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, 2003

    |_|     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. |X|

      Revenues for the year ended December 31, 2003: $9.9 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 March
23, 2004, was $29.5 million. The Registrant has no other class of capital stock
outstanding.

      As of March 23, 2004, 1,550,588 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 27, 2004. The Proxy
Statement will be filed with the Securities and Exchange Commission by April 29,
2004.

      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 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

<TABLE>
<CAPTION>
PART I                                                                              PAGE
                                                                                    ----
<S>                                                                                  <C>
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, Related Stockholder Matters
           and Small Business Issuer Purchases of Equity Securities...................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

Item 8A.   Controls and Procedures....................................................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.*  Principal Accountant Fees and Services.....................................35

Signatures............................................................................36
</TABLE>

*     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 27, 2004, and is incorporated herein by reference. The Proxy
      Statement will be filed with the Securities and Exchange Commission by
      April 29, 2004.

<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. Monmouth Community Bank has entered into a land lease
agreement and received the required regulatory approvals to open a seventh
branch in the Ursula Plaza Shopping Center, 444 Ocean Boulevard, Long Branch,
New Jersey. Construction of this branch is scheduled for completion by the end
of the summer of 2004. If construction remains on schedule, we anticipate
commencing operations at this branch in the autumn of 2004.

      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 professional environment, at
fair and reasonable prices, at convenient operating hours, with a commitment to
prompt, quality and highly personalized


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<PAGE>

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.

Market Area

      At December 31, 2003, Monmouth Community Bank had six (6) full-service
branch facilities located in Long Branch, Spring Lake Heights, Neptune City,
Little Silver, Ocean Grove and Neptune, New Jersey. Each branch is within
Monmouth County, New Jersey, the sixth largest county in the State of New
Jersey. 627 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 University 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.


                                       2
<PAGE>

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 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. Our 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
our 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 financial institutions.

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:


                                       3
<PAGE>

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 checks, a night depository, bond coupon
redemptions, bank-by-mail, direct deposit, business sweep accounts, automated
teller machines and telephone and internet banking. Effective January 2004,
Monmouth Community Bank also offers a variety of personal and business credit
cards. These credit cards are underwritten and managed by a third party
unaffiliated banking organization. Monmouth Community Bank also maintains coin
counting machines, for the convenience of its customers, in each of its branch
offices.

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 are located 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
(Executive Vice President, Chief Financial Officer, Treasurer and Secretary) are
the executive officers of the holding company, Monmouth Community Bancorp. Mr.
Vaccaro, Mr. Lindsey and Mr. Giordano, together with Kevin W. Hunt, Nancy
Malinconico and David A. O'Connor, are the executive officers of Monmouth
Community Bank. None of Mr. Vaccaro, Mr. Lindsey, Mr. Giordano or any other


                                       4
<PAGE>

executive officer of Monmouth Community Bank have employment agreements.
Including the aforementioned executive officers, Monmouth Community Bank has 80
employees, 67 of whom are full-time.

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 subsidiary. In
addition, in March 2004, the holding company formed MCBK Capital Trust I, a
Delaware statutory business trust and a wholly-owned, unconsolidated subsidiary
of the holding company. See Item 6. "Management's Discussion and Analysis or
Plan of Operation - Guaranteed Preferred Beneficial Interest in the Holding
Company's Subordinated Debt." Further, on March 9, 2004, Monmouth Community Bank
formed MCB Investment Company, a New Jersey corporation and wholly-owned
subsidiary of Monmouth Community Bank. It is the intention of Monmouth Community
Bank that MCB Investment Company will qualify as a New Jersey Investment Company
and hold and invest in securities in support of Monmouth Community Bank, which
will result in a state tax savings for Monmouth Community Bank.

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
the interpretation and application thereof 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.


                                       5
<PAGE>

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 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 2003,
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.

      Further, 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.


                                       6
<PAGE>

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 the holding company and Monmouth Community Bank's directors and
executive officers.

"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


                                       7
<PAGE>

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 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 Capital. 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, 2003, the holding company's ratios of Total
Capital and Tier 1 Capital to risk-weighted assets were 12.01% and 11.01%,
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, 2003, the holding company's leverage ratio was


                                       8
<PAGE>

6.86%. 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 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, 2003, 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.


                                       9
<PAGE>

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.

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 the latest CRA examination report
with respect to Monmouth Community Bank, dated November 10, 2003, 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.


                                       10
<PAGE>

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 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. On August
1, 2003, Monmouth Community Bank exercised its option to purchase its main
office and branch (land and building) located at 627 Second Avenue, Long Branch,
New Jersey, pursuant to the terms of its lease with KFC Associates, dated June
26, 1997. The purchase price paid for the land and building was $550,000.

      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


                                       11
<PAGE>

(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 is $6,335.

      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 had an
initial term of three (3) years which commenced on October 1, 2000. Monmouth
Community Bank renewed the Neptune City Lease for an additional five (5) years
commencing January 1, 2004. Monmouth Community Bank has the option to renew the
Neptune City Lease for an additional five (5) year term 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 current monthly
rent is $2,500 which will increase for each additional year of the Neptune City
Lease up to $3,262 per month in the thirteenth and final year of the Neptune
City Lease, assuming that Monmouth Community Bank elects to exercise its five
(5) year option after the current term expires.

      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 was $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. The current monthly rent is $6,130.

      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 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.


                                       12
<PAGE>

      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. This lease terminates on March 31, 2004, and
Monmouth Community Bank fully anticipates entering into a new lease with MCB
Associates, L.L.C. with terms and conditions to be negotiated. The lease amount
to be paid will be at fair market value as determined by an independent
appraiser.

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, Related Stockholder Matters and Small Business
        Issuer Purchases of Equity Securities

      The common stock of the holding company currently trades on the NASDAQ
SmallCap Market under the ticker symbol "MCBK."

     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 SmallCap Market for the period commencing May 12, 2003 through December
31, 2003 and the NASDAQ OTC Bulletin Board for the period commencing January 1,
2002 through May 11, 2003. 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 and has been adjusted to reflect the
5% stock distributions effected on December 31, 2003 and 2002, respectively.

      Year Ended December 31, 2003                             High        Low
                                                             ------      ------
      First Quarter .............................            $15.00      $14.10
      Second Quarter ............................             19.48       14.38
      Third Quarter .............................             20.38       18.10
      Fourth Quarter ............................             26.25       17.38

      Year Ended December 31, 2002                             High         Low
                                                             ------      ------
      First Quarter .............................            $15.71      $13.33
      Second Quarter ............................             16.10       12.57
      Third Quarter .............................             13.83       11.20
      Fourth Quarter ............................             14.96       12.79

      As of March 23, 2004, the following were market makers for the holding
company's common stock: Ryan, Beck & Co., LLC; Hill Thompson; Magid, L.P.;
Sandler, O' Neill & Partners, L.P.; Knight Securities, L.P.; Schwab Capital
Markets, L.P.; and The Brut ECN, LLC.

      As of March 23, 2004, the approximate number of registered holders of the
holding company's common stock was 407.

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

      The holding company did not repurchase any shares of its common stock
during the period covered by this report.


                                       14
<PAGE>

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, 2003 and 2002. The following information should be
read in conjunction with the holding company's audited financial statements for
the years ended December 31, 2003 and 2002, 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, 2003 and 2002, 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.

Overview

      Net profit from operations for the year ended December 31, 2003 was $482
thousand, or $.31 per basic share and $.30 per diluted share, compared to a net
profit of $784 thousand, or $.65 per basic share and $.64 per diluted share, for
the year ended December 31, 2002. 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, 2003 and 2002, respectively. Income tax
expense for 2003 was $322 thousand as compared to $70 thousand in 2002. Pre-tax
income for 2003 totaled $804 thousand as compared to $854 thousand of pre-tax
income generated in 2002.

      Total assets at December 31, 2003 were $222.6 million, an increase of 24%
over the year-end 2002 figure of $179.5 million. Total deposits of $207.2
million at December 31, 2003 exceeded the December 31, 2002 total of $164.0
million by $43.2 million. There were no loan charge-offs during 2003. At
December 31, 2003, there was one loan in non-accrual status totaling $40
thousand.

      Total assets of $222.6 million at December 31, 2003 were comprised
primarily of $4.7 million in Federal funds sold, $83.3 million in investment
securities plus an additional $5.0 million in securities due to other banks,
$115.8 million in net loans and $9.7 million in cash and due from banks,
compared to total assets of $179.5 million at December 31, 2002, which primarily
consisted 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. Total assets at December 31, 2003 were
funded primarily through deposits of $207.2 million, a 26% increase over
deposits of $164.0 million at December 31, 2002.


