EXHIBIT 10.12

                               GUARANTEE AGREEMENT

                           MONMOUTH COMMUNITY BANCORP

                           Dated as of March 25, 2004

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                               TABLE OF CONTENTS

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                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1  Definitions and Interpretation....................................1

                                   ARTICLE II

               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1  Powers and Duties of the Guarantee Trustee........................4
SECTION 2.2  Certain Rights of the Guarantee Trustee...........................5
SECTION 2.3  Not Responsible for Recitals or Issuance of Guarantee.............7
SECTION 2.4  Events of Default; Waiver.........................................7
SECTION 2.5  Events of Default; Notice.........................................8

                                   ARTICLE III

                              THE GUARANTEE TRUSTEE

SECTION 3.1  The Guarantee Trustee; Eligibility................................8
SECTION 3.2  Appointment, Removal and Resignation of the Guarantee Trustee.....9

                                   ARTICLE IV

                                    GUARANTEE

SECTION 4.1  Guarantee.........................................................9
SECTION 4.2  Waiver of Notice and Demand......................................10
SECTION 4.3  Obligations Not Affected.........................................10
SECTION 4.4  Rights of Holders................................................11
SECTION 4.5  Guarantee of Payment.............................................11
SECTION 4.6  Subrogation......................................................11
SECTION 4.7  Independent Obligations..........................................12
SECTION 4.8  Enforcement......................................................12

                                    ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1  Limitation of Transactions.......................................12
SECTION 5.2  Ranking..........................................................13


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                                   ARTICLE VI

                                   TERMINATION

SECTION 6.1  Termination......................................................13

                                   ARTICLE VII

                                 INDEMNIFICATION

SECTION 7.1  Exculpation......................................................13
SECTION 7.2  Indemnification..................................................14
SECTION 7.3  Compensation; Reimbursement of Expenses..........................15

                                  ARTICLE VIII

                                  MISCELLANEOUS

SECTION 8.1  Successors and Assigns...........................................15
SECTION 8.2  Amendments.......................................................16
SECTION 8.3  Notices..........................................................16
SECTION 8.4  Benefit..........................................................16
SECTION 8.5  Governing Law....................................................16
SECTION 8.6  Counterparts.....................................................17


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                               GUARANTEE AGREEMENT

            This GUARANTEE AGREEMENT (the "Guarantee"), dated as of March 25,
2004, is executed and delivered by Monmouth Community Bancorp, a bank holding
company incorporated in New Jersey (the "Guarantor"), and Wilmington Trust
Company, a Delaware banking corporation, as trustee (the "Guarantee Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Capital Securities (as defined herein) of MCBK Capital Trust I, a Delaware
statutory trust (the "Issuer").

            WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of March 25, 2004, among the trustees named
therein of the Issuer, Monmouth Community Bancorp, as sponsor, and the Holders
from time to time of undivided beneficial interests in the assets of the Issuer,
the Issuer is issuing on the date hereof securities, having an aggregate
liquidation amount of $5,000,000, designated in the Declaration as MMCapSSM (the
"Capital Securities"); and

            WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of Capital
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.

            NOW, THEREFORE, in consideration of the purchase by each Holder of
the Capital Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee for the
benefit of the Holders.

                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

            SECTION 1.1 Definitions and Interpretation.

            In this Guarantee, unless the context otherwise requires:

            (a) capitalized terms used in this Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;

            (b) a term defined anywhere in this Guarantee has the same meaning
throughout;

            (c) all references to "the Guarantee" or "this Guarantee" are to
this Guarantee as modified, supplemented or amended from time to time;

            (d) all references in this Guarantee to Articles and Sections are to
Articles and Sections of this Guarantee, unless otherwise specified;

            (e) terms defined in the Declaration as of the date of execution of
this Guarantee have the same meanings when used in this Guarantee, unless
otherwise defined in this Guarantee or unless the context otherwise requires;
and

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            (f) a reference to the singular includes the plural and vice versa.

            "Beneficiaries" means any Person to whom the Issuer is or hereafter
becomes indebted or liable.

