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

                                _________________
                                    FORM 10-Q
                                _________________



[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR
                  THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                       or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934
                   FOR THE TRANSITION PERIOD FROM____ TO ____


                         Commission File number 1-10518


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

       New Jersey                                               22-2553159
_______________________________                              ___________________
(State or other jurisdiction of                              (I.R.S. Employer
incorporation  or organization)                              Identification No.)

Park 80 West/Plaza Two, Saddle Brook, NJ                           07663
________________________________________                           _____
(Address of principal executive offices)                        (Zip Code)

                                 (201) 703-2265
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                      None
--------------------------------------------------------------------------------
(Former name,former address and former fiscal year,if changed since last report)


Indicate by checkmark  whether the Registrant (1) has filed all reports required
to be filed by  Sections  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  report)  and (2) has been  subject  to such  filing
requirements for the past 90 days. Yes X    No
                                      ___      ___

     The number of outstanding  shares of the Registrant's  common stock, no par
value per share, as of October 31, 2002, was 9,817,958 (after giving effect to a
3-for-2 stock split paid on July 12, 2002).

<PAGE>

                   INTERCHANGE FINANCIAL SERVICES CORPORATION

                                      INDEX

PART I    FINANCIAL INFORMATION
                                                                       Page No.
  Item 1  Financial Statements
                Consolidated Balance Sheets as of
                September 30, 2002 and December 31, 2001 . . . . . . . .   1

                Consolidated Statements of Income for the three
                and nine-month periods ended September 30, 2002 and 2001 . 2

                Consolidated Statements of Changes in
                Stockholders' Equity for the nine months ended
                September 30, 2002 and 2001 . . . . . . . . . . . . . . .  3

                Consolidated Statements of Cash Flows for the
                nine months ended September 30, 2002 and 2001 . . . . . .  4

                Notes to Consolidated Financial Statements . . . . . . .   5

  Item 2        Management's Discussion and Analysis of Financial
                Condition and Results of Operations . . . . . . . . . . .  8

  Item 3        Quantitative and Qualitative Disclosures About Market Risk
                (Disclosures about quantitative and qualitative market risk
                are located in Management's Discussion and Analysis of
                Financial Condition and Results of Operation in the section
                on Market Risk). . . . . . . . . . . . . . . . . . . . .  22

  Item 4        Controls and Procedures  . . . . . . . . . . . . . . . . .27


PART II   OTHER INFORMATION

  Item 1        Legal Proceedings . . . . . . . . . . . . . . . . . . . . 28

  Item 2        Changes in Securities and Use of Proceeds.  . . . . . . . 28

  Item 3        Defaults Upon Senior Securities . . . . . . . . . .  . .  28

  Item 4        Submission of Matters to a Vote of Security Holders . . . 28

  Item 5        Other Information . . . . . . . . . . . . . . . . . . . . 28

  Item 6        Exhibits and Reports on Form 8-K . . . . . . . . . . . .  28

                Signatures . . . . . . . . . . . . . . . . . . . . . . .  29

<PAGE>
<TABLE>
<CAPTION>

Item 1: Financial Statements
Interchange Financial Services Corporation
------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------------
(dollars in thousands)

                                                                          September 30,   December 31,
                                                                               2002           2001
                                                                          _____________   ____________
                                                                            (unaudited)
<S>                                                                       <C>             <C>

Assets
Cash and due from banks                                                        $ 26,148       $ 22,211
Federal funds sold                                                               10,850              -
                                                                          _____________   ____________
Total cash and cash equivalents                                                  36,998         22,211
                                                                          _____________   ____________

Securities held to maturity at amortized cost (estimated market value
  of $31,355 and $39,580 for September 30, 2002 and December 31, 2001,
  respectively)                                                                  29,657         38,872
                                                                          _____________   ____________
Securities available for sale at estimated market value (amortized cost
  of $193,479 and $152,935 for September 30, 2002 and December 31, 2001,
  respectively)                                                                 200,243        155,030
                                                                          _____________   ____________


Loans                                                                           624,571        581,323
Less:  Allowance for loan and lease losses                                        6,707          6,569
                                                                         ______________   ____________
Net loans                                                                       617,864        574,754
                                                                         ______________   ____________

 Bank owned life insurance                                                       16,044         15,378
Premises and equipment, net                                                      10,293         10,235
Foreclosed real estate and other repossesed assets                                  358            492
Accrued interest receivable and other assets                                      9,455         13,977
                                                                         ______________   ____________
Total assets                                                                   $920,912       $830,949
                                                                          =============   ============

Liabilities
Deposits
 Non-interest bearing                                                          $116,857       $109,416
 Interest bearing                                                               673,425        617,067
                                                                          _____________   ____________
Total deposits                                                                  790,282        726,483
                                                                          _____________   ____________

Securities sold under agreements to repurchase                                   22,049          6,700
Short-term borrowings                                                             7,000         18,100
Long-term borrowings                                                             10,000              -
Accrued interest payable and other liabilities                                   12,548         11,433
                                                                          _____________   ____________
Total liabilities                                                               841,879        762,716
                                                                          _____________   ____________

Stockholders' equity:
Common stock, without par value; 22,500,000 shares authorized;
 9,824,958 and 9,690,651 shares issued and outstanding at
 September 30, 2002 and December 31, 2001, respectively                           5,397          5,397
Capital surplus                                                                  21,098         20,993
Retained earnings                                                                61,273         54,758
Accumulated other comprehensive income                                            3,809          1,156
                                                                          _____________   ____________

                                                                                 91,577         82,304
Less:  Treasury stock                                                            12,544         14,071
                                                                          _____________   ____________
Total stockholders' equity                                                       79,033         68,233
                                                                          _____________   ____________
Total liabilities and stockholders' equity                                     $920,912       $830,949
                                                                          =============   ============
------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.

</TABLE>
                                       1
<PAGE>

<TABLE>
<CAPTION>
Interchange Financial Services Corporation
________________________________________________________________________________________________________________________________
CONSOLIDATED STATEMENTS OF INCOME
________________________________________________________________________________________________________________________________
(dollars in thousands, except per share data) (unaudited)

                                                                        Three Months Ended              Nine Months Ended
                                                                          September 30,                   September 30,
                                                                       --------------------           --------------------
                                                                          2002       2001                2002       2001
                                                                       ---------  ---------           ---------  ---------
<S>                                                                    <C>        <C>                 <C>        <C>

Interest income
Interest and fees on loans                                               $11,561    $11,560             $33,915    $34,889
Interest on federal funds sold                                                45         59                 165        495
Interest and dividends on securities
    Taxable interest income                                                2,563      2,438               7,665      7,408
    Interest income exempt from federal income taxes                         161        127                 436        409
    Dividends                                                                 40         59                 134        195
                                                                       ---------  ---------           ---------  ---------
Total interest income                                                     14,370     14,243              42,315     43,396
                                                                       ---------  ---------           ---------  ---------

Interest expense
Interest on deposits                                                       3,991      5,349              12,688     17,211
Interest on securities sold under agreements to repurchase                    91        104                 183        445
Interest on short-term borrowings                                            120        215                 370        638
Interest on long-term borrowings                                             108          -                 319          -
                                                                       ---------  ---------           ---------  ---------
Total interest expense                                                     4,310      5,668             13,560      18,294
                                                                       ---------  ---------           ---------  ---------

Net interest income                                                       10,060      8,575             28,755      25,102
Provision for loan and lease losses                                          405        210                885         590
                                                                       ---------  ---------           ---------  ---------
Net interest income after provision
 for loan losses                                                           9,655      8,365              27,870     24,512
                                                                       ---------  ---------           ---------  ---------

Non-interest income
Service fees on deposit accounts                                             659        610              1,922       1,835
Net gain on sale of securities                                               214        129                495         247
Other                                                                        902        726              2,396       1,761
                                                                       ---------  ---------           --------   ---------
Total non-interest income                                                  1,775      1,465              4,813       3,843
                                                                       ---------  ---------           --------   ---------

Non-interest expenses
Salaries and benefits                                                      3,505      3,082             10,067       9,159
Net occupancy                                                                843        822              2,576       2,502
Furniture and equipment                                                      267        274                857         818
Advertising and promotion                                                    258        391              1,047         963
Federal Deposit Insurance Corporation assessment                              32         32                 97          97
Other                                                                      1,421      1,096              4,106       3,576
                                                                       ---------  ---------           --------   ---------
Total non-interest expenses                                                6,326      5,697             18,750      17,115
                                                                       ---------  ---------           --------   ---------

Income before  income taxes                                                5,104      4,133             13,933      11,240

Income taxes                                                               1,647      1,340              4,471       3,642
                                                                       ---------  ---------           --------   ---------
Net income                                                               $ 3,457    $ 2,793            $ 9,462     $ 7,598
                                                                       =========  =========           ========   =========

Basic earnings per common share                                            $0.35      $0.29              $0.96       $0.78
                                                                       =========  =========           ========   =========


Diluted earnings per common share                                          $0.35      $0.28              $0.95       $0.77
                                                                       =========  =========           ========   =========


----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements

</TABLE>
                                       2
<PAGE>

<TABLE>
<CAPTION>

Interchange Financial Services Corporation
----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Nine Months Ended September 30,
----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data) (unaudited)

                                                                                  Accumulated
                                                                                    Other
                                                        Comprehensive  Retained  Comprehensive  Common  Capital  Treasury
                                                            Income     Earnings     Income       Stock  Surplus   Stock      Total
                                                        -------------  --------  -------------  ------- -------  --------  -------
<S>                                                     <C>            <C>       <C>            <C>     <C>      <C>       <C>

Balance at January 1, 2001                                              $47,735           $526   $5,397 $21,077  $(12,751) $61,984
Comprehensive income
  Net Income                                                  $7,598      7,598                                              7,598
  Other comprehensive income, net of taxes
   Unrealized gains on AFS debt securities                     1,582
   Add: losses on disposition of securities                       28
                                                        ------------
  Other comprehensive income, net of taxes                     1,610                     1,610                               1,610
                                                        ------------
Comprehensive income                                          $9,208
                                                        ============

    Dividends on common stock                                            (2,645)                                            (2,645)
    Issued 22,320 shares of common stock in connection
      with Executive Compensation Plan                                                                      (14)      255      241
    Exercised 6,045 option shares                                                                           (23)       69       46
    Purchased 69,300 shares of common stock                                                                          (835)    (835)
                                                                       --------   ------------- ------- -------  --------  -------
    Balance at September 30, 2001                                        52,688           2,136   5,397  21,040   (13,262)  67,999

    Comprehensive income
      Net Income                                              $2,942      2,942                                              2,942
      Other comprehensive income, net of taxes
         Unrealized  gains on AFS debt securities               (980)
         Add: losses on disposition of securities                  -
                                                        ------------
      Other comprehensive income                                (980)                      (980)                              (980)
                                                        ------------
    Comprehensive income                                      $1,962
                                                        ============
    Dividends on common stock                                              (872)                                              (872)
    Exercised 7,181 option shares                                                                           (47)       83       36
    Purchased 71,343 shares of common stock                                                                          (892)    (892)
                                                                       --------   ------------- ------- -------  --------  -------
    Balance at December 31, 2001                                         54,758           1,156   5,397  20,993   (14,071)  68,233

    Comprehensive income
      Net Income                                              $9,462      9,462                                              9,462
      Other comprehensive income, net of taxes
         Unrealized gains on AFS debt securities               3,106
         Less: gains on disposition of securities               (453)
                                                        ------------
      Other comprehensive income                               2,653                      2,653                              2,653
                                                        ------------
    Comprehensive income                                     $12,115
                                                        ============

    Dividends on common stock                                            (2,947)                                            (2,947)
    Issued 21,069 shares of common stock in connection
      with Executive Compensation Plan                                                                       66       244      310
    Exercised 23,658 option shares                                                                          (92)      274      182
    Issued 71,918 shares of common stock in connection with
      the acquisition of certain assets and assumption of
          certain liabilities of Monarch Capital Corporation                                                131     1,244    1,375
    Purchased 18,150 shares of common stock                                                                          (235)    (235)
                                                                       --------   ------------- ------- -------  --------  -------
    Balance at September 30, 2002                                       $61,273          $3,809  $5,397 $21,098  $(12,544) $79,033
                                                                       ========   ============= ======= =======  ========  =======


----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
                                       3
<PAGE>
<TABLE>
<CAPTION>

Interchange Financial Services Corporation
------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30,
------------------------------------------------------------------------------------------------------
(dollars in thousands) (unaudited)

