UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

(Mark One)
      [x]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                 EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 2002

      [  ]       TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                 EXCHANGE ACT OF 1934
                 For the transition period from   ________   to ______

                         Commission file number 0-27428


                           MONMOUTH COMMUNITY BANCORP
________________________________________________________________________________
                 (Name of small business issuer in its charter)


          New Jersey                                     22-3757709
_______________________________             ____________________________________
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


627 Second Avenue, Long Branch, New Jersey                              07740
__________________________________________                            __________
 (Address of principal executive offices)                             (Zip Code)


                    Issuer's telephone number: (732) 571-1300
                                               _______________

       Securities registered under Section 12(b) of the Exchange Act: None
                                                                      ____

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, par value $0.01
________________________________________________________________________________
                                (Title of class)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the Registrant's


<PAGE>


knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
[ ]

     Revenues for the year ended December 31, 2002: $8.9 million

     The aggregate market value of the shares of the Registrant's common stock,
par value $0.01 per share, held by non-affiliates of the Registrant, as of
February 28, 2003, was $16.2 million. The Registrant has no other class of
capital stock outstanding.

     As of February 28, 2003, 1,476,927 shares of the Registrant's common stock
were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

     Part III of this Annual Report on Form 10-KSB incorporates certain
information by reference from the Registrant's Proxy Statement for the Annual
Meeting of Shareholders scheduled to be held on May 29, 2003. The Proxy
Statement will be filed with the Securities and Exchange Commission by April 30,
2003.

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
                -------------------------------------------------

     Certain information included in this Annual Report on Form 10-KSB and other
filings of the Registrant under the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as well as information communicated orally or in writing
between the dates of such filings, contains or may contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Such statements are subject to certain risks, trends
and uncertainties that could cause actual results to differ materially from
expected results. Among these risks, trends and uncertainties are the effects of
the conflict between the United States and Iraq, the effect of governmental
regulation on Monmouth Community Bank, National Association, a nationally
chartered commercial bank and wholly-owned subsidiary of the Registrant, the
availability of working capital, the cost of personnel and the competitive
market in which Monmouth Community Bank operates.

     In some cases, forward-looking statements can be identified by terminology
such as "may," "will," "should," "could," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative
of such terms or other comparable terminology. Although the Registrant believes
that the expectations reflected in the forward-looking statements contained
herein are reasonable, the Registrant cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither the Registrant, nor any
other person assumes responsibility for the accuracy and completeness of such
statements. The Registrant is under no duty to update any of the forward-looking
statements contained herein after the date of this Annual Report on Form 10-KSB.


<PAGE>


                           Monmouth Community Bancorp

                              INDEX TO FORM 10-KSB
                              --------------------
PART I                                                                      PAGE
------

Item 1.  Description of Business............................................  1

Item 2.  Description of Property............................................ 11

Item 3.  Legal Proceedings.................................................. 13

Item 4.  Submission of Matters to a Vote of Security Holders................ 13

PART II
-------

Item 5.  Market for Common Equity and Related Stockholder Matters........... 14

Item 6.  Management's Discussion and Analysis or Plan of Operation.......... 15

Item 7.  Financial Statements............................................... 33

Item 8.  Changes In and Disagreements With Accountants on Accounting
         and Financial Disclosure........................................... 33

PART III
--------

Item 9.* Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) of the Exchange Act.................. 34

Item 10.*Executive Compensation............................................. 34

Item 11.*Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters........................................ 34

Item 12.*Certain Relationships and Related Transactions..................... 34

Item 13. Exhibits and Reports on Form 8-K................................... 34

Item 14. Controls and Procedures............................................ 35

Signatures.................................................................. 36

Certifications.............................................................. 38


* The information required under this Item is contained in the Registrant's
  Proxy Statement for the Annual Meeting of Shareholders scheduled to be held on
  May 29, 2003, and is incorporated herein by reference. The Proxy Statement
  will be filed with the Securities and Exchange Commission by April 30, 2003.

<PAGE>

                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS
                  -----------------------

     BUSINESS DEVELOPMENT

     Monmouth Community Bancorp is a single-bank holding company headquartered
in Long Branch, New Jersey. The holding company was incorporated in New Jersey
on March 7, 2000, and became an active bank holding company on August 31, 2000
through the acquisition of Monmouth Community Bank, National Association.
Monmouth Community Bank provides a full range of banking services to individual
and business customers located primarily in coastal Monmouth County, New Jersey.
Monmouth Community Bank has six (6) full-service branch facilities located in
Long Branch, Spring Lake Heights, Little Silver, Neptune, Neptune City and Ocean
Grove, New Jersey. The latest branch of Monmouth Community Bank was opened at
3636 Highway 33 in Neptune, New Jersey on February 27, 2003.

     Monmouth Community Bank offers a full range of retail and commercial
banking services to its customers, including checking accounts, savings
accounts, money market accounts, certificates of deposit, installment loans,
real estate mortgage loans, commercial loans, wire transfers, money orders,
traveler's checks, safe deposit boxes, night depository, federal payroll tax
deposits, bond coupon redemption, bank by mail, direct deposit and automated
teller services, telephone and internet banking. Monmouth Community Bank has
debit card, merchant card and international services available to its customers
through correspondent institutions.

     Monmouth Community Bank is a national association chartered by the Office
of the Comptroller of the Currency ("OCC"), and its deposits are insured by the
Federal Deposit Insurance Corporation ("FDIC"). As a community bank, Monmouth
Community Bank's emphasis is on providing a broad range of financial products
and services to individual consumers, small businesses and professionals in its
market area. When a customer's loan requirements exceed Monmouth Community
Bank's lending limit, Monmouth Community Bank seeks to arrange such loans on a
participation basis with other financial institutions. In addition, Monmouth
Community Bank participates in loans originated by other financial institutions.

     In 2001, Monmouth Community Bank converted from a state-chartered bank to a
national association chartered by the OCC. The activities permitted by the
national association charter and the OCC's regulatory parameters and oversight
are believed by our board of directors to be more consistent with the strategic
initiatives of Monmouth Community Bank.

BUSINESS STRATEGY

     Monmouth Community Bank's strategy is to provide a competitive range of
community banking services to its market area, in a cordial environment, at fair
and reasonable prices, at convenient operating hours, with a commitment to
prompt, professional and highly personalized service, which is both efficient
and responsive to local needs. Service to customers and a commitment to the
community are the basic and distinguishing features Monmouth Community Bank
offers. Management believes there is a need for a local bank to provide
personalized service that is responsive to local community needs and managed by
experienced personnel.

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MARKET AREA

     At December 31, 2002, Monmouth Community Bank had five (5) full-service
branch facilities located in Long Branch, Spring Lake Heights, Neptune City,
Little Silver and Ocean Grove, New Jersey. On February 27, 2003, a sixth branch
of Monmouth Community Bank was opened at 3636 Highway 33 in Neptune, New Jersey.
Each branch is within Monmouth County, New Jersey, the sixth largest county in
the State of New Jersey. Second Avenue, the address of the Long Branch location,
is highly visible and situated in the established West End business district of
the City of Long Branch. Similarly, the other five locations provide a great
deal of exposure and are well-situated to provide convenient services to
businesses, professionals and individuals throughout Monmouth Community Bank's
market area.

     The current market area of Monmouth Community Bank is comprised of the
municipalities of Allenhurst, Deal, Eatontown, Interlaken, Loch Arbour, Long
Branch, Monmouth Beach, Ocean Grove, Ocean Township, Oceanport, West Long
Branch, Asbury Park, Bradley Beach, Avon-by-the-Sea, Belmar, Spring Lake, Spring
Lake Heights, Sea Girt, Manasquan, Wall, Brielle, Neptune, Neptune City, Little
Silver, Sea Bright, Fair Haven, Rumson, Red Bank and Shrewsbury Borough and
Township, New Jersey.

     Monmouth Community Bank's market area is well-served by an established
network of arterial roadways including New Jersey Routes 33, 35, 36 and 71. The
Garden State Parkway is located just to the west of Monmouth Community Bank's
market area, with direct access to the market area provided by Routes 33 and 36.
Direct access from the New Jersey Turnpike to the market area is provided by
I-195. Overall, the regional road system is considered to be excellent in terms
of long-range access to the market area; and the local road network offers good
access and circulation to and about the branch locations.

     Commercial activity within Monmouth Community Bank's market area includes
small and medium sized businesses, corporate offices, professional offices,
major retail centers, resort and recreational businesses along the nearby
oceanfront, as well as numerous industrial establishments specializing in light
manufacturing, baking products, rubber and plastic products, surgical and
medical devices, electronics and telecommunications. In addition, the market
area contains a variety of major employers, including Monmouth Medical Center,
Jersey Shore Medical Center, Monmouth University and Fort Monmouth.

SERVICES OFFERED

     Monmouth Community Bank is community oriented and offers services and
products designed to meet the needs of local individuals, businesses and
professionals. Business people and professionals are offered a broad spectrum of
deposit and loan products designed to satisfy their occupational and personal
financial needs. In addition, Monmouth Community Bank provides a broad array of
consumer banking services to the general public residing or working in the
market area to which it serves.

     DEPOSITS. In order to attract and retain stable deposit relationships with
small businesses, Monmouth Community Bank offers competitive small business cash
management services. We believe that the expertise and experience of Monmouth
Community Bank's management coupled with the latest technology enables Monmouth
Community Bank to maximize the growth of

                                       2

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business related deposits. As for consumers, the primary deposit services of
Monmouth Community Bank are comprised of demand deposits, savings deposits
(including money markets), time deposits and individual retirement accounts.

     LOANS. The loan portfolio consists primarily of variable-rate and
short-term fixed rate loans, with a significant concentration in commercial
purpose transactions. We believe that the familiarity of management and the
members of the board of directors appointed to Monmouth Community Bank's loan
committee with prospective local borrowers enables Monmouth Community Bank to
better evaluate the character, integrity and creditworthiness of prospective
borrowers.

     RESIDENTIAL MORTGAGE LOANS. In order to effectively penetrate the mortgage
market, Monmouth Community Bank offers through one or more third parties a range
of residential mortgage products at competitive rates. Management believes that
Monmouth Community Bank's policy of closing loans in a time frame that meets the
needs of its borrowers is important to Monmouth Community Bank's business.

     COMMERCIAL MORTGAGE/CONSTRUCTION LOANS. Monmouth Community Bank originates
various types of loans secured with real estate, including construction loans.
Monmouth Community Bank's loan officers work closely with real estate
developers, individual builders and attorneys to offer construction loans and
services to the residential real estate market as well as to owner-occupied
commercial properties and investment properties. Construction lending
constitutes a minor portion of the loan portfolio. In some cases, Monmouth
Community Bank originates loans larger than its lending or policy limits and
participates these loans with other banks.

     CONSUMER LENDING. Monmouth Community Bank offers retail customers consumer
loan services including secured and unsecured personal loans, home equity loans,
lines of credit and auto loans.

     SMALL BUSINESS LOANS. Monmouth Community Bank targets businesses with
annual revenues of less than $25,000,000. Often, these businesses are ignored by
the larger lending institutions and have experienced the most negative effects
of the recent bank consolidations. Monmouth Community Bank offers
responsiveness, flexibility and local decision-making for loan applications of
small business owners, thereby eliminating the delays generally associated with
non-local management. Monmouth Community Bank may participate in the future in
Small Business Administration (SBA) programs, and currently participates in
programs offered through the New Jersey Economic Development Authority. As an
independent community bank, Monmouth Community Bank serves the special needs of
professionals in the legal, medical, accounting, insurance and real estate
industries. Lines of credit, term loans and time loans are tailored to meet the
needs of Monmouth Community Bank's customers in the professional community.

     OTHER SERVICES. To further attract and retain customer relationships,
Monmouth Community Bank provides the standard array of financial services
expected of a community bank including: the issuance of money orders, treasurer
checks, certified checks and gift checks, wire transfers, U.S. Savings Bonds
sales and redemptions, debit cards, U.S. Treasury Bills, notes and bonds, MAC
card memberships, federal payroll tax deposits, safe deposit boxes, traveler's

                                       3

<PAGE>

checks, a night depository, bond coupon redemptions, bank-by-mail, direct
deposit, business sweep accounts, automated teller machines and telephone and
internet banking.

COMPETITION

     The banking business in New Jersey is very competitive. We compete for
deposits and loans with existing New Jersey and out-of-state financial
institutions which have longer operating histories, larger capital reserves and
more established customer bases. Our competition includes large financial
service companies and other entities, in addition to traditional banking
institutions such as savings and loan associations, savings banks, commercial
banks, internet banks and credit unions. Such competition includes community
banks, with banking philosophies similar to those of Monmouth Community Bank,
which have recently opened or plan to open within or near the market area served
by Monmouth Community Bank.

     Our larger competitors have a greater ability than Monmouth Community Bank
to finance wide ranging advertising campaigns through their greater capital
resources. Marketing efforts to introduce prospective customers to Monmouth
Community Bank depend heavily upon referrals from our board of directors,
advisory boards, management and shareholders, selective advertising in local
media and direct mail solicitations. Monmouth Community Bank competes for
business principally on the basis of high quality, personal service to
customers, customer access to Monmouth Community Bank decision makers and
competitive interest rates and fees.

     In the financial services industry in recent years, intense market demands,
technological and regulatory changes and economic pressures have eroded once
clearly defined financial service industry classifications. Existing banks have
been forced to diversify their services, increase rates paid on deposits,
provide competitive pricing on loans and become more cost effective, as a result
of competition with one another and with new types of financial service
companies, including non-banking competitors. Corresponding changes in the
regulatory framework have resulted in increasing homogeneity in the financial
services offered by financial institutions. Some of the results of these market
dynamics in the financial services industry have been a number of new bank and
non-bank competitors, increased merger activity, and increased customer
awareness of product and service differences among competitors. These factors
may be expected to affect our business prospects.

EMPLOYEES

     As of the date of this report, James S. Vaccaro (Chairman and Chief
Executive Officer), Richard O. Lindsey (President) and Anthony Giordano, III
(Chief Financial Officer) are the executive officers of the holding company,
Monmouth Community Bancorp. Mr. Vaccaro, Mr. Lindsey and Mr. Giordano, together
with Kevin W. Hunt and David A. O'Connor, are the executive officers of Monmouth
Community Bank. None of Mr. Vaccaro, Mr. Lindsey, Mr. Giordano or any other
executive officer of the holding company or Monmouth Community Bank have
employment agreements. Including the aforementioned executive officers, Monmouth
Community Bank has 76 employees, 60 of whom are full-time.

                                       4

<PAGE>


HOLDING COMPANY OPERATIONS

     The holding company serves as a holding company for Monmouth Community
Bank. The holding company has no assets or liabilities other than its investment
in Monmouth Community Bank. The holding company does not conduct, nor does
management believe that it will conduct, any business. All banking products and
services are, and will be, provided by the holding company's subsidiaries. To
date, Monmouth Community Bank is the only subsidiary of the holding company.

GOVERNMENT REGULATION

     The holding company and its subsidiary, Monmouth Community Bank, operate
within a system of banking laws and regulations intended to protect Monmouth
Community Bank's customers and depositors. These laws and regulations govern the
permissible activities, reserves, loans and investments of the holding company
and Monmouth Community Bank. In addition, the holding company is subject to
general Federal laws and regulations, and the corporate laws and regulations of
the state of its incorporation, New Jersey. The following descriptions summarize
the key banking laws and regulations to which the holding company and Monmouth
Community Bank are subject. These descriptions are not intended to be complete
and are qualified in their entirety by reference to the full text of the
statutes and regulations. Future changes in these laws and regulations, or in
their interpretation and application by their administering agencies, cannot be
predicted, but could have a material effect on the business and results of the
holding company and Monmouth Community Bank.

     Monmouth Community Bancorp is a bank holding company within the meaning of
the Federal Bank Holding Company Act of 1956, and is subject to the supervision
of the Federal Reserve Board. In general, the Bank Holding Company Act limits
the business of bank holding companies to banking, managing or controlling
banks, and performing certain servicing activities for subsidiaries. Monmouth
Community Bank, the banking subsidiary of the holding company, is a national
association, and is subject to the regulation, supervision and examination of
the OCC. In addition, as a national bank, Monmouth Community Bank was required
to become a member bank of the Federal Reserve Bank of New York, and is subject
to examination and regulation by the Board of Governors of the Federal Reserve
System. Each of these agencies regulates aspects of activities conducted by the
holding company and Monmouth Community Bank, as discussed below.

FINANCIAL MODERNIZATION

     The most recent piece of legislation with a significant impact on the
financial services industry was the Gramm-Leach-Bliley Act, which was signed
into law on November 12, 1999 and became effective on March 11, 2000. That act
permits bank holding companies meeting certain fitness standards to engage in a
broader range of non-banking activities, and in relationships with non-banking
entities, to an extent not previously permitted. Generally, newly-authorized
activities for bank holding companies include underwriting insurance and
affiliating with insurance companies; underwriting, dealing in, or making
markets in securities and affiliating with securities firms; and providing
financial and investment advice and affiliating with mutual fund advisory
companies. In order to take advantage of the greater freedoms

                                       5

<PAGE>

afforded by the Gramm-Leach-Bliley Act, a bank holding company must file an
election with the Federal Reserve Board to become a "financial holding company,"
in addition to satisfying certain other criteria. The holding company does not
intend to seek a "financial holding company" designation at this time. We do not
believe that the decision to currently not seek a financial holding company
designation will adversely affect our ability to compete in our chosen markets.
Seeking such a designation would not position us to compete more effectively in
the offering of our current products and services.

DIVIDEND RESTRICTIONS

     The holding company and Monmouth Community Bank are separate legal entities
whose finances are in some ways interconnected. The holding company's principal
source of funds to pay cash dividends on its common stock is from cash dividends
paid to it by Monmouth Community Bank. As a national bank, Monmouth Community
Bank must obtain prior approval from the OCC to pay a cash dividend if the total
of all cash dividends declared by Monmouth Community Bank in any calendar year
would exceed Monmouth Community Bank's net income for that year, combined with
its retained net income for the preceding two calendar years, less any required
transfers to surplus. The amount of cash dividends payable by a national bank
are limited to the extent of its undivided profits. In 2002, Monmouth Community
Bank did not declare any cash dividends to the holding company. See also
"Government Regulation - Unsafe and Unsound Practices" below, and see Item 5.
"Market for Common Equity and Related Stockholder Matters."

     The FDIC also restricts payments of cash dividends by institutions whose
deposits it insures. Under the Federal Deposit Insurance Act, an insured
depository institution may not pay a cash dividend if it is undercapitalized or
would become undercapitalized as a result of the dividend. See "Government
Regulation - Capital Adequacy." Policy statements of the FDIC and other bank
regulators provide that banks insured by the FDIC should pay cash dividends only
out of current operating earnings.

     Payment of cash dividends may constitute an unsafe and unsound practice if
the payment would deplete Monmouth Community Bank's capital base to an
inadequate level. See "Government Regulation - Unsafe and Unsound Practices."

TRANSACTIONS WITH AFFILIATES

     Banking laws and regulations impose certain restrictions on the ability of
bank holding companies to borrow from and engage in other transactions with
their subsidiary banks. Generally, these restrictions require that any
extensions of credit must be secured by designated amounts of specified
collateral and are limited to (i) 10% of the bank's capital stock and surplus
per affiliated borrower, and (ii) 20% of the bank's capital stock and surplus
aggregated as to all affiliated borrowers. In addition, certain transactions
with affiliates must be on terms and conditions, including credit standards, at
least as favorable to the institution as those prevailing for arms-length
transactions. As a Federal Reserve member bank, Monmouth Community Bank must
comply with regulations which restrict loans made to Monmouth Community Bank's
principal shareholders, directors and executive officers.

                                       6

<PAGE>


"SOURCE OF STRENGTH" DOCTRINE

     Under the Bank Holding Company Act and Federal Reserve Board policy, bank
holding companies are expected to represent a source of financial and managerial
strength to their bank subsidiaries, and to commit resources to support bank
subsidiaries in circumstances where banks may not be in a financial position to
support themselves. Capital loans by a bank holding company to a bank subsidiary
are subordinate in right of repayment to deposits and other bank indebtedness.
If a bank holding company declares bankruptcy, its bankruptcy trustee must
fulfill any commitment made by the bank holding company to sustain the capital
of its subsidiary banks.

     In addition, under the National Bank Act, if the capital stock of a
national bank is impaired, by losses or otherwise, the OCC is authorized to
require payment of the deficiency by assessment upon the bank's parent company,
and to sell the stock of the bank if such assessment is not satisfied within
three months to the extent necessary to eliminate the deficiency.

DEPOSIT INSURANCE

     The Bank Insurance Fund of the FDIC insures substantially all of Monmouth
Community Bank's deposits, subject to limits of $100 thousand for each insured
depositor. Insurance of deposits by the FDIC subjects Monmouth Community Bank to
comprehensive regulation, supervision and examination by the FDIC. Monmouth
Community Bank is required, among other things, to pay premium charges to the
FDIC for insurance and maintain a reserve account and liquid assets at levels
fixed, from time to time, by the FDIC.

     The FDIC utilizes a risk-based assessment system which imposes premiums
based on a bank's capital level and supervisory rating. Depository institutions
that the FDIC regards as healthier will pay lower premiums than relatively
weaker institutions. The FDIC periodically examines insured depository
institutions to determine whether premium increases or other measures are
appropriate. Under the Federal Deposit Insurance Act, as amended (the "FDI
Act"), the FDIC may terminate deposit insurance upon a finding that the
institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition, or has violated any applicable banking law, rule, order or
regulatory condition.

CAPITAL ADEQUACY

     The Federal Reserve Board, the OCC and the FDIC have substantially similar
risk-based capital and leverage ratio guidelines for banking organizations.
These guidelines are intended to ensure that banking organizations have adequate
capital given the risk levels of their assets and off-balance sheet financial
instruments. Under the risk-based capital and leverage ratio guidelines, assets
and off-balance sheet items are assigned to broad risk categories, each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk-weighted assets and off-balance sheet items. These
risk-based capital requirements identify concentration of credit risk, and
facilitate management of those risks.

     To derive total risk-weighted assets, bank assets are given risk-weights of
0%, 20%, 50% and 100%. In addition, certain off-balance sheet items are
converted to asset equivalent amounts to which an appropriate risk-weight will
apply. Most loans are assigned to the 100% risk category, except for performing
first mortgage loans fully secured by residential property, which

                                       7

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carry a 50% risk-weighting. Most investment securities (including, primarily,
general obligation claims of states or other political subdivisions of the
United States) are assigned to the 20% category, except for municipal or state
revenue bonds, which have a 50% risk-weight, and direct obligations of the U.S.
Treasury or obligations backed by the full faith and credit of the United States
government, which have a 0% risk-weight. In converting off-balance sheet items,
direct credit substitutes, including general guarantees and standby letters of
credit backing financial obligations, are given a 100% risk-weighting.
Transaction-related contingencies such as bid bonds, standby letters of credit
backing nonfinancial obligations, and undrawn commitments (including commercial
credit lines with an initial maturity or more than one year) have a 50%
risk-weighting. Short-term commercial letters of credit have a 20%
risk-weighting, and certain short-term unconditionally cancelable commitments
have a 0% risk-weighting.

     Under the capital guidelines, a banking organization's total capital is
divided into tiers. "Tier I Capital" consists of common shareholders' equity and
qualifying preferred stock, less certain goodwill items and other intangible
assets. "Tier II Capital" consists of hybrid capital instruments, perpetual
debt, mandatory convertible debt securities, a limited amount of subordinated
debt, and preferred stock that does not qualify as Tier I Capital, plus a
limited amount of loan and lease loss allowances and a limited amount of
unrealized holding gains on equity securities. "Tier III Capital" consists of
qualifying unsecured subordinated debt. "Total capital" is the sum of Tier I,
Tier II and Tier III. The sum of Tier II and Tier III Capital may not exceed the
amount of Tier I capital.

     The required minimum ratio of total capital to risk-weighted assets
(including certain off-balance sheet activities, such as standby letters of
credit) is 8%. The required minimum ratio of Tier I Capital to risk-weighted
assets is 4%. At December 31, 2002, the holding company's total capital and Tier
1 Capital to risk-weighted asset ratios were 15.37% and 14.19%, respectively.

     The Federal Reserve Board also requires bank holding companies to comply
with minimum leverage ratio guidelines. The leverage ratio is the ratio of a
bank holding company's Tier I Capital to its total consolidated quarterly
average assets (as defined by the applicable regulations), net of loan loss
reserves, goodwill, and other intangible assets. Bank holding companies normally
must maintain a minimum leverage ratio of 4%, unless the bank holding company
has the highest supervisory rating or has implemented the Federal Reserve
Board's risk-adjusted measure for market risk, in which case its minimum
leverage ratio must be 3%. Banking organizations undergoing significant growth
or undertaking acquisitions must maintain even higher capital positions. At
December 31, 2002, the holding company's leverage ratio was 8.12%. Monmouth
Community Bank is subject to similar risk-based and leverage capital guidelines,
as adopted by the OCC.

PROMPT CORRECTIVE ACTION

     The FDI Act requires federal banking regulators to take prompt corrective
action with respect to depository institutions that do not meet minimum capital
requirements. Failure to meet minimum requirements can initiate certain
mandatory and possibly additional discretionary actions by regulators that, if
undertaken, could have an adverse material effect on the holding company's
financial condition. Under the Prompt Corrective Action Regulations, Monmouth
Community Bank must meet specific capital guidelines that involve quantitative
measures of

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Monmouth Community Bank's assets, liabilities and certain
off-balance sheet items as calculated under regulatory accounting practices.

     The Prompt Corrective Action Regulations define specific capital categories
based on an institution's capital ratios. The capital categories, in declining
order, are "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." The FDI Act
imposes progressively more restrictive constraints on operations, management and
capital distributions, depending on the capital category by which the
institution is classified. Institutions categorized as "undercapitalized" or
worse may be subject to requirements to file a capital plan with their primary
Federal regulator, prohibitions on the payment of dividends and management fees,
restrictions on asset growth and executive compensation, and increased
supervisory monitoring, among other things. Other restrictions may be imposed on
the institution by the regulatory agencies, including requirements to raise
additional capital, sell assets or sell the entire institution. Once an
institution becomes "critically undercapitalized," it generally must be placed
in receivership or conservatorship within ninety (90) days.

     The Prompt Corrective Action Regulations provide that an institution is
"well capitalized" if the institution has a total risk-based capital ratio of
10.0% or greater, a Tier I risk-based capital ratio of 6.0% or greater, and a
leverage ratio of 5.0% or greater. The institution also may not be subject to an
order, written agreement, capital directive or prompt corrective action
directive to meet and maintain a specific level for any capital measure. An
institution is "adequately capitalized" if it has a total risk-based capital
ratio of 8.0% or greater, a Tier I risk-based capital ratio of 4.0% or greater,
and a leverage ratio of 4.0% or greater. An institution is deemed
"undercapitalized" if it has a total risk-based capital ratio that is less than
8.0%, a Tier I risk-based capital ratio of less than 4.0%, or a leverage ratio
of less than 4.0%. An institution is "significantly undercapitalized" if the
institution has a total risk-based capital ratio that is less than 6.0%, a Tier
I risk-based capital ratio of less than 3.0%, or a leverage ratio less than
3.0%, unless it is "critically undercapitalized," which means that the
institution has a ratio of tangible equity to total assets that is equal to or
less than 2.0%.

     At December 31, 2002, Monmouth Community Bank was well-capitalized based on
the ratios and guidelines noted above. However, Monmouth Community Bank's
capital category is determined solely for the purpose of applying the Prompt
Corrective Action Regulations and may not constitute an accurate representation
of Monmouth Community Bank's overall financial condition or prospects.

UNSAFE AND UNSOUND PRACTICES

     Notwithstanding its Prompt Corrective Action category dictated by
risk-based capital ratios, the FDI Act permits the appropriate bank regulatory
agency to reclassify an institution if it determines, after notice and a
hearing, that the condition of the institution is unsafe or unsound, or if it
deems the institution to be engaging in an unsafe or unsound practice. Also, if
a Federal regulatory agency with jurisdiction over a depository institution
believes that the depository institution will engage, is engaging, or has
engaged in an unsafe or unsound practice, the regulator may require that the
bank cease and desist from such practice, following notice and a hearing on the
matter.


                                        9
<PAGE>



COMMUNITY REINVESTMENT ACT

     The Federal Community Reinvestment Act requires banks to respond to the
full range of credit and banking needs within their communities, including the
needs of low and moderate-income individuals and areas. A bank's failure to
address the credit and banking needs of all socio-economic levels within its
markets may result in restrictions on growth and expansion opportunities for the
bank, including restrictions on new branch openings, relocation, formation of
subsidiaries, mergers and acquisitions. In its latest CRA examination, Monmouth
Community Bank received a rating of satisfactory.

CONSUMER PRIVACY

     In addition to fostering the development of "financial holding companies,"
the Gramm-Leach-Bliley Act modified laws relating to financial privacy. The new
financial privacy provisions generally prohibit financial institutions,
including the holding company and Monmouth Community Bank, from disclosing or
sharing nonpublic personal financial information to third parties for marketing
or other purposes not related to transactions, unless customers have an
opportunity to "opt out" of authorizing such disclosure, and have not elected to
do so. It has never been the policy of Monmouth Community Bank to release such
information except as may be required by law.

LOANS TO ONE BORROWER

     National banking laws limit the amount a bank may lend to a single borrower
to 15% of the bank's capital base, unless the entire amount of the loan is
secured by adequate amounts of readily marketable capital. However, no loan to
one borrower may exceed 25% of a bank's statutory capital, notwithstanding
collateral pledged to secure it.

