UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-K

(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

                   For the fiscal year ended December 31, 1997

                                       OR

[ ]  TRANSITIONAL  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934


                  For the transition period from _____ to _____


Commission File No.   0-7806


                          RAMAPO FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)


        New Jersey                                    22-1946561
(State or other jurisdiction of                    (I.R.S. employer
incorporation or organization)                     identification no.)


64 Mountain View Boulevard, Wayne, New Jersey            07470
(Address of principal executive offices)               (Zip Code)


       Registrant's telephone number, including area code: (973) 696-6100

           Securities registered pursuant to Section 12(b) of the Act:

                                 Not Applicable

           Securities registered pursuant to Section 12(g) of the Act:

                     Common stock, par value $1.00 per share
                                (Title of Class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained,  to the best of registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

As of March 13, 1998,  the  aggregate  market value of the  7,786,528  shares of
Common Stock of the registrant  issued and outstanding  held by nonaffiliates on
such date was  approximately  $65.2  million based on the closing sales price of
$8.375 per share of the registrant's Common Stock on March 13, 1998 as listed on
the National  Association of Securities  Dealers  Automated  Quotation  National
Market System.  For purposes of this calculation,  it is assumed that directors,
executive  officers and  beneficial  owners of more than 5% of the  registrant's
outstanding voting stock are affiliates.

Number of shares of Common Stock outstanding as of March 13, 1998:  8,128,324


<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE

<TABLE>
<S>                                             <C>
PART I

Item 1 - Business                               Pages 1 and 2 (To Our Shareholders),
                                                and Pages 5 thru 19 (Management's
                                                Discussion and Analysis of
                                                Consolidated Financial Condition and
                                                Results of Operations) of the Annual
                                                Report to Stockholders for the year
                                                ended December 31, 1997 (Exhibit
                                                13).

PART II

Item 6 - Selected Financial Data                Pages 3 and 4 of the Annual Report to
                                                Stockholders for the year ended
                                                December 31, 1997 (Exhibit 13).

Item 7 - Management's Discussion                Pages 5 thru 19 of the Annual
         and Analysis of Financial              Report to Stockholders for the year
         Condition and Results of Operations    ended December 31, 1997 (Exhibit 13).

Item 8 - Financial Statements and               Pages 20 thru 40 of the Annual Report
         Supplementary Data                     to Stockholders for the year ended
                                                December 31, 1997 (Exhibit 13).

PART III

Item 10- Directors and Executive                All or part of items 10, 11, 12 and 13
         Officers of the Registrant             are contained in the registrant's
                                                definitive Proxy Statement for its
Item 11- Executive Compensation                 1998 Annual Meeting of Stockholders
                                                to be filed with the Securities and
Item 12- Security Ownership of                  Exchange Commission pursuant to
         Certain Beneficial Owners              Regulation 14A.
         and Mangement

Item 13- Certain Relationships and
         Related Transactions
</TABLE>

                                        2

<PAGE>


                  RAMAPO FINANCIAL CORPORATION AND SUBSIDIARIES

                    Index to Form 10-K for December 31, 1997

<TABLE>
<CAPTION>
                                                                                              Page No.
                                                                                              --------
<S>                                                                                              <C>
PART I

Item 1.  Business                                                                                 4
Item 2.  Properties                                                                              17
Item 3.  Legal Proceedings                                                                       18
Item 4.  Submission of Matters to a Vote of Security Holders                                     18

PART II

Item 5.  Market for Registrant's Common Stock and Related Stockholder Matters                    19
Item 6.  Selected Financial Data                                                                 19
Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations   19
Item 8.  Financial Statements and Supplementary Data                                             19
Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure    19

PART III

Item 10. Directors and Executive Officers of the Registrant                                      20
Item 11. Executive Compensation                                                                  20
Item 12. Security Ownership of Certain Beneficial Owners and Management                          20
Item 13. Certain Relationships and Related Transactions                                          20

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                         20

SIGNATURES                                                                                       22
</TABLE>


                                            3

<PAGE>


                                     PART I

Item 1.  Business.

Description of Business and Market Area

     Ramapo Financial  Corporation  ("Corporation") is a New Jersey bank holding
company that owns all of the  outstanding  stock of The Ramapo Bank ("Bank"),  a
New Jersey  state-chartered  commercial  bank. The  Corporation and the Bank are
headquartered in Wayne,  Passaic County, New Jersey, and all of the Bank's eight
offices are within 15 miles of its headquarters  building.  The Bank was founded
in 1967 and became a subsidiary  of the  Corporation  in 1974.  The  Corporation
commenced  operations  in 1971 when it acquired  ownership of Pilgrim State Bank
("Pilgrim"). In June 1993, the Corporation sold the principal banking assets and
liabilities of Pilgrim.  As a result,  the Bank is the  Corporation's  principal
subsidiary and its only remaining banking  subsidiary.  As of December 31, 1997,
the Corporation had consolidated  assets,  deposits and stockholders'  equity of
$285.7 million, $249.8 million and $31.3 million, respectively.

     The Corporation considers its primary banking markets to be the Wayne area,
in which  five of its eight  offices  are  located,  and the  cities of  Butler,
Clifton and  Parsippany.  The Bank also does business  with  customers in Essex,
Morris and Passaic County communities that are contiguous to these markets.

     The Wayne area is a combination  of upper middle income  neighborhoods  and
businesses  that is  located  approximately  18  miles  west of New  York  City.
According  to 1990 census  data,  the area has almost  100,000  residents  and a
median  household  income of $55,005,  or about one-third  higher than the state
average.  In  Wayne,  itself,  the  median  value of a  single-family  house was
$242,200.  The  number  of  private  sector  jobs in the area  approximates  the
resident workforce,  and companies with corporate  headquarters in Wayne include
Union  Camp  Corporation,   GAF  Corporation,  GEC  Marconi  Electronic  Systems
Corporation, Reckitt & Coleman Inc. and Castrol Inc.

     Butler is a small  community north of Wayne with a 1990 population of 7,392
residents and numerous small  businesses.  Butler's average  household income is
$49,375.  Clifton is an urban center with a 1990  population of 71,984 and a per
household income that approximates the state average.  The Bank's Clifton branch
provides  access to a large number of  prospective  commercial  loan  customers.
Parsippany is a prosperous  community of 48,478 located to the west of Wayne. It
has an average household income of $53,092 and is the home to major corporations
and small businesses alike.

     The  Corporation  is  supervised  by the Board of  Governors of the Federal
Reserve  System  ("Federal  Reserve").  The Bank is  supervised  by the  Federal
Deposit Insurance  Corporation ("FDIC") and the New Jersey Department of Banking
("State"), and its deposits are insured by the FDIC. The Corporation's executive
offices are located at 64 Mountain View Boulevard,  Wayne,  New Jersey,  and its
main telephone number is (973) 696-6100.

General

     The Corporation is a one-bank  holding company  headquartered in Wayne, New
Jersey whose  primary  operating  subsidiary  is the Bank.  The Bank  conducts a
general commercial and retail community banking business and offers a full range
of traditional deposit and lending services. Commercial services provided by the
Bank  include  real  estate  mortgage  loans,   term  loans,   revolving  credit
arrangements, lines of credit, real estate construction loans, business checking
and savings accounts,  certificates of deposit, and repurchase agreement "sweep"
accounts,  as well as night  depository,  wire transfer,  collection and deposit
account access via personal computer services. The Bank also offers a full range
of consumer banking services,  including checking, savings, NOW and money market
accounts,  certificates  of deposit,  secured and unsecured  loans,  installment
loans, home equity loans, safe deposit boxes, holiday club accounts,  collection
services,  money orders and travelers  checks.  Automated teller machines at all
branch  locations plus telephone access to deposit account  information  provide
convenience to consumers.  The Bank makes  brokerage  services  available to its
customers  through  an  affiliation  with  Invest  Financial   Corporation,   an
independent company. It also conducts limited trust activities.


                                      4

<PAGE>

Regulatory Orders

     Both the  Corporation  and the Bank were  released from  regulatory  orders
during the first quarter of 1996. The  Corporation  had been  operating  under a
Written  Agreement  ("Written  Agreement")  with the Federal Reserve Bank of New
York ("FRB") since November,  1993.  Based on a limited scope  inspection by the
FRB as of  September  30,  1995 which  noted the  continued  improvement  in the
Corporation's operations, the Written Agreement was terminated in March, 1996.

