<PAGE>   1
                       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 [FEE REQUIRED]
           

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

          OR

/ /  TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                        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: (201) 696-6100

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

                                 Not Applicable

           Securities registered pursuant to Section12(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 (section 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 15, 1996, the aggregate market value of the 7,790,309 shares of
Common Stock of the registrant issued and outstanding held by nonaffiliates on
such date was approximately $34.1 million based on the closing sales price of
$4.375 per share of the registrant's Common Stock on March 15, 1996 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 15, 1996: 8,096,449
<PAGE>   2
                       DOCUMENTS INCORPORATED BY REFERENCE

PART I

Item 1 - Business                                Page 1 (To Our Shareholders) 
                                                 and Pages 4 thru 18
                                                 (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, 1995
                                                 (Exhibit 13).

PART II

Item 6 -   Selected Financial Data               Pages 2 and 3 of the Annual
                                                 Report to Stockholders for the
                                                 year ended December 31, 1995
                                                 (Exhibit 13).

Item 7 -   Management's Discussion               Pages 4 thru 18 of the Annual
           and Analysis of Financial             Report to Stockholders for the
           Condition and Results of              year ended December 31, 1995
           Operations                            (Exhibit 13).


                                                 

Item 8 -   Financial Statements and              Pages 19 thru 39 of the Annual
           Supplementary Data                    Report to Stockholders for the
                                                 year ended December 31, 1995
                                                 (Exhibit 13).

PART III

Item 10-   Directors and Executive               All or part of items 10, 11, 12
           Officers of the Registrant            and 13 are contained in the 
                                                 registrant's definitive Proxy 
                                                 Statement for its 1996 Annual
Item 11-   Executive Compensation                Meeting of Stockholders to be
                                                 filed with the Securities and
                                                 Exchange Commission pursuant to
Item 12-   Security Ownership of                 Regulation 14A.
           Certain Beneficial Owners               
           and Mangement

Item 13-   Certain Relationships and
           Related Transactions








                                        2
<PAGE>   3
                  RAMAPO FINANCIAL CORPORATION AND SUBSIDIARIES

                    Index to Form 10-K for December 31, 1995
                                                                
                                                                     Page No(s).
                                                                     -----------
PART I                                                               

Item 1.  Business                                                              4
Item 2.  Properties                                                           18
Item 3.  Legal Proceedings                                                    18
Item 4.  Submission of Matters to Vote of Security Holders                    19

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.                               20

PART III

Item 10. Directors and Executive Officers of the Registrant                   19
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      21

SIGNATURES                                                                    22













                                        3
<PAGE>   4
                                     PART I

ITEM 1. BUSINESS.

DESCRIPTION OF BUSINESS AND MARKET AREA

     Ramapo Financial Corporation (the "Corporation") is a New Jersey bank
holding company that owns all of the outstanding stock of The Ramapo Bank (the
"Bank"), a New Jersey state-chartered commercial bank. The Corporation and the
Bank are headquartered in Wayne, New Jersey, and five of the Bank's six offices
are in Wayne or nearby communities. The Bank's sixth branch is in the City of
Clifton a few miles to the east of Wayne. 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, 1995, the Corporation had consolidated assets, deposits and stockholders'
equity of $246.5 million, $217.1 million and $27.2 million, respectively.
                                  
     The Corporation considers its primary banking markets to be the Wayne area,
in which five of its six offices are located, and the City of Clifton. 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.

     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.

     The Corporation is supervised by the Board of Governors of the Federal
Reserve System (the "Federal Reserve"). The Bank is supervised by the Federal
Deposit Insurance Corporation (the "FDIC") and the New Jersey Department of
Banking (the "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 (201) 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 and certificates of deposit, as well as night depository,
wire transfer and collection 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. 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>   5

MEMORANDUM OF UNDERSTANDING AND REGULATORY AGREEMENT

     Memorandum of Understanding. Until March 21, 1996, the Bank had been
operating under a Memorandum of Understanding (the "MOU") with the FDIC and the
State. The MOU was issued in May, 1995 pursuant to an examination of the Bank by
the FDIC and the State as of November 30, 1994. The MOU replaced a Cease and
Desist Order (the "Order") which was issued in November, 1992 by the FDIC and
the State.

     The MOU required the Bank to maintain its Tier 1 leverage capital ratio at
not less than 6.0%, to reduce the amount of classified assets to certain
specific levels, and to take various other actions. In addition, the MOU
restricted the Bank from paying dividends on its common stock without prior
written consent of the FDIC and the State. The FDIC has recently completed
another examination of the Bank as of December 31, 1995, and has found the Bank
to be in full compliance with the MOU. As a result, the FDIC terminated the MOU
on March 20, 1996. The State joined in that action a day later.