DEPOSITOR PREFERENCE STATUTE

     Under Federal law, depositors, certain claims for administrative expenses
and employee compensation against an insured depository institution are afforded
a priority over other general unsecured claims against the institution, in the
event of a "liquidation or other resolution" of the institution by a receiver.

OVERALL IMPACT OF NEW LEGISLATION AND REGULATIONS

     Statutory changes and corresponding changes in the regulatory framework
have resulted in increasing uniformity in the financial services offered by
financial institutions. As a result, some non-bank competitors have become
virtually indistinguishable from banks. The commercial banking industry faces
increasing thrift competition, non-bank competition, increased merger activity
among financial institutions and increased customer awareness of product and
service differences among competitors. These factors ensure that Monmouth
Community Bank will continue to face strong competition in the future. The
holding company believes, however, that a bank which concentrates on banking
services specifically designed to serve the local community, which offers
personal service and which is responsive to customer and other local banking
needs can operate successfully in Monmouth Community Bank's market area despite
the presence of such competition. See "Business Strategy" The holding company
also believes that its marketing strategy for Monmouth Community Bank, if
properly

                                       10
<PAGE>

implemented and combined with competitive prices and products, will
allow it to attract the types and numbers of customers necessary for it to
operate profitably. However, it cannot be predicted whether or to what extent
the business and condition of the holding company and Monmouth Community Bank
will be affected by new legislation or regulations, and legislation or
regulations as yet to be proposed or enacted.

IMPACT OF MONETARY POLICIES

     The earnings of Monmouth Community Bank will be affected by domestic
economic conditions and the monetary and fiscal policies of the United States
government and its agencies. The monetary policies of the Federal Reserve Board
have had, and will likely continue to have, an important impact on the operating
results of banks through the Federal Reserve Board's power to implement national
monetary policy in order, among other things, to curb inflation or combat a
recession. The Federal Reserve Board has a major effect upon the levels of bank
loans, investments and deposits through its open market operations in United
States government securities and through its regulation of, among other things,
the discount rate on borrowing of member banks and the reserve requirements
against member bank deposits. It is not possible to predict the nature and
impact of future changes in monetary and fiscal policies.

ITEM 2.           DESCRIPTION OF PROPERTY
                  -----------------------

BANK BUILDINGS

     The main office and the original branch of Monmouth Community Bank is
located in the City of Long Branch, New Jersey at 627 Second Avenue. Monmouth
Community Bank's Long Branch office is leased on terms and conditions set forth
in a lease which was negotiated between the organizers of Monmouth Community
Bank and the landlord (the "Long Branch Lease"). John A. Brockriede, a member of
the holding company's board of directors, has a 30% interest in the general
partnership which owns Monmouth Community Bank's Long Branch office.

     The initial term (the "Initial Term") of the Long Branch Lease, which
commenced on July 28, 1998, is ten (10) years. The net monthly rent for the
Initial Term is $4,500, which shall be adjusted prior to the sixth year of the
Initial Term to give effect to any increase in the Consumer Price Index for the
New York - North Eastern New Jersey Area (the "Consumer Price Index") between
the commencement date of the Long Branch Lease and the 59th month of the Initial
Term. Monmouth Community Bank may extend the Long Branch Lease for four (4)
additional terms of five (5) years. During any extended term, the monthly rent
will equal the monthly rent of the prior term, adjusted to give effect to any
increase in the Consumer Price Index since the last adjustment.

     Monmouth Community Bank has the option to purchase Monmouth Community
Bank's Long Branch office for $550,000 at the end of the fifth year of the
Initial Term and at any time after the 114th month, but prior to the 118th
month, of the Initial Term. If the Long Branch Lease is extended by Monmouth
Community Bank, Monmouth Community Bank will have the option to purchase
Monmouth Community Bank's Long Branch office during the initial five year
extension for a price ranging between $558,000 and $590,000, with the exact
price to be based on the date such option is exercised by Monmouth Community
Bank.

                                       11
<PAGE>

     On July 8, 1999, a second branch of Monmouth Community Bank was opened at
700 Allaire Road, Spring Lake Heights, New Jersey. Monmouth Community Bank's
Spring Lake Height's building is leased on terms and conditions set forth in a
lease dated December 22, 1998 (the "Spring Lake Heights Lease"). The Spring Lake
Heights Lease has an initial term of five (5) years which commenced on May 1,
1999, with Monmouth Community Bank having the option to renew the lease for two
(2) successive five (5) year terms, provided Monmouth Community Bank is not in
default on the lease at the end of any such term. The rent for the first and
second years of the lease was $5,600 per month. Thereafter, the monthly payment
for each additional year, including the individual years of each renewal term,
shall be equal to the greater of (a) 104% of the monthly payment for the
preceding year, or (b) $5,600 plus the percentage increase in the Consumer Price
Index between May 1 and April 30 of the prior lease year. The current monthly
rent for 2003 is $6,090.41.

     On July 10, 2001, a third branch of Monmouth Community Bank was opened at
Route 35 and 3rd Avenue, Neptune City, New Jersey. Monmouth Community Bank's
Neptune City office is leased on terms and conditions set forth in a lease dated
September 29, 2000 (the "Neptune City Lease"). The Neptune City Lease has an
initial term of three (3) years which commenced on October 1, 2000. Monmouth
Community Bank has the option to renew the Neptune City Lease for two (2)
consecutive five (5) year terms, provided that: (a) the lease is in full force
and effect; and (b) Monmouth Community Bank is current with all of its rental
obligations and is not and has not been in default of any of the provisions or
conditions of the Neptune City Lease. The rent for the first and second years of
the Neptune City Lease is $1,666.67 per month, which amount increases to
$2,083.33 per month for the third year of the lease. Thereafter, the monthly
rent increases for each additional year of the Neptune City Lease and will be
$3,261.93 per month in the thirteenth and final year of the Neptune City Lease.
Monmouth Community Bank has notified the landlord of its intention to exercise
its option to renew the Neptune City Lease for a five-year term commencing
January 1, 2004.

     On December 17, 2001, a fourth branch of Monmouth Community Bank was opened
at 700 Branch Avenue, Little Silver, New Jersey. Monmouth Community Bank's
Little Silver office is leased on terms and conditions set forth in a lease
dated June 22, 2001 (the "Little Silver Lease"). The Little Silver Lease has an
initial term of five (5) years which commenced on September 1, 2001, with
Monmouth Community Bank having the option to renew the Little Silver Lease for
three (3) consecutive five (5) year terms, provided that Monmouth Community Bank
is not in default of the Little Silver Lease at the end of any such term. The
rent for the first and second years of the Little Silver Lease is $6,000 per
month, with increases for all years thereafter driven by the percentage increase
in the Consumer Price Index between September 1 and August 31 of the prior lease
year.

     On October 12, 2002, a fifth branch of Monmouth Community Bank was opened
at 61 Main Avenue in Ocean Grove, New Jersey. Monmouth Community Bank's Ocean
Grove office is leased on terms and conditions set forth in a lease dated July
1, 2002 (the "Ocean Grove Lease"). The Ocean Grove Lease has an initial term of
five (5) years which commenced on July 1, 2002, with Monmouth Community Bank
having the option to renew the Ocean Grove Lease for two (2) consecutive five
(5) year terms, provided that Monmouth Community Bank is not in default of the
provisions or conditions of the Ocean Grove Lease. The basic rent is fixed at
the base rate of $36,000 per annum, or $3,000 per month. At the end of the third
year of the Ocean Grove Lease, the base rate shall be increased to $48,000 per
annum, or $4,000 per month. At the


                                       12
<PAGE>

end of the fourth year of the Ocean Grove Lease the base rent shall be increased
to $60,000 per annum, or $5,000 per month. Thereafter, the base rent shall be
increased by the percentage increase on the Consumer Price Index between July 1
and June 30 of the prior lease year.

     On February 27, 2003, a sixth branch of Monmouth Community Bank was opened
at 3636 Highway 33 in Neptune, New Jersey. Monmouth Community Bank's Neptune
office is leased on terms and conditions set forth in a lease dated June 15,
2002 (the "Neptune Lease"). The Neptune Lease has an initial term of seven (7)
years which commenced on July 15, 2002, with Monmouth Community Bank having the
option to renew the Neptune Lease for three (3) consecutive five (5) year terms,
provided that Monmouth Community Bank is not in default of the provisions or
conditions of the Neptune Lease. The base rent is fixed at $4,500 per month for
year one, $5,000 per month for year two and for each year thereafter the base
rent of $5,000 per month shall be increased by the difference in the Consumer
Price Index for the month ending May 2004 and the month ending prior to the
commencement of the applicable lease year.

     In addition, to alleviate the need for an additional conference room at
Monmouth Community Bank's Long Branch location, on April 1, 1999, Monmouth
Community Bank entered into a five (5) year lease to rent a 420 square foot
conference room located at 6 West End Court, Long Branch, New Jersey. Monmouth
Community Bank pays rent in the amount of $10 per square foot annually, or $350
per month. Subsequently, the need for office and storage space resulted in the
leasing at 6 West End Court of an office suite of 549 square feet, storage space
of 88 square feet and two offices of 210 square feet and 285 square feet,
respectively. The additional space at 6 West End Court is subject to the
identical terms and conditions as the original space and has been documented by
addendum to the original lease. The landlord of the space leased at 6 West End
Court is MCB Associates, L.L.C. The following directors of the holding company
have an interest in MCB Associates, L.L.C.: James G. Aaron, Mark R. Aikins,
Nicholas A. Alexander, John A. Brockreide, Richard O. Lindsey, John F. McCann,
Harold M. Miller, Jr., Carmen M. Penta, Mark G. Solow and James S. Vaccaro. The
negotiations with respect to the leased conference room and office and storage
space at 6 West End Court were conducted at arms-length and the lease amount
being paid by Monmouth Community Bank was determined by an independent appraiser
to be at fair market value.

ITEM 3.           LEGAL PROCEEDINGS
                  -----------------

         There are no material legal, governmental, administrative or other
proceedings pending against the holding company or Monmouth Community Bank, or
to which the holding company or Monmouth Community Bank is a party, and to the
knowledge of management no such material proceedings are threatened or
contemplated.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  ---------------------------------------------------

         None.


                                       13
<PAGE>
                                    PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                  --------------------------------------------------------

     The common stock of the holding company currently trades on the NASDAQ OTC
Bulletin Board under the symbol MMTH. On February 19, 2003, the holding company
submitted an application for listing of its common stock on the NASDAQ SmallCap
Market. The holding company's application is currently under review, and no
assurance can be given that the holding company's common stock will be listed on
the NASDAQ SmallCap Market.

     The following table sets forth, for the periods indicated, the high and low
last sale information for the holding company's common stock, as reported on the
NASDAQ OTC Bulletin Board. Please note that the information set forth below
reflects inter-dealer prices, without retail mark-up, mark-down or commission
and may not represent actual transactions.

     YEAR ENDED DECEMBER 31, 2002                                High      Low
                                                                 ----      ---

     First Quarter..............................................$16.50    $14.00
     Second Quarter............................................. 16.90     13.20
     Third Quarter.............................................. 14.52     11.76
     Fourth Quarter............................................. 15.71     13.43

     YEAR ENDED DECEMBER 31, 2001                                High      Low
                                                                 ----      ---

     First Quarter..............................................$10.48    $ 8.33
     Second Quarter.............................................  9.76      8.69
     Third Quarter.............................................. 10.48      8.91
     Fourth Quarter............................................. 12.00     10.00

     The NASDAQ OTC Bulletin Board is generally considered to be a less active
and efficient market than the NASDAQ National Market System or SmallCap Market
or any national exchange and will not provide investors with the liquidity that
the NASDAQ National Market System or SmallCap Market or a national exchange
would offer. Baird, Patrick & Co., Inc., Ryan, Beck & Co., LLC, Monroe
Securities, Inc., Hill Thompson, Magid, L.P., Sandler, O' Neill & Partners,
L.P., Wedbush Morgan Securities, Inc., Knight Securities, L.P., Schwab Capital
Markets, L.P. and F.J. Morrissey & Co., Inc. are market makers for our common
stock.

     As of January 6, 2003, the approximate number of registered holders of the
holding company's common stock was 494.

     The holding company has not paid any cash dividends on its common stock and
does not intend to declare or pay cash dividends in the foreseeable future. Our
dividend policy is subject to certain regulatory considerations and the
discretion of our board of directors and depends upon a number of factors,
including operating results, financial condition and general business
conditions. Holders of common stock are entitled to receive dividends as, if and
when declared by our board of directors out of funds legally available therefor,
subject to the restrictions set forth under the Federal Bank Holding Company
Act. We may pay cash dividends without regulatory approval if net income
available to shareholders fully funds the proposed dividends,


                                       14
<PAGE>

and the expected rate of earnings retention is consistent with capital needs,
asset quality and overall financial condition.

     On November 30, 2002, the holding company concluded its offering of
1,173,415 shares of its common stock, par value $0.01 per share. The shares
offered for sale by the holding company were registered pursuant to a
Registration Statement on Form SB-2 (File No. 333-87352), which was declared
effective by the Securities and Exchange Commission on July 23, 2002. At the
conclusion of the offering, the holding company had sold a total of 402,507
shares of its common stock (as adjusted to give effect to the 5% stock
distribution made to the shareholders of the holding company on December 31,
2002) for total gross proceeds of $5.4 million. The net offering proceeds of
$5.2 million reside in the shareholders' equity section of the holding company's
balance sheet. The proceeds will be used to fund further branch and general
market expansion in order to continue to create shareholder value.

     In the holding company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 2002, as filed with the Securities and Exchange Commission
on November 14, 2002, the holding company reported the expenses it incurred in
connection with the offering through September 30, 2002. The holding company
incurred an additional $6,600 in legal fees and expenses in connection with the
offering between November 14, 2002 and the date of this report. The total net
offering proceeds collected by the holding company after deducting the total
expenses incurred by the holding company in connection therewith is $5.2
million.

     Pursuant to Post-Effective Amendment No. 1 to its Registration Statement on
Form SB-2, the holding company deregistered 790,075 shares of common stock and
870,826 rights to purchase shares of common stock that had been registered
pursuant to the Registration Statement on Form SB-2 and not sold during the
offering period.

ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                  ---------------------------------------------------------

     The following discussion and analysis is intended to provide information
about the holding company's financial condition and results of operations for
the years ended December 31, 2002 and 2001. The following information should be
read in conjunction with the holding company's audited financial statements for
the years ended December 31, 2002 and 2001, including the related notes thereto,
which begin on pages F-1 of this report.

CRITICAL ACCOUNTING POLICIES

     Note (1) to our consolidated financial statements for the years ended
December 31, 2002 and 2001, contained elsewhere in this report, includes a
summary of our significant accounting policies. We believe our policy, with
respect to the methodology for our determination of the allowance for loan
losses, involves a high degree of complexity and requires management to make
difficult and subjective judgments which often requires assumptions or estimates
about uncertain matters. Changes in these judgments, assumptions or estimates
could cause reported results to differ materially. This critical policy and its
application is periodically reviewed by the holding company's audit committee
and board of directors.


                                       15
<PAGE>

OVERVIEW

     Our net profit from operations for the year ended December 31, 2002 was
$784 thousand, or $.68 per basic share and $.67 per diluted share compared to a
net profit of $537 thousand, or $.50 per basic and diluted share, for the year
ended December 31, 2001. Per share earnings have been adjusted in both periods
to reflect the 5% stock distributions to the shareholders of Monmouth Community
Bancorp paid on December 31, 2002 and 2001. Income tax expense for 2002 was
$70,000 as compared to $1,000 in 2001. In addition, loan growth of $27.7 million
in 2002 resulted in a provision for loan losses of $373 thousand, or $162
thousand higher than in 2001.

     Total assets at December 31, 2002 were $179.5 million, or 52% higher than
the year-end 2001 figure of $118 million. Total deposits of $164.0 million at
December 31, 2002 exceeded the December 31, 2001 total by more than $55.1
million. There was one loan charge-off during 2002 totaling $1 thousand that was
subsequently recovered. At December 31, 2002, there was one loan in non-accrual
status totaling $43 thousand.

     Total assets of $179.5 million at December 31, 2002 were comprised
primarily of $7.5 million in Federal funds sold, $70.3 million in investment
securities, $89.6 million in net loans and loans available for sale and $8.9
million in cash and due from banks, compared to total assets of $118.0 million
at December 31, 2001, which primarily consisted of $9.9 million in Federal funds
sold, $40.0 million in investment securities, $61.9 million in net loans and
loans available for sale and $3.8 million in cash and due from banks. Total
assets at December 31, 2002 were funded primarily through deposits of $164.0
million, a 51% increase over deposits of $108.9 million at December 31, 2001.

     During the year ended December 31, 2002, we experienced one non-accrual
loan totaling $43 thousand and a $1 thousand charge-off, which was subsequently
recovered, compared to no non-accrual loans and $6,000 charge-offs for the year
ended December 31, 2001.

                                                         Year ended December 31,
                                                         -----------------------
                                                          2002             2001
              Performance Ratios:                        -------         -------

              Return on average assets                   0.51%             0.54%
              Return on average shareholders' equity     7.64%             6.18%
              Shareholders' equity to total assets       8.32%             7.53%

RESULTS OF OPERATIONS

GENERAL

     The holding company's principal source of revenue derives from Monmouth
Community Bank's net interest income, which is the difference between interest
income on earning assets and interest expense on deposits. Interest-earning
assets consist principally of loans, securities and federal funds sold, while
the sources used to fund such assets consist primarily of deposits. The holding
company's net income is also affected by Monmouth Community Bank's provision for
loan losses, other income and other expenses. Other income consists primarily of
service charges and fees. Other expenses consist primarily of salaries and
employee benefits, occupancy costs and other operating related expenses.


                                       16
<PAGE>


FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND, IN SOME INSTANCES, 2000

NET INTEREST INCOME

     Net interest income of Monmouth Community Bank was $5.4 million for the
year ended December 31, 2002, as compared to $3.8 million for the year ended
December 31, 2001. Net interest income for the year ended December 31, 2002 was
comprised primarily of $254 thousand in interest on Federal funds sold and due
from banks, $5.5 million in interest on loans and $2.5 million in interest on
securities, less interest expense on deposits of $2.8 million, whereas net
interest income for the year ended December 31, 2001 was comprised primarily of
$478 thousand in interest on Federal funds sold and due from banks, $4.3 million
in interest on loans and $1.8 million in interest on securities, less interest
expense on deposits of $2.7 million.

     Interest-earning assets averaged $144.3 million for the year ended December
31, 2002, a 55% increase over interest-earning assets of $93.1 million for the
year ended December 31, 2001. Interest-earning assets for such periods were
funded primarily by deposit inflows. Deposits for the year ended December 31,
2002 averaged $141.8 million, of which $120.1 million, or 85%, were
interest-bearing. This number represents a 58% increase over total deposits for
the year ended December 31, 2001, which averaged $89.6 million of which $73.8
million, or 82%, were interest-bearing.

     Net interest margin, which represents net-interest income as a percentage
of average interest-earning assets, was 3.74% for the year ended December 31,
2002, as compared to 4.12% for the year ended December 31, 2001. The net
interest margin compression experienced in 2002 and 2001 was primarily
attributable to the general interest rate-declines that occurred during such
years. During 2002, interest rates, as measured by the prime rate of interest,
decreased from 4.75% at the beginning of the year to 4.25% by December 31, 2002.
As Monmouth Community Bank generates the majority of its interest income on
loans and investments, the prevailing interest rate environment resulted in
significantly lower rates available on interest earning assets.


                                       17
<PAGE>

     The following table presents a summary of the principal components of
interest income and interest expense for the years ended December 31, 2002, 2001
and 2000:

<TABLE>
<CAPTION>



    (dollars in thousands)       Year ended December 31, 2002   Year ended December 31, 2001  Year ended December 31, 2000
                                 ----------------------------   ----------------------------  ----------------------------

                                 Average             Average    Average             Average    Average             Average
                                 Balance  Interest  Yield/Cost  Balance  Interest  Yield/Cost  Balance  Interest  Yield/Cost
                                 -------  --------  ----------  -------  --------  ----------  -------  --------  ----------
<S>                              <C>        <C>          <C>    <C>      <C>          <C>      <C>        <C>       <C>


Interest earning assets:

Federal funds sold               $15,484    $  222       1.43%  $12,107  $   455      3.77%    $ 8,618    $  548    6.34%


Loans receivable, gross           77,347     5,481       7.09%   52,917    4,310      8.15%     36,956     3,241    8.77%

Deposits with banks                  535        32       5.92%      396       23      5.86%        133         8    5.89%

Securities                        50,914     2,453       4.82%   27,674    1,755      6.34%     12,558       847    6.74%
                                 -------    ------       ----   -------  -------      ----     -------    ------    ----

    Total interest earning       144,280     8,188       5.67%   93,094    6,543      7.03%     58,265     4,644    7.95%
assets

Cash and due from banks            6,435                          4,113                          3,418

Allowance for loan losses         (1,036)                          (713)                          (466)

Other assets                       2,824                          2,206                          1,274
                                --------                        -------                       --------

Total Assets                    $152,503                        $98,700                       $ 62,491
                                ========                        =======                       ========

Interest bearing liabilities:

Interest bearing demand          $42,274    $  796       1.88%  $27,295  $   778      2.85%    $13,018   $   415    3.18%

Money market                      27,322       707       2.59%    9,368      339      3.62%      5,219       216    4.13%

Savings                           15,247       209       1.37%   10,605      274      2.58%      8,265       279    3.37%

Time                              35,279     1,077       3.05%   26,487    1,312      4.96%     16,386       899    5.47%
                               ---------    ------       ----   -------   ------      ----    --------     -----    ----

    Total interest bearing
liabilities                      120,122     2,789       2.32%   73,755    2,703      3.67%     42,888     1,809    4.21%

Non-interest bearing demand       21,727                         15,893                         11,301

Other liabilities                    386                            361                            244

Shareholders' equity              10,268                          8,691                          8,058
                                --------                        -------                        -------
 Total liabilities and          $152,503                        $98,700                        $62,491
 shareholders' equity           ========                        =======                        =======


Net interest income                         $5,399                       $ 3,840                         $ 2,835
                                            ======                       =======                         =======

Net interest rate spread (1)                             3.35%                        3.36%                         3.74%

Net interest margin (2)                                  3.74%                        4.12%                         4.87%

<FN>
--------------------------
  1  Net interest rate spread represents the difference between the yield on
     interest-earning assets and the cost of interest-bearing liabilities.
  2 Net interest margin represents net interest income divided by average
    interest-earning assets.
</FN>
</TABLE>


                                       18
<PAGE>


Rate Volume Analysis

         The following table presents the extent to which changes in interest
rates and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected Monmouth Community Bank's interest income and interest
expense during the periods indicated. Information is provided in each category
with respect to: (i) changes attributable to changes in volume (changes in
volume multiplied by prior rate); (ii) changes attributable to changes in rate
(changes in rate multiplied by prior volume); and (iii) the net change. The
changes attributable to the combined impact of volume and rate have been
allocated proportionately to the changes due to volume and the changes due to
rate (in thousands).

<TABLE>
<CAPTION>


                                        Year ended December 31, 2002                Year ended December 2001
                                                 Compared to                              Compared to
                                        Year ended December 31, 2001              Year ended December 31, 2000
                                   -------------------------------------     -----------------------------------

                                      Increase (Decrease)                      Increase (Decrease)
                                       Due to Change in:        Total           Due to Change in:         Total
                                   ----------------------      Increase      ----------------------     Increase
                                      Volume        Rate      (Decrease)         Volume        Rate    (Decrease)
(in thousands)                     ---------     -------      ----------       --------      -------   ----------

<S>                                <C>           <C>           <C>             <C>           <C>        <C>
Interest Income:

  Loans                            $  1,789      $  (618)      $   1,171       $  1,306      $  (237)   $   1,069

  Securities                           1,199        (501)            698            962          (54)         908

  Other interest-bearing deposits          9         ---               9             15          ---           15

  Federal funds sold                     102        (335)           (233)           177         (269)         (92)
                                   ---------     -------       ---------       --------      -------    ---------
   Total interest-earning assets       3,099      (1,454)          1,645          2,460         (560)       1,900


Interest Expense:

  Interest-bearing checking              337        (319)             18            410          (47)         363

  Savings deposits                        93        (158)            (65)            69          (74)          (5)

  Money market deposits                  489        (121)            368            153          (30)         123

  Time deposits                          358        (593)           (235)           505          (91)         414
                                   ---------     -------       ---------       --------      -------    ---------
   Total interest-bearing
     liabilities                       1,277      (1,191)             86          1,137         (242)         895
                                   ---------     -------       ---------       --------      -------    ---------


Net interest income                $   1,822     $  (263)      $   1,559       $  1,323      $  (318)   $   1,005
                                   =========     =======       =========       ========      =======    =========
</TABLE>

PROVISION FOR LOAN LOSSES

         For the year ended December 31, 2002, Monmouth Community Bank's
provision for loan losses was $373 thousand, as compared to $211 thousand for
the prior year.

         See "Financial Condition - Allowance for Loan Losses and Related
Provision" for a further discussion on provision for loan losses.

NON-INTEREST INCOME

         Non-interest income was $748 thousand for the year ended December 31,
2002, as compared to $440 thousand for the year ended December 31, 2001, an
increase of $308 thousand, or 70%. The increase was due primarily to gains on
the sale of available for sale securities which totaled $159 thousand for 2002
and $0 for 2001, net gains on the sale of residential mortgage loans, servicing
released, which was $64 thousand for the year ended December 31, 2002, as
compared to $57 thousand for the prior year. Service charges on bank



                                       19
<PAGE>

accounts were $438 thousand for the year ended December 31, 2002, as compared to
$354  thousand  for the prior year.  Loan fees totaled $87 thousand for the year
ended December 31, 2002, as compared to $29 thousand for the prior year.

NON-INTEREST EXPENSE

         Non-interest expense includes, among other costs and expenses,
salaries, costs of employee benefits, professional and application fees and
occupancy expense. Non-interest expense for the year ended December 31, 2002 was
$4.9 million, as compared to non-interest expense of $3.5 million for the year
ended December 31, 2001. This increase was due to expenses incurred to support
the general growth of Monmouth Community Bank. During 2002, Monmouth Community
Bank opened one new branch. The Ocean Grove branch was opened in September of
2002.

FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

NET INTEREST INCOME

         Net interest income of Monmouth Community Bank was $3.8 million for the
year ended December 31, 2001, as compared to $2.8 million for the year ended
December 31, 2000. Net interest income for the year ended December 31, 2001 was
comprised primarily of $478 thousand in interest on Federal funds sold, $4.3
million in interest on loans and $1.8 million in interest on securities, less
interest expense on deposits of $2.7 million, whereas net interest income for
the year ended December 31, 2000 was comprised primarily of $556 thousand in
interest on Federal funds sold, $3.2 million in interest on loans and $847
thousand in interest on securities, less interest expense on deposits of $1.8
million.

         Interest-earning assets averaged $93.1 million for the year ended
December 31, 2001, a 60% increase over interest-earning assets of $58.3 million
for the year ended December 31, 2000. Interest-earning assets for such periods
were funded primarily by deposit inflows. Deposits for the year ended December
31, 2001 averaged $89.6 million, of which $73.8 million, or 82%, were
interest-bearing. This number represents a 65% increase over total deposits for
the year ended December 31, 2000, which averaged $54.2 million, of which $42.9
million, or 79%, were interest-bearing.

         Net interest margin, which represents net-interest income as a
percentage of average interest-earning assets, was 4.12% for the year ended
December 31, 2001, as compared to 4.87% for the year ended December 31, 2000.
The net interest margin compression experienced in 2001 was primarily
attributable to the general interest rate-declines that occurred during such
year. During 2001, interest rates, as measured by the prime rate of interest,
decreased from 9.50% at the beginning of the year to 4.75% by December 31, 2001.
As Monmouth Community Bank generates the majority of its interest income on
loans and investments, the prevailing interest rate environment resulted in
significantly lower rates available on interest earning assets.

PROVISION FOR LOAN LOSSES

         For the year ended December 31, 2001, Monmouth Community Bank's
provision for loan losses was $211 thousand, as compared to $291 thousand for
the prior year.


                                       20
<PAGE>

         See "Financial Condition - Allowance for Loan Losses and Related
Provision" for a further discussion on provision for loan losses.

NON-INTEREST INCOME

         Non-interest income was $440 thousand for the year ended December 31,
2001, as compared to $361 thousand for the year ended December 31, 2000, an
increase of $79 thousand, or 22%. The increase was due primarily to net gains on
the sale of residential mortgage loans, servicing released, which was $57
thousand for the year ended December 31, 2001, as compared to $0 for the prior
year. Service charges on bank accounts were $354 thousand for the year ended
December 31, 2001, as compared to $324 thousand for the prior year. Loan fees
totaled $29 thousand for the year ended December 31, 2001, as compared to $37
thousand for the prior year.

NON-INTEREST EXPENSE

         Non-interest expense includes, among other costs and expenses,
salaries, costs of employee benefits, professional and application fees and
occupancy expense. Non-interest expense for the year ended December 31, 2001 was
$3.5 million, as compared to non-interest expense of $2.7 million for the year
ended December 31, 2000. This increase was due to expenses incurred to support
the general growth of Monmouth Community Bank. During 2001, Monmouth Community
Bank opened two new branches and effectively doubled the size of its operations.
The Neptune City branch was opened in July of 2001 and the Little Silver branch
was opened in December of that same year.