     The Bank had been  operating  under a Memorandum of  Understanding  ("MOU")
issued by the FDIC and the State in May,  1995.  The MOU replaced a more onerous
order to cease and desist which had been jointly issued by the FDIC and State in
November,  1992. The MOU was terminated in March, 1996 as a result of the FDIC's
examination of the Bank as of December 31, 1995.

Lending Activities

     Loan Portfolio.  As of December 31, 1997, the  Corporation's  loans, net of
unearned  discount,  represented  59.2% of its total assets.  As of December 31,
1997,  its loan  portfolio  consisted  of  approximately  65.4%  commercial  and
commercial real estate loans,  6.2% commercial real estate  construction  loans,
3.7%  residential  real estate  mortgage loans and 24.7%  installment  loans. At
December  31, 1997,  substantially  all of the Bank's loans were to residents of
and businesses located in northern New Jersey.


                                      5

<PAGE>


     Set  forth  below is  selected  data  relating  to the  composition  of the
Corporation's  loan  portfolio by type of loan and type of security at the dates
indicated.  At December 31, 1997, the Corporation had no concentrations of loans
exceeding 10% of total loans in addition to those disclosed  below.  See "--Loan
Concentrations."


<TABLE>
<CAPTION>
                                                                         At December 31,
                                   -------------------------------------------------------------------------------------------------
                                         1997                1996               1995                 1994                1993
                                   ----------------    ----------------    ----------------    ----------------    -----------------
                                     Amount     %       Amount      %       Amount      %       Amount      %       Amount      %
                                   --------   -----    --------   -----    --------   -----    --------   -----    --------   ------
                                                                        (Dollars in thousands)
<S>                                <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>
Commercial and commercial real
  estate                           $110,589    65.4%   $105,819    64.1%   $ 96,469    60.1%   $101,292    61.7%   $114,889    61.6%
Commercial real estate
  construction                       10,553     6.2      10,949     6.6      15,177     9.5      18,462    11.2      29,695    15.9
Residential real estate
  mortgage (1)                        6,179     3.7       7,443     4.5       8,772     5.4      10,346     6.3       7,808     4.2
Installment                          41,785    24.7      40,859    29.8      40,128    25.0      34,211    20.8      34,211    18.3
                                   --------   -----    --------   -----    --------   -----    --------   -----    --------   -----
    Total                          $169,106   100.0%   $165,070   100.0%   $160,546   100.0%   $164,311   100.0%   $186,603   100.0%
                                   ========   =====    ========   =====    ========   =====    ========   =====    ========   =====
</TABLE>

-----------
(1)  Excludes loans held for sale.


                                         6

<PAGE>


     Origination of Loans. The Bank markets its loan programs  primarily through
its branch  managers and loan  officers.  In addition,  the Bank  receives  loan
referrals from the SBA due to its Preferred  Lender and Certified Lender status.
Existing  customers  of the Bank may  also  make  referrals  of  potential  loan
customers.  The  Bank's  commercial  loan  officers  also  have  utilized  Dun &
Bradstreet  and  other  similar  sources  of  information  to  target  potential
commercial  customers in the Bank's target  market.  The Bank does not originate
installment loans through automobile dealers or other third party sources.

     The Bank's lending activities are subject to its written, nondiscriminatory
underwriting  policies  and to loan  origination  procedures  prescribed  by the
Bank's Board of Directors and its management.  Each loan request is evaluated to
determine  the  borrower's  ability to repay.  In addition,  where  appropriate,
employment and other  verifications  are obtained.  Credit reports and financial
statements  are also  obtained.  Where  loans are to be secured by real  estate,
property  valuations are performed by appraisers approved by the Bank's Board of
Directors.

     The statutory legal limit for loans to one borrower  applicable to the Bank
is  generally  15% of capital  funds at the time the loan is  closed,  unless an
exception  is  approved by the State.  Such  exceptions  may be granted  only in
limited  circumstances.  At December 31, 1997 the Bank's legal lending limit was
$5.0 million.

     It is the Bank's policy on purchase money mortgages to record a lien on the
real estate securing the loan (whether  commercial or residential) and to obtain
title insurance  which insures that the property is free of prior  encumbrances.
Borrowers also must obtain hazard insurance  policies prior to closing and, when
the property is in a flood plain as designated by the  Department of Housing and
Urban  Development,  must obtain paid flood insurance  policies.  The properties
securing the Bank's real estate loans are  appraised by  independent  appraisers
approved at least annually by the Board of Directors.  For all  commercial  real
estate loans of $50,000 or more,  the Bank also  requires  that the loan officer
and the Borrower complete an environmental questionnaire to determine if a Phase
I or II environmental  audit is necessary.  On most  residential  first mortgage
loans,  borrowers also are required to advance funds on a monthly basis together
with each payment of principal  and interest to a mortgage  escrow  account from
which the Bank makes disbursements for items such as real estate taxes.

     The Board of Directors has adopted a policy setting forth specified  levels
of lending authority.  All unsecured loans between $15,000 and $350,000, and all
secured loans  between  $15,000 and $500,000 must be approved by two officers of
the Bank.  All unsecured  loans between  $350,000 and $500,000 and secured loans
between  $500,000 and  $750,000  must be approved by the  unanimous  vote of the
Bank's  Senior Loan  Committee,  which  includes the Chairman of the Board,  the
President  and the two lending  Senior  Vice  Presidents  of the Bank.  Loans in
excess of those  amounts  and loans  receiving  less than a  unanimous  vote for
approval must be approved by the  Executive  Committee of the Board of Directors
or the full Board of Directors.

     It is management's policy to monitor the Bank's loan portfolio  continually
to anticipate and address  potential and actual  delinquencies.  When a borrower
fails to make a payment on a loan,  the Bank takes  immediate  steps to have the
delinquency  cured and the loan  restored  to current  status.  Generally,  as a
matter of  policy,  the Bank will  contact  the  borrower  after a loan has been
delinquent  30 days.  If payment  is not  promptly  received,  the  borrower  is
contacted  again,  and efforts are made to formulate an affirmative plan to cure
the  delinquency.  With respect to commercial and  commercial  real estate loans
delinquent  30 days or more,  collection  efforts  are  reviewed by the Work Out
Committee to determine  appropriate  actions to be taken.  Generally,  after any
loan is delinquent 90 days or more,  formal legal  proceedings  are commenced to
collect  amounts owed.  Legal  proceedings  may be commenced prior to such time,
however,  and late fees generally are assessed against delinquent borrowers when
allowed by the terms of the loan documents.

     Commercial  Lending.  The Bank's commercial lending activities are directed
to small and lower  middle-market  New Jersey-based  businesses with $500,000 to
$25 million in annual sales. The Bank's  commercial  borrowers consist primarily
of  firms  engaged  in  manufacturing  and  distribution,   service   providers,
retailers,  and professionals in health care, accounting and law. Generally, the
Bank's  commercial  loans are secured by the assets of the  borrower,  which may
include  accounts  receivable,  inventory,  equipment and other business assets,
such as real estate, and are guaranteed by the principals of the borrowers.  The
Bank's commercial loan portfolio  includes loans which may be at least partially
secured by real estate but for which the expected source of repayment for the

                                        7

<PAGE>


loan is the cash flow resulting from the borrower's business. For years prior to
1993,  the Bank reported loans that were  categorized as commercial  real estate
loans as part of its commercial loan portfolio.

     The Bank  underwrites  its commercial  loans  primarily on the basis of the
borrower's  cash  flow and  ability  to  service  the  debt  from  earnings  and
secondarily on the basis of underlying  collateral value, and seeks to structure
such loans to have more than one source of  repayment.  The borrower is required
to provide the Bank with  sufficient  information to allow the Bank to determine
the  creditworthiness of the borrower,  the stability of the borrower's industry
and the competency of management.  In most instances,  this information consists
of at least three years of financial  statements,  a statement of projected cash
flows,  current  financial  information  on any  guarantor  and  any  additional
information on the collateral. For loans with maturities exceeding one year, the
Bank  requires  that  borrowers  and  guarantors   provide   updated   financial
information at least annually throughout the term of the loan.

     The Bank's  commercial loans may be structured as term loans or as lines of
credit.  Commercial  term loans are  generally  made to finance the  purchase of
assets and have maturities of five years or less. Commercial lines of credit are
typically for the purpose of providing  working capital and are usually approved
with a one-year term. The Bank generally requires that line of credit borrowings
be repaid at least 30 consecutive days during the one-year period. The Bank also
offers  both  commercial  and  standby  letters  of  credit  for its  commercial
borrowers.  Commercial  letters of credit are written for a maximum  term of one
year. The terms of standby  letters of credit  generally do not exceed one year,
although in certain instances, renewable standby letters of credit may be issued
with the approval of the Chairman of the Board,  President or one of the lending
Senior Vice Presidents of the Bank and must be reviewed and approved annually.

