<TABLE>
Interchange Financial Services Corporation
------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
<CAPTION>

                                                                                            September 30,       December 31,
                                                                                                1999                1998
                                                                                            --------------      --------------
                                                                                            (unaudited)
<S>                                                                                         <C>                 <C>
Assets
Cash and due from banks                                                                      $ 15,601            $ 20,109
Federal funds sold                                                                                  -              23,175
                                                                                            --------------      --------------
Total cash and cash equivalents                                                                15,601              43,284
                                                                                            --------------      --------------

Securities held to maturity at amortized cost (estimated market value of $53,685
     and $54,761 at September 30, 1999 and December 31, 1998, respectively)                    54,180              54,159
                                                                                            --------------      --------------
Securities available for sale at estimated market value (amortized cost of $110,314
     $93,872 at September 30, 1999 and December 31, 1998, respectively)                       109,638              95,771
                                                                                            --------------      --------------

Loans                                                                                         505,931             478,717
Less:  Allowance for loan losses                                                                5,281               5,645
                                                                                            --------------      --------------
Net loans                                                                                     500,650             473,072
                                                                                            --------------      --------------

Premises and equipment, net                                                                     9,765               9,871
Foreclosed real estate                                                                            250                  84
Accrued interest receivable and other assets                                                    8,471               9,123
                                                                                            ==============      ==============
Total assets                                                                                 $698,555            $685,364
                                                                                            ==============      ==============

Liabilities
Deposits
    Non-interest bearing                                                                     $100,160            $107,408
    Interest bearing                                                                          502,337             491,324
                                                                                            --------------      --------------
Total deposits                                                                                602,497             598,732
                                                                                            --------------      --------------

Securities sold under agreements to repurchase                                                  7,250               8,780
Short-term borrowings                                                                          21,955               9,768
Accrued interest payable and other liabilities                                                  6,810               5,712
                                                                                            --------------      --------------
Total liabilities                                                                             638,512             622,992
                                                                                            --------------      --------------

Commitments and contingent liabilities

Stockholders' equity:
Common stock, without par value; 15,000,000 shares authorized;
    6,889,776 and 7,200,133 shares issued and outstanding at September 30, 1999
    and December 31, 1998, respectively                                                         5,397               5,397
Capital surplus                                                                                21,304              21,256
Retained earnings                                                                              40,384              35,482
Accumulated other comprehensive (loss) income                                                    (447)              1,192
                                                                                            --------------      --------------
                                                                                               66,638              63,327
Less:  Treasury stock                                                                           6,595                 955
                                                                                            --------------      --------------
Total stockholders' equity                                                                     60,043              62,372
                                                                                            ==============      ==============
Total liabilities and stockholders' equity                                                   $698,555            $685,364
                                                                                            ==============      ==============

------------------------------------------------------------------------------------------------------------------------------
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>

<PAGE>

<TABLE>


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

                                                                           Three Months Ended                  Nine Months Ended
                                                                              September 30,                      September 30,
                                                                         ----------------------------  ---------------------------
                                                                             1999           1998          1999           1998
                                                                         -------------  -------------  -------------  ------------
<S>                                                                      <C>             <C>           <C>            <C>

Interest income
Interest and fees on loans                                               $10,047         $9,997         $29,405        $29,147
Interest on federal funds sold                                               129            359             543          1,162
Interest on interest bearing deposits                                          -              6               -             55
Interest and dividends on securities
   Taxable interest income                                                 2,186          2,021           6,164          6,003
   Interest income exempt from federal income taxes                          142             42             339             92
   Dividends                                                                  63             77             194            208
                                                                         -------------  -------------  -------------  ------------
Total interest income                                                     12,567         12,502          36,645         36,667
                                                                         -------------  -------------  -------------  ------------

Interest expense
Interest on deposits                                                       4,486          4,751          13,112         13,969
Interest on short-term borrowings                                            246            235             712            692
Interest on long-term borrowings                                               -            148               -            442
                                                                         -------------  -------------  -------------  ------------
Total interest expense                                                     4,732          5,134          13,824         15,103
                                                                         -------------  -------------  -------------  ------------

Net interest income                                                        7,835          7,368          22,821         21,564
Provision for loan losses                                                    300            210             900            641
                                                                         -------------  -------------  -------------  ------------
Net interest income after provision
for loan losses                                                            7,535          7,158          21,921         20,923
                                                                         -------------  -------------  ------------- -------------

Noninterest income
Service fees on deposit accounts                                             586            652           1,727          1,926
Net gain on sale of securities                                                 3             94             859             94
Other                                                                      1,015            267           1,887            835
                                                                         -------------  -------------   -------------  -----------
Total noninterest income                                                   1,604          1,013           4,473          2,855
                                                                         -------------  -------------   -------------  -----------

Noninterest expenses
Salaries and benefits                                                      2,623          2,206           7,732          6,933
Net occupancy                                                                648            616           1,978          1,750
Furniture and equipment                                                      260            247             767            757
Advertising and promotion                                                    259            219             778            654
Federal Deposit Insurance Corporation assessment                              20             20              60             57
Acquisition                                                                    -             3                -          1,392
Other                                                                      1,261            938           3,790          3,007
                                                                         -------------  -------------   -------------  -----------
Total noninterest expenses                                                 5,071          4,249          15,105         14,550
                                                                         -------------  -------------   -------------  -----------

Income before  income taxes                                                4,068          3,922          11,289          9,228

Income taxes                                                               1,363          1,375           3,820          3,276
                                                                         -------------  -------------   -------------  -----------

Net income                                                               $ 2,705        $ 2,547         $ 7,469        $ 5,952
                                                                         =============  =============   =============  ===========