                                       15
<PAGE>

      During the year ended December 31, 2003, we experienced one non-accrual
loan totaling $40 thousand and no charge-offs as compared to one non-accrual
loan totaling $43 thousand and a $1 thousand charge-off, which was subsequently
recovered, for the year ended December 31, 2002.

                                                         Year ended December 31,
                                                         -----------------------

      Performance Ratios:                                   2003          2002
                                                            ----          ----

             Return on average assets                       0.24%         0.51%
             Return on average shareholders' equity         3.23%         7.64%
             Shareholders' equity to total assets           6.69%         8.32%

Results of Operations

General

      The holding company's principal source of revenue is derived from Monmouth
Community Bank's net interest income, which is the difference between interest
income on earning assets and interest expense on deposits and borrowed funds.
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.

For the years ended December 31, 2003 and 2002

Net Interest Income

      Net interest income of Monmouth Community Bank was $6.5 million for the
year ended December 31, 2003, as compared to $5.5 million for the year ended
December 31, 2002. Net interest income for the year ended December 31, 2003 was
comprised primarily of $140 thousand in interest on Federal funds sold and due
from banks, $6.4 million in interest on loans and $2.5 million in interest on
securities, less interest expense on deposits of $2.6 million, whereas 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, $5.6 million
in interest on loans and $2.5 million in interest on securities, less interest
expense on deposits of $2.8 million.

      Interest-earning assets averaged $191.5 million for the year ended
December 31, 2003, a 33% increase over interest-earning assets of $144.3 million
for the year ended December 31, 2002. Interest-earning assets for such periods
were funded primarily by deposit inflows. Deposits for the year ended December
31, 2003 averaged $185.8 million, of which $160.3 million, or 86%, were
interest-bearing. This number represents a 31% increase over average total
deposits of $141.8 million for the year ended December 31, 2002, of which $120.1
million, or 85%, were interest-bearing.

      Net interest margin, which represents net-interest income as a percentage
of average interest-earning assets, was 3.39% for the year ended December 31,
2003, as compared to 3.80% for the year ended December 31, 2002. The net
interest margin compression experienced


                                       16
<PAGE>

in 2003 and 2002 was primarily attributable to the general interest
rate-declines that occurred during such years. During 2003 and 2002, interest
rates, as measured by the prime rate of interest, decreased from 4.75% at the
beginning of 2002 to 4.00% by December 31, 2003. 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. The following table presents a summary of
the principal components of interest income and interest expense for the years
ended December 31, 2003, 2002 and 2001:

<TABLE>
<CAPTION>
 (dollars in thousands)          Year ended December 31, 2003        Year ended December 31, 2002     Year ended December 31, 2001
                                 ----------------------------        ----------------------------     ----------------------------

                                 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              $  11,976   $  105      0.88%    $  15,484     $  222        1.43%   $ 12,107    $  455      3.77%
Loans receivable, gross            97,016    6,438      6.64%       77,347      5,568        7.20%     52,917     4,310      8.15%
Deposits with banks                   593       35      5.84%          535         32        5.92%        396        23      5.86%
Securities                         81,909    2,533      3.09%       50,914      2,453        4.82%     27,674     1,755      6.34%
                                ---------   ------      ----     ---------     ------        ----    --------    ------      ----
    Total interest earning
      assets                      191,494    9,111      4.76%      144,280      8,275        5.74%     93,094     6,543      7.03%
Cash and due from banks             7,837                            6,435                              4,113
Allowance for loan losses          (1,256)                          (1,036)                              (713)
Other assets                        3,144                            2,824                              2,206
                                ---------                        ---------                           --------
Total Assets                    $ 201,219                        $ 152,503                           $ 98,700
                                =========                        =========                           ========

Interest bearing liabilities:
Interest bearing demand         $  47,581   $  553      1.16%    $  42,274     $  796        1.88%   $ 27,295    $  778      2.85%
Money market                       42,921      661      1.54%       27,322        707        2.59%      9,368       339      3.62%
Savings                            18,232      116      0.64%       15,247        209        1.37%     10,605       274      2.58%
Time                               51,542    1,282      2.49%       35,279      1,077        3.05%     26,487     1,312      4.96%
                                ---------   ------      ----     ---------     ------        ----    --------    ------      ----
    Total interest bearing
      liabilities                 160,276    2,612      1.63%      120,122      2,789        2.32%     73,755     2,703      3.67%
Non-interest bearing demand        25,554                           21,727                             15,893
Other liabilities                     488                              386                                361
Shareholders' equity               14,901                           10,268                              8,691
                                ---------                        ---------                           --------
Total liabilities and
shareholders' equity            $ 201,219                        $ 152,503                           $ 98,700
                                =========                        =========                           ========

Net interest income                         $6,499                             $5,486                            $3,840
                                            ======                             ======                            ======

Net interest rate spread(1)                             3.13%                                3.42%                           3.36%

Net interest margin(2)                                  3.39%                                3.80%                           4.12%
</TABLE>

----------
(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.


                                       17
<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, 2003             Year ended December 2002
                                                              Compared to                             Compared to
                                                     Year ended December 31, 2002             Year ended December 31, 2001
                                                 ------------------------------------      ----------------------------------

                                                  Increase (Decrease)                     Increase (Decrease)
                                                   Due to Change in:                        Due to Change in:
                                                  -------------------        Total        -------------------         Total
                                                                            Increase                                 Increase
                                                  Volume        Rate       (Decrease)      Volume        Rate       (Decrease)
                                                 -------       -------     ----------      ------      -------      ---------
<S>                                              <C>           <C>           <C>           <C>         <C>           <C>
(in thousands)
Interest Income:
  Loans                                          $ 1,378       $  (508)      $   870       $1,807      $  (549)      $ 1,258
  Securities                                       1,157        (1,077)           80        1,199         (501)          698
  Other interest-bearing deposits                      3            --             3            9           --             9
  Federal funds sold                                 (43)          (74)         (117)         102         (335)         (233)
                                                 -----------------------------------       ---------------------------------
   Total interest-earning assets                   2,495        (1,659)          836        3,117       (1,385)        1,732

Interest Expense:
  Interest-bearing checking                           91          (334)         (243)         337         (319)           18
  Savings deposits                                    35          (128)          (93)          93         (158)          (65)
  Money market deposits                              308          (354)          (46)         489         (121)          368
  Time deposits                                      431          (226)          205          358         (593)         (235)
                                                 -----------------------------------       ---------------------------------
   Total interest-bearing liabilities                865        (1,042)         (177)       1,277       (1,191)           86
                                                 -----------------------------------       ---------------------------------
Net interest income                              $ 1,630       $  (617)      $ 1,013       $1,840      $  (194)      $ 1,646
                                                 ===================================       =================================
</TABLE>

Provision for Loan Losses

      For the year ended December 31, 2003, Monmouth Community Bank's provision
for loan losses was $150 thousand, as compared to $373 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 $780 thousand for the year ended December 31,
2003, as compared to $661 thousand for the year ended December 31, 2002, an
increase of $119 thousand, or 18%. The increase was due primarily to service
charges on bank accounts which were $656 thousand for the year ended December
31, 2003, as compared to $438 thousand for the prior year, an increase of $218
thousand, or 50%. In addition, Monmouth Community Bank generated $35 thousand in
fees from GMAC which, as part of a strategic partnership that commenced at the
beginning of 2003, provides residential mortgage products and services to


                                       18
<PAGE>

customers of Monmouth Community Bank. However, as a direct result of Monmouth
Community Bank switching from a residential mortgage provider to one that is a
true referral source in 2003, gains from the sale of loans held for sale
declined to $13 thousand in 2003 from $64 thousand in 2002. Gains on the sale of
available for sale securities were $76 thousand in 2003 as compared to $159
thousand in 2002.

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, 2003 was $6.3
million, as compared to non-interest expense of $4.9 million for the year ended
December 31, 2002. This increase was due to expenses incurred to support the
general growth of Monmouth Community Bank. During 2003, Monmouth Community Bank
opened one new branch. The Route 33 Neptune branch was opened in February of
2003.

For the years ended December 31, 2002 and 2001

Net Interest Income

      Net interest income of Monmouth Community Bank was $5.5 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, $5.6 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 average total
deposits of $89.6 million for the year ended December 31, 2001, 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 3.80% 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.


                                       19
<PAGE>

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 $661 thousand for the year ended December 31,
2002, as compared to $440 thousand for the year ended December 31, 2001, an
increase of $221 thousand, or 50%. 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 accounts
were $438 thousand for the year ended December 31, 2002, as compared to $354
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.

