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, June 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 July 31, 2002, was 9,823,458  shares (after giving affect
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
               June 30, 2002 and December 31, 2001 . . . . . . . . .       1

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

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

               Consolidated Statements of Cash Flows for the
               six months ended June 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



PART II   OTHER INFORMATION

      Item 1   Legal Proceedings . . . . . . . . . . . . . . . . . . . .  26

      Item 2   Changes in Securities and Use of Proceeds.  . . . . . . .  26

      Item 3   Defaults upon Senior Securities . . . . . . . . . . . . .  26

      Item 4   Submission of Matters to a Vote of Security Holders . . .  26

      Item 5   Other Information . . . . . . . . . . . . . . . . . . . .  26

      Item 6   Exhibits and Reports on Form 8-K . . . . . . . . . . . .   27

               Signatures . . . . . . . . . . . . . . . . . . . . . . .   27


<PAGE>

Item 1: Financial Statements

<TABLE>
<CAPTION>

Interchange Financial Services Corporation
------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------
(dollars in thousands)
                                                                        June 30,    December 31,
                                                                         2002          2001
                                                                      -----------   ------------
                                                                      (unaudited)

<S>                                                                   <C>           <C>

Assets
Cash and due from banks                                                  $ 18,132       $ 22,211

Securities held to maturity at amortized cost (estimated market value
      of $32,242 and $39,580 for June 30, 2002 and December 31, 2001,
      respectively)                                                        31,005         38,872
                                                                      -----------   ------------
Securities available for sale at estimated market value (amortized cost
     of $199,244 and $152,935 for June 30, 2002 and December 31, 2001,
      respectively)                                                       203,090        155,030
                                                                      -----------   ------------

Loans                                                                     621,909        581,323
Less:  Allowance for loan and lease losses                                  6,430          6,569
                                                                      -----------   ------------
Net loans                                                                 615,479        574,754
                                                                      -----------   ------------

Bank owned life insurance                                                  15,824         15,378
Premises and equipment, net                                                10,537         10,235
Foreclosed real estate and other repossesed assets                            592            492
Accrued interest receivable and other assets                               10,795         13,977
                                                                      -----------   ------------
Total assets                                                             $905,454       $830,949
                                                                      ===========   ============

Liabilities
Deposits
  Non-interest bearing                                                   $110,513       $109,416
  Interest bearing                                                        681,662        617,067
                                                                      -----------   ------------
Total deposits                                                            792,175        726,483
                                                                      -----------   ------------

Securities sold under agreements to repurchase                              6,255          6,700
Short-term borrowings                                                       7,900         18,100
Long-term borrowings                                                       10,000              -
Accrued interest payable and other liabilities                             14,250         11,433
                                                                      -----------   ------------
Total liabilities                                                         830,580        762,716
                                                                      -----------   ------------

Commitments and contingent liabilities

Stockholders' equity:
Common stock, without par value; 22,500,000 shares authorized;
    9,819,884 and 9,690,651 shares issued and outstanding at
    June 30, 2002 and December 31, 2001, respectively                       5,397          5,397
Capital surplus                                                            21,124         20,993
Retained earnings                                                          58,802         54,758
Accumulated other comprehensive income                                      2,156          1,156
                                                                      -----------   ------------
                                                                           87,479         82,304
Less:  Treasury stock                                                      12,605         14,071
                                                                      -----------   ------------
Total stockholders' equity                                                 74,874         68,233
                                                                      -----------   ------------
Total liabilities and stockholders' equity                               $905,454       $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             Six Months Ended
                                                                                  June 30,                      June 30,
                                                                            -------------------           -------------------
                                                                              2002       2001                2002      2001
                                                                            --------   --------           --------   --------

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

Interest income
Interest and fees on loans                                                   $11,340    $11,644            $22,354    $23,329
Interest on federal funds sold                                                    67        131                120        436
Interest and dividends on securities
    Taxable interest income                                                    2,598      2,575              5,102      4,970
    Interest income exempt from federal income taxes                             149        137                275        282
    Dividends                                                                     47         64                 94        136
                                                                            --------   --------           --------   --------
Total interest income                                                         14,201     14,551             27,945     29,153
                                                                            --------   --------           --------   --------


Interest expense
Interest on deposits                                                           4,313      5,796              8,697     11,862
Interest on securities sold under agreements to repurchase                        43        126                 92        341
Interest on short-term borrowings                                                110        218                250        423
Interest on long-term borrowings                                                 108          -                211          -
                                                                            --------   --------           --------   --------
Total interest expense                                                         4,574      6,140              9,250     12,626
                                                                            --------   --------           --------   --------
Net interest income                                                            9,627      8,411             18,695     16,527
Provision for loan and lease losses                                              255        200                480        380
                                                                            --------   --------           --------   --------
Net interest income after provision
 for loan losses                                                               9,372      8,211             18,215     16,147
                                                                            --------   --------           --------   --------
Non-interest income
Service fees on deposit accounts                                                 649        627              1,263      1,225
Net gain on sale of securities                                                    94         53                281        118
Other                                                                            734        474              1,494      1,035
                                                                            --------   --------           --------   --------
Total non-interest income                                                      1,477      1,154              3,038      2,378
                                                                            --------   --------           --------   --------

Non-interest expenses
Salaries and benefits                                                          3,303      3,005              6,562      6,077
Net occupancy                                                                    869        838              1,733      1,680
Furniture and equipment                                                          305        265                590        544
Advertising and promotion                                                        364        394                789        572
Federal Deposit Insurance Corporation assessment                                  33         32                 65         65
Other                                                                          1,418      1,198              2,685      2,480
                                                                            --------   --------           --------   --------
Total non-interest expenses                                                    6,292      5,732             12,424     11,418
                                                                            --------   --------           --------   --------