Basic earnings per common share                                            $0.38          $0.35           $1.04          $0.83
                                                                         =============  =============   =============  ===========

Diluted earnings per common share                                          $0.38          $0.35           $1.04          $0.82
                                                                         =============  =============   =============  ===========

 -------------------------------------------------------------------------------------------------------------------------------
<FN>
See notes to consolidated financial statements

</FN>
</TABLE>
<PAGE>
<TABLE>

Interchange Financial Services Corporation
----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except share data) (unaudited)
<CAPTION>

                                                                         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, 1998                                               $29,698     $1,185    $5,396   $21,557   $(1,706) $56,130
 Comprehensive income
    Net Income                                                  $5,952      5,952                                             5,952
    Other comprehensive income, net of taxes
      Unrealized  gains on debt securities                         467
      Unrealized losses securities transferred from held to
       maturity to available for sale - Acquisition                (22)
      Unrealized lossess on equity securities                     (268)
      Less: gains on disposition of equity securities              (56)
                                                             ----------
    Other comprehensive loss                                       121                   121                                    121
                                                             ----------
Comprehensive income                                            $6,073
                                                             ==========
Dividends on common stock                                                  (2,105)                                           (2,105)
Fractional shares on 3 for 2 stock split and merger shares                                                    (5)                (5)
Issued 12,769 shares of common stock in connection with
    Executive Compensation Plan                                                                               70       162      232
Exercise of 44,680 option shares                                                                     1      (331)      556      226
                                                                         ---------  -----------  ------- ---------- --------- ------
Balance at September 30, 1998                                              33,545      1,306     5,397    21,291      (988)  60,551
Comprehensive income
    Net Income                                                  $2,657      2,657                                             2,657
    Other comprehensive income, net of taxes
      Unrealized gains on debt securities                         (260)
      Unrealized gains securities transferred from held to
       maturity to available for sale - Acquisition                  5
      Unrealized gains on equity securities                        611
      Less:  gains on disposition of equity securities            (470)
                                                             ----------
    Other comprehensive income                                    (114)                 (114)                                  (114)
                                                             ----------
Comprehensive income                                             $2,543
                                                             ==========
Dividends on common stock                                                    (720)                                             (720)
Forfeiture of bonus stock                                                                                              (49)     (49)
Exercised 5,714 option shares                                                                                (35)       82       47
                                                             ---------  -----------  -------- ---------- ---------  --------- ------
Balance at December 31, 1998                                               35,482      1,192     5,397    21,256      (955)  62,372
Comprehensive income
    Net Income                                                   $7,469     7,469                                             7,469
    Other comprehensive income, net of taxes
      Unrealized losses on AFS debt securities                   (1,126)
      Less:  gains on disposition of securities (excludes equities) (90)
      Unrealized gains securities transferred from held to
       maturity to available to sale - Acquisition                   23
      Unrealized loss on equity securities                          (18)
      Less:  gains on disposition of equity securities             (428)
                                                              ----------
    Other comprehensive loss                                     (1,639)               (1,639)                               (1,639)
                                                              ----------
Comprehensive income                                             $5,830
                                                               ==========

Dividends on common stock                                                  (2,567)                                           (2,567)
Issued 14,489 shares of common stock in connection
    with Executive Compensation Plan                                                                          62       184      246
Exercised 2,954 option shares                                                                                (14)       37       23
Buy-back of stock                                                                                                   (5,861)  (5,861)
                                                                        ===========  ======== ========== ========= ========= ======
Balance at September 30, 1999                                             $40,384      $ (447)   $5,397    $21,304 $(6,595) $60,043
                                                                        ===========  ======== ========== ========= ========= ======

----------------------------------------------------------------------------------------------------------------------------------
<FN>
All share data has been adjusted for the effects of the 3 for 2 stock split issued on April 17, 1998 to shareholders of
record on March 20, 1998.
</FN>
</TABLE>
<PAGE>
<TABLE>



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

                                                                           1999           1998
                                                                         ----------     ----------
<S>                                                                      <C>           <C>
Cash flows from operating activities
Net income                                                                 $ 7,469        $ 5,952
Non-cash items included in earnings
    Depreciation and amortization                                            1,135          1,015
    Amortization of securities premiums                                        572            709
    Accretion of securities discounts                                         (128)          (131)
    Amortization of premiums in connection with acquisition                    234            305
    Provision for loan losses                                                  900            641
    Net gain on sale of securities                                            (859)           (94)
    Net gain on sale of foreclosed real estate                                 (36)             -
    Net loss on disposal of fixed assets                                         2              -
Decrease (increase) in operating assets
    Accrued interest receivable                                                254            (52)
    Other                                                                      114          1,389
(Decrease) increase in operating liabilities
    Accrued interest payable                                                  (155)           (83)
    Other                                                                    1,253           (733)
                                                                         ----------     ----------
Cash provided by operating activities                                       10,755          8,918
                                                                         ----------     ----------

Cash flows from investing activities
(Payments for) proceeds from
    Net originations of loans                                              (18,179)       (21,179)
    Purchase of loans                                                      (14,688)       (12,127)
    Purchase of term federal funds                                               -         (7,500)
    Maturities of term federal funds                                         5,000          2,500
    Sale of loans                                                                -            409
    Purchase of securities available for sale                              (53,900)       (14,662)
    Maturities of securities available for sale                             11,624         13,313
    Sale of securities available for sale                                   26,193            229
    Sale of foreclosed real estate                                             120              -
    Purchase of investment securities held to maturity                     (17,058)       (27,169)
    Maturities of investment securities held to maturity                    15,091         18,189
    Sale of securities held to maturity                                      2,003              -
    Purchase of fixed assets                                                  (910)        (1,414)
    Sale of fixed assets                                                         3              4
                                                                         ----------     ----------
Cash used in investing activities                                          (44,701)       (49,407)
                                                                         ----------     ----------