Financial Condition

Securities Portfolio

      At December 31, 2003, 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 $15.1 million at December 31, 2003, represented a
decrease of $10.4 million over the year ended December 31, 2002 total of $25.5
million. Securities available-for-sale had a market value of $68.2 million at
December 31, 2003, representing an increase of $23.4 million over the December
31, 2002 total of $44.8 million. This increase was the result of the general
balance sheet growth that occurred during 2003 and that virtually all investment
purchases made during 2003 occurred in the available for sale portfolio.


                                       20
<PAGE>

The following table summarizes the maturity and weighted average yields in each
of Monmouth Community Bank's securities portfolios at December 31, 2003:

<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                            $       --      $       82       $    6,863       $    3,624       $   10,569
   Weighted average yield                            --            7.57%            4.04%            4.18%            4.12%
Obligations of U.S. Government agencies
   Amortized cost                                    --           4,510               --               --            4,510
   Weighted average yield                            --            3.62%              --               --             3.62%
                                             -----------------------------------------------------------------------------
Total securities held to maturity
   Amortized cost                            $       --      $    4,592       $    6,863       $    3,624       $   15,079
   Weighted average yield                            --            3.69%            4.04%            4.18%            3.97%
                                             =============================================================================

Securities available for sale:

Mortgage-backed securities
   Amortized cost                            $       --      $    9,248       $   34,170       $       --       $   43,418
   Weighted average yield                            --            2.59%            3.28%              --             3.14%
Obligations of U.S. Government agencies
   Amortized cost                                    --          21,826            2,952               --           24,778
   Weighted average yield                            --            3.03%            3.50%              --             3.08%
                                             -----------------------------------------------------------------------------
Total securities available for sale
   Amortized cost                            $       --      $   31,074       $   37,122       $       --       $   68,196
   Weighted average yield                            --            2.90%            3.30%              --             3.12%
                                             =============================================================================
</TABLE>

      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. This increase was the result
of the general balance sheet growth that occurred during 2002 and that virtually
all investment purchases made during 2002 occurred in the available for sale
portfolio.

Investment Policy

      The 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


                                       21
<PAGE>

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 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.

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 and related entities. Executive
officers with lending authority and loan officers have various individual and
collective loan approval authority 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
(or from a borrowing relationship with aggregate debt in excess of $250,000)
presents a complete analysis of the proposed credit accommodation to the members
of the loan committee for their consideration. The analysis includes, among
other things, the following:


                                       22
<PAGE>

      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 requested credit
            accommodation.

      A similar analysis is prepared for those loan requests aggregating in
excess of $100,000 but less than the $250,000 threshold. The senior loan officer
and President or Chief Executive Officer review this analysis for approval
consideration.

      Monmouth Community Bank utilizes a comprehensive approach to loan
underwriting. The primary quantitative determinants in the underwriting process
include overall creditworthiness of the borrower, cash flow from operations in
relation to debt service requirements and the ability to secure the credit
accommodation with collateral of adequate value.

      For commercial loans, the collateral 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 (based upon an acceptable advance rate). Commercial
mortgage loans are secured by the underlying property with an acceptable equity
margin. Personal guarantees from the principals of a business are generally
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. 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 loan credit accommodations include home equity loans,
home equity lines of credit, direct automobile loans and secured and unsecured
personal loans. Underwriting criteria for home equity products include an
acceptable independent credit score for the borrower(s), a loan to value not to
exceed 75% and a debt service to income ratio not to exceed 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


                                       23
<PAGE>

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 securing the loan depreciate in value.

      The granting of a loan, by definition, contains inherent 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 loaned 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, 2003, 2002, 2001, 2000 and 1999.

<TABLE>
<CAPTION>
(in thousands)                          2003          2002           2001         2000          1999
                                        ----          ----           ----         ----          ----
------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>           <C>           <C>           <C>
Commercial and industrial loans       $ 20,380      $ 17,060      $ 17,396      $ 11,913      $  8,672
Real estate loans - commercial          77,799        57,079        32,776        25,355        14,936
Home equity and second mortgages        17,734        14,816        11,182         9,279         4,668
Consumer loans                           1,270         1,601         1,113         1,047           607
------------------------------------------------------------------------------------------------------
                                       117,183        90,556        62,467        47,594        28,883
Less allowance for loan losses           1,378         1,228           855           650           359
------------------------------------------------------------------------------------------------------
Net loans                              115,805        89,328      $ 61,612      $ 46,944      $ 28,524
======================================================================================================
Loans held for sale                   $      0      $    302      $    269      $      0      $      0
</TABLE>

      For the year ended December 31, 2003, net loans increased by $26.5 million
to $115.8 million, which represents a 30% increase from the $89.3 million at
December 31, 2002.

      For the year ended December 31, 2003, commercial and industrial loans and
commercial real estate loans increased by $24.1 million to $98.2 million, which
represents a 33% increase from the $74.1 million at December 31, 2002.

      During 2003, home equity and second mortgages increased by $2.9 million to
$17.7 million at December 31, 2003, which represents a 20% increase from the
$14.8 million at December 31, 2002.


                                       24
<PAGE>

      The following table summarizes the maturities of loans by category and
whether such loans are at a fixed or floating rate at December 31, 2003.

<TABLE>
<CAPTION>
                                                                                         December 31, 2003
                                                        ----------------------------------------------------------------------------

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                                          $    667     $    667       $  2,129      $    795      $    397    $  4,655
    Adjustable rate                                       20,954           --             --            --            --      20,954

All other loans secured by real estate
    Fixed rate                                             3,804        8,523         29,959        14,133            --      56,419
    Adjustable rate                                       13,505           --             --            --            --      13,505

All other loans
    Fixed rate                                             2,686        4,764          3,055         1,726            26      12,257
    Adjustable rate                                        9,393           --             --            --            --       9,393
                                                        ----------------------------------------------------------------------------
Total                                                   $ 51,009     $ 13,954       $ 35,143      $ 16,654      $    423    $117,183
                                                        ============================================================================
</TABLE>

Non-Performing Loans

      A loan is considered to be non-performing if it (i) is on a non-accrual
basis, (ii) is past due ninety (90) days or more and still accruing interest, or
(iii) has been renegotiated to provide a reduction or deferral of interest or
principal because of a weakening in the financial position of the borrower. 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, 2003 totaling $40 thousand and one at
December 31, 2002 totaling $43 thousand.

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, 2003 and 2002, 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, 2003 and 2002 was $1.9 million and $2.9 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


                                       25
<PAGE>

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 an analysis. This analysis 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 credit
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 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 2003 as compared to 2002.

      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, 2003 and 2002, 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 five 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.


                                       26
<PAGE>

      The provision for loan losses was $150 thousand for 2003, as compared to
$373 thousand for 2002. The 2003 provision was required based upon credit
characteristics of the net loan growth of 30% for the year ended December 31,
2003. The provision for loan losses of $373 thousand for the year ended December
31, 2002 was in response to net loan growth of 45% during such period. There
were no significant changes in loan portfolio composition, asset quality, or
credit delinquencies that impacted the allowance for loan losses during the year
ended December 31, 2003, as compared to the same period in 2002.

      Loan portfolio composition remained consistent in 2003 as compared to 2002
with commercial loans comprising 84% of total loans outstanding at December 31,
2003 as compared to 82% at December 31, 2002. In addition, Monmouth Community
Bank had one non-accrual or impaired loan at December 31, 2003 totaling $40
thousand as compared to one totaling $43 thousand at December 31, 2002. Gross
loans outstanding totaled $117.2 million at December 31, 2003, as compared to
$90.9 million at December 31, 2002, an increase of $26.3 million, or 29%. The
allowance for loan losses increased to $1.38 million, or 1.18%, at December 31,
2003, as compared to $1.23 million, or 1.36%, at December 31, 2002.


                                       27
<PAGE>

      The following table summarizes Monmouth Community Bank's allowance for
loan losses for the years ended December 31, 2003,2002, 2001, 2000 and 1999.

