SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM l0-Q
(Mark One)

|X|      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended        March 31, 2002
                                ------------------------

                                       OR

| |     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

           For the transition period from __________ to ____________

                         Commission file number 0-24168


                            TF FINANCIAL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


       Delaware                                                   74-2705050
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (I.R.S. employer
incorporation or organization)                               identification no.)


3 Penns Trail, Newtown, Pennsylvania                                    18940
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)


Registrant's telephone number, including area code         215-579-4000
--------------------------------------------------------------------------------


                                       N/A
--------------------------------------------------------------------------------
              Former name, former address and former fiscal year,
                         if changed since last report.

     Indicate by check whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.     Yes   X    No
                                           -----     -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock as of the latest practicable date:   April 30, 2002
                                                   ------------------


                  Class                                    Outstanding
      ----------------------------                      -----------------
      $.10 par value common stock                       2,715,588 shares


<PAGE>


                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

                                    FORM 1O-Q

                      FOR THE QUARTER ENDED MARCH 31, 2002


                                      INDEX


                                                                   Page
                                                                  Number
                                                                  ------

PART I - CONSOLIDATED FINANCIAL INFORMATION

Item  1.  Consolidated Financial Statements                          3
Item  2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                      8
Item  3.  Quantitative and Qualitative Disclosures about
            Market Risk                                             13

PART II- OTHER INFORMATION

Item  1.  Legal Proceedings                                         14
Item  2.  Changes in Securities and Use of Proceeds                 14
Item  3.  Defaults Upon Senior Securities                           14
Item  4.  Submission of Matters to a Vote of Security Holders       14
Item  5.  Other Information                                         14
Item  6.  Exhibits and Reports on Form 8-K                          14

SIGNATURES                                                          15



<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                 (in thousands)


<TABLE>
                                                                                   Unaudited     Audited
                                                                                   March 31,    December 31,
                                                                                      2002          2001
                                                                                 ------------   ------------
<S>                                                                             <C>            <C>
                                   Assets

Cash and cash equivalents                                                          $71,165        $69,139
Certificates of deposit in other financial institutions                                194            194
Investment securities available for sale - at fair value                            22,513         22,671
Investment securities held to maturity (fair value of $16,529 and $9,830,           16,670          9,866
  respectively)
Mortgage-backed securities available for sale - at fair value                      123,367         99,763
Mortgage-backed securities held to maturity (fair value of $81,513 and              80,160         93,367
  $94,735, respectively)

Loans receivable, net                                                              368,551        377,635
Federal Home Loan Bank stock - at cost                                              11,118         11,368
Accrued interest receivable                                                          4,278          4,154
Core deposit intangible                                                                717            775
Goodwill                                                                             4,213          4,324
Premises and equipment, net                                                          7,259          7,484
Other assets                                                                        10,607         10,464
                                                                                  --------       --------
                                Total assets                                      $720,812       $711,204
                                                                                  ========       ========

                    Liabilities and stockholders' equity
Liabilities
 Deposits                                                                         $432,285       $422,052
 Advances from the Federal Home Loan Bank                                          222,359        222,359
 Advances from borrowers for taxes and insurance                                     1,054          1,241
 Accrued interest payable                                                            4,287          3,762
 Other liabilities                                                                   2,605          3,815
                                                                                  --------       --------
                              Total liabilities                                    662,590        653,229
                                                                                  --------       --------

Commitments and contingencies
Stockholders' equity
  Preferred stock, no par value; 2,000,000 shares authorized
    and none issued.
  Common stock, $0.10 par value; 10,000,000 shares authorized,
    5,290,000 issued; 2,465,525 and 2,465,986 shares outstanding
    at March 31, 2002 and December 31, 2001, net of
    treasury shares of 2,575,212 and 2,571,712, respectively.                          529            529
  Retained earnings                                                                 57,203         56,370
  Additional paid-in capital                                                        51,623         51,652
  Unearned ESOP shares                                                              (2,492)        (2,523)
  Treasury stock - at cost                                                         (48,943)       (48,838)
  Accumulated other comprehensive income                                               302            785
                                                                                  --------       --------
                         Total stockholders' equity                                 58,222         57,975
                                                                                  --------       --------
Total liabilities and stockholders' equity                                        $720,812       $711,204
                                                                                  ========       ========
</TABLE>