Cash flows from financing activities
Proceeds from (payments for)
    Deposits more than withdrawals                                           3,765         23,049
    Securities sold under agreements to repurchase                          12,500         16,300
    Other borrowings                                                        12,275            650
    Retirement of securities sold under agreement to repurchase and other
      borrowings                                                           (14,118)       (20,129)
    Dividends                                                               (2,567)        (2,105)
    Common stock issued                                                        246            226
    Treasury stock                                                          (5,861)             -
    Exercise of option shares from Treasury                                     23            227
                                                                         ----------     ----------
Cash provided by financing activities                                        6,263         18,218
                                                                         ----------     ----------

Increase in cash and cash equivalents                                      (27,683)       (22,271)
Cash and cash equivalents, beginning of year                                43,284         36,583
                                                                         ==========     ==========
Cash and cash equivalents, end of period                                   $15,601        $14,312
                                                                         ==========     ==========

Supplemental disclosure of cash flow information:
Cash paid for:
      Interest                                                             $13,979        $15,172
      Income taxes                                                           2,540          4,113

Supplemental disclosure of non-cash investing activities:
      Decrease - market valuation of securities available for sale          $2,574           $145
      Loans transferred to foreclosed real estate                              250              -

--------------------------------------------------------------------------------------------------
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
                                   (Unaudited)

1.       Basis of Presentation

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in conformity  with  generally  accepted  accounting  principles 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 financial condition,  results
of operations and cash flows in conformity  with generally  accepted  accounting
principles  have  been  condensed  or  omitted.   These  consolidated  financial
statements include the accounts of Interchange  Financial  Services  Corporation
and  Interchange  Bank (the "Bank") and should be read in  conjunction  with the
financial statements and schedules thereto included in the annual report on Form
10-K of Interchange  Financial Services Corporation (the "Company") for the year
ended December 31, 1998.

     The  consolidated  financial  data for the nine months ended  September 30,
1999 and 1998,  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.


     Effective  May 31, 1998,  the Company  acquired The Jersey Bank for Savings
("Jersey").    The    acquisition    has   been    accounted   for   under   the
pooling-of-interests method of accounting, accordingly, the financial statements
have been  restated  to  include  the  consolidated  accounts  of Jersey for all
periods presented prior to the date of acquisition.  The transaction resulted in
the issuance of 780,198 shares of the Company's common stock.

2.       Earnings Per Common Share

     Basic  earnings  per common share is computed by dividing net income by the
weighted average number of shares of common stock outstanding.  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 had been issued.
<PAGE>


3.  Legal Proceedings
     The Company is a party to routine  litigation  involving various aspects of
its business, none of which, 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.

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     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, 1999 and 1998,  and should be read in  conjunction
with the consolidated  financial statements and notes thereto included in Item 1
hereof.

     Effective  May 31, 1998,  the Company  acquired The Jersey Bank for Savings
("Jersey").  The  acquisition  has been  accounted  for  under  the  pooling  of
interests method of accounting,  accordingly the financial  statements have been
restated  to  include  the  consolidated  accounts  of  Jersey  for all  periods
presented prior to the date of acquisition.

Forward Looking  Information

     In  addition  to  discussing  historical  information,  we discuss  certain
matters in this report regarding the financial condition,  results of operations
and  business  of the  Company  which are not  historical  facts,  but which are
"forward  looking  statements"  within  the  meaning of the  Private  Securities
Litigation Reform Act of 1995. These "forward looking statements"  include,  but
are not limited to, estimates of capital expenditures  relating to the Year 2000
issue,  costs of remediation  and testing,  the timetable for  implementing  the
remediation  and testing  phases of Year 2000 planning,  the possible  impact of
third  parties'  Year 2000 issues on the  Company,  management's  assessment  of
contingencies  and possible  scenarios in its Year 2000  planning.  The "forward
looking  statements" in this report involve risks and  uncertainties 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; (iii) general economic conditions, internationally,  nationally, or
in the State of New Jersey;  and (iv) legislation or regulatory  requirements or
changes adversely affecting the business of the Company. Reader should not place
undue expectations on any "forward looking  statements." We are not promising to
make any public  announcement when we think "forward looking statements" in this
document are no longer accurate,  whether as a result of new  information,  what
actually happens in the future or for any other reason.
<PAGE>



          THREE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998

Earnings Summary

     For the third  quarter of 1999,  the  Company  reported  net income of $2.7
million or $0.38  diluted  earnings  per common  share,  as  compared  with $2.5
million or $0.35 diluted  earnings per common share for the same period in 1998,
an increase of $158  thousand or 6.2%.  The increase was due, in part, to a $502
thousand  improvement  in  net  interest  income,  on a  tax  equivalent  basis,
resulting  largely from a 7.0% growth in average loans outstanding for the third
quarter  of 1999 as  compared  to the same  period in 1998.  Net income was also
favorably  affected  by  improved  non-interest  income,  which  increased  $591
thousand  or 58.3% as  compared  to the same period in 1998 due mostly to income
recognition of $365 of purchase  discounts on commercial loans and gains related
to the sale of the Company's VISA TM and merchant portfolios of $86 thousand and
$330  thousand,  respectively.   Non-interest  expenses,  which  increased  $822
thousand or 19.3%  principally  due to growth and  expansion,  partly offset the
benefits described above.