<TABLE>
<CAPTION>
(in thousands)                                               2003          2002           2001          2000          1999
                                                           -------       -------        -------        -------       -------

----------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>           <C>            <C>            <C>           <C>
Balance, beginning of year                                 $ 1,228       $   855        $   650        $   359       $    85
Provision charged to expense                                   150           373            211            291           334
Charge-offs                                                      0            (1)            (6)             0           (60)
Recoveries                                                       0             1              0              0             0
----------------------------------------------------------------------------------------------------------------------------
Balance, end of year                                       $ 1,378       $ 1,228        $   855        $   650       $   359
============================================================================================================================
Ratio of allowance for loan losses to total loans             1.18%         1.36%          1.37%          1.37%         1.24%
Ratio of net charge-offs to average loans outstanding         0.00%         0.00%          0.00%          0.00%         0.16%
</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):

<TABLE>
<CAPTION>
                             December 31, 2003                      December 31, 2002                    December 31, 2001
                     ---------------------------------     ---------------------------------     ---------------------------------
                                Percent of     Percent                Percent of     Percent                Percent of     Percent
                                allowance     of loans                allowance     of loans                allowance     of loans
                                 to total     to total                 to total     to total                 to total     to total
                     Amount     allowance      loans       Amount     allowance      loans       Amount     allowance      loans
                     ---------------------------------     ---------------------------------     ---------------------------------
<S>                  <C>          <C>          <C>        <C>          <C>           <C>           <C>        <C>           <C>
Commercial
  loans              $ 1,151       83.5%       83.8%      $ 1,007       82.0%         81.9%        $709        82.9%         80.3%

Consumer
  loans                  227       16.5%       16.2%          221       18.0%         18.1%         146        17.1%         19.7%
                     -------      -----        -----      -------      -----         -----         ----       -----         -----

Total                $ 1,378      100.0%       100.0%     $ 1,228      100.0%        100.0%        $855       100.0%        100.0%
                     =======      =====        =====      =======      =====         =====         ====       =====         =====

<CAPTION>

                            December 31, 2000                      December 31, 1999
                     ---------------------------------     ---------------------------------
                                Percent of     Percent                Percent of     Percent
                                allowance     of loans                allowance     of loans
                                 to total     to total                 to total     to total
                     Amount     allowance      loans       Amount     allowance       loans
                     ---------------------------------     ---------------------------------
<S>                   <C>         <C>          <C>          <C>         <C>          <C>
Commercial
  loans               $523         80.5%        78.3%       $301         83.8%        81.7%

Consumer
  loans                127         19.5%        21.7%         58         16.2%        18.3%
                      ----        -----        -----        ----        -----        -----

Total                 $650        100.0%       100.0%       $359        100.0%       100.0%
                      ====        =====        =====        ====        =====        =====
</TABLE>


                                       28
<PAGE>

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 with balances in excess of $100 thousand.

      Total deposits were $207.2 million at December 31, 2003, an increase of
$43.2 million, or 26%, from the year ended December 31, 2002 total of $164.0
million. Core deposits as a percentage of total deposits were 78% at December
31, 2003 as compared to 84% at December 31, 2002.

      The following table represents categories of Monmouth Community Bank's
deposits at December 31, 2003 and 2002.

<TABLE>
<CAPTION>
                                                                 December 31,       December 31,      December 31,
            (in thousands)                                           2003               2002              2001
                                                                 ------------       ------------      ------------
<S>                                                                <C>               <C>               <C>
            Demand deposits, non-interest bearing                  $ 26,818          $ 22,581          $ 17,215

            Savings, N.O.W. and money market accounts               118,265            98,328            63,603

            Certificates of deposit of less than $100,000            17,449            16,863            12,308

            Certificates of deposit of $100,000 or more              44,702            26,235            15,766
                                                                   --------          --------          --------

            Total deposits                                         $207,234          $164,007          $108,892
                                                                   ========          ========          ========
</TABLE>

      The following table represents categories of Monmouth Community Bank's
average deposit balances and weighted average interest rates for the years ended
December 31, 2003 and 2002.
<TABLE>
<CAPTION>
                                                    December 31,               December 31,             December 31,
(in thousands)                                          2003                       2002                     2001
                                                    ------------               ------------             ------------

                                                             Weighted                 Weighted                 Weighted
                                                 Average     Average       Average    Average       Average    Average
                                                 Balance       Rate        Balance      Rate        Balance      Rate
                                                 -------     --------      -------    --------      -------    --------
<S>                                              <C>           <C>        <C>           <C>        <C>           <C>
Demand deposits, non-interest bearing            $ 25,554        --%      $ 21,727        --%      $ 15,893        --%

Savings, N.O.W. and money market accounts         108,734      1.22%        84,843      2.02%        47,268      2.94%

Certificates of deposit of less than $100,000      17,306      2.95%        13,572      3.43%        11,144      5.12%

Certificates of deposit of $100,000 or more        34,236      2.22%        21,707      2.82%        15,343      4.84%
                                                 --------      ----       --------      ----       --------      ----

Total deposits                                   $185,830      1.41%      $141,849      1.97%      $ 89,648      3.02%
                                                 ========      ====       ========      ====       ========      ====
</TABLE>

      At December 31, 2003, Monmouth Community Bank had $62.2 million in time
deposits maturing as follows (in thousands):

<TABLE>
<CAPTION>
                                    3 months       Over 3 to     Over 1 year      Over 3
                                     or less       12 months      to 3 years       years          Total
                                    ---------      ---------     -----------     ---------      ---------
<S>                                 <C>            <C>            <C>            <C>            <C>
Less than $100,000                  $   5,370      $   7,666      $   3,370      $   1,043      $  17,449

Equal to or more than $100,000         17,179         24,089          3,114            320         44,702
                                    ---------      ---------      ---------      ---------      ---------
Total                               $  22,549      $  31,755      $   6,484      $   1,363      $  62,151
                                    =========      =========      =========      =========      =========
</TABLE>


                                       29
<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 2003 and 2002, Monmouth
Community Bank maintained levels of short-term assets sufficient to maintain
ample liquidity. During 2003, Monmouth Community Bank continued to build a large
secondary source of liquidity known as Investment Securities Available for Sale.
The market value of that portfolio was $68.2 million at December 31, 2003 and
$44.8 million at December 31, 2002.

      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
contingency purposes. 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
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


                                       30
<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, 2003, Monmouth Community Bank met all capital
adequacy requirements to which it is subject.

      As of December 31, 2003, the most recent notification from the OCC
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, 2003 and
December 31, 2002 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,
                                     --------------------        --------------------         --------------------
                                       2003         2002          2003          2002           2003          2002
                                     -------       ------        ------         -----         ------        ------
<S>                                    <C>          <C>           <C>          <C>            <C>          <C>
Monmouth Community Bank                6.86%        8.12%         11.01%       14.19%         12.01%       15.37%

"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>

Guaranteed Preferred Beneficial Interest in the Holding Company's Subordinated
Debt

      In March 2004, MCBK Capital Trust I, a newly formed Delaware statutory
business trust and a wholly-owned, unconsolidated subsidiary of the holding
company, issued an aggregate of $5.0 million of trust preferred securities to
ALESCO Preferred Funding III, a pooled investment vehicle. Sandler O'Neill &
Partners, L.P. acted as placement agent in connection with the offering of the
trust preferred securities. The securities issued by MCBK Capital Trust I are
fully guaranteed by the holding company with respect to distributions and
amounts payable upon liquidation, redemption or repayment. These securities have
a floating interest rate equal to the three month LIBOR plus 285 basis points,
which resets quarterly, with an initial interest rate of 3.96%. The securities
mature on April 7, 2034 and may be called at par by the holding company any time
after April 7, 2009. These securities were placed in a private transaction
exempted from registration under the Securities Act of 1933, as amended.


                                       31
<PAGE>

      The entire proceeds to MCBK Capital Trust I from the sale of the trust
preferred securities were used by MCBK Capital Trust I in order to purchase
floating rate junior subordinated debt securities (the "Subordinated
Debentures") from the holding company. The Subordinated Debentures bear a
variable interest rate equal to LIBOR plus 2.85% (1.11% + 2.85% = 3.96% at March
12, 2004). Although the Subordinated Debentures are treated as debt of the
holding company, they currently qualify as Tier I Capital investments, subject
to the 25% limitation under risk-based capital guidelines of the Federal
Reserve. The portion of the trust preferred securities that exceeds this
limitation qualifies as Tier II Capital of the holding company. At March 25,
2004, the $5.0 million of the trust preferred securities qualified for treatment
as Tier I Capital. The holding company intends to use the proceeds it received
from the Subordinated Debentures to support the general balance sheet growth of
Monmouth Community Bank and to ensure that Monmouth Community Bank maintains the
required regulatory capital ratios.

      In July 2003, the Board of Governors of the Federal Reserve System
instructed bank holding companies to continue to include the trust preferred
securities in their Tier I capital for regulatory capital purposes until notice
is given to the contrary. There can be no assurance that the Federal Reserve
will continue to allow institutions to include trust preferred securities in
Tier I capital for regulatory capital purposes. Assuming the Company will not be
allowed to include the $5.0 million in trust preferred securities issued by the
subsidiary trust in Tier I capital, the Company would remain "well capitalized."

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.