                                                                                2002          2001
                                                                           ------------   ------------
<S>                                                                        <C>            <C>

Cash flows from operating activities
Net income                                                                      $ 9,462        $ 7,598
Non-cash items included in earnings
    Depreciation and amortization                                                 1,092          1,036
    Amortization of securities premiums                                           1,347            704
    Accretion of securities discounts                                              (223)          (250)
    Amortization of premiums in connection with acquisition                          50             81
    Provision for loan losses                                                       885            590
    Increase in cash surrender value of Bank Owned Life insurance                  (666)             -
    Net gain on sale of securities                                                 (498)          (247)
    Net gain on sale of loans                                                      (223)          (240)
    Net gain on sale of foreclosed real estate                                      (40)             -
Decrease (increase) in operating assets
    Accrued interest receivable                                                     (60)           408
    Accounts receivable- leases sold                                              4,921              -
    Other                                                                          (596)           510
Incease (decrease) in operating liabilities
    Accrued interest payable                                                       (203)          (213)
    Other                                                                         1,319          1,110
                                                                           ------------   ------------
Cash provided by operating activities                                            16,567         11,087
                                                                           ------------   ------------
Cash flows from investing activities
(Payments for) proceeds from
    Net originations of loans                                                   (32,705)       (19,626)
    Purchase of loans                                                           (14,945)       (15,687)
    Sale of loans                                                                 3,486          4,178
    Purchase of securities available for sale                                   (90,277)       (61,552)
    Maturities of securities available for sale                                  29,441         32,816
    Sale of securities available for sale                                        19,791         21,339
    Purchase of investment securities held to maturity                                -        (18,548)
    Maturities of investment securities held to maturity                          7,066         19,411
    Sale of securities held to maturity                                           2,023              -
    Sale of foreclosed real estate                                                  290              -
    Purchase of Bank Owned Life Insurance                                             -        (15,000)
    Purchase of fixed assets                                                     (1,099)          (944)
    Sale of repossessed assets                                                      276              -
    Sale of fixed assets                                                              -          1,260
    Premium in connection with acquisition                                       (1,860)             -
                                                                           ------------   ------------
Cash used in investing activities                                               (78,513)       (52,353)
                                                                           ------------   ------------
Cash flows from financing activities
Proceeds from (payments for)
    Deposits more than withdrawals                                               63,799         36,911
    Securities sold under agreements to repurchase and other borrowings          69,353         47,312
    Retirement of securities sold under agreements to repurchase and other
      borrowings                                                                (55,104)       (49,765)
    Dividends                                                                    (2,947)        (2,646)
    Common stock issued                                                           1,685            241
    Treasury stock                                                                 (235)          (835)
    Exercise of option shares from Treasury                                         182             46
                                                                           ------------   ------------
Cash provided by financing activities                                            76,733         31,264
                                                                           ------------   ------------

Increase (decrease) in cash and cash equivalents                                 14,787        (10,002)
Cash and cash equivalents, beginning of year                                     22,211         33,150
                                                                           ------------   ------------
Cash and cash equivalents, end of period                                        $36,998        $23,148
                                                                           ============   ============

Supplemental disclosure of cash flow information:
Cash paid for:
      Interest                                                                  $13,763        $17,770
      Income taxes                                                                5,018          1,077

Supplemental disclosure of non-cash investing activities:
      Increase - market valuation of securities available for sale               $4,668         $1,610

------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>
                                       4
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002
                                   (Unaudited)

1. Basis of Presentation

     The accompanying  unaudited  consolidated  financial statements include the
accounts of  Interchange  Financial  Services  Corporation  and its wholly owned
subsidiaries  (collectively,  the "Company")  including its principal  operating
subsidiary,  Interchange Bank (the"Bank"),  and have been prepared in conformity
with accounting  principles  generally  accepted in the United States of America
within the banking  industry and in accordance with the rules and regulations of
the Securities and Exchange Commission.  Pursuant to such rules and regulations,
certain information or footnotes  necessary for a complete  presentation of such
financial  condition,  results of operations  and cash flows in conformity  with
accounting  principles generally accepted in the United States of America within
the  banking  industry  have  been  condensed  or  omitted.  These  consolidated
financial statements should be read in conjunction with the financial statements
and schedules  thereto included in the annual report on Form 10-K of the Company
for the year ended December 31, 2001.


     The consolidated  financial data for the three and nine-month periods ended
September  30,  2002  and  2001,  are  unaudited  but  reflect  all  adjustments
consisting  of only normal  recurring  adjustments  which are, in the opinion of
management,  considered  necessary  for a fair  presentation  of  the  financial
condition  and results of  operations  for the interim  periods.  The results of
operations for interim periods are not  necessarily  indicative of results to be
expected for any other period or the full year.


2. Earnings Per Common Share

     Basic  earnings per common share is computed by dividing net income for the
period by the  weighted  average  number of shares of common  stock  outstanding
during the same  period.  Diluted  earnings  per common  share is similar to the
computation  of basic  earnings per common share except that the  denominator is
increased to include the number of additional common shares that would have been
outstanding if the dilutive potential common shares (e.g. common shares issuable
upon the exercise of  outstanding  stock  options)  had been issued.  On May 23,
2002,  the Company  declared a 3 for 2 stock  split  payable on July 12, 2002 to
shareholders  of record as of June 17,  2002.  The effect of the stock split has
been retroactively reflected in the presentation of these consolidated financial
statements and notes thereto.

                                       5
3.  Legal Proceedings

     The Company  regularly is a party to routine  litigation  involving various
aspects  of its  business,  none of which  such  litigation,  in the  opinion of
management and its legal counsel,  is expected to have a material adverse impact
on the consolidated  financial condition,  results of operations or liquidity of
the Company.


4.  New Accounting Pronouncement

     In April 2002, the FASB issued Statement of Financial  Accounting Standards
No. 145,  Rescission  of FASB  Statements  No. 4, 44, and 64,  Amendment of FASB
Statement No. 13, and Technical Corrections ("SFAS 145"). SFAS 145 rescinds FASB
Statement No. 4, Reporting Gains and Losses from  Extinguishment of Debt, and an
amendment of that Statement, FASB Statement No. 64, Extinguishments of Debt Made
to Satisfy Sinking-Fund Requirements.  SFAS 145 also rescinds FASB Statement No.
44,  Accounting for Intangible  Assets of Motor  Carriers.  SFAS 145 amends FASB
Statement No. 13, Accounting for Leases,  to eliminate an inconsistency  between
the  required  accounting  for  sale-leaseback  transactions  and  the  required
accounting for certain lease  modifications  that have economic effects that are
similar to  sale-leaseback  transactions.  SFAS 145 also amends  other  existing
authoritative  pronouncements  to make various  technical  corrections,  clarify
meanings,  or  describe  their  applicability  under  changed  conditions.   The
provisions  of SFAS 145 related to the  rescission  of FASB  Statement No. 4 are
effective for fiscal years  beginning after May 15, 2002. The provisions of SFAS
145 related to FASB  Statement No. 13 are effective for  transactions  occurring
after May 15, 2002. All other provisions of SFAS 145 are effective for financial
statements  issued on or after May 15,  2002.  The  adoption  of SFAS 145 is not
expected to have a material effect on the  consolidated  financial  condition or
results of operations of the Company.

<PAGE>

     In July 2002, the FASB issued Statement of Financial  Accounting  Standards
No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS
146").  SFAS 146 requires  companies to recognize costs  associated with exit or
disposal  activities  when  they  are  incurred  rather  than  at the  date of a
commitment to an exit or disposal plan.  SFAS 146 replaces  Emerging Issues Task
Force Issue No. 94-3,  Liability  Recognition for Certain  Employee  Termination
Benefits and Other Costs to Exit an Activity  (including  Certain Costs Incurred
in a Restructuring). SFAS 146 is to be applied prospectively to exit or disposal
activities  initiated  after December 31, 2002. The adoption of SFAS 146 did not
have any impact on the consolidated financial condition or results of operations
of the Company.

                                       6

     In  October  2002,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 147 "Acquisitions of Certain Financial Institutions" ("SFAS 147"),
which provides  guidance on the accounting for the  acquisitions  of a financial
institution.  SFAS 147 requires that the excess of the fair value of liabilities
assumed  over the fair value of  tangible  and  identifiable  intangible  assets
acquired in a business combination  represents goodwill that should be accounted
for under FASB Statement No. 142,  Goodwill and Other Intangible  Assets.  Thus,
the  specialized  accounting  guidance in paragraph 5 of FASB  Statement No. 72,
Accounting for Certain Acquisitions of Banking or Thrift Institutions,  will not
apply after  September 30, 2002.  If certain  criteria in Statement 147 are met,
the  amount of the  unidentifiable  intangible  asset  will be  reclassified  to
goodwill  upon  adoption  of  that  Statement.  Financial  institutions  meeting
conditions  outlined in  Statement  147 will be  required to restate  previously
issued financial statements as if the amount accounted for under Statement 72 as
an  unidentifiable  intangible asset had been reclassified to goodwill as of the
date  Statement  142 was  initially  applied.  The  adoption  of SFAS 147 is not
expected to have a material effect on the  consolidated  financial  condition or
results of operations of the Company.


5. Cash Dividend

     The Company declared a cash dividend of $0.10 per share, payable on October
11, 2002 to shareholders of record as of September 16, 2002.

                                       7
<PAGE>


Item 2.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General

     The  following  discussion  is an  analysis of the  consolidated  financial
condition  and results of operations of the Company for the three and nine month
periods  ended  September 30, 2002 and 2001,  and should be read in  conjunction
with the consolidated  financial statements and notes thereto included in Item 1
hereof.

Company

     The Company is a bank holding company  headquartered in Bergen County,  New
Jersey. The Company's principal operating  subsidiary is Interchange Bank, a New
Jersey-chartered  commercial  bank. In addition to the Bank, the Company has one
other wholly-owned direct subsidiary: Clover Leaf Mortgage Company, a New Jersey
corporation,  which is not currently engaged in any business activity.  The Bank
has four direct subsidiaries:  Clover Leaf Investment Corporation, an investment
company  operating  pursuant to New Jersey law;  Clover Leaf  Insurance  Agency,
Inc., a New Jersey corporation engaged in the sale of tax-deferred annuities and
insurance;  Clover Leaf Management Realty Corporation,  a Real Estate Investment
Trust  ("REIT"),  which manages  certain real estate assets of the Company;  and
Interchange  Capital Company,  L.L.C.  ("ICC"),  a New Jersey limited  liability
company  which  engages  in  equipment  lease  financing.   All  of  the  Bank's
subsidiaries are 100% owned by the Bank, except for the REIT, which is 99% owned
by the Bank.

Forward-Looking Information

     In  addition  to  discussing  historical  information,  certain  statements
included  in  or  incorporated  into  this  report  relating  to  the  financial
condition,  results of  operations  and  business of the  Company  which are not
historical facts may be deemed  "forward-looking  statements" within the meaning
of the Private  Securities  Litigation Reform Act of 1995. When used herein, the
words"anticipate," "believe," "estimate" "expect,""will" and other similar
expressions  (including  when  preceded  or  followed  by the  word  "not")  are
generally intended to identify such forward-looking  statements. Such statements
are  intended to be covered by the safe harbor  provisions  for  forward-looking
statements  contained  in such Act,  and we are  including  this  statement  for
purposes  of  invoking  these  safe  harbor  provisions.   Such  forward-looking
statements  include,  but are not limited to, statements about the operations of
the Company,  the adequacy of the

                                       8

Company's allowance for losses associated with the loan portfolio, the prospects
of  continued  loan  and  deposit  growth,  and  improved  credit  quality.  The
forward-looking   statements  in  this  report  involve  certain   estimates  or
assumptions, known and unknown risks and uncertainties, many of which are beyond
the control of the Company, and reflect what we currently anticipate will happen
in each  case.  What  actually  happens  could  differ  materially  from what we
currently anticipate will happen due to a variety of factors,  including,  among
others, (i) increased  competitive pressures among financial services companies;
(ii) changes in the interest  rate  environment,  reducing  interest  margins or
increasing   interest  rate  risk;  (iii)   deterioration  in  general  economic
conditions, internationally, nationally, or in the State of New Jersey; (iv) the
occurrence  of acts of  terrorism,  such as the events of September 11, 2001, or
acts of war; (v)  legislation or regulatory  requirements  or changes  adversely
affecting  the business of the  Company;  (vi) losses in the  Company's  leasing
subsidiary exceeding management's  expectations;  and (vii) other risks detailed
in reports  filed by the Company with the  Securities  and Exchange  Commission.
Readers should not place undue expectations on any  forward-looking  statements.
We  are  not  promising  to  make  any  public  announcement  when  we  consider
forward-looking statements in this document to be no longer accurate, whether as
a result of new  information,  what  actually  happens  in the future or for any
other reason.