                              RESULTS OF OPERATIONS

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 $502
thousand to $7.9 million for the quarter ended September 30, 1999 as compared to
the same quarter of 1998.  The increase in net interest  income is due to higher
levels of interest earning assets,  particularly loans,  coupled with a decrease
in interest  expense  resulting  from a favorable  shift in the  composition  of
deposits ("mix") and a decline in average borrowings of $8.5 million.

     For the quarter ended  September 30, 1999,  average loans  increased  $32.7
million  or 7.0% over the same  period in 1998,  which  facilitated  a growth in
average  earning  assets of $35.5  million or 5.6%.  The loan  growth was funded
largely by a $38.2  million or 6.0%  growth in  average  deposits  for the third
quarter  1999 as  compared to the same  period in 1998.  During the  comparative
period,  average  non-interest  bearing  and  interest-bearing  demand  deposits
increased  $8.4 million or 8.8% and $27.0  million or 15.1%,  respectively.  The
favorable  change  in  the  retail  deposit  mix  combined  with  lower  average
borrowings  served  to  reduce  the  Company's  cost of  funds,  resulting  in a
favorable  impact on net interest  income.  For the third  quarter of 1999,  the
Company's cost of funding interest-earning assets was 2.82% as compared to 3.23%
for the same quarter in 1998.  The benefit  derived from the lower  funding cost
was partly  offset by a decline in yields on average  interest  earning  assets,
particularly  loans.  For the quarter  ended  September  30, 1999,  the yield on
average  interest  earning  assets was 7.51% as  compared  to 7.86% for the same
period in 1998.

Non-interest Income

     For the quarter ended September 30, 1999,  non-interest  income amounted to
$1.6  million,  an  increase  of $591  thousand or 58.3% as compared to the same
period in 1998. The increase was principally due to gains related to the sale of
the Company's VISA TM and merchant portfolios of $86 thousand and $330 thousand,
respectively.  The  VISA TM and  merchant  portfolios  were  sold  following  an
evaluation of the risk/reward profiles of the portfolios,  which determined that
the risk associated with the portfolios  exceeded the levels deemed desirable by
the Company. In addition, noninterest income increased due to the recognition of
$365 thousand of income  resulting  from the early  pay-off of commercial  loans
purchased at a discount.

     These gains were partially  offset by a decrease in service fees on deposit
accounts of $66 thousand or 10.1% for the third  quarter of 1999 compared to the
same period in 1998.

Non-interest Expenses

     For the quarter ended September 30, 1999, non-interest expenses amounted to
$5.1  million,  an  increase  of $822  thousand or 19.3% as compared to the same
period in 1998.  The most  significant  changes are  discussed in the  following
paragraph.

     Salaries and  benefits,  the largest  component of  non-interest  expenses,
increased  $417  thousand or 18.9% when compared to the same quarter in 1998 due
to normal  promotions,  salary  increases and  additions to staff,  particularly
those associated with the opening of a branch in Paramus,  New Jersey during the
fourth quarter of 1998. Occupancy expense increased $32 thousand,  when compared
to the  same  quarter  in  1998  of  which  approximately  $45  thousand  can be
attributed to the opening of the Paramus branch.  Directors'  expense  increased
$121 thousand and was  attributable  to the recognition of $119 thousand of cash
surrender  value from the Directors life insurance in the third quarter of 1998,
which served to reduce the Directors' expense in that period.

Income Taxes

     Income tax  expense  as a  percentage  of pre-tax  income was 33.5% for the
three months ended September 30, 1999 as compared to 35.1% for the third quarter
of 1998.  The decrease is  attributable  to the  establishment  of a Real Estate
Investment  Trust ("REIT") in the second half of 1998.  The REIT,  which manages
certain real estate assets of the Company,  was established in an effort to take
advantage of certain tax benefits.

           NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998

Earnings Summary

     For the nine months  ended  September  30, 1999,  the Company  reported net
income of $7.5 million or $1.04 diluted  earnings per common share,  as compared
with $6.0 million or $0.82 diluted earnings per common share for the same period
of 1998, an increase of $1.5 million or 25.5%. The increase was due, in part, to
a $1.3 million  improvement in net interest income,  on a tax equivalent  basis,
resulting  largely from a 6.8% growth in average loans outstanding for the first
nine months of 1999 as compared to the same  period in 1998.  In  addition,  net
income was positively affected by improved  non-interest income, which increased
$1.6  million or 56.7% due mostly to gains  from the sale of  securities,  which
increased $765 thousand, purchase discounts collected of $670 thousand and gains
related to the sale of the  Company's  VISA TM and  merchant  portfolios  of $86
thousand and $330 thousand,  respectively.  Non-interest expenses, excluding the
1998 one-time charges associated with the acquisition of Jersey,  increased $1.9
million or 14.8% as  compared  to the same  period in 1998,  principally  due to
growth and expansion, partly offset the benefits described above.


                              RESULTS OF OPERATIONS


Net Interest Income

     Net interest  income on a tax  equivalent  basis  increased $1.3 million to
$22.9  million for the nine months ended  September  30, 1999 as compared to the
same period in 1998. The increase in net interest income is due to higher levels
of interest  earning  assets,  particularly  loans,  coupled  with a decrease in
interest expense resulting from a favorable shift in the composition of deposits
("mix") and a decline in average borrowings of $9.0 million.