     The Bank's  commercial  loans generally have interest rates which float at,
or at some increment over, the Bank's  commercial  lending base rate. The Bank's
commercial  lending  base  rate is  determined  by the  Chairman  of the  Board,
President and the lending Senior Vice Presidents of the Bank.

     The Bank  participates  in various  lending  programs of the Small Business
Administration  (the "SBA") and the New Jersey  Economic  Development  Authority
(the "EDA") and has been designated a Certified Lender and a Preferred Lender by
the SBA.  Pursuant  to the SBA  Certified  Lender  program,  the SBA must make a
decision on loan requests forwarded to it by the Bank within three business days
of receipt of the loan  package.  If approved,  the SBA  guarantees  loans up to
$750,000 as follows:  (i) up to 80% of loans  $100,000 or less;  and (ii) 75% of
loans of more than  $100,000.  Guaranty  fees are based on loan maturity and the
SBA's  share.  In  addition,  the  Bank is one of  approximately  20 New  Jersey
financial  institutions which participate with the EDA in a state-wide loan pool
for small  businesses.  Under the terms of this program,  the Bank may originate
loans in an amount of up to $1.0  million for fixed asset  financing or $500,000
for working capital  purposes and the EDA may purchase a participation  interest
of up to 25% of the principal amount of the loan and may guarantee an additional
25% of the  remaining  balance  of the loan.  Under  the terms of the  guarantee
programs of both the SBA and the EDA, in the event of a default by the borrower,
the SBA or EDA will pay to the Bank the guaranteed portion of the loan. The Bank
and the SBA or the EDA will rank  pari  passu  with  respect  to the  collateral
securing the loan.

     Commercial Real Estate Lending. The Bank's commercial real estate portfolio
consists  of loans (i) the  purpose  of which was to  acquire  or  develop  real
estate, or (ii) where the primary source of repayment is liquidation of the real
estate held as collateral for the loan.  Commercial  real estate loans have been
made  primarily  to  builders  and  developers  to  finance  land   acquisition,
development and construction. The commercial real estate loan portfolio includes
loans to finance the  acquisition  of investment  properties,  including  office
buildings, warehouse space and strip shopping centers.

     Although terms vary, commercial real estate loans generally have maturities
of up to 5 years  with  payments  based on  amortization  schedules  of up to 25
years.  Loans are offered at both fixed interest rates and rates that float at a
margin over the Bank's  commercial  lending base rate.  The exact margin  varies
with each loan and is  determined  based on the risk  associated  with the loan.
Borrowers  generally  are charged a commitment  fee equal to 1% of the principal
amount of the loan.  Loan-to-value  ratios on the Bank's  commercial real estate
loans when originated  normally do not exceed 80% of the lesser of the appraised
value or the  purchase  price of the  property.  The  amount of the loan also is
determined  with  reference  to the amount of debt that can be  supported by the
property's existing cash flow.


                                        8

<PAGE>



     As part of the criteria for  underwriting  mini-permanent  loans,  the Bank
generally  requires  these  properties to provide  sufficient  income to satisfy
operating  expenses  and debt  service on the loan,  and to provide a reasonable
return to the owners on their  investment.  In evaluating the loan request,  the
Bank  generally  considers  cash flow from leases that have  unexpired  terms at
least equal to the term of the loan.

     Commercial  real estate  lending  entails  additional  risks as compared to
residential  property  lending.  Commercial real estate loans typically  involve
large  loan  balances  to  single  borrowers  or groups  of  related  borrowers.
Development of commercial  real estate  projects also may be subject to numerous
land use and  environmental  issues.  The  payment  experience  on such loans is
typically  dependent on the  successful  operation  of the real estate  project.
These risks can be significantly impacted by supply and demand conditions in the
market  for  commercial  and retail  space,  and,  as such,  may be subject to a
greater extent than residential  loans to adverse  conditions in the real estate
market and in the economy generally.

     Construction Lending.  Construction loans include loans for the acquisition
and   development   of  land  as  well  as  loans   for  the   construction   of
income-producing properties and residential properties. The maximum term of such
loans is 24 months with the first 12 months  allocated  to  development  and the
remaining  12 months  for sale of the  developed  property.  The Bank  generally
requires that the borrower's  estimates of development and construction costs be
evaluated  by a qualified  engineer  hired by the Bank but at the expense of the
borrower.  Generally, interest payments only are required during the term of the
loan with  interest  based on a floating  rate  equal to the  Bank's  commercial
lending base rate or some increment over that rate.  Fees equal to 1-1.5% of the
loan amount generally are charged.  The Bank's  construction  loans generally do
not exceed 70% of the lesser of the total cost of  development  or the appraised
value of the developed  property.  Since the primary source of repayment for the
loan is sales of the developed  lots,  the Bank requires that release prices for
individual  lots be calculated  such that the loan is repaid in full once 80% of
the land value in the project has been sold and released.

     Residential  Real Estate  Lending.  Prior to 1994, the  Corporation and the
Bank had engaged in mortgage origination,  underwriting,  servicing and document
custodian  services.  Mortgage  loans  were sold in the  secondary  market  with
servicing  retained.  During the first  quarter of 1994,  the  Corporation  sold
substantially  all of its servicing  rights and  outsourced  the  origination of
mortgage loans. The outsourcing arrangement has since expired.

     Installment  Lending.  The Bank's  installment  loans  include new and used
automobile loans,  secured and unsecured  personal loans,  second mortgage loans
and home equity lines of credit. Generally, personal loans have a four year term
and new  automobile  installment  loans  have a  maximum  term  of  five  years.
Installment  loans for the purchase of a used  automobile have a maximum term of
four years.  Second  mortgage loans have a maximum term of 20 years,  while home
equity lines of credit are  revolving  and payment  terms are based on a 15 year
amortization.  The  Bank  will  lend up to 80% of the  purchase  price  of a new
automobile and, with respect to used automobiles,  75% of the lesser of National
Automobile  Dealers  Association  (NADA) loan value or equivalent  loan value or
sales price if a purchase.  For home equity lines of credit and second  mortgage
loans,  the combination of all existing loans on the property plus the requested
loan may not exceed 75% of the property's  value. With respect to all automobile
loans and home equity and second  mortgage  loans,  the  borrower is required to
maintain hazard insurance naming the Bank as loss payee in an amount  sufficient
to  repay  the loan in full in the  event of  damage  to the  collateral.  Loans
secured by  subordinate  mortgages  on real estate  where the prior  mortgage is
$250,000 or greater, or where the loan amount exceeds $50,000,  require approval
either  from the  Department  Supervisor,  the  in-charge  lending  Senior  Vice
President, President or Chairman of the Board.

     Loan  Concentrations.  The Bank grants various  commercial and  installment
loans,  principally in northern New Jersey. A substantial  portion of the Bank's
commercial loan portfolio consists of loans for which the purpose was to acquire
or develop  real  estate or for which the  primary  source or  repayment  is the
liquidation  of the real estate  held as  collateral.  Substantially  all of the
commercial  real estate  securing  such loans is located in northern New Jersey.
The ability of  borrowers of such loans to repay them in  accordance  with their
terms, and the ability of the Corporation to realize  recoveries in the event of
their default,  are highly  dependent upon conditions in the northern New Jersey
real estate industry.


                                        9

<PAGE>


     The  Bank's  loan  portfolio  has  certain   concentrations  of  affiliated
borrowers.  The  three  largest  concentrations,  all of which are  involved  in
commercial and residential  real estate  development  and management,  aggregate
$31,245,000  and  $32,605,000 at December 31, 1997 and 1996,  respectively.  The
largest  borrower  concentration  consists  of loans  to a group  of  affiliated
borrowers with an aggregate  balance of $15,011,000  and $15,157,000 at December
31, 1997 and 1996,  respectively.  A majority of these loans is secured by first
mortgages on commercial properties where third-party loan payments paid directly
to the Bank are the primary source of repayment.

     A second  relationship  consists of loans primarily for the construction or
renovation of condominium units,  totaling $8,209,000 and $7,222,000 at December
31, 1997 and 1996, respectively.

     The third  concentration  involves loans to certain  affiliated real estate
development   companies   whose   principal   owners  have  had  a  longstanding
relationship with the Bank.  Outstanding balances for this group at December 31,
1997 and 1996 were $8,025,000 and $10,226,000, respectively. One commercial loan
of $2.1 million from these  concentrations  became  nonperforming  subsequent to
December 31, 1997.