Income before  income taxes                                                    4,557      3,633              8,829      7,107

Income taxes                                                                   1,492      1,159              2,824      2,302
                                                                            --------   --------           --------   --------
Net income                                                                   $ 3,065    $ 2,474            $ 6,005    $ 4,805
                                                                            ========   ========           ========   ========
Basic earnings per common share                                                $0.31      $0.25              $0.61      $0.49
                                                                            ========   ========           ========   ========
Diluted earnings per common share                                              $0.31      $0.25              $0.60      $0.49
                                                                            ========   ========           ========   ========

-----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>
                                       2

<PAGE>
<TABLE>
<CAPTION>

Interchange Financial Services Corporation
------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Six Months Ended Ended June 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                                           $4,805      4,805                                                    4,805
    Other comprehensive income, net of taxes
       Unrealized gains on AFS debt securities              481
                                                  -------------
    Other comprehensive income, net of taxes                481                        481                                      481
                                                  -------------
Comprehensive income                                     $5,286
                                                  =============

Dividends on common stock                                           (1,766)                                                  (1,766)
Issued 22,320 shares of common stock in connection
    with Executive Compensation Plan                                                                       (14)        255      241
Exercised 3,546 option shares                                                                              (22)         40       18
Purchased 19,800 shares of common stock                                                                               (239)    (239)
                                                                  --------   -------------   -------   -------   ---------  -------
Balance at June 30, 2001                                            50,774           1,007     5,397    21,041     (12,695)  65,524

Comprehensive income
    Net Income                                           $5,735      5,735                                                    5,735
    Other comprehensive income, net of taxes
       Unrealized  gains on AFS debt securities             121
       Add: losses on disposition of securities              28
                                                  -------------
    Other comprehensive income                              149                        149                                      149
                                                  -------------
Comprehensive income                                     $5,884
                                                  =============
Dividends on common stock                                           (1,751)                                                  (1,751)
Exercised 9,680 option shares                                                                              (48)        112       64
Purchased 120,843 shares of common stock                                                                            (1,488)  (1,488)
                                                                  --------   -------------   -------   -------   ---------  -------
Balance at December 31, 2001                                        54,758           1,156     5,397    20,993     (14,071)  68,233

Comprehensive income
    Net Income                                           $6,005      6,005                                                    6,005
    Other comprehensive income, net of taxes
       Unrealized gains on AFS debt securities            1,187
       Less: gains on disposition of securities            (187)
                                                  -------------
    Other comprehensive income                            1,000                      1,000                                    1,000
                                                  -------------
Comprehensive income                                     $7,005
                                                  =============

Dividends on common stock                                           (1,961)                                                  (1,961)
Issued 21,069 shares of common stock in connection
    with Executive Compensation Plan                                                                        66         244      310
Exercised 18,435 option shares                                                                             (66)        213      147
Issued 107,877 shares of common stock in connection with
    the acquisition of certain assets and assumption of
                                                                                                           131       1,244    1,375
Purchased 18,150 shares of common stock                                                                               (235)    (235)
                                                                  --------   -------------   -------   -------   ---------  -------
Balance at June 30, 2002                                           $58,802          $2,156    $5,397   $21,124    $(12,605) $74,874
                                                                  ========   =============   =======  ========   =========  =======


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

</TABLE>

                                       3
<PAGE>
<TABLE>

<CAPTION>
Interchange Financial Services Corporation
-----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30,
-----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
(unaudited)
                                                                                                      2002            2001
                                                                                                  -----------     -----------
<S>                                                                                               <C>             <C>
Cash flows from operating activities
Net income                                                                                            $ 6,005         $ 4,805
Adjustments to reconcile net income to net cash provided by operating activities
    Depreciation and amortization                                                                         728             736
    Amortization of securities premiums                                                                   853             409
    Accretion of securities discounts                                                                    (147)           (174)
    Amortization of premiums in connection with acquisition                                                32              74
    Provision for loan and lease losses                                                                   480             380
    Increase in cash surrender value of Bank Owned Life Insurance                                        (446)              -
    Net gain on sale of securities                                                                       (284)           (118)
    Net gain on sale of loans                                                                             (38)           (105)
Decrease (increase) in operating assets
    Accrued interest receivable                                                                          (442)            144
    Accounts receivable- leases sold                                                                    4,921               -
    Other                                                                                                (253)            420
(Decrease) increase in operating liabilities
    Accrued interest payable                                                                              (97)           (148)
    Other                                                                                               2,915            (104)
                                                                                                  -----------     -----------
Cash provided by operating activities                                                                  14,227           6,319
                                                                                                  -----------     -----------

Cash flows from investing activities
(Payments for) proceeds from
    Purchase of loans                                                                                 (14,945)        (12,758)
    Net originations of loans                                                                         (27,066)        (13,010)
    Sale of loans                                                                                         493           1,824
    Purchase of securities available for sale                                                         (74,343)        (55,811)
    Maturities of securities available for sale                                                        20,450          24,119
    Sale of securities available for sale                                                               7,234           6,050
    Sale of securities held to maturity                                                                 2,023               -
    Purchase of securities held to maturity                                                                 -         (18,458)
    Maturities of securities held to maturity                                                           5,772          12,920
    Purchase of fixed assets                                                                             (997)           (608)
    Sale of reposessed assets                                                                             251               -
    Premium in connection with acquisition                                                             (1,861)              -
                                                                                                  -----------     -----------
Cash used in investing activities                                                                     (82,989)        (55,732)
                                                                                                  -----------     -----------

