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, 2004
                               -------------------------------------------------
                                       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 000-24168
                                               ---------

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



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

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
                                              ---       ---

         Indicate by check mark whether the registrant is an  accelerated  filer
as defined in Exchange Act Rule 12b-2. Yes        No  X
                                           ---       ---


         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes  of  common  stock as of the  latest  practicable  date:  August 6, 2004
                                                                  --------------

           Class                                   Outstanding
---------------------------                     ----------------
$.10 par value common stock                     2,880,429 shares


<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

                                    FORM 1O-Q

                       FOR THE QUARTER ENDED JUNE 30, 2004


                                      INDEX


                                                                           Page
                                                                          Number
                                                                          ------

PART I - CONSOLIDATED FINANCIAL INFORMATION

        Item 1. Consolidated Financial Statements                              3
        Item 2. Management's Discussion and Analysis of
                Financial Position and Resultsof Operations                   13
        Item 3. Quantitative and Qualitative Disclosures about Market Risk    21
        Item 4. Controls and Procedures                                       21

PART II- OTHER INFORMATION

        Item 1. Legal Proceedings                                             23
        Item 2. Changes in Securities, Use of Proceeds, and
                Issuer Repurchases of Equity Securities                       23
        Item 3. Defaults Upon Senior Securities                               23
        Item 4. Submission of Matters to a Vote of Security Holders           23
        Item 5. Other Information                                             23
        Item 6. Exhibits and Reports on Form 8-K                              24

SIGNATURES                                                                    25

EXHIBITS

        31. Certifications pursuant to Section 302 of the
            Sarbanes-Oxley Act of 2002                                        26

        32. Certification pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002                                        28

                                       2

<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                   Unaudited        Audited
                                                                                    June 30,      December 31,
                                                                                      2004           2003
                                                                                   ----------    ----------
<S>                                                                              <C>           <C>
                                   Assets
Cash and cash equivalents                                                          $    6,467    $    8,241
Certificates of deposit in other financial institutions                                    38           155
Investment securities available for sale - at fair value                               16,186        14,433
Investment securities held to maturity (fair value of $8,603 and $10,815,               8,351        10,389
    respectively)
Mortgage-backed securities available for sale - at fair value                         115,935       106,774
Mortgage-backed securities held to maturity (fair value of $18,937 and                 18,209        23,630
    $24,774, respectively)
Loans receivable, net                                                                 421,893       404,649
Federal Home Loan Bank stock - at cost                                                  6,741         6,825
Accrued interest receivable                                                             2,560         2,671
 Core deposit intangible, net of accumulated amortization of $2,536 and                   288           368
 $2,456,
   respectively
Goodwill                                                                                4,324         4,324
Premises and equipment, net                                                             6,087         6,268
Other assets                                                                           17,589        18,025
                                                                                   ----------    ----------
                                Total assets                                       $  624,668    $  606,752
                                                                                   ==========    ==========

                    Liabilities and stockholders' equity
Liabilities
   Deposits                                                                        $  467,752    $  459,343
   Advances from the Federal Home Loan Bank                                            93,675        86,853
   Advances from borrowers for taxes and insurance                                      2,096         1,738
   Accrued interest payable                                                             1,819         1,908
   Other liabilities                                                                    2,059         1,430
                                                                                   ----------    ----------
                              Total liabilities                                       567,401       551,272
                                                                                   ----------    ----------

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; 2,676,395 and 2,596,037 shares outstanding
       at June 30, 2004 and December 31, 2003, net of treasury shares of
       2,402,852 and 2,474,366, respectively                                              529           529
   Retained earnings                                                                   55,040        52,626
   Additional paid-in capital                                                          51,359        51,982
   Unearned ESOP shares                                                                (2,107)       (2,196)
   Treasury stock - at cost                                                           (46,180)      (47,043)
   Accumulated other comprehensive (loss)                                              (1,374)         (418)
                                                                                   ----------    ----------
                         Total stockholders' equity                                    57,267        55,480
                                                                                   ----------    ----------
Total liabilities and stockholders' equity                                         $  624,668    $  606,752
                                                                                   ==========    ==========
</TABLE>
                See notes to consolidated financial statements.