Nonbank Subsidiaries

     RFC High Ridge,  Inc.,  RFC Harmony Park,  Inc.,  RFC National,  Inc.,  RFC
Center Plaza,  Inc. and RFC High Debi Hills,  Inc. were  organized in 1991.  RFC
Jefferson,  Inc. was organized in 1992 and RFC Deer Trail, Inc. was organized in
1993.  Three of the above  nonbank  subsidiaries  currently  hold real estate or
other collateral which was acquired through  foreclosure of, or which was deeded
in lieu of  foreclosure  from,  previously  contracted  debt;  the remainder are
inactive.  Another  nonbank  subsidiary,  RFC CKN,  Inc., was dissolved in 1997.
Ramapo  Investment  Corporation was organized in 1986 for the purpose of holding
certain  investments of the Bank.  All of these  corporations  are  wholly-owned
subsidiaries of the Bank.

     The Corporation  also has a one-third  interest in Bancorps'  International
Trading  Corporation,  a multi-bank  holding  company-sponsored  export  trading
company, which ceased operations during 1991.

Competition

     The Corporation encounters competition primarily in seeking deposits and in
obtaining loan  customers.  The level of competition for deposits is quite high.
The  Corporation's  principal  competitors  for  deposits  are  other  financial
institutions  within a few miles of the Bank's  offices,  including other banks,
savings institutions, and credit unions. Competition among these institutions is
based  primarily on interest rates offered,  service  charges imposed on deposit
accounts,  the  quality of services  rendered,  and the  convenience  of banking
facilities.  The Corporation's  competitors are generally permitted,  subject to
regulatory approval,  to establish branches throughout the Corporation's market.
Additional competition for depositors' funds comes from United States Government
securities,   private  issuers  of  debt  obligations  and  suppliers  of  other
investment alternatives for depositors, such as securities firms.

     The  Corporation  also  competes  in  its  lending  activities  with  other
financial institutions such as savings institutions,  credit unions,  securities
firms, insurance companies,  small loan companies,  finance companies,  mortgage
companies  and  other  sources  of  funds.  Many  of the  Corporation's  nonbank
competitors  are not  subject to the same  extensive  federal  regulations  that
govern bank holding  companies and federally  insured banks or state regulations
governing  state-chartered  banks. As a result,  such nonbank  competitors  have
advantages  over the  Corporation  in providing  certain  services.  Many of the
financial  institutions with which the Corporation  competes in both lending and
deposit activities are larger than the Corporation.

Employees

     As  of  December  31,  1997,  the  Corporation  and  its  subsidiaries  had
approximately  110  full-time  equivalent  employees.  None of the employees are
subject to a collective  bargaining  agreement.  The  Corporation  considers its
relationships with its employees to be good.


                                       10

<PAGE>


Regulation, Supervision and Governmental Policy

     The banking industry is highly regulated. Statutory and regulatory controls
increase a bank holding company's cost of doing business, limit its management's
options to deploy assets and maximize income,  and may  significantly  limit the
activities  of  institutions  which  do not  meet  regulatory  capital  or other
requirements. Areas subject to regulation and supervision by the bank regulatory
agencies include,  among others:  minimum capital levels;  dividends;  affiliate
transactions; expansion of locations; acquisitions and mergers; reserves against
deposits; deposit insurance premiums; credit underwriting standards;  management
and internal  controls;  investments;  and general safety and soundness of banks
and bank holding companies. Supervision,  regulation and examination of the Bank
and the Corporation by the bank regulatory  agencies are intended  primarily for
the protection of depositors,  the  communities  served by the  institutions  or
other  governmental  interests,  rather than for holders of stock of the Bank or
the Corporation.

     The following is a brief summary of certain statutes, rules and regulations
affecting  the  Corporation  and the  Bank.  A  number  of  other  statutes  and
regulations and governmental  policies have an impact on their  operations.  The
Corporation  is unable to predict the nature or the extent of the effects on its
business and earnings that fiscal or monetary policies,  economic control or new
federal or state legislation may have in the future.  The following summary does
not purport to be complete and is qualified in its entirety by reference to such
statutes and regulations.

     Bank Holding  Company  Regulation.  The Corporation is registered as a bank
holding  company  under the Bank  Holding  Company Act of 1956,  as amended (the
"Holding  Company  Act"),  and,  as such,  is subject  to  regular  examination,
supervision and regulation by the Federal  Reserve.  The Corporation is required
to file  reports  with  the  Federal  Reserve  and to  furnish  such  additional
information as the Federal  Reserve may require  pursuant to the Holding Company
Act. The Corporation also is subject to regulation by the Department.

     A policy of the Federal Reserve requires the Corporation to act as a source
of financial and  managerial  strength to the Bank,  and to commit  resources to
support the Bank. In addition, any loans by the Corporation to the Bank would be
subordinate  in right of payment to deposits and certain other  indebtedness  of
the  Bank.  The  Corporation,  however,  does  not  have  significant  financial
resources apart from its investment in the Bank. The Federal Reserve has adopted
guidelines  regarding  the capital  adequacy  of bank  holding  companies  which
require them to maintain specified minimum ratios of capital to total assets and
capital to risk-weighted assets.

     Holding Company Activities.  With certain  exceptions,  the Holding Company
Act prohibits a bank holding company from acquiring direct or indirect ownership
or control of more than 5% of the voting  shares of a company that is not a bank
or a bank holding company, or from engaging directly or indirectly in activities
other than  those of  banking,  managing  or  controlling  banks,  or  providing
services for its subsidiaries.  The principal  exceptions to these  prohibitions
involve  certain  nonbank  activities  which,  by statute or by Federal  Reserve
regulation or order,  have been identified as activities  closely related to the
business of banking. The Corporation's activities are subject to these legal and
regulatory limitations under the Holding Company Act and related Federal Reserve
regulations.  Notwithstanding  the Federal  Reserve's prior approval of specific
nonbanking  activities,  the  Federal  Reserve  has the power to order a holding
company or its  subsidiaries  to terminate  any  activity,  or to terminate  its
ownership or control of any subsidiary,  when it has reasonable cause to believe
that the continuation of such activity or such ownership or control  constitutes
a serious  risk to the  financial  safety,  soundness  or  stability of any bank
subsidiary  of  that  holding   company.   Bank  holding   companies  and  their
subsidiaries are also prohibited from engaging in certain tie-in arrangements in
connection  with any  extension  of  credit  or  provision  of any  property  or
services.

                                       11

<PAGE>



     Acquisitions of Bank Holding Companies and Banks. Under the Holding Company
Act, any company must obtain  approval of the Federal Reserve prior to acquiring
control of the Corporation or the Bank. For purposes of the Holding Company Act,
"control"  is  defined  as  ownership  of more  than 25% of any  class of voting
securities of the  Corporation  or the Bank, the ability to control the election
of a majority of the directors,  or the exercise of a controlling influence over
management or policies of the Corporation or the Bank.

     Under the Holding Company Act, a bank holding company must obtain the prior
approval  of the  Federal  Reserve  before  (i)  acquiring  direct  or  indirect
ownership or control of any voting  shares of any bank or bank  holding  company
if,  after  such  acquisition,  the  bank  holding  company  would  directly  or
indirectly  own or control more than 5% of such  shares;  (2)  acquiring  all or
substantially all of the assets of another bank or bank holding company;  or (3)
merging  or  consolidating  with  another  bank  holding  company.  Satisfactory
financial  condition,   particularly  with  regard  to  capital  adequacy,   and
satisfactory   Community   Reinvestment   Act  ("CRA")  ratings   generally  are
prerequisites to obtaining federal regulatory approval to make acquisitions. The
Bank was  notified in 1996 that it had received a  "Satisfactory"  CRA rating by
the FDIC  based on the  FDIC's CRA  examination  as of  December  31,  1995.  In
addition,  the Corporation is subject to various  requirements  under New Jersey
laws  concerning  future  acquisitions,  and a company  desiring  to acquire the
Corporation  also may be subject to such laws,  depending upon the nature of the
acquiror and the means by which the acquisition would be accomplished.