                                       9
<PAGE>


          THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
                              RESULTS OF OPERATIONS

Earnings Summary

     For the third quarter of 2002,  the Company  reported  earnings per diluted
common share of $0.35,  an increase of 25.0% over the $0.28 reported in the same
period in 2001.  Net income for the three  months ended  September  30, 2002 was
$3.5 million, an increase of $664 thousand,  or 23.8%, over the same period last
year.  The  increase in earnings  was driven  largely by growth in net  interest
income on a tax-equivalent  basis,  which increased $1.5 million,  or 17.4%, for
the three-month  period.  Growth in interest  earning assets and an improved net
interest margin  ("margin")  helped to fuel the increase in net interest income.
The growth in interest  earning  assets was funded  primarily with low cost core
deposits,  which is an essential and cost-effective funding source for the Bank.
The  improved  margin,  which  increased  18  basis  points  to  4.71%  for  the
three-month period ending September 30, 2002 when compared to the same period in
2001,  resulted from a favorable  decline in the cost of funds of  approximately
100 basis points.  A $310 thousand,  or 21.2%,  increase in non-interest  income
also contributed to the growth in revenue.

     The growth in  revenues  was partly  offset by a $629  thousand,  or 11.0%,
increase in  non-interest  expenses.  The increase  was due to normal  operating
growth  and costs  resulting  from  expansion  programs  initiated  in the first
quarter of 2002. The expansion  programs included the opening of a new branch in
Hackensack,  NJ and the  assumption  of Monarch  Capital  Corporation's  ("MCC")
operations by  Interchange  Capital  Company  ("ICC"),  which  resulted from the
Company's acquisition of certain assets and certain liabilities of MCC.


     For the three months ended  September  30, 2002,  two of the  Company's key
performance  ratios,  Return on  Average  Assets  ("ROA")  and Return on Average
Equity ("ROE")  improved when compared to the same period in 2001. ROA increased
to 1.51% from 1.38% and ROE increased to 18.22% from 16.84% when compared to the
same period last year.

Net Interest Income

     Net  interest  income  is the  most  significant  source  of the  Company's
operating income.  Net interest income on a tax-equivalent  basis increased $1.5
million,  or 17.4%, to $10.2 million for the quarter ended September 30, 2002 as
compared to the same quarter in 2001.  The  increase in net interest  income was
due mostly to a 12.7% growth in average interest  earning assets.  The growth in
interest earning assets was funded primarily by deposit liabilities,  which grew
11.4% on average for the third quarter of 2002 when compared to the same quarter
in 2001.  The margin,  which  increased  18 basis  points to 4.71% for the third
quarter of 2002 when compared to the same


                                       10
<PAGE>

quarter  in  2001,  contributed  to the  growth  in  net  interest  income.  The
improvement in the margin resulted from a decline in the Company's cost of funds
by approximately  100 basis points to 2.09% for the three months ended September
30, 2002 when compared to the same period in the prior year.

     Interest income, on a tax-equivalent  basis,  totaled $14.5 million for the
third quarter of 2002, an increase of $146 thousand,  or 1.0%,  when compared to
the same quarter in 2001. The increase was  principally  due to a $97.2 million,
or 12.7%,  growth in  average  interest-earning  assets.  The  growth in average
interest-earning assets occurred mostly in securities and loans, which increased
$51.2 million, or 29.5%, and $42.5 million, or 7.3%, respectively.  The increase
in  interest  income  was  tempered  by a 78 basis  point  decline  in yields on
interest  earning assets for the third quarter of 2002 when compared to the same
wuarter in 2001,  which was largely  attributed to a decrease in market interest
rates.

     Interest expense, which totaled $4.3 million for the third quarter of 2002,
decreased $1.4 million,  or 24.0%, when compared to the same period in 2001. The
decrease in interest  expense was a byproduct of the decline in market  interest
rates,  particularly  short-term rates,  during 2002. In addition,  a beneficial
shift in the composition of the Company's  deposits,  which is discussed further
in the  analysis of  financial  condition,  also had a  favorable  impact on the
Company's interest expense. The improved deposit composition combined with lower
short-term  interest  rates  reduced the average  rate paid on interest  bearing
liabilities  by 121 basis points to 2.43% for the quarter  ended  September  30,
2002 when  compared to the same period in 2001.  The  interest  expense  benefit
produced by the decline in the cost of interest  bearing  liabilities  more than
offset the increase in interest  expense  resulting from the growth of deposits.
Interest bearing deposits grew on average $76.3 million, or 12.8%, for the third
quarter of 2002 when compared to the same period in 2001.

                                       11
<PAGE>
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
Analysis of Net Interest Income
------------------------------------------------------------------------------------------------------------------------------------
for the three months ended September 30,
(dollars in thousands)
(unaudited)
                                                                           2002                              2001
                                                          __________________________________________________________________________
                                                           Average                 Average    Average                  Average
                                                           Balance     Interest     Rate      Balance     Interest      Rate
                                                          ________     ________    _______    ________    ________     _______
                         Assets
<S>                                                       <C>          <C>         <C>        <C>         <C>          <C>

Interest earning assets
Loans (1)                                                 $627,092     $11,599        7.40 %  $584,548     $11,595        7.93 %
Taxable securities                                         211,099       2,603        4.93     164,780       2,497        6.06
Tax-exempt securities (2)                                   13,620         221        6.49       8,728         171        7.84
Federal funds sold                                          10,261          45        1.75       6,796          59        3.46
                                                          ________     _______                ________    ________

  Total interest-earning assets                            862,072      14,468        6.71     764,852      14,322        7.49
                                                                       _______                            ________

Non-interest earning assets
Cash and due from banks                                     19,561                              19,736
Allowance for loan and lease losses                         (6,477)                             (6,419)
Other assets                                                37,809                              30,244
                                                          ________                            ________
  Total assets                                            $912,965                            $808,413
                                                          ========                            ========

    Liabilities and stockholders' equity

Interest-bearing liabilities
Interest bearing deposits                                 $674,038       3,991        2.37    $597,739       5,349        3.58
Borrowings                                                  34,749         319        3.66      24,578         319        5.19
                                                          ________     _______                ________    ________
  Total interest-bearing liabilities                       708,787       4,310        2.43     622,317       5,668        3.64
                                                                       _______                            ________
Non-interest bearing liabilities
Demand deposits                                            116,028                             111,516
Other liabilities                                           12,245                               8,233
                                                          ________                            ________
  Total liabilities (3)                                    837,060                             742,066
Stockholders' equity                                        75,905                              66,347
                                                          ________                            ________

  Total liabilities and stockholders' equity              $912,965                            $808,413
                                                          ========                            ========


Net interest income (tax-equivalent basis)                              10,158        4.28                   8,654        3.85
Tax-equivalent basis adjustment                                            (98)                                (79)
                                                                       _______                            ________
  Net interest income                                                  $10,060                              $8,575
                                                                       =======                            ========

Net interest income as a percent of interest-earning assets
(tax-equivalent basis)                                                                4.71 %                              4.53 %

------------------------------------------------------------------------------------------------------------------------------------
(1) Nonaccrual loans and any related interest recorded have been included in computing the average rate earned on the loan
portfolio. When applicable, tax exempt loans are computed on a fully taxable equivalent basis using the corporate federal tax
rate of 34%.
(2) Computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%.
(3) All deposits are in domestic bank offices.

</TABLE>

<PAGE>


 Provision for Loan and Lease Losses

     The provision for loan and lease losses represents management's calculation
of the  amount  necessary  to bring  the  allowance  for loan and  lease  losses
("ALLL") to a level that  management  considers  adequate to reflect the risk of
estimated  losses  inherent in the  Company's  loan  portfolio as of the balance
sheet date. A more  detailed  discussion  of the  evaluation  of the ALLL can be
found in the section titled "Significant  Accounting Policy:  Allowance for loan
and  lease  losses".  In the third  quarters  of 2002 and  2001,  the  Company's
provision  for loan  and  lease  losses  was $405  thousand  and $210  thousand,
respectively.  The increase in the provision was principally a byproduct of the
higher levels of nonperforming assets.

Non-interest Income

     For the quarter ended September 30, 2002,  non-interest income totaled $1.8
million,  an  increase of $310  thousand,  or 21.2%,  when  compared to the same
period in 2001.  The  improvement  was largely due to increases  in  commissions
earned on the sales of mutual funds and  annuities  and net gains from the sales
of securities of $94 thousand and $85 thousand,  respectively.  In addition,  an
increase in syndication  fees on leases sold and in the cash surrender

                                       12

value of Bank Owned Life  Insurance  ("BOLI") of $61 thousand and $50  thousand,
respectively, also contributed to the growth in non-interest income.

Non-interest Expenses

     Non-interest  expenses  increased  $629  thousand  to $6.3  million for the
quarter ended September 30, 2002, when compared to the same period one year ago.
Contributing to the increase in non-interest  expenses were costs resulting from
the  operation of a new branch and the  assumption  of MCC's  operations by ICC,
which  resulted from the  Company's  acquisition  of certain  assets and certain
liabilities of MCC. The operating  costs  associated with the new branch and the
assumption  of MCC's  operations  amounted  to $97  thousand  and $98  thousand,
respectively,  for the quarter  ended  September  30,  2002.  The new branch was
opened and MCC's  operations were assumed in January 2002. Also  contributing to
the increase in  non-interest  expenses were  increases in salaries and benefits
and legal fees,  which  increased $423 thousand and $79 thousand,  respectively.
Salaries and benefits,  excluding amounts attributable to the new branch and the
MCC acquisition, increased $293 thousand and were attributable to normal growth.

Income Taxes

     Income tax  expense  as a  percentage  of pre-tax  income was 32.3% for the
three months ended September 30, 2002 as compared to 32.4% for the third quarter
of 2001.
                                       13

<PAGE>

           NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
                              RESULTS OF OPERATIONS

Earnings Summary

     For the first nine months of 2002, the Company  reported net income of $9.5
million,  or $0.95  diluted  earnings per common  share,  as compared  with $7.6
million,  or $0.77 diluted  earnings per common share,  for the same period last
year.  The  increase in earnings  was driven  largely by growth in net  interest
income on a taxable  equivalent basis,  which increased $3.7 million,  or 14.5%.
The  improvement in net interest  income was  attributable to growth in deposits
that  fueled   additional  growth  in  interest  earning  assets.  In  addition,
non-interest  income,  which  increased $970 thousand,  or 25.2%,  over the same
period last year also contributed to the improvement in earnings.  The growth in
revenues was partly offset by a $1.6 million,  or 9.6% increase in  non-interest
expenses.

     For the nine months ended  September  30, 2002,  ROA improved to 1.43% from
1.27% and ROE  increased to 17.49% from 15.69% when  compared to the same period
last year.

Net Interest Income

     Net interest income on a  tax-equivalent  basis increased $3.7 million,  or
14.5%,  to $29.0  million  for the nine  months  ended  September  30, 2002 when
compared to the same period in 2001. The increase in net interest income was due
to a 9.4% growth in average interest earning assets.  The interest earning asset
growth was funded by deposit  liabilities,  which grew 10.3% on average  for the
nine months  ended of  September  30,  2002 when  compared to the same period in
2001.  Contributing  to the growth in net interest income was an increase in the
margin  of 21 basis  points  to 4.65%  for the  first  nine  months of 2002 when
compared to the same period in 2001. The improvement in the margin resulted from
a decline in the Company's  cost of funds by  approximately  109 basis points to
2.19% for the nine months  ended  September  30, 2002 when  compared to the same
period in the prior year.

     Interest income, on a tax-equivalent  basis,  totaled $42.6 million for the
first nine months of 2002, a decrease of $1.0 million, or 2.4%, when compared to
the same period in 2001. The decrease was mostly attributed to an 82 basis point
decline in interest  earning  asset  yields for the first nine months of 2002 as
compared to the same  period in 2001.  The  decline in  interest  earning  asset
yields was largely attributed to a decrease in market interest rates. The impact
on interest income due to the lower interest rate  environment was partly offset
by an increase in the volume of interest-earning  assets,  which grew on average
$71.9  million,  or 9.4%, for the first nine months of 2002 when compared to the
same period last year. The growth in interest-earning  assets occurred

                                       14


mostly in securities and loans,  which  increased $39.4 million,  or 22.9%,  and
$33.2 million, or 5.8%, respectively.