FINANCIAL CONDITION

SECURITIES PORTFOLIO

         At December 31, 2002, Monmouth Community Bank's securities portfolio
consisted of obligations of United States Government sponsored agencies and
mortgaged-backed securities of United States Government sponsored agencies.
Securities held to maturity of $25.5 million at December 31, 2002, represented a
decrease of $1.8 million over the year ended December 31, 2001 total of $27.3
million. Securities available for sale had a market value of $44.8 million at
December 31, 2002, representing an increase of $32.1 million over the December
31, 2001 total of $12.7 million.

                                       21
<PAGE>



         The following table summarizes the maturity and weighted average yields
in each of Monmouth Community Bank's securities portfolios at December 31, 2002:

<TABLE>
<CAPTION>

                                                              Over          Over
Maturities and weighted average yields:         Within       1 to 5       5 to 10       Over 10
(dollars in thousands)                          1 Year        Years        Years         Years        Total
                                              ----------   ---------    ----------    ---------    -----------
<S>                                           <C>          <C>          <C>           <C>          <C>
Securities held to maturity:

Mortgage-backed securities:
   Amortized cost                             $     ---    $     379    $    2,407    $   8,460    $    11,246
   Weighted average yield                           ---         7.40%         4.70%        5.10%          5.10%
Obligations of U.S. Government agencies
   Amortized cost                                    ---      14,293           ---          ---         14,293
   Weighted average yield                            ---        3.74%          ---          ---           3.74%
                                              ----------------------------------------------------------------
Total securities held to maturity
   Amortized cost                             $      ---   $  14,672    $    2,407    $   8,460    $    25,539
   Weighted average yield                            ---        3.83%         4.70%        5.10%          4.34%
                                              ================================================================

Securities available for sale:

Mortgage-backed securities:
   Amortized cost                             $      ---   $     ---    $   33,101    $   9,688    $    42,789
   Weighted average yield                            ---         ---          4.16%        3.69%          4.05%
Obligations of U.S. Government agencies
   Amortized cost                                    ---       2,002           ---          ---          2,002
   Weighted average yield                            ---        3.00%          ---          ---           3.00%
                                              ----------------------------------------------------------------
Total securities available for sale
   Amortized cost                             $      ---   $   2,002    $   33,101    $   9,688    $    44,791
   Weighted average yield                            ---        3.00%         4.16%        3.69%          4.00%
                                              ================================================================
</TABLE>


         Securities held to maturity of $25.5 million at December 31, 2002,
represented an decrease of 7% or $1.8 million below the year ended December 31,
2001. Securities available for sale had a market value of $44.8 million at
December 31, 2002, representing an increase of 253%, or $32.1 million, over the
$12.7 million at December 31, 2001.

         The following table summarizes the maturity and weighted average yield
in each category of Monmouth Community Bank's securities portfolios at December
31, 2001:

<TABLE>
<CAPTION>

                                                              Over          Over
Maturities and weighted average yields:         Within       1 to 5       5 to 10       Over 10
(dollars in thousands)                          1 Year        Years        Years         Years        Total
                                              ----------   ---------    ----------    ---------    -----------
<S>                                           <C>          <C>          <C>           <C>          <C>
Securities held to maturity:

Mortgage-backed securities:
   Amortized cost                             $      ---   $     832           ---    $  14,457    $    15,289
   Weighted average yield                            ---        6.90%          ---         6.03%          6.08%
Obligations of U.S. Government agencies
   Amortized cost                                    ---      12,000           ---          ---         12,000
   Weighted average yield                            ---        5.48%          ---          ---           5.48%
Total securities held to maturity
   Amortized cost                             $      ---   $  12,832           ---    $  14,457    $    27,289
   Weighted average yield                            ---        5.57%          ---         6.03%          5.81%
                                              ================================================================

Securities available for sale:

Mortgage-backed securities:
   Amortized cost                             $      ---         ---    $    4,011    $   5,611    $     9,622
   Weighted average yield                            ---         ---          5.09%        6.24%          5.75%
Obligations of U.S. Government agencies
   Amortized cost                                    ---       3,057           ---          ---          3,057
   Weighted average yield                            ---        6.51%          ---          ---           6.51%
                                              ------------ ------------ ------------- ------------ ------------
Total securities available for sale
   Amortized cost                             $      ---     $    3,057 $    4,011    $   5,611    $    12,679
   Weighted average yield                            ---         6.51%        5.09%        6.24%          5.93%
                                              ================================================================
</TABLE>

                                       22
<PAGE>

INVESTMENT POLICY

         Our board of directors has adopted an investment policy to govern the
investment function of Monmouth Community Bank, which includes the purchase of
securities for the held-to-maturity and available-for-sale portfolios and the
sale of securities from the available-for-sale portfolio.

         The basic objectives of the investment function are:

         o to keep Monmouth Community Bank's funds fully employed at the maximum
           after-tax return;
         o to minimize exposure to credit risk; and
         o to provide liquidity required by current circumstances.

         As used in our investment policy and in other policies of Monmouth
Community Bank, the term "liquidity" refers to the expected cash flow from
performing assets and secondary to borrowings secured by performing assets.
These two sources of liquidity are expected to fund the operations of Monmouth
Community Bank. For this reason, unless otherwise indicated, the term
"liquidity" in Monmouth Community Bank's policies does not refer to proceeds
from the sale of assets, except for the sale of assets available-for-sale.

         Investment management therefore emphasizes:

         o preservation of principal;
         o strong cash-flow characteristics;
         o ready availability of credit information;
         o appropriateness of size both as to Monmouth Community Bank and as to
           an obligor's outstanding debt;
         o eligibility as collateral for  public-agency deposits and customer
           repurchase-agreement accounts; and
         o broad marketability, as an indicator of quality.

         The purpose of bonds in the held-to-maturity portfolio is to provide
earnings consistent with the safety factors of quality, maturity and risk
diversification. This purpose is reflected in the accounting principle that
carrying a debt security at amortized cost is appropriate only if the investment
committee of Monmouth Community Bank has the positive intent and ability to hold
that security to maturity. Management should be indifferent to price
fluctuations unrelated to the continuing ability of a security to contribute to
recurring income. For purposes of our investment policy, a security shall be
deemed to have matured if it is sold (i) within 3 months of maturity or a call
date if exercise of the call is probable, or (ii) after collection of at least
85% of the principal outstanding at acquisition.

         Debt securities that are not positively expected to be held to
maturity, but rather for indefinite periods of time, and equity securities,
shall be booked to the available-for-sale portfolio, which shall be monitored
daily and reported at fair value with unrealized holding gains and losses
excluded from earnings and reported as a tax-effected net amount in a separate
component of shareholders' equity. However, in calculating and reporting
regulatory capital, only net unrealized losses on marketable equity securities
is deducted from Tier 1 or core capital.


                                       23
<PAGE>


LOAN PORTFOLIO

         Monmouth Community Bank's primary policy goal is to establish a sound
credit portfolio that contributes, in combination with other earning assets, to
a satisfactory return on assets, return on shareholders' equity and capital to
asset ratio.

         Monmouth Community Bank conducts both commercial and retail lending
activities. The loan approval process at Monmouth Community Bank is driven by
the aggregate indebtedness of the borrower. Executive officers with lending
authority and loans officers have various loan approval authorities up to
$250,000. All credit accommodations exceeding $250,000 are referred to Monmouth
Community Bank's loan committee for review and approval. The loan committee is
comprised of internal officers and outside directors. A loan officer with a loan
application for more than $250,000 presents a full analysis of the proposed
credit accommodation to the members of the loan committee for their
consideration. The analysis includes, among other things, the following:

         o a description of the borrower;
         o the loan purpose and use of proceeds;
         o the requested loan amount;
         o the recommended term;
         o the recommended interest rate;
         o primary, secondary and tertiary sources of repayment;
         o proposed risk rating;
         o full collateral description;
         o fees (if any);
         o full borrower financial analysis including comparative balance
           sheets, income statements and statements of cash flows; and
         o inherent strengths and weaknesses of the borrower.

         A similar analysis is prepared by the loan officer for those loan
applications that are for amounts at or below the $250,000 threshold. This
analysis is reviewed by the senior loan officer and credit officer prior to loan
approval.

         Monmouth Community Bank utilizes a comprehensive approach to loan
underwriting. The primary quantitative determinants in the underwriting process
include creditworthiness of the borrower, cash flow from income or operations
and the ability to secure an adequate collateral package.

         For commercial loans, the collateral package is somewhat dependent on
the loan type. Commercial lines of credit, term loans and time notes are
typically secured by a general lien on business assets, and qualified (typically
less than 90 days) accounts receivable. Commercial mortgage loans are secured by
the underlying property with an acceptable equity margin. Personal guarantees
from the principals of a business are often required. In general, Monmouth
Community Bank requires that income available to service debt repayment
requirements be equal to at least 125% of those requirements.

         Commercial loans are often subject to cyclical economic risks of the
underlying business(s) of the borrower. Such risks are generally reduced during
the loan approval process.


                                       24
<PAGE>


For example, Monmouth Community Bank requires that a loan amount be less than
the value of the collateral securing the loan and that the standard cash flow
analysis of the commercial borrower shows an ample margin for debt service even
with significant business contraction. Commercial mortgage underwriting also
requires that available funds for debt service exceed debt service requirements.

         Retail or consumer loans offered include home equity loans, home equity
lines of credit, direct automobile loans and unsecured loans. Underwriting
criteria for home equity products include an acceptable score for the
borrower(s), a loan to value not to exceed 75% and a debt service to income
maximum of 45%. Such criteria provides Monmouth Community Bank with underwriting
comfort without placing the institution in a position of competitive
disadvantage.

         There are a number of risks associated with the granting of consumer
loans. While income and equity or collateral values are primary determinants of
the loan approval process for consumer loans, Monmouth Community Bank also gives
much consideration to employment and debt payment history of the borrower(s). As
with the commercial underwriting process, consumer loans require both an income
cushion and a collateral cushion. Such criteria provide for a margin should a
borrower's income diminish or the collateral servicing the loan depreciate in
value.

         The granting of loans, by definition, have attendant risks. Monmouth
Community Bank attempts to mitigate risks through sound credit underwriting.
Each loan that Monmouth Community Bank approves undergoes credit scrutiny that
results in a quantification of risk and then the assignment of a risk rating.
Individual risk ratings carry with them a required reserve that is used to fund
Monmouth Community Bank's allowance for loan losses. The inherent risk
associated with each loan is a function of loan type, collateral, cash flow,
credit rating, general economic conditions and interest rates.

         Monmouth Community Bank is limited by regulation as to the total amount
which may be committed and lent to a borrower and its related entities. Monmouth
Community Bank's legal lending limit is equal to 15% of its capital funds,
including capital stock, surplus, retained earnings and the allowance for loan
losses. Monmouth Community Bank may lend an additional 10% of its capital funds
to a borrower and its related entities if the additional loan or extension of
credit is fully secured by readily marketable collateral having a market value
at least equal to the amount borrowed. The additional limitation is separate
from and in addition to the general limitation of 15%.

         The following table summarizes net loans outstanding by loan category
and amount at December 31, 2002 and 2001.

     (in thousands)                     December 31, 2002      December 31, 2001
                                        -----------------      -----------------
     Commercial and industrial loans      $     25,578             $    23,212
     Real estate loans - commercial             46,944                  26,960
     Home equity and second mortgages           14,816                  11,182
     Consumer loans                              3,218                   1,113
                                          ------------             -----------
                                                90,556                  62,467
     Less allowance for loan losses              1,228                     855
                                          ------------             -----------
     Net loans                            $     89,328             $    61,612
                                          ============             ===========
     Loans held for sale                  $        302             $       269
                                          ============             ===========

                                       25
<PAGE>

         For the twelve months ended December 31, 2002, net loans increased by
$27.8 million, or 45%, from the $61.9 million at December 31, 2001.

         For the twelve months ended December 31, 2002, commercial and
industrial loans and commercial real estate loans increased by $22.4 million, or
45%, from the $50.2 million at December 31, 2001.

         During 2002, home equity and second mortgages increased by $3.6 million
to $14.8 million at December 31, 2002, which represents a 32% increase from the
$11.2 million at December 31, 2001.

         The following table summarizes the maturities of loans by category and
whether such loans are at a fixed or floating rate at December 31, 2002.

<TABLE>
<CAPTION>

                                                                           December 31, 2002
                                                  ---------------------------------------------------------------------

Maturity and repricing data for loans:             Within    Over 1 to 3 Over 3 to 5 Over 5 to 10   Over 10
(in thousands)                                     1 Year       Years       Years        Years        Years     Total
                                                  ---------------------------------------------------------------------
<S>                                               <C>        <C>          <C>         <C>           <C>        <C>
Loans secured by 1-4 family residential
properties
    Fixed rate                                    $   1,112  $    1,726   $   2,366   $      388    $     0    $ 5,592
    Adjustable rate                                  15,401         ---         ---          ---        ---     15,401

All other loans secured by real estate
    Fixed rate                                        1,550      11,149      25,973        4,907        ---     43,579
    Adjustable rate                                   7,094         ---         ---          ---        ---      7,094

All other loans
    Fixed rate                                        3,421       3,033       4,943          149         13     11,559
    Adjustable rate                                   7,633         ---         ---          ---        ---      7,633
                                                  ---------------------------------------------------------------------
Total                                             $  36,211  $   15,908   $  33,282   $    5,444    $    13    $90,858
                                                  =====================================================================

</TABLE>

         The following table summarizes the maturities of loans by category and
whether such loans are fixed or floating rate at December 31, 2001.

<TABLE>
<CAPTION>

                                                                           December 31, 2001
                                                  ---------------------------------------------------------------------

Maturity and repricing data for loans:             Within    Over 1 to 3  Over 3 to 5 Over 5 to 10   Over 10
(in thousands)                                     1 Year       Years       Years         Years        Years     Total
                                                  ---------------------------------------------------------------------
<S>                                               <C>        <C>          <C>         <C>           <C>        <C>
Loans secured by 1-4 family residential
properties
    Fixed rate                                    $    376   $    1,469   $   3,186   $      167    $   770   $  5,968
    Adjustable rate                                  7,348          ---         ---          ---        ---      7,348

All other loans secured by real estate
    Fixed rate                                          64        7,652      15,320        2,171        ---     25,207
    Adjustable rate                                  5,000          ---         ---          ---        ---      5,000

All other loans
    Fixed rate                                       2,198        2,845       4,527          169          6      9,745
    Adjustable rate                                  9,468          ---         ---          ---        ---      9,468
                                                  ---------------------------------------------------------------------
Total                                             $ 24,454   $   11,966   $  23,033   $    2,507    $   776    $62,736
                                                  =====================================================================
</TABLE>


                                       26
<PAGE>

NON-PERFORMING LOANS

         Loans are considered to be non-performing if they are (i) on a
non-accrual basis, (ii) are past due ninety (90) days or more and still accruing
interest, or (iii) have been renegotiated to provide a reduction or deferral of
interest or principal because of a weakening in the financial positions of the
borrowers. A loan which is past due ninety (90) days or more and still accruing
interest remains on accrual status only where it is both adequately secured as
to principal and is in the process of collection. Monmouth Community Bank had
one non-performing loan at December 31, 2002 totaling $43 thousand and none at
December 31, 2001.

POTENTIAL PROBLEM LOANS

         In addition to non-performing loans, Monmouth Community Bank maintains
a "watch list" of loans which are subject to heightened scrutiny and more
frequent review by management. Loans may be placed on the "watch list" because
of documentation deficiencies, or because management has identified "structural
weaknesses" which potentially could cause such loans to become non-performing in
future periods.

         As of December 31, 2002 and 2001, there were no loans identified as
having structural weaknesses on the "watch list." The total balance of loans on
the "watch list" at December 31, 2002 and 2001 was $2.9 million and $1.6
million, respectively.

ALLOWANCE FOR LOAN LOSSES AND RELATED PROVISION

         The allowance for loan losses is a valuation reserve available for
losses incurred or expected on extension of credit. The determination of the
adequacy of the allowance for loan losses is a critical accounting policy of
Monmouth Community Bank, due to the inherently subjective nature of the
evaluation. Credit losses primarily arise from Monmouth Community Bank's loan
portfolio, but also may be derived from other credit-related sources, including
commitments to extend credit. Additions are made to the allowance through
periodic provisions which are charged to expense. All losses of principal are
charged to the allowance when incurred or when a determination is made that a
loss is expected. Subsequent recoveries, if any, are credited to the allowance.

         As part of our evaluation of the adequacy of our allowance for loan
losses, each quarter we prepare a worksheet. This worksheet categorizes the
entire loan portfolio by certain risk characteristics such as loan type
(commercial, commercial real estate, one- to four-family, consumer, etc.) and
loan risk rating.

         Loan risk ratings for every loan are determined by individual loan
officers who consider various factors including the borrower's current financial
condition and payment status, historical loan performance, underlying
collateral, as well as internal loan review and regulatory ratings. Any loans
with known potential losses are categorized and reserved for separately.

         The loss factors applied to each loan risk rating are inherently
subjective in nature, and, in Monmouth Community Bank's circumstances, even more
so due to the relatively unseasoned nature of the loan portfolio and the lack of
any meaningful charge-off experience. Loss factors are assigned to loan risk
rating categories on the basis of our assessment of the potential risk inherent
in each loan type. Key factors we consider in determining loss factors for each
loan



                                       27
<PAGE>

type include the current real estate market conditions, changes in the trend of
delinquencies and non-performing loans, the current state of the local and
national economy, loan portfolio growth and changes in composition and
concentrations within the portfolio. The loss factors are evaluated by
management on a quarterly basis and any adjustments are approved by the board of
directors of the holding company. There have been no significant changes in loss
factors in 2002 compared to 2001.

         We establish the provision for loan losses after considering the
allowance for loan loss worksheet, the amount of the allowance for loan losses
in relation to the total loan balance, loan portfolio growth, loan delinquency
trends and peer group analysis. Monmouth Community Bank's allowance for loan
losses is allocated on an individual loan basis and Monmouth Community Bank does
not maintain an unallocated allowance for loan losses. We have applied this
process consistently and have made minimal changes in the estimation methods and
assumptions that we have used.

         Our primary lending emphasis is the origination of commercial real
estate loans, commercial and industrial loans, and to a lesser extent, home
equity and second mortgages. As a result of our strategic plans and lending
emphasis, we have a loan concentration in commercial loans at December 31, 2002
and 2001, the majority of which are secured by real property located in New
Jersey.

         Based on the composition of our loan portfolio and the growth in our
loan portfolio over the past four years, we believe the primary risks inherent
in our portfolio are possible increases in interest rates, a possible decline in
the economy, generally, and a possible decline in real estate market values. Any
one or a combination of these events may adversely affect our loan portfolio
resulting in increased delinquencies and loan losses.

         The provision for loan losses was $373 thousand for 2002, as compared
to $211 thousand for 2001. The provision for loan losses increased in 2002 as
compared to 2001 primarily due to an increased rate of loan growth in 2002 as
compared to the loan growth experienced in 2001. Changes in loan portfolio
composition and asset quality had no significant impact on the calculation of
the allowance for loan losses and related provision in 2002 and 2001. Loan
portfolio composition remained consistent in 2002 as compared to 2001 with
commercial loans comprising 80% of total loans outstanding at December 31, 2002.
In addition, Monmouth Community Bank had one non-accrual or impaired loan at
December 31, 2002 totaling $43 thousand as compared to none at December 31,
2001. Loans outstanding totaled $90.9 million at December 31, 2002, as compared
to $62.7 million at December 31, 2001, an increase of 45%. The allowance for
loan losses increased to $1,228 thousand, or 1.36%, at December 31, 2002, as
compared to $855 thousand, or 1.36%, at December 31, 2001.




                                       28
<PAGE>



         The following table summarizes Monmouth Community Bank's allowance for
loan losses for the years ended December 31, 2002 and 2001.

<TABLE>
<CAPTION>

         (in thousands)                                          December 31, 2002    December 31, 2001
                                                                 -----------------    -----------------
<S>                                                                    <C>                  <C>
         Balance, beginning of year                                    $    855             $    650

         Provision charged to expense                                       373                  211

         Charge-offs                                                        (1)                  (6)

         Recoveries                                                           1                    0

         Balance, end of year                                          $  1,228             $    855
                                                                       ========             ========
         Ratio of allowance for loan losses
           to total loans                                                  1.36%                1.36%

         Ratio of net charge-offs to average loans
           outstanding                                                     0.00%                0.01%

</TABLE>


         The following table sets forth Monmouth Community Bank's percent of
allowance for loan losses to total allowance and the percent of loans to total
loans in each of the categories listed at the dates indicated (dollars in
thousands):



                      December 31, 2002                December 31, 2001
                ------------------------------   -------------------------------

                                     Percent                           Percent
                         Percent     of                    Percent     of
                         of          loans                 of          loans
                         allowance   to                    allowance   to
                         to total    total                 to total    total
                Amount   allowance    loans       Amount   allowance    loans
                -------- ----------- ---------   --------- ----------- ---------
Commercial
  loans         $ 1,007      82.0%      79.8%    $   709       82.9%      80.4%

Consumer loans      221      18.0%      20.2%        146       17.1%      19.6%
                -------     ------     ------    -------      ------     ------
Total           $ 1,228     100.0%     100.0%    $   855      100.0%     100.0%
                =======     ======     ======    =======      ======     ======

DEPOSITS

         One of Monmouth Community Bank's primary strategies is the accumulation
and retention of core deposits. Core deposits are defined as of all deposits
except certificates of deposits in excess of $100 thousand.

         Total deposits were $164.0 million at December 31, 2002, an increase of
$55.1 million, or 51%, from the year ended December 31, 2001 total of $108.9
million. Core deposits as a percentage of total deposits were 84% at December
31, 2002 as compared to 86% at December 31, 2001.


                                       29
<PAGE>



         The following table represents categories of Monmouth Community Bank's
deposits at December 31, 2002 and 2001.



                                                     December 31,   December 31,
                                                     ------------   ------------
    (in thousands)                                       2002            2001
                                                         ----            ----

   Demand deposits, non-interest bearing             $  22,581       $   17,215

   Savings, N.O.W. and money market accounts            98,328           63,603

   Certificates of deposit of less than $100,000        16,863           12,308

   Certificates of deposit of $100,000 or more          26,235           15,766
                                                     ---------       ----------
   Total deposits                                    $ 164,007       $  108,892
                                                     =========       ==========

         The following table represents categories of Monmouth Community Bank's
average deposit balances and weighted average interest rates for the years ended
December 31, 2002 and 2001.

<TABLE>
<CAPTION>

                                                           December 31,               December 31,
                                                      ----------------------      ---------------------
         (in thousands)                                        2002                       2001
                                                               ----                       ----
                                                                   Weighted                   Weighted
                                                       Average     Average         Average    Average
                                                       Balance       Rate          Balance      Rate
                                                      -----------  ---------      ---------   ---------
         <S>                                          <C>              <C>        <C>             <C>
         Demand deposits, non-interest bearing        $   21,727        ---%      $  15,893        ---%
         Savings, N.O.W. and money market accounts        84,843       2.02%         47,268       2.94%
         Certificates of deposit of less than
         $100,000                                         13,572       3.43%         11,144       5.12%
         Certificates of deposit of $100,000 or more      21,707       2.82%         15,343       4.84%
                                                      -----------  ---------      ---------   ---------
         Total deposits                               $  141,849       1.97%      $  89,648       3.02%
                                                      ===========  =========      =========   =========

</TABLE>


         At December 31, 2002, Monmouth Community Bank had $43.1 million in time
deposits maturing as follows (in thousands):

<TABLE>
<CAPTION>
                                                                               Over 1
                                                    3 months     Over 3 to    year to 3
                                                     or less     12 months      years     Over 3 years     Total
                                                   ------------ ------------ ------------ ------------- ------------

<S>                                                <C>          <C>          <C>          <C>           <C>
Less than $100,000                                 $   3,640    $    8,672   $    3,496   $    1,055    $   16,863

Equal to or more than $100,000                        15,666         9,304          956          309        26,235
                                                   ------------ ------------ ------------ ------------- ------------
Total                                              $  19,306    $   17,976   $    4,452   $    1,364    $   43,098
                                                   ============ ============ ============ ============= ============
</TABLE>

         At December 31, 2001, Monmouth Community Bank had $28.1 million in time
deposits maturing as follows (in thousands):

<TABLE>
<CAPTION>
                                                                               Over 1
                                                    3 months     Over 3 to    year to 3
                                                     or less     12 months      years     Over 3 years     Total
                                                   ------------ ------------ ------------ ------------- ------------

<S>                                                <C>          <C>          <C>          <C>           <C>
Less than $100,000                                 $   5,599    $    4,073   $    2,174   $      462    $   12,308

Equal to or more than $100,000                         8,815         6,498          353          100        15,766
                                                   ------------ ------------ ------------ ------------- ------------
Total                                              $  14,414    $   10,571   $    2,527   $      562    $   28,074
                                                   ============ ============ ============ ============= ============
</TABLE>


                                       30
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         Liquidity defines the ability of Monmouth Community Bank to generate
funds to support asset growth, meet deposit withdrawals, maintain reserve
requirements and otherwise operate on an ongoing basis. An important component
of a bank's asset and liability management structure is the level of liquidity,
which are net liquid assets available to meet the needs of its customers and
regulatory requirements. During the past two years, the liquidity needs of
Monmouth Community Bank were primarily met by cash on hand and loan and
investment amortizations. Monmouth Community Bank invests funds not needed for
operations (excess liquidity) primarily in daily Federal funds sold. With
adequate cash inflows resulting from deposits during the years 2002 and 2001,
Monmouth Community Bank maintained levels of short-term assets sufficient to
maintain ample liquidity. During 2002, Monmouth Community Bank built a large
secondary source of liquidity known as Investment Securities Available for Sale.
The market value of that portfolio was $44.8 million at December 31, 2002 and
$12.7 million at December 31, 2001.

         It has been Monmouth Community Bank's experience that its deposit base,
both core (which is defined as transaction accounts and term deposits of less
than $100,000) and non-core (which is defined as term deposits of $100,000 or
more) is primarily relationship-driven and not highly sensitive to changes in
interest rates. However, adequate sources of reasonably priced on-balance sheet
funds, such as overnight Federal funds sold, due from banks and short-term
investments maturing in less than one year, must be continually accessible for
times of need. This is accomplished primarily by the daily monitoring of certain
accounts for sufficient balances to meet future loan commitments, as well as
measuring Monmouth Community Bank's liquidity position on a monthly basis.

         Supplemental sources of liquidity include large certificates of
deposit, wholesale and retail repurchase agreements, and lines of credit with
correspondent banks. Correspondent banks, which are typically referred to as
"banker's banks," offer essential services such as cash letter processing,
investment services, loan participation support, wire transfer operations and
other traditional banking services. Brokered deposits, which are deposits
obtained, directly or indirectly, from or through the mediation or assistance of
a deposit broker, may be utilized as supplemental sources of liquidity only if
authorized by our board of directors in an addendum to Monmouth Community Bank's
balance sheet management policy. Contingent liquidity sources may include
off-balance sheet funds, such as advances from both the Federal Home Loan Bank
(once approved) and the Federal Reserve Bank, and Federal funds purchase lines
with "upstream" correspondents. An additional source of liquidity is made
available by curtailing loan activity and instead using the available cash to
fund short-term investments such as overnight Federal funds sold or other
approved investments maturing in less than one year. In addition, future
expansion of Monmouth Community Bank's retail banking network will create
additional sources of liquidity from new deposit customer relationships.

         Monmouth Community Bank is subject to various regulatory capital
requirements administered by Federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory, and possibly additional
discretionary, actions by regulators that, if undertaken, could have a direct
material effect on Monmouth Community Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
Monmouth Community Bank must meet specific capital guidelines that



                                       31
<PAGE>

involve quantitative measures of Monmouth Community Bank's assets, liabilities
and certain off-balance-sheet items as calculated under regulatory accounting
practices. Monmouth Community Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings and other factors. See "Item 1 Description of Business - Government
Regulation."

         Quantitative measures established by regulation to ensure capital
adequacy require Monmouth Community Bank to maintain minimum amounts and ratios
(set forth in the following table) of total capital and Tier 1 capital to risk
weighted assets, and of Tier 1 capital to average assets (leverage ratio). We
believe that, as of December 31, 2002, Monmouth Community Bank met all capital
adequacy requirements to which it is subject.

         As of December 31, 2002, the most recent notification from the Office
of the Comptroller of the Currency categorized Monmouth Community Bank as "well
capitalized" under the regulatory framework for prompt corrective action. There
are no conditions or events since that notification that we believe have changed
Monmouth Community Bank's category.