                                       3

<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
                  UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
                      (in thousands, except per share data)


<TABLE>
                                                                           For Three Months
                                                                            Ended March 31,
                                                                          --------------------
                                                                            2002        2001
                                                                          --------    --------
<S>                                                                       <C>         <C>

Interest income
   Loans                                                                    $6,731      $7,166
   Mortgage-backed securities                                                3,060       3,780
   Investment securities                                                       587       1,239
   Interest bearing deposits and other                                         209         145
                                                                           -------     -------
       Total interest income                                                10,587      12,330
                                                                           -------     -------
Interest expense
   Deposits                                                                  2,830       3,591
   Advances from the Federal Home Loan Bank and other borrowings             3,037       3,500
                                                                           -------     -------
       Total interest expense                                                5,867       7,091
                                                                           -------     -------
       Net interest income                                                   4,720       5,239
Provision for loan losses                                                      150         125
                                                                           -------     -------
       Net interest income after provision for loan losses                   4,570       5,114
                                                                           -------     -------
Non-interest income
   Service fees, charges and other operating income                            407         415
   Bank-owned life insurance                                                   133           -
   Loss on sale of loans and mortgage-backed securities available for sale       -         (15)
                                                                           -------     -------
       Total non-interest income                                               540         400
                                                                           -------     -------
Non-interest expense
   Compensation and benefits                                                 1,928       1,938
   Occupancy and equipment                                                     578         645
   Federal deposit insurance premium                                            19          21
   Professional fees                                                            80         156
   Amortization of core deposit intangible                                      58          69
   Amortization of goodwill                                                    111         111
   Advertising                                                                 110         126
   Other operating                                                             647         745
                                                                           -------     -------
       Total non-interest expense                                            3,531       3,811
                                                                           -------     -------
       Income before income taxes                                            1,579       1,703
Income taxes                                                                   376         445
                                                                           -------     -------
       Net income                                                           $1,203      $1,258
                                                                           =======     =======

Basic earnings per share                                                     $0.49       $0.51
Diluted earnings per share                                                   $0.44       $0.48
Weighted average number of shares outstanding - basic                        2,463       2,482
Weighted average number of shares outstanding - diluted                      2,716       2,637

</TABLE>

                 See notes to consolidated financial statements


                                       4

<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
                                                                                       For the three months
                                                                                               ended
                                                                                              March 31,
                                                                                        ---------------------
                                                                                          2002         2001
                                                                                        --------     --------
<S>                                                                                   <C>          <C>

Cash flows from operating activities
Net Income                                                                               $1,203       $1,258
Adjustments to reconcile net income to net cash provided by operating activities:
         Mortgage loan servicing rights                                                       3            3
         Deferred loan origination fees                                                     (63)         (52)
         Premiums and discounts on investment securities, net                                35           (8)
         Premiums and discounts on mortgage-backed securities and loans, net               (123)        (113)
         Amortization of goodwill and core deposit intangible                               169          181
Provision for loan losses                                                                   150          125
Depreciation of premises and equipment                                                      252          206
Recognition of ESOP and MSBP expenses                                                        67           58
Loss on sale of loans and mortgage-backed securities available for sale                       -           15
Increase in value of bank-owned life insurance                                             (133)           -
(Increase) decrease in:
         Accrued interest receivable                                                       (124)       1,243
         Other assets                                                                       155          260
Increase (decrease) in:
         Accrued interest payable                                                           525          601
         Other liabilities                                                                 (960)        (955)
                                                                                         ------      -------
         Net cash provided by operating activities                                        1,156        2,822
                                                                                         ------      -------
Cash flows  from investing activities
Loan originations and principal payments on loans, net                                   23,573        6,493
Purchases of loans                                                                      (14,767)      (3,792)
Proceeds from loan sales                                                                      -        1,227
Proceeds from sale of mortgage-backed securities available for sale                           -        4,309
Purchases of mortgage-backed securities available for sale                              (33,770)           -
Purchase of investment securities  held to maturity                                      (6,821)           -
Proceeds from maturities of investment securities held to maturity                            -       45,014
Proceeds from maturities of investment securities available for sale                          -        1,000
Principal repayments from mortgage-backed securities held to maturity                    13,265        7,071
Principal repayments from mortgage-backed securities available for sale                   9,643        2,709
Purchases and redemptions of Federal Home Loan Bank stock, net                              250            -
Proceeds from sales of real estate acquired through foreclosure                              18            -
Purchase of premises and equipment                                                          (27)         (20)
                                                                                         ------      -------
         Net cash provided by (used in) investing activities                             (8,636)      64,011
                                                                                         ------      -------
</TABLE>