     For the nine months ended September 30, 1999, average loans increased $31.0
million  or 6.8% over the same  period in 1998,  which  facilitated  a growth in
earning assets of $31.8 million or 5.1%. The loan growth was funded largely by a
$35.9 million or 6.3% growth in average  deposits for the nine months of 1999 as
compared  to the same period in 1998.  During the  comparative  period,  average
non-interest  bearing  and  interest-bearing  demand  deposits  increased  $10.0
million or 10.8% and $29.9 million or 17.9%, respectively, while higher yielding
certificates of deposits greater than $100 thousand decreased approximately $2.7
million on average. The favorable change in the retail deposit mix combined with
a decline in average  borrowings  served to reduce the Company's  cost of funds,
resulting  in a favorable  impact on net  interest  income.  For the nine months
ended September 30, 1999, the Company's cost of funding  interest-earning assets
was 2.81% as compared to 3.22% for the same period in 1998. The benefit  derived
from the lower  funding cost was partly offset by a decline in yields on average
interest earning assets, particularly loans. For the nine months ended September
30, 1999, the yield on average  interest earning assets was 7.46% as compared to
7.83% for the same period in 1998.

Non-interest Income

     For the nine months ended September 30, 1999,  non-interest income amounted
to $4.5  million,  an increase of $1.6 thousand or 56.7% as compared to the same
period in 1998.  The increase was  principally  due to the  recognition  of $859
thousand of gains  (pre-tax)  from the sale of debt and equity  securities.  The
Company  sold the  equity  securities  to  eliminate  the  market-risk  exposure
following the  announcement  by the issuing  company that it had agreed to merge
with another  organization.  The debt  securities were sold as part of a limited
portfolio  restructuring  aimed at improving the risk/reward  characteristics of
the  securities  portfolio.  In  addition,  non-interest  income was  positively
affected by the recognition of $670 thousand of income  resulting from the early
pay-off of commercial loans purchased at a discount.  Further,  gains associated
with the sale of the Company's  VISA TM and merchant  portfolios of $86 thousand
and $330 thousand, respectively, helped increase non-interest income.

     These gains were partially  offset by a decrease in service fees on deposit
accounts of $199 thousand or 10.3% for the nine months ended  September 30, 1999
compared to the same period in 1998.

Non-interest Expenses

     For the  nine  months  ended  September  30,  1999,  non-interest  expenses
amounted to $15.1  million,  an increase of $555 thousand or 3.8% as compared to
the same period in 1998.  Excluding  the one-time  charges  associated  with the
acquisition of Jersey, non-interest expenses for the nine months ended September
30, 1999 increased $1.9 million or 14.8% as compared to the same period in 1998.
The most significant changes are discussed in the following paragraph.


     Salaries and  benefits,  the largest  component of  non-interest  expenses,
increased $799 thousand or 11.5% when compared to the same period in 1998 due to
normal  promotions,  salary increases and the additions to staff associated with
the new branch opening in Paramus, New Jersey.  Occupancy expense increased $228
thousand  when compared to the same period in 1998 of which  approximately  $135
thousand of the increase can be attributed to the opening of the Paramus  branch
during the fourth quarter of 1998.  Directors'  expense  increased $384 thousand
and was attributable to the recognition of $355 thousand of cash surrender value
from the Directors  life insurance  during the first nine months of 1998,  which
served to reduce the Directors'  expense in that period.  Furthermore,  expenses
associated  with  modifying  computer  systems  to  address  the Year 2000 Issue
totaled $89 thousand for the nine months ended September 30, 1999. There were no
expenses related to the Year 2000 Issue during the same period in 1998.

Income Taxes

     Income tax expense as a percentage of pre-tax income was 33.8% for the nine
months  ended  September  30,  1999 as  compared to 35.5% for the same period in
1998. The decrease is attributable to the  establishment of a REIT in the second
half of 1998. The REIT, which manages certain real estate assets of the Company,
was established in an effort to take advantage of certain tax benefits.

                               FINANCIAL CONDITION

     At September 30, 1999, the Company's total assets were $698.5  million,  an
increase of $13.2  million or 1.9% from $685.4  million at December 31, 1998. At
September  30,  1999,  cash and cash  equivalents  decreased  $27.7  million  as
compared to December 31, 1998. The decrease in cash is principally the result of
investing  activities  (funding loans and investment growth) utilizing cash more
rapidly than  financing  activities  (reflecting  mostly changes in deposits and
borrowings) and operating activities (reflecting net income and changes in other
assets) can provide it.  This can be seen more  completely  on the  accompanying
Consolidated Statements of Cash Flows.

<PAGE>
<TABLE>
Securities

Securities held to maturity and securities available for sale consist of the following: (dollars in thousands)
<CAPTION>
                                                                   -----------------------------------------------------------------
                                                                                        September 30, 1999
                                                                   -----------------------------------------------------------------
                                                                                        Gross            Gross          Estimated
                                                                     Amortized       Unrealized       Unrealized          Market
                                                                       Cost             Gains           Losses            Value
                                                                   --------------   --------------   --------------   --------------
<S>                                                               <C>               <C>              <C>              <C>
Securities held to maturity
    Obligations of U.S. Treasury                                          $9,996              $33                -          $ 10,029
    Mortgage-backed securities                                            21,775               92             $203            21,664
    Obligations of U.S. agencies                                           7,990               32               38             7,984
    Obligations of states & political subdivisions                        14,295                -              412            13,883
    Other debt securities                                                    124                1                -               125
                                                                   --------------   --------------   --------------   --------------
                                                                          54,180              158              653            53,685
                                                                   --------------   --------------   --------------   --------------

Securities available for sale
    Obligations of U.S. Treasury                                           6,019              155                -             6,174
    Mortgage-backed securities                                            70,257              157              906            69,508
    Obligations of U.S. agencies                                          27,122              127               53            27,196
    Obligations of states & political subdivisions                         3,144                -              156             2,988
    Equity securities                                                      3,772                -                -             3,772
                                                                   --------------   --------------   --------------   --------------
                                                                         110,314              439            1,115           109,638
                                                                   --------------   --------------   --------------   --------------