         Monmouth Community Bank's actual capital ratios at December 31, 2002
and December 31, 2001 are presented in the following table:

<TABLE>
<CAPTION>
                                            Tier I                      Tier I
                                         Capital to                  Capital to              Total Capital to
                                     Average Assets Ratio           Risk Weighted               Risk Weighted
           Capital Ratios              (Leverage Ratio)               Asset Ratio                Asset Ratio
------------------------------      --------------------------  --------------------------  ---------------------
                                         December 31,                December 31,               December 31,
                                    --------------------------  --------------------------  ---------------------
                                      2002          2001         2002           2001         2002           2001
                                      ----          ----         ----           ----         ----           ----

<S>                                    <C>          <C>           <C>          <C>            <C>          <C>
Monmouth Community Bank                8.12%        7.68%         14.19%       11.60%         15.37%       12.73%


"Adequately capitalized"
   institution (under Federal
   regulations)                        4.00%        4.00%         4.00%        4.00%           8.00%        8.00%


"Well capitalized" institution
   (under Federal regulations)         5.00%        5.00%          6.00%        6.00%         10.00%       10.00%


</TABLE>

IMPACT OF INFLATION

         The financial statements and related financial data presented in this
report have been prepared in accordance with generally accepted principles,
which require the measurement of financial position and operating results in
terms of historical dollars without considering changes in the relative
purchasing power of money over time due to inflation. The primary impact of
inflation on the operation of the holding company and Monmouth Community Bank is
reflected in increased operating costs. Unlike most industrial companies,
virtually all of the assets and liabilities of a financial institution are
monetary in nature. As a result, interest rates have a more significant impact
on a financial institution's performance than the effects of general levels of
inflation. Interest rates do not necessarily move in the same direction or in
the same magnitude as the prices of goods and services. We believe that
continuation of our efforts to manage the rates, liquidity and interest
sensitivity of our assets and liabilities is necessary to generate an acceptable
return on assets.

                                       32
<PAGE>



RECENT ACCOUNTING PRONOUNCEMENTS

         In December, 2002, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 148, "Accounting
for Stock-Based Compensation, Transition and Disclosure." SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. SFAS No. 148 also
requires that disclosures of the pro forma effect of using the fair value method
of accounting for stock-based employee compensation be displayed more
prominently and in tabular format. Additionally, SFAS No. 148 requires
disclosure of the pro forma effect in interim financial statements. The
additional disclosure requirements of SFAS No. 148 are effective for fiscal
years ended after December 15, 2002. The Company has adopted the expanded
disclosure provisions of this statement effective December 31, 2002.

ITEM 7.  FINANCIAL STATEMENTS
         --------------------

         The consolidated financial statements and supplementary data of the
holding company called for by this item are submitted under a separate section
of this report. Reference is made to the Index of Financial Statements contained
on page F-1 herein.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
         --------------------

         None.




                                       33
<PAGE>



                                    PART III


ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
         -------------------------------------------------

         The information required under this Item with respect to the holding
company's directors and executive officers is contained in the holding company's
Proxy Statement for the Annual Meeting of Shareholders scheduled to be held on
May 29, 2003, under the captions "Election of Directors," "Compliance with
Section 16(a) of the Securities Exchange Act" and "Executive Officers" and is
incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION
         ----------------------

         The information required under this Item with respect to executive
compensation is contained in the holding company's Proxy Statement for the
Annual Meeting of Shareholders scheduled to be held on May 29, 2003, under the
caption "Executive Compensation" and is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS
         ---------------------------

         The information required by Items 201(d) and 403 of Regulation S-B is
contained in the holding company's Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held on May29, 2003, under the captions "Securities
Authorized for Issuance under Equity Compensation Plan" and "Principal
Shareholders and Security Ownership of Management" and is incorporated herein by
reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

         The information required by this item is contained in the holding
company's Proxy Statement for the Annual Meeting of Shareholders scheduled to be
held on May 29, 2003, under the caption "Certain Relationships and Related Party
Transactions" and is incorporated herein by reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

   a)    EXHIBITS
         --------

         Reference is made to the Index of Exhibits beginning on page E-1
         herein.

   b)    Reports on Form 8-K:
         -------------------

         During the three months ended December 31, 2002, the Registrant filed
with the Securities and Exchange Commission the following four Current Reports
on Form 8-K:

            On October 16, 2002, the Registrant filed a Current Report on Form
8-K with the Securities and Exchange Commission. This Current Report on Form
8-K, filed pursuant to Item



                                       34
<PAGE>

5 of that Form, reported the conclusion of the Registrant's offering to its
shareholders of record as of July 23, 2002 of 1,023,415 rights to purchase
shares of the Registrant's common stock pursuant to the Registrant's
Registration Statement on Form SB-2 (Registration No. 333-87352).

         On November 4, 2002, the Registrant filed a Current Report on Form 8-K
with the Securities and Exchange Commission. This Current Report on Form 8-K,
filed pursuant to Item 5 of that Form, reported that the Registrant had issued a
press release on October 31, 2002, announcing a 108% increase in third quarter
earnings.

         On December 16, 2002, the Registrant filed a Current Report on Form 8-K
with the Securities and Exchange Commission. This Current Report on Form 8-K,
filed pursuant to Item 5 of that Form, reported that the Registrant's board of
directors had declared a five-percent stock distribution payable on December 31,
2002 to the Registrant's shareholders of record as of December 16, 2002.

         On December 23, 2002, the Registrant filed a Current Report on Form 8-K
with the Securities and Exchange Commission. This Current Report on Form 8-K,
filed pursuant to Item 5 of that Form, reported that Solomon Dwek had resigned
from the Registrant's board of directors.

         There were no financial statements filed with any of the above
described Current Reports on Form 8-K.

ITEM 14. CONTROLS AND PROCEDURES
         -----------------------

         As required by Rule 13a-15 under the Exchange Act, within ninety
(90) days prior to the filing date of this report, the holding company carried
out an evaluation of the effectiveness of the design and operation of the
holding company's disclosure controls and procedures. This evaluation was
carried out under the supervision and with the participation of the holding
company's management, including the holding company's Chairman and Chief
Executive Officer and the holding company's Chief Financial Officer, who
concluded that the holding company's disclosure controls and procedures are
effective. There have been no significant changes in the holding company's
internal controls or in other factors which could significantly affect internal
controls subsequent to the date the holding company carried out its evaluation.

         Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in the
holding company's reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in the holding company's
reports filed under the Exchange Act is accumulated and communicated to
management, including the holding company's Chief Executive Officer and Chief
Financial Officer as appropriate, to allow timely decisions regarding required
disclosure.


                                       35
<PAGE>

                                   SIGNATURES


         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                            MONMOUTH COMMUNITY BANCORP



Date:  March 27, 2003                   By: /s/ James S. Vaccaro
                                            ____________________________________
                                            James S. Vaccaro
                                            Chairman and Chief Executive Officer



         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James S. Vaccaro and Richard O. Lindsey
and each of them, his true and lawful attorneys-in-fact and agents for him and
in his name, place an stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Annual Report on Form
10-KSB, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents may lawfully do or cause to be done by virtue hereof.

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has caused this report to be signed by the following persons in the
capacities and on the dates stated.


              Signatures                  Title                      Date
              ----------                  -----                      ----

         /s/ James S. Vaccaro    Chairman of the Board of         March 27, 2003
         ____________________    Directors and Chief Executive
             James S. Vaccaro    Officer (Principal Executive
                                 Officer)


                                       36
<PAGE>


         /s/ Anthony Giordano, III     Senior Vice President      March 27, 2003
         _________________________     and Chief Financial Officer
             Anthony Giordano, III     (Principal Financial and
                                       Accounting Officer)

         /s/ Richard O. Lindsey        President and Director     March 27, 2003
         _________________________
             Richard O. Lindsey

         /s/ John A. Brockriede        Director                   March 27, 2003
         _________________________
             John A. Brockriede

         /s/ James G. Aaron            Director                   March 27, 2003
         _________________________
             James G. Aaron

         /s/ Mark R. Aikins            Director                   March 27, 2003
         _________________________
             Mark R. Aikins

         /s/ Nicholas A. Alexander     Director                   March 27, 2003
         _________________________
             Nicholas A. Alexander

         /s/ John F. McCann            Director                   March 27, 2003
         _________________________
             John F. McCann

         /s/ Harold M. Miller, Jr.     Director                   March 27, 2003
         _________________________
             Harold M. Miller, Jr.

         /s/ Carmen M. Penta           Director                   March 27, 2003
         _________________________
             Carmen M. Penta

                                       Director                   March 27, 2003
         _________________________
             Mark G. Solow


                                       37
<PAGE>



                                  CERTIFICATION

         I, James S. Vaccaro, certify that:

         1.  I have reviewed this annual report on Form 10-KSB of Monmouth
Community Bancorp;

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

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

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

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

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

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

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

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

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

         6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date:  March 27, 2003
                                            /s/ James S. Vaccaro
                                            ____________________________________
                                            James S. Vaccaro
                                            Chairman and Chief Executive Officer



                                       38
<PAGE>



                                  CERTIFICATION

         I, Anthony Giordano, III, certify that:

         1.  I have reviewed this annual report on Form 10-KSB of Monmouth
Community Bancorp;

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

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

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

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

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

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

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

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

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

         6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  March 27, 2003
                                                   /s/ Anthony Giordano, III
                                                   ___________________________
                                                       Anthony Giordano, III
                                                       Chief Financial Officer



                                       39
<PAGE>


                           MONMOUTH COMMUNITY BANCORP
                                 AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS


                                    CONTENTS



                                DECEMBER 31, 2002



Independent Auditors' Report ................................................F-2
Consolidated Balance Sheets at December 31, 2002 and 2001....................F-3
Consolidated Statements of Income for the years ended
  December 31, 2002 and 2001.................................................F-4
Consolidated Statements of Changes in Shareholders' Equity for the years
     ended December 31, 2002 and 2001........................................F-5
Consolidated Statement of Cash Flows for the years ended
     December 31, 2002 and 2001..............................................F-6
Notes to Consolidated Financial Statements...................................F-7


















                                      F-1

<PAGE>

















                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholders
Monmouth Community Bancorp:


We have audited the accompanying consolidated balance sheets of Monmouth
Community Bancorp and subsidiary as of December 31, 2002 and 2001, and the
related consolidated statements of income, changes in shareholders' equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Monmouth Community
Bancorp and subsidiary as of December 31, 2002 and 2001, and the results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.


                                                 /s/ KPMG LLP





Short Hills, New Jersey
January 27, 2003


                                      F-2


<PAGE>

<TABLE>
<CAPTION>

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2002 AND 2001
                (dollars in thousands, except per share amounts)



ASSETS                                                                                      2002                     2001
------                                                                               -------------------      -------------------

<S>                                                                                            <C>                      <C>
Cash and due from banks                                                                        $  8,880                 $  3,798
Federal funds sold                                                                                7,500                    9,900
Investment securities available for sale, at market value                                        44,791                   12,679
Investment securities held to maturity (market value of $25,973
     and $27,428 at December 31, 2002 and 2001, respectively)                                    25,539                   27,289
Loans held for sale                                                                                 302                      269
Loans, net                                                                                       89,328                   61,612
Premises and equipment                                                                            1,638                    1,300
Other assets                                                                                      1,559                    1,177
                                                                                     -------------------      -------------------

          Total assets                                                                         $179,537                 $118,024
                                                                                     ===================      ===================

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Deposits:
     Non-interest bearing                                                                       $22,581                  $17,215
     Interest bearing                                                                           141,426                   91,677
                                                                                     -------------------      -------------------
                                                                                                164,007                  108,892
Accrued expenses and other liabilities                                                              599                      240
                                                                                     -------------------      -------------------

          Total liabilities                                                                     164,606                  109,132
                                                                                     -------------------      -------------------

Commitments and contingencies (Notes 4 and 8)

Shareholders' equity:
Common stock, par value $0.01 per share. Authorized 100,000,000 shares and
     issued and outstanding 1,476,927 and 1,074,586 shares at December 31, 2002
     and 2001, respectively                                                                          15                       10
Additional paid-in capital                                                                       14,767                    9,519
Accumulated other comprehensive income                                                              149                       70
Accumulated deficit                                                                                  --                    (707)
                                                                                     -------------------      -------------------
          Total shareholders' equity                                                             14,931                    8,892

                                                                                     -------------------      -------------------
          Total liabilities and shareholders' equity                                           $179,537                 $118,024
                                                                                     ===================      ===================
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-3



<PAGE>

<TABLE>
<CAPTION>

                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                (dollars in thousands, except per share amounts)

                                                                                  2002                     2001
                                                                           -------------------       -----------------

<S>                                                                                    <C>                     <C>
Interest and dividend income:
     Interest and fees on loans                                                        $5,481                  $4,310
     Interest on securities available for sale                                            895                     465
     Interest on securities held to maturity                                            1,558                   1,290
     Interest on federal funds sold and due from banks                                    254                     478
                                                                           -------------------       -----------------
          Total interest income                                                         8,188                   6,543

Interest expense - interest on deposits                                                 2,789                   2,703
                                                                           -------------------       -----------------
          Net interest income                                                           5,399                   3,840

Provision for loan losses                                                                 373                     211
                                                                           -------------------       -----------------
          Net interest income after provision for loan losses                           5,026                   3,629
                                                                           -------------------       -----------------

Other income:
     Service charges on deposit accounts                                                  438                     354
     Gain on the sale of available for sale securities                                    159                      --
     Gain on the sale of loans held for sale                                               64                      57
     Other service charges, commissions and fees                                           87                      29
                                                                           -------------------       -----------------
          Total other income                                                              748                     440
                                                                           -------------------       -----------------

Operating expenses:
     Salaries and employee benefits                                                     2,473                   1,732
     Occupancy expenses                                                                   563                     337
     Data processing fees                                                                 418                     352
     Outside service fees                                                                 404                     283
     Professional and application fees                                                    236                     170
     Furniture, fixtures and equipment                                                    198                     150
     Stationery, supplies and printing                                                    173                     121
     Advertising and public relations                                                     125                     118
     Telephone and postage                                                                113                      90
     Insurance                                                                             68                      62
     Other expenses                                                                       149                     116
                                                                           -------------------       -----------------
          Total other expenses                                                          4,920                   3,531
                                                                           -------------------       -----------------

Income before provision for income taxes                                                  854                     538

Income taxes                                                                               70                       1
                                                                           -------------------       -----------------

     Net income                                                                          $784                    $537
                                                                           ===================       =================

Basic earnings per share                                                                 $.68                   $ .50
                                                                           ===================       =================
Diluted earnings per share                                                               $.67                   $ .50
                                                                           ===================       =================

Average basic shares outstanding                                                        1,151                   1,075
                                                                           ===================       =================
Average diluted shares outstanding                                                      1,172                   1,075
                                                                           ===================       =================
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4


<PAGE>

<TABLE>
<CAPTION>

                            CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                  FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                                              (dollars in thousands)




                                                                                    Accumulated
                                                                Additional             other
                                                 Common          paid-in           comprehensive        Accumulated
                                                 stock           capital               income             deficit         Total
------------------------------------------ ------------ ------------------ ----------------- --------------------- --------------
<S>                                               <C>             <C>                  <C>               <C>             <C>
Balance at December 31, 2000                      $ 10            $ 9,520              $ --              $(1,244)        $ 8,286
------------------------------------------ ------------ ------------------ ----------------- --------------------- --------------
Comprehensive income:
Net income                                          --                 --                --                   537            537
Unrealized gain on
securities                  available               --                 --                70                    --             70
for sale                                                                                                                 -------
Total comprehensive income                          --                 --                --                    --            607
Issuance of 5% stock distribution -
48,595 shares                                       --                 --                --                    --             --
Fractional shares paid in cash                      --                 (1)               --                    --             (1)
------------------------------------------ ------------ ------------------ ----------------- --------------------- --------------
Balance at December 31, 2001                      $ 10            $ 9,519              $ 70                 $(707)       $ 8,892
------------------------------------------ ------------ ------------------ ----------------- --------------------- --------------
Comprehensive income:
Net income                                          --                 --                --                   784            784
Unrealized gain on securities
available for sale, net of tax of $163              --                 --               174                    --            174
Less reclassification adjustment for
gains included in income, net of tax of
$64                                                                                     (95)                                 (95)
                                                                                                                          ------
Total comprehensive income                          --                 --                --                    --            863
Issuance of 5% stock distribution -
70,172 shares                                        1                 76                --                   (77)            --
Fractional shares paid in cash                      --                (2)                --                    --             (2)
Issuance of 402,507 shares of common
stock, net of $188 in stock issuance
costs                                                4              5,174                --                    --          5,178
------------------------------------------ ------------ ------------------ ----------------- --------------------- --------------
Balance at December 31, 2002                      $ 15            $14,767              $149                  $  -        $14,931
========================================== ============ ================== ================= ===================== ==============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-5


<PAGE>

<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                             (dollars in thousands)


                                                                                                     2002               2001
                                                                                                ----------------      ----------
<S>                                                                                               <C>                 <C>
Cash flows from operating activities:
     Net income                                                                                   $     784           $     537
Adjustments to reconcile net income to net cash provided by operating activities:
     Provision for loan losses                                                                          373                 211
     Depreciation and amortization                                                                      268                 162
     Gain on the sale of available for sale securities                                                (159)                  --
     Gain on the sale of loans held for sale                                                           (64)                (57)
     Origination of loans held for sale                                                             (8,767)             (8,367)
     Proceeds from sale of loans held for sale                                                        8,798               8,693
     Net premium amortization on held to maturity securities                                            119                  36
     Net premium amortization on available for sale securities                                          145                  35
      Increase in other assets                                                                        (382)               (516)
      Increase in accrued expenses and other liabilities                                                259                  73
                                                                                                ------------        ------------
          Net cash provided by operating activities                                                   1,374                 807
                                                                                                ------------        ------------

Cash flows from investing activities:
     Purchase of investment securities held to maturity                                            (17,325)            (22,561)
     Purchase of investment securities available for sale                                          (39,212)            (10,022)
     Maturities of and paydowns on investment securities held to maturity                            18,956              10,575
     Maturities of and paydowns on investment securities available for sale                           7,134                 385
     Proceeds from the sales of securities available for sale                                           159                  --
     Net increase in loans                                                                         (28,089)            (15,417)
     Purchases of premises and equipment, net                                                         (606)               (658)
                                                                                                ------------        ------------
          Net cash used in investment activities                                                   (58,983)            (37,698)
                                                                                                ------------        ------------

Cash flows from financing activities:
     Net increase in non-interest bearing deposits                                                    5,366               3,222
     Net increase in interest bearing deposits                                                       49,749              33,318
     Issuance of common stock, net                                                                    5,178                  --
     Cash paid for fractional shares                                                                    (2)                 (1)
                                                                                                ------------        ------------
          Net cash provided by financing activities                                                  60,291              36,539
                                                                                                ------------        ------------

          Increase (decrease) in cash and cash equivalents                                            2,682               (352)

Cash and cash equivalents at beginning of period                                                     13,698              14,050
                                                                                                ------------        ------------
Cash and cash equivalents at end of period                                                          $16,380             $13,698
                                                                                                ============        ============

Cash paid during the period for:
     Interest                                                                                     $   2,803           $   2,712
                                                                                                ============        ============
     Income taxes                                                                                 $       1           $       1
                                                                                                ============        ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-6

<PAGE>



MONMOUTH COMMUNITY BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Effective August 31, 2000, Monmouth Community Bancorp ("Bancorp"), a newly
formed corporation, acquired all of the shares of Monmouth Community Bank, N.A.
(the "Bank"). Bancorp and the Bank are collectively referred to herein as the
"Company." Each share of $5 par value common stock of the Bank was exchanged for
one share of $0.01 par value common stock of Bancorp. The reorganization was
accounted for as if it were a pooling of interests.

The Company provides a full range of banking services to customers located
primarily in the greater Monmouth County, New Jersey area. Bancorp and the Bank
are subject, as applicable, to Federal statutes applicable to banks and bank
holding companies. In 2001, the Bank converted from a state chartered
institution to a nationally chartered institution regulated by the Office of
Comptroller of the Currency (OCC). The Bank's deposits are insured by the
Federal Deposit Insurance Corporation (FDIC). Bancorp is subject to regulation,
supervision and examination by the Federal Reserve Bank of New York.

In 2002, in conjunction with a stock offering commenced on July 23, 2002,
402,507 shares of common stock were issued at $13.33 per share (these amounts
have been adjusted to give effect to the subsequent December 31, 2002 stock
distribution). The offering closed on November 29, 2002.

On December 31, 2002, the Company paid a 5% stock distribution on the 1,476,927
authorized and outstanding shares of Bancorp common stock to the shareholders of
record as of December 6, 2002. On December 31, 2001, the Company paid a 5% stock
distribution on the 1,074,586 authorized and outstanding shares of Bancorp
common stock to the shareholders of record on December 15, 2001. These amounts
have been adjusted to give effect to the subsequent December 31, 2002 stock
distribution.

BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying consolidated financial statements include the accounts of
Bancorp and its wholly-owned subsidiary, the Bank. All significant inter-company
accounts and transactions have been eliminated in consolidation. Certain prior
year amounts have been reclassified to conform to the current year presentation.
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the date of the balance sheet and results of operations for the periods
indicated. Actual results could differ significantly from those estimates.

Material estimates that are particularly susceptible to significant change in
the near term relate to the determination of the allowance for loan losses.

While management uses available information to recognize estimated losses on
loans, such estimates may be adjusted to account for changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowances for loan
losses. Such agencies may require the Company to increase such allowance based,
in their judgment, on the information available to them at the time of their
examination.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior period amounts to conform
with the current period presentation.

                                      F-7

<PAGE>


INVESTMENT SECURITIES

Investment securities held to maturity are comprised of debt securities that the
Company has the positive intent and ability to hold to maturity. Such securities
are stated at cost, adjusted for amortization of premiums and accretion of
discounts using a method that approximates a level yield.

Securities to be held for indefinite periods of time and not intended to be held
to maturity, including all equity securities, are classified as available for
sale. Securities available for sale include securities that management intends
to use as part of its asset/liability management strategy and that may be sold
in response to changes in interest rates, resultant prepayment risk and other
factors related to interest rate and resultant prepayment risk changes.
Securities available for sale are carried at estimated fair value and unrealized
holding gains and losses on such securities are excluded from earnings and
reported as a separate component of shareholders' equity. Gains and losses on
sales of securities are based on the identifiable cost and are accounted for on
a trade date basis.

LOANS AND LOANS HELD FOR SALE

Loans are stated at unpaid principal balances, less unearned income and deferred
loan fees and costs. Loans held for sale are carried at the lower of aggregate
cost or fair value.

Interest on loans is credited to operations based upon the principal amount
outstanding.

Loan origination and commitment fees and certain direct loan origination costs
are deferred, and the net amount is amortized over the estimated life of the
loan on a basis that approximates a level yield.

A loan is considered impaired when, based on current information and events, it
is probable that the Company will be unable to collect all amounts due according
to the contractual terms of the loan agreement. Impaired loans are measured
based on the present value of expected future cash flows, or, as a practical
expedient, at the loan's observable market price, or the fair value of the
underlying collateral, if the loan is collateral dependent. Conforming
residential mortgage loans, home equity and second mortgages, and loans to
individuals are excluded from the definition of impaired loans as they are
characterized as smaller balance, homogeneous loans and are collectively
evaluated.

The accrual of income on loans, including impaired loans, is generally
discontinued when a loan becomes more than ninety (90) days delinquent as to
principal or interest or when other circumstances indicate that collection is
questionable, unless the loan is well secured and in the process of collection.
Income on non-accrual loans, including impaired loans, is recognized only in the
period in which it is collected, and only if management determines that the loan
principal is fully collectible. Loans are returned to an accrual status when a
loan is brought current as to principal and interest and reasons indicating
doubtful collection no longer exist.

The allowance for loan losses is based on management's evaluation of the
adequacy of the allowance based on known and inherent risks in the portfolio,
adverse situations that may affect the borrowers' ability to repay, estimated
value of any underlying collateral, and current economic conditions. Increases
in the allowance arise from charges to operations through the provision for loan
losses or from the recovery of amounts previously charged off. The allowance is
reduced by charge-offs. Management believes that the allowance for loan losses
is adequate.

PREMISES AND EQUIPMENT

Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is charged to operations on a straight-line basis
over the estimated useful lives of the assets or, in the case of leasehold
improvements, the lease period, if shorter. Depreciable lives range from three
to ten years for furniture, fixtures and equipment and five to fifteen years for
leasehold improvements. Gains or losses on dispositions are reflected in current
operations. Maintenance and repairs are charged to expense as incurred.

                                      F-8

<PAGE>


INCOME TAXES

Income taxes are accounted for under the asset and liability method. Current
income taxes are provided for based upon amounts estimated to be currently
payable, for both Federal and state income taxes. Deferred Federal and state tax
assets and liabilities are recognized for the expected future tax consequences
of existing differences between financial statement and tax bases of existing
assets and liabilities. Deferred tax assets are recognized for future deductible
temporary differences and tax loss carryforwards if their realization is "more
likely than not." The effect of a change in the tax rate on deferred taxes is
recognized in the period of the enactment date.

NET INCOME PER SHARE

Basic and diluted net income per share for 2002 was calculated by dividing the
net income of $784,000 by the weighted average number of shares outstanding of
1,150,981 and 1,171,782, respectively. Stock options to purchase 51,550 shares
of Bancorp's common stock at an average exercise price of $14.50 were excluded
from the diluted net income per share calculation because they were
anti-dilutive. Basic and diluted net income per share for 2001 was calculated by
dividing the net income of $537,000 by the weighted average number of shares
outstanding of 1,074,586. Stock options to purchase 122,525 shares of Bancorp's
common stock at an average exercise price of $10.08 were excluded from the
diluted net income per share calculation because they were anti-dilutive.

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks and Federal funds sold. Federal funds sold are
generally sold for one-day periods.

STOCK BASED COMPENSATION

The Company has elected to account for stock-based compensation under APB
Opinion No. 25, "Accounting for Stock Issued to Employees" and to provide pro
forma disclosures of net loss and loss per share as if the Company had adopted
the fair value based method of accounting in accordance with Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" as amended by Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation," which assumes the fair value based
method of accounting had been adopted.

Had compensation cost for the Company's stock options been determined in
accordance with SFAS No. 123, the Company's net income and related per share
amounts for 2002 and 2001 would have decreased to the following pro forma
amounts:

<TABLE>
<CAPTION>

                                                                       2002            2001
-----------------------------------------------------------------------------------------------
<S>                                                                  <C>               <C>
Net Income:
     As reported                                                     $784,000          $537,000
Deduct: Total stock-based employee compensation
          expense determined under the fair value based
          method for all awards, net of related tax effects           108,000            83,000
                                                                -------------------------------
     Pro forma                                                       $676,000          $454,000

Net income per share - basic:
     As reported                                                       $ 0.68            $ 0.50
     Pro forma                                                         $ 0.59            $ 0.42

Net income per share - diluted:
     As reported                                                       $ 0.67            $ 0.50
     Pro forma                                                         $ 0.58            $ 0.42

</TABLE>


                                      F-9

<PAGE>


The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions were used for 2002 grants: dividend yield of 0%, expected volatility
of 23.17%; risk free interest rate of 3.05% and 4.30% for employee and director
grants, respectively; and expected lives of four years. The following
weighted-average assumptions were used for 2001 grants: dividend yield of 0%,
expected volatility of 25%; risk free interest rate of 4.57% and 3.97% for
employee grants and 4.86% for director grants; and expected lives of five years.

(2) CASH AND DUE FROM BANKS

The Company is required to maintain reserve balances with the Federal Reserve
Bank. As of December 31, 2002, the Company had a reserve balance of
approximately $3.0 million. The Company was not required to maintain any other
reserve balances.

(3) SECURITIES

The amortized cost, gross unrealized gains and losses, and estimated market
value of investment securities held to maturity and securities available for
sale at December 31, 2002 and 2001 are as follows (in thousands):

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
                                                              2002
----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Gross           Gross         Estimated
                                                                    Amortized        unrealized       unrealized       market
                                                                       cost             gains           losses          value
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                  <C>             <C>              <C>
Investment securities held to maturity:
U.S. Treasury securities and obligations of U.S.
     Government sponsored agencies                                   $14,293              $125            $--             $14,418
Mortgage-backed securities of U.S. Government
     sponsored agencies                                               11,246               309             --              11,555
----------------------------------------------------------------------------------------------------------------------------------
Total                                                                $25,539              $434            $--             $25,973
==================================================================================================================================
Investment securities available for sale:
U.S. Treasury securities and obligations of U.S.
     Government sponsored agencies                                   $ 2,000              $  2            $--             $ 2,002
Mortgage-backed securities of U.S. Government
     sponsored agencies                                               42,542               253              6              42,789
----------------------------------------------------------------------------------------------------------------------------------
Total                                                                $44,542              $255            $ 6             $44,791
==================================================================================================================================
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
                                                              2001
----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Gross           Gross            Estimated
                                                                    Amortized        unrealized       unrealized           market
                                                                       cost             gains           losses              value
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                 <C>              <C>           <C>
Investment securities held to maturity:
U.S. Treasury securities and obligations of U.S.
     Government sponsored agencies                                     $12,000              $109            $84           $12,025
Mortgage-backed securities of U.S. Government
     sponsored agencies                                                 15,289               129             15            15,403
----------------------------------------------------------------------------------------------------------------------------------
Total                                                                  $27,289              $238            $99           $27,428
==================================================================================================================================
Investment securities available for sale:
U.S. Treasury securities and obligations of U.S.
     Government sponsored agencies                                     $ 3,002              $ 55            $--           $ 3,057
Mortgage-backed securities of U.S. Government
     sponsored agencies                                                  9,607                76             61             9,622
----------------------------------------------------------------------------------------------------------------------------------
Total                                                                  $12,609              $131            $61           $12,679
==================================================================================================================================
</TABLE>

                                      F-10

<PAGE>

The amortized cost and estimated market value of investment securities held to
maturity and debt securities available for sale at December 31, 2002 by
contractual maturity are shown below (in thousands). Expected maturities will
differ from contractual maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties.

During 2002, securities available for sale with a carrying value of $5.9 million
were sold realizing gains totaling $159 thousand.