            "Common Securities" has the meaning specified in the Declaration.

            "Corporate Trust Office" means the office of the Guarantee Trustee
at which at any particular time its corporate trust business shall be
principally administered, which at all times shall be located within the United
States and at the time of the execution of this Guarantee shall be Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890-0001.

            "Covered Person" means any Holder of Capital Securities.

            "Debenture Issuer" means Monmouth Community Bancorp or any successor
entity resulting from any consolidation, amalgamation, merger or other business
combination, in its capacity as issuer of the Debentures.

            "Debentures" means the junior subordinated debentures of the
Debenture Issuer that are designated in the Indenture as the "Floating Rate
Junior Subordinated Debt Securities due 2034" and held by the Institutional
Trustee (as defined in the Declaration) of the Issuer.

            "Event of Default" has the meaning set forth in Section 2.4.

            "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) which are required to be paid on such Capital Securities to
the extent the Issuer has funds available in the Property Account (as defined in
the Declaration) therefor at such time, (ii) the price payable upon the
redemption of any Capital Securities to the extent the Issuer has funds
available in the Property Account therefor at such time, with respect to any
Capital Securities that are (1) called for redemption by the Issuer or (2)
mandatorily redeemed by the Issuer, in each case, in accordance with the terms
of such Capital Securities, and (iii) upon a voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders of the Capital
Securities in exchange therefor as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount of the Capital Securities and all
accrued and unpaid Distributions on the Capital Securities to the date of
payment, to the extent the Issuer has funds available in the Property Account
therefor at such time, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer after
satisfaction of liabilities to creditors of the Issuer as required by applicable
law (in either case, the "Liquidation Distribution").

            "Guarantee Trustee" means Wilmington Trust Company, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

            "Holder" means any Person in whose name any Capital Securities are
registered on the books and records of the Issuer; provided, however, that, in
determining whether the


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holders of the requisite percentage of Capital Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

            "Indemnified Person" means the Guarantee Trustee (including in its
individual capacity), any Affiliate of the Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Guarantee Trustee.

            "Indenture" means the Indenture, dated as of March 25, 2004, between
the Debenture Issuer and Wilmington Trust Company, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the Institutional Trustee of the
Issuer.

            "Liquidation Distribution" has the meaning set forth in the
definition of "Guarantee Payments" herein.

            "Majority in liquidation amount of the Capital Securities" means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the amount that would be paid upon the
redemption, liquidation or otherwise on the date upon which the voting
percentages are determined, plus unpaid Distributions accrued thereon to such
date) of all Capital Securities then outstanding.

            "Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer, other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.

            "Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:

            (a) a statement that such officer signing the Officer's Certificate
has read the covenant or condition and the definitions relating thereto;

            (b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officer's Certificate;

            (c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

            (d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.

            "Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust,


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unincorporated association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.

            "Responsible Officer" means, with respect to the Guarantee Trustee,
any officer within the Corporate Trust Office of the Guarantee Trustee with
direct responsibility for the administration of any matters relating to this
Guarantee, including any vice president, any assistant vice president, any
secretary, any assistant secretary, the treasurer, any assistant treasurer, any
trust officer or other officer of the Corporate Trust Office of the Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.

            "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

            "Trust Securities" means the Common Securities and the Capital
Securities.

                                   ARTICLE II

               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

            SECTION 2.1 Powers and Duties of the Guarantee Trustee.

            (a) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders of the Capital Securities, and the Guarantee Trustee
shall not transfer this Guarantee to any Person except a Holder of Capital
Securities exercising his or her rights pursuant to Section 4.4 (b) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Guarantee Trustee.

            (b) If an Event of Default actually known to a Responsible Officer
of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee for the benefit of the Holders of the Capital
Securities.

            (c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee, and no implied covenants shall be read into this
Guarantee against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.4(b)) and is
actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee
Trustee shall exercise such of the rights and powers vested in it by this
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.


