Bank of New York ("FHLBNY").

Business Strategy

The  Bank's  business  strategy  has  been  to  operate  as  a  well-capitalized
independent  financial  institution dedicated to providing convenient access and
quality  service  at  competitive  prices.  Generally,  the Bank has  sought  to
implement this strategy by maintaining a substantial part of its assets in loans
secured by  one-to-four  family  residential  real estate  located in its market
area, as well as in home equity and consumer  loans.  During  recent years,  the
Bank  has   significantly   increased  its  origination  of   multi-family   and
non-residential  mortgages.  To the extent that new deposits  have exceeded loan
originations,  the Bank has invested  these funds  primarily in  mortgage-backed
securities.

The Bank  intends  to  continue  to  emphasize  a variety  of  deposit  and loan
products,  with the  latter  consisting  primarily  of  residential  one-to-four
family, home equity,  multi-family/non-residential,  and consumer loans. We will
continue to evaluate our business beyond  traditional  retail banking to include
other financial services such as insurance products,  as well as trust and asset
management  services,  either  through  internal  development  of such  lines of
business, third party affiliations or through acquisitions.  We do not, however,
have any current understandings, agreements or arrangements for the expansion of
our business, other than opening new branch office locations.

As of December 31, 2002,  the Bank operated 16 offices in  Middlesex,  Monmouth,
Morris, and Union Counties, New Jersey.

Management of Interest Rate Risk and Market Risk

The Company's earnings are affected by the Bank's net interest income,  which is
the  difference   between  interest  income  earned  on  loans  and  investments
(interest-earning  assets) and interest  paid on deposits and on borrowed  funds
(interest-bearing  liabilities).  Net  interest  income is  affected  by (a) the
difference between rates of interest earned on our  interest-earning  assets and
rates paid on our  interest-bearing  liabilities  (interest rate spread) and (b)
the  relative  amounts  of  our  interest-earning  assets  and  interest-bearing
liabilities.

4
<PAGE>

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

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

o    Originate  loans with  adjustable-rate  features or  fixed-rate  loans with
     short maturities;

o    Invest  excess  funds  in  intermediate  and   adjustable-rate   investment
     securities  that provide  stable cash flow,  thereby  providing  investable
     funds, and prevailing market yields in varying market cycles;

o    Lengthen the maturities of both certificate of deposits and borrowings when
     it would be cost effective through aggressive pricing and promotion; and

o    Increase core deposits (i.e., transaction and savings accounts), which tend
     to be less interest rate sensitive.

Management  actively  monitors  its  interest  rate risk  exposure.  The  Bank's
objective is to maintain a consistent level of profitability  within  acceptable
risk tolerance across a broad range of hypothetical  interest rate environments.
The Bank uses the Office of Thrift Supervision ("OTS") Net Portfolio Value (NPV)
model to monitor its exposure to interest rate risk, which calculates changes in
NPV in hypothetical  plus or minus rate shock  environments.  As of December 31,
2002, the Bank was in full compliance with its Board  established  interest rate
risk limits.

Rate/Volume  Analysis.  The table below sets forth certain information regarding
changes in interest  income and interest  expense of the Company for the periods
indicated.  For each category of  interest-earning  assets and  interest-bearing
liabilities,  information is provided on changes  attributable to (i) changes in
volume (changes in average volume multiplied by old rate); (ii) changes in rates
(changes in rate  multiplied by old average  volume);  and (iii) 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.


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Year ended December 31,                                           2002 vs 2001                           2001 vs 2000
-----------------------------------------------------------------------------------------     -------------------------------------
                                                       Increase (Decrease) Due to              Increase (Decrease) Due to
                                                       Volume          Rate           Net      Volume         Rate            Net
-----------------------------------------------------------------------------------------     -------------------------------------
(Dollars in thousands)
<S>                                                 <C>           <C>            <C>        <C>          <C>             <C>
Interest-earning assets:
  Securities (1) .................................... $ 1,025       $  (670)       $  355     $   (21)     $   (73)        $  (94)
  Loans receivable, net..............................   5,701        (1,500)        4,201       2,149         (407)         1,742
  Other interest-earning assets (2)..................    (115)         (154)         (269)        623         (320)           303
-----------------------------------------------------------------------------------------     -------------------------------------
Total interest-earning assets........................   6,611        (2,324)        4,287       2,751         (800)         1,951
-----------------------------------------------------------------------------------------     -------------------------------------
Interest-bearing liabilities:
  Deposits ..........................................  (2,444)        2,585           141      (1,354)        (282)        (1,636)
  FHLB advances and other borrowings ................    (557)          668           111         257           42            299
-----------------------------------------------------------------------------------------     -------------------------------------
Total interest-bearing liabilities ..................  (3,001)        3,253           252      (1,097)        (240)        (1,337)
-----------------------------------------------------------------------------------------     -------------------------------------
Net change in net interest income.................... $ 3,610       $   929        $4,539     $ 1,654      $(1,040)        $  614
-----------------------------------------------------------------------------------------     -------------------------------------
</TABLE>

(1)  Includes investment securities and FHLB stock.
(2)  Includes certificates of deposit and other interest-bearing accounts.

                                                                               5
<PAGE>

Average  Balance  Sheet.  The  following  table sets forth  certain  information
relating to the Company's  average  balance sheet and reflects the average yield
on assets and average cost of liabilities for the periods indicated. Such yields
and costs are derived by dividing  income or expenses by the average  balance of
assets or liabilities, respectively, for the periods presented. Average balances
are derived from daily average balances.

<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31,                                     2002                        2001                       2000
------------------------------------------------------------------------------------------------------------------------------------
                                                                    Average                     Average                    Average
                                                 Average            Yield/    Average            Yield/   Average           Yield/
                                                 Balance  Interest   Cost     Balance  Interest   Cost    Balance  Interest  Cost
------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S>                                           <C>       <C>         <C>     <C>      <C>      <C>      <C>          <C>   <C>
Assets:
  Interest-earning assets:
  Securities, net ............................  $ 54,505  $  2,950     5.41% $ 52,393 $  2,595   4.95%  $ 43,997     2,689   6.11%
  Loans receivable (2) (3)....................   280,665    20,190     7.19%  204,494   15,989   7.82%   177,525    14,247   8.03%
  Other interest-earning assets (1) (4) ......    11,308       218     1.93%    5,768      487   8.44%     2,471       184   7.45%
                                                ------------------           -----------------          ------------------
  Total interest-earning assets ..............   346,478    23,358     6.74%  262,655   19,071   7.26%   223,993    17,120   7.64%
------------------------------------------------------------------------------------------------------------------------------------
  Non-interest earning assets ................    25,156                        9,390                      9,358
------------------------------------------------------------------------------------------------------------------------------------
Total assets .................................  $371,634                     $272,045                   $233,351
====================================================================================================================================
Liabilities and stockholders' equity:
  Interest-bearing liabilities:
  Statement & regular savings accounts .......  $ 62,310       765     1.23% $ 53,527      973   1.82%  $ 52,117     1,095   2.10%
  Money market accounts.......................    44,966       784     1.74%   36,325    1,038   2.86%    34,305     1,131   3.30%
  Certificates of deposit ....................   160,305     5,773     3.60%  101,594    5,452   5.37%    65,598     3,601   5.49%
                                                ------------------           -----------------          ------------------
    Total interest-bearing deposits ..........   267,581     7,322     2.74%  191,446    7,463   3.90%   152,020     5,827   3.83%
  Non-interest-bearing deposit liabilities ...    36,743         0     0.00%   28,561        0   0.00%    27,104         0   0.00%
  FHLB advances and other borrowings .........    40,532     1,722     4.25%   29,809    1,833   6.15%    33,943     2,132   6.28%
                                                ------------------           -----------------          ------------------
  Total interest-bearing liabilities
    plus non-interest-bearing deposits .......   344,856     9,044     2.62%  249,816    9,296   3.72%  $213,068     7,959   3.74%
------------------------------------------------------------------------------------------------------------------------------------
  Other non-interest-bearing liabilities .....     1,742                        1,308                      1,315
------------------------------------------------------------------------------------------------------------------------------------
    Total liabilities ........................   346,598                      251,124                    214,383
Stockholders' equity..........................    25,036                       20,921                     18,968
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity....  $371,634                     $272,045                   $233,351
====================================================================================================================================
Net interest income/interest rate spread (5)..             $14,314     4.12%           $ 9,775   3.54%             $ 9,161   3.90%
====================================================================================================================================
Net interest margin (6) ......................                         4.13%                     3.72%                       4.09%
Interest-earning assets/
  interest-bearing liabilities ...............                       100.47%                   105.14%                     105.13%
====================================================================================================================================
</TABLE>

(1)  Includes securities and Federal Home Loan Bank ("FHLB") stock.
(2)  Amount is net of deferred  loan fees,  loan  discounts  and  premiums,  and
     loans-in-process; it includes non-accruing loans.
(3)  Interest  income  includes  loan fees of  approximately  $399,000  in 2002,
     $117,000 in 2001 and $141,000 in 2000.
(4)  Amount   includes   interest   earned  on  balances   at  other   financial
     institutions.
(5)  Interest rate spread represents the difference between the yield on average
     interest-earning   assets   and  the  cost  of   average   interest-bearing
     liabilities.
(6)  Net  interest  margin  represents  net interest  income  divided by average
     interest-earning assets.

6
<PAGE>

Liquidity and Capital Resources

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

Our  primary   sources  of  liquidity   are  deposits,   borrowings,   scheduled
amortization and prepayment of loans and investment securities.  In addition, we
invest  excess  funds in  overnight  federal  fund  investments,  which  provide
liquidity. Our cash and cash equivalents,  defined as cash and deposits in other
financial institutions with original maturities of three months or less, totaled
approximately  $7.9  million at  December  31,  2002.  To a lesser  extent,  the
earnings  and  funds  provided  from our  operating  activities  are a source of
liquidity.

For  the  year  ended  December  31,  2002,   purchases  of  securities  totaled
approximately  $64.4  million,  proceeds from the sale of investment  securities
totaled  approximately  $2  million,  and  principal  repayments  of  investment
securities totaled approximately $34.3 million.