                 See notes to consolidated financial statements

                                       5

<PAGE>


                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
           UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                                 (in thousands)

<TABLE>
                                                                                   For the three months
                                                                                          ended
                                                                                         March 31,
                                                                                  -----------------------
                                                                                     2002          2001
                                                                                  -------         -------
<S>                                                                             <C>             <C>

Cash flows from financing activities
Net increase in deposits                                                           10,233          2,118
Net decrease in advances from Federal Home Loan Bank                                    -        (12,500)
Net decrease in other borrowings                                                        -        (14,962)
Net decrease in advances from borrowers for taxes and insurance                      (187)             -
Exercise of stock options                                                             100             21
Purchase of treasury stock, net                                                      (270)          (730)
Common stock cash dividend                                                           (370)          (385)
                                                                                  -------         -------
         Net cash provided by (used in) financing activities                        9,506        (26,438)
                                                                                  -------         -------
         Net increase in cash and cash equivalents                                  2,026         40,395

Cash and cash equivalents at beginning of period                                   69,139         10,618
                                                                                  -------        -------
Cash and cash equivalents at end of period                                        $71,165        $51,013
                                                                                  =======        =======
Supplemental disclosure of cash flow information
Cash paid for
         Interest on deposits and advances                                        $ 5,342        $ 6,490
         Income taxes                                                             $   700        $   610
Non-cash transactions
         Transfers from loans to real estate acquired through foreclosure         $   185        $     -


</TABLE>

                 See notes to consolidated financial statements

                                       6

<PAGE>


                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - PRINCIPLES OF CONSOLIDATION
     The consolidated  financial statements as of March 31, 2002 (unaudited) and
     December 31, 2001 and for the three-month  periods ended March 31, 2002 and
     2001  (unaudited)  include the  accounts of TF Financial  Corporation  (the
     "Company")  and its wholly owned  subsidiaries  Third Federal  Savings Bank
     (the  "Bank"),   TF  Investments   Corporation,   Penns  Trail  Development
     Corporation and Teragon Financial  Corporation.  The Company's  business is
     conducted  principally  through  the  Bank.  All  significant  intercompany
     accounts and transactions have been eliminated in consolidation.

NOTE 2 - BASIS OF PRESENTATION
     The accompanying  unaudited consolidated financial statements were prepared
     in  accordance  with  instructions  for Form  10-Q and,  therefore,  do not
     include  all  of  the  disclosures  or  footnotes  required  by  accounting
     principles  generally  accepted  in the United  States of  America.  In the
     opinion of  management,  all  adjustments,  consisting of normal  recurring
     accruals,  necessary for fair  presentation of the  consolidated  financial
     statements  have been  included.  The results of operations  for the period
     ended March 31, 2002 are not  necessarily  indicative  of the results which
     may be expected for the entire fiscal year or any other period. For further
     information,  refer to  consolidated  financial  statements  and  footnotes
     thereto included in the Company's Annual Report on Form 10-K for the fiscal
     year ended December 31, 2001.

NOTE 3 - CONTINGENCIES
     The  Company,  from time to time,  is a party to  routine  litigation  that
     arises in the normal course of business. In the opinion of management,  the
     resolution of this  litigation,  if any, would not have a material  adverse
     effect on the  Company's  consolidated  financial  condition  or results of
     operations.

NOTE 4 - OTHER COMPREHENSIVE INCOME (LOSS)
     The Company's other  comprehensive  income consists of net unrealized gains
     on investment securities and mortgage-backed securities available for sale.
     Total comprehensive income for the three-month periods ended March 31, 2002
     and 2001 was  $720,000  and  $2,041,000,  net of  applicable  income tax of
     $127,000 and $849,000, respectively.

NOTE 5- RECLASSIFICATIONS
     Certain prior year amounts have been reclassified to conform to the current
     period presentation.