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            (d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct or bad faith, except that:

                  (i) prior to the occurrence of any Event of Default and after
      the curing or waiving of all Events of Default that may have occurred:

                        (A) the duties and obligations of the Guarantee Trustee
                  shall be determined solely by the express provisions of this
                  Guarantee, and the Guarantee Trustee shall not be liable
                  except for the performance of such duties and obligations as
                  are specifically set forth in this Guarantee, and no implied
                  covenants or obligations shall be read into this Guarantee
                  against the Guarantee Trustee; and

                        (B) in the absence of bad faith on the part of the
                  Guarantee Trustee, the Guarantee Trustee may conclusively
                  rely, as to the truth of the statements and the correctness of
                  the opinions expressed therein, upon any certificates or
                  opinions furnished to the Guarantee Trustee and conforming to
                  the requirements of this Guarantee; but in the case of any
                  such certificates or opinions furnished to the Guarantee
                  Trustee, the Guarantee Trustee shall be under a duty to
                  examine the same to determine whether or not on their face
                  they conform to the requirements of this Guarantee;

                  (ii) the Guarantee Trustee shall not be liable for any error
      of judgment made in good faith by a Responsible Officer of the Guarantee
      Trustee, unless it shall be proved that such Responsible Officer of the
      Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining
      the pertinent facts upon which such judgment was made;

                  (iii) the Guarantee Trustee shall not be liable with respect
      to any action taken or omitted to be taken by it in good faith in
      accordance with the written direction of the Holders of a Majority in
      liquidation amount of the Capital Securities relating to the time, method
      and place of conducting any proceeding for any remedy available to the
      Guarantee Trustee, or exercising any trust or power conferred upon the
      Guarantee Trustee under this Guarantee; and

                  (iv) no provision of this Guarantee shall require the
      Guarantee Trustee to expend or risk its own funds or otherwise incur
      personal financial liability in the performance of any of its duties or in
      the exercise of any of its rights or powers, if the Guarantee Trustee
      shall have reasonable grounds for believing that the repayment of such
      funds is not reasonably assured to it under the terms of this Guarantee,
      or security and indemnity, reasonably satisfactory to the Guarantee
      Trustee, against such risk or liability is not reasonably assured to it.

            SECTION 2.2 Certain Rights of the Guarantee Trustee.

            (a) Subject to the provisions of Section 2.1:


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                  (i) The Guarantee Trustee may conclusively rely, and shall be
      fully protected in acting or refraining from acting upon, any resolution,
      certificate, statement, instrument, opinion, report, notice, request,
      direction, consent, order, bond, debenture, note, other evidence of
      indebtedness or other paper or document believed by it to be genuine and
      to have been signed, sent or presented by the proper party or parties.

                  (ii) Any direction or act of the Guarantor contemplated by
      this Guarantee shall be sufficiently evidenced by an Officer's
      Certificate.

                  (iii) Whenever, in the administration of this Guarantee, the
      Guarantee Trustee shall deem it desirable that a matter be proved or
      established before taking, suffering or omitting any action hereunder, the
      Guarantee Trustee (unless other evidence is herein specifically
      prescribed) may, in the absence of bad faith on its part, request and
      conclusively rely upon an Officer's Certificate of the Guarantor which,
      upon receipt of such request, shall be promptly delivered by the
      Guarantor.

                  (iv) The Guarantee Trustee shall have no duty to see to any
      recording, filing or registration of any instrument or other writing (or
      any rerecording, refiling or reregistration thereof).

                  (v) The Guarantee Trustee may consult with counsel of its
      selection, and the advice or opinion of such counsel with respect to legal
      matters shall be full and complete authorization and protection in respect
      of any action taken, suffered or omitted by it hereunder in good faith and
      in accordance with such advice or opinion. Such counsel may be counsel to
      the Guarantor or any of its Affiliates and may include any of its
      employees. The Guarantee Trustee shall have the right at any time to seek
      instructions concerning the administration of this Guarantee from any
      court of competent jurisdiction.