     Agreement with the Federal Reserve Bank of New York. From November 26, 1993
to March 14, 1996, the Corporation operated under an agreement (the "Agreement")
with the Federal Reserve Bank of New York (the "Reserve Bank"). The Agreement
prohibited the Corporation from declaring or paying any dividends without the
prior written approval of the Reserve Bank. The Agreement also required the
Corporation to submit a capital plan designed to achieve and maintain an
adequate capital position for the consolidated organization, and addressing,
among other things, the capital requirements of both the Bank and the
Corporation, the requirements of the Capital Plan submitted to the FDIC, the
adequacy of the Bank's loan loss reserves, the anticipated level of earnings,
the source and timing of any additional capital infusions, a program to reduce
borrowing at the Corporation level and using such borrowed funds to infuse
additional capital into the Bank, and the Corporation's responsibility to act as
a source of strength, including capital support, for the Bank. The Corporation
also was required to submit a written consolidated contingency liquidity plan
describing actions to be taken by the Corporation to address any liquidity needs
of the Bank, including procedures for monitoring the Bank's deposit base and any
related funding needs and a written operating plan providing goals and
strategies for improving the Corporation's earnings.

     The Agreement also prohibited, without the prior written consent of the
Reserve Bank, incurring any debt (including renewals of existing debt), the
payment to any one individual or entity in an amount in excess of $10,000 in any
calendar month or the redemption or repurchase of any outstanding stock. The
Agreement required the Corporation's Board of Directors to review all existing
employment contracts and discretionary bonus or incentive plans and certify, in
writing, that such contracts and plans were consistent with applicable laws and
safe and sound banking practices. The Agreement further required the
Corporation's Board of Directors to appoint a committee comprised of outside
directors to monitor compliance with the provisions of the Agreement and to
provide progress reports to the Reserve Bank detailing the form and manner of
all actions taken to secure compliance with the Agreement.

     The Corporation has since received a full examination by the Reserve Bank
as of December 31, 1994 and a limited scope inspection as of September 30, 1995.
Based on the continued improvement in the Corporation's operations and full
compliance with the Agreement, the Reserve Bank terminated the Agreement on
March 15, 1996.

LENDING ACTIVITIES

     Loan Portfolio. As of December 31, 1995, the Corporation's loans, net of
unearned discount and loans held for sale, represented 65.1% of its total
assets. As of December 31, 1995, its loan portfolio consisted of approximately
60.1% commercial and commercial real estate loans, 9.5% commercial real estate
construction loans, 5.4% residential real estate mortgage loans and 25.0%
installment loans. At December 31, 1995, substantially all of the Bank's loans
were to residents of and businesses located in northern New Jersey.





                                        5
<PAGE>   6

     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, 1995, 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,
                                                ------------------------------------------------------------------------------------
                                                          1995                             1994                          1993     
                                                          ----                             ----                          ----   
                                               Amount               %              Amount          %             Amount         % 
                                               ------             -----            ------        -----           ------       -----
                                                                               (Dollars in thousands)
<S>                                           <C>                <C>             <C>            <C>            <C>            <C>
Commercial and commercial real
  estate...................................   $ 96,469            60.1%          $101,292        61.7%         $114,889        61.6%
Commercial real estate
  construction.............................     15,177             9.5             18,462        11.2            29,695        15.9
Residential real estate
  mortgage (1).............................      8,772             5.4             10,346         6.3             7,808         4.2
Installment................................     40,128            25.0             34,211        20.8            34,211        18.3
                                              --------           -----           --------       -----          --------       -----
    Total..................................   $160,546           100.0%          $164,311       100.0%         $186,603       100.0%
                                              ========           =====           ========       =====          ========       =====
 
<CAPTION>

                                                                     At December 31,          
                                               ------------------------------------------------------                            
                                                          1992                             1991           
                                                          ----                             ----           
                                               Amount               %              Amount          %   
                                               ------             ----             ------        -----                 
<S>                                           <C>                <C>             <C>           <C> 
Commercial and commercial real                                                                   
  estate...................................   $154,508            58.1%          $155,223        54.6%
Commercial real estate                                                                           
  construction.............................     33,527            12.6             47,246        16.6 
Residential real estate                                                                          
  mortgage (1).............................     26,414             9.9             32,766        11.5 
Installment................................     51,483            19.4             49,139        17.3 
                                              --------           -----           --------       ----- 
    Total..................................   $265,932           100.0%          $284,374       100.0%
                                              ========           =====           ========       ===== 
</TABLE>

(1)      Excludes Loans Held For Sale.




