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                  June 30, 2001
                                ------------------------------------------------

                                       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 incorporation                (I.R.S. employer
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: July 27, 2001
                                                   -------------

            Class                                             Outstanding
-----------------------------                               ----------------
  $.10 par value common stock                               2,710,312 shares


<PAGE>


                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

                                    FORM 1O-Q

                       FOR THE QUARTER ENDED JUNE 30, 2001


                                      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                          9
Item     3.       Quantitative and Qualitative Disclosures about Market Risk  17

PART II- OTHER INFORMATION

Item     1.       Legal Proceedings                                           18
Item     2.       Changes in Securities and Use of Proceeds                   18
Item     3.       Defaults Upon Senior Securities                             18
Item     4.       Submission of Matters to a Vote of Security Holders         18
Item     5.       Other Information                                           18
Item     6.       Exhibits and Reports on Form 8-K                            18

SIGNATURES                                                                    19

                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                               Unaudited     Audited     Unaudited
                                                                                June 30,   December 31,   June 30,
                                                                                  2001         2000         2000
                                                                               ---------    ---------    ---------
<S>                                                                          <C>          <C>          <C>

                                   Assets
Cash and cash equivalents                                                      $  59,196    $  10,618    $   8,980
Certificates of deposit in other financial institutions                              190          191          556
Investment securities available for sale - at fair value                          10,161       18,865       22,366
Investment securities held to maturity (fair value of $15,510, $61,919 and        15,460       63,461       73,111
    $71,037, respectively)
Mortgage-backed securities available for sale - at fair value                     94,825       97,914      138,908
Mortgage-backed securities held to maturity (fair value of $117,923,             117,799      135,142      148,145
    $133,458, and $142,601, respectively)
Loans receivable, net                                                            368,129      361,806      293,330
Federal Home Loan Bank stock - at cost                                            11,368       13,042       13,042
Accrued interest receivable                                                        4,212        5,523        4,880
Goodwill and other intangible assets                                               5,448        5,809        6,183
Premises and equipment, net                                                        7,932        9,410        9,326
Other assets                                                                       1,075        1,516        2,694
                                                                               ---------    ---------    ---------
                                 Total assets                                  $ 695,795    $ 723,297    $ 721,521
                                                                               =========    =========    =========
                    Liabilities and stockholders' equity

Liabilities
   Deposits                                                                    $ 409,145    $ 400,851    $ 419,611
   Advances from the Federal Home Loan Bank                                      222,359      244,859      208,359
   Other borrowings                                                                   --       14,962       34,228
   Advances from borrowers for taxes and insurance                                 1,281        1,158        1,441
   Accrued interest payable                                                        4,108        4,670        4,759
   Other liabilities                                                               3,625        3,688        3,846
                                                                               ---------    ---------    ---------
                             Total liabilities                                   640,518      670,188      672,244
                                                                               ---------    ---------    ---------
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; 2,454,432,  2,491,454, and 2,531,852 shares
Outstanding
       at June 30, 2001, December 31, 2000 and June 30, 2000, net of
       treasury shares of 2,577,188, 2,534,088, and 2,487,612, respectively          529          529          529
   Retained earnings                                                              53,846       51,604       49,880
   Additional paid-in capital                                                     52,210       52,161       52,118
   Unearned ESOP shares                                                           (2,584)      (2,644)      (2,705)
   Shares acquired by MSBP                                                            --           (4)         (38)
   Treasury stock - at cost                                                      (48,934)     (48,173)     (47,489)
   Accumulated other comprehensive income (loss)                                     210         (364)      (3,018)
                                                                               ---------    ---------    ---------
                         Total stockholders' equity                               55,277       53,109       49,277
                                                                               ---------    ---------    ---------
Total liabilities and stockholders' equity                                     $ 695,795    $ 723,297    $ 721,521
                                                                               =========    =========    =========
</TABLE>
                 See notes to consolidated financial statements