Cash flows from financing activities
Proceeds from (payments for)
    Deposits in excess of withdrawals                                                                  65,692          40,955
    Securities sold under agreements to repurchase and other borrowings                                13,542          31,760
    Retirement of securities sold under agreement to repurchase and
      other borrowings                                                                                (14,187)        (33,500)
    Dividends                                                                                          (1,961)         (1,766)
    Treasury stock                                                                                       (235)           (239)
    Common stock issued                                                                                 1,685             295
    Exercise of option shares                                                                             147             (36)
                                                                                                  -----------     -----------
Cash provided by financing activities                                                                  64,683          37,469
                                                                                                  -----------     -----------

Increase in cash and cash equivalents                                                                  (4,079)        (11,944)
Cash and cash equivalents, beginning of year                                                           22,211          33,150
                                                                                                  -----------     -----------
Cash and cash equivalents, end of period                                                              $18,132         $21,206
                                                                                                  ===========     ===========

Supplemental disclosure of cash flow information:
Cash paid for:
    Interest                                                                                           $9,348         $12,037
    Income taxes                                                                                        2,679             795

Supplemental disclosure of non-cash investing activities:
    Loans transferred to foreclosed real estated and other
      repossessed assets                                                                                  351               -
    Increase - market valuation of securities available for sale, net of taxes                         (1,000)           (481)


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

                                       4
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 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 six-month  periods ended
June 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
<PAGE>

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 July 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  No. 141  "Business  Combinations"
("SFAS 141"),  which provides guidance on accounting for a business  combination
at the date a business  combination  is completed.  SFAS 141 requires the use of
the purchase method of accounting for all business combinations  initiated after
June 30, 2001,  thereby  eliminating the use of the pooling of interest  method.
Also, it provides new criteria  that  determine  whether an acquired  intangible
asset should be recognized  separately  from goodwill.  The adoption of SFAS 141
did not have any impact on the  financial  condition or results of operations of
the Company.

     In July 2001, the FASB issued Statement of Financial  Accounting  Standards
No. 142  "Goodwill  and Other  Intangible  Asset"  ("SFAS  142") which  provides
guidance  on how to  account  for  goodwill  and  intangible  assets  after  the
acquisition is complete.  The most substantive change represented by SFAS 142 is
that  goodwill will no longer be  amortized;  instead,  it will be evaluated for
impairment on an annual basis.  Identifiable  intangible assets will continue to
be amortized  over their useful lives and reviewed for  impairment in accordance
with SFAS 121  "Accounting  for the  Impairment  of  Long-Lived  Assets  and for
Long-Lived  Assets to be Disposed  of" SFAS 142 will apply to existing  goodwill
and intangible  assets,  beginning with fiscal years starting after December 15,
2001.  The adoption of this  standard  did not have any impact on the  financial
conditio or results of operations of the Company.

     In  August  2001,  the FASB  released  Statement  of  Financial  Accounting
Standards,  "Accounting  for the  Impairment or Disposal of  Long-Lived  Assets"
"SFAS 144").  The provisions of SFAS 144 are effective for financial  statements
issued for fiscal  periods  beginning  after  December 15, 2001. The adoption of
SFAS 144 did not  have any  impact  on the  financial  position  or  results  of
operations of the Company.

     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

                                       6
<PAGE>

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  varioius   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  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.


     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 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 Company is currently reviewing
the impact of the adoption of SFAS 146 on the Company's  consolidated  financial
statements.

5.  Cash Dividend

     On May 23, 2002,  the Company  declared a cash  dividend of $0.10 per share
(adjusted for the 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.

                                     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 six month
periods ended June 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  statement" 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 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

                                       8
<PAGE>

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 JUNE 30, 2002 AND JUNE 30, 2001
                              RESULTS OF OPERATIONS

Earnings Summary

     For the second quarter of 2002, the Company  reported  earnings per diluted
common share of $0.31,  an increase of 24.0% over the $0.25 reported in the same
period in 2001.  Net income for the three  months  ended June 30,  2002 was $3.1
million, an increase of $591 thousand, or 23.9%, 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  $1.2  million,  or  14.4%,  for the
comparative  three-month periods.  Growth in earnings assets and an improved net
interest margin  ("margin")  helped to fuel the increase in net interest income.
The growth in 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 22 basis points to 4.64% for the three-month
period  ending June 30,  2002 as  compared to the same period in 2001,  resulted
from a favorable decline in the cost of funds of approximately 109 basis points.
In addition, a $323 thousand,  or 28.0%,  increase in non-interest income during
the comparative periods favorably affected revenue.

     The growth in  revenues  was  partly  offset by a $560  thousand,  or 9.8%,
increase in non-interest  expenses.  This increase largely reflects the expenses
associated  with a branch  opened  in the first  quarter  of 2002 as well as the
acquisition during the first quarter of 2002 of certain assets and assumption of
certain  liabilities of Monarch Capital  Corporation  ("MCC") by the Company. As
part of that transaction, MCC's staff joined ICC.

     For the  three  months  ended  June  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
1.38% from 1.23% and ROE  increased  to 17.23% from 15.25% 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 $1.2
million,  or 14.4%,  to $9.7  million  for the  quarter  ended June 30,  2002 as
compared to the same quarter in 2001.  The  increase in net interest  income was
due mostly to growth in deposits  and interest  earning  assets.  This  interest
earning  asset growth was funded  primarily by deposit  liabilities,  which grew
11.0% on average for the second  quarter of 2002 as compared to the same quarter
in 2001.  The margin,  which  increased  22 basis points to 4.64% for the second
quarter of 2002 as  compared  to the same  quarter in 2001,  contributed  to the
growth in net interest income.