                                       3

<PAGE>

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

<TABLE>
<CAPTION>
                                                                             For Three Months        For Six Months
                                                                               Ended June 30,        Ended June 30,
                                                                               --------------        --------------
                                                                               2004       2003       2004         2003
                                                                             ------     ------    -------       ------
<S>                                                                        <C>        <C>       <C>          <C>
Interest income
   Loans                                                                     $5,960     $5,625    $11,950      $11,676
   Mortgage-backed securities                                                 1,531      1,845      2,988        3,697
   Investment securities                                                        280        518        560        1,026
   Interest bearing deposits and other                                            4        168          7          414
                                                                             ------     ------    -------       ------
       Total interest income                                                  7,775      8,156     15,505       16,813
                                                                             ------     ------    -------       ------
Interest expense
   Deposits                                                                   1,478      1,824      2,984        3,868
   Advances from the Federal Home Loan Bank and other borrowings                673      2,701      1,319        5,480
                                                                             ------     ------    -------       ------
       Total interest expense                                                 2,151      4,525      4,303        9,348
                                                                             ------     ------    -------       ------
       Net interest income                                                    5,624      3,631     11,202        7,465
Provision for loan losses                                                       150         90        300          180
                                                                             ------     ------    -------       ------
       Net interest income after provision for loan losses                    5,474      3,541     10,902        7,285
                                                                             ------     ------    -------       ------

Non-interest income
   Service fees, charges and other operating income                             544        440      1,120          885
   Bank-owned life insurance                                                    137        129        270          262
   Gain (loss) on sale of investment and mortgage-backed securities
     available  for sale                                                        ---         79        ---          585
                                                                             ------     ------    -------       ------
       Total non-interest income                                                681        648      1,390        1,732
                                                                             ------     ------    -------       ------
Non-interest expense
   Compensation and benefits                                                  2,247      2,036      4,521        4,060
   Occupancy and equipment                                                      644        602      1,239        1,230
   Federal deposit insurance premium                                             18         18         36           37
   Professional fees                                                            132        158        338          318
   Amortization of core deposit intangible                                       40         48         80           96
   Advertising                                                                  163        138        326          275
   Other operating                                                              625        599      1,246        1,322
                                                                             ------     ------    -------       ------
       Total non-interest expense                                             3,869      3,599      7,786        7,338
                                                                             ------     ------    -------       ------
       Income before income taxes                                             2,286        590      4,506        1,679
Income tax expense                                                              630        154      1,241          464
                                                                             ------     ------    -------       ------
       Net income                                                            $1,656       $436     $3,265       $1,215
                                                                             ======       ====     ======       ======

Basic earnings per share                                                      $0.62      $0.17      $1.23        $0.49
Diluted earnings per share                                                    $0.58      $0.16      $1.15        $0.45
Dividends paid                                                                $0.17      $0.15      $0.32        $0.30
</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,
                                                                                                 2004           2003
                                                                                                 ----           ----
<S>                                                                                        <C>            <C>
Cash flows from operating activities
Net income                                                                                   $  3,265       $  1,215
Adjustments to reconcile net income to net cash provided by operating activities:
         Mortgage loan servicing rights                                                           ---              7
         Deferred loan origination fees                                                            (8)          (139)
         Premiums and discounts on investment securities, net                                      41             26
         Premiums and discounts on mortgage-backed securities and loans, net                      418          1,179
         Amortization of core deposit intangible                                                   80             96
Provision for loan losses                                                                         300            180
Depreciation of premises and equipment                                                            475            502
Recognition of ESOP and MSBP expenses                                                             274            267
Gain on sale of investment and mortgage-backed securities available for sale                      ---           (585)
Gain on sale of real estate                                                                        (1)           (12)
Increase in value of bank-owned life insurance                                                   (270)          (262)
(Increase) decrease in:
         Accrued interest receivable                                                              111            392
         Other assets                                                                             600           (219)
Increase (decrease) in:
         Accrued interest payable                                                                 (89)            52
         Other liabilities                                                                      1,122             59
                                                                                             --------       --------
         Net cash provided by operating activities                                              6,318          2,758
                                                                                             --------       --------