                                       3
<PAGE>
                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
                  UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                    For Three Months        For Six Months
                                                                     Ended June 30,         Ended June 30,
                                                                   -------------------   --------------------
                                                                     2001       2000       2001        2000
                                                                   --------   --------   --------    --------
<S>                                                              <C>        <C>        <C>         <C>
Interest income
   Loans                                                           $  7,147   $  5,851   $ 14,313    $ 11,407
   Mortgage-backed securities                                         3,568      4,841      7,348       9,711
   Investment securities                                                671      1,541      1,910       3,072
   Interest bearing deposits and other                                  431         93        576         165
                                                                   --------   --------   --------    --------
       Total interest income                                         11,817     12,326     24,147      24,355
                                                                   --------   --------   --------    --------
Interest expense
   Deposits                                                           3,577      3,812      7,168       7,388
   Advances from the Federal Home Loan Bank and other borrowings      3,156      3,540      6,656       7,143
                                                                   --------   --------   --------    --------
       Total interest expense                                         6,733      7,352     13,824      14,531
                                                                   --------   --------   --------    --------
       Net interest income                                            5,084      4,974     10,323       9,824
Provision for loan losses                                               124        120        249         164
                                                                   --------   --------   --------    --------
       Net interest income after provision for loan losses            4,960      4,854     10,074       9,660
                                                                   --------   --------   --------    --------
Non-interest income
   Service fees, charges and other operating income                     355        376        770         750
   Gain on sale of premises and equipment                               444         --        444          --
   Gain (loss) on sale of loans and mortgage-backed securities
     available for sale                                                  10         --         (5)         --
                                                                   --------   --------   --------    --------
       Total non-interest income                                        809        376      1,209         750
                                                                   --------   --------   --------    --------
Non-interest expense
   Compensation and benefits                                          1,900      1,969      3,836       3,796
   Occupancy and equipment                                              580        619      1,225       1,245
   Federal deposit insurance premium                                     18         21         39          43
   Professional fees                                                    124        100        317         287
   Amortization of goodwill and other intangible assets                 180        195        360         389
   Advertising                                                          126        168        252         338
   Other operating                                                      558        645      1,268       1,243
                                                                   --------   --------   --------    --------
       Total non-interest expense                                     3,486      3,717      7,297       7,341
                                                                   --------   --------   --------    --------
       Income before income taxes                                     2,283      1,513      3,986       3,069
Income taxes                                                            595        456      1,040         983
                                                                   --------   --------   --------    --------
       Net income                                                  $  1,688   $  1,057   $  2,946    $  2,086
                                                                   ========   ========   ========    ========

Basic earnings per share                                           $   0.69   $   0.42   $   1.19    $   0.82
Diluted earnings per share                                         $   0.64   $   0.40   $   1.12    $   0.79
Weighted average number of shares outstanding - basic                 2,454      2,539      2,468       2,554
Weighted average number of shares outstanding - diluted               2,647      2,554      2,642       2,632
</TABLE>

                 See notes to consolidated financial statements

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                     For the six months ended
                                                                                            June 30,
                                                                                         2001        2000
                                                                                       --------    --------
<S>                                                                                  <C>         <C>
Cash flows from operating activities
Net Income                                                                             $  2,946    $  2,086
Adjustments to reconcile net income to net cash provided
by  operating activities:
                 Mortgage loan servicing rights                                               7           7
                 Deferred loan origination fees                                             (86)        (29)
                 Premiums and discounts on investment securities, net                        (5)        (44)
                 Premiums and discounts on mortgage-backed securities and loans, net       (142)         (7)
                 Amortization of goodwill and other intangible assets                       361         387
Provision for loan losses                                                                   250         208
Depreciation of premises and equipment                                                      431         505
Recognition of ESOP and MSBP expenses                                                       114         136
Loss on sale of loans and mortgage-backed securities available for sale                       5          --
Gain on sale of premises and equipment                                                     (444)         --
(Gain) loss on sale of real estate acquired through foreclosure                             (27)          4
(Increase) decrease in:
                 Accrued interest receivable                                              1,311          78
                 Other assets                                                               229      (1,566)
Increase (decrease) in:
                 Accrued interest payable                                                  (562)      1,010
                 Other liabilities                                                         (327)      1,362
                                                                                       --------    --------
                 Net cash provided by operating activities                                4,061       4,137
                                                                                       --------    --------
Cash flows  from investing activities
Loan origination and principal payments on loans, net                                     9,645       1,041
Purchases of loans                                                                      (17,184)     (6,595)
Proceeds from loan sales                                                                  1,227          --
Maturities of certificates of deposit in other financial institutions, net                   --         291
Purchases of investment securities held to maturity                                                 (11,316)
Purchases of investment securities available for sale                                    (3,030)       (429)
Proceeds from sale of mortgage-backed securities available for sale                       4,309          --
Purchases of mortgage-backed securities available for sale                               (8,407)    (11,079)
Redemption of Federal Home Loan Bank stock                                                1,674          --
Proceeds from maturities of investment securities held to maturity                       44,991       5,000
Proceeds from maturities of investment securities available for sale                     15,000          --
Principal repayments from mortgage-backed securities held to maturity                    17,335      11,675
Principal repayments from mortgage-backed securities available for sale                   7,716       4,853
Proceeds from sales of premises and equipment                                             1,784
Proceeds from sales of real estate acquired through foreclosure                             102         354
Purchase of premises and equipment                                                         (133)       (654)
                                                                                       --------    --------
                 Net cash used in investing activities                                   75,029      (6,859)
                                                                                       --------    --------
</TABLE>
                 See notes to consolidated financial statements