                                      10
<PAGE>

     Interest income, on a tax-equivalent  basis,  totaled $14.3 million for the
second quarter of 2002, a decrease of $343 thousand, or 2.3%, as compared to the
same quarter in 2001.  The decrease was mostly  attributed  to a 79 basis points
decline in  interest  earning  asset  yields  for the second  quarter of 2002 as
compared to the same quarter in 2001, which 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  interest-earning
assets,  which grew on average $68.8 million, or 8.9%, for the second quarter of
2002  as  compared  to  the  same  period  last  year.  The  growth  in  average
interest-earning assets occurred mostly in securities and loans, which increased
$34.1 million, or 19.1%, and $30.8 million, or 5.3%, respectively.

     Interest  expense,  which  totaled $4.6  million for the second  quarter of
2002,  decreased $1.6 million, or 25.5%, as compared to the same period in 2001.
The  decrease  in interest  expense  was 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 131 basis points to 2.66% for the quarter ended June 30, 2002 as
compared to the same period in 2001.  The magnitude of the benefit  derived from
the decrease in rates paid on interest bearing liabilities was partially reduced
by the positive growth of deposits.  Interest  bearing  deposits grew on average
$72.8 million,  or 12.3%, for the second quarter of 2002 as compared to the same
period in 2001.

                                       11
<PAGE>

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
Analysis of Net Interest Income
------------------------------------------------------------------------------------------------------------------------------------
for the quarter ended June 30,
(dollars in thousands)                                                  2002                                2001
(unaudited)                                              ---------------------------------------------------------------------------
                                                          Average                  Average      Average                 Average
                                                          Balance    Interest       Rate        Balance    Interest      Rate
                                                         --------    --------     --------     --------    --------    --------
<S>                                                      <C>         <C>          <C>          <C>         <C>         <C>

                 Assets

Interest earning assets
Loans (1)                                                $608,589     $11,377         7.48 %   $577,745     $11,680        8.09 %
Taxable securities                                        199,186       2,645         5.31      166,536       2,639        6.34
Tax-exempt securities (2)                                  13,775         200         5.81       12,279         182        5.93
Federal funds sold                                         15,582          67         1.72       11,819         131        4.43
                                                         --------    --------                  --------    --------
     Total interest-earning assets                        837,132      14,289         6.83      768,379      14,632        7.62
                                                                     --------                              --------

Non-interest earning assets
Cash and due from banks                                    20,270                                20,247
Allowance for loan and lease losses                        (6,336)                               (6,433)
Other assets                                               38,454                                20,577
                                                         --------                              --------
     Total assets                                        $889,520                              $802,770
                                                         ========                              ========

                Liabilities and stockholders' equity

Interest-bearing liabilities
Interest bearing deposits                                $665,563       4,313         2.59     $592,783       5,796        3.91
Borrowings                                                 23,407         261         4.46       26,106         344        5.27
                                                         --------    --------                  --------    --------
     Total interest-bearing liabilities                   688,970       4,574         2.66      618,889       6,140        3.97
                                                                     --------                              --------

Non-interest bearing liabilities
Demand deposits                                           116,267                               111,700
Other liabilities                                          13,124                                 7,299
                                                         --------                              --------
     Total liabilities (3)                                818,361                               737,888
Stockholders' equity                                       71,159                                64,882
                                                         --------                              --------
     Total liabilities and stockholders' equity          $889,520                              $802,770
                                                         ========                              ========

Net interest income (tax-equivalent basis)                             9,716         4.17                     8,492        3.65
Tax-equivalent basis adjustment                                          (88)                                   (83)
                                                                     --------                              --------
     Net interest income                                              $9,628                               $  8,411
                                                                     ========                              ========
Net interest income as a percent of interest-earning
assets (tax-equivalent basis)                                                         4.64 %                               4.42 %
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
</FN>
</TABLE>

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  second  quarter  of 2002 and 2001,  the  Company's
provision  for loan  and  lease  losses  was $255  thousand  and $200  thousand,
respectively.

Non-interest Income

     For the quarter  ended June 30,  2002,  non-interest  income  totaled  $1.5
million, an increase of $323 thousand,  or 28.0%, as compared to the same period
in 2001.  Increases in the cash surrender value of the Bank Owned Life Insurance
("BOLI")  contracts  amounted to $225 thousand and were the

                                       12
<PAGE>

principal reason for this increase. In addition, commissions earned on the sales
of  mutual  funds  and  insurance  products  and net  gains  from  the  sales of
securities increased $130 thousand and $41 thousand, respectively, when compared
to the same period in 2001, and also  contributed to the growth in  non-interest
income.  Syndication  fees on leases sold by ICC  decreased by $66 thousand over
the  comparative  periods,  and  served  to  offset  some of the  aforementioned
benefits.

Non-interest Expenses

     For the quarter ended June 30, 2002,  non-interest  expenses increased $560
thousand to $6.3  million,  an increase of 9.8% when compared to the same period
one year ago. The Bank's  expansion  program,  including the acquisition of MCC,
contributed  to the  increase in  non-interest  expenses.  The Bank opened a new
branch in  Hackensack  in January 2002.  The costs  associated  with this branch
amounted to $98 thousand for the quarter  ended June 30, 2002.  In addition,  in
January  2002,  the  Company   acquired   certain  assets  and  assumed  certain
liabilities of MCC. As part of the acquisition, the staff of MCC joined ICC. The
additional staffing contributed to the increase in ICC non-interest  expenses of
$142  thousand  for the three months ended June 30, 2002 as compared to the same
period last year.  In  addition,  increases  in salaries  and benefits and other
expenses  contributed  to the increase in  non-interest  expenses.  Salaries and
benefits,  excluding  amounts  attributable  to  the  new  branch  and  the  MCC
acquisition,  increased by $161 thousand and is  attributable  to normal growth.
Other  expenses  increased  by  $220  thousand  due in  large  part  to a  legal
settlement.