Cash flows  from investing activities
Loan originations                                                                             (71,106)       (55,286)
Purchases of loans                                                                             (3,546)       (21,927)
Loan principal payments                                                                        57,045         85,946
Proceeds from sale of mortgage-backed securities available for sale                               ---         15,075
Purchases of mortgage-backed securities available for sale                                    (27,701)       (65,873)
Purchase of investment securities available for sale                                           (2,180)       (91,122)
Proceeds from maturities of investment securities held to maturity                              2,000          1,830
Proceeds from maturities of investment securities available for sale                              ---         30,000
Principal repayments from mortgage-backed securities held to maturity                           5,418         18,862
Principal repayments from mortgage-backed securities available for sale                        17,242         27,472
Purchase of bank-owned insurance                                                                  ---         (1,500)
(Purchases) and maturities of certificates of deposit in other financial
   institutions, net                                                                              117             (8)
Redemptions of Federal Home Loan Bank stock, net                                                   84            174
Proceeds from sales of real estate                                                                 32             96
Purchase of real estate held for investment                                                         4            ---
Purchase of premises and equipment                                                               (294)          (419)
                                                                                             --------       --------
         Net cash (used) investing activities                                                 (22,885)       (56,680)
                                                                                             --------       --------
</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,
                                                                                                       --------
                                                                                                   2004         2003
                                                                                                   ----         ----
<S>                                                                                        <C>            <C>
Cash flows from financing activities
Net increase in deposits                                                                          8,409        5,581
Net decrease (increase) in advances from Federal Home Loan Bank                                   6,822      (15,000)
Net increase in advances from borrowers for taxes and insurance                                     358          183
Exercise of stock options                                                                         1,281          915
Purchase of treasury stock, net                                                                  (1,226)         ---
Common stock cash dividend                                                                         (851)        (748)
                                                                                               --------     --------
         Net cash provided by (used in) financing activities                                     14,793       (9,069)
                                                                                               --------     --------

         Net (decrease) in cash and cash equivalents                                             (1,774)     (62,991)

Cash and cash equivalents at beginning of period                                                  8,241      100,580
                                                                                               --------     --------

Cash and cash equivalents at end of period                                                     $  6,467     $ 37,589
                                                                                               ========     ========
Supplemental disclosure of cash flow information
Cash paid for
         Interest on deposits and advances                                                     $  4,392     $  9,296
         Income taxes                                                                          $      0     $    250
Non-cash transactions
         Transfers from loans to real estate acquired through foreclosure                      $      0     $  1,857
</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, 2004 (unaudited)
         and December 31, 2003 and for the six-month  periods ended June 30 2004
         and 2003 (unaudited)  include the accounts of TF Financial  Corporation
         (the "Company") and its wholly owned subsidiaries Third Federal Savings
         Bank  (the  "Bank"),   TF  Investments   Corporation  and  Penns  Trail
         Development   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  June 30,  2004 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, 2003.

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  position or
         results of operations.

NOTE 4 - OTHER COMPREHENSIVE INCOME (LOSS)
         The  Company's  other  comprehensive  income  (loss)  consists  of  net
         unrealized gains (losses) on investment  securities and mortgage-backed
         securities  available for sale. Total  comprehensive  income (loss) for
         the three-month  periods ended June 30, 2004 and 2003 was ($99,000) and
         $425,000,  net of applicable income tax expense (benefit) of ($275,000)
         and  $148,000,   respectively.   Total  comprehensive  income  for  the
         six-month  periods  ended  June 30,  2004 and 2003 was  $2,309,000  and
         $607,000,  net  of  applicable  income  tax  expense  of  $748,000  and
         $151,000, respectively.