NOTE 6- NEW ACCOUNTING PRONOUNCEMENTS
     On January 1, 2002,  the Company  adopted  Financial  Accounting  Standards
     Board Statement of Financial Accounting Standards (SFAS) No. 141, "Business
     Combinations", SFAS No. 142, "Goodwill and Intangible Assets", and SFAS No.
     144,  "Accounting for the Impairment or Disposal of Long-Lived Assets". The
     adoption  of  these  statements  did  not  have a  material  impact  on the
     financial condition or results of operations of the Company.

     On January 1, 2002,  the Company also adopted  Statement of Position  (SOP)
     01-6,  "Accounting  by  Certain  Entities  That  Lend  to  or  Finance  the
     Activities of Others",  which reconciles and conforms existing  differences
     in the accounting and financial  reporting  guidance in the AICPA Audit and
     Accounting Guides, Banks and Savings Institutions, Audits of Credit Unions,
     and  Audits  of  Finance  Companies.  It also  carries  forward  accounting
     guidance  for   practices   deemed  to  be  unique  to  certain   financial
     institutions.  The  adoption  of this SOP had no  impact  on the  Company's
     financial position or results of operations.

                                       7

<PAGE>


                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

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

GENERAL

TF  Financial   Corporation   may  from  time  to  time  make  written  or  oral
"forward-looking  statements",  including  statements contained in the Company's
filings with the Securities and Exchange  Commission  (including  this Quarterly
Report on Form 10-Q and the exhibits  thereto),  in its reports to  stockholders
and in other communications by the Company,  which are made in good faith by the
Company  pursuant to the "Safe  Harbor"  Provisions  of the  Private  Securities
Litigation Reform Act of 1995.

These  forward-looking  statements  involve  risks  and  uncertainties,  such as
statements  of the  Company's  plans,  objectives,  expectations,  estimates and
intentions that are subject to change based on various  important  factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in, trade, monetary and fiscal policies
and laws,  including  interest  rate  policies of the Board of  Governors of the
Federal  Reserve  System,   inflation,   interest  rate,   market  and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the Company and the perceived  overall  value of these  products and
services by users,  including  the  features,  pricing  and quality  compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Company's products and services;  the
success of the  Company in  gaining  regulatory  approval  of its  products  and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes,  acquisitions;  changes in consumer spending
and saving habits; and the success of the Company at managing the risks involved
in the foregoing.

The  Company  cautions  that the  foregoing  list of  important  factors  is not
exclusive.  The  Company  does  not  undertake  to  update  any  forward-looking
statement,  whether written or oral, that may be made from time to time by or on
behalf of the Company.

Financial Condition

The  Company's  total assets at March 31, 2002 and December 31, 2001 were $720.8
million and $711.2 million,  respectively, an increase of $9.6 million, or 1.3%,
during the  three-month  period.  The  increase  in total  assets was the direct
result  of  the  deployment  of  deposit  growth  into  various   earning  asset
categories.  Cash and cash  equivalents  increased by $2.0  million.  Investment
securities  held to maturity  increased by $6.8 million due to the  purchases of
such  securities.  Mortgage-backed  securities  available for sale  increased by
$23.6 million as $33.8 million in purchases of such securities more than off-set
the  principal   paydowns  received  from  these   securities.   Mortgage-backed
securities  held to maturity  decreased by $13.2 million due to the high rate of
prepayments  of  the  mortgages   underlying  these   pass-through   securities.
Similarly,  high  prepayments  of  existing  mortgages  in the loans  receivable
portfolio  more than  off-set  new loans  closed  and  purchased,  causing a net
decrease of $9.1 million in loans receivable.

Total  liabilities  increased  by $9.4  million due to $10.2  million in deposit
growth.  Non-interest bearing demand deposits grew by $3.0 million while savings
and  money  market  accounts  grew  by $9.7  million.  Certificates  of  deposit
decreased by $1.4 million and  interest-bearing  checking accounts  decreased by
$1.1 million.


                                       8

<PAGE>


Total  consolidated  stockholders'  equity of the Company  was $58.2  million or
8.08% of assets at March 31, 2002,  compared to $54.1 million or 7.74% of assets
at March 31,  2001.  During the first  quarter of 2002 the  Company  repurchased
12,200  shares of its  common  stock and issued  8,700  shares  pursuant  to the
exercise  of stock  options.  As of March 31,  2002,  there  were  approximately
118,800 shares  available for repurchase  under the previously  announced  share
repurchase  plan,  and the Company will continue to  repurchase  shares as share
availability and market conditions permit.