                                        6
<PAGE>   7
     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, 1995 the Bank's legal lending limit was
$4.2 million.

     It is the Bank's policy 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 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 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 loans between $15,000 and $350,000 must be approved
by two officers of the Bank. All unsecured loans between $350,000 and $500,000
and secured loans between $350,000 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 Senior Credit Officer 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 its 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, 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 loan is the cash flow





                                        7
<PAGE>   8
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 on the basis of the borrower's
cash flow and ability to service the debt from earnings rather than 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 the Senior Credit
Officer 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 Senior Credit Officer 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 of $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. Any participation interest in loans purchased by
the EDA is subordinated to the Bank's interest in the event of default.  

     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. 





                                        8
<PAGE>   9
     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 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.  

     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 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 total cost of development or the lesser of 70% of the cost
or appraised value of the 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. Although the outsourcing arrangement has since expired, the Bank
continues to offer residential mortgage loans in its market in a limited way. 
As a result, the Corporation anticipates that loans held for sale will decrease
in future periods and that income attributable to the origination and sale of
mortgage loans also will decrease.                              


                                        9
<PAGE>   10
     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 and new automobile
installment loans have a maximum term of 5 years. Installment loans for the
purchase of a used automobile have a maximum term of 4 years. Second mortgage
loans and home equity lines of credit have a maximum term of 15 years. The Bank
will lend up to 75% of the purchase price of a new automobile and, with respect
to used automobiles, 100% of the National Automobile Dealer's Association loan
value. 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 has a balance of
$200,000 or greater or where the loan amount exceeds $50,000 must be approved by
the Chairman of the Board, President or Senior Credit Officer of the Bank.
Installment loan applicants are required to complete a written application which
is evaluated using the Bank's credit scoring policy.

     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. 

     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
$35,233,000 and $41,313,000 at December 31, 1995 and 1994, respectively.

     The largest borrower concentration consists of loans to a group of
affiliated borrowers with an aggregate outstanding balance of $15,430,000 and
$15,433,000 at December 31, 1995 and 1994, respectively, all of which were
performing and current as to the required principal and interest payments. A
majority of these loans are 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 concentration involves loans to certain affiliated real estate
development companies whose principal owners have had a long-standing and
excellent relationship with the Bank. Outstanding balances for this group at
December 31, 1995 and 1994 were $12,245,000 and $16,871,000, respectively. All
such loans were performing as of the respective year end dates.

     Another relationship consists of nine loans, primarily for the construction
or renovation of condominium units, totaling $7,558,000 and $9,009,000 at
December 31, 1995 and 1994, respectively. The majority of the loans are secured
by first mortgages on condominium developments with the principal source of
repayment currently consisting of third party lease payments which are paid
directly to the Bank. At December 31, 1995, such lease payments were sufficient
to service the debt in accordance with the restructured terms and cover all
expenses associated with the properties.

NONBANK SUBSIDIARIES

     RFC High Ridge, Inc., RFC Harmony Park, Inc., RFC CKN, 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. All 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. 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.



                                       10
<PAGE>   11
     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, 1995, the Corporation and its subsidiaries had
approximately 104 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.

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 of
applicable statutes and regulations 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 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 regular examination by the Federal Reserve and is subject to
regulation by the Department.



                                       11
<PAGE>   12
     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 Federal Reserve has adopted guidelines regarding the capital
adequacy of bank holding companies, which require bank holding companies 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 activities of the Corporation are subject to these
legal and regulatory limitations under the Holding Company Act and the 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. Under Section 106 of
the 1970 amendments to the Holding Company Act and the regulations of the
Federal Reserve, bank holding companies and their subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with any extension of
credit or provision of any property or services.

     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 1995 that it has received a "Needs to Improve" CRA rating
as a result of a CRA examination as of December 31, 1994. This rating means that
the Bank has a less than satisfactory record of ascertaining and helping to meet
the credit needs of its entire delineated community, including low- and
moderate-income neighborhoods, in a manner consistent with its resources. The
Bank has initiated programs to improve its CRA lending record. The FDIC has
recently concluded a CRA examination of the Bank as of December 31, 1995, but
has not yet issued its written report. Management believes that its recent
lending record warrants an upgrade to "Satisfactory". 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




                                       12
<PAGE>   13
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.