     Interest  expense,  which  totaled  $13.6 million for the nine months ended
September 30, 2002,  decreased $4.7 million, or 25.9%, when compared to the same
period in 2001.  The  improvement  to  interest  expense is a  byproduct  of the
decline in interest  rates,  particularly  short-term  rates,  during  2002.  In
addition, a beneficial shift in the composition of the Company's deposits, which
is  discussed  further  in the  analysis  of  financial  condition,  also  had a
favorable  impact on the Company's  interest  expense.  The improved deposit mix
combined with lower  short-term  interest rates reduced the average rate paid on
interest  bearing  liabilities  by 132 basis points to 2.64% for the nine months
ended  September 30, 2002 when compared to the same period in 2001. The interest
expense  benefit  produced  by the  decline  in the  cost  of  interest  bearing
liabilities more than offset the increase in interest expense resulting from the
growth of deposits.  Interest bearing deposits grew on average $67.8 million, or
11.5%, for the first nine months of 2002 as compared to the same period in 2001.

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Analysis of Net Interest Income
-----------------------------------------------------------------------------------------------------------------------------------
for the nine months ended September 30,
(dollars in thousands)
(unaudited)
                                                                           2002                              2001
                                                          __________________________________________________________________________
                                                           Average                 Average      Average                  Average
                                                           Balance     Interest     Rate        Balance     Interest      Rate
                                                          ________     ________    _______      ________    ________     _______
                         Assets
<S>                                                       <C>          <C>         <C>          <C>         <C>          <C>

Interest earning assets
Loans (1)                                                 $609,248     $34,030        7.45 %    $576,023     $34,997        8.10 %
Taxable securities                                         195,056       7,799        5,33       160,925       7,603        6.30
Tax-exempt securities (2)                                   16,048         597        4.96        10,810         543        6.70
Federal funds sold                                          12,828         165        1.71        13,516         495        4.88
                                                          ________     _______                  ________    ________

  Total interest-earning assets                            833,180      42,591        6.82       761,274      43,638        7.64
                                                                       _______                              ________

Non-interest earning assets
Cash and due from banks                                     20,289                                10,173
Allowance for loan and lease losses                         (6,460)                               (6,369)
Other assets                                                37,714                                24,213
                                                          ________                              ________
  Total assets                                            $884,723                              $799,291
                                                          ========                              ========

    Liabilities and stockholders' equity

Interest-bearing liabilities
Interest bearing deposits                                 $657,584      12,688        2.57      $589,793      17,211        3.89
Borrowings                                                  28,045         872        4.15        26,600       1,083        5.43
                                                          ________     _______                  ________    ________
  Total interest-bearing liabilities                       685,629      13,560        2.64       616,393      18,294        3.96
                                                                       _______                              ________
Non-interest bearing liabilities
Demand deposits                                            114,824                               110,682
Other liabilities                                           12,136                                 7,648
                                                          ________                              ________
  Total liabilities (3)                                    812,589                               734,723
Stockholders' equity                                        72,134                                64,568
                                                          ________                              ________

  Total liabilities and stockholders' equity              $884,723                              $799,291
                                                          ========                              ========


Net interest income (tax-equivalent basis)                              29,031        4.18                    25,344        3.69
Tax-equivalent basis adjustment                                           (276)                                 (242)
                                                                       _______                              ________
  Net interest income                                                  $28,755                               $24,102
                                                                       =======                              ========

Net interest income as a percent of interest-earning assets
(tax-equivalent basis)                                                                4.65 %                                4.44 %

------------------------------------------------------------------------------------------------------------------------------------
(1) Nonaccrual loans and any related interest recorded have been included in computing the average rate earned on the loan
portfolio. When applicable, tax exempt loans are computed on a fully taxable equivalent basis using the corporate federal tax
rate of 34%.
(2) Computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%.
(3) All deposits are in domestic bank offices.

</TABLE>

                                       15
<PAGE>

Provision for Loan and Lease Losses

     For the nine  months  ended  September  30,  2002 and 2001,  the  Company's
provision  for loan  and  lease  losses  was $885  thousand  and $590  thousand,
respectively.  The increase in the provision was a result of incresed  levels of
nonperforming  assets at the Company's leasing subsidiary,  ICC, which increased
$631 thousand at September 30, 2002, when compared to September 30, 2001. A more
detailed  discussion  of the  evaluation of the ALLL can be found in the section
titled "Significant Accounting Policy: Allowance for loan and lease losses".


Non-interest Income

     For the nine months ended September 30, 2002,  non-interest  income grew to
$4.8 million, an increase of $970 thousand,  or 25.2%, when compared to the same
period one year ago. The  improvement in  non-interest  income was attributed to
increases  in the cash  surrender  value of contracts  related to the BOLI,  net
gains on the sales of securities and  commissions  earned on the sales of mutual
funds  and  annuities  of  $495  thousand,  $248  thousand  and  $198  thousand,
respectively.

Non-interest Expenses

     Non-interest  expenses  for the  nine  months  ended  September  30,  2002,
increased by $1.6 million to $18.8  million,  an increase of 9.6% from the $17.1
million total for the same period in 2001. The increase in non-interest expenses
was partly due to the Bank's  expansion  programs  undertaken  in January  2002,
which  included  a new  branch in  Hackensack,  NJ and the  assumption  of MCC's
operations.  Expenses associated with the Hackensack branch and MCC totaled $315
thousand and $361 thousand, respectively. Salaries and benefits, after adjusting
for the  increase  due to  expansion,  grew  $540  thousand.  The  increase  was
primarily due to normal growth and higher costs related to employee benefits. In
addition,  other  expenses  grew $530  thousand  mostly due to  increases in the
following:  legal  expenses of $128 thousand;  recruiting  fees of $89 thousand;
consulting  fees of $70 thousand;  and audit fees of $76  thousand;  and a legal
settlement of $113 thousand.

Income Taxes

     Income tax expense as a percentage of pre-tax income was 32.1% for the nine
months  ended  September  30,  2002 as  compared to 32.4% for the same period of
2001.

                                       16
<PAGE>

                               FINANCIAL CONDITION

     At September 30, 2002, the Company's total assets were $920.9  million,  an
increase of $90.0 million,  or 10.8%,  from $830.9 million at December 31, 2001.
The growth was  largely in loans and  securities,  which grew $43.2  million and
$36.0 million,  respectively,  during the period between  September 30, 2002 and
December 31, 2001.  The asset growth was funded  principally  by a $63.8 million
increase in deposit liabilities.

Cash and Cash Equivalents

     At September 30, 2002, cash and cash equivalents increased $14.8 million to
$37.0 million when compared to December 31, 2001. This was largely the result of
financing activities  (reflecting  principally deposit growth less repayments of
borrowings) and operating activities (reflecting net income and changes in other
assets)  generating cash more rapidly than investing  activities  (funding loans
and investment growth) could utilize it. This can be seen more completely on the
accompanying unaudited Statements of Cash Flows.

Securities Portfolio

     Under Statement of Financial  Accounting  Standards No. 115 "Accounting for
Certain  Investments in Debt and Equity Securities " ("SFAS 115"), each security
is classified as either trading, available for sale ("AFS"), or held to maturity
("HTM").  The  Company  has no  securities  held in a trading  account.  The AFS
securities are recorded at their fair value.  The after-tax  difference  between
amortized  cost and fair value of AFS  securities  is recorded  as  "accumulated
other comprehensive  income" in the equity section of the balance sheet. The tax
impact of such  adjustment  is  recorded as an  adjustment  to the amount of the
deferred tax liability.  The HTM securities are carried at cost adjusted for the
amortization of premiums and accrretion of discounts, which are recognized as an
adjustment to income. Under SFAS No. 115, HTM securities,  with some exceptions,
may only be sold within three months of maturity.

     The Company uses its securities portfolio to ensure liquidity for cash flow
requirements,  to manage  interest rate risk, to provide a source of income,  to
ensure  collateral  is available for pledging  requirements  and to manage asset
quality  diversification.  At September 30, 2002,  investment securities totaled
$229.9  million and  represented  25.0% of total  assets,  as compared to $193.9
million and 23.3%, respectively,  at December 31, 2001. AFS securities comprised
87.1% of the total  securities  portfolio at  September  30, 2002 as compared to
80.0% at December 31, 2001.  During the third quarter of 2002,  the Company sold
securities with a book value of approximately  $12.3 million and recognized $214
thousand in gains.

                                       17

<PAGE>
<TABLE>
<CAPTION>

     The following table reflects the  composition of the securities  portfolio:
(dollars in thousands)

                                                                  ------------------------------------------------------
                                                                                     September 30, 2002
                                                                  ------------------------------------------------------
                                                                                        (unaudited)
                                                                                    Gross         Gross       Estimated
                                                                    Amortized     Unrealized    Unrealized      Market
                                                                      Cost           Gains        Losses        Value
                                                                  ___________     __________    __________    __________
<S>                                                               <C>            <C>           <C>           <C>

Securities held to maturity
   Mortgage-backed securities                                         $17,782           $738           $ -     $ 18,520
   Obligations of U.S. agencies                                         1,987             89             -        2,076
   Obligations of states & political subdivisions                       9,655            873             2       10,526
   Other debt securities                                                  233              -             -          233
                                                                  ___________     __________    __________    __________

                                                                      29,657           1,700             2       31,355
                                                                  ----------      ----------    ----------    ----------
Securities available for sale
   Mortgage-backed securities                                        $98,010          $1,882          $160      $ 99,732
   Obligations of U.S. agencies                                       73,353           3,804             -        77,157
   Obligations of states & political subdivisions                     18,179           1,238             -        19,417
   Equity securities                                                   3,937               -             -         3,937
                                                                  ----------      ----------    ----------    ----------
                                                                     193,479           6,924           160       200,243
                                                                  ----------      ----------    ----------    ----------
     Total securities                                               $223,136          $8,624          $162      $231,598
                                                                  ==========      ==========    ==========    ==========

                                                                  ------------------------------------------------------
                                                                                    December 31, 2001
                                                                  ------------------------------------------------------
                                                                                    Gross         Gross       Estimated
                                                                   Amortized     Unrealized     Unrealized       Market
                                                                      Cost           Gains        Losses         Value
                                                                  ----------      ----------    ----------    ----------

Securities held to maturity
   Mortgage-backed securities                                        $22,201            $300            $9      $ 22,492
   Obligations of U.S. agencies                                        5,977             181             -         6,158
   Obligations of states & political subdivisions                      9,855             244            23        10,076
   Other debt securities                                                 839              15             -           854
                                                                  ----------      ----------    ----------    ----------
                                                                      38,872             740            32        39,580
                                                                  ----------      ----------    ----------    ----------


Securities available for sale
   Obligations of U.S. Treasury                                       $1,999             $18             -        $2,017
   Mortgage-backed securities                                         97,022           1,808          $313        98,517
   Obligations of U.S. agencies                                       39,944             529           409        40,064
   Obligations of states & political subdivisions                      9,993             462             -        10,455
   Equity securities                                                   3,977               -             -         3,977
                                                                  ----------      ----------    ----------    ----------
                                                                     152,935           2,817           722       155,030
                                                                  ----------      ----------    ----------    ----------

     Total securities                                               $191,807          $3,557         $754       $194,610
                                                                  ==========      ==========    ==========    ==========

</TABLE>

                                       18
<PAGE>

     At September 30, 2002,  the  contractual  maturities of securities  held to
maturity  and  securities  available  for  sale  were as  follows:  (dollars  in
thousands)


<TABLE>
<CAPTION>

                                  Securities                   Securities
                               Held to Maturity            Available for Sale
                            ----------------------      ------------------------
                             Amortized     Market        Amortized       Market
                                Cost        Value           Cost          Value
                            ----------------------      ------------------------

<S>                         <C>           <C>           <C>             <C>

Within 1 year                $ 2,362      $ 2,456          $ 9,377      $ 9,548
After 1 but within 5 years     5,443        5,817          116,827      121,218
After 5 but within 10 years   16,159       17,082           29,227       30,153
After 10 years                 5,693        6,000           34,111       35,387
Equity securities                  0            0            3,937        3,937
                            ----------------------      ------------------------

                  Total      $29,657     $ 31,355         $193,479     $200,243
                            ======================      ========================
</TABLE>

Loans

     Total loans  amounted to $624.6  million at September 30, 2002, an increase
of $43.2  million  from $581.3  million at  December  31,  2001.  The growth was
predominately in commercial  mortgage and commercial and financial loans,  which
increased $24.9 million and $14.8 million, respectively. In addition, commercial
lease  financing  increased  $12.0  million  mostly  due to the  acquisition  of
commercial  leases from MCC in the first quarter of 2002.  The  acquisition  was
part  of the  Company's  strategy  of  shifting  the  emphasis  of  its  leasing
subsidiary, ICC, more towards the middle-market leasing business. The 1-4 family
residential mortgage portfolio declined by $12.3 million, which served to partly
offset the commercial loan growth. Increased loan prepayments as a result of the
historically low market interest rate environment and increased  competition for
these loans drove the decline in the 1-4 family residential mortgage portfolio.