Loan originations,  net of principal  repayments,  totaled  approximately  $87.3
million for the year ended  December 31, 2002,  compared to $48.3 million net in
2001. During 2002, the Bank acquired  approximately  $13.7 million and sold $5.4
million in loans.  The majority of the loans  purchased were indirect auto loans
from First Bank. The sale of mortgage loans is part of management's  strategy to
mitigate  interest  rate risk by selling  longer-term  fixed-rate  mortgages and
acquiring  shorter-term  loans.  Management also offers loan  participations  to
local financial institutions to mitigate credit risk exposure on larger credits,
primarily secured by multi-family and non-residential properties.  Approximately
$4.9 million of the loan sales during 2002 consisted of  longer-term  fixed-rate
residential  mortgages.  We may continue to sell or participate out loans in the
future when doing so mitigates interest rate or credit risk.

For the year ended  December 31, 2002, we experienced a net increase of deposits
of  approximately   $104.3  million,   of  which  $81.3  million   consisted  of
certificates of deposit,  as compared to a net increase of  approximately  $58.7
million  in total  deposits  for the  prior  year.  Based  on prior  experience,
management  believes that a significant  portion of certificates of deposit will
remain with the Bank upon maturity, although there can be no assurance that this
will be the case. In addition,  the cost of such  deposits may be  significantly
higher upon renewal in a rising rate environment.

Liquidity  management  is  both a  daily  and  long-term  function  of  business
management.  While  scheduled  principal  repayments  on  loans  and  investment
securities are a relatively  predictable source of funds, deposit flows and loan
repayments  are  greatly   influenced  by  general   interest  rates,   economic
conditions, and competition.  If we require funds beyond our ability to generate
them  internally,  we have the ability to obtain  advances from the Federal Home
Loan Bank of New York, which provides an additional source of funds. At December
31, 2002, our unused borrowing capacity limit with the Federal Home Loan Bank of
New York was  approximately  $84.5  million.  At December 31, 2002, we had $36.5
million  of  borrowings  outstanding.

As previously  discussed,  the Company  completed its minority stock offering on
September 17, 2002 via issuance of 43.5% percent of its common stock to eligible
Bank depositors.  A total of 1,454,750 shares were sold, at $10.00 per share, to
eligible  depositors of the Bank in a subscription  offering.  An Employee Stock
Ownership  Plan ("ESOP") was also  established  at this time with a $1.2 million
intercompany  loan.  The net capital  infusion from this minority stock offering
totaled approximately $14 million.

We are not aware of any trends,  events or  uncertainties  that will have or are
reasonably  likely  to have a  material  effect  on our  liquidity,  capital  or
operations  nor  are  we  aware  of any  current  recommendation  by  regulatory
authorities,  which, if implemented,  would have a material effect on liquidity,
capital or operations.  The total amount of our commitments to extend credit for
mortgage and consumer  loans as of December 31, 2002,  was  approximately  $31.4
million,  excluding  commitments  on  unused  lines  of  credit,  which  totaled
approximately $12.9 million.

The  Bank  is  subject  to  federal  regulations  that  impose  minimum  capital
requirements.  As of December 31, 2002,  the Bank exceeded all of its regulatory
capital requirements and was considered to be well-capitalized.

For  additional  information  about cash flows from  operating,  financing,  and
investing  activities,  see  the  Statements  of  Cash  Flows  included  in  the
consolidated financial statements.

Impact of Inflation and Changing Prices

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

Recent Accounting Pronouncements

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

                                                                               7
<PAGE>

In October 2001, the Financial  Accounting  Standards Board ("FASB") issued SFAS
No. 144,  Accounting for the Impairment or Disposal of Long-Lived  Assets.  SFAS
No. 144,  supersedes  SFAS No. 121,  Accounting for the Impairment of Long-Lived
Assets and for  Long-Lived  Assets to Be Disposed Of, and certain  provisions of
Auditing  Practices  Board  ("APB")  Opinion  No. 30,  Reporting  the Results of
Operations - Reporting  the Effects of Disposal of a Segment of a Business,  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions. SFAS
No. 144  establishes  standards  for  long-lived  assets to be disposed  of, and
redefines the valuation and  presentation of discontinued  operations.  SFAS No.
144 is effective for fiscal years beginning after December 15, 2001, and interim
periods  within those fiscal years.  The adoption of SFAS No. 144 did not have a
material effect on the Company's financial position,  results of operations,  or
cash flows.

Changes in Financial Condition From December 31,
2001 to December 31, 2002

General.  Total assets increased $134.3 million,  or 45.2%, to $431.3 million at
December  31, 2002 from $297.0  million at December  31,  2001,  primarily  as a
result of increased lending activity and the purchase of investment securities.

Cash and Cash  Equivalents.  Cash  increased  $4.2  million from $3.7 million at
December 31, 2001 to $7.9 million at December  31, 2002.  This  increase was due
primarily to the initial  public  offering of equity and the positive  impact of
operations.

Securities      Available-for-Sale     and     Held-to-Maturity.      Securities
available-for-sale  increased  $18.4  million from $43.9 million at December 31,
2001 to $62.3  million at December 31, 2002.  This increase was due primarily to
the purchase of mortgage-backed  securities using funds from loan repayments and
FHLB borrowings,  as well as unrealized gains attributable to market conditions.
Securities  held-to-maturity increased from $7.2 million at December 31, 2001 to
$17.4 million due to reinvestment of cash inflows from loans,  and investment of
borrowed funds.

Loans Receivable,  Net. The Bank's net loans receivable increased $94.7 million,
or 42.2%,  to $319.4  million  from $224.7  million at December  31,  2001,  due
primarily  to  increased  lending  activity,  as  well  as  the  purchase  of or
participation in externally originated loans. These included approximately $13.7
million in indirect auto loans purchased from First Bank of Central Jersey and a
$2.5 million commercial loan participation.

Deposits.  The Bank's deposits  increased  $104.3  million,  or 41.8%, to $354.1
million at December 31, 2002 from $249.8 million at December 31, 2001. Increases
were due primarily to growth in  certificates  of deposit,  savings and checking
accounts. Management's deposit strategy is focused on growing core deposits.

Advances  From  FHLB.  Advances  from the  Federal  Home  Loan  Bank of New York
increased  $14.0  million,  or 62%, to $36.5  million at December 31, 2002.  The
borrowings were utilized to finance operations.

Stockholders'  Equity.  Stockholders'  equity increased $15.5 million, or 69.1%,
from $22.4  million at December 31, 2001, to $37.9 million at December 31, 2002,
due primarily to the proceeds from an initial  public  offering of stock and net
income.

Comparison  of Operating  Results for Years Ended  December 31, 2002 to December
31, 2001 and December 31, 2000

Analysis of Net Income

General.  The  Company  had net income of $2.0  million,  $1.9  million and $1.5
million for the years 2002, 2001 and 2000, respectively.  The $129,219, or 6.8%,
increase  during  fiscal 2002  compared to fiscal 2001 was  primarily  due to an
increase in net interest income of $4.5 million, or 46.4%.

Interest  Income.  Interest income amounted to $23.4 million,  $19.1 million and
$17.1 million for the years ended 2002,  2001 and 2000,  respectively.  The $4.3
million,  or 22.5%,  increase  during  fiscal  2002  compared to fiscal 2001 was
primarily due to increased interest from loans and securities.

Interest Expense.  Interest expense totaled $9.0 million,  $9.3 million and $8.0
million for the years ended December 31, 2002, 2001 and 2000, respectively.  The
$252,130,  or 2.7%,  decrease  during  fiscal  2002  compared to fiscal 2001 was
primarily due to a 116 basis point drop in deposit interest rates,  along with a
190 basis point drop in FHLB advance rates,  during 2002. The average rates paid
on  interest-bearing  deposits  decreased  from 3.39% in fiscal 2001 to 2.41% in
fiscal 2002.

Net Interest Income. Net interest income amounted to $14.3 million, $9.8 million
and $9.2  million  for the  years  ended  December  31,  2002,  2001  and  2000,
respectively. The net interest rate margin was 4.13% in fiscal 2002 and 3.72% in
fiscal 2001.  The increase in margin was  primarily due to a lower cost of funds
(deposits and borrowings) during 2002.

Provision for Loan Losses. The Bank provided $1.1 million, $362,692 and $480,000
to the allowance for loan losses for the years ended December 31, 2002, 2001 and
2000,  respectively.  The  allowance  for loan  losses was $2.2  million at 2002
fiscal year-end,  $1.4 million at 2001 fiscal year-end, and $1.2 million at 2000
fiscal  year-end.  The 2002  provision  reflects  a higher  balance  in the loan
portfolio of consumer and commercial real estate loans.

Management  periodically  estimates  the  likely  level of losses  to  determine
whether the allowance for loan losses is adequate to absorb  possible  losses in
the  existing  portfolio.  Based on these  estimates,  an amount is  charged  or
credited  to the  provision  for loan  losses  and  credited  or  charged to the
allowance for loan losses in order to adjust the allowance to a level determined
to be adequate to absorb anticipated future losses. These analyses are performed
monthly.  There has been no significant  change in the Bank's estimation methods
during the current period.

While the Bank  maintains its allowance for losses at a level which it considers
to be adequate to provide for existing  losses,  there can be no assurance  that
further  additions will not be made to the loss  allowances and that such losses
will not exceed the  estimated  amounts.  See Note 1 to  Consolidated  Financial
Statements.

Other Income.  Other income during the years ended  December 31, 2002,  2001 and
2000  amounted to $1.7  million,  $2.5 million and $1.8  million,  respectively.
Other  income  was  predominantly  service  charges  and other  fees on  deposit
accounts.  The  substantial  increase  in other  income  during  the year  ended
December 31, 2001 was primarily the result of a one-time gain on the sale of the
Bank's  credit card  portfolio;  which  provided  gross  proceeds of $857,847 or
$549,194 after tax. The balance of that sale was recorded during 2002 with gross
proceeds of $66,279 or $39,807 after tax.

8
<PAGE>

Other Expense. Non-interest expense totaled $11.7 million, $9.0 million and $8.2
million during the years ended  December 31, 2002,  2001 and 2000. The increases
in both fiscal 2002 and 2001 were due to higher  operating  expenses  associated
with expansion of the branch  network,  and increased  marketing  expenses.  The
principal  component  of other  expense,  compensation  and  employee  benefits,
increased to $6.1 million for fiscal 2002 from $4.8 million during fiscal 2001.

Income Tax Expense.  For the years ended  December 31, 2002,  2001 and 2000, the
Bank incurred  income tax expenses of $1.2  million,  $1.0 million and $711,628,
respectively. The increase in taxes reflects higher income and changes in income
tax rates.