                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                  For the six months ended
                                                                                          June 30,
                                                                                      2001        2000
                                                                                    --------    --------
<S>                                                                                <C>        <C>
Cash flows from financing activities
Net increase in deposits                                                               8,294      17,913
Net decrease in advances from Federal Home Loan Bank                                 (22,500)    (40,174)
Net increase (decrease) in other borrowings                                          (14,962)     18,462
Net decrease in advances from borrowers for taxes and insurance                          123         243
Exercise of stock options                                                                 26         437
Purchase of treasury stock, net                                                         (801)     (1,226)
Common stock cash dividend                                                              (692)       (668)
                                                                                    --------    --------
                 Net cash provided by financing activities                           (30,512)     (5,013)
                                                                                    --------    --------
                 Net increase (decrease) in cash and cash equivalents                 48,578      (7,735)

Cash and cash equivalents at beginning of period                                      10,618      16,715
                                                                                    --------    --------
Cash and cash equivalents at end of period                                          $ 59,196    $  8,980
                                                                                    ========    ========

Supplemental disclosure of cash flow information
Cash paid for
                 Interest on deposits and advances                                  $ 14,386    $ 13,521
                 Income taxes                                                       $    995    $    850
Non-cash transactions
                 Transfers from loans to real estate acquired through foreclosure   $     --    $     28


</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 June 30, 2001 (unaudited),
         December 31, 2000,  June 30, 2000  (unaudited)  and for the three-month
         and six-month periods ended June 30, 2001 and 2000 (unaudited)  include
         the accounts of TF Financial Corporation (the "Company") and its wholly
         owned  subsidiaries Third Federal Savings Bank (the "Savings Bank"), TF
         Investments  Corporation,   Penns  Trail  Development  Corporation  and
         Teragon  Financial  Corporation.  The  Company's  business is conducted
         principally  through the Savings  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  June 30,  2001 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, 2000.

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 (losses) on investment securities and mortgage-backed  securities
         available  for sale.  Total  comprehensive  income for the  three-month
         periods ended June 30, 2001 and 2000 was $1,479,000 and $1,436,000, net
         of applicable income tax of $487,000 and $651,000,  respectively. Total
         comprehensive  income for the six-month periods ended June 30, 2001 and
         2000 was $3,520,000  and  $2,154,000,  net of applicable  income tax of
         $1,336,000 and $1,018,000, respectively.

NOTE 5- RECLASSIFICATIONS

         Certain  prior year  amounts have been  reclassified  to conform to the
         current period presentation.