     The  following  table  reflects  the  composition  of the  loan  and  lease
portfolio: (dollars in thousands)

<TABLE>
<CAPTION>

                                        ---------------    ---------------
                                          September 30,      December 31,
                                              2002               2001
                                        ---------------    ---------------
                                          (unaudited)
<S>                                     <C>                <C>

Amount of loans by type
     Real estate-mortgage
         1-4 family residential
             First liens                       $105,513           $113,703
             Junior liens                         7,013              8,384
             Home equity                        127,943            130,658
         Commercial                             223,242            198,319
         Construction                            11,977              5,265
                                        ---------------    ---------------
                                                475,688            456,329
                                        ---------------    ---------------
     Commercial loans
         Commercial and financial               100,564             85,801
         Lease financing                         27,897             15,850
                                        ---------------   ----------------
                                                128,461            101,651
                                        ---------------   ----------------
     Consumer loans
         Lease financing                         16,640             18,822
         Installment                              3,782              4,521
                                        ---------------    ---------------
                                                 20,422             23,343
                                        ---------------    ---------------
               Total                           $624,571           $581,323
                                        ===============    ===============
</TABLE>

                                       19
<PAGE>

Deposits

     Deposits, which include non-interest-bearing demand deposits, time deposits
and other interest-bearing  deposits are an essential and cost-effective funding
source for the Company.  The Company  attributes its success in growing deposits
to the emphasis it places on building core customer  relationships by offering a
variety of products  designed to meet the financial needs of its customers based
on their identifiable "life stages".

     At September 30, 2002,  total deposits were $790;3 million,  an increase of
$63.8  million,  or 8.8%,  when compared to $726.5 million at December 31, 2001.
The growth in deposits  occurred mostly in other  interest-bearing  deposits and
time  deposits  less than  $100,000,  which  increased  $44.6  million and $10.9
million, respectively, during the period between September 30, 2002 and December
31,  2001.  Other  interest-bearing   deposits,   which  include  money  market,
interest-bearing  demand, and savings accounts,  comprise the largest segment of
the Company's  total  deposits.  At September 30, 2002,  other  interest-bearing
deposits  amounted to $446.6  million,  an increase of $44.6 million,  or 11.1%,
from  December 31, 2001 levels.  The growth in other  interest-bearing  deposits
occurred  largely in interest  bearing demand  deposits,  which  increased $29.8
million, or 10.6%, during the period between September 30, 2002 and December 31,
2001. Total time deposits  represented  28.7% of total deposits at September 30,
2002 compared to 29.6% at December 31, 2001.

     For the three and nine months  ended  September  30,  2002,  the  Company's
overall  yield on deposits  declined by 100 basis  points to 2.02% and 109 basis
points to 2.19%,  respectively,  as compared to the same periods last year.  For
each of the  periods,  the  decrease  was  attributable  to a decline  in market
interest  rates and a shift in the  composition of deposit  liabilities  towards
lower cost deposits.

     The  following  table  reflects  the  composition  of deposit  liabilities:
(dollars in thousands)

                                        -------------       -------------
                                        September 30,        December 31,
                                             2002                 2001
                                        -------------       -------------
Non-interest Demand                          $116,857            $109,416
Interest Bearing Demand                       311,996             282,173
Savings                                        78,613              72,092
Money Market Savings                           55,849              47,569
Time Deposits <$100,000                       205,635             194,754
Time Deposits >$100,000                        21,332              20,479
                                        -------------       -------------
     Total                                    790,282             726,483
                                        =============       =============


                                       20
<PAGE>

Nonperforming Assets

     Nonperforming assets are comprised of nonaccrual loans, restructured loans,
foreclosed  real estate and other  repossessed  assets.  At September  30, 2002,
nonperforming  assets amounted to $4.0 million, an increase of $1.2 million from
$2.8  million at December 31, 2001.  The  increase in  nonperforming  assets was
principally due to two credit facilities that were placed on non-accrual status:
a commercial and financial loan and a commercial  lease,  which amounted to $1.0
million and $900 thousand, respectively. The commercial and financial loan is to
a  contracting  company and is secured by cash and real estate  collateral.  The
commercial  lease  was  part  of the  leases  acquired  in the  Monarch  Capital
Corporation  transaction.  A holdback  (from the purchase  price) of $500,000 is
maintained,  which can be applied  against  losses on the acquired  leases.  The
increase in  nonperforming  assets was partly offset by a decline in residential
nonperforming  loans,  the  pay-off  of a  restructured  loan  and the sale of a
foreclosed  asset.  The  ratio  of  nonperforming  assets  to  total  loans  and
foreclosed  assets  increased  to 0.65% at  September  30,  2002  from  0.48% at
December 31, 2001.

     The  following  table  lists  nonaccrual  loans,   restructured  loans  and
foreclosed real estate and other  repossessed  assets at September 30, 2002, and
December 31, 2001. (dollars in thousands)

<TABLE>
<CAPTION>

                                                            ---------------    ---------------
                                                              September 30,       December 31,
                                                                   2002               2001
                                                            ---------------    ---------------
<S>                                                         <C>                <C>

Nonperforming loans                                                  $3,675             $2,160
Restructured Loan                                                         0                150
Foreclosed real estate and other repossessed assets                     358                492
                                                            ---------------    ---------------
      Total nonperforming assets                                     $4,033             $2,802
                                                            ===============    ===============
</TABLE>

Significant Accounting Policy

     Allowance  for loan and  lease  losses:  The  ALLL is  established  through
periodic  charges  to income.  Loan  losses are  charged  against  the ALLL when
management  believes  that the  future  collection  of  principal  is  unlikely.
Subsequent  recoveries,  if  any,  are  credited  to the  ALLL.  If the  ALLL is
considered  inadequate to absorb future loan losses on existing loans, based on,
but not limited to,  increases in the size of the loan  portfolio,  increases in
charge-offs or changes in the risk  characteristics of the loan portfolio,  then
the provision for loan and lease losses is increased.

     The Company's  ALLL is an amount  considered  adequate to absorb  estimated
losses on  existing  loans and  leases  that may become  uncollectible  based on
managemen's  evaluations  of the size and current risk  characteristics  of the
loan and lease portfolio as of the balance sheet date. The

                                       21

evaluations  consider such factors as changes in the  composition  and volume of
the loan  portfolio,  the impact of changing  economic  conditions on the credit
worthiness of the borrowers, review of specific

<PAGE>

problem  loans and  managemen's  assessment  of the  inherent  risk and  overall
quality of the loan portfolio.

     While the ALLL is management's  best estimate of loan losses incurred as of
the balance sheet date, the process of  determining  the adequacy of the ALLL is
essentially   judgmental   and  subject  to  changes  in  external   conditions.
Accordingly,  there can be no assurance  that  existing  levels of the ALLL will
ultimately prove adequate to cover actual loan losses. The ALLL was $6.7 million
at  September  30, 2002,  and $6.6  million at December  31, 2001,  representing
182.5% and 304.1% of nonperforming loans at those dates, respectively.

     The  following  table  presents the  provisions  for loan and lease losses,
loans charged off and recoveries on loans previously  charged off, the amount of
the allowance,  the average loans  outstanding and certain  pertinent ratios for
the three and nine  months  ended  September  30,  2002 and  2001.  (dollars  in
thousands)

<TABLE>
<CAPTION>

                                                    Three months ended               Nine Months ended
                                                     September 30,                    September 30,
                                                   ---------------------            --------------------
                                                      2002       2001                  2002       2001
                                                   ---------   ---------            ---------  ---------
<S>                                                <C>         <C>                  <C>        <C>

Average loans outstanding                           $627,092    $584,548             $609,248   $576,023
                                                   =========   =========            =========  =========

Allowance at beginning of period                       6,430       6,524                6,569      6,154
                                                   ---------   ---------            ---------  ---------

Loans charged off
     Real estate                                          14           3                   14          5
     Commercial and financial                              0           0                    0          0
     Commercial lease financing                          124         470                  758        697
     Consumer loans                                        0           2                   31          4
                                                   ---------   ---------            ---------  ---------
          Total                                          138         475                  803        706
                                                   ---------   ---------            ---------  ---------

Recoveries of loans previously charged off
     Real estate                                           0           2                   29         20
     Commercial and financial                              0          76                    0        266
     Commercial lease financing                            1           0                    9          6
     Consumer loans                                        9           2                   18          9
                                                   ---------   ---------            ---------  ---------
          Total                                           10          80                   56        301
                                                   ---------   ---------            ---------  ---------

Additions to allowance charged to expense                405         210                  885        590
                                                   ---------   ---------            ---------  ---------
Allowance at end of period                            $6,707      $6,339               $6,707     $6,339
                                                   =========   =========            =========  =========

Allowance to total loans                                1.07 %      1.07 %
Ratio of net charge-offs to average loans               0.08 %      0.27 %               0.16 %     0.09 %


</TABLE>

Market Risk

     The Company's primary exposure to market risk arises from changes in market
interest rates  ("interest rate risk").  The Company's  profitability is largely
dependent upon its ability to manage interest rate risk.  Interest rate risk can
be defined as the  exposure  of the  Company's  net  interest  income to adverse
movements in interest  rates.  Although the Company  manages other risks,  as in
credit and liquidity  risk,  in the normal  course of its  business,  management
considers  interest

                                       22
rate risk to be its most significant  market risk and could potentially have the
largest  material  effect on the  Company's  financial  condition.  The  primary
objective of the asset/liability management process is

<PAGE>


to measure  the effect of changing  interest  rates on net  interest  income and
economic value of equity and adjust the balance sheet, if necessary, to minimize
the  inherent  risk and  maximize  income.  On a  weekly  basis,  the  Company's
Asset/Liability Management Committee ("ALCO") meets to review matters pertaining
to market and interest rate risk. On a quarterly basis,  management  through the
use of an  asset/liability  simulation model produces a report,  which estimates
the potential impact on net interest income and future economic value of equity.
ALCO and the Board of Directors  review this report.  At September 30, 2002, the
Company  simulated the effects on net interest income given an instantaneous and
parallel shift in the yield curve of 200 basis points in either direction. Based
on the simulation,  the results did not significantly change from June 30, 2002.
At September 30, 2002,  the Company was within policy limits  established by the
Board of Directors for changes in net interest  income and future economic value
of equity.

     The  Company  does not have  any  material  exposure  to  foreign  currency
exchange rate risk or commodity  price risk.  The Company did not enter into any
market rate sensitive  instruments for trading purposes nor did it engage in any
hedging transactions utilizing derivative financial instruments during the first
nine months of 2002.

     The Company is, however, a party to financial  instruments with off-balance
sheet risk in the normal course of business to meet the  financing  needs of its
customers.  These  instruments,  which include  commitments to extend credit and
standby letters of credit,  involve, to varying degrees,  elements of credit and
interest  rate risk in  excess  of the  amount  recognized  in the  consolidated
statement of condition. Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any  condition  established  in the
contract.  Commitments  generally  have fixed  expiration  dates and may require
collateral from the borrower if deemed necessary by the Company. Standby letters
of credit are  conditional  commitments  issued by the Company to guarantee  the
performance  of a customer to a third party up to a  stipulated  amount and with
specified terms and conditions. Commitments to extend credit and standby letters
of credit are not recorded on the Company's consolidated balance sheet until the
instrument is exercised.