     Holding Company Dividends and Stock Repurchases. The Federal Reserve has
the power to prohibit dividends by bank holding companies if their actions
constitute unsafe or unsound practices. The Federal Reserve has issued a policy
statement on the payment of cash dividends by bank holding companies, which
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. In addition, the Agreement required the Corporation to
obtain the written approval from the Federal Reserve prior to declaring or
paying any dividends while it was in effect.

     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 addition, the Agreement required
the Corporation to obtain written approval from the Federal Reserve 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 but not limited to 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 its
stockholder. In addition, the Bank is 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, which require such 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 thereof, 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



                                       13
<PAGE>   14
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 thereby from paying dividends or making other
capital distributions without the permission of the FDIC. 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 such other 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 secured loans and other 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 and as to the Corporation and all other
affiliates 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 that establish appropriate limits and
standards for extensions of credit that are secured by liens on or interests in
real estate or are made for the purpose of financing permanent improvements to
real estate. These policies 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
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, and the Bank is 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, and
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. Pursuant to FDICIA, the FDIC
implemented a transitional risk-based insurance premium system on January 1,
1993 which became the permanent risk-based premium system on January 1, 1994.
Generally, under this system, banks are assessed insurance premiums according to
how much risk they are deemed to present the BIF. As of January 1, 1996, such
premiums range from 0.00% to 0.27% of insured deposits. 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:



                                       14
<PAGE>   15
(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. Prior
to July 1, 1995, the assessment rates ranged from 0.23% of deposits for well-
capitalized institutions in Subgroup A to 0.31% of deposits for
under-capitalized institutions in Subgroup C. The Bank was deemed an
"undercapitalized" institution for deposit insurance assessment purposes during
that time. For the last six months of 1995, the assessment rates ranged from
0.04% of deposits for well-capitalized institutions in Subgroup A to 0.31% of
deposits for undercapitalized institutions in Subgroup C. These rates were again
lowered effective January 1, 1996 to a range of 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 rates for the last half of
1995 and the first three months of 1996 were/are 0.07% and 0.03%, respectively.

     Proposed 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 proposed standards
covering internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, fees, benefits, and 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 that the Bank
meets the standards which have been proposed.

     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 are empowered to 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
directors, officers, employees, controlling shareholders, agents, consultants,
attorneys, accountants, appraisers and others associated with a depository
institution are subject to the imposition of fines, penalties, and other
enforcement actions based upon the conduct of their relationships with the
institution.

     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
and 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



                                       15
<PAGE>   16
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 nonmember 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, 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.



                                       16
<PAGE>   17
     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 non-traditional activities. The federal banking
regulators, including the Federal Reserve and the FDIC, have issued a proposed
rule that would add an interest rate risk component to the currently effective
risk-based capital standards. Under the proposal, bank holding companies and
banks with higher exposures to 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, 1995, the Corporation's total risk-based capital and
leverage capital ratios were 14.66% and 10.08%, respectively. The minimum levels
established by the regulators for these measures are 8.00% and 3.00%,
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, 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 the institution. The senior executive officers of a
significantly undercapitalized institution may not receive bonuses or increases
in compensation without prior approval. A critically undercapitalized
institution is prohibited from making payments of principal or interest on its
subordinated debt, except with respect to debt as approved by the FDIC or, until
July 15, 1996, with respect to subordinated debt outstanding on July 15, 1991
and not extended or otherwise renegotiated after July 15, 1991. 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



                                       17
<PAGE>   18
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 has informed the
Bank that the Bank is "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 and certain additional
information regarding the Corporation's offices at December 31, 1995. The
Corporation owns all of its offices except as indicated.

<TABLE>
<CAPTION>
                                                                                      NET BOOK
                                   YEAR        TOTAL            TOTAL             VALUE AT DECEMBER     APPROXIMATE
BRANCH                            OPENED      DEPOSITS        INVESTMENT               31, 1995        SQUARE FOOTAGE
------                            ------      --------        ----------          -----------------    --------------
                                                           (DOLLARS IN THOUSANDS)
<S>                                <C>         <C>              <C>                   <C>                   <C> 
Main office                        1980        $53,124          $1,648                 $1,037               23,000
Packanack                          1967         49,914             643                    362                4,000
Valley                             1972         39,868             738                    488                8,000
Clifton                            1974         23,760             282                     24 (1)            2,000
North Haledon                      1986  (2)    21,950              61                      8 (3)            2,000
Butler                             1986  (2)    28,446             236                    142 (3)            2,000

</TABLE>

(1)  Land lease.
(2)  Date acquired.
(3)  Leased.