<TABLE>
<CAPTION>

                                                                                      Estimated
                                                                    Amortized          market
                                                                       cost             value
----------------------------------------------------------------------------- -----------------
<S>                                                                  <C>               <C>
Investment securities held to maturity:
Due after one year through five years                                $14,672           $14,815
Due after fifth year through tenth year                                2,407             2,461
Due after tenth year                                                   8,460             8,697
---------------------------------------------------------------- ------------ -----------------
Total                                                                $25,539           $25,973
================================================================ ============ =================
Investment securities available for sale:
Due after one year through five years                                $ 2,000           $ 2,002
Due after fifth year through tenth year                               32,893            33,101
Due after tenth year                                                   9,649             9,688
---------------------------------------------------------------- ------------ -----------------
Total                                                                $44,542           $44,791
================================================================ ============ =================

</TABLE>



At December 31, 2002 and 2001, there were $51,860,000 and $19,920,000,
respectively, of investment securities pledged to secure public funds or for any
other purposes required by law.

(4) LOANS

Loans at December 31, 2002 and 2001 are summarized as follows (in thousands):

<TABLE>
<CAPTION>

                                                                      2002                   2001
--------------------------------------------------------------- ----------------- ----------------
<S>                                                                 <C>                   <C>
Commercial and industrial loans                                     $25,578               $23,212
Real estate loans - commercial                                       46,944                26,960
Home equity and second mortgages                                     14,816                11,182
Consumer loans                                                        3,218                 1,113
--------------------------------------------------------------- ------------ ---------------------
                                                                     90,556                62,467
Less allowance for loan losses                                        1,228                   855
--------------------------------------------------------------- ------------ ---------------------
Net loans                                                           $89,328               $61,612
=============================================================== ============ =====================
Loans held for sale                                                 $   302               $   269
=============================================================== ============ =====================

</TABLE>


A substantial portion of the Company's loans are secured by real estate and made
to borrowers located in New Jersey, primarily in Monmouth County. Accordingly,
as with most financial institutions in the Company's market area, the ultimate
collectibility of a substantial portion of the Company's loan portfolio is
susceptible to changes in market conditions in the market area.

                                      F-11

<PAGE>


Activity in the allowance for loan losses for the years ended December 31, 2002
and 2001 is summarized as follows (in thousands):

<TABLE>
<CAPTION>

                                                                      2002             2001
--------------------------------------------------------------- ----------------- ----------------
<S>                                                                  <C>               <C>
Balance, beginning of year                                           $  855            $ 650
Provision charged to expense                                            373              211
Charge-offs                                                              (1)              (6)
Recoveries                                                                1               --
--------------------------------------------------------------- ----------------- ----------------
Balance, end of year                                                 $1,228            $ 855
=============================================================== ================= ================
Ratio of allowance for loan losses to total loans                      1.36%            1.36%
=============================================================== ================= ================
Ratio of net charge-offs to average loans outstanding                  0.00%            0.01%
=============================================================== ================= ================
</TABLE>


At December 31, 2002 and 2001, the Company had non-accrual loans totaling
$43,000 and $0, respectively, and no impaired loans for either period.

The Company is party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financial needs of its customers. These
financial instruments include unused lines of credit and involve, to varying
degrees, elements of credit risk in excess of the amount recognized in the
financial statements. The contract or notional amounts of these instruments
express the extent of involvement the Company has in each category of financial
instruments.

The Company's exposure to credit loss from nonperformance by the other party to
the above-mentioned financial instruments is represented by the contractual
amount of those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet
instruments.

The contract or notional amount of financial instruments whose contract amounts
represent credit risk at December 31, 2002 and 2001 is as follows (in
thousands):

                                                        2002        2001
-------------------------------------------------------------------------------
Standby letters of credit                             $   570      $   858

Outstanding loan and credit line commitments          $16,046      $15,551
-------------------------------------------------------------------------------

Standby letters of credit are conditional commitments issued by the Company
guaranteeing performance by a customer to a third party. Outstanding loan
commitments represent the unused portion of loan commitments available to
individuals and companies as long as there is no violation of any condition
established in the contract. Outstanding loan commitments generally have a fixed
expiration date of one year or less, except for home equity loan commitments
which generally have an expiration date of up to 15 years. The Company evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained if deemed necessary by the Company upon extension of credit
is based upon management's credit evaluation of the customer. Various types of
collateral may be held, including property and marketable securities. The credit
risk involved in these financial instruments is essentially the same as that
involved in extending loan facilities to customers.

(5) PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2002 and 2001 is summarized as follows
(in thousands):


                                                      2002          2001
-----------------------------------------------------------------------------
Leasehold improvements                               $1,225        $  856
Equipment                                             1,105           868
-----------------------------------------------------------------------------
                                                      2,330         1,724
Accumulated depreciation and amortization              (692)         (424)
-----------------------------------------------------------------------------
                                                     $1,638        $1,300
=============================================================================

                                      F-12

<PAGE>

Depreciation and amortization expense amounted to $268,000 and $162,000 in 2002
and 2001, respectively.

(6) DEPOSITS

Interest-bearing deposits at December 31, 2002 and 2001 consist of the following
(in thousands):

                                                      2002          2001
-------------------------------------------------------------------------------
Savings and N.O.W. accounts                         $ 98,328       $63,603
Certificates of deposit less than $100,000            16,863        12,308
Certificates of deposit of $100,000 or more           26,235        15,766
-------------------------------------------------------------------------------
Total                                               $141,426       $91,677
===============================================================================

At December 31, 2002, certificates of deposit mature as follows: 2003-
$37,282,000; 2004- $2,868,000; 2005- $1,584,000 and 2006- $1,364,000.

(7) INCOME TAXES

Components of income tax expense for the years ended December 31, 2002 and 2001
are as follows (in thousands):

                                                             2002      2001
------------------------------------------------------------------------------
Current income tax expense:
          Federal                                            $ 104         $0
          State                                                 87          1
------------------------------------------------------------------------------
                                                               191          0
------------------------------------------------------------------------------

Deferred income tax expense (benefit)
          Federal                                              (51)         0
          State                                                (70)         0
------------------------------------------------------------------------------
                                                              (121)         0
------------------------------------------------------------------------------
                                                             $  70         $1
==============================================================================

A reconciliation between the reported income taxes and income taxes which would
be computed by applying the normal Federal income tax rate of 34% to income
before taxes follows (in thousands):

                                                           2002           2001
------------------------------------------------------------------------------
Federal income tax                                         $ 290        $ 183
State income tax effect, net of Federal tax effect            51           33
Meals and entertainment                                        2           --
Other                                                          1            3
------------------------------------------------------------------------------
                                                             344          219
Change in valuation reserve                                 (274)        (218)
------------------------------------------------------------------------------
Provision charged to expense                               $  70        $   1
==============================================================================

                                      F-13

<PAGE>



The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 2002 and
2001 are as follows (in thousands):

                                                             2002        2001
------------------------------------------------------------------------------
Deferred tax assets:
Allowance for loan losses                                     $440       $292
Organizational and start-up costs                               20         53
Allowance for uncollected interest                              13         11
Net operating loss carryforwards                                39        237
------------------------------------------------------------------------------
Gross deferred tax asset                                       512        593
Less:     valuation reserve                                     (1)      (247)
------------------------------------------------------------------------------
Deferred tax assets, net                                       511        346
------------------------------------------------------------------------------

Deferred tax liabilities:
Deferred loan costs                                             34         31
Depreciation                                                    56         32
Unrealized gain - securities available for sale                 99         28
Accrual to cash adjustment                                     272        255
------------------------------------------------------------------------------
Gross deferred tax liabilities                                 461        346
------------------------------------------------------------------------------
Net deferred tax assets                                       $ 50       $ --
==============================================================================

Based upon current facts concerning taxes paid in the carryback period and
projections of future taxable income, management has determined that it is more
likely than not that the deferred tax asset will be realized. However, there can
be no assurances about the level of future earnings.

(8) Commitments and Contingencies

At December 31, 2002, the Company was obligated under non-cancelable lease
agreements for [six (6)] premises. The leases provide for increased rentals
based upon increases in real estate taxes and the cost of living index. Minimum
rental payments under the terms of these leases are as follows (in thousands):

2003                                $300
2004                                 227
2005                                 199
2006                                 175
2007                                 115
2008 and thereafter                   85
-----------------------------------------
          Total                   $1,101
=========================================

Total rent expense was $282,000 and $174,000 in 2002 and 2001, respectively.

LITIGATION

The Bank may, in the ordinary course of business, become a party to litigation
involving collection matters, contract claims and other legal proceedings
relating to the conduct of its business. The Bank may also have various
commitments and contingent liabilities which are not reflected in the
accompanying consolidated statement of condition. Management is not aware of any
present legal proceedings or contingent liabilities and commitments that would
have a material impact on the Bank's financial position or results of
operations.

                                      F-14


<PAGE>



RELATED PARTY TRANSACTIONS

The Company has entered into two (2) lease agreements for both branch and
administrative office space. Certain members of the board of directors of the
Company hold an ownership interest in the leased properties. The negotiations
with respect to the leased space were conducted at arms-length and the lease
amount to be paid by the Bank was determined by an independent appraiser to be
at fair market value. Total lease payments for both years 2002 and 2001 were
$73,000.

(9) REGULATORY MATTERS

Subject to applicable law, the board of directors of the Bank may provide for
the payment of cash dividends. Prior approval of the OCC is required to the
extent that the total of all cash dividends to be declared by the Bank in any
calendar year exceeds net profits, as defined, for that year combined with its
retained net profits from the preceding two calendar years less any transfers to
capital surplus.

The Bank and Bancorp are subject to various regulatory capital requirements
administered by Federal banking agencies. Failure to meet minimum requirements
can initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Company's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank and Bancorp must
meet specific capital guidelines that involve quantitative measures of the Bank
and Bancorp's assets, liabilities and certain off-balance sheet items as
calculated under regulatory accounting practices. The capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors.

The prompt corrective action regulations define specific capital categories
based on an institution's capital ratios. The capital categories, in declining
order, are "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized" and "critically undercapitalized." An
institution categorized as "undercapitalized" or worse are subject to certain
restrictions, including the requirement to file a capital plan with its primary
federal regulator, prohibitions on the payment of dividends and management fees,
restrictions on asset growth and executive compensation and increased
supervisory monitoring, among other things. Other restrictions may be imposed on
the institution by the applicable regulatory agencies, including requirements to
raise additional capital, sell assets or sell the entire institution. Once an
institution becomes "critically undercapitalized," it must generally be placed
in receivership or conservatorship within ninety (90) days. An institution is
deemed to be "critically undercapitalized" if it has a tangible equity ratio, as
defined, of 2% or less.

To be considered "well capitalized," an institution must generally have a
leverage ratio (Tier 1 capital to total assets), as defined, of at least 5%, a
Tier 1 risk-based capital ratio, as defined, of at least 6%, and a total
risk-based capital ratio, as defined, of at least 10%. Management believes that,
as of December 31, 2002, the Bank and Bancorp meet all capital adequacy
requirements of their regulators. Further, the most recent regulatory
notification categorized the Bank and Bancorp as well-capitalized under the
prompt corrective action regulations.

                                      F-15


<PAGE>



The following is a summary of the Bank and Bancorp's actual capital amounts and
ratios as of December 31, 2002 and 2001, compared to the minimum capital
adequacy requirements and the requirements for classification as a
"well-capitalized" institution (dollars in thousands):

<TABLE>
<CAPTION>

                                                                              Minimum                   Classification
          December 31, 2002                                                   capital                       as well
          Capital Ratios                       Actual                         adequacy                    capitalized
--------------------------------   --------------------------------   --------------------------   --------------------------
                                      Amount           Ratio           Amount          Ratio          Amount          Ratio
                                   --------------   ---------------   -----------     ----------   ------------   -----------
<S>                                    <C>              <C>            <C>                <C>         <C>               <C>
Leverage (Tier 1) capital              $14,782           8.12%         $7,282             4.00%       $ 9,102            5.00%
Risk-based capital:
     Tier 1                             14,782          14.19           4,167             4.00          6,250            6.00
     Total                              16,010          15.37           8,333             8.00         10,416           10.00

</TABLE>

<TABLE>
<CAPTION>

                                                                              Minimum                   Classification
          December 31, 2001                                                   capital                       as well
          Capital Ratios                       Actual                         adequacy                    capitalized
--------------------------------   --------------------------------   --------------------------   --------------------------
                                      Amount           Ratio           Amount          Ratio          Amount          Ratio
                                   --------------   ---------------   -----------     ----------   ------------   -----------
<S>                                    <C>              <C>            <C>                <C>         <C>               <C>
Leverage (Tier 1) capital               $8,822           7.68%         $4,592             4.00%        $5,740            5.00%
Risk-based capital:
     Tier 1                              8,822          11.60           3,041             4.00          4,562            6.00
     Total                               9,677          12.73           6,082             8.00          7,603           10.00

</TABLE>


(10) STOCK OPTION PLAN

In 2000, the Company established an Employee and Director Stock Option Plan (the
"Plan"). The Plan currently provides for the granting of stock options to
purchase in aggregate up to 551,250 shares of the Company's common stock,
subject to adjustment for certain dilutive events such as stock distributions.
As of December 31, 2002 and 2001, 51,550 and 94,385 options have been granted to
employees and directors which vest over a period of time with credit received
for past service with the Company for the options granted in 2001.

A summary of the status of the Company's stock options as of and for the years
ended December 31, 2002 and 2001 is presented below:

<TABLE>
<CAPTION>

                                                             2002                                  2001
--------------------------------------------------------------------------------------------------------------------
                                                                  Weighted                               Weighted
                                                                   average                                average
                                                                  exercise                               exercise
                                                     Shares         price                   Shares               price
---------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>                      <C>              <C>
Outstanding at beginning of year                      128,651        $ 9.65                   43,817           $9.11
Granted                                                51,550         14.50                   94,385            9.78
Forfeited                                             (10,171)        10.49                   (9,551)           9.29
---------------------------------------------------------------------------------------------------------------------
Outstanding at end of year                            170,030         11.07                  128,651            9.65
=====================================================================================================================
Options exercisable at year end                        70,621          9.53                   47,637            9.61
Weighted average fair value of options
     granted during the year                                         $ 3.57                                    $3.08
=====================================================================================================================
</TABLE>

                                      F-16

<PAGE>



The following table summarizes information about stock options outstanding at
December 31, 2002:

<TABLE>
<CAPTION>
                                              Options Outstanding and Exercisable
                                                       December 31, 2002
-------------------------------------------------------------------------------------------------------------------
                                                                      Weighted                  Weighted
                                                                       average                   average
             Number                                                   remaining                 exercise
           outstanding                  Exercisable               contractual life                price
-------------------------------------------------------------------------------------------------------------------
          <S>                           <C>                        <C>                           <C>
             33,455                        30,622                     92 Months                  $ 9.06
             55,257                        12,712                     104 Months                 $ 9.61
             26,460                        26,460                     97 Months                  $ 9.98
              3,308                          827                      108 Months                 $10.88
             25,200                          --                       110 Months                 $14.29
             26,350                          --                       120 Months                 $14.71
===================================================================================================================
</TABLE>

(11) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following fair value estimates, methods and assumptions were used to measure
the fair value of each class of financial instruments for which it is practical
to estimate such value:

CASH AND CASH EQUIVALENTS

As cash and cash equivalents are short-term in nature, the carrying amount was
considered to be a reasonable estimate of fair value.

SECURITIES

Securities were valued based upon quoted market prices, if available, to
determine fair value. If a quoted market price was not available, fair values
were estimated using quoted market prices for similar securities.

LOANS AND LOANS HELD FOR SALE

Fair values were estimated for portfolios of performing loans with similar
characteristics. For certain similar types of loans, such as residential
mortgages, fair value was estimated using the quoted market prices for
securities backed by similar loans, adjusted for differences in loan
characteristics. The fair value of other performing loan types was estimated by
discounting total future cash flows using market discount rates that reflect the
credit and interest rate risk inherent in the loan. Fair values of loans held
for sale are based upon quoted market prices.

COMMITMENTS TO EXTEND CREDIT

The majority of the Bank's commitments to extend credit carry current market
rates if converted to loans. Therefore, the estimated fair value is approximated
by the recorded deferred fee amounts. Such amounts are immaterial to the
financial statements of the Company and, therefore, are not separately
disclosed.

DEPOSIT LIABILITIES

The fair value of demand, savings, N.O.W. and money market deposits is the
amount payable on demand at December 31, 2002. The fair value of certificates of
deposit was based on the discounted value of contractual cash flows. The
discount rate was estimated utilizing the rates currently offered for deposits
of similar remaining maturities.

                                      F-17

<PAGE>

LIMITATIONS

Fair value estimates were made at December 31, 2002 and 2001, based upon
pertinent market data and relevant information on each financial instrument.
These estimates do not include any premium or discount that could result from an
offer to sell the Company's entire holdings of a particular financial instrument
or category thereof at one time. Since no market exists for a substantial
portion of the Company's financial instruments, fair value estimates were
necessarily based on judgments with respect to future loss experience, current
economic conditions, risk assessments of various financial instruments involving
a myriad of individual borrowers, and other factors. Given the subjective nature
of these estimates, the uncertainties surrounding them and other matters of
significant judgment that must be applied, these fair value estimations cannot
be calculated with precision. Modifications in such assumptions could
meaningfully alter these estimates. Since these fair value approximations were
made solely for the balance sheet financial instruments at December 31, 2002 and
2001, no attempt was made to estimate the value of anticipated future business
or the value of non-financial statement assets or liabilities. Furthermore,
certain tax implications related to the realization of the unrealized gains and
losses could have a substantial impact on these fair value estimates and have
not been incorporated into the estimates.

The estimated fair values of the Company's financial instruments at December 31,
2002 and 2001 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                               2002                                2001
                                                               ----                                ----
                                                      Book              Fair             Book               Fair
                                                      value            value             value              value
                                                    --------        ---------          ---------         ---------
<S>                                                 <C>              <C>                 <C>              <C>
Financial Assets:
Cash and cash equivalents                           $ 16,380         $ 16,380           $  13,698         $ 13,698
Investment securities available for sale              44,791           44,791              12,679           12,679
Investment securities held to maturity                25,539           25,973              27,289           27,428
Loans, net                                            89,630           90,448              61,881           63,417

Financial Liabilities:
Deposits                                            $164,007         $163,927            $108,892         $110,253
==================================================================================================================
</TABLE>

                                      F-18

<PAGE>


(12) CONDENSED FINANCIAL STATEMENTS OF MONMOUTH COMMUNITY BANCORP (BANCORP ONLY)

The following information of the Bancorp as of and for the years ended December
31, 2002 and 2001 should be read in conjunction with the notes to the
consolidated financial statements (in thousands):



Balance Sheets                                           2002         2001
------------------------------------------------------------------------------
Assets:
Investment in subsidiary                               $14,931        $ 8,892
------------------------------------------------------------------------------
     Total assets                                       14,931          8,892
------------------------------------------------------------------------------

Shareholders' Equity:
Common stock                                                15             10
Additional paid-in capital                              14,767          9,519
Retained earnings                                           --          (707)
Accumulated other comprehensive income                     149             70
------------------------------------------------------------------------------
     Total shareholders' equity                        $14,931        $ 8,892
==============================================================================

Statements of Income                                     2002         2001
------------------------------------------------------------------------------
Equity in undistributed earnings of Bank                  $784           $537
------------------------------------------------------------------------------
Net income                                                $784           $537
==============================================================================

Statements of Cash Flows                                 2002         2001
------------------------------------------------------------------------------
Net income                                                $784           $537
Less equity in undistributed earnings of the Bank        (784)          (537)
------------------------------------------------------------------------------
Net cash provided by operating activities                   --             --
------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period            --             --
------------------------------------------------------------------------------
Cash and cash equivalents at the end of period             $--            $--
==============================================================================

                                      F-19

<PAGE>


(13) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables are a summary of certain quarterly financial data for the
years ended December 31, 2002 and 2001.

<TABLE>
<CAPTION>

                                                                             2002 Quarter Ended
                                          --------------------------------------------------------------------------------------
                                            March 31                June 30               September 30          December 31
                                          ---------------       -----------------       ------------------     -----------------
                                                               (dollars in thousands, except per share data)

<S>                                   <C>                    <C>                     <C>                     <C>
Interest income                       $            1,785     $             1,987     $              2,147    $            2,269
Interest expense                                     620                     628                      745                   796
                                          ---------------       -----------------       ------------------     -----------------

      Net interest income                          1,165                   1,359                    1,402                 1,473
Provision for loan losses                            112                     107                       56                    98
                                          ---------------       -----------------       ------------------     -----------------

      Net interest income after
          provision for loan losses
                                                   1,053                   1,252                    1,346                 1,375

Non-interest income                                  135                     107                      186                   320
Non-interest expense                               1,085                   1,188                    1,249                 1,398
                                          ---------------       -----------------       ------------------     -----------------

Income before income taxes                           103                     171                      283                   297
      Income taxes                                    --                      --                        7                    63
                                          ---------------       -----------------       ------------------     -----------------
Net income                            $              103     $               171     $                276    $              234
                                          ===============       =================       ==================     =================

Earnings per share:

Basic                                 $             0.09     $              0.16     $               0.26    $             0.17
                                          ===============       =================       ==================     =================

Diluted                               $             0.09     $              0.16     $               0.25    $             0.17
                                          ===============       =================       ==================     =================

Weighted average shares outstanding:

Basic                                               1,075                  1,075                    1,079                 1,374
                                          ================      =================       ==================     =================
Diluted                                             1,094                  1,091                    1,102                 1,397
                                          ================      =================       ==================     =================
</TABLE>

                                      F-20

<PAGE>


<TABLE>
<CAPTION>


                                                                            2001 Quarter Ended
                                          ---------------------------------------------------------------------------------------
                                           March 31                 June 30               September 30           December 31
                                          --------------        -----------------       ------------------      -----------------
                                                               (dollars in thousands, except per share data)

<S>                                   <C>                    <C>                     <C>                      <C>
Interest income                       $           1,550      $             1,586     $              1,671     $            1,736
Interest expense                                    704                      665                      668                    666
                                          --------------        -----------------       ------------------      -----------------

      Net interest income                           846                      921                    1,003                  1,070
Provision for loan losses                            29                       46                       24                    112
                                          --------------        -----------------       ------------------      -----------------

      Net interest income after
          provision for loan losses
                                                    817                      875                      979                    958

Non-interest income                                 114                      112                       96                    118
Non-interest expense                                760                      857                      942                    972
                                          --------------        -----------------       ------------------      -----------------

Income before income taxes                          171                      130                      133                    104
      Income taxes                                   --                       --                       --                      1
                                          --------------        -----------------       ------------------      -----------------
Net income                            $             171      $               130     $                133     $              103
                                          ==============        =================       ==================      =================

Earnings per share:

Basic                                 $             .16      $               .12     $                .12     $              .10
                                          ==============        =================       ==================      =================

Diluted                               $             .16      $               .12     $                .12     $              .10
                                          ==============        =================       ==================      =================

Weighted average shares outstanding:

Basic                                             1,075                    1,075                    1,075                  1,075
                                          ==============        =================       ==================      =================
Diluted                                           1,075                    1,075                    1,075                  1,075
                                          ==============        =================       ==================      =================

</TABLE>

                                      F-21


<PAGE>

                                INDEX OF EXHIBITS



EXHIBIT NO.                          DESCRIPTION OF EXHIBIT
-----------                          ----------------------

    2.1           Plan of Acquisition of all of the outstanding stock of
                  Monmouth Community Bank by the Registrant, entered into as
                  of March 16, 2000 by Monmouth Community Bank and the
                  Registrant (Incorporated by reference to Exhibit 2.1 to
                  the Registrant's Registration Statement on Form SB-2
                  (Registration No. 333-87352), effective July 23, 2002).

    3.1           Certificate of Incorporation of the Registrant (Incorporated
                  by reference to Exhibit 3.1 to the Registrant's Registration
                  Statement  on  Form  SB-2 (Registration No.333-87352),
                  effective July 23, 2002).

    3.2           By-laws of the Registrant (Incorporated by reference to
                  Exhibit 3.2 to the  Registrant's  Registration  Statement  on
                  Form SB-2 (Registration No. 333-87352), effective July 23,
                  2002).

    3.3           Audit Committee Charter.

    *4.           Specimen certificate representing the Registrant's common
                  stock,  par value $0.01 per share (Incorporated by reference
                  to Exhibit 4 to the Registrant's Registration Statement on
                  Form SB-2 (Registration No. 333-87352), effective July 23,
                  2002).

    10.1          Registrant's Stock Option Plan (Incorporated by reference to
                  Exhibit 10.1 to the  Registrant's Registration Statement on
                  Form SB-2 (Registration No. 333-87352), effective July 23,
                  2002).

    *10.2         Indenture of Lease between Monmouth Community Bank
                  (then in organization), as Tenant, and KFC Associates, as
                  Landlord, dated June 26, 1997, for the premises located at
                  627 Second Avenue, Long Branch, New Jersey (Incorporated
                  by reference to Exhibit 10.2 to the Registrant's
                  Registration Statement on Form SB-2 (Registration No.
                  333-87352), effective July 23, 2002).

    *10.3         Lease Agreement between Monmouth Community Bank, as
                  Tenant, and Anthony S. Amoscato and Geraldine R. Amoscato,
                  as Landlord, dated December 22, 1998, for the premises
                  located at 700 Allaire Road, Spring Lake Heights, New
                  Jersey (Incorporated by reference to Exhibit 10.3 to the
                  Registrant's Registration Statement on Form SB-2
                  (Registration No. 333-87352), effective July 23, 2002).


                                      E-1


<PAGE>



    *10.4         Lease between Monmouth Community Bank, as Tenant, and
                  MCB Associates, L.L.C., as Landlord, dated April 1, 1999,
                  for the premises located at 6 West End Court, Long Branch,
                  New Jersey, as amended by Addenda dated November 1, 1999,
                  February 1, 2000, April 1, 2000, and July 15, 2000
                  (Incorporated by reference to Exhibit 10.4 to the
                  Registrant's Registration Statement on Form SB-2
                  (Registration No. 333-87352), effective July 23, 2002).

    *10.5         Shopping Center Lease, Net Building and Land Lease,
                  between Monmouth Community Bank, as Tenant, and Neptune
                  Realty Associates, as Landlord, dated September 29, 2000,
                  for the premises located at the Neptune City Shopping
                  Center, Neptune City, New Jersey (Incorporated by
                  reference to Exhibit 10.5 to the Registrant's Registration
                  Statement on Form SB-2 (Registration No. 333-87352),
                  effective July 23, 2002).

    *10.6         Lease Agreement (Business and Commercial) between
                  Monmouth Community Bank, as Tenant, and Frank Santangelo,
                  as Landlord, dated June 22, 2001, for the premises located
                  at 700 Branch Avenue, Little Silver, New Jersey
                  (Incorporated by reference to Exhibit 10.6 to the
                  Registrant's Registration Statement on Form SB-2
                  (Registration No. 333-87352), effective July 23, 2002).

    *10.7         Services Agreement between Monmouth Community Bank and Bisys,
                  Inc.,   dated  April  27,  1998,  with  Additional   Services
                  Agreements and Addenda  (Incorporated by reference to Exhibit
                  10.7 to the Registrant's  Registration Statement on Form SB-2
                  (Registration No. 333-87352), effective July 23, 2002).

    *10.8         QuestPoint Check Services Agreement between Monmouth Community
                  Bank and QuestPoint  Check Services,  L.P., dated as of August
                  1, 1998  (Incorporated  by  reference  to Exhibit  10.8 to the
                  Registrant's Registration Statement on Form SB-2 (Registration
                  No. 333-87352), effective July 23, 2002).

    10.9          Lease Agreement between Monmouth Community Bank, as Tenant,
                  and  The  Ocean  Grove  Camp  Meeting  Association  of  United
                  Methodist  Church,  as Landlord,  dated July 1, 2002,  for the
                  premises located at 61 Main Avenue, Ocean Grove, New Jersey.

    10.10         Net Lease between Monmouth Community Bank, as Tenant, and
                  Medical  Realty,  Inc., as Landlord,  dated June 15, 2002, for
                  the premises located at 3636 Highway 33, Neptune, New Jersey.

    23.1          Consent of Independent Accountants.

    99.1          Certification of Chief Executive Officer.

    99.2          Certification of Chief Financial Officer.


                                      E-2


<PAGE>


    *  Filed with Amendment No. 1 to the Registrant's Registration Statement on
       Form SB-2 (Registration No. 333-87352)on June 19, 2002.











                                      E-3


<PAGE>


                                                                     EXHIBIT 3.3


                           MONMOUTH COMMUNITY BANCORP
            CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS


I.  Audit Committee Purpose

     The Audit Committee is appointed by the Board of Directors of Monmouth
     Community Bancorp (the "Board" or "Board of Directors") to assist the Board
     in fulfilling its oversight responsibilities. The Audit Committee's primary
     duties and responsibilities are to:



          >> Monitor the integrity of the financial reporting process and
          systems of internal controls regarding finance, accounting and legal
          compliance of Monmouth Community Bancorp and its subsidiary, Monmouth
          Community Bank, N.A. (collectively, the "Company").

          >> Monitor the independence and performance of the Company's
          independent auditors.

          >> Provide an avenue of communication among the independent auditors,
          management and the Board of Directors.

     The Audit Committee has the authority to conduct any investigation
     appropriate to fulfilling its responsibilities, and shall have direct
     access to the independent auditors as well as anyone in the organization.
     The Audit Committee has the ability to retain, at the Company's expense,
     special legal, accounting or other consultants or experts it deems
     necessary in the performance of its duties.