Income Taxes

     Income tax  expense  as a  percentage  of pre-tax  income was 32.7% for the
three months ended June 30, 2002 as compared to 31.9% for the second  quarter of
2001.

                                      13
<PAGE>


                SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
                              RESULTS OF OPERATIONS

Earnings Summary

     For the first six months of 2002,  the Company  reported net income of $6.0
million,  or $0.60  diluted  earnings per common  share,  as compared  with $4.8
million,  or $0.49  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 $2.2 million,  or 13.1%.
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 $660 thousand,  or 27.8%,  over the same
period last year also contributed to the improvement in earnings.  The growth in
revenues was partly offset by a $1.0 million,  or 8.8% increase in  non-interest
expenses.

     For the six months ended June 30, 2002,  ROA and ROE improved to 1.38% from
1.21% and ROE  increased to 17.10% from 15.09% when  compared to the same period
last year.


Net Interest Income

     Net interest income on a  tax-equivalent  basis increased $2.2 million,  or
13.1%,  to $18.9  million for the six months  ended June 30, 2002 as compared to
the same period in 2001.  The increase in net interest  income was due to growth
in interest  earning  assets.  The interest  earning  asset growth was funded by
deposit liabilities, which grew 9.7% on average for the six months ended of June
30, 2002 as 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 4.61%
for the first six months of 2002 as compared to the same period in 2001.

     Interest income, on a tax-equivalent  basis,  totaled $28.1 million for the
first six months of 2002,a decrease of $1.2 million, or 4.1%, as compared to the
same period in 2001.  The  decrease was mostly  attributed  to an 85 basis point
decline in  interest  earning  asset  yields for the first six 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
$59.0  million,  or 7.8%,  for the first  half of 2002 as  compared  to the same
period  last year.  The growth in  interest-earning  assets  occurred  mostly in
securities  and  loans,  which  increased  $33.3  million,  or 19.5%,  and $28.5
million, or 5.0%, respectively.

     Interest expense,  which totaled $9.3 million for the six months ended June
30, 2002,  decreased $3.4 million,  or 26.7%,  as 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

                                       14
<PAGE>

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 137 basis points to 2.75% for the six months ended June 30, 2002
as compared to the same period in 2001.  The  magnitude  of the benefit  derived
from the decrease in rates paid on interest  bearing  liabilities  was partially
reduced by the positive growth of deposits.  Interest  bearing  deposits grew on
average $63.5 million, or 10.8%, for the first six months of 2002 as compared to
the same period in 2001.

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
Analysis of Net Interest Income
------------------------------------------------------------------------------------------------------------------------------------
for the quarter ended June 30,
(dollars in thousands)                                                  2002                                2001
(unaudited)                                              ---------------------------------------------------------------------------
                                                          Average                  Average      Average                 Average
                                                          Balance    Interest       Rate        Balance    Interest      Rate
                                                         --------    --------     --------     --------    --------    --------
<S>                                                      <C>         <C>          <C>          <C>         <C>         <C>

                 Assets

Interest earning assets
Loans (1)                                                $600,178     $22,431         7.47 %   $571,691     $23,402        8.19 %
Taxable securities                                        191,606       5,196         5.42      158,964       5,106        6.42
Tax-exempt securities (2)                                  12,577         376         5.98       11,870         372        6.27
Federal funds sold                                         14,133         120         1.70       16,930         436        5.15
                                                         --------    --------                  --------    --------
     Total interest-earning assets                        818,494      28,123         6.87      759,455      29,316        7.72
                                                                     --------                              --------

Non-interest earning assets
Cash and due from banks                                    20,659                                20,395
Allowance for loan and lease losses                        (6,451)                               (6,344)
Other assets                                               37,666                                21,147
                                                         --------                              --------
     Total assets                                        $870,368                              $794,653
                                                         ========                              ========

                Liabilities and stockholders' equity

Interest-bearing liabilities
Interest bearing deposits                                $649,221       8,697         2.68     $585,755      11,862        4.05
Borrowings                                                 24,637         553         4.49       27,629         764        5.53
                                                         --------    --------                  --------    --------
     Total interest-bearing liabilities                   673,858       9,250         2.75      613,383      12,626        4.12
                                                                     --------                              --------

Non-interest bearing liabilities
Demand deposits                                           114,213                               110,258
Other liabilities                                          12,080                                 7,348
                                                         --------                               -------
     Total liabilities (3)                                800,150                               730,989
Stockholders' equity                                       70,218                                63,664
                                                         --------                               -------
     Total liabilities and stockholders' equity          $870,368                               794,653
                                                         ========                               =======

Net interest income (tax-equivalent basis)                            18,873          4.12                   16,690        3.60
Tax-equivalent basis adjustment                                         (178)                                  (163)
                                                                     --------                              --------
     Net interest income                                             $18,695                               $ 16,527
                                                                     ========                              ========
Net interest income as a percent of interest-earning
assets (tax-equivalent basis)                                                         4.61%                                4.40 %
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
</FN>
</TABLE>

Provision for Loan and Lease Losses

     For the six months ended June 30, 2002 and 2001,  the  Company's  provision
for loan and lease losses was $480 thousand and $380 thousand,  respectively.  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".

                                       15

<PAGE>

Non-interest Income

     For the six months  ended June 30, 2002,  non-interest  income grew to $3.0
million,  an increase of $660 thousand,  or 27.8%, as compared to the six months
ended  June 30,  2001.  The  improvement  was  driven by  increases  in the cash
surrender  value of  contracts  related  to the BOLI,  net gains on the sales of
securities  and  commissions  on the sales of  annuities  and  insurance of $445
thousand,  $163  thousand  and  $105  thousand,  respectively.  A  reduction  in
syndication  fees from the sales of leases of $55 thousand  offset  somewhat the
aforementioned gains.