Recent Accounting Pronouncements

      Financial Accounting Standards Board ("FASB") Interpretation No. 46,
Consolidation of Variable Interest Entities ("FIN 46"), was issued in January
2003. FIN 46 applies immediately to enterprises that hold a variable interest in
variable interest entities created after January 31, 2003. FIN 46 provides
guidance on the identification of entities controlled through means other than
voting rights. Further, FIN 46 specifies how a business enterprise should
evaluate its interest in a variable interest entity to determine whether to
consolidate that entity. A variable interest entity must be consolidated by its
primary beneficiary if the entity does not effectively disperse risks among the
parties involved. The adoption of FIN 46 did not have an impact the holding
company's consolidated financial statements, however, the holding company will
not be


                                       32
<PAGE>

permitted to consolidate the subsidiary trust created in the issuance of trust
preferred securities. The deconsolidation of a subsidiary trust results in the
holding company reporting on its statements of condition the Subordinated
Debentures that have been issued from the holding company to the subsidiary
trust.

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.

Item 8A. Controls and Procedures

      As required by Rule 13a-15 under the Exchange Act, as of the end of the
period covered by this Annual Report on Form 10-KSB, 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 has been no significant change in the holding company's
internal controls during the last fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the holding company's internal
control over financial reporting.

      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.


                                       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 27, 2004, 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 27, 2004, 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 May 27, 2004, 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 27, 2004, 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, 2003, the Registrant filed with
the Securities and Exchange Commission the following three Current Reports on
Form 8-K:

      The Registrant filed a Current Report on Form 8-K with the Securities and
Exchange Commission with respect to an event occurring on November 24, 2003.
This Current Report on


                                       34
<PAGE>

Form 8-K, filed pursuant to Item 5 of that Form, reported that the Registrant's
common stock will be included in a newly formed NASDAQ stock index which will be
known as America's Community Bankers NASDAQ Index.

      The Registrant filed a Current Report on Form 8-K with the Securities and
Exchange Commission with respect to an event occurring on November 7, 2003. This
Current Report on Form 8-K, filed pursuant to Item 5 of that Form, reported that
the Board of Directors of the Registrant declared a five-percent stock
distribution payable December 31, 2003 to shareholders of record on December 15,
2003.

      The Registrant filed a Current Report on Form 8-K with the Securities and
Exchange Commission with respect to an event occurring on November 7, 2003. This
Current Report on Form 8-K, filed pursuant to Items 7 and 12 of that Form,
reported that the Registrant had sent a letter to its shareholders of record
discussing its results of operations and overall financial performance for the
quarter ended September 30, 2003.

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

Item 14. Principal Accounting Fees and Services

      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 27, 2004, under the caption "Principal Accounting Fees and Services"
and is incorporated herein by reference.


                                       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 26, 2004                     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 26, 2004
---------------------------    Directors and Chief Executive
     James S. Vaccaro          Officer (Principal Executive
                               Officer)


                                       36
<PAGE>


  /s/ Anthony Giordano, III         Executive Vice President,     March 26, 2004
-----------------------------       Chief Financial Officer,
    Anthony Giordano, III           Treasurer and Secretary
                                    (Principal Financial and
                                    Accounting Officer)


   /s/ Richard O. Lindsey           President and Director        March 26, 2004
-----------------------------
     Richard O. Lindsey


   /s/ John A. Brockriede                Director                 March 26, 2004
-----------------------------
     John A. Brockriede


     /s/ James G. Aaron                  Director                 March 26, 2004
-----------------------------
       James G. Aaron


     /s/ Mark R. Aikins                  Director                 March 26, 2004
-----------------------------
       Mark R. Aikins


  /s/ Nicholas A. Alexander              Director                 March 26, 2004
-----------------------------
    Nicholas A. Alexander


     /s/ John F. McCann                  Director                 March 26, 2004
-----------------------------
       John F. McCann


  /s/ Harold M. Miller, Jr.              Director                 March 26, 2004
-----------------------------
    Harold M. Miller, Jr.


     /s/ Carmen M. Penta                 Director                 March 26, 2004
-----------------------------
       Carmen M. Penta


      /s/ Mark G. Solow                  Director                 March 26, 2004
-----------------------------
        Mark G. Solow


                                       37
<PAGE>

                           MONMOUTH COMMUNITY BANCORP
                                 AND SUBSIDIARY

                        Consolidated Financial Statements

                                    Contents

                                December 31, 2003

<TABLE>
<S>                                                                                           <C>
Independent Auditors' Report .................................................................F-2
Consolidated Balance Sheets at December 31, 2003 and 2002.....................................F-3
Consolidated Statements of Income for the years ended December 31, 2003 and 2002..............F-4
Consolidated Statements of Changes in Shareholders' Equity for the years
     ended December 31, 2003 and 2002.........................................................F-5
Consolidated Statement of Cash Flows for the years ended
     December 31, 2003 and 2002...............................................................F-6
Notes to Consolidated Financial Statements....................................................F-7
</TABLE>


                                      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, 2003 and 2002, 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, 2003 and 2002, 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
February 2, 2004


                                      F-2
<PAGE>

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2003 AND 2002
                (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
ASSETS                                                                      2003            2002
                                                                         ---------       ---------
<S>                                                                      <C>             <C>
Cash and due from banks                                                  $   9,689       $   8,880
Federal funds sold                                                           4,675           7,500
Investment securities available for sale, at market value                   68,196          44,791
Investment securities held to maturity (market value of $15,278 and
     $25,973 at December 31, 2003 and 2002, respectively)                   15,079          25,539
Loans held for sale                                                             --             302
Loans, net                                                                 115,805          89,328
Premises and equipment                                                       2,171           1,638
Other assets                                                                 2,037           1,559
Due from broker                                                              4,961              --
                                                                         ---------       ---------

          Total assets                                                   $ 222,613       $ 179,537
                                                                         =========       =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
     Non-interest bearing                                                $  26,818       $  22,581
     Interest bearing                                                      180,416         141,426
                                                                         ---------       ---------
                                                                           207,234         164,007
Accrued expenses and other liabilities                                         480             599
                                                                         ---------       ---------

          Total liabilities                                                207,714         164,606
                                                                         ---------       ---------

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 1,550,530 and
     1,550,470 shares at December 31, 2003 and
     2002, respectively                                                         16              15
Additional paid-in capital                                                  15,241          14,767
Accumulated other comprehensive (loss) income                                 (358)            149
                                                                         ---------       ---------
          Total shareholders' equity                                        14,899          14,931

                                                                         ---------       ---------
          Total liabilities and shareholders' equity                     $ 222,613       $ 179,537
                                                                         =========       =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                      2003             2002
                                                                   ----------      ----------
<S>                                                                <C>             <C>
Interest and dividend income:
     Interest and fees on loans                                    $    6,438      $    5,568
     Interest on securities available for sale                          1,791             895
     Interest on securities held to maturity                              742           1,558
     Interest on federal funds sold and due from banks                    140             254
                                                                   ----------      ----------
          Total interest income                                         9,111           8,275

Interest expense - interest on deposits                                 2,612           2,789
                                                                   ----------      ----------
          Net interest income                                           6,499           5,486

Provision for loan losses                                                 150             373
                                                                   ----------      ----------
          Net interest income after provision for loan losses           6,349           5,113
                                                                   ----------      ----------

Other income:
     Service charges on deposit accounts                                  656             438
     Gain on the sale of available for sale securities                     76             159
     Gain on the sale of loans held for sale                               13              64
     Other service charges, commissions and fees                           35              --
                                                                   ----------      ----------
          Total other income                                              780             661
                                                                   ----------      ----------

Operating expenses:
     Salaries and employee benefits                                     3,185           2,473
     Occupancy expenses                                                   792             563
     Outside service fees                                                 500             404
     Data processing fees                                                 485             418
     Professional and application fees                                    301             236
     Furniture, fixtures and equipment                                    273             198
     Advertising and public relations                                     182             125
     Stationery, supplies and printing                                    172             173
     Telephone and postage                                                126             113
     Insurance                                                             77              68
     Other expenses                                                       232             149
                                                                   ----------      ----------
          Total other expenses                                          6,325           4,920
                                                                   ----------      ----------

Income before provision for income taxes                                  804             854

Income taxes                                                              322              70
                                                                   ----------      ----------

     Net income                                                    $      482      $      784
                                                                   ==========      ==========

Basic earnings per share                                           $      .31      $      .65
                                                                   ==========      ==========
Diluted earnings per share                                         $      .30      $      .64
                                                                   ==========      ==========