                  (vi) The Guarantee Trustee shall be under no obligation to
      exercise any of the rights or powers vested in it by this Guarantee at the
      request or direction of any Holder, unless such Holder shall have provided
      to the Guarantee Trustee such security and indemnity, reasonably
      satisfactory to the Guarantee Trustee, against the costs, expenses
      (including attorneys' fees and expenses and the expenses of the Guarantee
      Trustee's agents, nominees or custodians) and liabilities that might be
      incurred by it in complying with such request or direction, including such
      reasonable advances as may be requested by the Guarantee Trustee;
      provided, however, that nothing contained in this Section 2.2(a)(vi) shall
      be taken to relieve the Guarantee Trustee, upon the occurrence of an Event
      of Default, of its obligation to exercise the rights and powers vested in
      it by this Guarantee.

                  (vii) The Guarantee Trustee shall not be bound to make any
      investigation into the facts or matters stated in any resolution,
      certificate, statement, instrument, opinion, report, notice, request,
      direction, consent, order, bond, debenture, note, other evidence of
      indebtedness or other paper or document, but the Guarantee Trustee, in its
      discretion, may make such further inquiry or investigation into such facts
      or matters as it may see fit.


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                  (viii) The Guarantee Trustee may execute any of the trusts or
      powers hereunder or perform any duties hereunder either directly or by or
      through agents, nominees, custodians or attorneys, and the Guarantee
      Trustee shall not be responsible for any misconduct or negligence on the
      part of any agent or attorney appointed with due care by it hereunder.

                  (ix) Any action taken by the Guarantee Trustee or its agents
      hereunder shall bind the Holders of the Capital Securities, and the
      signature of the Guarantee Trustee or its agents alone shall be sufficient
      and effective to perform any such action. No third party shall be required
      to inquire as to the authority of the Guarantee Trustee to so act or as to
      its compliance with any of the terms and provisions of this Guarantee,
      both of which shall be conclusively evidenced by the Guarantee Trustee's
      or its agent's taking such action.

                  (x) Whenever in the administration of this Guarantee the
      Guarantee Trustee shall deem it desirable to receive instructions with
      respect to enforcing any remedy or right or taking any other action
      hereunder, the Guarantee Trustee (A) may request instructions from the
      Holders of a Majority in liquidation amount of the Capital Securities, (B)
      may refrain from enforcing such remedy or right or taking such other
      action until such instructions are received and (C) shall be protected in
      conclusively relying on or acting in accordance with such instructions.

                  (xi) The Guarantee Trustee shall not be liable for any action
      taken, suffered, or omitted to be taken by it in good faith, without
      negligence or willful misconduct and reasonably believed by it to be
      authorized or within the discretion or rights or powers conferred upon it
      by this Guarantee.

            (b) No provision of this Guarantee shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law to perform
any such act or acts or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Guarantee Trustee shall be
construed to be a duty.

            SECTION 2.3 Not Responsible for Recitals or Issuance of Guarantee.

            The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.

            SECTION 2.4 Events of Default; Waiver.

            (a) An "Event of Default" under this Guarantee will occur upon the
failure of the Guarantor to perform any of its payment or other obligations
hereunder.

            (b) The Holders of a Majority in liquidation amount of the Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities,


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waive any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and shall be deemed to have been cured,
for every purpose of this Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

            SECTION 2.5 Events of Default; Notice.

            (a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Capital Securities, notices of all Events of Default actually
known to a Responsible Officer of the Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, however, that the
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Guarantee Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the Capital
Securities.

            (b) The Guarantee Trustee shall not be charged with knowledge of any
Event of Default unless the Guarantee Trustee shall have received written notice
thereof from the Guarantor or a Holder of the Capital Securities, or a
Responsible Officer of the Guarantee Trustee charged with the administration of
this Guarantee shall have actual knowledge thereof.

                                  ARTICLE III

                              THE GUARANTEE TRUSTEE

            SECTION 3.1 The Guarantee Trustee; Eligibility.