Asset Quality

Subsequent  to the first  quarter of 2002,  the Company  placed a portion of its
purchased  lease  portfolio  on  non-performing  status  because  it had  ceased
receiving the payments to which it was entitled. At the present time the Company
believes that the collectibility of approximately $600,000 of these payments may
be in doubt.  Because all of the facts  surrounding  this matter are still being
developed and are not known, the Company cannot estimate at this time the amount
or timing of eventual  loss,  if any. The ultimate  resolution of this issue may
result in an  increase  in the  allowance  for loan and  lease  losses in future
periods and impact the Company's earnings. Other than the foregoing, the Company
has not experienced any  significant  deterioration  in its asset quality during
the first quarter of 2002.

The following table sets forth information regarding the Company's asset quality
(dollars in thousands):


<TABLE>
                                                        March 31,  December 31,  March 31,
                                                        ---------  ------------  ---------
                                                           2002        2001         2001
                                                        ---------  ------------  ---------
<S>                                                    <C>         <C>          <C>

Non-performing loans                                      $3,904      $3,776       $1,302
Ratio of non-performing loans to gross loans                1.05%       0.99%        0.36%
Ratio of non-performing loans to total assets               0.54%       0.53%        0.19%
Foreclosed property                                         $198         $40         $176
Foreclosed property to total assets                         0.03%       0.01%        0.03%
Ratio of total non-performing assets to total assets        0.57%       0.54%        0.21%

</TABLE>


Management  maintains an allowance  for loan and lease losses at levels that are
believed  to be  adequate;  however,  there can be no  assurances  that  further
additions will not be necessary or that losses inherent in the existing loan and
lease  portfolios will not exceed the allowance.  The following table sets forth
the  activity  in the  allowance  for loan and lease  losses  during the periods
indicated (in thousands):

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

   Beginning balance, January 1,              $1,972     $1,714
   Provision                                     150        125
   Less: charge-off's (recoveries), net           66         62
                                              ------     ------
   Ending  balance, March 31,                 $2,056     $1,777
                                              ======     ======

                                       9

<PAGE>




RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001

Net Income. The Company recorded net income of $1,203,000,  or $0.44 per diluted
share,  for the three months ended March 31, 2002 as compared to $1,258,000,  or
$0.48 per diluted share, for the three months ended March 31, 2001.

Average Balance Sheet

The following  table sets forth  information  relating to the Company's  average
balance  sheet and  reflects  the average  yield on assets and  average  cost of
liabilities  for the  periods  indicated.  The yields and costs are  computed by
dividing  income or expense by the  average  daily  balance of  interest-earning
assets or interest-bearing liabilities, respectively, for the periods indicated.


<TABLE>
                                                                         Three months ended March 31,
                                                                           Three Months Ended March,
                                                               2002                            2001
                                                  ------------------------------   -----------------------------
                                                   Average              Average     Average             Average
                                                   Balance   Interest   Yld/Cost    Balance   Interest  Yld/Cost
                                                  ---------  --------   --------   ---------  --------  --------
                                                                       (dollars in thousands)

<S>                                             <C>         <C>        <C>       <C>          <C>      <C>
Assets:
  Interest-earning assets:
    Loans receivable (1).......................    $372,490    $6,731     7.33%     $362,020     $7,166   8.03%
    Mortgage-backed securities.................     201,796     3,060     6.15%      232,319      3,780   6.60%
    Investment securities......................      47,792       587     4.99%       83,824      1,239   5.99%
    Other interest-earning assets(2)...........      53,966       209     1.56%       10,687        145   5.50%
                                                   --------   -------               --------    -------
      Total interest-earning assets............     676,044    10,587     6.35%      688,850     12,330   7.26%
                                                              -------                           -------
Non interest-earning assets....................      34,928                           28,503
                                                   --------                         --------
      Total assets.............................     710,972                          717,353
                                                   ========                         ========
Liabilities and stockholders' equity:
  Interest-bearing liabilities
    Deposits...................................     423,239     2,830     2.71%      404,512      3,591   3.60%
    Advances from the FHLB and other
               Borrowings......................     222,359     3,037     5.54%      251,405      3,500   5.65%
                                                   --------   -------               --------    -------
      Total interest-bearing liabilities.......     645,598     5,867     3.69%      655,917      7,091   4.39%
                                                              -------                           -------
Non interest-bearing liabilities...............       7,394                            7,859
                                                   --------                         --------
      Total liabilities..........................   652,992                          663,776
Stockholders' equity...........................      57,980                           53,517
                                                   --------                         --------
   Total liabilities and stockholders' equity....  $710,972                         $717,353
                                                   ========                         ========
Net interest income............................                 $4,720                           $5,239
                                                                ======                           ======
Interest rate spread (3).......................                           2.66%                           2.87%
Net yield on interest-earning assets (4).......                           2.83%                           3.08%
Ratio of average interest-earning assets to
average interest bearing liabilities...........                            105%                            105%