The  Company  and its  subsidiaries  file New Jersey  income tax returns and are
subject  to a state  income  tax that is  calculated  based on  federal  taxable
income,  with certain  adjustments.  In July, 2002, New Jersey eliminated the 3%
tax rate formerly applicable to thrift institutions  located in the state. These
institutions  are  now  subject  to the 9% tax  rate  applicable  to New  Jersey
corporations. Such change was retroactive to January 1, 2002.

In  response to the changes in New Jersey tax law,  the  Company  organized  and
incorporated  Synergy Capital Investments,  Inc., a Synergy Bank subsidiary,  on
November 7, 2002.  This New Jersey  corporation,  organized under the New Jersey
Business Corporation Act, is authorized to invest in stocks,  bonds,  mortgages,
and other investment  securities,  and to engage in the offering of all types of
investment-related  services.   Corporations  organized  under  the  New  Jersey
Business  Corporation Act are subject to a state income tax rate of 3.6% (versus
the 9% rate for New  Jersey  savings  banks).  Following  the  incorporation  of
Synergy Capital Investments, Inc., the Bank transferred its investment portfolio
to this company in order to minimize the impact of the revised state tax laws.

Appointment of Auditors
--------------------------------------------------------------------------------

On December 5, 2002, the Company  dismissed  Fontanella  and Babitts,  Certified
Public Accountants,  as the Company's  independent  auditors and appointed Grant
Thornton LLP as its new independent auditors. The decision to change accountants
was  approved by the  Company's  Board of  Directors.  Fontanella  and  Babitts'
reports on the Company's  consolidated  financial  statements for the two fiscal
years ended  December 31, 2001 did not contain an adverse  opinion or disclaimer
of opinion, and were not qualified or modified as to uncertainty, audit scope or
accounting  principles.  In connection with audits of the two fiscal years ended
December 31, 2001 and any subsequent  interim period  preceding the date hereof,
there were no  disagreements  or  reportable  events  between  the  Company  and
Fontanella  and Babitts on any matters of  accounting  principles  or practices,
financial statement  disclosure,  or auditing scope or procedure,  which, if not
resolved to the  satisfaction of Fontanella and Babitts,  would have caused them
to make a reference to the subject  matter of the  disagreements  or  reportable
events in connection with their reports. During the two most recent fiscal years
and the  subsequent  interim  period to the date  hereof,  the  Company  did not
consult  with  Grant  Thornton  LLP  regarding  the  application  of  accounting
principals to any  transaction  or as to any  accounting,  auditing or financial
reporting issues.

The Board of Directors of the Company has  appointed  Grant  Thornton LLP as the
Company's  independent  auditor for the fiscal year ending  December  31,  2003,
subject to ratification by the Company's stockholders. A representative of Grant
Thornton LLP is expected to be present at the Meeting, will have the opportunity
to make a statement if he so desires, and is expected to be available to respond
to appropriate questions.

Stock Price Information
--------------------------------------------------------------------------------

Since it commenced trading on September 18, 2002, the Company's common stock has
traded  in  the  over-the-counter   market  with  quotations  available  on  the
OTC-Electronic  Bulletin  Board under the trading  symbol  "SYNF." The following
table  reflects  high and low  closing  prices as  reported  by  Nasdaq  for the
calendar quarter indicated.  The quotations reflect inter-dealer prices, without
retail  mark-up,  markdown or  commission  and may or may not  represent  actual
transactions.

------------------------------------------------------------------------------
Quarter Ended                                                   High      Low
------------------------------------------------------------------------------
December 31, 2002
(beginning September 18, 2002)............................... $18.95    $12.55
------------------------------------------------------------------------------

There were 292 holders of record of the  Company's  common  stock as of February
28,  2003.  This number  does not reflect the number of persons or entities  who
held stock in nominee or "street" name through various brokerage firms.

The Company's ability to pay dividends to stockholders is largely dependent upon
the dividends it receives from the Bank.  The Bank's ability to pay dividends to
the Company is restricted by federal banking  regulations.  To date, the Company
has paid no dividends to stockholders.

                                                                               9
<PAGE>

Report of Independent Certified Public Accountants
--------------------------------------------------------------------------------



Board of Directors
Synergy Financial Group, Inc.

We have audited the accompanying consolidated balance sheet of Synergy Financial
Group,  Inc.  and  subsidiaries  as  of  December  31,  2002,  and  the  related
consolidated statement of income,  retained earnings and cash flows for the year
then ended.  These financial  statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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 Synergy Financial
Group,  Inc. and  subsidiaries  as of December 31,  2002,  and the  consolidated
results of their  operations  and their cash flows for the year then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.




/s/Grant Thornton LLP

Grant Thornton LLP
Philadelphia, Pennsylvania
February 15, 2003


10
<PAGE>

Synergy Financial Group, Inc. and Subsidiaries


Consolidated Balance Sheets
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
December 31,                                                                                              2002            2001
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                 <C>             <C>
Assets:
Cash and amounts due from banks ...................................................................   $  3,064,302    $  2,026,535
Interest-bearing deposits with banks ..............................................................      4,821,926       1,680,969
----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents .........................................................................      7,886,228       3,707,504
Investment securities available-for-sale, at fair value ...........................................     62,303,108      43,894,168
Investment securities held-to-maturity (fair value of $17,668,930 and $7,230,338, respectively) ...     17,407,365       7,152,853
Loans receivable, net .............................................................................    319,423,198     224,688,651
Accrued interest receivable .......................................................................      1,533,305       1,150,969
Property and equipment, net .......................................................................     17,646,759      11,639,424
Federal Home Loan Bank of New York stock, at cost .................................................      1,856,200       1,550,000
Cash surrender value of officer life insurance ....................................................      2,109,678       2,051,079
Other assets ......................................................................................      1,109,869       1,127,950
----------------------------------------------------------------------------------------------------------------------------------
  Total assets ....................................................................................   $431,275,710    $296,962,598
==================================================================================================================================
Liabilities:
Deposits ..........................................................................................   $354,141,633    $249,813,341
Federal Home Loan Bank of New York advances .......................................................     36,455,639      22,500,000
Advance payments by borrowers for taxes and insurance .............................................      1,414,339       1,045,625
Accrued interest payable on advances ..............................................................        165,157         174,188
Other liabilities .................................................................................      1,226,793       1,039,073
----------------------------------------------------------------------------------------------------------------------------------
  Total liabilities ...............................................................................    393,403,561     274,572,227
----------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock; $0.10 par value, authorized 2,000,000 shares; none issued and outstanding ........             --              --
Common stock; $0.10 par value, authorized 18,000,000 shares; issued 2002 - 3,344,252; 2001 - 100...        334,425              10
Additional paid-in capital ........................................................................     13,643,090          99,990
Retained earnings .................................................................................     24,446,145      22,315,215
Unearned ESOP shares ..............................................................................     (1,125,007)             --
Accumulated other comprehensive income (loss) .....................................................        573,496         (24,844)
----------------------------------------------------------------------------------------------------------------------------------
  Total stockholders' equity ......................................................................     37,872,149      22,390,371
----------------------------------------------------------------------------------------------------------------------------------
  Total liabilities and stockholders' equity ......................................................   $431,275,710    $296,962,598
==================================================================================================================================
</TABLE>

The accompanying notes are an integral part of these statements.

                                                                              11
<PAGE>

Synergy Financial Group, Inc. and Subsidiaries

Consolidated  Statements  of  Income
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Year  ended  December  31,                                               2002           2001          2000
--------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>            <C>           <C>
Interest income:
  Loans, including fees ...........................................   $20,190,795    $15,989,486   $14,246,605
  Investment securities ...........................................     2,950,002      2,595,329     2,689,335
  Other ...........................................................       217,706        486,509       183,563
--------------------------------------------------------------------------------------------------------------
    Total interest income .........................................    23,358,503     19,071,324    17,119,503
--------------------------------------------------------------------------------------------------------------
Interest expense:
  Deposits ........................................................     7,322,040      7,463,442     5,827,132
  Borrowed funds ..................................................     1,722,194      1,832,922     2,131,728
--------------------------------------------------------------------------------------------------------------
    Total interest expense ........................................     9,044,234      9,296,364     7,958,860
--------------------------------------------------------------------------------------------------------------
    Net interest income before provision for loan losses ..........    14,314,269      9,774,960     9,160,643
--------------------------------------------------------------------------------------------------------------
Provision for loan losses .........................................     1,077,394        362,692       480,000
--------------------------------------------------------------------------------------------------------------
    Net interest income after provision for loan losses ...........    13,236,875      9,412,268     8,680,643
--------------------------------------------------------------------------------------------------------------
Other income:
  Service charges and other fees on deposit accounts ..............     1,112,053        884,585       753,559
  Net gains on sales of loans .....................................       118,005        888,137            --
  Net (losses) gains on sales of investments ......................        (6,250)         4,596            --
  Commissions .....................................................       249,459        270,166       614,683
  Other ...........................................................       247,136        467,403       402,258
--------------------------------------------------------------------------------------------------------------
    Total other income ............................................     1,720,403      2,514,887     1,770,500
--------------------------------------------------------------------------------------------------------------
Other expenses:
  Salaries, wages and employee benefits ...........................     6,104,598      4,843,916     4,418,953
  Premises and equipment ..........................................     2,650,928      2,264,544     2,037,306
  Occupancy .......................................................     1,290,672        903,565       746,124
  Professional services ...........................................       383,849        301,086       281,326
  Marketing .......................................................       733,080        363,573       321,907
  Other operating .................................................       562,646        324,798       403,667
--------------------------------------------------------------------------------------------------------------
    Total other expenses ..........................................    11,725,773      9,001,482     8,209,283
--------------------------------------------------------------------------------------------------------------
    Income before income tax expense ..............................     3,231,505      2,925,673     2,241,860
--------------------------------------------------------------------------------------------------------------
Income tax expense ................................................     1,200,575      1,023,962       711,628
--------------------------------------------------------------------------------------------------------------
    Net income ....................................................   $ 2,030,930    $ 1,901,711   $ 1,530,232
==============================================================================================================
Per share of common stock:
  Basic earnings ..................................................            NM             --            --
  Diluted earnings ................................................            NM             --            --
==============================================================================================================
</TABLE>

The accompanying notes are an integral part of these statements.