Non-interest Expenses

     For the six months ended June 30, 2002, non-interest expenses totaled $12.4
million, an increase of $1.0 million, or 8.8%, as compared to the same period in
2001.  Salaries and  benefits,  advertising  and  promotion  and other  expenses
increased $485 thousand,  $217 thousand and $205  thousand,  respectively,  when
compared  to the same  period one year ago.  The  opening  of the Bank's  newest
branch in January along with an increase in the operations of ICC comprised $287
thousand of the increase to salaries and  benefits.  Advertising  and  promotion
expenses increased as a result of a more aggressive  marketing campaign aimed at
increasing the Company's market  penetration,  the introduction of the Company's
new brand  positioning in the market place as "The Bank For People Like You" and
promotional  expenses  related to the grand  opening of the  Hackensack  office.
Other  expenses  increased  primarily due to a legal  settlement,  as well as an
increase  in  employee  recruiting  fees  of $76  thousand.  The  year  to  date
comparison  is also  affected by a  non-recurring  entrance fee of $59 thousand,
paid in 2001 for the Company's listing on the NASDAQ National Market System.

Income Taxes

     Income tax expense as a percentage of pre-tax  income was 32.0% for the six
months ended June 30, 2002 as compared to 32.4% for the same period of 2001.

                                       16
<PAGE>

                               FINANCIAL CONDITION

     The  Company's  total assets were $905.5  million at June 30,  2002,  which
represents  an  increase  of $74.5  million,  or 9.0%,  from  $830.9  million at
December 31, 2001.  The growth was largely in securities  and loans,  which grew
$40.2 million and $40.6 million,  respectively, for June 30, 2002 as compared to
December 31, 2001. The asset growth was funded  principally by growth in deposit
liabilities,  which occurred largely in interest  bearing demand deposits,  time
deposits greater than $100,000 and money market savings.

Cash and Cash Equivalents

     At June 30, 2002, cash and cash equivalents decreased $4.1 million to $18.1
million  as  compared  to  December  31,  2001.  This is  largely  the result of
investing  activities  (funding loans and investment growth) investing cash more
rapidly than financing  activities  (reflecting  principally deposit growth less
repayments of borrowings)  and operating  activities  (reflecting net income and
changes in other assets) could generate 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 accretion 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 June 30, 2002, investment securities totaled $234.1
million and represented 25.9% of total assets, as compared to $193.9 million and
23.3%, respectively, at December 31, 2001. AFS securities comprised 86.8% of the
total securities portfolio at June 30, 2002 as compared to 80.0% at December 31,
2001. During the second quarter of 2002, the Company sold securities with a book
value of approximately $6 million and recognized $94 thousand in gains.

                                       17
<PAGE>

<TABLE>
<CAPTION>

     The following table reflects the  composition of the securities  portfolio:
(dollars in thousands)
                                                                 ------------------------------------------------------------
                                                                                        June 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                                        $19,028            $659               -          $ 19,687
   Obligations of U.S. agencies                                        1,984              98               -             2,082
   Obligations of states & political subdivisions                      9,736             482             $ 2            10,216
   Other debt securities                                                 257               -               -               257
                                                                 -----------    ------------     -----------     -------------
                                                                      31,005           1,239               2            32,242
                                                                 -----------    ------------     -----------     -------------

Securities available for sale
   Mortgage-backed securities                                        102,266           2,282              59           104,489
   Obligations of U.S. agencies                                       73,471           1,199             237            74,433
   Obligations of states & political subdivisions                     18,185             622               3            18,804
   Other debt securities                                               1,385              42               -             1,427
   Equity securities                                                   3,937               -               -             3,937
                                                                 -----------    ------------     -----------     -------------
                                                                     199,244           4,145             299           203,090
                                                                 -----------    ------------     -----------     -------------
     Total securities                                               $230,249          $5,384            $301          $235,332
                                                                 ===========    ============     ===========     =============



                                                                 -------------------------------------------------------------
                                                                                    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 June 30, 2002, the contractual maturities of securities held to maturity
and securities available for sale are 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                    $   752    $   760      $ 11,597   $ 11,679
After 1 but within 5 years         7,566      7,936       122,472    124,326
After 5 but within 10 years       16,484     17,132        25,313     26,015
After 10 years                     6,203      6,414        35,925     37,133
Equity securities                      -          -         3,937      3,937
                               ---------  ---------     ---------  ---------
                     Total       $31,005    $32,242      $199,244   $203,090
                               ====================     ====================

</TABLE>

Loans

     Total loans  amounted to $621.9  million at June 30,  2002,  an increase of
$40.6  million  from  $581.3  million  at  December  31,  2001.  The  growth was
predominately  in commercial  loans and leases and  commercial  mortgage  loans,
which increased $32.6 million and $16.0 million,  respectively.  The increase in
commercial  lease  financing was due to the acquisition of  approximately  $10.7
million  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  following  table  reflects  the  composition  of the  loan  and  lease
portfolio: (dollars in thousands)

<TABLE>
<CAPTION>

                                        ---------------   ---------------
                                             June 30,       December 31,
                                               2002            2001
                                        ---------------   ---------------
                                          (unaudited)