II.  Audit Committee Composition and Meetings

     Audit Committee members shall meet the requirements of all applicable
     federal and state securities laws as well as the requirements of any of the
     regulators of the Company. The Audit Committee shall be comprised of three
     or more members of the Board, each of whom shall be independent
     non-executive directors, free from any relationship that would interfere
     with the exercise of his or her independent judgment. All members of the
     Audit Committee shall have a basic understanding of finance and accounting
     and be able to read and understand fundamental financial statements, and at
     least one member of the Audit Committee shall have accounting or related
     financial management expertise. Audit Committee members shall be appointed
     by the Board.


     The Audit Committee shall meet at least four times annually, or more
     frequently as circumstances dictate. The Audit Committee Chair shall
     prepare and/or approve an agenda in advance of each meeting. The Audit
     Committee should meet privately in executive session at least annually with
     (i) management, (ii) the independent auditors, and (iii) as a committee, to
     discuss any matters that the Audit Committee or each of these groups
     believe



<PAGE>


     should be discussed. In addition, the Audit Committee, or at least
     its Chair, should communicate with management and review with them the
     Company's financial statements and significant findings.

III.  Audit Committee Responsibilities and Duties

         Review Procedures

         The Audit Committee shall complete the following objectives.

             A.  Review  and  reassess  the  adequacy  of this  Charter at least
                 annually.  Submit any  proposed  changes to this Charter to the
                 Board of Directors for approval.

             B.  Review the Company's annual audited financial  statements prior
                 to  filing  such  financial  statements  being  filed  with the
                 Securities  and  Exchange  Commission  or any other  regulatory
                 body, or distributing such financial  statements to the public,
                 in general.  Review should include  discussion  with management
                 and  independent   auditors  of  significant  issues  regarding
                 accounting principles, practices and judgments.

             C.  In consultation  with  management and the independent  auditor,
                 consider the  integrity of the  Company's  financial  reporting
                 processes  and controls.  Discuss  significant  financial  risk
                 exposures  and the  steps  management  has  taken  to  monitor,
                 control and report such exposures.  Review significant findings
                 prepared   by   the   independent   auditors,   together   with
                 management's responses thereto.


             D.  Review  with  financial   management  the  Company's  quarterly
                 financial  results prior to the release of earnings  and/or the
                 Company's quarterly  financial  statements prior to filing such
                 financial   statements   with  the   Securities   and  Exchange
                 Commission or any other regulatory  body, or distributing  such
                 financial  statements  to the public,  in general.  Discuss any
                 significant changes to the Company's accounting  principles and
                 any  items  required  to be  communicated  by  the  independent
                 auditors  in  accordance  with  SAS 61 (see  Item E  under  the
                 caption  "Independent  Auditors").   The  Chair  of  the  Audit
                 Committee may represent the entire Audit Committee for purposes
                 of this review.

Independent Auditors


             A.  The  independent  auditors are  ultimately  accountable  to the
                 Audit Committee and the Board of Directors. The Audit Committee
                 shall review the  independence  and performance of the auditors
                 and  annually   recommend   to  the  Board  of  Directors   the
                 appointment  of  the   independent   auditors  or  approve  any
                 discharge of auditors when circumstances warrant.


                                       2
<PAGE>


             B.  The Audit Committee shall review and approve the fees and other
                 significant   compensation   to  be  paid  to  the  independent
                 auditors.

             C.  On an  annual  basis,  the Audit  Committee  shall  review  and
                 discuss  with  the   independent   auditors   all   significant
                 relationships  they have with the Company that could impair the
                 auditor's independence.

             D.  The Audit Committee shall review the independent auditors audit
                 plan and discuss with the  independent  auditors  their general
                 audit approach,  including the scope,  staffing and reliance of
                 management of any audit.

             E.  Prior to releasing the year-end  earnings,  the Audit Committee
                 shall  discuss  the  results of the audit with the  independent
                 auditors and also shall discuss with the  independent  auditors
                 the matters  required to be communicated to audit committees in
                 accordance with AICPA SAS 61.

             F.  The Audit Committee  shall consider the  independent  auditors'
                 judgments  about  the  quality  and   appropriateness   of  the
                 Company's  accounting  principles  as applied in its  financial
                 reporting.

             G.  The  Audit  Committee   shall  perform  any  other   activities
                 consistent  with  this  Charter,   the  Company's  by-laws  and
                 governing law, as the Audit  Committee or Board deems necessary
                 or appropriate.

             H.  The Audit  Committee  shall  maintain  minutes of meetings  and
                 periodically  report to the Board of Directors  on  significant
                 results and the foregoing activities.

Internal Auditors


             A.  The Audit Committee is the supervisor of the Company's Internal
                 Auditor and the Internal  Audit Staff.  The Audit  Committee is
                 responsible for hiring the Internal Auditor, determining his or
                 her salary and giving him or her annual performance reviews.

             B.  The  Internal  Auditor  shall  report  directly  to  the  Audit
                 Committee.  As  set  forth  in  Article  II  above,  the  Audit
                 Committee  shall  meet at least four  times  annually,  or more
                 frequently as circumstances  dictate. The Audit Committee Chair
                 will approve an agenda in advance of each meeting.  The minutes
                 of these  meetings  will be taken by the  Internal  Auditor and
                 provided to the Audit Committee members prior to the next Audit
                 Committee meeting.

             C.  The Internal  Auditor will provide the Audit  Committee  with a
                 proposed  Audit Plan for all audits that will be completed each
                 year.  The Audit  Committee  will  determine  the  adequacy and
                 completeness  of the  proposed  plan and  approve  or revise it
                 accordingly.  The  Internal  Auditor  will be  responsible  for
                 completing  the  approved  Audit Plan  annually.  The  Internal
                 Auditor  will update the Audit  Committee  on the status of the
                 Audit Plan at Audit Committee meetings.


                                       3
<PAGE>


             D.  For each area audited,  the Internal Auditor will prepare audit
                 workpapers  to document the reviews  performed.  These  reviews
                 will  include,  but  not  be  limited  to:  Internal  Controls,
                 Adherence   to  Policies   and   Procedures,   General   Ledger
                 Reconcilements,  File Documentation,  Interest  Recalculations,
                 Approved Limits and Collateral Reviews.

             E.  Upon  completion  of the  workpapers,  an Audit  Report will be
                 issued. The Audit Report will include the audit date, the scope
                 of the audit, findings and recommendations and an audit rating.
                 The Audit  Report will be rated  according  to the Audit Rating
                 Criteria previously approved by the Audit Committee.  The Audit
                 Report  will  be  issued  to the  senior  officer  of the  area
                 audited. The senior officer will be responsible for replying to
                 the concerns  addressed  within the Audit Report within fifteen
                 (15) business  days of receipt of the Audit  Report.  All Audit
                 Reports,  together with the senior officers' responses, will be
                 submitted to the Audit  Committee  at the next Audit  Committee
                 meeting.  Any  Audit  Report  that  has  been  issued  but  not
                 responded to within the fifteen (15) business days will also be
                 included  in the package  for the Audit  Committee  meeting and
                 will be noted as having a delinquent response.

Other Optional Charter Disclosures


             A.  Periodically   perform   self-assessment   of  Audit  Committee
                 performance.   Review   financial  and   accounting   personnel
                 succession planning within the Company.

             B.  Annually  review  policies  and  procedures  as well  as  audit
                 results   associated  with  directors'  and  officers'  expense
                 accounts  and   perquisites.   Annually  review  a  summary  of
                 directors'  and  officers'   related  party   transactions  and
                 potential conflicts of interest.



                                       4
<PAGE>


                                                                    EXHIBIT 10.9

                                 LEASE AGREEMENT
                                 ---------------

         THIS AGREEMENT OR LEASE made this 1st day of July, 2002, by and between
THE OCEAN GROVE CAMP MEETING ASSOCIATION OF UNITED METHODIST CHURCH, a
corporation of the state of New Jersey, having an office at 54 Pittman Avenue,
Ocean Grove, New Jersey, PARTY OF THE FIRST PART, hereinafter referred to as
LANDLORD: and MONMOUTH COMMUNITY BANK, N.A., a banking corporation, having its
principal office at 627 Second Avenue, Long Branch, New Jersey, PARTY OF THE
SECOND PART; hereinafter referred to as TENANT:

                                   WITNESSETH:

         The LANDLORD hereby demises and leases unto the TENANT and the TENANT
hereby hires and takes from the LANDLORD premises located on the northeast
corner of Main Avenue and Pilgrim Pathway, Ocean Grove, New Jersey, and
consisting of the entire first floor and basement of said premises, hereinafter
referred to as "demised premises" to be used only as and for a branch bank of
the aforesaid TENANT together with all uses, normally and usually incident
thereto as permitted by law including such portion of the sidewalk and outside
area which might be required to be used by TENANT for night depository purposes,
"walk-up" window and similar banking purposes.

         TO HAVE AND TO HOLD the demised premises for a term of five (5) years
to comments on the ____ day of ___________, 2002. It is hereby mutually
covenanted and agreed by and between the LANDLORD and the TENANT that this lease
is made upon the foregoing and upon the following terms, covenants, and
conditions and the LANDLORD AND TENANT hereby mutually covenant and agree to
perform each and every one of the terms, covenants, and conditions of this lease
on their respective parts to be performed.



<PAGE>

     1. The TENANT shall pay to the LANDLORD at the LANDLORD'S  present  address
or at  such  other  place  or  places  as the  LANDLORD  may  from  time to time
designate,  basic  rent  at  the  base  rate  of  THIRTY  SIX  THOUSAND  DOLLARS
($36,000.00) per annum to be adjusted as hereinafter provided. At the end of the
third  year of this  lease  on the  anniversary  date,  the base  rate  shall be
increased to FORTY EIGHT THOUSAND ($48,000.00). At the end of the fourth year of
this  lease the base rent  shall be  increased  to SIXTY  THOUSAND  ($60,000.00)
thereafter the base rate shall be increased by the percentage of increase in the
Consumer Price Index as hereinafter defined (the "CPI") to wit:

                        -  Beginning July 1st, 2008, the rent shall be the base
                           rent plus an amount equal to the base rent multiplied
                           by the percentage increase in the CPI between July 1,
                           2007 and July 1, 2008.

                        -  Beginning each year thereafter, the rent shall be the
                           base rent multiplied by the percentage increase in
                           the CPI between July 1st of the prior year and the
                           year being renewed.

     The CPI shall be the Consumer  Price Index for all Urban  Consumers for all
items,  New York,  North New  Jersey-issued by the Bureau of Labor Statistics of
the United States, Department of Labor.

     Said rent shall be paid in twelve (12) equal  monthly  installments  during
each year in advance  without any set-off or deductions  whatsoever  and without
any prior demand therefor. Such payments shall commence on (blank).

     2. All costs and expenses which TENANT assumes or agrees to pay pursuant to
this lease shall, at the LANDLORD'S election,  be treated as additional rent and
in the event of  non-payment,  LANDLORD  shall have all the rights and  remedies
herein  provided  for in the  case  of

                                       2
<PAGE>

nonpayment  of rent or of a breach of  condition.  If TENANT  shall  default  in
making any payment required to be made by TENANT (other than the payment of rent
required by Paragraph 1 of this lease) or shall default in performing  any term,
covenant,  or  condition  of this  lease on the part of TENANT to be  performed,
which shall involve the  expenditure of money by TENANT,  LANDLORD at LANDLORD'S
option,  may, but shall not be  obligated  to, make such payment or on behalf of
TENANT  expend such sum as may be  necessary  to perform and fulfill  such term,
covenant,  or  condition  and any and all  sums so  expended  by  LANDLORD  with
interest  thereon at the rate of twelve (12%) percent per annum from the date of
such expenditure shall be and be deemed to be additional rent in addition to the
fixed  rent and shall be repaid by TENANT to  LANDLORD  on  demand,  but no such
payment  or  expenditure  by  LANDLORD  shall be deemed to a waiver of  TENANT'S
default  nor shall it  affect  any other  remedy of  LANDLORD  by reason of such
default.

     3. (A) This lease shall be deemed and construed to be a "net lease" and the
LANDLORD  shall  receive  all rents  hereunder  made by the TENANT free from any
charges,  taxes,  assessments,  impositions,  expenses, or deductions of any and
every kind and nature  whatsoever.  However,  nothing herein  contained shall be
construed to require the TENANT to pay any franchise,  corporation,  income,  or
exercise  taxes or surtaxes  imposed upon the LANDLORD  named herein or upon its
legal representative, successors, or assigns, or any of them.

        (B) It is mutually  agreed between the parties hereto that TENANT
shall, at its own cost and expense, secure adequate hazard insurance the amount
thereof to be mutually  agreed upon between the parties  hereto from time to
time but in no event less than the market value of the premises in question.

                                       3
<PAGE>


     4. (A) TENANT shall  punctually  pay and discharge as additional  rent, all
real  estate  taxes,  assessments,  water  rents and  charges  and  governmental
impositions,   duties,   and  charges  of  every  kind  and  nature  whatsoever,
extraordinary  as well as ordinary and whether now within the  contemplation  of
the parties or not, as hereinafter  provided,  and each and every installment of
each of them which shall or may during the term of this lease be charged,  laid,
levied,  assessed,  or imposed  upon, or become a lien or liens upon the demised
premises,  or any part  thereof,  or upon any  sidewalks  or streets in front or
adjoining the demised premises, or which may become due and payable with respect
thereto and any and all taxes charged,  laid,  levied,  assessed,  or imposed in
lieu of or in  addition  to the  foregoing  under or by virtue of any present or
future laws, rules, requirements, orders, directions, ordinances, or regulations
of the United States of America, or of the State, County, or City government, or
of any other municipal governmental or lawful authority whatsoever, and all gas,
electricity,  or other service or services furnished to the occupied premises or
the occupants  thereof during the term hereof.  TENANT shall also punctually pay
and discharge as additional  rent, all taxes and assessments  which shall or may
during the term of this lease be charged,  laid,  levied,  assessed,  or imposed
upon, or become a lien upon the personal property of the TENANT,  attached to or
used in connection  with the operation of the premises or in connection with the
TENANT'S  business  conducted  on the  premises.  TENANT shall be deemed to have
complied with the foregoing covenants of this Paragraph 4 if payment of any such
taxes,  assessments,  water rents and charges or other governmental impositions,
duties and charges or other governmental impositions, duties and charges is made
by TENANT with the period during which payment is permitted  without  penalty or
interest and TENANT shall within thirty (30) days thereafter produce and exhibit
to LANDLORD  satisfactory  evidence of such payment.


                                       4
<PAGE>

        (B) All real estate taxes,  ground rents,  sewer  charges,  assessments
or other tax  impositions  which  shall  become  payable for the first and last
tax years of the term hereof,  shall be  apportioned  pro rate between  LANDLORD
and TENANT in accordance with the respective  number of days during which each
party shall be in possession of the demised premises in said respective tax
years.

        (C) TENANT  shall have the right to contest or review by legal
 proceedings in its own name or in the name of the LANDLORD or in such other
manner as may be legal (which, if instituted, shall be conducted promptly at
TENANT'S own expense and free of all expense to LANDLORD) any tax assessment,
water, rent or charge, or other governmental imposition  aforementioned or any
compensation or award in condemnation  or  eminent  domain  proceedings.  The
legal  proceedings  herein referred  to shall  include  appropriate  appeals
from any orders or  judgments therein but all such proceedings  shall be begun
as soon as reasonably  possible after  the  imposition  or  assessment  of any
 contested  items  and  shall  be prosecuted to final adjudication with
reasonable  dispatch.  In the event of any reduction, cancellation, or
discharge, TENANT shall pay the amount that shall be finally levied or assessed
against the demised premises or personal  property or adjudicated  to be due
and payable  and if there shall be any refund  payable by the  governmental
authority with respect  thereto.  TENANT shall be entitled to receive and
retain the same.

     LANDLORD  agrees that it will not,  during the term of the herein  lease or
extension thereof, institute any eminent domain or condemnation proceedings with
might effect the premises in question.

     5. The TENANT shall be responsible for the payment of all real estate taxes
to the Tax Collector of the Township of Neptune when such taxes shall be due and
payable.


                                       5
<PAGE>

Simultaneous  with the execution of the within  lease,  the Tax Assessor for the
Township  of  Neptune  shall be  directed  to  forward  all future tax bills and
assessments to the TENANT and the TENANT shall forward a duplicate of such bills
to the  LANDLORD  or its  designated  agent  with the  rental  payment  next due
subsequent  to the  receipt  thereof.

     6. (A)  Upon  the  execution  of the  herein  lease,  the  tenant  may make
renovation to the interior and to the exterior of the demised  premises but only
upon  the  written  consent  of  the  LANDLORD,   which  consent  shall  not  be
unreasonably  withheld;  however, the LANDLORD may impose as a condition of such
renovation approval, that upon termination of this lease and the vacation of the
premises by the TENANT, that the renovation be removed and the premises restored
to its former condition.

        (B) Before commencing any such renovation work, TENANT shall at its own
cost and expenses, deliver to LANDLORD a general accident and public liability
policy more particularly described in Paragraph 10 hereof, but said policy
shall recite and refer to such work.

        (C) It is mutually understood and agreed between the parties hereto that
any trade fixtures now or hereafter installed shall remain the property of the
TENANT and may be removed by the TENANT without prior written consent of the
LANDLORD. The presently existing vault shall not be removed and replaced except
upon terms to be mutually agreed upon between the parties hereto. The movable
furniture and personal property of the TENANT, however, shall remain the
TENANT'S property at all times and may be removed at the termination of this
lease, any damage to the premises in the course of such removal to be repaired
by the TENANT at the TENANT'S own cost and expense.

     7. (A) TENANT  shall,  at  TENANT'S  own cost and  expense,  put,  keep and
maintain in thorough repair and good order and safe condition,  the building and
improvements,



                                        6
<PAGE>

both  interior  and  exterior,  standing  upon  the  occupied  premises  at  the
commencement  of the  term  hereof  or  thereafter  erected  upon  the  occupied
premises, or forming part of the occupied premises, and their full equipment and
appurtenances,  and each and  every  part  thereof,  both  inside  and  outside,
structural and nonstructural,  extraordinary and ordinary,  and shall repair the
whole and each and  every  part  thereof  in order to keep the same at all times
during the term hereof in thorough repair and good order and safe condition, and
whether  or not the  same  shall  occur in  whole  or in  part,  by wear,  tear,
obsolescence  or  defects,  latent or  otherwise,  and shall use all  reasonable
precaution to prevent  waste,  damage or injury.  TENANT shall also, at TENANT'S
own cost and expense,  put, keep,  and maintain the premises in thorough  repair
and good order and safe condition,  and free from dirt,  snow, ice,  rubbish and
other obstructions or encumbrances.

        (B) TENANT shall have no power to do any act or make any contract which
may create or be the foundation for any lien, mortgage or other encumbrance upon
the reversion or other expense of LANDLORD, or of any interest of LANDLORD in
the occupied premises, or upon or in the building or improvements thereon; it
being agreed that should TENANT cause any alterations, changes, additions,
improvements or repairs to be made to the occupied premises shall, under any
circumstances, be liable for the payment of any expense incurred or for the
value of any work done or material furnished to the occupied premises or any
part thereof, but all such alterations, changes, additions, improvements and
repairs, and materials and labor shall be at TENANT'S expense and TENANT shall
be solely and wholly responsible to contractors, laborers and material men
furnishing labor and material to said premises and building or any part thereof.


                                        7
<PAGE>

     8. If,  because of any act or omission of TENANT,  any  mechanic's or other
lien or order for the  payment  of money  shall be filed  against  the  occupied
premises or any building or improvement thereon, or against LANDLORD (whether or
not such  lien or order is valid or  enforceable  as  such),  TENANT  shall,  at
TENANT'S own cost and expense,  indemnify  and save  harmless  LANDLORD from and
against  any and all  costs,  expenses,  claims,  losses or  damages,  including
reasonable counsel fees, resulting therefrom or by reason thereof.

     9. During the term hereof TENANT  shall,  at TENANT'S own cost and expense,
promptly   observe  and  comply  with  all  present  or  future   laws,   rules,
requirements,  orders,  directions,  ordinances  and  regulations  of the United
States of America, or of the state, county or city governments,  or of any other
municipal,  governmental or lawful authority whatsoever,  affecting the occupied
premises  or  appurtenances  or any part  thereof,  and of any and all of its or
their  departments,  bureaus or officials and of the Board of Fire  Underwriters
and/or of any other body  exercising  similar  functions,  and of all  insurance
companies writing policies  covering the demised premises,  or any part thereof,
whether  such  laws  rules,  requirements,  orders,  directions,  ordinances  or
regulations relate to structural alterations,  charges, additions,  improvements
or repairs, inside or outside, extraordinary or ordinary, or otherwise, to or in
and about the occupied premises, or any building thereon or in the franchises or
privileges  appurtenant  thereto or connection with the enjoyment thereof, or to
charges or  requirements  incident to or  otherwise  and whether the same are in
force at the  commencement of the term hereof,  or at any time in the future may
be  passed,  enacted or  directed;  and  TENANT  shall pay all costs,  expenses,
claims, losses, damages, fines and penalties, including reasonable counsel fees,
that may in any  manner  arise out of or be imposed  because  of the  failure of
TENANT to comply with these covenants.

                                        8
<PAGE>


     If TENANT  shall  desire to contest  the  validity  of any such law,  rule,
requirement,  order, direction,  ordinance or regulation TENANT may, at TENANT'S
own cost and expense,  carry on such contest,  and if  non-compliance  therewith
shall not  constitute  a crime or  misdemeanor,  such  non-compliance  by TENANT
during such contest shall not be deemed a breach of the  covenants  contained in
this  Paragraph 9, provided  TENANT shall  indemnify  LANDLORD  against the cost
thereof  and against  all  liability  for any cost,  expenses,  claims,  losses,
damages, fines and penalties,  including reasonable counsel fees, resulting from
or incurred in connection with such contest and  non-compliance.

     10. (A) During the term  hereof  TENANT  shall,  at  TENANT'S  own cost and
expense,  provide and keep in force,  for the benefit of the  LANDLORD,  general
accident and public liability  insurance fully  protecting  LANDLORD against any
and all  liability  occasioned  by accident or disaster,  and such  accident and
liability  insurance  shall cover the entire  building and occupied  premises as
well as the  sidewalks in front of and adjacent to the occupied  premises.  Said
coverage may be included,  if desired, in any blanket insurance coverage,  which
the TENANT may carry on all its buildings.

         (B) Prior to the expiration of any policy or policies of such
insurance, TENANT shall pay the premiums for the renewal insurance and deliver
to LANDLORD a certificate with respect to the insurance referred to in
subdivision (A) of this paragraph shall be delivered by TENANT; and if such
premiums or any of them shall not be so paid and the policies or certificates
shall not be so delivered, LANDLORD may procure and/or pay for the same, and the
amount so paid by LANDLORD, with interest thereon at the rate of twelve (12%)
percent per annum from the date of payment, shall become due and payable by
TENANT as additional rent with the next or any subsequent installment of fixed
rent which shall become due after such



                                        9
<PAGE>

payment by LANDLORD:  it being expressly  covenanted that payment by LANDLORD of
any such  premiums  shall not be deemed to waive or release  the  default in the
payment  thereof by TENANT,  or the right of LANDLORD to take such action as may
be permissible hereunder as in the case of default in the payment of base rent.

        (C) TENANT shall not violate or permit to be violated any of the
conditions or provisions of any of said policies, and TENANT shall so perform
and satisfy the requirements of the companies writing such policies that at all
times companies of good standing and acceptable to LANDLORD shall be willing to
write and continue such insurance.

     11. No  abatement,  diminution  or  reduction  of the fixed rent,  or other
charges,  payable by TENANT under this lease,  shall be claimed by or allowed to
TENANT for any  inconvenience,  interruption or cessation or loss of business or
otherwise, caused, directly or indirectly, by any present or future laws, rules,
requirements,  orders, direction, ordinances or regulations of the United States
of  America,  or of the  state,  county  or city  governments,  or of any  other
municipal,  governmental  or  lawful  authority  whatsoever,  or by  priorities,
rationing or curtailment of labor or materials, or by war or any matter or thing
resulting  therefrom  or, except as provided in this lease by any other cause or
causes beyond the control of LANDLORDS,  nor shall this lease be affected by any
such causes.

     12. TENANT shall, at TENANT'S own cost and expense,  procure each and every
permit, license,  certificate or other authorization required in connection with
the lawful and proper use of the  occupied  premises or  required in  connection
with any  building  or  improvements  now or  hereafter  erected on the  demised
premises.

     13. TENANT shall permit LANDLORD or LANDLORD'S agents to enter the occupied
premises at all  reasonable  hours for the purpose of inspecting  the same or of
making



                                       10
<PAGE>

repairs that TENANT may neglect or refuse to make in accordance  with the terms,
covenants and conditions of this lease,  and also for the purpose of showing the
occupied  premises to persons  wishing to purchase the same,  and during the six
months next  preceding  the  expiration  of this lease shall  permit  inspection
thereof by or on behalf of prospective tenants. The provisions contained in this
paragraph are not to be construed as an increase of LANDLORD'S obligations under
this  lease;  it being  expressly  agreed  that the right and  authority  hereby
reserved  does not impose,  nor does LANDLORD  assume,  by reason  thereof,  any
responsibility or liability  whatsoever for the repair,  care of, supervision of
the occupied  premises,  or any  building,  equipment,  or  appurtenance  on the
occupied premises.

     14.  During the last six  months of the term or any  extended  term  hereby
granted LANDLORD may post and maintain, without hindrance or molestation,  signs
or notices indicating that the premises are for sale and/or for rent. Such signs
shall be affixed to a door or window on the premises,  provided the said sign or
notices shall in no way interfere  with TENANT'S  right to peaceable  possession
and  enjoyment of said  premises and further  provided  same shall not interfere
with TENANT'S normal operation of its business.

     15. If prior to, or at any time during the term  hereof,  the TENANT  shall
file in any court or there  shall be filed by or  against  TENANT,  in any court
pursuant to any statute  either of the United States or any state, a petition in
bankruptcy or  insolvency  or for  reorganization  or for the  appointment  of a
receiver or trustee of all of TENANT'S property,  or if TENANT shall dissolve or
commence an action or  proceeding  for  dissolution  or  liquidation,  or if the
property of TENANT shall be taken by any governmental  officer or agent pursuant
to statutory  authority for the  dissolution  or  liquidation  of TENANT,  or if
TENANT,  shall be  adjudicated  a bankrupt,  or a receiver  or trustee  shall be
appointed for the liquidation or reorganization of TENANT,  any such



                                       11
<PAGE>

event shall be a default by TENANT and a breach of this lease,  and  LANDLORD at
LANDLORD'S option, may give TENANT or any such trustee, receiver, officer, agent
or assignee,  within a reasonable  time after notice of the happening of any one
or more of such  events,  a Notice in writing,  stating  that this lease and the
term hereby  granted  shall cease and expire on a date not less than thirty (30)
days after the date of the giving of such notice; and upon the expiration of the
time fixed by such notice the term hereby  granted shall wholly cease and expire
in the same  manner and with the same effect as if the date fixed by such notice
were the date herein originally fixed for the termination  hereof,  and LANDLORD
shall thereupon be entitled to the immediate  possession of the demised premises
and may  institute  summary  proceedings  against  TENANT  or may take any other
suitable proceedings or action to obtain possession thereof.

     16. (A) If the TENANT shall default in the payment of rent herein  reserved
or any part thereof for a period of thirty (30) days after its due date it shall
be  deemed a  breach  of this  lease,  or if the  TENANT  shall  default  in the
performance  of any of the other terms,  covenants and  conditions of this lease
and if such default shall continue for thirty (30) days after notice,  or if any
execution  or  attachment  shall be issued  against  TENANT  whereby the demised
premises  shall be taken by someone  other than TENANT or if TENANT shall vacate
and abandon the demised premises,  then the LANDLORD shall have the right at the
LANDLORD'S  option to  terminate  this lease and the term thereof as well as all
right,  title and interest of the TENANT  hereunder by giving the TENANT  thirty
(30) days notice in writing of such  intention  and upon the  expiration  of the
time fixed in such latter notice if the TENANT has not cured such default nor is
diligently  proceeding to cure such defaults,  this lease and the term hereof as
well as all the right, title and interest of TENANT hereunder SHALL wholly cease
and expire in the same



                                       12
<PAGE>

manner and with the same force and effect  (except as to TENANT'S  liability) as
if the  date  fixed  by such  latter  notice  were  the  expiration  of the term
originally  granted and the TENANT shall  immediately  quit and surrender to the
LANDLORD,  the demised premises and each and every part thereof and the LANDLORD
may enter  into or  repossess  the  demised  premises  either by force,  summary
proceedings or otherwise.

        (B) If the demised premises shall be vacated or abandoned or in the
event of a cancellation or termination hereof either by operation of law or by
the issuance of a dispossess warrant or by the service of a notice of
termination based on default of TENANT as above provided, TENANT shall
nevertheless remain and continue liable to LANDLORD in a sum equal to all fixed
rent and all additional rent herein reserved for the balance of the term herein
originally granted.

        (C) The TENANT hereby expressly waives any notice of intention to
reenter and expressly waives any and all right to recover or regain possession
of the demised premises or to reinstate or redeem this lease as may be permitted
or provided by or under any statutes, law or decision now or hereafter in force
and effect.