Capital Adequacy

     The  Company is subject to  capital  adequacy  requirements  imposed by the
Board of Governors of the Federal  Reserve System (the "Federal  Reserve");  and
the Bank is subject  to similar  capital  adequacy  requirements  imposed by the
Federal Deposit Insurance  Corporation (the "FDIC"). The Federal Reserve and the
FDIC have adopted  risk-based  capital  requirements  for assessing bank holding
company and bank capital adequacy.  These standards define capital and establish

                                       23

<PAGE>

minimum  capital  requirements  in  relation  to assets  and  off-balance  sheet
exposure,  adjusted for credit risk. The risk-based capital standards  currently
in effect are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among bank holding  companies and banks, to account
for off-balance sheet exposure.  Assets and off-balance sheet items are assigned
to broad risk  categories,  each with  appropriate  relative risk  weights.  The
resulting   capital   ratios   represent   capital  as  a  percentage  of  total
risk-weighted assets and off-balance sheet items.

     A banking  organization's total qualifying capital includes two components:
core capital (Tier 1 capital) and supplementary  capital (Tier 2 capital).  Core
capital,  which must comprise at least half of total  capital,  includes  common
shareholders'  equity,  qualifying  perpetual  preferred stock,  trust preferred
securities  (subject  to  certain  limitations)  and  minority  interests,  less
goodwill.  Supplementary capital includes the allowance for loan losses (subject
to  certain  limitations),  other  perpetual  preferred  stock,  trust-preferred
securities not includable in core capital, certain other capital instruments and
term  subordinated  debt.  Total  capital  is the sum of core and  supplementary
capital.

     At September 30, 2002, the minimum  risk-based  capital  requirements to be
considered  adequately  capitalized  were 4% for Tier 1 capital and 8% for total
capital.

     Federal banking regulators have also adopted leverage capital guidelines to
supplement the risk-based measures. The leverage ratio is determined by dividing
Tier 1 capital as  defined  under the  risk-based  guidelines  by average  total
assets (non risk-adjusted) for the preceding quarter. At September 30, 2002, the
minimum leverage ratio requirement to be considered  adequately  capitalized was
4%.

     The capital  levels of the Company and the Bank at September 30, 2002,  and
the  two  highest  capital  adequacy  levels  recognized  under  the  guidelines
established by the Federal banking agencies are included in the following table.
The Company and the Bank exceeded all the minimum capital ratios  established by
the Federal banking  agencies to be considered  "well-capitalized".  The minimum
capital guidelines are detailed in the table below.

                                       24

<PAGE>
<TABLE>
<CAPTION>

The Company's and the Bank's capital amounts and ratios are as follows: (dollars in thousands)
                                                                                                           To be "Well
                                                                                                        Capitalized" under
                                                                                For Capital              Prompt Corrective
                                                        Actual               Adequacy Purposes          Action Provisions
                                                -----------------------    ----------------------     ----------------------
                                                  Amount        Ratio         Amount      Ratio          Amount     Ratio
                                                ----------   ----------    ----------  ----------     ----------  ----------
<S>                                             <C>          <C>           <C>         <C>            <C>        <C>

As of September 30, 2002:
  Total Capital (to Risk Weighted Assets):
    The Company                                    $80,173        12.93 %     $49,613        8.00 %          N/A         N/A
    The Bank                                        78,860        12.72        49,600        8.00        $62,000       10.00 %
  Tier 1 Capital (to Risk Weighted Assets):
    The Company                                     73,466        11.85        24,807        4.00            N/A         N/A
    The Bank                                        72,152        11.64        24,800        4.00         37,200        6.00
  Tier 1 Capital (to Average Assets):
    The Company                                     73,466         8.10        27,220        3.00            N/A         N/A
    The Bank                                        72,152         7.95        27,220        3.00         45,366        5.00

As of December 31, 2001:
  Total Capital (to Risk Weighted Assets):
    The Company                                    $73,700        12.89 %     $45,727        8.00 %          N/A         N/A
    The Bank                                        71,916        12.58        45,733        8.00        $57,166       10.00 %
  Tier 1 Capital (to Risk Weighted Assets):
    The Company                                     67,131        11.74        22,864        4.00            N/A         N/A
    The Bank                                        65,347        11.43        22,866        4.00         34,299        6.00
  Tier 1 Capital (to Average Assets):
    The Company                                     67,131         8.09        24,901        3.00            N/A         N/A
    The Bank                                        65,347         7.93        24,727        3.00         41,212        5.00


</TABLE>

Liquidity

     Liquidity  is the  ability  to  provide  sufficient  resources  to meet all
financial current  obligations and finance prospective  business  opportunities.
The Company's  liquidity  position over any given period of time is a product of
its operating, financing and investing activities. The extent of such activities
is often shaped by such external  factors as competition for deposits and demand
for loans.

     The  Company's  most liquid  assets are cash and due from banks and federal
funds sold.  At September 30, 2002,  the total of such assets  amounted to $37.0
million, or 4.0%, of total assets,  compared to $22.2 million, or 2.7%, of total
assets at December 31, 2001. The increase in cash and cash  equivalents  was due
to financing activities  (reflecting  principally deposit growth less repayments
of borrowings)  and operating  activities  (reflecting net income and changes in
other assets)  generating cash more rapidly than investing  activities  (funding
loans and investment growth) could utilize it.

     Net loans at September 30, 2002 amounted to $617.9 million,  an increase of
$43.1  million,  or 7.5%,  from $574.8  million at December 31,  2001.  In 2002,
despite  heightened  competition for loans, loan production  continued to be the
Company's principal investing activity. At September 30, 2002, total securities
amounted to $229.9 million, an increase of $36.0 million or 18.6% as compared to

                                       25
<PAGE>

December 31, 2001. The growth in investments  occurred mostly in AFS securities,
which is also another  significant  liquidity source. At September 30, 2002, AFS
securities amounted to $200.2 million,  or 87.1%, of total securities,  compared
to $155.0 million, or 80.0%, of total securities at December 31, 2001.

     Financing for the Company's loans and securities is derived  primarily from
deposits, along with interest and principal payments on loans and securities. At
September 30, 2002,  total deposits  amounted to $790.3 million,  an increase of
$63.8  million,  or 8.8%,  from  December  31, 2001.  In  addition,  the Company
supplements  the more  traditional  funding  sources  with  borrowings  from the
Federal  Home Loan Bank of New York  ("FHLB")  and with  securities  sold  under
agreements to  repurchase  ("REPOS").  At September 30, 2002,  advances from the
FHLB and REPOS  amounted to $17.0 million and $22.0  million,  respectively,  as
compared to $18.1 million and $6.7 million,  respectively, at December 31, 2001.
At September 30, 2002,  total  borrowings  amounted to 4.2% of total assets,  an
increase  from 3.0% at December  31,  2001.  In  addition to the  aforementioned
sources of  liquidity,  the  Company  has  available  various  other  sources of
liquidity,  including  federal funds  purchased from other banks and the Federal
Reserve  discount  window.  The Bank  also has a $86.3  million  line of  credit
available  through its  membership  in the FHLB.  Management  believes  that the
Company's   sources  of  funds  are  sufficient  to  meet  its  current  funding
requirements.

                                       26

Item 4.  Controls and Procedures

     Within the 90 days prior to the date of this  report,  the Company  carried
out an  evaluation,  under the  supervision  and with the  participation  of the
Company's management,  including the Company's Chief Executive Officer and Chief
Financial  Officer,  of the  effectiveness  of the design and  operation  of the
Company's  disclosure  controls  and  procedures  pursuant to Exchange  Act Rule
13a-14.  Based  upon that  evaluation,  the Chief  Executive  Officer  and Chief
Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures  are  effective  in  timely  alerting  them to  material  information
relating to the Company (including its consolidated subsidiaries) required to be
included  in  the  Company's  periodic  filings  with  Securities  and  Exchange
Commissioner.  There were no significant  changes in our internal controls or in
other factors that could  significantly  affect these controls subsequent to the
date of their evaluation.

                                       27

<PAGE>

                           PART II - OTHER INFORMATION
Item 1.  Legal Proceedings
         Reference is also made to Note 3 of the  Company's  Consolidated
         Financial Statements in this Form 10-Q.

Item 2.  Change in Securities and Use of Proceeds
         None

Item 3.  Defaults Upon Senior Securities
         None

Item 4.  Submission of Matters to a Vote of Security Holders
         None

Item 5.  Other Information
         None

Item 6.  Exhibits and Reports on Form 8-K
         (a)  The following exhibits are furnished herewith:
                 Exhibit.
                 --------
                   3 (a)Certificate of Amendment to Certificate of Incorporation
                        increasing the number of common shares to 22,500,000.

                     (b) Amended and Restated Bylaws dated October 24, 2002.

                  Exhibit.
                  --------
                   11    Statement re computation of per share earnings

                  Exhibit.
                  --------
                   99    Certifications   Pursuant   to   Section   906  of  the
                         Sarbanes-Oxley Act of 2002

         (b)   Reports on Form 8-K
               None

         (c)   Executive Compensation Plans and Arrangements

               (1)  Interchange  Financial Services Corporation Stock Option and
                    Incentive Stock Plan of 1997, as amended  (formerly known as
                    "Stock  Option Plan of 1989")  filed as part of Amendment to
                    Form S-8 filed with the Securities  and Exchange  Commission
                    on August 26, 2002, is  incorporated  herein by reference to
                    Registration Statement No. 33-82530.

                                       28

<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  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.


Interchange Financial Services Corporation


By:      /s/ Anthony Labozzetta
         _________________________________
         Anthony Labozzetta
         Executive Vice President & CFO
         (Duly Authorized Officer and Principal
         Financial and Accounting Officer)

Dated: November 14, 2002

                                       29
<PAGE>




                      CERTIFICATION OF DISCLOSURE CONTROLS

I, Anthony S. Abbate, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Interchange Financial
     Services Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: November 14, 2002                    /s/ Anthony S. Abbate
      _________________                    _____________________________________
                                           President and Chief Executive Officer

<PAGE>


                      CERTIFICATION OF DISCLOSURE CONTROLS

I, Anthony Labozzetta, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Interchange Financial
     Services Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: November 14, 2002                            /s/ Anthony Labozzetta
      _________________                            _____________________________
                                                   Executive Vice President and
                                                   Chief Financial Officer


<PAGE>

Exhibit 3 (a). Certificate of Amendment to Certificate of Incorporation

                   INTERCHANGE FINANCIAL SERVICES CORPORATION

                            CERTIFICATE OF AMENDMENT
                                       TO
                          CERTIFICATE OF INCORPORATION

     Interchange Financial Services Corporation, organized under the laws of the
State of New Jersey,  to amend its Certificate of  Incorporation to increase the
number of authorized shares of Common Stock in connection with a division of its
outstanding  shares of Common Stock in accordance  with N.J.S.A.  14A:7-15.1(3),
hereby certifies:

     FIRST:  The  name of the  Corporation  is  Interchange  Financial  Services
Corporation.

     SECOND:  The Board of  Directors,  at a meeting duly called and held on May
23,  2002,  authorized  and  approved a 3 for 2  division  of all its issued and
outstanding  shares of Common Stock,  no par value,  effective July 12, 2002 and
distributable  to shareholders of record as of the close of business on June 17,
2002. As of the close of business on June 17, 2002 there were  7,274,633  shares
of Common  Stock,  no par value  issued and  outstanding  which are divided into
10,911,950 shares of Common Stock, no par value.

     THIRD: To increase the number of authorized  shares of the Corporation from
15,000,000  to  22,500,000,  Article  V  of  the  Corporation's  Certificate  of
Incorporation  is amended to delete the first  paragraph  thereof and replace it
with a paragraph reading as follows:

                                   "ARTICLE V
                                  CAPITAL STOCK

          The  Corporation  is authorized to issue  22,500,000  shares of common
          stock,  all of which are without nominal or par value, as the Board of
          Directors may determine.  The  Corporation is also authorized to issue
          1,000,000  shares of preferred stock, all of which are without nominal
          or par value, as the Board of Directors may determine."

     Except as set  forth in the  foregoing  amendment,  all  provisions  of the
Corporation's  Certificate  of  Incorporation  shall  continue in full force and
effect.

     FOURTH: The amendment  described in Article THIRD will not adversely affect
the rights or preferences  of the holders of outstanding  shares of any class or
series and will not result in the  percentage of authorized  shares that remains
unissued  after the share  division  described in Article  SECOND  exceeding the
percentage of authorized shares that was unissued before division of shares.

     FIFTH: The within amendment to the Certificate of Incorporation was adopted
by the Board of Directors of the  Corporation  at a meeting duly called and held
on May 23, 2002 in accordance with N.J.S.A. 14A:7-15.1(2).

     SIXTH:  The  foregoing  amendment  to  the  Corporation's   Certificate  of
Incorporation  shall become  effective to occur on the later of July 12, 2002 or
the date on which this  Certificate  of Amendment is filed with the Secretary of
State of the State of New Jersey.