12
<PAGE>

Synergy Financial Group, Inc. and Subsidiaries

Consolidated  Statement of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Years ended December 31, 2002 and 2001
------------------------------------------------------------------------------------------------------------------------------------
                                                     Common stock                             Accumulated
                                                  ----------------    Additional   Unearned      other
                                                  Shares      Par      paid-in     Retained       ESOP      comprehensive    Total
                                                  issued     value     capital     earnings      shares     income (loss)   equity
                                                  ------     -----     -------     --------      ------     -------------   ------
<S>                                           <C>        <C>       <C>         <C>          <C>             <C>        <C>
Balance at January 1, 2000.....................        -- $     --  $        -- $19,083,272  $        --     $(887,071) $18,196,201
  Net income...................................        --       --           --   1,530,232           --            --    1,530,232
  Other comprehensive income, net of
    reclassification adjustment and taxes .....        --       --           --          --           --       635,697      635,697
------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income ....................                                                                           2,165,929
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000...................        --       --           --  20,613,504           --      (251,374)  20,362,130
  Net income...................................        --       --           --   1,901,711           --            --    1,901,711
  Other comprehensive income, net of
    reclassification adjustment and taxes .....        --       --           --          --           --       226,530      226,530
------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income ....................                                                                           2,128,241
------------------------------------------------------------------------------------------------------------------------------------
  Distribution to capitalize Mutual Holding
    Company and Stock Holding Company..........       100       10       99,990    (200,000)          --            --     (100,000)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001...................       100       10       99,990  22,315,215                    (24,844)  22,390,371
  Net income...................................        --       --           --   2,030,930           --            --    2,030,930
  Other comprehensive income, net of
    reclassification adjustment and taxes .....        --       --           --          --           --       598,340      598,340
------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income ....................                                                                           2,629,270
------------------------------------------------------------------------------------------------------------------------------------
  Net proceeds of stock offering and
    issuance of common stock .................. 3,344,152  334,415   13,525,582     100,000           --            --   13,959,997
  Common stock acquired by
    ESOP (116,380 shares) .....................        --       --           --          --   (1,163,800)           --   (1,163,800)
  Common stock held by ESOP committed
    to be released (3,879 shares)..............        --       --       17,518          --       38,793            --       56,311
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002................... 3,344,252 $334,425  $13,643,090 $24,446,145  $(1,125,007)     $573,496  $37,872,149
====================================================================================================================================
</TABLE>

The accompanying notes are an integral part of this statement.

                                                                              13
<PAGE>

Synergy Financial Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Year Ended December  31,                                                                 2002            2001            2000
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>             <C>             <C>
Operating activities:
  Net income ....................................................................   $  2,030,930    $  1,901,711    $  1,530,232
  Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization ...............................................        944,088         735,525         682,485
    Provision for loan losses ...................................................      1,077,394         362,692         480,000
    Deferred income taxes .......................................................       (336,625)        (34,163)        (33,566)
    Amortization of deferred loan fees ..........................................         12,853        (123,200)       (201,379)
    Amortization of premiums on investment securities ...........................        337,588          83,292          38,510
    Net loss (gain) on sale of investment securities ............................          6,250          (4,596)              -
    Gain on sale of loans .......................................................       (118,005)       (888,137)              -
    Release of ESOP shares ......................................................         56,311               -               -
    Increase in accrued interest receivable .....................................       (382,336)         (8,796)       (129,632)
    Increase (decrease) in other assets .........................................         38,771        (165,419)        (34,326)
    Increase (decrease) in other liabilities ....................................        187,720         282,848        (474,763)
    Increase in cash surrender value of officer life insurance ..................        (58,599)       (108,879)        (99,260)
    Increase (decrease) in accrued interest payable on advances .................         (9,031)        (75,424)        120,952
------------------------------------------------------------------------------------------------------------------------------------
      Net cash provided by operating activities .................................      3,787,309       1,957,454       1,879,253
------------------------------------------------------------------------------------------------------------------------------------
Investing activities:
  Purchase of investment securities held-to-maturity ............................    (15,216,746)     (6,000,000)              -
  Purchase of investment securities available-for-sale ..........................    (49,198,802)    (36,904,849)              -
  Maturity and principal repayments of investment securities held-to-maturity ...      4,899,575      11,057,847       1,323,653
  Maturity and principal repayments of investment securities available-for-sale .     29,396,282      18,290,474       7,782,195
  Purchase of property and equipment ............................................     (6,951,421)     (7,219,863)       (909,566)
  (Purchase) redemption of FHLB Stock ...........................................       (306,200)        435,000        (635,000)
  Proceeds from sale of investment securities available-for-sale ................      2,036,425       1,010,000               -
  Loan originations, net of principal repayments ................................    (87,384,348)    (48,322,808)    (23,192,590)
  Purchase of loans .............................................................    (13,684,618)     (3,998,072)     (3,011,250)
  Proceeds from sale of loans ...................................................      5,352,426      17,378,810               -
------------------------------------------------------------------------------------------------------------------------------------
      Net cash used in investing activities .....................................   (131,057,427)    (54,273,461)    (18,642,558)
------------------------------------------------------------------------------------------------------------------------------------
Financing activities:
  Net increase in deposits ......................................................    104,328,292      58,669,836      10,200,059
  Net advances from (repayments to) Federal Home Loan Bank ......................     13,955,639      (9,000,000)      9,800,000
  Increases in advance payments by borrowers for taxes and insurance ............        368,714         314,930          12,883
  Net proceeds from issuance of common stock ....................................     13,959,997               -               -
  Purchase of common stock for ESOP .............................................     (1,163,800)              -               -
  Capitalization of Mutual Holding Company ......................................              -        (100,000)              -
------------------------------------------------------------------------------------------------------------------------------------
      Net cash provided by financing activities .................................    131,448,842      49,884,766      20,012,942
------------------------------------------------------------------------------------------------------------------------------------
      Net (decrease) increase in cash and cash equivalents ......................      4,178,724      (2,431,241)      3,249,637
Cash and cash equivalents at beginning of year ..................................      3,707,504       6,138,745       2,889,108
------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year ........................................   $  7,886,228    $  3,707,504    $  6,138,745
====================================================================================================================================
Supplemental disclosure of cash flow information:
  Cash paid during the year for income taxes ....................................   $  1,528,583    $  1,058,125    $    918,440
====================================================================================================================================
  Interest paid on deposits and borrowed funds ..................................   $  9,053,265    $  9,375,965    $  7,830,995
====================================================================================================================================
</TABLE>

The accompanying notes are an integral part of these statements.

14
<PAGE>

Synergy Financial Group, Inc. and Subsidiaries
--------------------------------------------------------------------------------

Notes to Consolidated Financial Statements

December 31, 2002 and 2001

NOTE A - Summary of Significant Accounting Policies

As part of a reorganization  and stock offering  completed on September 17, 2002
and  described  more  fully  in note  B,  Synergy  Financial  Group,  Inc.  (the
"Company") was formed as a federally-chartered corporation and parent of Synergy
Bank, formerly known as Synergy Federal Savings Bank (the "Bank").

The Bank has sixteen office locations, including its main office, and provides a
range of financial  services to individuals and corporate  customers through its
branch network located throughout Middlesex, Monmouth, Morris and Union counties
in New Jersey.  Although the Bank offers numerous services, its lending activity
has  concentrated  primarily on residential and commercial  real  estate-secured
loans within New Jersey.  Additionally, a significant concentration of loans and
deposits  continue to be associated  with  employees of the Bank's former credit
union sponsor organization, a pharmaceutical research and manufacturing company.

The Bank competes with other banking and financial  institutions  in its primary
market  communities.   Commercial  banks,   savings  banks,   savings  and  loan
associations,  credit unions and money market funds actively compete for savings
and time deposits and loans. Such  institutions,  as well as consumer  financial
and insurance companies,  may be considered competitors of the Bank with respect
to one or more of the  services  it  renders.  On  January  10,  2003,  the Bank
acquired  all of the net  assets  of First  Bank of  Central  Jersey  for a cash
purchase price of approximately $2.1 million.

The Bank is subject to regulations of certain federal agencies and, accordingly,
it is periodically examined by those regulatory authorities. As a consequence of
the  regulation  of  commercial  banking  activities,  the  Bank's  business  is
particularly  susceptible to being affected by future  federal  legislation  and
regulations.

1. Basis of Financial Statement Presentation

The accounting policies followed by the Company conform to accounting principles
generally  accepted in the United States of America and to predominant  practice
within the banking industry.

The consolidated  financial  statements  include the accounts of the Company and
its wholly-owned  subsidiaries,  the Bank and Synergy Financial  Services,  Inc.
("SFSI").  All  significant  intercompany  accounts and  transactions  have been
eliminated in consolidation.

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

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

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

2. Investment Securities

Investment  securities  which are held for  indefinite  periods  of time,  which
management intends to use as part of its asset/liability  strategy, or which may
be sold in response to changes in interest  rates,  changes in prepayment  risk,
increases in capital  requirements,  or other similar  factors are classified as
available-for-sale  and are  carried at fair  value.  Net  unrealized  gains and
losses for such  securities,  net of tax,  are  required to be  recognized  as a
separate  component of shareholders'  equity and excluded from  determination of
net income.  Gains or losses on  disposition  are based on the net  proceeds and
cost of the securities sold, adjusted for amortization of premiums and accretion
of discounts, using the specific identification method.

3. Loans and Allowance for Loan Losses

Loans that  management  has the intent and  ability to hold for the  foreseeable
future or until maturity or payoff are stated at the amount of unpaid principal,
reduced by unearned  income and an allowance for loan losses.  Interest on loans
is calculated  based upon the principal amount  outstanding.  The Company defers
and amortizes  certain  origination and commitment fees, and certain direct loan
origination  costs over the contractual life of the related loans.  This results
in an adjustment of the related loan's yield.  Accrual of interest is stopped on
a loan  when  management  believes,  after  considering  economic  and  business
conditions and collection  efforts,  that the borrower's  financial condition is
such that collection of interest is doubtful.

The  allowance  for loan losses is  established  as losses are estimated to have
occurred  through a provision for loan losses  charged to earnings.  Loan losses
are charged against the allowance when management believes the  uncollectibility
of a loan balance is confirmed.  Subsequent recoveries,  if any, are credited to
the allowance.  The allowance for loan losses is evaluated on a regular basis by
management and is based upon management's  periodic review of the collectibility
of the loans in light of  historical  experience,  the  nature and volume of the
loan portfolio,  adverse  situations  that may affect the borrower's  ability to
repay,  estimated  value of any underlying  collateral  and prevailing  economic
conditions.  This evaluation is inherently  subjective as it requires  estimates
that  are  susceptible  to  significant  revision  as more  information  becomes
available.