Average basic shares outstanding                                    1,550,490       1,208,530
                                                                   ==========      ==========
Average diluted shares outstanding                                  1,597,484       1,230,371
                                                                   ==========      ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                Accumulated
                                                               Additional          other
                                                  Common        paid-in        comprehensive      Accumulated
                                                   stock        capital        Income (loss)        deficit             Total
-------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>            <C>               <C>               <C>               <C>
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
-------------------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net income                                             --             --                --               482               482
Unrealized loss on securities
available for sale, net of tax of $213                 --             --              (461)               --              (461)

Less reclassification adjustment for
gains included in income, net of tax of $30            --             --               (46)               --               (46)
                                                                                                                      ---------
Total comprehensive (loss)                             --             --                --                --               (25)
Issuance of 5% stock distribution -
73,545 shares                                           1            481                --              (482)               --
Fractional shares paid in cash                         --             (8)               --                --                (8)
Exercise of stock options - 60 shares                  --              1                --                --                 1
-------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2003                     $     16       $ 15,241          $   (358)         $     --          $ 14,899
===============================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                         2003            2002
                                                                                       --------       --------
<S>                                                                                    <C>            <C>
Cash flows from operating activities:
     Net income                                                                        $    482       $    784
Adjustments to reconcile net income to net cash provided by operating activities:
     Deferred taxes                                                                         (50)          (121)
     Provision for loan losses                                                              150            373
     Depreciation and amortization                                                          417            268
     Gain on the sale of available for sale securities                                      (76)          (159)
     Increase in due from broker                                                         (4,961)            --
     Gain on the sale of loans held for sale                                                (13)           (64)
     Origination of loans held for sale                                                  (1,605)        (8,767)
     Proceeds from sale of loans held for sale                                            1,920          8,798
     Net premium amortization on held to maturity securities                                108            119
     Net premium amortization on available for sale securities                              864            145
      Increase in other assets                                                             (185)          (261)
      (Decrease) increase in accrued expenses and other liabilities                         (19)           259
                                                                                       --------       --------
          Net cash used in  operating activities                                         (2,968)         1,374
                                                                                       --------       --------

Cash flows from investing activities:
     Purchase of investment securities held to maturity                                  (9,963)       (17,325)
     Purchase of investment securities available for sale                               (85,995)       (39,212)
     Maturities of and paydowns on investment securities held to maturity                20,315         18,956
     Maturities of and paydowns on investment securities available for sale              43,082          1,188
     Proceeds from sale of investment securities available for sale                      17,870          6,105
     Net increase in loans                                                              (26,627)       (28,089)
     Purchases of premises and equipment, net                                              (950)          (606)
                                                                                       --------       --------
          Net cash used in investment activities                                        (42,268)       (58,983)
                                                                                       --------       --------

Cash flows from financing activities:
     Net increase in non-interest bearing deposits                                        4,237          5,366
     Net increase in interest bearing deposits                                           38,990         49,749
     Issuance of common stock, net                                                            1          5,178
     Cash paid for fractional shares                                                         (8)            (2)
                                                                                       --------       --------
          Net cash provided by financing activities                                      43,220         60,291
                                                                                       --------       --------

          (Decrease) increase  in cash and cash equivalents                              (2,016)         2,682

Cash and cash equivalents at beginning of period                                         16,380         13,698
                                                                                       --------       --------
Cash and cash equivalents at end of period                                             $ 14,364       $ 16,380
                                                                                       ========       ========

Cash paid during the period for:
     Interest                                                                          $  2,616       $  2,803
                                                                                       ========       ========
     Income taxes                                                                      $    361       $      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 that commenced on July 23, 2002,
422,632 shares of Bancorp common stock were issued at $12.70 per share (these
amounts have been adjusted to give effect to the subsequent December 31, 2003
and 2002 stock distributions). The offering closed on November 29, 2002.

Bancorp effected a 5% stock distribution to the shareholders of record as of
December 15, 2003, which resulted in 1,550,530 authorized and outstanding shares
of Bancorp common stock as of December 31, 2003. Bancorp effected a 5% stock
distribution to the shareholders of record as of December 6, 2002, which
resulted in 1,476,927 authorized and outstanding shares of Bancorp common stock
as of December 31, 2002.

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 specific identification method 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 2003 was calculated by dividing the
net income of $482,000 by the weighted average number of shares outstanding of
1,550,490 and 1,597,484, respectively. Stock options to purchase 75,069 shares
of Bancorp's common stock at an average exercise price of $23.81 were excluded
from the diluted net income per share calculation because they were
anti-dilutive. 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 1,208,531 and 1,230,371, respectively. Stock options to purchase
27,166 shares of Bancorp's common stock at an average exercise price of $14.01
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.


                                      F-9
<PAGE>

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 2003 and 2002 would have decreased to the following pro forma
amounts:

                                                           2003          2002
===============================================================================
Net Income:
     As reported                                         $482,000      $784,000
Deduct: Total stock-based employee compensation
        expense determined under the fair value
        based method for all awards, net of related
        tax effects                                       111,000       108,000
                                                         --------      --------
     Pro forma                                           $371,000      $676,000

Net income per share - basic:
     As reported                                         $   0.31      $   0.65
     Pro forma                                           $   0.24      $   0.56

Net income per share - diluted:
     As reported                                         $   0.30      $   0.64
     Pro forma                                           $   0.23      $   0.55

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 used for 2003 grants: dividend yield of 0%, expected volatility of
28.12%; risk free interest rate of 3.28% and 2.91% for employee and director
grants, respectively; and expected lives of four years. 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.

(2) Cash and Due from Banks

The Company is required to maintain reserve balances with the Federal Reserve
Bank. As of December 31, 2003, the Company had a reserve balance of
approximately $3.0 million. The Company was not required to maintain any other
reserve balances.


                                      F-10
<PAGE>

(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, 2003 and 2002 are as follows (in thousands):

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                      2003
----------------------------------------------------------------------------------------------------------------------------
                                                                                   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                               $ 4,510          $     8          $     8          $ 4,510
Mortgage-backed securities of U.S. Government
     sponsored agencies                                           10,569              199               --           10,768
----------------------------------------------------------------------------------------------------------------------------
Total                                                            $15,079          $   207          $     8          $15,278
============================================================================================================================
Investment securities available for sale:
U.S. Treasury securities and obligations of U.S.
     Government sponsored agencies                               $25,064          $     2          $   288          $24,778
Mortgage-backed securities of U.S. Government
     sponsored agencies                                           43,733               48              363           43,418
----------------------------------------------------------------------------------------------------------------------------
Total                                                            $68,797          $    50          $   651          $68,196
============================================================================================================================

<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
============================================================================================================================
</TABLE>

The amortized cost and estimated market value of investment securities held to
maturity and debt securities available for sale at December 31, 2003 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.


                                      F-11
<PAGE>

During 2003, securities available for sale with a carrying value of $17.9
million were sold realizing gains totaling $76 thousand. During 2002, securities
available for sale with a carrying value of $5.9 million were sold realizing
gains totaling $159 thousand.

                                                                      Estimated
                                                       Amortized        market
                                                          cost          value
--------------------------------------------------------------------------------
Investment securities held to maturity:
Due after one year through five years                   $ 4,592        $ 4,595
Due after fifth year through tenth year                   6,863          6,929
Due after tenth year                                      3,624          3,754
--------------------------------------------------------------------------------
Total                                                   $15,079        $15,278
================================================================================
Investment securities available for sale:
Due after one year through five years                   $31,398        $31,074
Due after fifth year through tenth year                  37,399         37,122
Due after tenth year                                         --             --
--------------------------------------------------------------------------------
Total                                                   $68,797        $68,196
================================================================================

At December 31, 2003 and 2002, there were $56,917,000 and $51,760,000,
respectively, of investment securities pledged to secure public funds or for any
other purposes required by law.

Gross unrealized losses on both securities held to maturity and securities
available for sale and their related estimated fair values, aggregated by
security category and length of time that individual securities have been in a
continuous unrealized loss position, at December 31, 2003, were as follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                              Less than 12 months         12 months or more                 Total
                                           --------------------------------------------------------------------------------
                                                         Estimated                     Estimated                  Estimated
         Investment securities              Unrealized     market       Unrealized       market     Unrealized      market
           Held to maturity                   losses       value          losses         value        losses        value
---------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>          <C>          <C>            <C>            <C>          <C>
U.S. Government agencies                      $     8      $ 1,992      $      --      $      --      $     8      $ 1,992
---------------------------------------------------------------------------------------------------------------------------
Total                                         $     8      $ 1,992      $      --      $      --      $     8      $ 1,992
===========================================================================================================================

<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                              Less than 12 months         12 months or more                 Total
                                           --------------------------------------------------------------------------------
                                                          Estimated                    Estimated                  Estimated
        Investment securities               Unrealized      market     Unrealized        market     Unrealized     market
         Available for sale                   losses        value        losses          value         losses       value
---------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>          <C>          <C>            <C>            <C>          <C>
U.S. Government agencies                      $   288      $24,778      $      --      $      --      $   288      $24,778
Mortgage-backed securities                    $   363      $33,379             --             --      $   363      $33,379
---------------------------------------------------------------------------------------------------------------------------
Total                                         $   651      $58,157      $      --      $      --      $   651      $58,157
===========================================================================================================================
</TABLE>

U.S. Government agencies - The unrealized losses in U.S. Government agencies
were caused by interest rate increases. Since the Company has the ability and
intent to hold these securities until a market price recovery or maturity, these
securities are not considered other-than-temporarily impaired.