NOTE 6- RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         On June 29,  2001,  the  Financial  Accounting  Standards  Board (FASB)
         approved for  issuance  Statement  of  Financial  Accounting  Standards
         (SFAS)  141,  Business   Combinations,   and  SFAS  142,  Goodwill  and
         Intangible Assets. Major provisions of these Statements are as follows:
         all business  combinations

                                       7
<PAGE>

          initiated  after  June  30,  2001  must  use the  purchase  method  of
          accounting; the pooling of interest method of accounting is prohibited
          except for  transactions  initiated  before  July 1, 2001;  intangible
          assets  acquired in a business  combination  must recorded  separately
          from goodwill if they arise from  contractual or other legal rights or
          are separable from the acquired  entity and can be sold,  transferred,
          licensed,  rented or exchanged,  either  individually  or as part of a
          related contract,  asset or liability;  goodwill and intangible assets
          with indefinite  lives are not amortized but are tested for impairment
          annually,  except in certain  circumstances,  and whenever there is an
          impairment  indicator;  all  acquired  goodwill  must be  assigned  to
          reporting  units  for  purposes  of  impairment  testing  and  segment
          reporting;  effective  January  1,  2002,  goodwill  will no longer be
          subject to amortization. Although it is still reviewing the provisions
          of these Statements, management's preliminary assessment is that these
          Statements will not have a material impact on the Company's  financial
          position or results of operations.

                                       8


<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 June 30, 2001 and December 31, 2000 totaled $695.8
million and $723.2 million,  respectively, a decrease of $27.4 million, or 3.8%,
during  the  six-month  period.  The  decrease  is mainly  the result of a $56.7
million decrease in investment securities due to the maturity or exercise of the
call feature  associated with these securities.  In addition,  there was a $19.6
million decrease in mortgage-backed  securities,  partly due to the sale of $4.3
million  of  such  securities,  and a $1.5  million  decrease  in  premises  and
equipment due to the sale of vacant land that had  originally  been purchased by
the Company during 1993 as a possible administrative location.  Offsetting these
decreases was a $48.6 million  increase in cash and cash  equivalents and a $6.3
million increase in loans receivable.

Total liabilities decreased by $29.7 million during the first six months of 2001
primarily as a result of the use of excess cash to repay maturing  advances from
the Federal Home Loan Bank and other borrowings.

                                       9
<PAGE>

Total  consolidated  stockholders'  equity of the Company  was $55.3  million or
7.94% of assets at June 30, 2001,  compared to $53.1  million or 7.34% of assets
at December  31,  2000,  and $49.3  million or 6.83% of assets at June 30, 2000.
During the first half of 2001, the net increase in retained  earnings,  which is
net  income  less  dividends  paid,  plus  the  increase  in  accumulated  other
comprehensive  income,  was partially  offset by the net cost of treasury shares
purchased.  During January of 2000 management announced that the Company's board
of  directors  had  authorized  the  purchase  of up to  142,638  shares  of the
Company's  stock  in  the  open  market.   As  of  June  30,  2001,  there  were
approximately  32,000 shares  available for repurchase  under this plan, and the
Company will  continue to  repurchase  shares as share  availability  and market
conditions permit.

Asset Quality


Management  of the  Company  believes  that there has been no  material  adverse
change in the Company's asset quality during the six-month period ended June 30,
2001.

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

<TABLE>
<CAPTION>
                                                        June 30,   December 31,  June 30,
                                                       ---------   ------------  ---------
                                                          2001         2000         2000
                                                       ---------    ---------    ---------
<S>                                                    <C>          <C>          <C>
Non-performing loans                                   $   1,288    $   1,478    $   1,322
Ratio of non-performing loans to gross loans                0.35%        0.41%        0.45%
Ratio of non-performing loans to total assets               0.19%        0.20%        0.18%
Foreclosed property                                    $     101    $     176    $     188
Foreclosed property to total assets                         0.01%        0.02%        0.03%
Ratio of total non-performing assets to total assets        0.20%        0.23%        0.21%
</TABLE>

Management maintains an allowance for loan 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  portfolios  will not
exceed  the  allowance.  The  following  table sets  forth the  activity  in the
allowance for loan losses during the periods indicated (in thousands):


                                                            2001        2000
                                                           ------      ------
         Beginning balance, January 1,                     $1,714      $1,970
         Provision                                            249         164
         Less: charge-off's (recoveries), net                 155         232
                                                           ------      ------
         Ending balance, June 30,                          $1,808      $1,902
                                                           ======      ======

                                       10
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000

Net Income. The Company recorded net income of $1,688,000,  or $0.64 per diluted
share,  for the three months ended June 30, 2001 as compared to  $1,057,000,  or
$0.40 per diluted share, for the three months ended June 30, 2000.