            (a) There shall at all times be a Guarantee Trustee which shall:

                  (i) not be an Affiliate of the Guarantor; and

                  (ii) be a corporation or national association organized and
      doing business under the laws of the United States of America or any state
      thereof or of the District of Columbia, or Person authorized under such
      laws to exercise corporate trust powers, having a combined capital and
      surplus of at least 50 million U.S. dollars ($50,000,000), and subject to
      supervision or examination by federal, state or District of Columbia
      authority. If such corporation or national association publishes reports
      of condition at least annually, pursuant to law or to the requirements of
      the supervising or examining authority referred to above, then, for the
      purposes of this Section 3.1(a)(ii), the combined capital and surplus of
      such corporation or national association shall be deemed to be its
      combined capital and surplus as set forth in its most recent report of
      condition so published.

            (b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 3.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set forth in Section 3.2(c).

            (c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee shall


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either eliminate such interest or resign to the extent and in the manner
provided by, and subject to, this Guarantee.

            SECTION 3.2 Appointment, Removal and Resignation of the Guarantee
Trustee.

            (a) Subject to Section 3.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during an
Event of Default.

            (b) The Guarantee Trustee shall not be removed in accordance with
Section 3.2(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.

            (c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.

            (d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 3.2 within 60 days after
delivery of an instrument of removal or resignation, the Guarantee Trustee
resigning or being removed may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.

            (e) No Guarantee Trustee shall be liable for the acts or omissions
to act of any Successor Guarantee Trustee.

            (f) Upon termination of this Guarantee or removal or resignation of
the Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to
the Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections
7.2 and 7.3 accrued to the date of such termination, removal or resignation.

                                    ARTICLE IV

                                    GUARANTEE

            SECTION 4.1 Guarantee.

            (a) The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense
(except defense of payment by the Issuer), right of set-off or counterclaim that
the Issuer may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.


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            (b) The Guarantor hereby also agrees to assume any and all
Obligations of the Issuer and in the event any such Obligation is not so
assumed, subject to the terms and conditions hereof, the Guarantor hereby
irrevocably and unconditionally guarantees to each Beneficiary the full payment,
when and as due, of any and all Obligations to such Beneficiaries. This
Guarantee is intended to be for the Beneficiaries who have received notice
hereof.

            SECTION 4.2 Waiver of Notice and Demand.

            The Guarantor hereby waives notice of acceptance of this Guarantee
and of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any other
Person before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.

            SECTION 4.3 Obligations Not Affected.

            The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

            (a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Capital Securities to be performed
or observed by the Issuer;

            (b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, the price payable upon the redemption of the
Capital Securities, the Liquidation Distribution or any other sums payable under
the terms of the Capital Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the
Capital Securities (other than an extension of time for the payment of the
Distributions, the price payable upon the redemption of the Capital Securities,
the Liquidation Distribution or other sums payable that results from the
extension of any interest payment period on the Debentures);

            (c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;

            (d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;

            (e) any invalidity of, or defect or deficiency in, the Capital
Securities;

            (f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or


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            (g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 4.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.

            There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

            SECTION 4.4 Rights of Holders.

            (a) The Holders of a Majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee; provided, however, that (subject to
Sections 2.1 and 2.2) the Guarantee Trustee shall have the right to decline to
follow any such direction if the Guarantee Trustee shall determine that the
actions so directed would be unjustly prejudicial to the Holders not taking part
in such direction or if the Guarantee Trustee being advised by legal counsel
determines that the action or proceeding so directed may not lawfully be taken
or if the Guarantee Trustee in good faith by its board of directors or trustees,
executive committee or a trust committee of directors or trustees and/or
Responsible Officers shall determine that the action or proceeding so directed
would involve the Guarantee Trustee in personal liability.

            (b) Any Holder of Capital Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee Trustee's
rights under this Guarantee, without first instituting a legal proceeding
against the Issuer, the Guarantee Trustee or any other Person. The Guarantor
waives any right or remedy to require that any such action be brought first
against the Issuer, the Guarantee Trustee or any other Person before so
proceeding directly against the Guarantor.

            SECTION 4.5 Guarantee of Payment.

            This Guarantee creates a guarantee of payment and not of collection.

            SECTION 4.6 Subrogation.

            The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by applicable provisions
of law) be entitled to enforce or exercise any right that it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee, if, after giving effect to any such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.