Mortgage-backed securities - The unrealized losses on mortgage-backed securities
were caused by interest rate increases. Fannie Mae and Freddie Mac guarantee the
contractual cash flows of these securities. Since the decline in estimated
market value is attributable to changes in interest rates and not credit
quality, and because the Bank has the ability and intent to hold these
securities until a market price recovery or maturity, these securities are not
considered other-than-temporarily impaired.


                                      F-12
<PAGE>

(4) Loans

Loans at December 31, 2003 and 2002 are summarized as follows (in thousands):

                                                             2003          2002
--------------------------------------------------------------------------------
Commercial and industrial loans                             $ 20,380    $ 17,060
Real estate loans - commercial                                77,799      57,079
Home equity and second mortgages                              17,734      14,816
Consumer loans                                                 1,270       1,601
--------------------------------------------------------------------------------
                                                             117,183      90,556
Less allowance for loan losses                                 1,378       1,228
--------------------------------------------------------------------------------
Net loans                                                   $115,805    $ 89,328
================================================================================
Loans held for sale                                         $     --    $    302
================================================================================

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.

Activity in the allowance for loan losses for the years ended December 31, 2003
and 2002 is summarized as follows (in thousands):

                                                            2003          2002
--------------------------------------------------------------------------------
Balance, beginning of year                                 $ 1,228      $   855
Provision charged to expense                                   150          373
Charge-offs                                                     --           (1)
Recoveries                                                      --            1
--------------------------------------------------------------------------------
Balance, end of year                                       $ 1,378      $ 1,228
================================================================================
Ratio of allowance for loan losses to total loans             1.18%        1.36%
================================================================================
Ratio of net charge-offs to average loans outstanding         0.00%        0.00%
================================================================================

At December 31, 2003 and 2002, the Company had non-accrual loans totaling
$40,000 and $43,000, respectively, and no impaired loans.

In the ordinary course of business to meet the financial needs of the Company's
customers, the Company is party to financial instruments with off-balance sheet
risk. 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.


                                      F-13
<PAGE>

The contract or notional amount of financial instruments which represent credit
risk at December 31, 2003 and 2002 is as follows (in thousands):

                                                              2003         2002
--------------------------------------------------------------------------------
Standby letters of credit                                   $   590      $   570

Outstanding loan and credit line commitments                $16,202      $16,046
--------------------------------------------------------------------------------

Standby letters of credit are conditional commitments issued by the Company
which guarantee performance by a customer to a third party. The credit risk and
underwriting procedures involved in issuing letters of credit are essentially
the same as that involved in extending loan facilities to customers. All of the
Bank's outstanding standby letters of credit are performance standby letters
within the scope of FASB Interpretation No. 45. These are irrevocable
undertakings by the Bank, as guarantor, to make payments in the event a
specified third party fails to perform under a non-financial contractual
obligation. Most of the Bank's performance standby letters of credit arise in
connection with lending relationships and have terms of one year or less. The
maximum potential future payments the Bank could be required to make equals the
face amount of the letters of credit shown above. The Bank's recognized
liability for performance standby letters of credit was insignificant at
December 31, 2003.

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 any, 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, 2003 and 2002 is summarized as follows
(in thousands):

                                                          2003            2002
--------------------------------------------------------------------------------
Land                                                    $   176         $    --
Buildings and improvements                                  377              --
Leasehold improvements                                    1,407         $ 1,225
Equipment                                                 1,320           1,105
--------------------------------------------------------------------------------
                                                          3,280           2,330
Accumulated depreciation and amortization                (1,109)           (692)
--------------------------------------------------------------------------------
                                                        $ 2,171         $ 1,638
================================================================================

Depreciation and amortization expense amounted to $417,000 and $268,000 in 2003
and 2002, respectively.

(6) Deposits

Interest-bearing deposits at December 31, 2003 and 2002 consist of the following
(in thousands):

                                                          2003            2002
--------------------------------------------------------------------------------
Savings and N.O.W. accounts                             $118,265        $ 98,328
Certificates of deposit less than $100,000                17,449          16,863
Certificates of deposit of $100,000 or more               44,702          26,235
--------------------------------------------------------------------------------
Total                                                   $180,416        $141,426
================================================================================

At December 31, 2003, certificates of deposit mature as follows: 2004-
$54,304,000; 2005- $4,399,000; 2006- $2,086,000 and 2007- $1,362,000.


                                      F-14
<PAGE>

(7) Income Taxes

Components of income tax expense for the years ended December 31, 2003 and 2002
are as follows (in thousands):

                                                          2003            2002
--------------------------------------------------------------------------------
Current income tax expense:
          Federal                                         $ 278           $ 104
          State                                              94              87
--------------------------------------------------------------------------------
                                                            372             191
--------------------------------------------------------------------------------

Deferred income tax expense (benefit)
          Federal                                           (30)            (51)
          State                                             (20)            (70)
--------------------------------------------------------------------------------
                                                            (50)           (121)
--------------------------------------------------------------------------------
                                                          $ 322           $  70
================================================================================

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):

                                                             2003          2002
--------------------------------------------------------------------------------
Federal income tax                                           $ 273        $ 290
State income tax effect, net of Federal tax effect              48           51
Meals and entertainment                                          3            2
Other                                                           (2)           1
--------------------------------------------------------------------------------
                                                               322          344
Change in valuation reserve                                     --         (274)
--------------------------------------------------------------------------------
Provision charged to expense                                 $ 322        $  70
================================================================================

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 2003 and
2002 are as follows (in thousands):

                                                            2003           2002
--------------------------------------------------------------------------------
Deferred tax assets:
Allowance for loan losses                                   $ 501         $ 440
Organizational and start-up costs                               3            20
Allowance for uncollected interest                             16            13
Unrealized loss - securities available for sale               243            --
Net operating loss carryforwards                               38            39
--------------------------------------------------------------------------------
Gross deferred tax asset                                      801           512
Less: valuation reserve                                        (1)           (1)
--------------------------------------------------------------------------------
Deferred tax assets, net                                      800           511
--------------------------------------------------------------------------------

Deferred tax liabilities:
Deferred loan costs                                            38            34
Depreciation                                                  116            56
Unrealized gain - securities available for sale                --            99
Accrual to cash adjustment                                    204           272
--------------------------------------------------------------------------------
Gross deferred tax liabilities                                358           461
--------------------------------------------------------------------------------
Net deferred tax assets                                     $ 442         $  50
================================================================================


                                      F-15
<PAGE>

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, 2003, 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):

2004                                  $318
2005                                   334
2006                                   323
2007                                   245
2008                                   222
2009 and thereafter                    251
------------------------------------------
          Total                     $1,693
==========================================

Total rent expense was $316,000 and $282,000 in 2003 and 2002, 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.

Related Party Transactions

The Company leases administrative office space at 6 West End Court, Long Branch,
New Jersey. Certain members of the board of directors of the Company hold an
ownership interest in the leased property. 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 2003 and 2002 were $24,000 and $20,000, respectively.

On August 1, 2003, the Bank exercised its option to purchase its main office and
branch (land and building) located at 627 Second Avenue, Long Branch, New
Jersey, pursuant to the terms of its lease with KFC Associates, dated June 26,
1997. The purchase price was $550,000.

(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.


                                      F-16
<PAGE>

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) of at least 5%, a Tier 1
risk-based capital ratio of at least 6%, and a total risk-based capital ratio of
at least 10%. Management believes that, as of December 31, 2003, 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.

The following is a summary of the Bank and Bancorp's actual capital amounts and
ratios as of December 31, 2003 and 2002, 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, 2003                                              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      $ 15,107          6.86%      $  8,810          4.00%      $ 11,013          5.00%
Risk-based capital:
     Tier 1                      15,107         11.01          5,489          4.00          8,233          6.00
     Total                       16,485         12.01         10,977          8.00         13,722         10.00

<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>

(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 578,812 shares of the Company's common stock,
subject to adjustment for certain dilutive events such as stock distributions.
As of December 31, 2003 and 2002, 100,269 and 54,128 options, respectively, have
been granted to employees and directors which vest over a period of four years.