     17. On the last day of the term hereof or on the earlier termination
thereof, TENANT shall peaceably and quietly leave, surrender and deliver up to
LANDLORD the demised premises, together with all alterations, changes, additions
and improvements which may have been made upon the occupied premises (except
movable furniture, trade fixtures, or personal property), in their then present
condition with no warranties, covenants or representation of any kind, either
express or implied, regarding the condition of said buildings. TENANT, on or
before said date, shall remove all of TENANT'S personal property from the
occupied premises and all property not so removed shall be deemed to have been
abandoned and may be

                                       13
<PAGE>

appropriated,  sold,  stored,  destroyed  or  otherwise  disposed of by LANDLORD
without  notice to TENANT and without  obligation  to account  therefor.  TENANT
shall pay to  LANDLORD  the cost  incurred by  LANDLORD  in  removing,  selling,
storing, destroying or otherwise disposing of any such personal property. If the
demised premises be not so surrendered,  TENANT shall make good to LANDLORD, all
damage which  LANDLORD  shall suffer by reason  thereof,  and in addition  shall
indemnify  LANDLORD  from and against all claims made by any  succeeding  tenant
against LANDLORD,  found upon delay by LANDLORD in delivering  possession of the
premises to such  succeeding  tenant,  so far as such delay is occasioned by the
failure of TENANT to  surrender  the  premises.  In the event that this lease is
cancelled or terminated by LANDLORD by notice pursuant to any provision  hereof,
TENANT  shall have  thirty  (30) days,  from  termination  date set forth in the
notice, to remove all TENANT'S personal property and trade fixtures installed by
TENANT  from the  premises,  and in the event  TENANT does not remove the goods,
they shall be deemed abandoned.

     TENANT  shall have the right to remove any  additions  to the  premises  in
question whether trade fixtures or not, provided that any damages caused by said
removal  shall be repaired and restored by TENANT in a workmanlike  manner.

     18. TENANT may place on the outside of the building on the demised premises
any sign, advertisement, illumination or projection of a substantial size and of
a permanent character and nature, subject to municipal zoning ordinances and
regulations.

     19.  LANDLORD  covenants  that, if and so long as TENANT pays the base rent
and additional rent and other charges  reserved by this lease,  and performs all
the terms,  covenants and  conditions of this lease on the part of the TENANT to
be performed, TENANT shall quietly enjoy the demised premises, subject, however,
to the terms of this lease or any defaults

                                       14
<PAGE>

thereunder.  TENANT'S  obligation  to pay  fixed  rent  and  additional  rent is
conditioned  upon its right and privilege to the peaceable  possession,  use and
enjoyment of the demised premises as undertaken in this paragraph by LANDLORD.

     20.  Provided  the  TENANT  is not in  default  pursuant  to the  terms and
conditions of this lease,  the TENANT is hereby given the right and privilege to
renew the within lease, for two (2) separate five (5) year option periods, which
options shall be upon the same terms and conditions as in this lease  contained,
rental to be a continuation of the terms of the previous existing lease with the
Consumer Price Index Clause which, will determine the future rent.

     The right option and privilege of the TENANT to renew this lease as
hereinabove set forth is expressly conditioned upon the TENANT delivering to the
LANDLORD, in writing, by certified mail, return receipt requested, six (6)
months prior notice of its intention to renew.

     At the end of three years of this five-year lease, the TENANT has the
right to terminate this lease by paying a termination fee of $36,000.00. This
right is expressly conditioned upon the TENANT delivering to the LANDLORD, in
writing, by certified mail, return receipt requested, six (6) months prior
notice of its intention to terminate.

     It is also mutually agreed between the parties hereto that in the event
that LANDLORD receives an offer or offers for the sale of said premises during
the term of the herein lease, TENANT shall have the right of first refusal to
purchase said premises upon the same terms as offered to LANDLORD.

     21. If the premises in question shall be destroyed or damaged in whole or
in part, as a result of any casualty, hazard, or catastrophe of any kind or
nature whatsoever, the TENANT shall promptly, at its own cost and expense,
repair, replace and rebuild the same at least to the extent of the value and as
nearly as possible to the character of the building with improvements

                                       15

<PAGE>

existing immediately prior to such occurrence, said repairs or rebuilding to
commence forthwith and shall be completed within a reasonable period of time
thereafter, due regard being had to conditions beyond the control of the TENANT.

     It is mutually agreed between the parties hereto that LANDLORD shall take
such steps as are necessary to make available to TENANT all of the insurance
proceeds available in the event of such occurrence.

     22. The parties hereto covenant and agree that this lease shall be binding
upon their respective successors and assigns.

     23. The terms, Conditions and provisions herein set forth constitute the
entire lease agreement between the parties hereto and shall supersede all
previous communication, representations, or agreements either verbal or written
between the parties hereto with respect to the subject matter hereof.

     24. TENANT shall neither assign this lease nor sublet all or any portion of
Leased Premises without LANDLORD'S prior consent, which consent shall not be
unreasonably withheld.


                                       16

<PAGE>


     IN WITNESS WHEREOF, the parties hereto have caused these presents to be
signed by their proper corporate officers and caused their proper corporate
seals to be hereto affixed the day and year first above mentioned.



ATTEST:                               The Ocean Grove Camp Meeting
                                      Association of the United Methodist Church


/s/ Secretary                         /s/ Rev. Dr. Harold E. Schmul
______________________                __________________________________
Secretary                             President



ATTEST:                               Monmouth Community Bank, N.A.


/s/ James G. Aaron                    By: /s/ James S. Vaccaro
______________________                    ______________________________


                                ADDENDUM TO LEASE


     The parties agree that the tenant shall have a third five-year option, to
run through the year 2018, based upon the payment schedule applicable after July
1, 2008. Therefore, the Tenant's option shall be exercisable in the years 2008
and 2013. ATTEST: The Ocean Grove Camp Meeting
                                      Association of the United Methodist Church


/s/ Secretary                         /s/ Rev. Dr. Harold E. Schmul
______________________                __________________________________
Secretary                             President



ATTEST:                               Monmouth Community Bank, N.A.


/s/ James G. Aaron                    By: /s/ James S. Vaccaro
______________________                    ______________________________




                                       17

<PAGE>

                                                                   EXHIBIT 10.10






                                    NET LEASE





                                     BETWEEN






                              MEDICAL REALTY, INC.
                               c/o Joseph Clemente
                                 1270 Highway 35
                          Middletown, New Jersey 07748






                                       AND






                          MONMOUTH COMMUNITY BANK, N.A.
                                627 Second Avenue
                       Long Branch, New Jersey 07740-0630



<PAGE>

                                TABLE OF CONTENTS

                                                                          Page

ARTICLE 1.          PREMISES.................................................1

ARTICLE 2.          USE......................................................1

ARTICLE 3.          SHORT TERM GROSS LEASE...................................1

ARTICLE 4.          FIXED ANNUAL RENT - ADDITIONAL RENT......................2

ARTICLE 5.          TENANT'S PROPERTY........................................2

ARTICLE 6.          ADJUSTMENT OF RENTS......................................3

ARTICLE 7.          PUBLIC UTILITY AND OTHER CHARGES.........................4

ARTICLE 8.          COMPLIANCE WITH LAWS, ETC................................4

ARTICLE 9.          INDEMNIFICATION..........................................6

ARTICLE 10.         MAINTENANCE AND REPAIRS, COVENANT AGAINST WASTE, AND
                      RIGHT TO INSPECTION....................................6

ARTICLE 11.         MECHANICS' LIENS.........................................7

ARTICLE 12.         ALTERATIONS..............................................7

ARTICLE 13.         INSURANCE................................................8

ARTICLE 14.         DAMAGE OR DESTRUCTION....................................9

ARTICLE 15.         CONDEMNATION............................................10

ARTICLE 16.         DEFAULT PROVISIONS......................................11

ARTICLE 17.         SUBORDINATION TO LESSORS AND MORTGAGEES.................13

ARTICLE 18.         QUIET ENJOYMENT.........................................14

ARTICLE 19.         SURRENDER OF PREMISES...................................14

ARTICLE 20.         ASSIGNMENT AND SUBLETTING...............................14

ARTICLE 21.         ESTOPPEL CERTIFICATE....................................14

                                      -i-

<PAGE>


ARTICLE 22.         NOTICES.................................................15

ARTICLE 23.         INVALIDITY OF PARTICULAR PROVISIONS.....................15

ARTICLE 24.         CUMULATIVE REMEDIES - WAIVER - ORAL CHANGE..............15

ARTICLE 25.         BROKER..................................................16

ARTICLE 26.         SIGNS...................................................16

ARTICLE 27.         PARKING.................................................16

ARTICLE 28.         HOLDOVER................................................16

ARTICLE 29.         CAPTIONS AND MARGINAL NOTES.............................16

ARTICLE 30.         LIMITATION OF LIABILITY.................................17

ARTICLE 31.         COVENANTS BINDING ON RESPECTIVE PARTIES.................17

ARTICLE 32.         GOVERNING LAWS..........................................17

ARTICLE 33.         RIGHT OF RENEWAL........................................17

ARTICLE 34.         NET LEASE...............................................18


                                      -ii-


<PAGE>



                                    NET LEASE
                                    ---------

     THIS LEASE, made as of this 15th day of June 2002, between Medical Realty,
Inc., a New Jersey corporation having an office at c/o Joseph Clemente, 1270
Highway 35, Middletown, New Jersey 07748 (hereinafter called "Landlord") and
Monmouth Community Bank, N.A., a New Jersey Corporation having an office at 627
Second Ave., Long Branch, New Jersey 07740-0630, (hereinafter called "Tenant").

                                   WITNESSETH:
                                   -----------

ARTICLE 1.     PREMISES

               1.1. Landlord, for and in consideration of the rents, covenants
and agreements hereinafter reserved and contained on the part of Tenant to be
paid, kept and performed does hereby lease to Tenant, and Tenant does hereby
hire from Landlord, upon and subject to the terms, covenants and conditions
herein set forth, the land and building containing 2,300 +/-square feet
("Building") upon property known as 3636 Highway 33, Neptune, New Jersey, more
particularly described on Exhibit A annexed hereto and made a part hereof (the
land and Building being collectively referred to as the "Demised Premises" or
"Premises").

     SUBJECT, however, to all zoning ordinances and regulations now or hereafter
in force of any public authority or governmental agency or department having
jurisdiction.

     TO HAVE AND TO HOLD the Demised Premises for a term commencing on June 15,
2002 ("Commencement Date") and expiring on the seventh (7th) anniversary of the
Commencement Date ("Expiration Date"), all at the rents and upon the terms,
covenants and conditions hereinafter provided.

ARTICLE 2.     USE

               2.1. Tenant shall use and occupy the Demised Premises for a
banking institution and purposes related thereto.

               2.2. Tenant shall not at any time use or occupy, or do or permit
anything to be done in the Demised Premises in violation of any Certificate of
Occupancy (or other similar municipal ordinance) governing the use and occupancy
of the Demised Premises. Tenant acknowledges that Landlord has made no
representation with respect to Tenant's right to utilize the Demised Premises
for its intended purpose.

ARTICLE 3.     SHORT TERM GROSS LEASE

               3.1. Commencing on June 15, 2002 for a maximum term of sixty (60)
days Tenant agrees to pay a Gross Rent in he amount of twenty-five hundred
dollars ($2,500) per month to Landlord for the purposes of permitting Tenant to
obtain all approvals from the Office of Controller of the Currency for the
opening of a branch bank on the Premises. The first $2,500.00 payment is due on
or before June 15, 2002 and the second payment is due on July 15, 2002. In the
event that the Tenant obtains approval from the Office of Controller of the


<PAGE>

Currency prior to the expiration of the Short Term, the terms and conditions of
the Net Lease shall commence without any credit for offset for the Short Term
Lease payments.

               3.2. Upon the earlier of receipt of approval and/or expiration of
the sixty (60) day period if not sooner terminated by the Tenant, the terms and
conditions of this Net Lease will commence.

               3.3. Tenant agrees to use its best effort to secure all required
approvals required for Tenant to use and occupy the Demised Premises for a
banking institution and purposes related thereto.

ARTICLE 4.     FIXED ANNUAL RENT - ADDITIONAL RENT

               4.1. The rents reserved under this Lease, for the term hereof,
shall be and consist of:

                    (a) Fixed Annual Rental for the term shall be as set forth
on Schedule B annexed hereto and as set forth in Article 33 and made a part
hereof for rental for the term commencing on the Commencement Date; and

                    (b) Additional Rent consisting of all such other sums of
money as shall become due from or be payable by Tenant to Landlord or for and on
behalf of Landlord pursuant to the terms of this Lease, including but not
limited to Taxes and Operating Expenses as hereinafter defined, (for default in
payment of which Landlord shall have the same remedies as for a default in
payment of fixed Annual Rent), all to be paid to Landlord at its office, or such
other place, or to such agent and at such place, as Landlord may designate by
notice to Tenant, in lawful money of the United States of America.

                    4.2. Tenant agrees to pay the fixed Annual Rent and
Additional Rent herein reserved promptly as and when the same shall become due
and payable, without demand therefor and without any abatement, deduction or set
off whatsoever except as expressly provided in this Lease. Fixed Annual Rental
shall be payable monthly in advance without any offsets or deductions (except as
specifically provided for in this Lease) on the first day of each and every
month during the term of this Lease. In the event that Tenant fails to pay any,
fixed or Additional Rent within ten (10) days of its due date Tenant shall also
pay to Landlord, in recognition of Landlords administrative expense, a late
charge calculated at the rate of two cents for each dollar not paid within ten
(10) days of its due date which sum shall be deemed Additional Rent hereunder
and if not paid by the tenth (10th) of any month, interest on amounts owed at
Prime Rate (as reported in the Wall Street Journal as of the date payment was
due,) plus four (4%) percent from its due date through the date of payment.

ARTICLE 5.     TENANT'S PROPERTY

               5.1. All business and trade fixtures, machinery and equipment,
communications equipment and office equipment, whether or not attached to or
built into the Demised Premises, which are installed in the Demised Premises by
or for the account of Tenant, without expense to Landlord, and can be removed
without permanent structural damage to the Building, and all furniture,
furnishings and other articles of movable personal property owned by


                                      -2-

<PAGE>

Tenant and located in the Demised Premises exclusive of any building service
equipment which may be installed by Tenant including but not limited to heating,
ventilating and air conditioning and sprinkler equipment (all of which are
sometimes called "Tenant's Property") shall be and shall remain the property of
Tenant and may be removed by it at any time during the term of this Lease,
provided that if any of Tenant's Property is removed, Tenant shall repair or pay
the cost of repairing any damage to the Demised Premises or to the Building
resulting from such removal, if any.

               5.2. At or before the Expiration Date, or the date of any earlier
termination of this Lease, or as promptly as practicable after such an earlier
termination date, Tenant, at its expense, shall remove from the Demised Premises
all of Tenant's Property and shall repair any damage to the Demised Premises
resulting from such removal, if any.

               5.3. Other than with respect to items of Tenant's Property which
Landlord has agreed may remain, any other items of Tenant's Property (except
money, securities and other like valuables) which shall remain in the Demised
Premises after the Expiration Date or after a period of fifteen (15) days
following an earlier termination of this Lease, may, at the option of the
Landlord, be deemed to have been abandoned, and in such case either may be
retained by Landlord as its property or may, at Tenant's expense, be disposed
of, without accountability, in such manner as Landlord may see fit.

ARTICLE 6.     ADJUSTMENT OF RENTS

               6.1. For the purpose of Sections 6.1-6.3:

                    (a) "Taxes" shall mean real estate taxes, special and
extraordinary assessments and governmental levies against the Demised Premises
provided, however, if at any time during the term of this Lease the method of
taxation prevailing at the date of this Lease shall be altered so that in lieu
of, or as an addition to, or as a substitute for any or all of the above there
shall be assessed, levied or imposed (i) a tax, assessment, levy, imposition or
charge based on the income or rents received therefrom whether or not wholly or
partially as a capital levy or otherwise, or (ii) a tax, assessment, levy,
imposition or charge measured by or based in whole or in part upon all or any
part of the land and/or Building and imposed upon Landlord, or (iii) a license
fee measured by the rents, or (iv) any other tax, assessment, levy, imposition,
charge or license fee however described or imposed, then all such taxes,
assessments, levies, impositions, charges or license fees or the part thereof so
measured or based shall be included in the definition of "Taxes".

               Any assessments shall be apportioned between Landlord and Tenant
as of the Commencement Date and Expiration Date of this Lease, it being intended
that Tenant shall pay any assessment as is allocable to the full term of this
Lease. To the extent that same may be permitted by law, Landlord agrees to apply
for the conversion of any assessment for local improvements assessed during the
term of this Lease in order to cause the same to be payable in annual
installments, and upon such conversion, Tenant shall be responsible for the
payment of such installments which shall be applicable to the term of this
Lease, and Tenant shall not be responsible for the payment of any installments
(or parts thereof) which are allocable to a period prior to the Commencement
Date or subsequent to the expiration date of this Lease.

                                      -3-

<PAGE>


                    (b) "Tax Year" shall mean the fiscal year for which Taxes
are levied by the governmental authority.

                    (c) "Operational Year" shall mean each calendar year
commencing with the calendar year in which the Commencement Date occurs.

                    (d) "Tenant's Proportionate Share of Taxes" shall mean One
Hundred (100%) Percent of the Taxes applicable to each Operational Year.

                    (e) "Tenant's Projected Share of Taxes" shall mean the
amount reasonably estimated by Landlord as Tenant's Proportionate Share of Taxes
for each Operational Year divided by twelve (12) and payable monthly by Tenant
to Landlord as Additional Rent.

               6.2. After the expiration of each Operational Year, Landlord
shall furnish to Tenant a copy of the applicable real estate tax bill(s),
together with a written statement of the Taxes incurred for such Operational
Year, which statement shall set forth Tenant's Proportionate Share of Taxes and
there shall be an adjustment such that Tenant shall have only paid its Pro Rata
Share of Taxes for such Operational Year.

               6.3. Unless requested by Landlord, Tenant shall not be required
to pay to Landlord Tenant's Projected Share of Taxes and shall pay all Taxes on
or before their due date directly to the taxing authority and forward to
Landlord a copy of the receipted tax bill or other evidence of payment within
forty-five (45) days of their due date. Landlord reserves the right at any time
to require Tenant to make the monthly deposits required pursuant to 6.1(e)
herein.

               6.4. Landlord hereby grants to Tenant the right in the name of
Tenant or if legally required, in the name of Landlord to appeal any Real Estate
Taxes applicable to the Demised Premises at Tenant's sole cost and expense.
Tenant shall provide to Landlord copies of all documents filed with respect to
any tax appeal within two (2) days of their filing.

ARTICLE 7.     PUBLIC UTILITY AND OTHER CHARGES

               7.1. Tenant agrees to pay as of the Commencement Date, all
charges for gas, water, sewer, electricity, heat or any other utility or service
supplied to the Demised Premises, and the cost of repair, maintenance,
replacement and reading of any meters measuring Tenant's consumption thereof. In
addition, Tenant agrees to arrange and pay for as of the Commencement Date, all
charges for rubbish removal and janitorial services supplied to the Demised
Premises. Tenant expressly agrees that Landlord shall not be responsible for the
failure of supply to Tenant of any of the aforesaid, or any other utility or
services. Tenant agrees to cause the electric and gas meters to be placed in
Tenant's name.

ARTICLE 8.     COMPLIANCE WITH LAWS, ETC.

               8.1. From and after the Commencement Date, Tenant shall, at its
own cost and expense, promptly comply, or cause compliance with, all laws and
ordinances and the orders, rules, regulations and requirements of all federal,
state, county and, municipal governments, and appropriate departments,
commissions, boards and offices thereof, and the requirements of any insurer of
the Demised Premises or the Board of Fire Underwriters or any

                                      -4-

<PAGE>

other body (all of the above being hereinafter collectively referred to as
"Statutes"), now or hereafter exercising similar functions foreseen or
unforeseen, ordinary as well as extraordinary, and whether or not the same shall
presently be within the contemplation of the Parties or shall involve any change
of governmental policy, which may be applicable to the Demised Premises, the
purposes to which the Demised Premises are put, or manner of use of the Demised
Premises at the commencement of or during the term of this Lease.

               8.2. If the actions of Tenant or any of Tenant's subtenants shall
require same, Tenant shall, at Tenant's sole expense, comply with the provisions
of any Federal, State or Local environmental laws, rules or regulations
applicable to the Demised Premises including, but not limited to the Industrial
Site Recovery Act (ISRA) and the regulations promulgated thereunder as same
relate to Tenant's occupancy of the Demised Premises. Tenant shall, at Tenant's
own expense, make all submissions to, provide all information to, and comply
with all requirements of, the Division of Hazardous Waste Management (the
"Bureau") of the New Jersey Department of Environmental Protection ("NJDEP").
Should the Bureau or any other division of NJDEP determine that a cleanup plan
be prepared and that a cleanup be undertaken because of any spills or discharges
of hazardous substances or wastes at the Demised Premises which were caused by
Tenant or its subtenants or any agents or contractors of Tenant or its
subtenants, then Tenant shall, at Tenant's own expense, prepare and submit the
required plans and financial assurances, and carry out the approved plans. In
the event that Landlord shall have to comply with ISRA by reason of Landlord's
actions, Tenant shall promptly provide all information requested by Landlord for
preparation of non-applicability affidavits, an Administrative Consent Order or
a Negative Declaration and shall promptly sign such affidavits when requested by
Landlord, provided the information contained therein is true and accurate.
Landlord represents that the Demised Premises and the land upon which same is
constructed do not, to the best of its knowledge, contain any hazardous
substances or wastes beyond allowable federal and/or state permitted levels.
Tenant shall indemnify defend and save harmless Landlord from all fines, suits,
procedures, claims and actions of any kind arising out of or in any way
connected with any spills or discharges of hazardous substances or wastes at the
Demised Premises which were caused by Tenant, its subtenants or its or their
agents or contractors; and from all fines, suits procedures, claims and actions
of any kind arising out of Tenant's failure to provide all information, make all
submissions and take all actions required by ISRA or any other Federal, State or
County agency or bureau having jurisdiction. Tenant's obligations and
liabilities under this paragraph shall continue so long as Landlord remains
responsible for any spills or discharges of hazardous substances or wastes at
the Demised Premises which were caused by Tenant, its subtenants or its or their
agents or contractors. Tenant's failure to abide by the terms of this paragraph
shall be restrainable by injunction. Tenant shall have no responsibility to
obtain a "Negative Declaration" or "Letter of Non-Applicability" from the NJDEP
if the sole reason for obtaining same is in connection with a sale or other
disposition of the real estate by Landlord (other than to Tenant or its
designees) but Tenant agrees to cooperate with Landlord in Landlord's effort to
obtain same and shall perform, at Tenant's expense, any clean up required by
reason of Tenant's or its subtenant's use and occupancy of the Demised Premises.
In the event that the foregoing shall be applicable and any required cleanup is
not completed prior to the expiration or sooner termination of this Lease,
Tenant shall be responsible for the rent and Additional Rent provided for herein
until such cleanup shall have been completed and Tenant has obtained a Negative
Declaration. As used herein, the term hazardous

                                      -5-

<PAGE>

waste or substances shall be given their broadest meaning under any Federal
and/or State statute defining same for any purpose.

ARTICLE 9.     INDEMNIFICATION

               9.1. Tenant covenants and agrees, at its own cost and expense, to
indemnify and hold harmless Landlord against and from any and all claims by or
on behalf of any person, firm or corporation asserted against Landlord and
arising out of or in connection with (a) the conduct or management of, and the
payment for, any work or thing whatsoever done in or about the Demised Premises
by-or on behalf of Tenant (or any person holding or claiming through or under
Tenant) other than by Landlord during the term of this Lease; (b) the condition
of the Demised Premises during the term of this Lease, unless caused by the
fault or neglect of Landlord or its agents, servants, employees or contractors;
(c) any act, negligence or fault of Tenant, or any of its agents, servants,
employees, contractors, invitees or licensees; (d) any accident, injury or
damage whatsoever caused to any person, firm or corporation (other than those
caused by Landlord or its agents, servants, employees or contractors) occurring
during the term of this Lease, in or about the Demised Premises; and (e) any
work done by Tenant in the Demised Premises. Further, Tenant agrees to indemnify
and hold harmless Landlord against and from all reasonable costs, counsel fees,
expenses and liabilities incurred in or about any such claim and any action or
proceeding brought thereon, and in case any action or proceeding be brought
against Landlord by reason of any such claim, Tenant, upon notice from Landlord,
agrees to resist or defend such action or proceeding on behalf of Landlord (by
counsel reasonably satisfactory to Landlord or counsel selected by any insurer
required to provide a defense to such action) unless Tenant pays such claim or
otherwise causes the same to be discharged and satisfied. Tenant's covenants and
obligations under this Section shall survive the expiration or sooner
termination of the term of this Lease.

ARTICLE 10.    MAINTENANCE AND REPAIRS, COVENANT AGAINST WASTE, AND RIGHT TO
               INSPECTION

               10.1. Tenant shall, throughout the term of this Lease, and at no
expense whatsoever to Landlord, take good care of the Demised Premises and shall
promptly make all repairs to the Demised Premises of every kind and nature,
which are required, structural or nonstructural, foreseen or unforeseen. When
used in this Article, the term "repairs" shall include replacements,
restorations and/or renewals when necessary. Tenant shall keep and maintain all
portions of the Demised Premises and the sidewalks adjoining same, in a clean
and orderly condition, free of snow (including the treatment of ice), dirt and
rubbish.

               10.2. As of the Commencement Date, Landlord shall assign to
Tenant any and all warranties and guarantees received by Landlord in connection
with the construction of the Building. To the extent any warranty or guarantee
is not assignable, tenant shall have the right to enforce same in the name of
the Landlord.

               10.3. Tenant shall permit Landlord and the authorized
representatives of Landlord, upon notice which is reasonable under the
circumstances, to enter the Demised Premises at all reasonable times during
usual business hours for the purpose of exhibiting same to potential lenders, or
inspecting the same and for curing defaults (subject to the applicable

                                      -6-

<PAGE>

 notice
provisions of this Lease) on the part of Tenant, or for the performance of any
work therein that may be necessary to comply with any laws, ordinances, rules,
orders, regulations or requirements of any public authority, pursuant to this
Lease, or that may be necessary to prevent substantial waste or deterioration in
connection with the Demised Premises or to enable Landlord to fulfill its
obligations as set forth in this Lease. Nothing in this Section 9.3 shall imply
any duty upon the part of Landlord to cure any such defaults or to do any such
work. Landlord shall not in any event be liable for inconvenience, annoyance,
disturbance, loss of business or other damage of Tenant or any other occupant of
the Demised Premises or part thereof, by reason of making repairs or the
performance of any work on the Demised Premises or on account of bringing
materials, supplies and equipment into or through the Demised Premises during
the course thereof, provided, however, Landlord shall be liable for any damage
caused to Tenant's Property by reason of the negligence of Landlord and/or its
authorized representatives. Landlord agrees to utilize its best efforts to make
any required repairs in such a manner so as to cause the least interference with
Tenant's business, but nothing contained herein shall be construed as requiring
Landlord to perform such work after normal business hours.

ARTICLE 11.    MECHANICS' LIENS

               11.1. Tenant shall not suffer or permit any liens to be filed
against the Demised Premises or any part thereof or against Tenant's leasehold
estate therein by reason of any work, labor, services or materials done for, or
supplied, or claimed to have been for, or supplied to, Tenant or anyone holding
the Demised Premises or any part thereof through or under Tenant. If any such
lien shall at any time be filed against the Demised Premises or any part thereof
or against Tenant's leasehold estate therein, Tenant shall cause the same to be
discharged of record within sixty (60) days after notice of the filing of same,
by either payment, deposit or bond or provide Landlord with such other security
as Landlord may require to assure removal of any such lien.

               11.2. Nothing in this Lease shall be deemed to be, or construed
in any way as constituting, the consent or request of Landlord, expressed or
implied, by inference or otherwise, to any person, firm or corporation for the
performance of any labor or the furnishing of any materials for any
construction, rebuilding, alteration or repair of or to the Demised Premises or
any part thereof, nor as giving Tenant any right, power or authority to contract
for or permit the rendering of any services or the furnishing of any materials
which might in any way give rise to the right to file any lien against
Landlord's interest in the Demised Premises or Tenant's leasehold estate
therein.

ARTICLE 12.    ALTERATIONS

               12.1. Tenant may not make, or cause, or permit the making of any
alteration, addition or improvement other than decorative such as painting to
the Demised Premises without Landlord's prior written consent which consent
shall not be unreasonably withheld or delayed.

               12.2. With respect to any alteration Tenant shall comply with all
legal requirements and shall, prior to commencing such work, procure all
requisite permits at its own cost and expense. The originals or certified copies
of all such approvals, authorizations, and


                                      -7-

<PAGE>

permits, and upon completion of any substantial alteration, additional or
improvement, a complete set of reproducible mylar as built drawings shall be
delivered to and retained by Landlord. All alterations, additions, and
improvements made hereunder by Tenant shall be performed in a first-class
workmanlike manner. At all time when any such work is in progress, Tenant shall
maintain or cause to be maintained adequate worker's compensation insurance
covering all persons employed in connection with the work.

               12.3. Except as otherwise provided in this Lease, all
alterations, additions and improvements made by Tenant shall, upon the
expiration or sooner termination of this Lease, be and become part of the realty
and the sole and absolute property of Landlord and shall remain upon and be
surrendered with the Demised Premises at the expiration or sooner termination of
the term of this Lease unless Tenant shall be required to remove such
alteration, addition or improvement pursuant to the terms of this Lease, in
which event they shall be removed by Tenant and the Demised Premises restored to
its original condition at Tenant's expense upon or prior to the expiration of
the term hereof.