     The net book value of the Corporation's investment in premises and
equipment totalled approximately $2.7 million at December 31, 1995. For a
discussion of premises and equipment, see Note 11 of Notes to Consolidated
Financial Statements contained in the Corporation's 1995 Annual Report to
Stockholders.

ITEM 3. LEGAL PROCEEDINGS.

     During the second quarter of 1995, a former senior officer of the
Corporation's former subsidiary, Pilgrim State Bank, sued the Corporation and
its former CEO alleging fraud arising from wrongful termination of employment.
The Corporation believes the suit is without merit and is vigorously defending
its position. The Corporation has been advised by counsel that its exposure for
defense costs and any liability is in any event limited to $150,000, the
deductible amount of its coverage under applicable insurance policies.

     In addition to the aforementioned suit, the Corporation and its
subsidiaries are party, in the ordinary course of business, to litigation
involving collection matters, contract claims and other miscellaneous causes of
action


                                       18
<PAGE>   19
arising from its 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 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, 1995.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

     Dividend Policy. The Corporation has suspended its annual dividend payment
on the Common Stock and has not paid dividends since February 1992. The payment
of dividends in the future is predicated on the redemption of all outstanding
Class A preferred stock, the continued profitable operations of the Corporation,
and other factors to be considered by the Board of Directors if all of the
foregoing factors are satisfied.

     All other required information is incorporated by reference to Page 41 of
the Corporation's 1995 Annual Report to Stockholders.

ITEM 6. SELECTED FINANCIAL DATA.

     The required information is incorporated by reference to Pages 2 and 3 of
the Corporation's 1995 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 4 thru 18 of
the Corporation's 1995 Annual Report to Stockholders.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         A.  Financial Statements

     The required information is incorporated by reference to Pages 19 thru 39
of the Corporation's 1995 Annual Report to Stockholders.

<TABLE>
<CAPTION>


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

<S>                                                                         <C>
Report of Independent Public Accountants                                        39
Ramapo Financial Corporation and Subsidiaries:

         Consolidated Balance Sheets                                            19
         Consolidated Statements of Operations                                  20
         Consolidated Statements of Changes in Stockholders' Equity             21
         Consolidated Statements of Cash Flows                                  22
         Notes to Consolidated Financial Statements (Notes 1 - 21)            23-38

         B.  Supplementary Data
</TABLE>


                                      
                                      19
<PAGE>   20
     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.

                                    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
1996 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, 1996              TITLE
----                    --------------              -----
Walter A. Wojcik, Jr.        46          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.




                                       20
<PAGE>   21
                                     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:

          Report of Independent Public Accountants

          Consolidated Balance Sheets as of December 31, 1995 and 1994

          Consolidated Statements of Operations for the Years Ended December 31,
          1995, 1994 and 1993

          Consolidated Statements of Changes in Stockholders' Equity for the
          Years Ended December 31, 1995, 1994 and 1993

          Consolidated Statements of Cash Flows for the Years Ended December 31,
          1995, 1994 and 1993

          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 and is also the Exhibit Index.

                                                                   Page in
                                                                   Sequentially
      No.         Description                                      Numbered Copy
      ---         -----------                                      -------------

      11          Statement re Computation of Per Share Earnings        23
      13          Annual Report to Security Holders                     24
      21          Subsidiaries of the Registrant                        25
      23          Consent of Independent Public Accountants             26
      27          Financial Data Schedule                               27


          (b) REPORTS ON FORM 8-K. The Registrant did not file any current
reports on Form 8-K during the quarter ended December 31, 1995.

          (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>   22
                                   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 28, 1996                                 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 28, 1996
-------------------------------------------- 
Mortimer J. O'Shea, Director,
President and Chief Executive Officer
(Principal Executive Officer)

/s/ Walter A. Wojcik, Jr.                                        March 28, 1996
-------------------------------------------- 
Walter A. Wojcik, Jr.
Treasurer
(Principal Financial and Accounting Officer)

/s/ Victor C. Otley, Jr.                                         March 28, 1996
-------------------------------------------- 
Victor C. Otley, Jr.
Chairman of the Board
                      
/s/ James R. Kaplan                                              March 28, 1996
--------------------------------------------
James R. Kaplan
Director

/s/ Erwin D. Knauer                                              March 28, 1996
--------------------------------------------
Erwin D. Knauer, Director,
Senior Vice President

/s/ Louis S. Miller                                              March 28, 1996
--------------------------------------------
Louis S. Miller
Director

/s/ Richard S. Miller                                            March 28, 1996
--------------------------------------------
Richard S. Miller
Director

 



                                       22
<PAGE>   23
                                EXHIBIT INDEX
                                -------------

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

          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