                                       11
<PAGE>

            SECTION 4.7 Independent Obligations.

            The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.

            SECTION 4.8 Enforcement.

            A Beneficiary may enforce the Obligations of the Guarantor contained
in Section 4.1(b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor.

            The Guarantor shall be subrogated to all rights (if any) of any
Beneficiary against the Issuer in respect of any amounts paid to the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any rights that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Beneficiaries and to pay
over such amount to the Beneficiaries.

                                   ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

            SECTION 5.1 Limitation of Transactions.

            So long as any Capital Securities remain outstanding, if (a) there
shall have occurred and be continuing a Default or an Event of Default or (b)
Debenture Issuer shall have selected an Extension Period as provided in the
Indenture and such period, or any extension thereof, shall have commenced and be
continuing, then the Guarantor may not (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Guarantor's capital stock, (y) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Guarantor that rank in all respects pari passu with
or junior in interest to the Debentures or (z) make any payment under any
guarantees of the Guarantor that rank in all respects pari passu with or junior
in interest to this Guarantee (other than (i) repurchases, redemptions or other
acquisitions of shares of capital stock of the Guarantor (A) in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of one or more employees, officers, directors, or consultants, (B)
in connection with a dividend reinvestment or stockholder stock purchase plan or
(C) in connection with the issuance of capital stock of the Guarantor (or
securities convertible into or exercisable for such capital stock), as
consideration in an acquisition transaction entered into prior to the occurrence
of the Event of Default or the


                                       12
<PAGE>

applicable Extension Period, (ii) as a result of any exchange or conversion of
any class or series of the Guarantor's capital stock (or any capital stock of a
subsidiary of the Guarantor) for any class or series of the Guarantor's capital
stock or of any class or series of the Guarantor's indebtedness for any class or
series of the Guarantor's capital stock, (iii) the purchase of fractional
interests in shares of the Guarantor's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged, (iv) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (v) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior in interest to such
stock).

            SECTION 5.2 Ranking.

            This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the foregoing provisions of this Guarantee and the other terms set forth
herein.

                                   ARTICLE VI

                                   TERMINATION

            SECTION 6.1 Termination.

            This Guarantee shall terminate as to the Capital Securities (i) upon
full payment of the price payable upon redemption of all Capital Securities then
outstanding, (ii) upon the distribution of all of the Debentures to the Holders
of all of the Capital Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon dissolution of the Issuer. This
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Capital Securities must restore payment of any
sums paid under the Capital Securities or under this Guarantee.

                                   ARTICLE VII

                                 INDEMNIFICATION

            SECTION 7.1 Exculpation.

            (a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission of such
Indemnified Person in good faith in accordance with this Guarantee and in a
manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss, damage
or claim


                                       13
<PAGE>

incurred by reason of such Indemnified Person's negligence, willful misconduct
or bad faith with respect to such acts or omissions.

            (b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Issuer or the Guarantor and upon such
information, opinions, reports or statements presented to the Issuer or the
Guarantor by any Person as to matters the Indemnified Person reasonably believes
are within such other Person's professional or expert competence and who, if
selected by such Indemnified Person, has been selected with reasonable care by
such Indemnified Person, including information, opinions, reports or statements
as to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Capital Securities might properly be paid.

            SECTION 7.2 Indemnification.

            (a) The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence, willful
misconduct or bad faith on the part of the Indemnified Person, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including but not limited to the costs and expenses (including
reasonable legal fees and expenses) of the Indemnified Person defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of the Indemnified Person's powers or duties
hereunder. The obligation to indemnify as set forth in this Section 7.2 shall
survive the resignation or removal of the Guarantee Trustee and the termination
of this Guarantee.