</TABLE>


(1)  Nonaccrual loans have been included in the appropriate average loan balance
     category,  but  interest  on  nonaccrual  loans has not been  included  for
     purposes of  determining  interest  income.
(2)  Includes interest-bearing deposits in other banks.
(3)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(4)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest


                                       10

<PAGE>



(5) Rate/Volume Analysis

The following table presents, for the periods indicated,  the change in interest
income and interest  expense (in thousands)  attributed to (i) changes in volume
(changes in the weighted average balance of the total interest earning asset and
interest bearing  liability  portfolios  multiplied by the prior year rate), and
(ii) changes in rate (changes in rate multiplied by prior year volume).  Changes
attributable  to the  combined  impact  of volume  and rate have been  allocated
proportionately based on the absolute value of changes due to volume and changes
due to rate.

<TABLE>
                                                           Three months ended
                                                                March 31,
                                                            2002 vs. 2001
                                                     -------------------------------
                                                           Increase (decrease)
                                                               due to
                                                     -------------------------------
                                                       Volume      Rate      Net
                                                     -------------------------------
<S>                                                <C>         <C>         <C>
   Interest income:
        Loans receivable, net                          $1,154     (1,589)     ($435)
        Mortgage-backed securities                       (474)      (246)      (720)
        Investment securities                            (468)      (184)      (652)
        Other interest-earning assets                     769       (705)        64
                                                      -------------------------------
           Total interest-earning assets                  981     (2,724)    (1,743)
                                                      ===============================
   Interest expense:
        Deposits                                        1,015     (1,776)      (761)
        Advances from the FHLB and other borrowings      (398)       (65)      (463)
                                                      -------------------------------
           Total interest-bearing liabilities             617     (1,841)    (1,224)
                                                      ===============================
   Net change in net interest income                     $364       (883)     ($519)
                                                      ===============================

</TABLE>



Total Interest Income.  Total interest income decreased by $1.7 million or 14.1%
to $10.6  million for the three  months ended March 31, 2002  compared  with the
first quarter of 2001  primarily  because of the  consequences  of a substantial
decrease in market interest  rates.  Since the beginning of the first quarter of
2001, the Federal Reserve Board lowered the federal funds rate eleven times from
6.50% to 1.75%. Longer term market interest rates also decreased  significantly.
As a result the Company's  callable  investment  securities were called,  higher
coupon  mortgage-related  securities were paid down at an accelerated  rate, and
loans  receivable  were refinanced by borrowers at lower rates, or away from the
Bank,  resulting in large paydowns of higher yielding  loans.  In addition,  the
interest rates on the Company's  adjustable rate loans adjusted downward.  Thus,
each  component of the Company's  earning assets  produced less interest  income
because of declining market interest rates. In addition,  the Company's cash and
cash equivalents  were  significantly  higher during the 2002 period,  while the
rate earned on these assets,  the federal funds rate minus 25 basis points,  was
substantially  lower  during the 2002  period.  At March 31,  2002 cash and cash
equivalents totaled $71.2 million.

Total Interest Expense. Total interest expense decreased by $1.2 million to $5.9
million for the  three-month  period ended March 31,  2002.  The increase in the
average  balance of deposits was more than offset by lower market interest rates
during  the  period  and  the  lower  rates  paid  on  the  Company's   renewing
certificates of deposit that had been originated when market interest rates were
higher. In addition,  during the fourth quarter of 2001 and the first quarter of
2002,  the  Company  lowered  the  interest  rates  paid on several of its other
deposit  products in order to keep them in line with short term market  interest
rates, mainly the federal funds rate.