       Total securities                                                 $164,494             $597           $1,768          $163,323
                                                                   ==============   ==============   ==============   ==============


                                                                   -----------------------------------------------------------------
                                                                                           December 31, 1998
                                                                   -----------------------------------------------------------------
                                                                                        Gross            Gross          Estimated
                                                                     Amortized       Unrealized       Unrealized          Market
                                                                       Cost             Gains           Losses            Value
                                                                   --------------   --------------   --------------   --------------
Securities held to maturity
    Obligations of U.S. Treasury                                        $ 15,992            $ 180                -          $ 16,172
    Mortgage-backed securities                                            18,921              227             $ 23            19,125
    Obligations of U.S. agencies                                           7,986              175                -             8,161
    Obligations of states & political subdivisions                        11,111               48                6            11,153
    Other debt securities                                                    149                1                -               150
                                                                   --------------   --------------   --------------   --------------
                                                                          54,159              631               29            54,761
                                                                   --------------   --------------   --------------   --------------

Securities available for sale
    Obligations of U.S. Treasury                                          33,264              777                -            34,041
    Mortgage-backed securities                                            42,824              398              156            43,066
    Obligations of U.S. agencies                                          13,687              190               53            13,824
    Equity securities                                                      4,097              743                -             4,840
                                                                   --------------   --------------   --------------   --------------
                                                                          93,872            2,108              209            95,771
                                                                   --------------   --------------   --------------   --------------

       Total securities                                                 $148,031           $2,739             $238          $150,532
                                                                   ==============   ==============   ==============   ==============
</TABLE>
<PAGE>
<TABLE>
       At September 30, 1999, the contractual maturities of securities held to maturity and securities
available for sale are as follows: (dollars in thousands)
<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                                         $18,533          $18,561               $ 2,001           $ 1,995
After 1 but within 5 years                             11,303           11,302                29,727            29,892
After 5 but within 10 years                            12,345           12,299                25,643            25,076
After 10 years                                         11,999           11,523                49,171            48,903
Equity securities                                           -                -                 3,772             3,772
                                                --------------    -------------       ---------------   ---------------

                        Total                         $54,180          $53,685              $110,314          $109,638
                                                ==============    =============       ===============   ===============

</TABLE>


     During  the  second  quarter  of 1999,  the  Company  performed  a  limited
securities   portfolio   restructuring   aimed  at  improving  the   risk/reward
characteristics  of  the  securities   portfolio.   Available-for-sale   ("AFS")
securities with a book value of $24.2 million were sold.  Gains of $143 thousand
and losses of $4 thousand were  recognized  from the sale. One  held-to-maturity
("HTM")  security  with a book  value of $2.0  million  was  sold.  A gain of $3
thousand was recognized from the sale. The HTM security had a remaining maturity
of less  than two  months,  therefore,  it is  considered  as a  "maturity"  for
purposes of classification of securities under Statement of Financial Accounting
Standard  No.  115,  Accounting  for  Certain  Investments  in Debt  and  Equity
Securities.

Loans

     Total loans  amounted to $505.9 million and $478.7 million at September 30,
1999 and  December  31,  1998,  respectively.  Total loans at December 31, 1998,
included $5.0 million of term federal funds sold, which for accounting  purposes
were classified as a loan. Excluding the term federal funds sold, total loans at
September 30, 1999  increased  $32.2 million or 6.8% as compared to December 31,
1998.

<PAGE>
<TABLE>

The following table reflects the composition of the loan portfolio:
<CAPTION>

                                                   -------------------    ----------------
                                                     September 30,           December 31,
                                                          1999                  1998
                                                   -------------------    ----------------
<S>                                                <C>                    <C>
Amount of loans by type (dollars in thousands)
      Real estate-mortgage
         Commercial                                          $155,996            $148,875
         1-4 family residential
              First liens                                     110,614              89,852
              Junior liens                                     10,505              14,322
              Home equity                                     146,163             142,781
      Commercial and financial                                 66,927              64,067
      Real estate-construction                                  2,768                 974
      Installment
         Credit cards and related plans                           868               2,033
         Other                                                  2,745               1,200
      Lease financing                                           9,345               9,613
      Term Fed Funds                                                -               5,000
                                                   ===================    ================
              Total                                          $505,931            $478,717
                                                   ===================    ================

</TABLE>

Deposits

     At September 30, 1999,  total  deposits  increased  $3.8 million or 0.6% to
$602.5  million  from  $598.7  million  at  December  31,  1998.  The growth was
principally  in interest  bearing  demand  deposits,  which grew $9.6 million or
4.9%.  The growth was  offset,  in part,  by a decline in  non-interest  bearing
deposits of 7.2 million or 6.7%.  Time  deposits grew $1.3 million and represent
28.5% of all  deposits at September  30, 1999,  as compared to 28.5% at December
31, 1998.

Nonperforming Assets

     Nonperforming assets are comprised of nonaccrual loans,  restructured loans
and foreclosed real estate. At September 30, 1999, nonperforming assets amounted
to $1.3  million,  a decrease  of $430  thousand  or 24.6% from $1.8  million at
September  30,  1998.  The  ratio of  nonperforming  assets  to total  loans and
foreclosed  real estate  decreased to 0.26% at September  30, 1999 from 0.37% at
September 30, 1998. At September 30, 1999,  nonperforming  assets decreased $491
thousand  or 27.1%  from  $1.8  million  at  December  31,  1998.  The  ratio of
nonperforming  assets to total loans and  foreclosed  real estate  decreased  to
0.26% at  September  30, 1999 from 0.38% at  December  31,  1998.  Nonperforming
assets decreased due to the payoff of two nonperforming consumer loans, the sale
of a foreclosed  real estate  property and principal  paydowns of a restructured
commercial loan.