                                                                              15
<PAGE>

The Company  accounts for its impaired  loans in  accordance  with SFAS No. 114,
Accounting  by Creditors  for  Impairment of a Loan, as amended by SFAS No. 118,
Accounting  by  Creditors  for  Impairment  of a Loan - Income  Recognition  and
Disclosures.  Accordingly,  a  non-residential  real estate  loan is  considered
impaired when, based on current  information and events, it is probable that the
Company  will be unable to  collect  the  scheduled  payments  of  principal  or
interest  when due  according to the  contractual  terms of the loan  agreement.
Factors  considered by  management in  determining  impairment  include  payment
status,  collateral value, and the probability of collecting scheduled principal
and interest  payments when due.  Loans that  experience  insignificant  payment
delays  and  payment  shortfalls  generally  are  not  classified  as  impaired.
Management  determines the significance of payment delays and payment shortfalls
on a case-by-case  basis,  taking into  consideration  all of the  circumstances
surrounding  the loan and the borrower,  including the length of the delay,  the
reason for the delay, the borrower's prior payment record, and the amount of the
shortfall in relation to the principal and interest owed. Impairment is measured
on a  loan-by-loan  basis for commercial  and  construction  loans by either the
present value of expected future cash flows  discounted at the loan's  effective
interest  rate,  the loan's  obtainable  market price,  or the fair value of the
collateral if the loan is collateral-dependent.

Large groups of smaller  balance  homogenous  loans  (residential  mortgages and
consumer   installment   loans)  are  collectively   evaluated  for  impairment.
Accordingly,  the Company does not separately identify individual  consumers and
residential loans for impairment disclosures.

The  Company  accounts  for its  transfers  and  servicing  financial  assets in
accordance  with  SFAS No.  140,  Accounting  for  Transfers  and  Servicing  of
Financial Assets and  Extinguishments  of Liabilities.  SFAS No. 140 revises the
standards  for  accounting  for  the  securitizations  and  other  transfers  of
financial assets and collateral.

At December 31, 2002 and 2001, the Bank servicing loans  portfolio  approximated
$13,000,000 and $18,000,000, respectively.

On July 6, 2001,  the  Securities  and  Exchange  Commission  (SEC) issued Staff
Accounting Bulletin (SAB) No. 102, Selected Loan Loss Allowance  Methodology and
Documentation  Issues.  SAB  No.  102  provides  guidance  on  the  development,
documentation,  and application of a systematic  methodology for determining the
allowance for loans and leases in accordance  with US GAAP and is effective upon
issuance.  SAB No. 102 did not have a material impact on the Company's financial
position or results of operations.

4. Premises and Equipment

Buildings,  equipment  and  leasehold  improvements  are  stated  at  cost  less
accumulated  depreciation and amortization  computed by the straight-line method
over the estimated useful lives of the assets.

On January  1, 2002,  the  Company  adopted  SFAS No.  144,  Accounting  for the
Impairment or Disposal of Long-Lived  Assets.  SFAS No. 144 retains the existing
requirements to recognize and measure the impairment of long-lived  assets to be
held  and  used  or  to be  disposed  of by  sale.  SFAS  No.  144  changes  the
requirements  relating to reporting the effects of a disposal or discontinuation
of a segment of a  business.  The  adoption  of this  statement  did not have an
impact on the financial condition or results of operations of the Company.

5. Income Taxes

The Company accounts for income taxes under the liability  method.  Deferred tax
assets and  liabilities  are  determined  based on the  difference  between  the
financial  statement and tax bases of assets and  liabilities as measured by the
enacted  tax rates  that  will be in  effect  when  these  differences  reverse.
Deferred  tax  expense  is the  result of  changes  in  deferred  tax assets and
liabilities.  The principal types of differences  between assets and liabilities
for financial  statement and tax return  purposes are allowance for loan losses,
deferred   loan  fees,   deferred   compensation   and   investment   securities
available-for-sale.

6. Other Real Estate Owned

Other real  estate  owned is  recorded  at the lower of cost or  estimated  fair
market value less costs of disposal.  When property is acquired,  the excess, if
any, of the loan balance over fair market value is charged to the  allowance for
possible  loan  losses.  Periodically  thereafter,  the  asset is  reviewed  for
subsequent declines in the estimated fair market value.  Subsequent declines, if
any, and holding  costs,  as well as gains and losses on  subsequent  sale,  are
included in the consolidated statements of income.

7. Stock-Based Compensation

The Company has established an Employee Stock  Ownership Plan ("ESOP")  covering
eligible employees with one year of service, as defined by the ESOP. The Company
accounts for the ESOP in  accordance  with the  American  Institute of Certified
Public Accountants'  Statement of Position (SOP) 93-6, Employers' Accounting for
Employee Stock Ownership  Plans. SOP 93-6 addresses the accounting for shares of
stock issued to employees by an ESOP. SOP 93-6 requires that the employer record
compensation  expense in the amount equal to the fair value of shares  committed
to be released from the ESOP to employees.

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

8. Earnings Per Share

The Company calculates  earnings per share under the provisions of SFAS No. 128,
Earnings Per Share.  Basic earnings per share excludes  dilution and is computed
by dividing  income  available to common  shareholders  by the weighted  average
common shares  outstanding  during the period.  Diluted earnings per share takes
into account the  potential  dilution  that could occur if  securities  or other
contracts to issue common stock were  exercised and converted into common stock.
ESOP  shares  committed  to  be  released  are  considered   outstanding   while
unallocated ESOP shares are not considered outstanding.

Earnings per share is not presented for the period from  September 17, 2002 (the
date of conversion to a stock company)  though December 31, 2002 as the earnings
per share calculation for that period is not meaningful.  Earnings per share are
not presented  for the periods  prior to the  conversion to stock form since the
Bank was a mutual savings bank and no stock was outstanding.

9. Advertising Costs

It is the Company's policy to expense  advertising  costs in the period in which
they are incurred.

16
<PAGE>

10. Comprehensive Income

The Company reports  comprehensive  income, which includes net income as well as
certain other items, which results in a change to equity during the period.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                December 31, 2002                      December 31, 2001                   December 31, 2000
---------------------------------------------------------------------------------------------------------------------------------
                          Before     Tax          Net of       Before        Tax          Net of    Before      Tax        Net of
                           tax     (expense)        tax          tax       (expense)       tax       tax      (expense)     tax
                          amount    benefit        amount       amount      benefit       amount    amount     benefit     amount
---------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>        <C>           <C>          <C>         <C>           <C>       <C>        <C>         <C>
Unrealized gains on
  investment securities:
  Unrealized holding
    gains arising
    during period .... $ 917,869  $ (323,530)   $ 594,339    $ 358,438   $ (128,967)   $ 229,471 $ 992,965  $ (357,268) $ 635,697
  Less reclassification
    adjustment for
    gains (losses)
    realized in net
    income ...........    (6,250)      2,249       (4,001)       4,596       (1,655)       2,941        --          --         --
---------------------------------------------------------------------------------------------------------------------------------
Other comprehensive
  income (loss), net.. $ 924,119  $ (325,779)   $ 598,340    $ 353,842   $ (127,312)   $ 226,530 $ 992,965  $ (357,268) $ 635,697
=================================================================================================================================
</TABLE>


11. Reclassifications

Certain  2001 and 2000  amounts  have been  reclassified  to conform to the 2002
consolidated financial statement presentation.

NOTE B - Reorganizational and Stock Offering

The Company is a federally chartered  corporation that was organized in 2001 for
the purpose of acquiring all of the capital stock of the Bank upon completion of
the  Bank's  reorganization  from a mutual  savings  bank into a mutual  holding
company ("MHC") structure.

The overall MHC  reorganization was a change in legal organization and form, not
a change in enterprise.  Specifically, SFAS No. 141 excludes from the definition
of business  combination,  any transfer by an  enterprise of its net assets to a
newly-formed  corporate  entity  chartered  by  the  existing  enterprise  and a
transfer  of net assets and an  exchange  of shares  between  enterprises  under
common control. Accordingly,  absent classification as a business combination as
defined under SFAS No. 141, the basis of MHC's assets and liabilities subsequent
to the  reorganization  will  remain  unchanged  from  the  Bank's  pre-existing
historical basis.

In 2002, the Company offered for sale 43.5% of the shares of its common stock in
an  offering  fully  subscribed  for by  eligible  depositors  of the Bank  (the
Offering).  The  remaining  56.5% of the  Company's  shares of common stock were
issued to Synergy,  MHC (MHC),  a federally  chartered  mutual  holding  company
incorporated  in  2001.  The  reorganization  and  Offering  were  completed  on
September  17,  2002.  Prior to that date,  the  Company  had not engaged in any
significant  business.  Completion  of the Offering  resulted in the issuance of
3,344,152 shares of common stock,  1,889,402 shares (56.5%) of which were issued
to the  MHC and  1,454,750  shares  (43.5%)  of  which  were  sold  to  eligible
depositors  of the Bank at $10.00  per  share.  Costs  related  to the  Offering
(primarily  marketing  fees paid to an  underwriting  firm,  professional  fees,
registration  fees,  and printing and mailing  costs)  aggregated  approximately
$687,000  and have been  deducted  to arrive at net  proceeds  of  approximately
$13,960,000 from the Offering.  The Company  contributed 43% of the net proceeds
of the Offering to the Bank for general corporate use.