            (b) Promptly after receipt by an Indemnified Person under this
Section 7.2 of notice of the commencement of any action, such Indemnified Person
will, if a claim in respect thereof is to be made against the Guarantor under
this Section 7.2, notify the Guarantor in writing of the commencement thereof;
but the failure so to notify the Guarantor (i) will not relieve the Guarantor
from liability under paragraph (a) above unless and to the extent that the
Guarantor did not otherwise learn of such action and such failure results in the
forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person other than the indemnification obligation provided in paragraph (a)
above. The Guarantor shall be entitled to appoint counsel of the Guarantor's
choice at the Guarantor's expense to represent the Indemnified Person in any
action for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be satisfactory to the Indemnified
Person. Notwithstanding the Guarantor's election to appoint counsel to represent
the Indemnified Person in any action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate counsel, if
(i) the use of counsel chosen by the Guarantor to represent the Indemnified
Person would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the
Indemnified Person and the Guarantor and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it and/or
other Indemnified Persons


                                       14
<PAGE>

which are different from or additional to those available to the Guarantor,
(iii) the Guarantor shall not have employed counsel satisfactory to the
Indemnified Person to represent the Indemnified Person within a reasonable time
after notice of the institution of such action or (iv) the Guarantor shall
authorize the Indemnified Person to employ separate counsel at the expense of
the Guarantor. The Guarantor will not, without the prior written consent of the
Indemnified Persons, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the Indemnified Persons are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Person from all liability
arising out of such claim, action, suit or proceeding.

            SECTION 7.3 Compensation; Reimbursement of Expenses.

            The Guarantor agrees:

            (a) to pay to the Guarantee Trustee from time to time such
compensation for all services rendered by it hereunder as the parties shall
agree to from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and

            (b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by it in accordance with any provision of this
Guarantee (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to the negligence, willful misconduct or bad
faith of the Guarantee Trustee.

            The provisions of this Section 7.3 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.

                                  ARTICLE VIII

                                  MISCELLANEOUS

            SECTION 8.1 Successors and Assigns.

            All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's assets to another entity, in each case to the extent
permitted under the Indenture, the Guarantor may not assign its rights or
delegate its obligations under this Guarantee without the prior approval of the
Holders of a Majority in liquidation amount of the Capital Securities.


                                       15
<PAGE>

            SECTION 8.2 Amendments.

            Except with respect to any changes that do not adversely affect the
powers, preferences, rights or interests of Holders of the Capital Securities in
any material respect (in which case no approval of Holders will be required),
this Guarantee may be amended only with the prior approval of the Holders of a
Majority in liquidation amount of the Capital Securities. The provisions of the
Declaration with respect to amendments thereof shall apply equally with respect
to amendments of the Guarantee.

            SECTION 8.3 Notices.

            All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:

            (a) if given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Holders of the Capital Securities): Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration, Telecopy: 302-651-8882,
Telephone: 302-651-1000;

            (b) if given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Capital Securities and to the Guarantee Trustee): Monmouth
Community Bancorp, 627 Second Avenue, Long Branch, New Jersey 07740, Attention:
Anthony Giordano, Telecopy: 732-571-1037, Telephone: 732-71-1300; or

            (c) if given to any Holder of the Capital Securities, at the address
set forth on the books and records of the Issuer.

            All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

            SECTION 8.4 Benefit.

            This Guarantee is solely for the benefit of the Holders of the
Capital Securities and, subject to Section 2.1(a), is not separately
transferable from the Capital Securities.

            SECTION 8.5 Governing Law.

            THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.


                                       16
<PAGE>

            SECTION 8.6 Counterparts.

            This Guarantee may contain more than one counterpart of the
signature page and this Guarantee may be executed by the affixing of the
signature of the Guarantor and the Guarantee Trustee to any of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.


                                       17
<PAGE>

            THIS GUARANTEE is executed as of the day and year first above
written.


                                  MONMOUTH COMMUNITY BANCORP,
                                  as Guarantor

                                  By: /s/ James S. Vaccaro
                                      ------------------------------------------
                                     Name: James S. Vaccaro
                                     Title: Chairman and Chief Executive Officer


                                  WILMINGTON TRUST COMPANY,
                                  as Guarantee Trustee

                                  By: /s/ Denise M. Geran
                                      ------------------------------------------
                                       Name: Denise M. Geran
                                       Title: Vice President


                                       18