     The Holding  Company Act  prohibits the Federal  Reserve from  approving an
application by a bank holding company to acquire voting shares of a bank located
outside  the  state  in which  the  operations  of the  holding  company's  bank
subsidiaries   are  principally   conducted,   unless  such  an  acquisition  is
specifically  authorized  by state  law.  The State of New  Jersey  has  enacted
reciprocal  interstate  banking  statutes that authorize banks and their holding
companies  in New Jersey to be acquired by banks or their  holding  companies in
states which also have enacted reciprocal banking  legislation,  and permits New
Jersey banks and their holding  companies to acquire banks in such other states.
The  Holding  Company  Act  does  not  place  territorial  restrictions  on  the
activities of nonbank subsidiaries of bank holding companies.

     The Change in Bank Control Act and the related  regulations  of the Federal
Reserve  require any person or persons  acting in concert  (except for companies
required to make  application  under the Holding  Company Act) to file a written
notice  with the  Federal  Reserve  before  such  person or persons  may acquire
control of the  Corporation  or the Bank. The Change in Bank Control Act defines
"control"  as the  power,  directly  or  indirectly,  to vote 25% or more of any
voting  securities  or to direct the  management  or policies of a bank  holding
company  or an  insured  bank.  Federal  Reserve  regulations  provide  that  an
acquisition  of voting  securities of a bank holding  company which results in a
person or group which is acting in concert  owning,  controlling  or holding the
power to vote 10% or more or any class of voting  securities of the bank holding
company will be presumed to constitute  the  acquisition  of control if the bank
holding company has registered  securities under the Securities  Exchange Act of
1934 or if no other person will own, control or hold the power to vote a greater
percentage of the class of voting securities immediately after the transaction.

     Holding Company  Dividends and Stock  Repurchases.  The Federal Reserve has
the power to prohibit  bank  holding  companies  from paying  dividends if their
actions  are deemed to  constitute  unsafe or  unsound  practices.  The  Federal
Reserve has issued a policy  statement on the payment of cash  dividends by bank
holding  companies.  The policy statement  expresses the Federal  Reserve's view
that a bank holding  company  should pay cash  dividends only to the extent that
the  company's net income for the past year is sufficient to cover both the cash
dividends and a rate of earnings retention that is consistent with the company's
capital needs, asset quality and overall financial condition.

     As a bank holding company,  the Corporation is required to give the Federal
Reserve  prior written  notice of any purchase or redemption of its  outstanding
equity  securities if the gross  consideration  for the purchase or  redemption,
when  combined  with  the net  consideration  paid  for all  such  purchases  or
redemptions  during  the  preceding  12  months,  is equal to 10% or more of the
Corporation's  consolidated net worth. The Federal Reserve may disapprove such a
purchase or redemption if it determines that the proposal would violate any law,
regulation,  Federal Reserve order,  directive,  or any condition imposed by, or
written agreement with, the Federal Reserve. In

                                       12

<PAGE>



addition,  the Written  Agreement  required the  Corporation  to obtain  written
approval from the FRB prior to redeeming or repurchasing  any of its outstanding
stock while it was in effect.

     Bank  Regulation.  As a  state-chartered  bank which is not a member of the
Federal Reserve System,  the Bank is subject to the primary federal  supervision
of the FDIC under the Federal  Deposit  Insurance  Act (the  "FDIA").  The prior
approval of the FDIC is required  for the Bank to establish or relocate a branch
office or to engage in any merger, consolidation or significant purchase or sale
of assets.  The Bank also is subject to regulation and supervision by the State.
In  addition,  the Bank is  subject  to  numerous  federal  and  state  laws and
regulations  which set forth specific  restrictions and procedural  requirements
with respect to the  establishment of branches,  investments,  interest rates on
loans,  credit practices,  the disclosure of credit terms and  discrimination in
credit transactions.

      The FDIC  and the  State  regularly  examine  the  Bank's  operations  and
condition,   including  capital  adequacy,   reserves,  loans,  investments  and
management  practices.  These  examinations are for the protection of the Bank's
depositors and the Bank Insurance Fund ("BIF") and not the Corporation. The Bank
is also required to furnish quarterly and annual reports to the FDIC. The FDIC's
enforcement  authority  includes the power to remove  officers and directors and
the  authority  to issue  orders to  prevent a bank from  engaging  in unsafe or
unsound practices or violating laws or regulations governing its business.

     The FDIC has adopted  regulations  regarding the capital  adequacy of banks
subject to its primary  supervision.  Such  regulations  require  those banks to
maintain  specified  minimum  ratios of capital to total  assets and  capital to
risk-weighted assets. See "--Regulatory Capital Requirements."

     Statewide  branching  is  permitted  in New Jersey.  Branch  approvals  are
subject to statutory  standards  relating to safety and soundness,  competition,
public convenience and CRA performance.

     Bank Dividends.  New Jersey law permits the Bank to declare a dividend only
if, after payment of the  dividends,  its capital  would be  unimpaired  and its
remaining  surplus  would  equal at least 50 percent of its  capital.  Under the
FDIA, the Bank is prohibited  from  declaring or paying  dividends or making any
other capital  distribution if, after that distribution,  the Bank would fail to
meet its  regulatory  capital  requirements.  Prior to March 21, 1996,  the Bank
operated under regulatory  agreements with the FDIC and the State which affected
the payment of dividends. From November, 1992 to May, 1995, the Order prohibited
the Bank from  paying  dividends.  From May,  1995 to March  21,  1996,  the MOU
required  the Bank to  obtain  permission  from the  FDIC and the  State  before
declaring and paying dividends. The MOU was terminated effective March 21, 1996.
The FDIC also has  authority to prohibit the payment of dividends by a bank when
it determines  such payment to be an unsafe and unsound  banking  practice.  The
FDIC may  prohibit  bank  holding  companies  of banks  which  are  deemed to be
"significantly undercapitalized" under the FDIA or which fail to properly submit
and  implement  capital  restoration  plans  required  by the FDIC  from  paying
dividends or making other capital  distributions  without the FDIC's permission.
See "--Holding Company Dividends and Stock Repurchases."

     Restrictions  Upon  Intercompany  Transactions.  The  Bank  is  subject  to
restrictions  imposed by federal  law on  extensions  of credit to, and  certain
other transactions with, the Corporation and other affiliates. Such restrictions
prevent the  Corporation  and its affiliates from borrowing from the Bank unless
the loans are secured by specified collateral,  and require such transactions to
have terms comparable to terms of arms-length  transactions  with third persons.
Such  transactions  by the  Bank  are  generally  limited  in  amount  as to the
Corporation  and as to any other  affiliate  to 10% of the  Bank's  capital  and
surplus.  As to the Corporation and all other  affiliates such  transactions are
limited  to an  aggregate  of 20% of  the  Bank's  capital  and  surplus.  These
regulations and restrictions may limit the Corporation's ability to obtain funds
from the Bank for its cash  needs,  including  funds  for  acquisitions  and for
payment of dividends, interest and operating expenses.

     Real Estate Lending  Guidelines.  Under FDIC regulations,  state banks must
adopt  and  maintain  written  policies  establishing   appropriate  limits  and
standards for  extensions of credit that are secured by liens on or interests in
real estate or that are made for the purpose of financing permanent improvements
to real estate. These policies

                                      13

<PAGE>


must establish loan portfolio  diversification  standards,  prudent underwriting
standards (including  loan-to-value limits that are clear and measurable),  loan
administration   procedures   and   documentation,    approval   and   reporting
requirements.  A bank's real estate lending policy must reflect consideration of
the Interagency  Guidelines for Real Estate Lending  Policies (the  "Interagency
Guidelines")  that  have  been  adopted  by the  federal  bank  regulators.  The
Interagency Guidelines, among other things, call upon depository institutions to
establish  internal  loan-to-value  limits for real estate loans that are not in
excess of the loan-to-value  limits specified in the Interagency  Guidelines for
the various  types of real  estate  loans.  The  Interagency  Guidelines  state,
however, that it may be appropriate in individual cases to originate or purchase
loans  with  loan-to-value  ratios in excess  of the  supervisory  loan-to-value
limits.

     Deposit  Insurance.  Since  the  Bank is an FDIC  member  institution,  its
deposits are currently  insured to a maximum of $100,000 per  depositor  through
the BIF,  administered  by the FDIC. The Bank is also required to pay semiannual
deposit insurance premium assessments to the FDIC.