                                                                              17
<PAGE>

NOTE C - Investment Securities

The amortized cost,  gross  unrealized  gains and losses,  and fair value of the
Bank's investment  securities  available-for-sale  and  held-to-maturity  are as
follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
December 31, 2002
--------------------------------------------------------------------------------------
                                                     Gross        Gross
                                      Amortized    unrealized   unrealized
                                        cost         gains        losses    Fair value
--------------------------------------------------------------------------------------
<S>                               <C>             <C>         <C>        <C>
Available-for-sale:
  Equity securities ..............  $    11,005     $      -    $     883  $    10,122
  Mortgage-backed securities:
    FHLMC ........................   21,140,544      266,685            -   21,407,229
    FNMA .........................   40,266,600      619,157            -   40,885,757
--------------------------------------------------------------------------------------
      Total available-for-sale ...  $61,418,149     $885,842    $     883  $62,303,108
======================================================================================
Held-to-maturity:
  Mortgage-backed securities:
    FHLMC ........................  $ 3,249,166     $ 18,884    $       -  $ 3,268,050
    FNMA .........................   11,395,355      124,106            -   11,519,461
    GNMA .........................    2,762,844      138,575            -    2,901,419
--------------------------------------------------------------------------------------
      Total held-to-maturity .....  $17,407,365     $281,565    $       -  $17,668,930
======================================================================================


--------------------------------------------------------------------------------------
December 31, 2001
--------------------------------------------------------------------------------------
                                                     Gross        Gross
                                      Amortized    unrealized   unrealized
                                        cost         gains        losses    Fair value
--------------------------------------------------------------------------------------
Available-for-sale:
  Mortgage-backed securities:
    FHLMC ........................  $24,608,937     $179,289     $192,830  $24,595,396
    FNMA .........................   19,324,038      133,670      158,936   19,298,772
--------------------------------------------------------------------------------------
      Total available-for-sale ...  $43,932,975     $312,959     $351,766  $43,894,168
======================================================================================
Held-to-maturity:
  Mortgage-backed securities:
    FNMA .........................  $ 2,458,294     $ 37,104     $      -  $ 2,495,398
    GNMA .........................    4,694,559       40,381            -    4,734,940
--------------------------------------------------------------------------------------
      Total held-to-maturity .....  $ 7,152,853     $ 77,485     $      -  $ 7,230,338
======================================================================================
</TABLE>

The amortized  cost and fair value of investment  securities  available-for-sale
and  held-to-maturity,  by contractual  maturity, at December 31, 2002 are shown
below.  Expected  maturities  will differ from  contractual  maturities  because
borrowers may have the right to call or prepay  obligations with or without call
or prepayment penalties.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                                          Available-for-sale         Held-to-maturity
------------------------------------------------------------------------------------------
                                      Amortized cost  Fair value Amortized cost Fair value
------------------------------------------------------------------------------------------
<S>                                   <C>          <C>          <C>          <C>
Due in one year or less ..............  $   122,011  $   122,799  $         -  $         -
Due after one through five years .....   15,444,248   15,653,121      727,275      744,837
Due after five through ten years .....   15,960,937   16,451,129    6,358,939    6,415,566
Due after ten years ..................   29,879,948   30,065,937   10,321,151   10,528,528
Marketable equity securities and other       11,005       10,122            -            -
------------------------------------------------------------------------------------------
                                        $61,418,149  $62,303,108  $17,407,365  $17,668,931
==========================================================================================
</TABLE>

Proceeds from the sales of  investment  securities  during 2002,  2001 and 2000,
were approximately  $2,006,000,  $1,010,000 and $-0-, respectively.  Gross gains
realized  on those  sales  were $-0-,  $5,000  and $-0- in 2002,  2001 and 2000,
respectively,  gross losses were approximately  $6,250 in 2002, $-0- in 2001 and
$-0- in 2000.  As of December 31, 2002 and 2001,  investment  securities  with a
book value of $291,000 and $131,000, respectively, were pledged to secure public
deposits and for other purposes as provided by law.

18
<PAGE>

NOTE D - Loans Receivable

Major classifications of loans are as follows:
--------------------------------------------------------------------------------
December 31,                                            2002            2001
--------------------------------------------------------------------------------
Mortgages:
  Residential, 1-4 family .........................$202,324,763    $148,825,720
  Residential, multi-family .......................  18,069,633       5,281,089
  Non-residential .................................  30,316,788      13,762,776
Automobile ........................................  66,267,820      52,206,307
Credit card .......................................     135,617          30,075
Other loans .......................................   4,454,255       6,032,858
--------------------------------------------------------------------------------
                                                    321,568,876     226,138,825
Deferred loan fees and costs.......................      84,913         (78,353)
Allowance for loan losses .........................  (2,230,591)     (1,371,821)
--------------------------------------------------------------------------------
                                                   $319,423,198    $224,688,651
================================================================================


A summary of the activity in the allowance for loan losses is as follows:
--------------------------------------------------------------------------------

Year ended December 31,                      2002          2001          2000
--------------------------------------------------------------------------------
Balance, beginning of period............ $1,371,821    $1,176,248    $  994,941
Provision for loan losses ..............  1,077,394       362,692       480,000
Recoveries .............................    216,491       250,256       196,341
Loans charged-off ......................   (435,115)     (417,375)     (495,034)
--------------------------------------------------------------------------------
Balance, end of period ................. $2,230,591    $1,371,821    $1,176,248
================================================================================

Loan balances on which the accrual of interest has been discontinued amounted to
approximately $449,000 and $71,000 at December 31, 2002 and 2001,  respectively.
If  interest  on these  loans  had been  accrued,  interest  income  would  have
increased by approximately $17,000 and $ 2,000, respectively. As of December 31,
2002 and 2001,  there were no loans past due 90 days or more, which are not on a
non-accrual status.

The Bank's  policy is to  consider  non-accrual  loans in excess of  $300,000 as
impaired.  As defined,  there were no impaired loans as of December 31, 2002 and
2001, respectively.

In the normal course of business,  the Company makes loans to certain  officers,
directors  and their  related  interests.  All loan  transactions  entered  into
between  the Company and such  related  parties  were made on the same terms and
conditions as transactions with all other parties. In management's opinion, such
loans are  consistent  with sound banking  practices  and are within  applicable
regulatory lending limitations. The balance of these loans at December 31, 2002,
was approximately  $1,999,000.  In 2002, new loans to these individuals amounted
to approximately $1,562,000.

                                                                              19

<PAGE>

NOTE E - Property and Equipment

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
                                                   Estimated
                                                   useful life        2002          2001
-------------------------------------------------------------------------------------------
<S>                                              <C>             <C>           <C>
Land ............................................. Indefinite     $ 2,703,904   $   782,370
Building and improvements ........................ 3 to 40 years   10,985,815     2,230,102
Furniture, equipment and automobiles.............. 3 to 12 years    5,595,950     4,284,051
Leasehold improvements............................ 3 to 15 years    3,027,515     1,886,910
Property held for future office sites............. Indefinite         375,541     6,553,894
-------------------------------------------------------------------------------------------
                                                                   22,688,725    15,737,327
Less accumulated depreciation and amortization....                 (5,041,966)   (4,097,903)
-------------------------------------------------------------------------------------------
                                                                  $17,646,759   $11,639,424
===========================================================================================
</TABLE>

NOTE F - Deposits

--------------------------------------------------------------------------------
                                                            2002          2001
--------------------------------------------------------------------------------
Demand accounts:
  Non-interest-bearing .............................  $ 39,076,492  $ 31,147,966
  Interest-bearing .................................    47,917,101    40,810,786
--------------------------------------------------------------------------------
                                                        86,993,593    71,958,752
Savings and club accounts ..........................    64,827,870    56,816,270
Certificates of deposit under $100,000..............   131,462,965    88,718,219
Certificates of deposit over $100,000...............    70,857,205    32,320,100
--------------------------------------------------------------------------------
                                                      $354,141,633  $249,813,341
================================================================================

The  scheduled  maturities  of  certificates  of  deposit  are  as  follows  (in
thousands):

--------------------------------------------------------------------------------
2003 ................................................................   $152,856
2004.................................................................     40,023
2005.................................................................      5,720
2006.................................................................      1,022
2007.................................................................      2,318
Thereafter ..........................................................        381
--------------------------------------------------------------------------------
                                                                        $202,320
================================================================================

Interest expense on deposits is as follows:

--------------------------------------------------------------------------------
Year ended December 31,                          2002        2001        2000
--------------------------------------------------------------------------------
Demand ....................................  $  783,714  $1,038,124  $1,130,613
Savings ...................................     765,125     972,501   1,095,182
Certificates of deposit....................   5,773,201   5,452,817   3,601,337
--------------------------------------------------------------------------------
                                             $7,322,040  $7,463,442  $5,827,132
================================================================================


20
<PAGE>

NOTE G - Federal Home Loan Bank of New York Advances

At December 31, 2002,  advances from the Federal Home Loan Bank (FHLB)  totaling
approximately $36,455,600 will mature within one to eight years and are reported
as  long-term  borrowings.  The advances  are  collateralized  by FHLB stock and
certain first mortgage loans and mortgage-backed securities.  These advances had
a weighted  average  interest rate of 4.2%.  Unused overnight lines of credit at
the FHLB was  approximately  $14.7  million at December  31,  2002.  Outstanding
borrowings mature as follows (in thousands):


--------------------------------------------------------------------------------
2003.................................................................    $11,811
2004.................................................................      8,905
2005.................................................................      2,740
2006.................................................................          -
2007.................................................................      4,000
Thereafter ..........................................................      9,000
--------------------------------------------------------------------------------
                                                                         $36,456
================================================================================

NOTE H - Benefit Plans

1. Profit Sharing Retirement Plan

The Company had a profit  sharing  plan which  covered  eligible  employees  and
included an employees'  thrift savings plan established  under the provisions of
the Internal  Revenue Code Section 401(k).  Contributions  to the profit sharing
plan were at the  discretion  of the Board of Directors.  The  Company's  profit
sharing retirement plan expense amounted to $216,000, $214,000 and $196,000, for
the years ended December 31, 2002,  2001 and 2000,  respectively.  This plan was
replaced by the Board of Directors on September 21, 2002 with an Employee  Stock
Ownership Plan ("ESOP") as discussed below.

2. Supplemental Executive Retirement Plans

The Company  established a Supplemental  Executive  Retirement Plan ("SERP") for
the benefit of its chief executive officer. In connection therewith, the Company
purchased a life insurance policy to satisfy its benefit obligation  thereunder.
This policy is held within a rabbi trust.  The cash surrender  value of the life
insurance  policy  related  to  the  SERP  was   approximately   $2,110,000  and
$2,051,000,  at December 31, 2002 and 2001,  respectively.  Annual  accruals for
expense are paid to a trust for the benefit of the chief executive officer.  The
present value of future  benefits is being accrued over the term of  employment.
SERP expense for the years ended,  December 31, 2002, 2001 and 2000, amounted to
approximately $22,000, $20,000, $17,000, respectively.

On January 1, 2002 the Company adopted a SERP for the benefit of other executive
officers.  This plan  requires  an annual  accrual  equal to ten percent of each
participants'  base  salary to be  credited to the plan  reserve.  Plan  expense
amounted to approximately $35,000 for the year ended December 31, 2002.

3. Phantom Stock Plan

Prior to the  reorganization  and stock  offering  as  described  in note B, the
Company  maintained a phantom  stock and phantom  option plan for the benefit of
its chief  executive  officer.  Under the plan, the chief  executive was awarded
phantom stock and options,  the value of which is determined annually based upon
a valuation of the Company assuming it was a stock company. Plan expense for the
years ended December 31, 2002, 2001 and 2000 amounted to  approximately  $8,300,
$11,000 and $11,000, respectively. The phantom stock and phantom option plan for
the  benefit  of  the  chief  executive  officer  was  replaced  by  a  deferred
compensation  plan in  September,  2002.  The Plan  expenses  for the year ended
December 31, 2002 were approximately $4,700.