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 balance of interest-earning  assets or
interest-bearing liabilities, respectively for the periods indicated.

<TABLE>
<CAPTION>
                                                                            Three months ended June 30,
                                                    --------------------------------------------------------------------------
                                                                  2001                                    2000
                                                    ----------------------------------      ----------------------------------
                                                    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 (4)                           $362,295      $ 7,147         7.91%     $294,372      $ 5,851         7.99%
    Mortgage-backed securities                      220,103        3,568         6.50%      290,922        4,841         6.69%
    Investment securities                            46,795          671         5.75%       99,385        1,541         6.24%
    Other interest-earning assets(1)                 39,904          431         4.33%       11,072           93         3.38%
                                                   --------      -------                   --------           --
       Total interest-earning assets                669,097       11,817         7.08%      695,751       12,326         7.13%
                                                                 -------                                 -------
 on interest-earning assets                          25,235                                  25,352
                                                   --------                                --------
      Total assets                                  694,332                                 721,103
                                                   ========                                ========
 Liabilities and stockholders' equity:
  Interest-bearing liabilities
    Deposits                                        403,810        3,577         3.55%      414,940        3,812         3.69%
    Advances from the FHLB and other
               borrowings                           227,345        3,156         5.57%      248,437        3,540         5.73%
                                                   --------      -------                   --------      -------
      Total interest-bearing liabilities            631,155        6,733         4.28%      663,377        7,352         4.46%
                                                                 -------                                 -------
 on interest-bearing liabilities                      8,778                                   9,805
                                                   --------                                --------
      Total liabilities                             639,933                                 673,182
 Stockholders' equity                                54,399                                  47,921
                                                   --------                                --------
   Total liabilities and stockholders' equity      $694,332                                $721,103
                                                   ========                                ========
Net interest income                                              $ 5,084                                 $ 4,974
                                                                 =======                                 =======
Interest rate spread (2)                                                         2.81%                                   2.67%
Net yield on interest-earning assets (3)                                         3.05%                                   2.88%
Ratio of average interest-earning assets to
average interest bearing liabilities                                              106%                                    105%

</TABLE>
(1)  Includes interest-bearing deposits in other banks.
(2)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(3)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average  interest-earning  assets.
(4)  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.

                                       11

<PAGE>

     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.

                                                       Three months ended
                                                            June 30,
                                                          2001 vs. 2000
                                                   ---------------------------
                                                       Increase (decrease)
                                                             due to
                                                   ---------------------------
                                                   Volume      Rate       Net
                                                   ---------------------------
Interest income:
     Loans receivable, net                         $ 1,694     (398)   $ 1,296
     Mortgage-backed securities                     (1,140)    (133)    (1,273)
     Investment securities                            (758)    (112)      (870)
     Other interest-earning assets                     305       33        338
                                                   ---------------------------
        Total interest-earning assets                  101     (610)      (509)
                                                   ===========================

Interest expense:
     Deposits                                          (97)    (138)      (235)
     Advances from the FHLB and other borrowings      (289)     (95)      (384)
                                                   ---------------------------
        Total interest-bearing liabilities            (386)    (233)      (619)
                                                   ===========================

Net change in net interest income                  $   487     (377)   $   110
                                                   ===========================

Total Interest  Income.  Total interest income  decreased by $509,000 or 4.3% to
$11.8  million for the three months ended June 30, 2001 compared with the second
quarter of 2000.  Average  earning assets  decreased by $26.5 million during the
same  periods.  However,  because  of the  change  in the  mix of the  Company's
interest-earning  assets the Company's  interest  income  experienced a positive
$101,000  volume-based  improvement.  During the second  quarter of 2001,  loans
receivable, which carried higher yields than other earning assets, were 54.1% of
total  interest-earning  assets  compared to 42.3% during the second  quarter of
2000.  The increase in loans is the direct  result of the  Company's  successful
efforts to increase its purchases of seasoned,  single-family residential loans.
Offsetting the volume-based  interest income increase was a $610,000  rate-based
decrease in interest  income,  primarily  the direct  result of generally  lower
market  interest rates and the lowering by the Federal  Reserve Board of the fed
funds rate during 2001 by 275 basis points. A lower fed funds rate resulted in a
lowering of the prime rate, and thus the interest income earned on the Company's
prime rate-based loans.