                                       11

<PAGE>


Non-interest  income. Total non-interest income was $540,000 for the three-month
period ended March 31, 2002  compared with $400,000 for the same period in 2001.
The increase is due to the increase in the cash  surrender  value of  bank-owned
life insurance which was purchased during the third quarter of 2001.

Non-interest  expense.  Total non-interest expense decreased by $280,000 to $3.5
million for the three months ended March 31, 2002 compared to the same period in
2001.  Compensation  and benefits expense would have been slightly higher except
for a $93,000  reduction in pension expense caused by participants  who had very
high balances  leaving the plan.  Occupancy and equipment  expense  decreased in
part  because  the  Company  sold one of its  branch  offices  during the fourth
quarter of 2001,  and also because  maintenance  expenses  were  unusually  high
during the first  quarter of 2001 due to inclement  weather.  Professional  fees
were lower during the first quarter of 2002 compared to the year earlier  period
mainly  due to  $60,000  of costs  incurred  during  the first  quarter  of 2001
associated  with the  implementation  of in-house item  processing and statement
rendering  capabilities.  The  Company's  effective  tax rate  during  the first
quarter of 2002 was 23.8%  compared with 26.1% during the first quarter of 2001.
The  decrease is due to the purchase of  bank-owned  life  insurance  during the
third quarter of 2001.


                                       12

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

Liquidity

The  Company's  liquidity  is a  measure  of its  ability  to  fund  loans,  pay
withdrawals of deposits, and other cash outflows in an efficient, cost-effective
manner.  The  Company's   short-term  sources  of  liquidity  include  maturity,
repayment and sales of assets,  excess cash and cash equivalents,  new deposits,
broker deposits,  other borrowings,  and new advances from the Federal Home Loan
Bank. There has been no material adverse change during  three-month period ended
March 31, 2002 in the ability of the Company and its  subsidiaries to fund their
operations.

At March 31, 2002,  the Company had  commitments  outstanding  under  letters of
credit of $1.6 million,  commitments to originate  loans of $12.1  million,  and
commitments  to fund  undisbursed  balances of closed  loans and unused lines of
credit of $27.6 million.

Capital Requirements

The Bank is in compliance  with all of its capital  requirements as of March 31,
2002.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Asset and Liability Management

The  Company's  market risk  exposure is  predominately  caused by interest rate
risk,  which is defined as the  sensitivity of the Company's  current and future
earnings, the values of its assets and liabilities, and the value of its capital
to changes in the level of market  interest  rates.  Management  of the  Company
believes that there has not been a material adverse change in market risk during
the three months ended March 31, 2002.


                                       13

<PAGE>


                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

                                     PART II

 ITEM 1.    LEGAL PROCEEDINGS
            Not applicable.

 ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS
            Not applicable.

 ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
            Not applicable.

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

            The Annual Meeting of Stockholders (the "Meeting")  of  the  Company
was held on April 24, 2002.  There were  outstanding and entitled to vote at the
Meeting  2,727,994 shares of Common Stock of the Company.  There were present at
the  meeting  or by proxy the  holders  of  2,375,554  shares  of  Common  Stock
representing  87.08% of the total eligible  votes to be cast.  Proposal 1 was to
elect one director of the Company. The result of the voting at the Meeting is as
follows (percentages in terms of votes cast):

            Proposal 1
            John R. Stranford      FOR: 2,177,233    PERCENT FOR: 91.65%

 ITEM 5.    OTHER INFORMATION
            None

 ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K
            (a)     Exhibits
                    None
            (b)     Reports on Form 8-K
                    On April 24, 2002 the  Company  filed a Form 8-K wherein the
                    Company  disclosed that it had adopted  Amended and Restated
                    Bylaws  in order to add  sections  which  impose  additional
                    qualifications for Directors of the Company.

                                       14

<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                     TF FINANCIAL CORPORATION



Date:      May 14, 2002               /s/ John R. Stranford
                                     -------------------------------------------
                                     John R. Stranford
                                     President and CEO
                                     (Principal Executive Officer)



Date:      May 14, 2002               /s/ Dennis R. Stewart
                                     -------------------------------------------
                                      Dennis R. Stewart
                                      Senior Vice President and
                                      Chief Financial Officer
                                      (Principal Financial & Accounting Officer)



                                       15