4. Employee Stock Ownership Plan

On  September  24,  2002,  the Board of  Directors  approved an  Employee  Stock
Ownership  Plan  ("ESOP")  that became  effective  January 1, 2002.  The Plan is
designed to provide  eligible  employees  the  advantage of ownership of Company
stock.  Employees  are eligible to  participate  in the Plan after  reaching age
twenty-one,  completion of one year of service and working at least one thousand
hours of  consecutive  service during the year.  Contributions  are allocated to
eligible participants on the basis of compensation.

The ESOP borrowed $1,163,800 from the Company to finance the purchase of 116,380
shares in connection  with the initial public  offering.  The loan is payable in
annual  installments  over ten years and bears  interest at 4.75% per annum with
interest  payable  quarterly.  The loan can be  prepaid  without  penalty.  Loan
payments are principally  funded by cash contributions from the Bank, subject to
federal tax law limits.

Shares used as  collateral  to secure the loan are  released and  available  for
allocation  to eligible  employees as the  principal and interest on the loan is
paid.  Employees  become fully vested in their ESOP account  after five years of
service.  Dividends on unallocated  shares are generally applied towards payment
of the loan. ESOP shares committed to be released are considered  outstanding in
determining earnings per share.

At December 31, 2002, the ESOP held 112,501  unallocated  shares at an aggregate
cost  of  $1,125,007;  the  market  value  of  such  shares  at  that  date  was
approximately  $1,859,000.  For the year ended  December 31,  2002,  $56,311 was
charged to compensation and employee benefits expense based on the commitment to
release 3,879 shares to eligible employees.

                                                                              21

<PAGE>

NOTE I - Income Taxes

The components of income taxes are summarized as follows:

--------------------------------------------------------------------------------
Year ended December 31,                    2002          2001          2000
--------------------------------------------------------------------------------
Current tax expense:
  Federal income ...................   $1,202,726    $  964,912     $ 667,545
  State income .....................      334,474        93,213        77,649
--------------------------------------------------------------------------------
                                        1,537,200     1,058,125       745,194
--------------------------------------------------------------------------------
Deferred tax (benefit) expense:
  Federal income ...................     (222,908)      (27,132)      (30,455)
  State income .....................     (113,717)       (7,031)       (3,111)
--------------------------------------------------------------------------------
                                         (336,625)      (34,163)      (33,566)
--------------------------------------------------------------------------------
                                       $1,200,575    $1,023,962     $ 711,628
================================================================================

A  reconciliation  of income taxes computed at the statutory  federal income tax
rate to the reported income tax expense is as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Year ended December 31,                                                    2002          2001          2000
--------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>           <C>            <C>
Expected federal income tax expense ................................   $1,098,712    $  994,729     $ 762,232
Increase (decrease) in federal income tax expense resulting from
  State income tax, net of federal income tax effect ...............      145,699        56,880        49,195
  Other, net........................................................      (43,836)      (27,647)      (99,799)
--------------------------------------------------------------------------------------------------------------
                                                                       $1,200,575    $1,023,962     $ 711,628
==============================================================================================================
</TABLE>

Deferred tax assets and liabilities consisted of the following:

--------------------------------------------------------------------------------
December 31,                                                   2002        2001
--------------------------------------------------------------------------------
Deferred loan fees, net of costs .......................   $(98,416)   $(26,560)
Allowance for loan losses ..............................    581,374     196,392
Depreciation ...........................................    120,972     101,782
Unrealized loss on available-for-sale securities........   (311,816)     13,963
Other ..................................................      9,794       5,485
--------------------------------------------------------------------------------
  Net deferred tax asset ...............................   $301,908    $291,062
================================================================================

22
<PAGE>

NOTE J - Fair Value of Financial Instruments

SFAS No. 107  requires  disclosure  of the  estimated  fair value of an entity's
assets and liabilities considered to be financial instruments.  For the Bank, as
for most financial institutions,  the majority of its assets and liabilities are
considered financial  instruments as defined in SFAS No. 107. However, many such
instruments  lack an available  trading market,  as  characterized  by a willing
buyer and seller engaging in an exchange transaction. Therefore, the Bank had to
use  significant  estimates  and  present  value  calculations  to prepare  this
disclosure, as required by SFAS No. 107. Accordingly,  the information presented
below does not purport to represent the aggregate net fair value of the Bank.

Changes in the  assumptions  or  methodologies  used to estimate fair values may
materially  affect the estimated  amounts.  Also,  management is concerned  that
there may not be reasonable  comparability  between institutions due to the wide
range of  permitted  assumptions  and  methodologies  in the  absence  of active
markets.  This lack of uniformity gives rise to a high degree of subjectivity in
estimating financial instrument fair values.

Estimated  fair values have been  determined  by the Bank using what  management
believes to be the best  available data and an estimation  methodology  suitable
for each category of financial instruments.  The estimation  methodologies used,
the estimated  fair values,  and recorded book balances at December 31, 2002 and
2001 are set forth below.

For cash and due from  banks  and  interest-bearing  deposits  with  banks,  the
recorded book values of  approximately  $7,886,000  and $3,708,000 are deemed to
approximate  fair  values  at  December  31,  2002 and 2001,  respectively.  The
estimated fair values of investment and mortgage-backed  securities are based on
quoted market prices,  if available.  If quoted market prices are not available,
the  estimated  fair  values  are based on quoted  market  prices of  comparable
instruments.

The fair values of loans are estimated  based on a discounted cash flow analysis
using interest rates currently offered for loans with similar terms to borrowers
of similar credit quality.  The carrying value of accrued  interest is deemed to
approximate fair value.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                       2002                         2001
------------------------------------------------------------------------------------------------
                                                     Carrying   Estimated   Carrying  Estimated
                                                       amount   fair value   amount   fair value
------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>         <C>        <C>
(Dollars in thousands)
Investment securities............................ $     78,826  $ 79,972    $ 51,047   $ 51,125
Federal Home Loan Bank stock ....................        1,856     1,856       1,550      1,550
Loans receivable ................................      321,569   332,740     226,061    226,290
Cash surrender value of officer life insurance ..        2,110     2,110       2,051      2,051
================================================================================================
</TABLE>

The estimated fair values of demand deposits (i.e.,  interest- and non-interest-
bearing  checking  accounts,  passbook savings and certain types of money market
accounts)  are,  by  definition,  equal to the  amount  payable on demand at the
reporting  date  (i.e.,  their  carrying  amounts).   The  carrying  amounts  of
variable-rate,  fixed-term  money market  accounts and  certificates  of deposit
approximate  their  fair  values  at the  reporting  date.  The fair  values  of
fixed-rate  certificates  of deposit are estimated  using a discounted cash flow
calculation that applies interest rates currently being offered to a schedule of
aggregated  expected  monthly time deposit  maturities.  The carrying  amount of
accrued interest payable approximates its fair value.

--------------------------------------------------------------------------------
                                            2002                  2001
--------------------------------------------------------------------------------
                                     Carrying  Estimated   Carrying  Estimated
                                       amount  fair value   amount   fair value
-------------------------------------------------------------------------------
(Dollars in thousands)
Time deposits......................  $202,320   $206,047   $121,038   $122,531
FHLB advances .....................    36,456     36,456     22,500     22,500
===============================================================================

The fair value of commitments to extend credit is estimated  based on the amount
of  unamortized  deferred  loan  commitment  fees.  The fair value of letters of
credit  is based on the  amount of  unearned  fees  plus the  estimated  cost to
terminate  the  letters  of  credit.  Fair  values  of  unrecognized   financial
instruments including commitments to extend credit and the fair value of letters
of credit are considered immaterial.

                                                                              23
<PAGE>

NOTE K - Financial Instruments With Off-Balance-Sheet Risk

The Bank is a party to financial instruments with  off-balance-sheet risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments  include commitments to extend credit and unused lines of
credit.  Those instruments  involve, to varying degrees,  elements of credit and
interest  rate risk in  excess  of the  amount  recognized  in the  consolidated
balance   sheets.   The  Bank's   exposure  to  credit  loss  in  the  event  of
nonperformance by the other party to the financial  commitments to extend credit
and unused lines of credit are  represented by the  contractual  amount of those
instruments.  The Bank uses the same credit  policies in making  commitments and
conditional obligations as it does for on-balance-sheet instruments.

The Bank had the following approximate  off-balance-sheet  financial instruments
whose contract amounts represent credit risk:

--------------------------------------------------------------------------------
                                                                 2002      2001
--------------------------------------------------------------------------------
(Dollars in thousands)
Commitments to grant loans.............................       $ 31,456  $ 38,948
Unfunded commitments under lines of credit.............         12,898     8,767
--------------------------------------------------------------------------------
                                                              $ 44,354  $ 47,715
================================================================================

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent  future  cash   requirements.   The  Bank  evaluates  each  customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained,  if
deemed necessary by the Bank upon extension of credit,  is based on management's
credit evaluation of the customer. Collateral held varies but primarily includes
residential  real  estate  located in New  Jersey and the New York  metropolitan
area.

NOTE L - Commitments and Contingent Liabilities

1. Lease Commitments

Future approximate lease payments under non-cancelable  operating leases are due
as follows (in thousands):

--------------------------------------------------------------------------------
2003..................................................................... $  414
2004.....................................................................    456
2005.....................................................................    483
2006.....................................................................    477
2007.....................................................................    435
Thereafter ..............................................................  3,503
--------------------------------------------------------------------------------
                                                                          $5,768
================================================================================

Total rent  expense was  approximately  $426,000,  $376,000 and $332,000 for the
years ended December 31, 2002, 2001 and 2001, respectively.

The Company  maintains six office locations  within the corporate  facilities of
the Company's  former credit union  sponsor  organization.  The Company makes no
rental payments for these branch locations.  The locations are occupied pursuant
to a written  agreement that provides for two-year terms that are  automatically
renewed upon expiration  unless written notice of termination is given by either
party.

2. Other

In the normal  course of  business,  the Company and the Bank have been named as
defendants  in certain  lawsuits.  Although the ultimate  outcome of these suits
cannot be  ascertained  at this time, it is the opinion of  management  that the
resolutions  of such  suits  will  not have a  material  adverse  effect  on the
consolidated financial position or results of operation of the Company.