     IN WITNESS WHEREOF,  the Corporation has caused its duly authorized officer
to execute this certificate the 28th day of June, 2002.


ATTEST:                                  INTERCHANGE FINANCIAL SERVICES
                                         CORPORATION



BY:   /s/ Benjamin Rosenzweig            BY: /s/ Anthony J. Labozzetta
      _______________________                ___________________________________
      Benjamin Rosenzweig                    Anthony J. Labozzetta
      Secretary                              Executive Vice President & CFO


<PAGE>

Exhibit 3 (b).  Amended and Restated Bylaws dated October 24, 2002.

                   INTERCHANGE FINANCIAL SERVICES CORPORATION
                             Park 80 West/Plaza Two
                         Saddle Brook, New Jersey 07663

                                     BY-LAWS

                                    ARTICLE I
                              SHAREHOLDERS' MEETING

Section 1 - Annual Meeting

     The Annual Meeting of  Shareholders  for the election of Directors and such
     other business as may properly come before the meeting shall be held on the
     last Wednesday in April each year at the principal place of business of the
     Corporation; or at such other date and place as shall be fixed by the Board
     of Directors  (hereinafter referred to as the "Board").  The Annual Meeting
     shall be held upon not less than ten,  nor more than  sixty,  days  written
     notice of the hours,  date, place and purposes of the meeting.

 Section 2 - Special Meetings

     A Special  Meeting of  shareholders  may be called  for any  purpose by the
     Chairman  of the  Board,  the  President,  a  majority  of the Board or the
     Executive  Committee.  A special  meeting  shall be held upon not less than
     ten, nor more than sixty days written notice of the hour,  date,  place and
     purposes of the meeting.

Section 3 - Quorum

     A majority of the  outstanding  common  stock  represented  in person or by
     proxy shall constitute a quorum at any meeting of shareholders. If a quorum
     is not present at a meeting,  the meeting may be adjourned  and the meeting
     may be held, as adjourned, without further notice, in the event a quorum is
     present.

Section 4 - Shareholder Action

     A  majority  of the  votes  cast  shall  decide  every  question  or matter
     submitted  to  the  shareholders  at  any  meeting,  except  as to  matters
     requiring a greater  proportion of shares as provided by the Certificate of
     Incorporation or the New Jersey Business Corporation Act.

Section 5 - Record Date

     The Board shall fix a record date for each meeting of shareholders  and for
     other corporate  action for purposes of determining the shareholders of the
     Corporation  who are entitled to: (i) notice of, or to vote at, any meeting
     of  shareholders;  (ii)  give a written  consent  to any  action  without a
     meeting;  or  (iii)  receive  payment  of  any  dividend,  distribution  or
     allotment of any right.  The record date shall not be more than sixty days,
     nor  less  than  ten  days,  prior to the  shareholders  meeting,  or other
     corporate action or event to which it relates.

Section 6 - Mailing or Delivering Notice

     All notices,  dividends or distributions to which a shareholder is entitled
     shall be mailed to the most recent address  listed for each  shareholder of
     record on the books of the corporation.

<PAGE>

Section 7 - Inspectors of Election

     At meetings of  shareholders,  three  Inspectors  shall be appointed by the
     Board to manage the  election  of  directors  and to act as tellers for any
     other vote taken by ballot.  The  Inspectors of Election shall tabulate the
     proxies and ballots for the election of Directors and other votes and shall
     file with the Secretary of the meeting,  a  Certificate  under their hands,
     certifying  the results  thereof,  including in the case of the election of
     directors,  the names of the directors elected.  Upon his/her  appointment,
     each inspector shall take and sign an oath faithfully to execute the duties
     of  inspector  with strict  impartiality  and  according to the best of his
     ability.  Inspectors  shall perform all the duties imposed upon them by the
     New Jersey Business Corporation Act, Section 14A:5-26.

Section 8 - Proxies

     Shareholders  may vote at any meeting of the  shareholders  by proxies duly
     authorized in writing.

                                   ARTICLE II
                                    DIRECTORS

Section 1 - Board of Directors

     The Board  shall have  power to manage  and  administer  the  business  and
     affairs of the Corporation.  Except as expressly limited by law, all powers
     of the Corporation shall be vested in, and may be exercised by, the Board.

Section 2 - Number & Term of Office

     The number of  directors  shall be not less than five (5) and not more than
     fifteen (15). The exact number shall be determined by the Board.  Directors
     shall be  elected  according  to the class as  determined  by a  resolution
     adopted  by the Board and for such  terms as set forth in such  resolution.
     Three  classes  will be created in the  resolution  at the  initial  annual
     meeting at which directors are elected by class.  One class will be elected
     for a term of one  year,  the  second  class  for a term of two years and a
     third  class for a term of three  years.  Each class will  thereafter  hold
     office  until its  successors  are  elected and  qualified.  At each annual
     meeting  thereafter the  successors of the classes of Directors  whose term
     expires in that year  shall be  elected to hold  office for a term of three
     years and thereafter  until the  successors are elected and qualified.  The
     Board  shall have the right to  increase  the number of  Directors  between
     annual meetings and to fill the vacancies so created.

Section 3 - Regular Meetings

     The  regular  organizational  meeting  of the Board  shall be held  without
     notice  immediately  following  the annual  shareholders'  meeting  for the
     purpose of electing  officers and conducting any other business as may come
     before  the  meeting  and at such  place  as  determined  by the  Board  by
     resolution.  The Board  shall  hold  other  regular  meetings  on the third
     Thursday  of each month at such time and place as fixed by the  Board.  Any
     regular  meeting  may be omitted  entirely.  Each  Director  shall be given
     notice of all regular meetings by telephone,  in person, by regular mail or
     by hand delivery of the notice.

Section 4 - Special Meetings

     A special meeting of the Board may be called for any purpose at any time by
     the Chairman of the Board,  the  President  or a majority of the Board.  At
     least  24 hours  notice  shall be given  if  delivered  orally  (either  by
     telephone,  in person or by  telegraph),  or at least  three days notice if
     such notice shall be given by mail

<PAGE>

     to the business or  residence  address of each  Director.  The notice shall
     specify the hour, date and place of the meeting.

Section 5 - Action Without Meeting

     The Board,  and any committees of the Board,  may act without a meeting if,
     prior or  subsequent  to the  action,  each  member of the  Board,  or such
     committee  thereof,  shall  consent in writing to the  action.  The written
     consent or consents shall be filed in the minutes book.

Section 6 - Participation at Meetings by Conference Telephone Calls

     Any or all  directors  may  participate  in a  meeting  of the  Board  or a
     committee  thereof by means of telephone  conference call,  speakerphone or
     any other means of communication by which all persons  participating in the
     meeting are able to hear each other.

Section 7 - Quorum

     A majority of the Directors then in office shall constitute a quorum at any
     meeting,  except  when  otherwise  provided by law or these  By-Laws.  If a
     quorum is not present at a meeting,  the meeting may be  adjourned by those
     directors  present and the adjourned  meeting may be held,  without further
     notice,  when a quorum is  present.  The act of the  majority  present at a
     meeting at which a quorum is present shall be the act of the Board,  unless
     otherwise provided by law or these By-Laws.

Section 8 - Removal

     Any director, or the entire Board of Directors,  may be removed at any time
     by the  shareholders,  with or without cause,  but only by the  affirmative
     vote of the  holders  of at  least  80% of the  shares  of the  Corporation
     entitled to vote for the  election  of  Directors  generally.  The Board of
     Directors may remove any director for cause or suspend a Director pending a
     final determination that cause exists for removal, but in either case, only
     by a majority vote of the entire Board.

Section 9 - Vacancies on Board of Directors

     Newly created  directorships  resulting  from any increase in the number of
     directors may be filled by the Board.  Any vacancies on the Board resulting
     from death,  resignation,  disqualification,  retirement,  removal or other
     cause may be filled:  (i) by the Board;  (ii) by the affirmative  vote of a
     majority of the remaining directors in the event the vacancies have reduced
     the remaining directors to less than a quorum; or (iii) by a sole remaining
     director. Any director elected by The Board in accordance with this section
     shall  hold  office  until the next  annual  meeting  of  shareholders  and
     thereafter  until his successor  shall have been elected and qualified.  No
     decrease in the number of  directors  constituting  the Board of  Directors
     shall shorten the term of any incumbent Director.

Section 10 - Director Qualifications - 9/26/02

     A person is not  qualified to serve as a director if he or she is (a) under
     indictment for, or has ever been convicted of, a criminal offense involving
     dishonesty  or breach of trust and the  penalty for such  offense  could be
     imprisonment for more than one year; (b) is a person against whom a federal
     or state bank regulatory  agency has,  within the past ten years,  issued a
     cease and desist order for conduct involving  dishonesty or breach of trust
     and that  order is final and not  subject  to  appeal;  (c) has been  found
     either by any federal or state  regulatory  agency whose  decision is final
     and not  subject to appeal or by a court to have (i)  breached a  fiduciary
     duty involving personal profit or (ii) committed a willful violation of any
     law, rule or  regulation  governing  banking,  securities,  commodities  or
     insurance,  or any  final  cease and  desist  order  issued  by a  banking,
     securities,  commodities or insurance  regulatory  agency;  or (d) has been

<PAGE>

     nominated by a person who would be disqualified  from serving as a director
     of this  Corporation  under  subsection  (a),  (b) or (c) or (e) is a party
     (either   directly  or  through  an   affiliate)   to   litigation   or  an
     administrative   proceeding   adverse  to  the   Corporation  or  its  bank
     subsidiary,  except (i)  derivative  litigation  brought in the name of the
     Corporation  or its bank  subsidiary by the director in his or her capacity
     as a shareholder  of the  Corporation or (ii)  litigation  arising out of a
     proxy fight  concerning the election of directors of the Corporation or its
     bank  subsidiary or otherwise  involving  control of the Corporation or its
     bank  subsidiary.  Each director of the  Corporation is obligated to inform
     the   Corporation   immediately  of  any  occurrence   which  comes  within
     subsections (a), (b), (c), (d) or (e) of the prior sentence.  A director of
     the Corporation who becomes  unqualified to serve as a director pursuant to
     this  Section  shall  forthwith  cease  to  serve  as  a  director  of  the
     Corporation  without  the  necessity  of  action  by the Board to remove or
     suspend the director.  In case of a director who becomes  unqualified under
     subsection (e) of the first  sentence of this section,  the director may be
     considered  for  re-election  to the  Board  after  the  conclusion  of the
     litigation or administrative  proceeding.  The Corporation shall confirm in
     writing to any director who becomes  unqualified  to serve as a director of
     the Corporation as set forth in this Section,  that the director has become
     unqualified  and  shall  forthwith  cease  to serve  as a  director  of the
     Corporation.  In addition, notice of said disqualification and cessation of
     service shall be given to the  directors as well as to the Regional  Office
     of  the  Board  of  Governors  of  the  Federal  Reserve  System,   and  as
     appropriate, to the Commission of Banking and Insurance of the State of New
     Jersey.
                                   ARTICLE III
                             COMMITTEES OF THE BOARD

Section 1 - Executive Committee - 10/24/02

     The  Board,  at its  organizational  meeting  each  year,  may  appoint  an
     Executive Committee of at least eight (8) Directors, including the Chairman
     of the Board and the  President  and  directors  who  presently  serve,  or
     previously  served  as  chairmen  of  standing  committees.  The  Executive
     Committee  shall have the power to conduct the  affairs of the  Corporation
     between regular meetings of the full Board.  The Executive  Committee shall
     be bound to carry out the policies and  philosophies  of the full Board, as
     expressed by the Board at its regular  meetings,  and as set forth in these
     By-Laws.  Where  sufficient  policy  guidelines  are  not  available,   the
     Executive Committee shall, except in emergent matters, await discussions by
     and  policy  guidance  from the full  Board at a  meeting.  Subject  to any
     limitations  imposed  by the  New  Jersey  Business  Corporation  Act,  the
     Certificate of Incorporation,  these By-Laws or any resolution duly adopted
     by the Board, the Executive Committee may exercise all of the powers of the
     Board except the Executive Committee shall not:

     (a) Make, alter or repeal  any  By-Law
     (b) Elect, appoint or remove any officer of the corporation,  any directors
     or any member of the Executive Committee
     (c) Submit to shareholders any action that requires shareholders' approval;
     or
     (d) Amend or repeal any resolution previously adopted by the Board

     The Executive Committee shall keep minutes of its meetings and such minutes
     shall be submitted  to the next regular or special  meeting of the Board at
     which a quorum is present. The Executive Committee may make rules governing
     its meetings and  procedures as are  consistent  with these By-Laws and the
     New Jersey  Business  Corporation  Act. A  majority  of the  members of the
     Executive  Committee  shall  constitute  a quorum  for the  transaction  of
     business and the  Executive  Committee may act by the vote of a majority of
     the  directors  voting at any  meeting  at which a quorum is  present.  The
     Executive Committee shall select one of its members to serve as chairman of
     the committee.