Provision for Loan Losses and Loan Loss Experience

     The provision for loan losses represents management's  determination of the
amount  necessary  to bring  the  allowance  for  loan  losses  to a level  that
management  considers  adequate to reflect the risk of future losses inherent in
the Company's loan portfolio. In its evaluation of the adequacy of the allowance
for loan losses, management considers past loan loss experience,  changes in the
composition of performing and  nonperforming  loans,  the condition of borrowers
facing  financial  pressure,  the  relationship  of  the  current  level  of the
allowance  to the  credit  portfolio  and to  nonperforming  loans and  existing
economic  conditions.  However,  the process of determining  the adequacy of the
allowance  is  necessarily   subjective  and  subject  to  changes  in  external
conditions.  Accordingly,  there can be no assurance that existing levels of the
allowance will ultimately prove adequate to cover actual loan losses.

     The allowance  for loan losses was $5.3 million at September 30, 1999,  and
$5.6  million  at  December  31,  1998,   representing   493.5%  and  327.1%  of
nonperforming loans at those dates, respectively.  The decrease in the allowance
for loan losses was due to the charge-off of a commercial loan amounting to $1.1
million  during the second and third quarters of 1999. For the nine months ended
September 30, 1999,  the Company's  provision for loan losses was $900 thousand,
an increase of $259  thousand  from the same period a year ago. The increase was
largely due to continued loan growth.

Market Risk

     The Company's primary source of market risk exposure arises from changes in
market interest rates ("interest rate risk").  The Company's  success 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 rate risk to be its most significant  market risk that could
potentially  have  the  largest  material  effect  on  the  Company's  financial
condition. The primary objective of the asset/liability management process is 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. The Company's exposure to market risk and
interest  rate risk is  reviewed  on a  quarterly  basis by the  Asset/Liability
Committee.  Tools used by management to evaluate risk include an asset/liability
simulation  model.  At September 30, 1999, 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.  At September 30, 1999, the Company was
within  policy limits  established  by the Board of Directors for changes in net
interest income and future economic value.

     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 nine
months ended September 30, 1999.

     The Company is, however,  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 financial 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's subsidiary
bank 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.

<PAGE>
<TABLE>
Capital Adequacy

The Company's and the Bank's capital amounts and ratios are as follows: (dollars in thousands)
<CAPTION>

                                                                                                                     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, 1999:
    Total Capital (to Risk Weighted Assets):
       The Company                                      $65,376        14.81 %        $35,307        8.00 %        N/A          N/A
       The Bank                                          70,180        15.90           36,044        8.00      $45,054       10.00%
    Tier 1 Capital (to Risk Weighted Assets):
       The Company                                       60,095        13.62           17,653        4.00          N/A          N/A
       The Bank                                          64,899        14.40           18,022        4.00       27,033         6.00
    Tier 1 Capital (to Average Assets):
       The Company                                       60,095         8.57           21,040        3.00          N/A          N/A
       The Bank                                          64,899         9.24           21,078        3.00       35,130         5.00

As of December 31, 1998:
    Total Capital (to Risk Weighted Assets):
       The Company                                      $66,474        15.12 %        $35,149        8.00 %        N/A          N/A
       The Bank                                          63,777        14.59           34,976        8.00      $43,721       10.00%
    Tier 1 Capital (to Risk Weighted Assets):
       The Company                                       60,646        13.80           17,575        4.00          N/A          N/A
       The Bank                                          58,312        13.34           17,488        4.00       26,232         6.00
    Tier 1 Capital (to Average Assets):
       The Company                                       60,646         9.08           20,041        3.00          N/A          N/A
       The Bank                                          58,312         8.76           19,979        3.00       33,299         5.00


</TABLE>
<PAGE>

Liquidity

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

     Financing for the Company's loans and investments is derived primarily from
deposits,  along with interest and principal  payments on loans and investments.
At September 30, 1999, total deposits amounted to $602.5 million, an increase of
$3.8  million  or  0.6%  from  December  31,  1998.  In  addition,  the  Company
supplemented  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, 1999,  advances from the
FHLB and REPOS  amounted to $22.0  million and $7.3  million,  respectively,  as
compared to $9.8 million and $8.8 million, respectively, at December 31, 1998.

     In 1999,  despite  heightened  competition  for  loans and  increased  loan
prepayments,  loan production  continued to be the Company's principal investing
activity.  Net loans at  September  30,  1999  amounted  to $500.7  million,  an
increase of $27.6 million or 5.8%, from $473.1 million at December 31, 1998. Net
loans at December 31, 1998,  included  $5.0 million in term federal  funds which
matured  during  the second  quarter of 1999.  Adjusting  for the  matured  term
federal  funds,  net loans  increased  $32.6  million at  September  30, 1999 as
compared to December 31, 1998.

     The  Company's  most liquid  assets are cash and due from banks and federal
funds sold.  At September 30, 1999,  the total of such assets  amounted to $15.6
million  or 2.2% of total  assets,  compared  to $43.3  million or 6.3% of total
assets at year-end  1998.  The decline was  primarily due to a decrease of $23.2
million in federal  funds sold,  which were used to fund the growth in loans and
investments.

     Another  significant  liquidity source is the Company's  available-for-sale
("AFS")  securities.  At September 30, 1999, AFS  securities  amounted to $109.6
million  or 66.9% of total  securities,  compared  to $95.8  million or 63.9% of
total securities at year-end 1998.