24
<PAGE>

NOTE M - Condensed Financial Information - Parent Corporation Only

Condensed financial  information for Synergy Financial Group
(Parent Corporation only) follows (in thousands):

<TABLE>
<CAPTION>
Condensed Balance Sheets
--------------------------------------------------------------------------------------------------------
<S>                                                                               <C>        <C>
December 31, ....................................................................      2002       2001
--------------------------------------------------------------------------------------------------------
Assets:
  Cash and cash equivalents......................................................   $ 8,610    $   100
  Investment in subsidiaries, at equity .........................................    30,956     22,295
  Other assets ..................................................................        98         23
--------------------------------------------------------------------------------------------------------
    Total assets ................................................................   $39,664    $22,418
========================================================================================================
Liabilities and Stockholders' Equity:
  Loan payable to Bank for ESOP .................................................   $ 1,135    $     -
  Other liabilities .............................................................       657         28
  Stockholders' equity ..........................................................    37,872     22,390
--------------------------------------------------------------------------------------------------------
    Total liabilities and stockholders' equity ..................................   $39,664    $22,418
========================================================================================================

Condensed Statements of Income
--------------------------------------------------------------------------------------------------------
Year ended December 31,                                                                2002       2001
--------------------------------------------------------------------------------------------------------
Income:
  Equity in undistributed net earnings of subsidiaries ..........................  $  2,068    $ 1,907
--------------------------------------------------------------------------------------------------------
    Total income ................................................................     2,068      1,907
--------------------------------------------------------------------------------------------------------
Expenses:
  Other expenses ................................................................        37          5
--------------------------------------------------------------------------------------------------------
    Total expenses ..............................................................        37          5
--------------------------------------------------------------------------------------------------------
    Net Income ..................................................................  $  2,031    $ 1,902
========================================================================================================

Condensed Statements of Cash Flows
--------------------------------------------------------------------------------------------------------
Year ended December 31,                                                                2002       2001
--------------------------------------------------------------------------------------------------------
Operating Activities:
  Net income ....................................................................  $  2,031    $ 1,902
  Adjustments to reconcile net income to net cash provided by operating activities:
    Equity in undistributed income of subsidiary ................................    (2,068)    (1,907)
    Amortization, depreciation and other ........................................        73          -
    Increase in other assets ....................................................       (75)       (23)
    Increase in other liabilities ...............................................       629         28
--------------------------------------------------------------------------------------------------------
      Net cash provided by operating activities .................................       590          -
--------------------------------------------------------------------------------------------------------
Investing Activities:
  Additional investment in subsidiaries .........................................    (6,000)         -
--------------------------------------------------------------------------------------------------------
      Net cash used in investing activities .....................................    (6,000)         -
--------------------------------------------------------------------------------------------------------
Financing Activities:
  Net proceeds from issuance of common stock ....................................    13,960        100
  Repayments of Bank loan for ESOP ..............................................       (29)         -
  Purchase of investment securities available-for-sale ..........................       (11)         -
--------------------------------------------------------------------------------------------------------
      Net cash provided by financing activities .................................    13,920        100
--------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents .......................................     8,510        100
Cash and cash equivalents at beginning of year ..................................       100          -
--------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year ........................................  $  8,610    $   100
========================================================================================================
</TABLE>

                                                                              25
<PAGE>

NOTE N - Regulatory Matters

The Bank is subject to various regulatory capital  requirements  administered by
its  primary  federal  regulator,  the Office of Thrift  Supervision  (the OTS).
Failure to meet minimum capital  requirements can initiate  certain  mandatory -
and  possible  additional   discretionary  -  actions  by  regulators  that,  if
undertaken, could have a direct material effect on the Bank and the consolidated
financial  statements.  Under the regulatory capital adequacy guidelines and the
regulatory  framework for prompt corrective  action, the Bank must meet specific
capital  guidelines  that involve  quantitative  measures of the Bank's  assets,
liabilities,  and certain off-balance-sheet items as calculated under regulatory
accounting  practices.  The Bank's capital amounts and classifications under the
prompt  corrective  action  guidelines  are  also  subject  to  the  qualitative
judgments  by the  regulators  about  components,  risk  weightings,  and  other
factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to  maintain  minimum  amounts  and ratios of total  risk-based
capital  and  Tier  I  capital  to  risk-weighted  assets  (as  defined  in  the
regulations), Tier I capital (as defined) to adjusted total assets (as defined),
and tangible capital to adjusted total assets (as defined).  Management believes
that the Bank meets all capital adequacy requirements to which it is subject.

As  of  December  31,  2002,  the  Bank  is  considered  well-capitalized  under
regulatory  framework  for  prompt  corrective  action.  To  be  categorized  as
well-capitalized,  the Bank  must  maintain  minimum  total  risk-based,  Tier I
risk-based,  and Tier I leverage ratios, as set forth in the table below.  There
are  no  conditions  or  events  that  management   believes  have  changed  the
institution's prompt corrective action category.

The Bank's actual capital amounts and ratios are as follows:

<TABLE>
<CAPTION>
OTS Requirements
------------------------------------------------------------------------------------------------------------------------
December 31, 2002:
------------------------------------------------------------------------------------------------------------------------
                                                                                                       Regulatory
                                                                               Minimum           for classification as
                                                     Bank actual           capital adequacy        well-capitalized
------------------------------------------------------------------------------------------------------------------------
                                                   Amount     Ratio        Amount       Ratio      Amount        Ratio
------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>           <C>        <C>             <C>     <C>             <C>
Total risk-based capital
(to risk-weighted assets).....................  $32,535,000   11.17%    $23,294,000      8.00%  $29,118,000      10.00%
Tier I capital
  (to risk-weighted assets) ..................   30,305,000   10.41%            N/A        N/A   17,471,000       6.00%
Tier I capital (to adjusted total assets) ....   30,305,000    7.01%      6,482,000      1.50%          N/A        N/A
Tangible capital (to adjusted total assets) ..   30,305,000    7.01%      6,482,000      1.50%          N/A        N/A
========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
December 31, 2001:
------------------------------------------------------------------------------------------------------------------------
                                                                                                       Regulatory
                                                                               Minimum           for classification as
                                                     Bank actual           capital adequacy        well-capitalized
------------------------------------------------------------------------------------------------------------------------
                                                   Amount     Ratio        Amount       Ratio      Amount        Ratio
------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>           <C>        <C>             <C>     <C>             <C>
Total risk-based capital
  (to risk-weighted assets)...................  $23,592,000   12.00%    $15,731,000     8.00%    $19,663,000    10.00%
Tier I capital (to risk-weighted assets)......   22,220,000   11.30%            N/A      N/A      11,798,000     6.00%
Tier I capital (to adjusted total assets).....   22,220,000    7.48%     11,883,000     4.00%     14,853,000     5.00%
Tangible capital (to adjusted total assets) ..   22,220,000    7.48%      4,456,000     1.50%            N/A      N/A
========================================================================================================================
</TABLE>

The Company's Annual Report for the Year Ended December, 31, 2002 filed with the
Securities  Exchange  Commission  on Form 10-KSB  without  exhibits is available
without charge upon written request.  For a copy of the Form 10-KSB or any other
investor  information,  please  write the  Secretary of the Company at 310 North
Avenue  East,  Cranford,  New Jersey  07016.  Copies of any exhibits to the Form
10-KSB are available at cost.

26
<PAGE>

Board of Directors
------------------
Synergy Financial Group, Inc. and Synergy Bank
Kenneth S. Kasper* (Chairman)
Nancy A. Davis*
Magdalena M. De Perez
John S. Fiore*+
David H. Gibbons, Jr.*
Paul T. LaCorte*
George Putvinski*
W. Phillip Scott*
Albert N. Stender*

*  Also a director of Synergy Financial Services, Inc.
+  Chairman of Synergy Financial Services, Inc.

General Counsel
---------------
Peter J. Liska, LLC
Tinton Falls, New Jersey

Independent Auditors
--------------------
Grant Thornton, LLP
Philadelphia, Pennsylvania

Officers
--------
Synergy Financial Group, Inc.
John S. Fiore.......................President and Chief Executive Officer
Kevin M. McCloskey..................Senior Vice President and
                                    Chief Operating Officer
Kevin A. Wenthen....................Senior Vice President, Chief
                                    Administrative Officer and Secretary
Ralph A. Fernandez..................Vice President and
                                    Chief Financial Officer

Synergy Bank
John S. Fiore.......................President and Chief Executive Officer
Kevin M. McCloskey..................Senior Vice President and
                                    Chief Operating Officer
Kevin A. Wenthen....................Senior Vice President, Chief
                                    Administrative Officer and Secretary
Ralph A. Fernandez..................Vice President and
                                    Chief Financial Officer
Linda A. Douglas....................Vice President
Mariann Jeffers.....................Vice President
Janice L. Ritz......................Vice President
Angelo E. Verrone...................Vice President
Carmen A. Anastase..................Assistant Vice President
Mary Beth Gorecki...................Assistant Vice President
Edward P. Hassenkamp................Assistant Vice President
Edmund Mizerek......................Assistant Vice President
Veronica R. Senecke.................Assistant Vice President

Synergy Financial Services, Inc.
Kevin A. Wenthen....................President, Chief Executive Officer
                                    and Secretary
Teresa A. Lowe......................Senior Vice President
Ralph A. Fernandez..................Treasurer
Kevin M. McCloskey..................Assistant Secretary

Full-Service Branch Offices
---------------------------
Clark................................315 Central Avenue, Clark, New Jersey
Cranford.............................310 North Avenue East, Cranford, New Jersey
Freehold.............................101 Barkalow Avenue, Freehold, New Jersey
Iselin...............................1162 Green Street, Iselin, New Jersey
Kenilworth...........................15 Market Street, Kenilworth, New Jersey
Linden...............................225 North Wood Avenue, Linden, New Jersey
Matawan..............................168-170 Main Street, Matawan, New Jersey
Monroe...............................337 Applegarth Road, Monroe, New Jersey
Morganville..........................473 Route 79, Morganville, New Jersey
North Brunswick......................1727 Route 130, North Brunswick, New Jersey
Old Bridge...........................3665 Route 9 North, Old Bridge, New Jersey
Union................................1887 Morris Avenue, Union, New Jersey

--------------------------------------
Synergy Bank and Synergy Financial Services, Inc. are
wholly-owned subsidiaries of Synergy Financial Group, Inc.