Total Interest Expense. Total interest expense decreased to $6.7 million for the
three-month  period ended June 30, 2001 from $7.4 million for the same period in
2000  primarily  due to decreased  advances  from the Federal Home Loan Bank and
other   borrowings,   which   resulted   in  an  overall   decrease  in  average
interest-bearing liabilities. In addition, generally lower market interest rates
resulted in a lowering of the Company's deposit interest expense.

Non-interest  income. Total non-interest income was $809,000 for the three-month
period ended June 30, 2001  compared  with $376,000 for the same period in 2000.
The  increase  is due to a  $444,000  gain on the sale of  vacant  land that the
Company  had  purchased  during  1993  for  potential  use as an  administrative
location.

                                       12
<PAGE>

Non-interest  expense.  Total non-interest expense decreased by $231,000 to $3.5
million for the three months ended June 30, 2001  compared to the same period in
2000.  Operating  expenses  decreased  in part due to the  consolidation  of one
branch during the first quarter of 2001,  thus enabling the Company to avoid the
personnel,  occupancy, and other costs associated with operating that branch. In
addition,  the Company  spent less for its marketing  and sales  personnel,  and
reduced its expenditures for direct advertising.

                                       13
<PAGE>

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000

Net Income. The Company recorded net income of $2,946,000,  or $1.12 per diluted
share,  for the six months  ended June 30, 2001 as compared  to  $2,086,000,  or
$0.40 per diluted share, for the six months ended June 30, 2000.

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 balance of interest-earning  assets or
interest-bearing liabilities, respectively for the periods indicated.

<TABLE>
<CAPTION>
                                                                           Six months ended June 30,
                                                                           Three Months Ended March,
                                                    --------------------------------------------------------------------------
                                                                 2001                                    2000
                                                    ----------------------------------      ----------------------------------
                                                    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 (4)                           $360,169      $14,313         8.01%     $292,016      $11,407         7.86%
    Mortgage-backed securities                      224,934        7,348         6.59%      291,838        9,711         6.69%
    Investment securities                            64,849        1,910         5.94%      100,656        3,072         6.14%
    Other interest-earning assets(1)                 25,237          576         4.60%        9,263          165         3.58%
                                                   --------      -------                   --------      -------
      Total interest-earning assets                 675,189       24,147         7.21%      693,773       24,355         7.06%
                                                                 -------                                 -------
Non interest-earning assets                          26,712                                  26,487
                                                   --------                                --------
      Total assets                                  701,901                                 720,260
                                                   ========                                ========
Liabilities and stockholders' equity:
  Interest-bearing liabilities
     Deposits                                       401,938        7,168         3.60%      409,516        7,388         3.63%
    Advances from the FHLB and other
               borrowings                           237,994        6,656         5.64%      254,057        7,143         5.58%
                                                   --------      -------                   --------      -------
      Total interest-bearing liabilities            639,932       13,824         4.36%      663,573       14,531         4.23%
                                                                 -------                                 -------
 on interest-bearing liabilities                      8,275                                   8,821
                                                   --------                                --------
      Total liabilities                             648,207                                 672,394
 tockholders' equity                                 53,694                                  47,866
                                                   --------                                --------
   Total liabilities and stockholders' equity      $701,901                                $720,260
                                                   ========                                ========
 Net interest income                                             $10,323                                  $9,824
                                                                 =======                                  ======
Interest rate spread (2)                                                         2.86%                                   2.54%
Net yield on interest-earning assets (3)                                         3.08%                                   2.72%
Ratio of average interest-earning assets to
average interest bearing liabilities                                              106%                                    105%

</TABLE>

(5)  Includes interest-bearing deposits in other banks.
(6)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(7)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.
(8)  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.