     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  Company's
subsidiary  bank also has a $67.5 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 funding requirements.
<PAGE>


Preparation for the Year 2000

     Many of the world's  computers and software  applications  were designed to
read years in a two-digit format.  Thus, many of the world's information systems
and/or  computer  programs may not have the ability to recognize four digit date
code fields and,  accordingly,  may not have the ability to  distinguish  a year
that begins with "20"  instead of the  familiar  "19".  If not  corrected,  this
problem will render many computer  applications  incapable of interpreting dates
beyond the year 1999, which could significantly disrupt business.  This issue is
referred  to  herein  as  the  "Year  2000  issue".  A  company's   exposure  to
uncertainties  and costs associated with the Year 2000 issue depends on a number
of factors, including software, hardware, the industry in which it operates, and
other entities with which it electronically interacts.

     The Company has  developed  and  adopted a Year 2000  Compliance  Plan (the
"Plan") and has established a Year 2000 Compliance  Committee (the  "Committee")
to address the Year 2000 issues and prepare the Company for the new  millennium.
As recommended by the Federal Financial  Institutions  Examination  Council, the
Plan  encompassed  the  following  phases:  Awareness,  Assessment,  Renovation,
Validation and Implementation. These phases have enabled the Company to identify
risks,  develop an action  plan,  and  perform  adequate  testing  and  complete
certification  that its processing systems are Year 2000 ready. In the Awareness
phase, the Company defined the Year 2000 issues,  informed  management and staff
and  obtained  executive  level  support and funding.  In addition,  the Company
compiled a  comprehensive  list of items that may be  affected  by the Year 2000
compliance  issues.  Such items include  facilities and related  non-information
technology  systems  (embedded  technology),  computer  systems,  hardware,  and
services and products  provided by third parties.  In the Assessment  phase, the
Company  evaluated the items identified in the Awareness phase to assess whether
the items will function  properly  with the century date change.  The items were
ranked in the order that they will need to be remediated  based on their mission
critical nature and the potential  impact to the Company.  The Renovation  phase
included  an  analysis  of the  items  that  are  affected  by  Year  2000,  the
identification  of problem  areas and the  repair of  non-compliant  items.  The
Validation  (testing)  phase  included a thorough  testing and  verification  of
systems,  databases and  utilities,  including  present and forward date testing
which   consists  of  simulating   data   conditions  in  the  Year  2000.   The
Implementation  phase  consisted  of  placing  all the  systems,  databases  and
utilities that have been renovated  into  production.  As of September 30, 1999,
the Company has completed all of the phases of the Plan. The Company  expects to
continue  testing  date-sensitive  applications  throughout the remainder of the
year.

     The  Company  continues  to survey  and  communicate  with  counterparties,
intermediaries  and  vendors  ("Third  Parties")  with  whom  it  has  important
financial and  operational  relationships  to determine the extent to which they
are  vulnerable to Year 2000 issues and what impact,  if any, their efforts will
have on the Company's business and operations. In the event that a Third Party's
system will not be year 2000  compliant,  the Company has assessed the potential
risk and, to the extent it is  feasible,  transfer  its business to an alternate
vendor.  As  of  September  30,  1999,  the  Company  has  received   sufficient
information  from its Third Parties to conclude that they are in the Renovation,
Validation and Implementation  phases of their respective plans.  However, as of
September 30, 1999, the Company has not yet received conclusive information from
all Third  Parties  related to the  Renovation,  Validation  and  Implementation
phases to predict the outcome of their efforts.

     There are many risks  associated  with the Year 2000 issue,  including  the
possible failure of the Company's computer and non-financial technology systems.
Such failures could have a material  adverse effect on the Company and may cause
system malfunctions, incorrect or incomplete transaction processing resulting in
the inability to reconcile  accounting books and records.  In addition,  even if
the Company  successfully  remediates its Year 2000 issues,  it can be adversely
affected by failures of Third  Parties  with which the Company has  financial or
operational  relationships to remediate their own Year 2000 issues.  The failure
of Third  Parties to remediate  their Year 2000 issues in a timely  manner could
result in a material financial risk to the Company.  Such risks include business
interruption  or  shutdown,   financial  loss,   regulatory  actions  and  legal
liability.  The Company has developed a Year 2000 specific  contingency  plan as
part of its overall Plan in an effort to mitigate Year 2000 risk.

     Based on current  information,  the Company  does not  anticipate  that the
overall  costs related to the  implementation  of the Plan to be material in any
single year. The Company  estimates that the total external cost of implementing
its Plan will amount to approximately $170 thousand. The Year 2000 costs include
all  activities  undertaken  on Year 2000 related  matters,  including,  but not
limited to, renovation, validation, third party review and contingency planning.
However, costs for compensation and benefits of the Company's internal employees
have not yet been determined. The cost of Year 2000 compliance and the estimated
date of completion of necessary  modifications  are based on the Company's  best
estimates,  which  were  derived  from  various  assumptions  of future  events,
including  the  continued   availability  of  certain  resources,   third  party
modification  plans and other factors.  However,  there can be no guarantee that
these  estimates will be achieved,  and actual  results could differ  materially
from those  anticipated.  Through the first nine months of 1999, the Company has
expended  approximately  $89  thousand on the Year 2000  project.  All Year 2000
costs are expensed in the period incurred.


<PAGE>

                           PART II - OTHER INFORMATION

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

Item 5. Other Information
         None

Item 6.  Exhibits and Reports on Form 8-K
         (a)      The following exhibits are furnished herewith:
                  Exhibit No.

                  11       Statement Re:  Computation of Per Share Earnings
                  27       Financial Data Schedule

         (b)      The Company filed a Current Report on Form 8-K, dated
                  September 3, 1999, covering Item 5 - Other Events -
                  regarding the adoption of a Stock Repurchase Plan to
                 repurchase up to 10% of the Company's outstanding common stock.
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  and 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 12, 1999