Section 2 - Other Committees

<PAGE>

     The  Board  may  appoint,  from  time to time,  other  committees  for such
     purposes and with such powers as the Board may  determine.  A Director must
     serve a minimum of three years before being considered for the chairmanship
     of a committee.

                                   ARTICLE IV
                                    OFFICERS
Section 1

     At the first  meeting of the Board  following  each  annual  meeting of the
     shareholders of the  Corporation,  the Directors shall elect a Chairman and
     Vice  Chairman  of the  Board and  elect a  President  and one or more Vice
     Presidents who shall hold their  respective  offices from the time of their
     election  until the first  meeting of the Board  following  the next annual
     meeting of  shareholders  at which such  officers are elected or appointed.
     The elected or appointed  officers  shall hold office subject to removal by
     the Board at its pleasure. Other officers may hold more than one office.

Section 2

     The Chairman of the Board shall preside at the annual shareholders' meeting
     and all  shareholders'  meetings and at the annual meeting of the Board and
     all regular and special  meetings of the Board. The Chairman shall have all
     powers of the directors as defined in these  By-Laws,  the  Certificate  of
     Incorporation  and the Statutes of the State of New Jersey.  He shall cause
     to have  prepared  an agenda for each of the  Directo'  meetings.  The Vice
     Chairman  of the Board shall  preside  over the meeting of the Board in the
     absence of the Chairman.  The Chairman shall be an ex-officio member of all
     Board committees to which he is not appointed.  The Chairman shall exercise
     such  specific  additional  powers  and  duties as from time to time may be
     assigned by the Board.

Section 3

     The President shall be the Chief Executive  Officer of the corporation and,
     in addition to  statutory  duties,  shall,  during the recess of the Board,
     have  general  control and  management  of the affairs and  business of the
     Corporation;  he shall be a member  ex-officio of all standing  committees,
     and  shall  perform  such  other  duties as  shall,  from time to time,  be
     assigned to him by the Board or the Executive  Committee,  if any. He shall
     execute the  policies  and  instructions  of the Board and may delegate the
     duties and functions imposed upon him to other officers of the Corporation.
     In the  absence  of the  Chairman  and  Vice  Chairman  of the  Board,  the
     President  shall  preside at the  meetings of the Board and at  shareholder
     meetings.

     The President shall, from time to time,  engage other personnel,  employees
     and agents for the  Corporation  as the President and Board deem  necessary
     and advisable for the  transaction of business who shall hold their offices
     respectively  during  the  pleasure  of the  Board and the  President;  and
     perform  such duties as may be  designated  or assigned to them by the said
     Board or the President.

Section 4

     The  Vice  Presidents  shall  perform  such  duties  as  designated  by the
     President or the Board, and if the Office of the President  becomes vacant,
     the  Executive  Vice  President  shall  perform the duties of the President
     until such time as the Board elects a President.

Section 5
<PAGE>

     The Board may appoint one or more  assistant Vice  Presidents,  one or more
     Assistant  Secretaries,  one or more Assistant  Treasurers;  and such other
     officers  as, from time to time,  may appear to the Board to be required or
     desirable to transact the business of the corporation.  Such officers shall
     exercise  such powers and perform  such duties as pertain to their  several
     offices,  or as may be  conferred  upon or assigned to them by the Board or
     the President.

Section 6

     The Secretary,  in addition to statutory duties,  shall act as Secretary of
     all meetings of the  shareholders  and shall record the minutes of all such
     meetings in books  provided  for that  purpose;  shall attend to giving and
     serving of all  notices of the  Corporation  and shall have  charge of such
     books,  documents  and papers as the Board may direct:  shall  perform such
     other duties as shall,  from time to time,  be assigned by the Board or The
     Executive  Committee,  if any, and shall be sworn to the faithful discharge
     of duties.


Section 7

     The  Treasurer,  in  addition  to  statutory  duties,  shall  keep full and
     accurate  accounts of the receipts and disbursements of the funds belonging
     to the  Corporation,  shall disburse the funds of the corporation as may be
     ordered by the Board or by the Executive  Committee,  if any, taking proper
     vouchers  for such  disbursements,  and shall render to the  President  and
     Directors  whenever  they may require,  an account of all  transactions  as
     Treasurer and of the financial condition of the Corporation;  shall perform
     such other duties as shall be assigned by the Board or Executive Committee,
     if any.

Section 8

     If the office of any  Director or of the  Chairman or Vice  Chairman of the
     Board, the President, Vice President, Secretary or Treasurer or one or more
     of them becomes vacant for any reason whatsoever,  the remaining Directors,
     at any duly convened meeting, may by a majority vote of those present, fill
     such  vacancy and the person  chosen  shall hold office for the  un-expired
     term of such office and until his successor shall be chosen.

Section 9

     All officers  and agents  chosen or appointed by the Board shall be subject
     to removal by the Board at any time, with or without cause;  and in case of
     the  absence of any  officers or agent of the Board may,  without  removal,
     delegate that officer's  powers and duties to any other officer or suitable
     person for such period as it shall deem proper.

Section 10

     The  Corporation  shall  indemnify its officers,  directors,  employees and
     agents and former officers,  directors,  employees and agents and any other
     persons serving at the request of the Corporation as an officer,  director,
     employee or agent of another corporation,  association,  partnership, joint
     venture,  trust or other enterprise against expenses  (including  attorneys
     fees,  judgments,  fines  and  amounts  paid  in  settlement)  incurred  in
     connection  with any  pending or  threatened  action,  suit or  proceeding,
     whether civil, criminal,  administrative or investigative,  with respect to
     such officer,  director,  employee,  agent or other person is a party or is
     threatened  to be made a party  to the  full  extent  permitted  by the New
     Jersey Business corporation Act. The indemnification  provided herein shall
     not be deemed  exclusive  of any other  right to which any  person  seeking
     indemnification  may be  entitled  under any By-Law,  agreement  or vote of
     shareholders  or  disinterested   directors  or  vote  of  shareholders  or
     otherwise, both as to action in their official capacity and as to action in
     another capacity and shall inure to the benefit of the heirs, executors and
     the  administrators of any such person. The Corporation shall advance legal
     fees and

<PAGE>

     expenses pursuant to this Indemnification provision whenever any officer or
     director  has been sued or  brought  into an  administrative  hearing  as a
     result  of  actions  taken  on  behalf  of  the  Corporation  or any of its
     subsidiaries,  subject,  however,  to  receipt  of an  undertaking  by  the
     officer,  director  or agent to repay  such  advances  if it be  ultimately
     determined  that  such  person  is not  entitled  to  indemnification.  The
     Corporation  shall have the power to purchase  and  maintain  insurance  on
     behalf of any  persons  enumerated  above  against any  liability  asserted
     against him and  incurred by him in any such  capacity,  arising out of his
     status as such,  whether  or not the  Corporation  would  have the power to
     indemnify him against such liability under the provisions of this Article.

Section 11

     Signature  powers of officers and  employees  and the authority of officers
     and  employees  to affix the  corporate  seal of the  corporation  shall be
     designated by the Board or the Executive Committee, if any.

                                    ARTICLE V
                                WAIVERS OF NOTICE

     Any notice required by these By-Laws,  by the Certificate of  Incorporation
     or by the New Jersey Business Corporation act may be waived in writing by a
     person  entitled to notice.  The waiver or waivers  may be executed  either
     before or after the event with respect to which the notice is waived.  Each
     director or shareholder attending a meeting without protesting prior to its
     conclusion,  the lack of proper notice shall be deemed conclusively to have
     waived notice of the meeting.

     The shares of the  corporation  shall be represented by Certificates of the
     Corporation  signed by, or in the name of, the  corporation in such form as
     authorized  by law and approved by the Board;  and shall be sealed with the
     seal of the corporation. The seal may be reproduced by facsimile.

     Nothing  contained  in this  Article VII shall be  construed to relieve any
     interested shareholder from any fiduciary obligation imposed by law.

                                   ARTICLE VI
                AMENDMENTS TO AND EFFECT OF BY-LAWS; FISCAL YEAR

     1. Force and Effect of By-Laws These By-Laws are subject to the  provisions
     of  the  New  Jersey  Business   Corporation  Act  and  the   Corporation's
     Certificate  of  Incorporation,  as it may be amended from time to time. If
     any provision in these By-Laws is inconsistent  with a provision of the Act
     or the  Certificate  of  Incorporation,  the  provisions  of the Act or the
     Certificate of Incorporation shall govern.

     2. Amendments to By-Laws: These By-Laws may be altered,  amended,  repealed
     by the shareholders, but only by the affirmative vote of the holders of 80%
     or more of the then  outstanding  voting  stock,  or by a  majority  of the
     entire Board.  Any By-Law adopted,  or repealed by the  shareholders may be
     amended or repealed by the Board, unless the resolution of the shareholders
     adopting such By-Laws  expressly  reserves to the shareholders the right to
     amend or repeal it.


     3. Fiscal Year: The fiscal year of the Corporation shall begin on the first
     day of January each year.

     4.  Records:  The  Certificate  of  Incorporation,   the  By-Laws  and  the
     proceedings  of all  meetings of the  shareholders,  the Board and standing
     committees  of the Board,  shall be recorded in  appropriate

<PAGE>

     minute books provided for the purpose. The minutes of each meeting shall be
     signed by the Secretary or other  officer  appointed to act as secretary of
     the meeting.

     5. Inspection: A copy of the By-Laws, with all amendments thereto, shall at
     all times be kept in a convenient  place at the principal place of business
     of the Corporation,  and for a proper purpose, shall be open for inspection
     to any shareholder during business hours.


<PAGE>
<TABLE>
<CAPTION>

Exhibit 11.  Computation Re: Earnings Per Share
             (dollars in thousands, except per share amounts)


                            --------------------------------------------------  ---------------------------------------------------
                                     Three Months Ended,                                  Nine Months Ended,
                            --------------------------------------------------  ---------------------------------------------------
                               September 30, 2002       September 30, 2001         September 30, 2002        September 30, 2001
                            ----------------------    ------------------------  ------------------------  -------------------------
                                   Weighted Per              Weighted  Per              Weighted  Per             Weighted    Per
                                   Average  Share             Average  Share            Average   Share           Average    Share
                            Income Shares   Amount    Income  Shares   Amount    Income Shares   Amount   Income  Shares     Amount
                            ------ -------- ------    ------ --------  -------   ------ -------- -------  ------- --------   ------
<S>                         <C>    <C>      <C>       <C>    <C>       <C>       <C>    <C>      <C>      <C>     <C>

Basic Earnings per
   Common Share
Income available to
   common shareholders      $3,457    9,824  $0.35    $2,793    9,782    $0.29   $9,462    9,806   $0.96   $7,598    9,803    $0.78
                                            ======                     =======                   =======                     ======

Effect of Dilutive Shares
Options issued to
   management                           132                        57                        122                        42
                                   --------                  --------                   --------                  --------

Diluted Earnings per
   Common Share             $3,457    9,956  $0.35    $2,793    9,839    $0.28   $9,462    9,928   $0.95   $7,598    9,845    $0.77
                            ====== ======== ======    ====== ======== ========   ====== ========  ======  ======= ========   ======

</TABLE>
<PAGE>




Exhibit 99- Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
                                      2002

In  connection  with the  filing  of the  Quarterly  Report on Form 10-Q for the
Quarter  Ended  September  30, 2002,  (the  "Report") by  Interchange  Financial
Services  Corporation  ("Registrant"),  each of the undersigned hereby certifies
that:


     1.   The Report fully complies with the requirements of Section 13(a) or 15
          (d) of the Securities Exchange Act of 1934, as amended, and

     2.   The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of Registrant.


                                      /s/ Anthony S. Abbate
                                      _____________________________________
                                      Anthony S. Abbate
                                      President and Chief Executive Officer


                                      /s/ Anthony Labozzetta
                                      _____________________________________
                                      Anthony Labozzetta
                                      Executive Vice President and CFO