                                       14
<PAGE>

     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.


                                                        Six months ended
                                                            June 30,
                                                          2001 vs. 2000
                                                   ----------------------------
                                                       Increase (decrease)
                                                             due to
                                                   ----------------------------
                                                    Volume      Rate      Net
                                                   ----------------------------
Interest income:
     Loans receivable, net                         $ 2,686       220    $ 2,906
     Mortgage-backed securities                     (2,218)     (145)    (2,363)
     Investment securities                          (1,065)      (97)    (1,162)
     Other interest-earning assets                     353        58        411
                                                   ----------------------------
        Total interest-earning assets                 (244)       36       (208)
                                                   ============================

Interest expense:
     Deposits                                         (152)      (68)      (220)
     Advances from the FHLB and other borrowings      (474)      (13)      (487)
                                                   ----------------------------
        Total interest-bearing liabilities            (626)      (81)      (707)
                                                   ============================

Net change in net interest income                  $   382       117    $   499
                                                   ============================

Total Interest  Income.  Total interest income  decreased by $208,000 or 0.9% to
$24.1  million for the SIX months  ended June 30, 2001  compared  with the first
half of 2000.  Average earning assets decreased by $18.6 million during the same
periods.  However,  there was a  substantial  change in the mix of the Company's
interest-earning assets. During the first half of 2001, loans receivable,  which
carried  higher  yields  than  other  earning   assets,   were  53.3%  of  total
interest-earning  assets  compared to 42.1%  during the first half of 2000.  The
increase in loans is the direct  result of the Company's  successful  efforts to
increase its purchases of seasoned, single-family residential loans.

Total Interest  Expense.  Total interest expense  decreased to $13.8 million for
the six-month  period ended June 30, 2001 from $14.5 million for the same period
in 2000 primarily due to decreased  advances from the Federal Home Loan Bank and
other   borrowings,   which   resulted   in  an  overall   decrease  in  average
interest-bearing liabilities. In addition, generally lower market interest rates
resulted  in a lowering  of the  Company's  deposit  interest  expense,  and the
Company's  average  deposits  decreased  by $7.6  million  due  mainly  to lower
balances in certificates of deposit.

Non-interest  income. Total non-interest income was $1,209,000 for the six-month
period ended June 30, 2001  compared  with $750,000 for the same period in 2000.
The  increase  is due to a  $444,000  gain on the sale of  vacant  land that the
Company  had  purchased  during  1993  for  potential  use as an  administrative
location.

Non-interest  expense.  Total non-interest  expense decreased by $44,000 to $7.3
million for the six months  ended June 30,  2001  compared to the same period in
2000.  Operating  expenses  decreased  in part due to the  consolidation  of one
branch during the first quarter of 2001,  thus enabling the Company to avoid the
personnel,  occupancy, and other costs associated with operating that branch. In
addition, the Company reduced its expenditures for direct advertising.

                                       16

<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  six-month period ended
June 30, 2001 in the ability of the Company and its  subsidiaries  to fund their
operations.

At June 30,  2001,  the Company had  commitments  outstanding  under  letters of
credit of $3.7 million,  commitments to originate  loans of $15.0  million,  and
commitments  to fund  undisbursed  balances of closed  loans and unused lines of
credit of $36.0 million.

Capital Requirements

The Savings Bank is in  compliance  with all of its capital  requirements  as of
June 30, 2001.


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 six months ended June 30, 2001.

                                       17

<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
                           None

      ITEM 5.              OTHER INFORMATION
                           None

      ITEM 6.              EXHIBITS AND REPORTS ON FORM 8-K
                           (a)     Exhibits
                                   None
                           (b)     Reports on Form 8-K
                                   None

                                       18

<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




                                /s/ John R. Stranford
                                ---------------------
Date:  August 10, 2001          John R. Stranford
                                President and CEO
                                (Principal Executive Officer)


                                /s/ Dennis R. Stewart
                                ---------------------
Date:  August 10, 2001          Dennis R. Stewart
                                Senior Vice President and
                                Chief Financial Officer
                                (Principal Financial & Accounting Officer)


                                       19