<S>                                     <C>               <C>

Amount of loans by type
     Real estate-mortgage
         1-4 family residential
             First liens                       $111,352          $113,703
             Junior liens                         8,212             8,384
             Home equity                        126,553           130,658
         Commercial                             214,370           198,319
         Construction                             6,162             5,265
                                        ---------------    --------------
                                                466,648           456,329
                                        ---------------    --------------
     Commercial loans
         Commercial and financial               105,428            85,801
         Lease financing                         28,788            15,850
                                        ---------------    --------------
                                                134,216           101,651
                                        ---------------    --------------
     Consumer loans
         Lease financing                         17,299            18,822
         Installment                              3,746             4,521
                                        ---------------    --------------
                                                 21,045            23,343
                                        ---------------    --------------
               Total                           $621,909          $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 June 30, 2002,  total  deposits  increased  $65.7  million,  or 9.0%, to
$792.2  million from $726.5 million at December 31, 2001. The growth in deposits
occurred  mostly in other  interest-bearing  deposits and time  deposits,  which
increased  $50.0 million and $14.6  million,  respectively,  at June 30, 2002 as
compared to December 31, 2001. Other  interest-bearing  deposits,  which include
interest-bearing demand, money market and savings accounts, comprise the largest
segment  of the  Company's  total  deposits.  At June 30,  2002,  such  deposits
amounted  to $451.8  million,  an  increase  of $50.0  million,  or 12.4%,  from
December  31,  2001.  The  growth in other  interest-bearing  deposits  occurred
largely in interest bearing checking,  which increased $33.2 million,  or 11.8%,
for June 30, 2002 as compared to December 31, 2001.  Time  deposits  amounted to
$229.9  million at June 30, 2002, an increase of $14.6  million,  or 6.8%,  from
December 31, 2001. The growth in time deposits was principally  attributed to an
increase in municipal time deposits  greater than $100,000.  Total time deposits
represented  29.0%  of total  deposits  at June 30,  2002  compared  to 29.6% at
December  31,  2001.

     For the three and six months ended June 30,  2002,  the  Company's  overall
yield on deposits  declined by 108 basis points to 2.21% and 113 basis points to
2.28%, respectively, as compared to the same periods last year. The decrease was
attributed predominately to changes in market interest rates and a change in the
composition of deposit liabilities.

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

<TABLE>
<CAPTION>

                              -------------      -------------
                                 June 30,         December 31,
                                   2002               2002
                              -------------      -------------

<S>                           <C>                <C>

Non-interest Demand                $110,513           $109,416
Interest Bearing Demand             315,340            282,173
Savings                              78,587             72,092
Money Market Savings                 57,883             47,569
Time Deposits <$100,000             197,007            194,754
Time Deposits >$100,000              32,845             20,479
                              -------------      -------------
     Total                         $792,175           $726,483
                              =============      =============

</TABLE>

                                       20
<PAGE>

Nonperforming Assets

     Nonperforming assets are comprised of nonaccrual loans, restructured loans,
foreclosed  real  estate  and  other  repossessed  assets.  At  June  30,  2002,
nonperforming  assets amounted to $2.8 million, a decrease of $489 thousand,  or
17.5%,  from $2.3 million at December 31,  2001.  The decrease in  nonperforming
assets was partly due to a $592 thousand  commercial mortgage loan, which became
current during the second quarter of 2002. The ratio of nonperforming  assets to
total loans and foreclosed real estate decreased to 0.37% at June 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 as June 30,  2002,  and
December 31, 2001 (dollars in thousands).

<TABLE>
<CAPTION>

                                                      ------------     ------------
                                                        June 30,       December 31,
                                                          2002            2002
                                                      ------------     ------------

<S>                                                   <C>              <C>
Nonperforming loans                                        $ 1,721          $ 2,160
Restructured Loans                                               -              150
Foreclosed real estate and other repossessed assets            592              492
                                                      ------------     ------------
     Total nonperforming assets                            $ 2,313          $ 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
management's  evaluations  of the size and current risk  characteristics  of the
loan and lease portfolio as of the balance sheet date. The 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 problem loans and management'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  to  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 $6.4 million
at June 30, 2002, and $6.6 million at December 31, 2001, representing 373.6% and
304.1% of the nonperforming loans at those dates, respectively.

                                       21
<PAGE>

     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 six months ended June 30, 2002 and 2001 (dollars in thousands).

<TABLE>
<CAPTION>
                                                --------------------------------
                                                            June 30,
                                                --------------------------------
                                                   2002                  2001
                                                ----------            ----------
<S>                                             <C>                   <C>


Average loans outstanding                       $  600,178            $  571,691
                                                ==========            ==========
Allowance at beginning of year                       6,569                 6,154
                                                ----------            ----------
Loans charged off
     Commercial and financial                            9                     -
     Commercial lease financing                        634                   227
     Consumer loans                                     22                     4
                                                ----------            ----------
          Total                                        665                   231
                                                ----------            ----------

Recoveries of loans previously charged off
     Real estate                                        28                     3
     Commercial and financial                            -                   189
     Commercial lease financing                          8                     6
     Consumer loans                                     10                    23
                                                ----------            ----------
          Total                                         46                   221
                                                ----------            ----------
Additions to allowance charged to expense              480                   380
                                                ----------            ----------
Allowance at end of period                          $6,430                $6,524
                                                ==========            ==========
Allowance to total loans                              1.07  %               1.14  %
Ratio of net charge-offs to average loans             0.10  %               0.00  %
--------------------------------------------------------------------------------------
</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 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 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  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.
This report is reviewed by ALCO and the Board of  Directors.  At June 30,  2002,
the Company simulated the effects on net interest

                                       22

<PAGE>

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 March 31,  2001.  At June 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
six 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
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

                                       23
<PAGE>


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,  certain other capital instruments and term subordinated debt. Total
capital is the sum of core and supplementary capital.