                                      F-17
<PAGE>

A summary of the status of the Company's stock options as of and for the years
ended December 31, 2003 and 2002 is presented below:

<TABLE>
<CAPTION>
                                                               2003                           2002
--------------------------------------------------------------------------------------------------------------
                                                                       Weighted                       Weighted
                                                                       average                        average
                                                                       exercise                       exercise
                                                        Shares          price         Shares            price
--------------------------------------------------------------------------------------------------------------
<S>                                                      <C>            <C>            <C>             <C>
  Outstanding at beginning of year                       178,531        $10.54         135,084         $ 9.19
  Granted                                                100,269         21.54          54,128          13.81
  Forfeited                                                (947)         11.68         (10,681)          9.99
  Exercised                                                 (60)          8.84              --             --
==============================================================================================================
  Outstanding at end of year                             277,793         14.51         178,531          10.54
==============================================================================================================
  Options exercisable at year end                        106,053          9.69          74,152           9.08
  Weighted average fair value of options
       granted during the year                                          $ 5.88                         $ 3.40
==============================================================================================================
</TABLE>


                                      F-18
<PAGE>

The following table summarizes information about stock options outstanding at
December 31, 2003:

                       Options Outstanding and Exercisable
                                December 31, 2003
--------------------------------------------------------------------------------
                                                Weighted             Weighted
                                                 average             average
        Number                                  remaining            exercise
     outstanding        Exercisable         contractual life          price
--------------------------------------------------------------------------------
        34,946            34,280                80 Months            $ 8.63
        57,696            28,848                92 Months            $ 9.16
        27,783            27,783                85 Months            $ 9.50
         3,473             1,736                96 Months            $10.37
        26,460             6,615                98 Months            $13.61
        27,166             6,791               108 Months            $14.01
        25,200                --               110 Months            $14.76
        75,069                --               119 Months            $23.81
================================================================================

(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, 2003. 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-19
<PAGE>

Limitations

Fair value estimates were made at December 31, 2003 and 2002, 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, 2003 and
2002, 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,
2003 and 2002 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                             2003                      2002
                                                             ----                      ----
                                                      Book          Fair          Book         Fair
                                                      value         value         Value        value
                                                      -----         -----         -----        -----
<S>                                                 <C>           <C>           <C>          <C>
Financial Assets:
Cash and cash equivalents                           $ 14,364      $ 14,364      $ 16,380     $ 16,380
Investment securities available for sale              68,196        68,196        44,791       44,791
Investment securities held to maturity                15,079        15,278        25,539       25,973
Loans, net                                           115,805       115,279        89,630       90,448

Financial Liabilities:
Deposits                                            $207,234      $206,940      $164,007     $163,927
=====================================================================================================
</TABLE>


                                      F-20
<PAGE>

(12) Condensed Financial Statements of Monmouth Community Bancorp (Bancorp only)

The following information with respect to Bancorp is as of and for the years
ended December 31, 2003 and 2002, and should be read in conjunction with the
notes to the consolidated financial statements (in thousands):

Balance Sheets                                           2003            2002
--------------------------------------------------------------------------------
Assets:
Investment in subsidiary                                $ 14,899       $ 14,931
--------------------------------------------------------------------------------
     Total assets                                         14,899         14,931
--------------------------------------------------------------------------------

Shareholders' Equity:
Common stock                                                  16             15
Additional paid-in capital                                15,241         14,767
Retained earnings                                             --             --
Accumulated other comprehensive income                      (358)           149
--------------------------------------------------------------------------------
     Total shareholders' equity                         $ 14,899       $ 14,931
================================================================================

Statements of Income                                      2003           2002
--------------------------------------------------------------------------------
Equity in undistributed earnings of Bank                $    482       $    784
--------------------------------------------------------------------------------
Net income                                              $    482       $    784
================================================================================

Statements of Cash Flows                                  2003           2002
--------------------------------------------------------------------------------
Cash Flow From Operating Activities
--------------------------------------------------------------------------------
Net income                                              $    482       $    784
Less equity in undistributed earnings of the Bank           (482)          (784)
--------------------------------------------------------------------------------
Net cash provided by operating activities                     --             --
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Cash Flow From Financing Activities
--------------------------------------------------------------------------------
Proceeds from issuance of common stock, net                    1          5,178
--------------------------------------------------------------------------------
Fractional shares paid in cash                                (8)            (2)
--------------------------------------------------------------------------------
Capital contribution (to)/from subsidiary                      7         (5,176)
--------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period              --             --
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of period          $     --       $     --
================================================================================


                                      F-21
<PAGE>

(13) Selected Quarterly Financial Data (Unaudited)

The following tables are a summary of certain quarterly financial data for the
years ended December 31, 2003 and 2002.

<TABLE>
<CAPTION>
                                                            2003 Quarter Ended
                                          ----------------------------------------------------------
                                            March 31        June 30      September 30    December 31
                                          ----------      ----------     ------------    -----------
                                                 (dollars in thousands, except per share data)
<S>                                       <C>             <C>             <C>             <C>
Interest income                           $    2,224      $    2,253      $    2,041      $    2,593
Interest expense                                 703             688             604             617
                                          ----------      ----------      ----------      ----------
      Net interest income                      1,521           1,565           1,437           1,976
Provision for loan losses                         18               5              16             111
                                          ----------      ----------      ----------      ----------

      Net interest income after
          provision for loan losses            1,503           1,560           1,421           1,865

Non-interest income                              208             182             180             210
Non-interest expense                           1,530           1,563           1,595           1,637
                                          ----------      ----------      ----------      ----------
Income before income taxes                       181             179               6             438
      Income taxes                                72              72               2             176
                                          ----------      ----------      ----------      ----------
Net income                                $      109      $      107      $        4      $      262
                                          ==========      ==========      ==========      ==========

Earnings per share:

Basic                                     $     0.07      $     0.07      $     0.00      $     0.17
                                          ==========      ==========      ==========      ==========
Diluted                                   $     0.07      $     0.07      $     0.00      $     0.16
                                          ==========      ==========      ==========      ==========

Weighted average shares outstanding:

Basic                                      1,550,429       1,550,429       1,550,430       1,550,490
                                          ==========      ==========      ==========      ==========
Diluted                                    1,579,957       1,590,751       1,598,374       1,606,638
                                          ==========      ==========      ==========      ==========
</TABLE>


                                      F-22
<PAGE>

<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      $    2,175      $    2,328
Interest expense                                 620             628             745             796
                                          ----------      ----------      ----------      ----------
      Net interest income                      1,165           1,359           1,430           1,532
Provision for loan losses                        112             107              56              98
                                          ----------      ----------      ----------      ----------

      Net interest income after
          provision for loan losses            1,053           1,252           1,374           1,434

Non-interest income                              135             107             158             261
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                                     $      .09      $      .15      $      .25      $      .16
                                          ==========      ==========      ==========      ==========
Diluted                                   $      .09      $      .15      $      .24      $      .16
                                          ==========      ==========      ==========      ==========

Weighted average shares outstanding:

Basic                                      1,128,315       1,128,315       1,133,132       1,442,668
                                          ==========      ==========      ==========      ==========
Diluted                                    1,148,774       1,148,907       1,153,200       1,467,077
                                          ==========      ==========      ==========      ==========
</TABLE>


                                      F-23
<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).

(x)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).

(x)10.2           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).

(x)10.3           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).


                                      E-1
<PAGE>

(x)10.4           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).

(x)10.5           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).

(x)10.6           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).

(x)10.7           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).

10.8              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
                  (Incorporated by reference to Exhibit 10.9 to the Registrant's
                  Annual Report on Form 10-KSB for the year ended December 31,
                  2002).

10.9              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
                  (Incorporated by reference to Exhibit 10.10 to the
                  Registrant's Form 10-KSB for the year ended December 31,
                  2002).

10.10             Indenture between Registrant and Wilmington Trust Company,
                  dated March 25, 2004.

10.11             Amended and Restated Declaration of Trust of MCBK Capital
                  Trust I, dated March 25, 2004.

10.12             Guarantee Agreement by Registrant and Wilmington Trust
                  Company, dated March 25, 2004.

14.1              Chief Executive and Senior Financial Officer Code of Ethics.

                                      E-2
<PAGE>

21.1              List of Subsidiaries.

23.1              Consent of Independent Accountants.

31.1              Section 302 Certification of Chief Executive Officer.

31.2              Section 302 Certification of Chief Financial Officer

32.1              Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350.

32.2              Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350.

(x)   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