     The  Federal  Deposit  Insurance   Corporation   Improvement  Act  of  1991
("FDICIA")  included  provisions to reform the federal deposit insurance system,
including the  implementation of risk-based deposit insurance  premiums.  FDICIA
permits the FDIC to make special assessments on insured depository  institutions
in amounts determined by the FDIC to be necessary to give it adequate assessment
income to repay amounts borrowed from the U.S. Treasury and other sources or for
any other purpose the FDIC deems necessary. Under a risk-based insurance premium
system which became permanent during 1994, banks are assessed insurance premiums
according  to how much risk they are deemed to  present  to the BIF.  Banks with
higher levels of capital and involving a low degree of  supervisory  concern are
assessed lower premiums than banks with lower levels of capital and/or involving
a higher degree of supervisory concern. Specifically, the assessment rate for an
insured depository institution depends upon the risk classification  assigned to
the  institution  by the FDIC based  upon the  institution's  capital  level and
supervisory  evaluations.  Institutions  are  assigned  to one of three  capital
groups--well capitalized,  adequately capitalized or  undercapitalized--based on
the data  reported  to  regulators  for the date  closest to the last day of the
seventh month  preceding the  semiannual  assessment  period.  Well  capitalized
institutions are institutions  satisfying the following capital ratio standards:
(i) total risk-based  capital ratio of 10.0% or greater;  (ii) Tier 1 risk-based
capital  ratio of 6.0% or  greater;  and (iii) Tier 1 leverage  ratio of 5.0% or
greater.  Adequately capitalized  institutions are institutions that do not meet
the standards for well  capitalized  institutions but that satisfy the following
capital ratio standards:  (i) total risk-based capital ratio of 8.0% or greater;
(ii) Tier 1  risk-based  capital  ratio of 4.0% or  greater;  and  (iii)  Tier 1
leverage  ratio of 4.0% or  greater.  Undercapitalized  institutions  consist of
institutions  that do not qualify as either "well  capitalized"  or  "adequately
capitalized."  Within each capital  group,  institutions  are assigned to one of
three  subgroups on the basis of supervisory  evaluations  by the  institution's
primary supervisory  authority and such other information as the FDIC determines
to be relevant to the  institution's  financial  condition and the risk posed to
the  deposit   insurance  fund.   Subgroup  A  consists  of  financially   sound
institutions  with  only  a  few  minor  weaknesses.   Subgroup  B  consists  of
institutions that demonstrate weaknesses that, if not corrected, could result in
significant  deterioration  of the institution and increased risk of loss to the
deposit  insurance  fund.  Subgroup  C  consists  of  institutions  that  pose a
substantial  probability of loss to the deposit  insurance fund unless effective
corrective  action is taken.  Effective  January  1, 1996 the  assessment  rates
ranged from 0.00% to 0.27% of  deposits.  Since July 1, 1995,  the Bank has been
deemed well capitalized for insurance  assessment  purposes.  The Bank's deposit
assessment rate for 1997 was 0.00%.

     The Deposit  Insurance Act of 1996  authorized  the  Financing  Corporation
("FICO") to levy assessments on BIF-assessable  deposits and stipulated that the
rate must equal  one-fifth the FICO  assessment rate that is applied to deposits
assessable by the Savings  Association  Insurance Fund. The rates,  which change
quarterly, established for the Bank for 1997 ranged from .01260% to .01300%. The
rate for the first quarter of 1998 was set at .01256%.

     Standards  for Safety and  Soundness.  Under FDICIA,  each federal  banking
agency is required to prescribe, by regulation,  noncapital safety and soundness
standards for institutions  under its authority.  The federal banking  agencies,
including  the  Federal  Reserve  and the FDIC,  have  adopted  the  Interagency
Guidelines  Establishing Standards for Safety and Soundness which cover internal
controls,  information  systems and internal audit systems,  loan documentation,
credit underwriting,  interest rate exposure, asset growth, compensation,  fees,
benefits, and

                                       14

<PAGE>


standards for asset quality and earnings sufficiency. An institution which fails
to meet any of these standards, when they are established,  would be required to
develop  a  plan  acceptable  to the  agency,  specifying  the  steps  that  the
institution will take to meet the standards. Failure to submit or implement such
a plan may subject the  institution  to regulatory  sanctions.  The  Corporation
believes the Bank meets all of the standards which have been adopted.

     Enforcement  Powers. The bank regulatory  agencies have broad discretion to
issue cease and desist  orders if they  determine  that the  Corporation  or its
subsidiaries are engaging in "unsafe or unsound banking practices." In addition,
the federal  bank  regulatory  authorities  may impose  substantial  civil money
penalties for violations of certain  federal banking  statutes and  regulations,
violation of a fiduciary  duty,  or violation of a final or temporary  cease and
desist order,  among other things.  Financial  institutions and a broad range of
persons associated with them are subject to the imposition of fines,  penalties,
and other enforcement actions based upon the conduct of their relationships with
the institutions.

     Under the FDIA,  the FDIC may be appointed as a conservator or receiver for
a  depository  institution  based  upon a number  of events  and  circumstances,
including:  (i)  consent  by the board of  directors  of the  institution;  (ii)
cessation  of the  institution's  status as an insured  depository  institution;
(iii) the  institution  is  undercapitalized  and has no reasonable  prospect of
becoming  adequately  capitalized  when  required  to do so,  fails to submit an
acceptable  capital plan or materially fails to implement an acceptable  capital
plan;  (iv) the  institution  is  critically  undercapitalized  or otherwise has
substantially insufficient capital; (v) appointment of a conservator or receiver
by a state banking authority,  such as the State; (vii) the institution's assets
are less than its  obligations to its creditors and others;  (viii)  substantial
dissipation  in the  institution's  assets or earnings  due to  violation of any
statute or regulation or unsafe or unsound practice; (ix) a willful violation of
a cease  and  desist  order  that has  become  final;  (x) an  inability  of the
institution to pay its obligations or meet its depositors' demands in the normal
course of business;  or (xi) any concealment of the institution's books, records
or assets or refusal to submit to  examination.  The  Corporation has few assets
other than its  investment  in the Bank.  In the event of the  appointment  of a
receiver or  conservator  for the Bank,  any  remaining  equity  interest of the
Corporation in the Bank and of the  Corporation's  stockholders  would likely be
eliminated.

     Under the FDIA,  the FDIC as a  conservator  or  receiver  of a  depository
institution has express  authority to repudiate  contracts with such institution
which it determines to be  burdensome  or if such  repudiation  will promote the
orderly  administration  of  the  institution's   affairs.   Certain  "qualified
financial  contracts",   defined  to  include  securities  contracts,  commodity
contracts,  forward  contracts,  repurchase  agreements,  and  swap  agreements,
generally are excluded from the repudiation powers of the FDIC. The FDIC is also
given  authority  to  enforce   contracts  made  by  a  depository   institution
notwithstanding any contractual  provision  providing for termination,  default,
acceleration,  or exercise of rights upon, or solely by reason of, insolvency or
the appointment of a conservator or receiver.  Insured  depository  institutions
also are prohibited from entering into contracts for goods, products or services
which would adversely affect the safety and soundness of the institutions.

     Regulatory  Capital  Requirements.  The  Federal  Reserve and the FDIC have
established  guidelines with respect to the maintenance of appropriate levels of
capital by bank holding companies and state-chartered banks that are not members
of the Federal  Reserve  System ("state  nonmember  banks"),  respectively.  The
regulations impose two sets of capital adequacy  requirements:  minimum leverage
rules,  which  require bank holding  companies and banks to maintain a specified
minimum ratio of capital to total assets,  and risk-based  capital rules,  which
require   the   maintenance   of   specified   minimum   ratios  of  capital  to
"risk-weighted" assets.

     The  regulations  of the Federal  Reserve and the FDIC require bank holding
companies  and state  non-member  banks,  respectively,  to  maintain  a minimum
leverage  ratio  of "Tier 1  capital"  (as  defined  in the  risk-based  capital
guidelines  discussed  in the  following  paragraphs)  to total  assets of 3.0%.
Although  setting a minimum 3.0% leverage ratio, the capital  regulations  state
that only the  strongest  bank  holding  companies  and  banks,  with  composite
examination  ratings  of 1 under the  rating  system  used by the  federal  bank
regulators,  would be  permitted  to  operate at or near such  minimum  level of
capital.  All other bank holding  companies and banks are expected to maintain a
leverage  ratio of at least 1% to 2% above the minimum  ratio,  depending on the
assessment  of an  individual  organization's  capital  adequacy  by its primary
regulator.  Any  bank or  bank  holding  company  experiencing  or  anticipating
significant  growth would be expected to maintain capital well above the minimum
levels. In addition,

                                       15

<PAGE>



the Federal Reserve has indicated that whenever  appropriate,  and in particular
when a bank holding company is undertaking  expansion,  seeking to engage in new
activities or otherwise facing unusual or abnormal risks, it will consider, on a
case-by-case  basis,  the level of an  organization's  ratio of tangible  Tier 1
capital (after  deducting all  intangibles) to total assets in making an overall
assessment of capital.