ARTICLE 13.    INSURANCE

               13.1. During the term of this Lease, Tenant shall, at its own
cost and expense, provide and keep in force the following insurance:

                    (a) Comprehensive public liability insurance for the mutual
benefit of Landlord and Tenant against claims for bodily injury, death or
property damage occurring in or about the Demised Premises and any sidewalk
adjoining the same (including, without limitation, bodily injury, death or
property damage resulting directly or indirectly from or in connection with any
change, alteration, improvement or repair thereof) with limits of not less than
$1,000,000 for bodily injury or death to any number of persons and property
damage with limits of not less than $500,000.

                    (b) A fire and extended coverage policy with a broad form
all risk endorsement and rider including building ordinance coverage covering
the Building for its full replacement value plus a loss of rents provision for
not less than one (1) year. Notwithstanding the above, Landlord reserves the
right to place the insurance and Tenant shall pay to Landlord, monthly,
one-twelfth (1/12) of the amount necessary to pay same in full when the premium
becomes due.

               13.2. All insurance to be provided and kept in force by Tenant
under the provisions hereof shall be in companies acceptable to Landlord and
shall name as the insured Landlord, Landlord's mortgagee, if applicable, and
Tenant as their respective interests may appear. Prior to the Commencement Date,
all policies shall be obtained and certificates thereof shall be delivered to
Landlord. All required insurance shall be taken in responsible companies
licensed to do business in the State of New Jersey and acceptable to Landlord's
mortgagee(s) where applicable. All policies, if available, shall contain a
provision whereby the same cannot be cancelled unless Landlord is given at least
thirty (30) days prior written notice of such cancellation. Tenant shall procure
and pay for renewals of such insurance from time to time and Tenant shall
promptly deliver to Landlord certificates thereof at least thirty (30) days
before the expiration thereof.

                                      -8-

<PAGE>


               13.3. Neither Landlord nor Tenant shall be liable to the other or
to any insurance company (by way of subrogation or otherwise) insuring the other
party for any loss or damage to any building, structure or other tangible
property, or any resulting loss of income, or losses under worker's compensation
laws and benefits, even though such loss or damage might have been occasioned by
the negligence of such party, its agents or employees if any such loss or damage
is covered by insurance benefiting the party suffering such loss or damage.

               13.4. Tenant shall not carry separate or additional insurance
concurrent in form and contributing in the event of any loss or damage to the
Demised Premises with any insurance required to be obtained by Landlord or
Tenant under this Lease.

               13.5. Any insurance carried by Landlord or Tenant pursuant to the
terms of this Lease may be effected by a policy, policies of blanket insurance,
or under so-called "all risk" or "multi-peril" insurance policies, provided that
the amount of the total insurance allocated to the Demised Premises shall be
such as to furnish in protection the equivalent of separate policies in the
amounts required, pursuant to the terms of this Lease.

ARTICLE 14.    DAMAGE OR DESTRUCTION

               14.1. If the Demised Premises shall be partially damaged or
destroyed by fire or other casualty, Tenant shall repair, restore, replace, or
rebuild the same (hereinafter called the "Work") to, as nearly as may be
practicable, its condition and character immediately prior to such damage or
destruction by fire or any other cause, provided, however, in the event that the
Demised Premises shall be damaged or destroyed to such an extent that the cost
of restoration, as reasonably estimated by Landlord, Landlord's architect or
insurance company, will equal or exceed $500,000 or there shall be less than
three years remaining on the term of this Lease, either Landlord or Tenant may,
not later than thirty (30) days following the damage, give notice to the other
stating that it elects to cancel this Lease on the sixtieth (60th) business day
following the date on which such notice is given. In the event that such a
notice is given, this Lease shall be deemed cancelled and the term hereof shall
expire on the date set forth in said notice and Tenant shall surrender
possession of the Premises on said date; and the fixed Annual Rent, Additional
Rent and other obligations of Tenant hereunder shall be apportioned as of the
date of the damage and destruction and any amounts paid for any period beyond
said date shall be repaid to Tenant together with any Security Deposit. In the
event the term of this Lease shall be terminated as aforesaid, Landlord shall be
entitled to receive and retain all proceeds of insurance which are payable in
connection with such damage.

               If this Lease is not cancelled as aforesaid, Tenant shall
commence the performance of the Work as soon as practicable, and shall complete
the Work, in accordance with the provisions of this Lease, with reasonable
diligence and as promptly as may be practicable; subject, however, to ordinary
delays and delays beyond the reasonable control of the party performing the Work
available. Landlord agrees that in the event that this Lease is not terminated
the Landlord shall cause the insurance proceeds to be deposited in a segregated
account and to make the proceeds thereof available to Tenant during the
restoration process. The amount to be disbursed from the segregated account
shall be based upon Landlord's architect's certification as to the value of the
work completed and provided further that at all times there shall be remaining
in the segregated account sufficient funds to complete the restoration.

                                      -9-

<PAGE>

Notwithstanding anything to the contrary contained herein, Landlord reserves the
right to perform the restoration itself.

               14.2. In the event of any damage by fire or other casualty not
resulting in a termination of this Lease, the provisions of this Lease shall be
unaffected and Tenant shall remain and continue liable for the payment of all
fixed Annual Rent, Additional Rent and all other charges required hereunder to
be paid by Tenant, as though no damage or fire or other casualty had occurred,
provided, however, Tenant's obligations as set forth herein shall be reduced by
the amount of any rent insurance received by Landlord.

ARTICLE 15.    CONDEMNATION

               15.1. If, at any time during the term of this Lease, title (i) to
the whole Building or (ii) any portion of the Building containing the Demised
Premises, such that the remainder can not be utilized by Tenant for its intended
purpose, shall be taken by the exercise of the right of condemnation or eminent
domain, or by agreement between Landlord and those authorized to exercise such
right in the case of an eminent, threatened or pending condemnation, at the
option of either Landlord or Tenant this Lease shall terminate and expire on the
date that Tenant shall be required to deliver possession of the Building, or
applicable portion thereof and the fixed Annual Rent, Additional Rent and other
charges to be paid by Tenant hereunder shall be apportioned and paid to the date
Tenant vacates the Building.

               15.2. If, at any time during the term of this Lease, any portion
of the land of which the Demised Premises forms a part (exclusive of the
Building) shall be taken by the exercise of the right of condemnation or eminent
domain or by agreement between Landlord and those authorized to exercise such
right in the case of any eminent, threatened or pending condemnation, and as a
result thereof, the Demised Premises are not utilizable for their intended
purpose as reasonably determined by Landlord and Tenant, then this Lease shall
terminate and expire on the date that the condemning authority shall take actual
possession of that portion of the land affected by the condemnation and Tenant
vacates the Building, and the fixed Annual Rent, Additional Rent and other
charges to be paid by Tenant thereunder shall be apportioned and paid to the
date Tenant vacates the Building.


               15.3. In the event of any condemnation or taking by agreement in
accordance with the terms of Section 145.2 and this Lease shall not be
terminated by reason thereof; this Lease shall continue, except that thereafter
the fixed Annual Rent shall be equitably adjusted, if required. Tenant agrees
that it shall not be entitled to any reduction in the fixed Annual Rent in the
event any portion of the land, but not the Building is taken.

               15.4. In the event of a taking resulting in the termination of
this Lease, Tenant shall not be entitled to any part of the award for such
taking or any payment in lieu thereof, but Tenant may file a separate claim for
the taking of any fixtures and equipment owned by Tenant which have not become
Landlord's property, and for moving expenses, but not the value of Tenant's
leasehold.


                                      -10-

<PAGE>

ARTICLE 16.  DEFAULT PROVISIONS

               16.1. This Lease and the terms hereof are subject to the
limitation that, if at any time during the term hereof, any one or more of the
following events (herein separately called an "event of default") shall occur,
that is to say:

                    (a) if Tenant shall make an assignment for the benefit of
its creditors; or

                    (b) any petition shall be filed by or against Tenant in any
court, whether or not pursuant to any statute of the United States or of any
State, in any bankruptcy, reorganization, composition, extension, arrangement or
insolvency proceedings and with respect to a petition filed against Tenant the
same is not dismissed within one hundred twenty (120) days thereafter; or

                    (c) if, in any proceedings, a receiver or trustee appointed
be for all or any portion of Tenant's Property and with respect to a petition
filed against Tenant the same is not dismissed within one hundred twenty (120)
days thereafter; or

                    (d) if Tenant shall fail to pay any installment of fixed
Annual Rent, or any part thereof, for ten (10) days after notice of non-payment;
or

                    (e) if Tenant shall fail to pay any item of Additional Rent
or any other charge required to be paid by Tenant hereunder (other than the
payment of fixed Annual Rent), and such failure shall continue for thirty (30)
days after notice thereof from Landlord to Tenant; or

                    (f) if Tenant shall fail to perform or observe any other
material requirement of this Lease (not hereinbefore in this Section 15.1
specifically referred to) on the part of Tenant to be performed or observed, and
such failure shall continue for thirty (30) days after notice thereof from
Landlord to Tenant, then upon the happening of any one or more of the
aforementioned events of default, and the expiration of the period of time for
curing the same, if the event of default has not been cured, Landlord may give
Tenant a notice (hereinafter called "Notice of Termination") of intention to end
the term of this Lease at the expiration of thirty (30) days from the date of
service of such notice of termination, and at the expiration of such thirty (30)
days, unless Tenant shall have cured or commenced the curing of such default,
this Lease and the term hereof, as well as all of the right, title and interest
of Tenant hereunder, shall wholly cease and terminate in the same manner and
with the same force and effect as if the date of expiration of such thirty (30)
day period were the date originally specified herein for the expiration of this
Lease and the term hereof, and Tenant shall then quit and surrender the Demised
Premises to Landlord, but Tenant shall remain liable as hereinafter provided.
Landlord agrees to use commercially reasonable efforts to relet the Demised
Premises.

               16.2. If this Lease shall be terminated as provided in Section
15.1 hereof, Landlord, and Landlord's agents or servants, may immediately or at
any time thereafter re-enter the Demised Premises and remove Tenant, its agents,
employees, servants, licensees, and any subtenants and other persons, firms, or
corporations, and all or any part of its or their property therefrom by summary
dispossess proceedings or by any suitable action or proceeding

                                      -11-

<PAGE>

at law and to repossess and enjoy the Demised Premises, together with all
additions, alterations and improvements thereto.

               16.3. In case of any such termination, re-entry or dispossess by
summary proceedings or otherwise, the fixed Annual Rent, Additional Rent and all
other charges required to be paid by Tenant hereunder shall thereupon become due
and be paid up to the time of such termination, re-entry or dispossess, and
Tenant shall also pay to Landlord all reasonable expenses which Landlord may
then or thereafter incur for legal expenses, attorneys' fees, brokerage
commissions, and all reasonable costs paid or incurred by Landlord resulting for
restoring the Demised premises to good order and condition making same ready for
use and occupancy by a replacement Tenant. Landlord may, at any time and from
time to time, relet the Demised Premises, in whole or part, either in its own
name or as agent of Tenant, for a term or terms which, at Landlord's option, may
be for the remainder of the term of this Lease, or for any longer or shorter
period, and bring an action against Tenant for damages, unless the statute or
rule of law which governs or shall govern the proceeding in which such damages
are to be provided limits or shall limit the amount of such claim capable of
being so proved and allowed; in which case Landlord shall be entitled to prove
as and for liquidated damages and have allowed an amount equal to the maximum
allowed by or under any such statute or rule of law. Tenant shall be obligated
to, and shall pay to Landlord as damages, upon demand, and Landlord shall be
entitled to recover from Tenant damages (payable in monthly installments, in
advance, on the first day of each calendar month following such termination,
re-entry or dispossess, and continuing until the date originally fixed herein
for the expiration of the term of this Lease) in an amount or amounts equal to
the excess, if any, of the sum of the aggregate expenses paid by Landlord during
the month immediately preceding such calendar month for all such items, as, by
the terms of this Lease, are required to be paid by Tenant, plus an amount equal
to the amount of the installment of fixed Annual Rent which would have been
payable by Tenant hereunder in respect of such calendar month, had this Lease
and the term hereof not been so terminated, or had Landlord not so re-entered,
over the rents, if any, collected by or accruing to Landlord in respect of such
calendar month pursuant to such reletting, and any suit or action brought to
collect the amount of the deficiency for any month shall not prejudice in any
way the rights of Landlord to collect the deficiency for any subsequent month by
a similar proceeding.

               16.4. Landlord, at its option after such termination, may make
such alterations, and/or repairs in and to the Demised Premises as in its
reasonable judgment Landlord considers advisable and necessary, and the making
of such alterations, repairs and/or decorations shall not operate or be
construed to release Tenant from liability hereunder. Landlord shall in no event
be liable in any way whatsoever for failure to relet the Demised Premises
(provided that Landlord has made commercially reasonable efforts to relet same),
or in the event that the Demised Premises are relet, for failure to collect rent
therefor under such reletting after making diligent efforts to collect same, and
in no event shall Tenant be entitled to receive any excess of such Annual Rents
over the sums payable by Tenant to Landlord hereunder. Suit or suits for the
recovery of such damages, or any installments thereof, may be brought by
Landlord from time to time at its election, and nothing herein contained shall
be deemed to require Landlord to postpone suit until the date when the term of
this Lease would have expired if it had not been terminated under the provisions
of this Lease, or under any provision of law or had Landlord not re-entered into
or upon the Demised Premises.

                                      -12-

<PAGE>


               16.5. Tenant, for itself and any and all persons claiming through
or under Tenant, including but not limited to its creditors, upon the
termination of this Lease and of the term hereof in accordance with the terms
hereof, or in the event of entry of judgment for the recovery of the possession
of the Demised Premises in any action or proceeding, or if Landlord shall enter
the Demised Premises by process of law or otherwise, hereby waives any right of
redemption provided or permitted by any statute, law or decisions now or
hereafter in force, and does hereby waive, surrender and give up all rights or
privileges which it or they may or might have under and by reason of any present
or future law or decision, to redeem the Demised Premises or for a continuation
of this Lease after having been dispossessed or ejected by process of law.
Landlord and Tenant hereby waive all right to trial by jury in any action or
summary or other judicial proceeding hereafter instituted pursuant to the terms
of this Lease.

               16.6. Anything in this Article 15 to the contrary
notwithstanding, it is expressly understood that, with respect to any event of
default within the purview of subsection (f) of Section 15.1 hereof, which
cannot be cured within the period of thirty (30) days provided for in said
subsection (f), Landlord shall not be entitled to serve a notice of termination
upon Tenant, as provided in said Section 15.1, if Tenant shall commence the
curing of such default promptly, and shall thereafter proceed with all due
diligence to complete the curing of such default, it being the intention hereof
that, in connection with any default not susceptible of being cured with due
diligence within said period of thirty (30) days, the time of Tenant within
which to cure the same shall be extended for such period as may be necessary to
complete the same with all due diligence.

               16.7. The words "re-enter" and "re-entry" as used herein are not
restricted to their technical legal meaning.

ARTICLE 17.    SUBORDINATION TO LESSORS AND MORTGAGEES

               17.1. This Lease, and all rights of Tenant hereunder, are and
shall be subject and subordinate in all respects to all mortgages which may now
or hereafter affect the Demised Premises and to each and every advance made or
hereafter to be made under such mortgages, and to all renewals, modifications,
replacements and extensions of such Leases and such mortgages and spreaders and
consolidations of such mortgages. This Article shall be self-operative and no
further instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall promptly execute and deliver any instrument that
Landlord or the holder of any such mortgage shall request.

               17.2. Landlord agrees to use its best efforts to obtain a
non-disturbance agreement from Landlord's mortgagee for the benefit of Tenant,
but Landlord's inability to obtain same shall not be deemed a default hereunder.
In the event that Landlord is unable to obtain a non-disturbance agreement for
the benefit of Tenant, Landlord agrees to provide Tenant with any notice(s) of
default served upon Landlord by its mortgagee and Tenant shall have the right to
cure such default and deduct the cost to Tenant of curing such default from any
sums thereafter becoming due to Landlord under this Lease until Tenant shall
have been fully reimbursed.

                                      -13-

<PAGE>


ARTICLE 18.    QUIET ENJOYMENT

               18.1. Landlord covenants and agrees that Tenant, upon paying the
fixed Annual Rent, Additional Rent and other charges herein reserved, and
substantially performing and observing the covenants, conditions and agreements
hereof upon the part of Tenant to be performed and observed, shall and may
peaceably hold and enjoy the Demised Premises during the term hereof, without
any interruption or disturbance from Landlord. This covenant shall be construed
as running with the land to and against subsequent owners and successors in
interest, and is not, nor shall it operate or be construed as, a personal
covenant of Landlord, except to the extent of Landlord's interest in the Demised
Premises and only so long as such interest shall continue, and thereafter this
covenant shall be binding upon such subsequent owners and successors in
interest, to the extent of their respective interests, as and when they shall
acquire the same, and for so long as they shall retain such interest.

               18.2. Landlord warrants and represents that it is the sole owner
of the Premises and has the right to execute and deliver this Lease without
securing the consent of any other party or entity.

ARTICLE 19.    SURRENDER OF PREMISES

               19.1. Tenant shall, upon the expiration or sooner termination of
the term of this Lease, surrender to Landlord the Demised Premises, together
with all alterations (unless Landlord shall elect to require Tenant to remove
same) and replacements thereof then on the Demised Premises, in good order,
condition and repair, except for reasonable wear and tear.

ARTICLE 20.    ASSIGNMENT AND SUBLETTING

               20.1. Tenant shall not assign or transfer this Lease or sublet
all or any portion of the Demised Premises or permit the use or occupancy of the
whole or any portion of the Demised Premises, without the prior written consent
of Landlord, and any Mortgagee of Landlord, if required. If any Mortgagee shall
refuse to consent to any assignment or subletting, then Landlord shall not be
deemed to have unreasonably withheld its consent.

               20.2. Notwithstanding the consent to any assignment or
subletting, Tenant shall remain fully liable for the performance of all of
Tenant's obligations herein. If this Lease be assigned, or if the Demised
Premises be sublet or occupied by anyone other than Tenant, Landlord may, after
default by Tenant, collect rent from the assignee, subtenant or occupant, and
apply any amount collected to the fixed Annual Rent, Additional Rent and other
charges herein reserved, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of this covenant, or the acceptance of the
assignee, subtenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of the terms, covenants and conditions of this
Lease on the part of Tenant to be performed.

ARTICLE 21.    ESTOPPEL CERTIFICATE

               21.1. Landlord and Tenant agree at any time and from time to
time, upon not less than fifteen (15) days prior request, they shall execute,
acknowledge and deliver to each other a statement in writing, in a form
acceptable to Landlord and any Lender of Landlord,

                                      -14-

<PAGE>

certifying that this Lease is unmodified (or, in the alternative, that there
have been modifications) and in full force and effect, and the dates to which
the fixed Annual Rent and other charges have been paid in advance, and if there
are any defaults hereunder claimed by Landlord or Tenant, it being intended that
any such statement delivered pursuant to this Article may be relied upon by any
prospective purchaser of the fee or mortgage (fee or leasehold) or any assignee
or any mortgagee.

ARTICLE 22.    NOTICES

               22.1. All notices, demands, consents, elections and requests
which are required or desired to be given by either party to the other hereunder
shall be in writing and shall be sent by United States registered or certified
mail, return receipt requested or by private receipted delivery services,
addressed to (a) Landlord, at the address set forth above and (b) to Tenant, at
the address set forth above or at such other place as either party may from time
to time designate by like notice to the other party. All notices which are given
by Landlord or Tenant in the manner aforesaid, shall be deemed to have been
given for all purposes hereunder on the third (3rd) business day next following
the date on which such notice, demand or request shall have been mailed as
aforesaid. Notices delivered by private receipted delivery services shall be
deemed to have been given on the date of delivery of same. Copies of all notices
forwarded to Landlord shall be forwarded to Giordano, Halleran & Ciesla, P.O.
Box 190, Middletown, New Jersey 07748, Attn: Michael A. Bruno.

ARTICLE 23.    INVALIDITY OF PARTICULAR PROVISIONS

               23.1. If any term of provision of this Lease or the application
thereof to any person or circumstance shall to any extent be invalid or
unenforceable except with respect to the possession of the Demised Premises by
Tenant and/or Tenant's obligation to pay the fixed Annual Rent and Additional
Rent provided for in this Lease, the remainder of the Lease, or the application
of such term or provision to persons or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.

ARTICLE 24.    CUMULATIVE REMEDIES - WAIVER - ORAL CHANGE

               24.1. Every term, condition, agreement or provision contained in
this Lease shall be deemed to be also a covenant.

               24.2. The specified remedies to which Landlord may resort under
the terms of this Lease are cumulative and are not intended to be exclusive of
any other remedies or means of redress to which Landlord may be lawfully
entitled in case of any breach or threatened breach by Tenant of any provision
of this Lease.

               24.3. The failure of Landlord to insist in any one or more cases
upon the strict performance of any of the terms, covenants, conditions,
provision or agreements of this Lease herein contained shall not be construed as
a waiver or a relinquishment for the future of any such term, covenant,
condition, provision or agreement. No waiver by Landlord of any term, covenant,
condition, provision or agreement of this Lease shall be deemed to have been
made unless expressed in writing and signed by Landlord.

                                      -15-
<PAGE>


               24.4. In addition to the other remedies in this Lease provided,
Landlord shall be entitled to the restraint by injunction of any violation or
attempted or threatened violation, of any of the terms, covenants, conditions,
provisions or agreements of this Lease.

               24.5. This Lease may not be changed, modified or discharged
orally but only by an agreement in writing signed by the party against whom the
enforcement of the change, modification or discharge is sought.

ARTICLE 25.    BROKER

               25.1. Landlord and Tenant each warrant and represent to each
other that they dealt with no brokers in connection with this Lease and each
party to this Lease agrees to hold the other party harmless from and against any
claims for commissions by any broker arising by reason of its actions in
connection with the execution of this Lease and for any and all loss, costs or
damage (including reasonable attorneys fees) reasonably related to a breach of
the foregoing warranties.

ARTICLE 26.    SIGNS

               26.1. Subject to the prior written consent of Landlord (which
consent will not be unreasonably withheld or delayed, Tenant shall have the
right to place and maintain any sign(s) on the exterior walls (but not the roof)
of the Building. In connection with the installation of any sign about the
grounds of the Demised Premises, Tenant shall, at its expense, comply with all
applicable laws and regulations of the governmental authorities having
jurisdiction and obtain all required permits and/or licenses. At the expiration
or sooner termination of this Lease, Tenant shall, at the request of Landlord,
remove any such signs and repair any damage caused by their removal.

ARTICLE 27.    PARKING

               27.1. Tenant shall have the exclusive right to all of the parking
at the Premises.

ARTICLE 28.    HOLDOVER

               28.1. If Tenant continues in occupancy of the Premises after the
expiration of the term of this Lease, such occupancy shall not be deemed to
extend or renew the term of this Lease, but shall be deemed to create a tenancy
from month to month (at one hundred and fifty (150%) percent of the fixed Annual
Rent in effect upon the expiration of the term of this Lease) upon the terms,
covenants and conditions (including the Additional Rent) set forth in this
Lease. The provisions of this Article shall not be construed to relieve Tenant
from liability to Landlord for damages resulting from any such holding over.

ARTICLE 29.    CAPTIONS AND MARGINAL NOTES

               29.1. The captions and marginal notes of this Lease are for
convenience and reference only, and in no way define, limit or describe the
scope or intent of this Lease nor in any way affect this Lease.

                                      -16-

<PAGE>

ARTICLE 30.    LIMITATION OF LIABILITY

               30.1. Neither Landlord nor any partner member of Landlord, past,
present or future, shall be under any personal liability with respect to any of
the provisions of the Lease, and if Landlord is in breach or default with
respect to its obligations or otherwise under this Lease, Tenant shall look
solely to the equity of Landlord in the Demised Premises for the satisfaction of
Tenant's remedies. It is expressly understood and agreed that Landlord's
obligations under this Lease shall in no event exceed the loss of Landlord's
equity in the Demised Premises.

ARTICLE 31.    COVENANTS BINDING ON RESPECTIVE PARTIES

               31.1. The terms, covenants and conditions contained in this Lease
shall bind and inure to the benefit of Landlord and Tenant and their respective
heirs, distributees, executors, administrators, and assigns However, the
obligations of Landlord under this Lease shall no longer be binding upon
Landlord named herein after the sale, assignment or transfer by Landlord named
herein (or upon any subsequent landlord) of its interest in the Demised Premises
or portions thereof as owner or lessor, and in the event of any such sale,
assignment or transfer, such obligations shall thereafter be binding upon the
grantee, assignee or other transferee of such interest, and any such grantee,
assignee or transferee, by accepting such interest, shall be deemed to have
assumed such obligations. A Lease of the entire Building shall be deemed a
transfer within the. meaning of the foregoing sentence.

ARTICLE 32.    GOVERNING LAWS

               32.1. This Lease shall be construed in accordance with the laws
of the State of New Jersey.

ARTICLE 33.    RIGHT OF RENEWAL

               33.1. Landlord hereby grants to Tenant the right to renew the
term of this Lease upon not less than six (6) months prior written notice from
the then current expiration date of the term of this Lease ("Last Exercise
Date") for three (3) additional periods of five (5) years each upon the same
terms and conditions set forth herein, other than with respect to the Right of
Renewal, and the Fixed Annual Rental which shall be as set forth in Section 33
hereof ("Renewal Term"). If proper notification of the exercise of a Renewal
Term is not given and/or received, such option will automatically expire. The
Renewal Term may only be exercised consecutively. Failure to exercise an option
terminates that option and all subsequent options. Tenant acknowledges that
because of the importance to Landlord of knowing no later than the Last Exercise
Date whether or not Tenant will exercise the option, the failure of Tenant to
notify Landlord by the Last Exercise Date shall conclusively be presumed to be
an election by Tenant not to exercise the option.

               33.2. Tenant shall have no right to exercise an option (i) if
Tenant is in default or (ii) in the event that Landlord has given to Tenant
three (3) or more notices of separate defaults during the twelve (12) month
period immediately preceding the exercise of the option, whether or not the
defaults are cured. The period of time within which an option may be

                                      -17-

<PAGE>

exercised will not be extended or enlarged by reason of Tenant's inability to
exercise an option because of the provisions of this paragraph.

               33.3. The options are personal to Tenant, cannot be assigned or
exercised by anyone other than Tenant and only while Tenant is in full
possession of the Premises and without the intention of thereafter assigning or
subletting.

               33.4. The Fixed Annual Rental for each Lease Year and for each
Renewal Term shall be the greater of (i) the Fixed Annual Rental for the
preceding Lease Year or (ii) $5,000 plus the sum arrived at by multiplying
$5,000 by the percentage difference between the "base index" and the "price
index" (both as hereinafter defined).

               33.5. As used herein the term "base index" shall mean the
Consumer Price Index for the New York-North Jersey-Long Island, CT, PA
(1982-84=100) published by the United States Department of Labor Bureau of Labor
Statistics for the month prior to the month in which the second (2nd) Lease Year
shall commence and "price index" shall mean the index published for the last
month of the then current expiring term.

By way of example: assuming the "base index "is 102 and the "price index" is
105.03, resulting in a three (3%) percent difference, the rental would be
calculated as follows:

                          $5000 + (5000 X .03) = $5,150

In the event that the above noted Consumer Price Index ceases to be published on
a monthly basis then the publication for the month nearest the month initially
selected shall be utilized and if the Index shall cease to be published the
parties shall select and index most nearly representing the former index.

ARTICLE 34.    NET LEASE

               34.1. Tenant acknowledges that this Lease is a net lease and
except as otherwise specifically provided for herein, Landlord shall have no
obligation of any kind with respect to the Demised Premises be they seen or
unforeseen, ordinary or extraordinary and that same shall be the obligation of
Tenant.


                                      -18-

<PAGE>


         IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.

                                               LANDLORD:

                                               Medical Realty, Inc.


                                               /s/ Joseph Clemente
                                               _______________________________


                                               TENANT:

                                               Monmouth Community Bank, N.A.


                                               By: /s/ James S. Vaccaro
                                               _______________________________
                                               Chairman and CEO



                                      -19-

<PAGE>


                                    EXHIBIT A





                                Legal Description






                                      -20-

<PAGE>


                                    EXHIBIT B





------------- --------------------------------- ------------------------------
                       Rental Schedule(1)
------------- --------------------------------- ------------------------------
   Year                Fixed Annual Rental                 Monthly Rental
------------- --------------------------------- ------------------------------
     1                     $54,000.00                         $4,500.00
------------- --------------------------------- ------------------------------
     2                     $60,000.00                         $5,000.00
------------- --------------------------------- ------------------------------
    3-7                 $60,000.00 + CPI                   $5,000.00 + CPI
------------- --------------------------------- ------------------------------




                     Option Period Rental (If Applicable)
------------------------------------------------------------------------------
    8-12                                                   $5,000.00 + CPI
--------------------------- -------------------------- -----------------------
    13-17                                                  $5,000.00 + CPI
--------------------------- -------------------------- -----------------------
    18-23                                                  $5,000.00 + CPI
--------------------------- -------------------------- -----------------------


(1) The fixed Annual Rent for years 3-7 as well the fixed Annual Rent for the
Optional Renewal Term will be calculated as set forth in Paragraph 33 of this
Lease.


                                      -21-