     At June  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 June 30, 2002,  the
minimum leverage ratio requirement to be considered  adequately  capitalized was
4%.

     The capital  levels of the Company and the Bank at June 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-capitalize".  The  minimum  capital
guidelines are detailed in the table below.

<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 June 30, 2002:
     Total Capital (to Risk Weighted Assets):
       The Company                                       $77,372       12.64 %    $48,973       8.00 %         N/A        N/A
       The Bank                                           76,046       12.35       49,280       8.00       $61,601      10.00 %
     Tier 1 Capital (to Risk Weighted Assets):
       The Company                                        70,942       11.59       24,487       4.00           N/A        N/A
       The Bank                                           69,616       11.30       24,640       4.00        36,960       6.00
     Tier 1 Capital (to Average Assets):
       The Company                                        70,942        8.01       26,566       3.00           N/A        N/A
       The Bank                                           69,616        7.87       26,527       3.00        44,211       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

                                       24
<PAGE>

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 June 30,  2002,  the  total of such  assets  amounted  to $18.1
million, or 2.0%, of total assets,  compared to $22.2 million, or 2.7%, of total
assets at December 31, 2001. The decrease in cash and cash  equivalents  was due
largely to growth in loans and  securities.  Net loans at June 30, 2002 amounted
to $615.5 million, an increase of $40.7 million, or 7.1%, 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 June 30, 2002, total securities  amounted to $234.1 million, an increase
of $40.2  million or 20.7% as  compared  to  December  31,  2001.  The growth in
investments occurred mostly in AFS securities, which is also another significant
liquidity source.  At June 30, 2002, AFS securities  amounted to $203.1 million,
or 86.8%, 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
June 30, 2002, total deposits  amounted to $792.1 million,  an increase of $65.7
million,  or 9.0%, 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 June 30,  2002,  advances  from  the  FHLB and  REPOS
amounted to $17.9 million and $6.3 million,  respectively,  as compared to $18.1
million and $6.7 million,  respectively, at December 31, 2001. At June 30, 2002,
total borrowings amounted to 2.7% of total assets, which was a decline 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 $79.9 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.

                                       25
<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. In the second
        quarter of 2002, the Company  entered  into a  settlement agreement with
        respect to the matter involving Michael C.Guttuso and Anthony Andora as
        previously described in the Company's  quarterly report on Form 10-Q for
        the quarterly period ended March 31, 2002. The terms of the settlement
        are confidential.  Management believes the amount paid and expenses
        in the second quarter in settlement of this matter did not have a
        material  effect on the financial condition or results of operations of
        the Company.


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
        (a)The company held its Annual Meeting of Shareholders on April 25,2002.

        (b)Each of the persons nominated for director was elected; amendment of
           Company's Stock Option and Incentive Plan of 1997 was approved; and
           the selection of Deloitte & Touche, LLP as the Company's independent
           auditors for 2002 was ratified. The following are the voting results
           on each of these matters:
                                                          Against
                                                           Or
                                                 For     Withheld    Abstentions
                                                 ___     ________    __________
(1)  ELECTION OF DIRECTORS
     Anthony S. Abbate                        7,312,218   92,795         0
     Anthony R. Coscia                        7,311,705   93,308         0
     John J. Eccleston                        7,302,058  100,955         0
     Eleanore S. Nissley                      7,312,035   92,978         0

(2)  Approve amendment to the Company's
     Stock Option and Incentive Plan of 1997
     increasing shares of common stock
     reserved for issuance.                   6,759,665  571,041    74,307

(3)  Ratification of the selection of
     Deloitte & Touche, LLP as the Company's
     independent Auditors for 2002.           7,143,108  259,092     2,813

     All share data has been restated to reflect a 3 for 2 stock split paid on
     July 12, 2002.

Item 5. Other Information
        None

                                       26
<PAGE>

Item 6. Exhibits and Reports on Form 8-K
        (a)   The following exhibits are furnished herewith:

              Exhibit.
              --------
              3  Certificate of Amendment to Certificate of Incorporation

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

         (b)  Reports on Form 8-K

              During the quarter ended June 30, 2002, the Company filed the
              following Current Report on Form 8-K:

              Form  8-K  filed  May  23,  2002,   announcing  that  Interchange
              Financial  Services  Corporation  declared a 3 for 2 stock  split
              payable on July 12,  2002,  along with its  regular  dividend  of
              $0.15 per common share,  also payable on July 12, 2002 to holders
              of record as of June 17, 2002.



                                   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: August 14, 2002



                                       27
<PAGE>

 Exhibit 3

                   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."


<PAGE>


     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>

<TABLE>
<CAPTION>

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


                         --------------------------------------------------     ----------------------------------------------------
                                          Three Months Ended,                                     Six Months Ended,
                         --------------------------------------------------     ----------------------------------------------------
                               June 30, 2002             June 30, 2001               June 30, 2002            June 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>        <C>

Basic Earnings per
 Common Share
Income available to
  common shareholders     $3,065    9,818  $0.31   $2,474     9,815   $0.25     6,005     9,797   $0.61  $4,805      9,813    $0.49
                                          ======                    =======                      ======

Effect of Dilutive Shares
Options issued to
 management                           174                        43                         132                         34
                                 --------                 ---------                   ---------                  ---------

Diluted Earnings per
  Common Share            $3,065    9,992  $0.31   $2,474     9,858   $0.25    $6,005    9,929   $0.60  $4,805      9,847     $0.49
                         ======= ======== ======   ====== ========= =======    ====== =========  ======  ======  =========  =======

</TABLE>

<PAGE>


     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 June 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 J. Labozzetta
                                    ____________________________________________
                                    Anthony J. Labozzetta
                                    Executive Vice President and CFO