     The  risk-based  capital rules of the Federal  Reserve and the FDIC require
bank holding companies and state nonmember banks to maintain minimum  regulatory
capital  levels based upon a weighting  of their  assets and off- balance  sheet
obligations  according  to risk.  The  risk-based  capital  rules have two basic
components:  a Tier 1 or core capital  requirement and a Tier 2 or supplementary
capital  requirement.  Tier 1 capital consists primarily of common stockholders'
equity,  certain  perpetual  preferred stock (which must be  noncumulative  with
respect to banks), and minority interests in the equity accounts of consolidated
subsidiaries;  less most intangible assets,  primarily goodwill.  Tier 2 capital
elements include,  subject to certain  limitations,  the allowance for losses on
loans and leases; perpetual preferred stock that does not qualify for Tier 1 and
long-term  preferred  stock with an original  maturity of at least 20 years from
issuance;  hybrid capital  instruments,  including  perpetual debt and mandatory
convertible  securities;  and subordinated debt and intermediate-term  preferred
stock.

     The risk-based  capital  regulations assign balance sheet assets and credit
equivalent  amounts of off-balance  sheet  obligations to one of four broad risk
categories  based  principally on the degree of credit risk  associated with the
obligor.  The assets and off-balance sheet items in the four risk categories are
weighted  at 0%,  20%,  50% and  100%.  These  computations  result in the total
risk-weighted assets. Most loans are assigned to the 100% risk category,  except
for first  mortgage  loans fully  secured by  residential  property  and,  under
certain circumstances, residential construction loans, both of which carry a 50%
rating. Most investment securities are assigned to the 20% category,  except for
municipal  or state  revenue  bonds,  which have a 50%  risk-weight,  and direct
obligations of or obligations guaranteed by the United States Treasury or United
States  Government  agencies,  which  have  a  0%  risk-weight.   In  converting
off-balance sheet items, direct credit substitutes, including general guarantees
and standby letters of credit backing  financial  obligations,  are given a 100%
conversion  factor.  Transaction-related  contingencies such as bid bonds, other
standby letters of credit and undrawn  commitments,  including commercial credit
lines  with an initial  maturity  of more than one year,  have a 50%  conversion
factor.  Short-term,  self-liquidating trade contingencies are converted at 20%,
and short-term commitments have a 0% factor.

     The  risk-based  capital  regulations  require  all banks and bank  holding
companies to maintain a minimum  ratio of total  capital to total  risk-weighted
assets of 8%, with at least 4% as core capital.  For the purpose of  calculating
these ratios, (i) supplementary  capital is limited to no more than 100% of core
capital, and (ii) the aggregate amount of certain types of supplementary capital
is limited. In addition,  the risk-based capital regulations limit the allowance
for loan losses which may be included as capital to 1.25% of total risk-weighted
assets.

     FDICIA required the federal banking  regulators to revise their  risk-based
capital rules to take adequate  account of interest rate risk,  concentration of
credit risk, and the risks of  nontraditional  activities.  The federal  banking
regulators,  including the Federal Reserve and the FDIC, have issued a new rule,
effective  January  1,  1997,  that  would add a market  risk  component  to the
currently  effective  risk-based  capital  standards.  Under the new rule,  bank
holding  companies  and banks  with  higher  exposures  to  market  risk such as
interest  rate risk may be  required to maintain  higher  levels of capital.  In
addition,  the federal banking regulators have proposed  regulations which allow
the FDIC to increase  regulatory  capital  requirements on a case-by-case  basis
based upon the factors including the level and severity of problem and adversely
classified assets and loan portfolio and other concentrations of credit risk.

     At December  31,  1997,  the  Corporation's  total  risk-based  capital and
leverage capital ratios were 16.5% and 10.5%,  respectively.  The minimum levels
established   by  the   regulators   for  these  measures  are  8.0%  and  3.0%,
respectively.

     FDICIA also required the federal  banking  regulators  to classify  insured
depository  institutions by capital levels and to take various prompt corrective
actions to resolve  the  problems of any  institution  that fails to satisfy the
capital  standards.  The FDIC has issued final  regulations  establishing  these
capital levels and otherwise  implementing  FDICIA's  prompt  corrective  action
provisions. Under FDICIA and these regulations, all institutions,

                                      16

<PAGE>





regardless  of their  capital  levels,  are  restricted  from making any capital
distribution  or paying any management  fees that would cause the institution to
fail to satisfy the minimum levels for any of its capital requirements.

     Under the FDIC's prompt corrective action regulation,  a "well capitalized"
bank is one that is not subject to any regulatory order or directive to meet any
specific  capital level and that has or exceeds the following  capital levels: a
total risk-based  capital ratio of 10%, a Tier 1 risk-based capital ratio of 6%,
and a leverage  ratio of 5%. An "adequately  capitalized"  bank is one that does
not qualify as "well  capitalized"  but meets or exceeds the  following  capital
requirements:  a total  risk-based  capital  ratio  of 8%,  a Tier 1  risk-based
capital  ratio of 4%,  and a  leverage  ratio of either (i) 4% or (ii) 3% if the
bank has the highest  composite  examination  rating.  A bank not meeting  these
criteria    will    be    treated    as    "undercapitalized,"    "significantly
undercapitalized," or "critically  undercapitalized"  depending on the extent to
which to which the bank's capital levels are below these standards.  A bank that
falls within any of the three  "undercapitalized"  categories established by the
prompt corrective action regulation will be: (i) subject to increased monitoring
by the  appropriate  federal  banking  regulator;  (ii)  required  to  submit an
acceptable  capital  restoration  plan  within 45 days;  (iii)  subject to asset
growth  limits;  and (iv)  required  to obtain  prior  regulatory  approval  for
acquisitions,  branching and new lines of  businesses.  The capital  restoration
plan must  include a guarantee  by the  institution's  holding  company that the
institution  will comply with the plan until it has been adequately  capitalized
on average for four consecutive quarters,  under which the holding company would
be liable up to the lesser of 5% of the institution's total assets or the amount
necessary to bring the  institution  into capital  compliance  as of the date it
failed  to  comply  with  its  capital   restoration   plan.   A   significantly
undercapitalized  institution, as well as any undercapitalized  institution that
did not  submit an  acceptable  capital  restoration  plan,  will be  subject to
regulatory demands for recapitalization,  broader application of restrictions on
transactions  with  affiliates,  limitations on interest rates paid on deposits,
asset  growth  and other  activities,  possible  replacement  of  directors  and
officers,  and restrictions on capital distributions by any bank holding company
controlling  the  institution.  Any company  controlling  the institution may be
required  to divest  its  interest  in the  institution.  The  senior  executive
officers of a significantly undercapitalized institution may not receive bonuses
or increases in compensation  without prior approval.  If an institution's ratio
of  tangible  capital to total  assets  falls below a level  established  by the
appropriate  federal banking regulator,  which may not be less than 2%, nor more
than 65% of the minimum tangible capital level otherwise required (the "critical
capital  level"),   the  institution  will  be  subject  to  conservatorship  or
receivership  within  90 days  unless  periodic  determinations  are  made  that
forbearance  from such action would better protect the deposit  insurance  fund.
Unless  appropriate  findings  and  certifications  are made by the  appropriate
federal bank regulatory agencies, a critically undercapitalized institution must
be placed in receivership if it remains critically  undercapitalized  on average
during  the  calendar  quarter  beginning  270 days  after  the  date it  became
critically undercapitalized.

     Based on its  examination  as of December 31, 1995,  the FDIC  informed the
Bank that the Bank was "well  capitalized"  under the FDIC's  prompt  corrective
action regulation.

     Federal regulators have the authority to increase the capital  requirements
applicable to banks and bank holding companies in general and to the Corporation
and the Bank in particular. Although no such increases in requirements have been
announced or are  anticipated,  there can be no assurance  that federal  banking
regulators will not impose such higher  requirements in the future,  or that the
Bank would be able to obtain  approval of a new or amended capital plan designed
to restore capital to such higher levels.

Item 2.  Properties.

     The  following  table sets forth the  location  of and  certain  additional
information  regarding  the  Corporation's  offices at December  31,  1997.  The
Corporation owns all of its offices except as indicated.



                                      17

<PAGE>


                  Year     Total       Total      Net Book      Approximate
Branch           Opened  Deposits    Investment     Value      Square Footage
------           ------  --------    ----------   --------     --------------
                                (Dollars in thousands)

Main office      1980    $51,293     $ 1,701       $  979          23,000
Packanack        1967     52,145         664          319           4,000
Valley           1972     46,976         731          444           8,000
Clifton          1974     25,516          56            9(1)        2,000
North Haledon    1986(2)  20,688          58          -- (3)        2,000
Butler           1986(2)  41,435         240          113(3)        2,000
Fairfield        1996      7,768           4            2(3)        2,000
Parsippany       1997      3,939(4)      --           -- (3)        1,900

----------
(1)  Land lease.
(2)  Date acquired.
(3)  Leased.
(4)  Opened August, 1997

     The  net  book  value  of the  Corporation's  investment  in  premises  and
equipment  totalled  approximately  $3.2  million at December  31,  1997.  For a
discussion  of  premises  and  equipment,  see Note 6 of  Notes to  Consolidated
Financial  Statements  contained  in the  Corporation's  1997  Annual  Report to
Stockholders.

Item 3. Legal Proceedings.

     The Corporation and its subsidiaries are parties, in the ordinary course of
business, to litigation involving collection matters,  contract claims and other
miscellaneous causes of action arising from their business.  Management does not
consider that any such proceedings  depart from usual routine  litigation and in
its judgment,  neither the Corporation's consolidated financial position nor its
results of operations will be affected materially by any present proceedings.

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

     No matters were  submitted to a vote of security  holders during the fourth
quarter of the fiscal year ended December 31, 1997.


                                      18

<PAGE>


                                     PART II

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters.

     Dividend Policy. Commencing with the third quarter of 1996, the Corporation
has declared quarterly dividends.  Prior to these declarations,  no dividend had
been paid since February, 1992, when an annual dividend was paid. The payment of
dividends in the future is predicated upon the continued  profitable  operations
of the Corporation.

     All other required  information is  incorporated by reference to Page 42 of
the Corporation's 1997 Annual Report to Stockholders.

Item 6.  Selected Financial Data.

     The required  information is  incorporated by reference to Pages 3 and 4 of
the Corporation's 1997 Annual Report to Stockholders.

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

     The required information is incorporated by reference to Pages 5 thru 19 of
the Corporation's 1997 Annual Report to Stockholders.

Item 8.  Financial Statements and Supplementary Data.

     A.   Financial Statements

     The required  information is  incorporated by reference to Pages 20 thru 40
of the Corporation's 1997 Annual Report to Stockholders.

                                                                     Page of
                                                                  Annual Report
                                                                 to Stockholders
                                                                 ---------------

Report of Independent Public Accountants                                 40

Ramapo Financial Corporation and Subsidiaries:
      Consolidated Balance Sheets                                        20
      Consolidated Statements of Income                                  21
      Consolidated Statements of Changes in Stockholders' Equity         22
      Consolidated Statements of Cash Flows                              23
      Notes to Consolidated Financial Statements (Notes 1 - 17)         24-39

     B.   Supplementary Data

     No supplementary data is included in this report as it is inapplicable, not
required,  or the information is included elsewhere in the financial  statements
or notes thereto.

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

     Not applicable.


                                      19

<PAGE>


                                    PART III


Item 10. Directors and Executive Officers of the Registrant.

     For information  concerning the Board of Directors of the Corporation,  the
information   contained  under  the  section   captioned  "ITEM  1--ELECTION  OF
DIRECTORS" in the Corporation's definitive proxy statement for the Corporation's
1998 Annual Meeting of Stockholders (the "Proxy Statement") to be filed with the
Commission is incorporated herein by reference.

Executive Officers Who Are Not Directors

     The following sets forth information with respect to executive  officers of
the Corporation who do not serve on the Board of Directors.

                        Age as of
Name                  March 31, 1998               Title
----                  --------------               -----
Walter A. Wojcik, Jr.       48        Treasurer of the Corporation and the Bank;
                                      Senior Vice President of the Bank

Item 11. Executive Compensation.

     The information  contained under the section captioned "ITEM 1--ELECTION OF
DIRECTORS--Executive  Compensation and Other Benefits" in the Proxy Statement is
incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

     (a)  Security  Ownership  of Certain  Beneficial  Owners:  The  information
required by Item 403(a) of Reg. S-K is  incorporated  herein by reference to the
section captioned "Voting Securities and Principal Holders Thereof" in the Proxy
Statement.

     (b) Security  Ownership of  Management:  The  information  required by Item
403(b) of Reg. S-K is incorporated  herein by reference to the section captioned
"ITEM 1--ELECTION OF  DIRECTORS--Security  Ownership of Management" in the Proxy
Statement.

     (c)  Changes  in  Control:  Management  of  the  Corporation  knows  of  no
arrangements,   including  any  pledge  by  any  person  of  securities  of  the
Corporation,  the operation of which may at a subsequent date result in a change
in control of the Corporation.

Item 13.  Certain Relationships and Related Transactions.

     The information  required by this item is incorporated  herein by reference
to the section captioned "ITEM 1--ELECTION OF  DIRECTORS--Certain  Relationships
and Related Transactions" in the Proxy Statement.

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

     (a) List of Documents Filed as Part of this Report.

     (1) Financial Statements.  The following  consolidated financial statements
are filed as a part of this report in Item 8 hereof:


                                       20

<PAGE>


     Report of Independent Public Accountants

     Consolidated Balance Sheets as of December 31, 1997 and 1996

     Consolidated  Statements  of Income for the Years Ended  December 31, 1997,
     1996 and 1995

     Consolidated  Statements of Changes in  Stockholders'  Equity for the Years
     Ended December 31, 1997, 1996 and 1995

     Consolidated  Statements  of Cash Flows for the Years  Ended  December  31,
     1997, 1996 and 1995

     Notes to Consolidated Financial Statements

     (2) Financial  Statement  Schedules.  All schedules for which  provision is
made in the  applicable  accounting  regulations  of the Securities and Exchange
Commission are omitted because of the absence of conditions under which they are
required or because the  required  information  is included in the  consolidated
financial statements and related notes thereto.

     (3)  Exhibits.  The  following is a list of exhibits  filed as part of this
Annual Report on Form 10-K.

                                                              Page in
                                                              Sequentially
    No.     Description                                       Numbered Copy
    --      -----------                                       -------------
     3      Restated Certificate of Incorporation                24
    11      Statement re Computation of Per Share Earnings       29
    13      Annual Report to Security Holders                    30
    21      Subsidiaries of the Registrant                       75
    23      Consent of Independent Public Accountants            76
    27      Financial Data Schedule                              77

     (b) Reports on Form 8-K. The Registrant did not file any current reports on
Form 8-K during the quarter ended December 31, 1997.

     (c)  Exhibits.  The  exhibits  required by Item 601 of  Regulation  S-K are
either  filed as part of this  Annual  Report  on Form 10-K or  incorporated  by
reference herein.

     (d) Financial  Statements and Schedules Excluded from Annual Report.  There
are no other financial  statements and financial  statement schedules which were
excluded from the Annual  Report to  Stockholders  pursuant to Rule  14a-3(b)(1)
which are required to be included herein.


                                       21

<PAGE>



                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                         RAMAPO FINANCIAL CORPORATION


March 27, 1998                           By: /s/ Mortimer J. O'Shea
                                             ----------------------
                                             Mortimer J. O'Shea, President and
                                             Chief Executive Officer

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


/s/ Mortimer J. O'Shea                          March 27, 1998
----------------------------------------
Mortimer J. O'Shea, Director,
President and Chief Executive Officer
(Principal Executive Officer)


/s/ Walter A. Wojcik, Jr.                       March 27, 1998
----------------------------------------
Walter A. Wojcik, Jr.
Treasurer
(Principal Financial and Accounting Officer)


/s/ Victor C. Otley, Jr.                        March 27, 1998
----------------------------------------
Victor C. Otley, Jr.
Chairman of the Board


/s/ Erwin D. Knauer                             March 27, 1998
----------------------------------------
Erwin D. Knauer, Director
Senior Vice President


/s/ Donald W. Barney                            March 27, 1998
----------------------------------------
Donald W. Barney
Director


/s/ Richard S. Miller                           March 27, 1998
----------------------------------------
Richard S. Miller
Director


                                       22

<PAGE>



                                  EXHIBIT INDEX




     NO.     DESCRIPTION
     ---     -----------

      3      Restated Certificate of Incorporation
     11      Statement re Computation of Per Share Earnings
     13      Annual Report to Security Holders
     21      Subsidiaries of the Registrant
     23      Consent of Independent Public Accountants
     27      Financial Data Schedule




                                       23