                                       7
<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 - EARNINGS PER SHARE

<TABLE>
<CAPTION>
                                                                               Three months ended June 30, 2004
                                                                               --------------------------------
                                                                                           Weighted
                                                                        (000's)             Average
                                                                        Income              Shares            Per share
                                                                      (numerator)        (denominator)          Amount
                                                                      -----------        -------------          ------
<S>                                                                    <C>                <C>                 <C>
         Basic earnings per share
          Income available to common stockholders                        $ 1,656            2,672,534           $ 0.62

         Effect of dilutive securities
                  Stock options                                                -              166,559            (0.04)
                                                                         -------            ---------           ------
         Diluted earnings per share
          Income available to common stockholders plus effect
          of dilutive securities                                         $ 1,656            2,839,093           $ 0.58
                                                                         =======            =========           ======
</TABLE>

<TABLE>
<CAPTION>
                                                                               Six months ended June 30, 2004
                                                                               ------------------------------
                                                                                           Weighted
                                                                        (000's)             Average
                                                                        Income              Shares            Per share
                                                                      (numerator)        (denominator)          Amount
                                                                      -----------        -------------          ------
<S>                                                                    <C>                <C>                 <C>
         Basic earnings per share
           Income available to common stockholders                        $3,265            2,660,871           $ 1.23

         Effect of dilutive securities
                  Stock options                                                -              169,012            (0.08)
                                                                          ------            ---------           ------
         Diluted earnings per share
           Income available to common stockholders plus effect
           of dilutive securities                                         $3,265            2,829,883           $ 1.15
                                                                          ======            =========           ======
</TABLE>

         Options to purchase  31,913  shares of common stock at $34.14 per share
         which were  outstanding  during the three and six months ended June 30,
         2004 were not included in the computation of diluted earnings per share
         because the  options'  exercise  prices were  greater  than the average
         market price of the common shares.

                                       8
<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 - EARNINGS PER SHARE (continued)

<TABLE>
<CAPTION>
                                                                               Three months ended June 30, 2003
                                                                               --------------------------------
                                                                                           Weighted
                                                                        (000's)             Average
                                                                        Income              Shares            Per share
                                                                      (numerator)        (denominator)          Amount
                                                                      -----------        -------------          ------
<S>                                                                    <C>                <C>                 <C>
         Basic earnings per share
           Income available to common stockholders                        $  436            2,516,638           $ 0.17

         Effect of dilutive securities
                  Stock options                                                -              208,264            (0.01)
                                                                          ------            ---------           ------
         Diluted earnings per share
           Income available to common stockholders plus effect
           of dilutive securities                                         $  436            2,724,902           $ 0.16
                                                                          ======            =========           ======
</TABLE>


<TABLE>
<CAPTION>
                                                                               Six months ended June 30, 2003
                                                                               --------------------------------
                                                                                           Weighted
                                                                        (000's)             Average
                                                                        Income              Shares            Per share
                                                                      (numerator)        (denominator)          Amount
                                                                      -----------        -------------          ------
 <S>                                                                    <C>                <C>                 <C>
        Basic earnings per share
          Income available to common stockholders                         $1,215            2,502,600           $ 0.49

         Effect of dilutive securities
                  Stock options                                                -              207,467            (0.04)
                                                                          ------            ---------           ------
         Diluted earnings per share
           Income available to common stockholders plus effect
           of dilutive securities                                         $1,215            2,710,067           $ 0.45
                                                                          ======            =========           ======
</TABLE>

         There were options to purchase 34,900 shares of common stock at a range
         of $25.33 to $28.00 per share which were  outstanding  during the three
         and six  months  ended  June 30,  2003  that were not  included  in the
         computation of diluted earnings per share because the options' exercise
         prices were greater than the average market price of the common shares.

                                       9

<PAGE>

                           TF FINANCIAL CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6- STOCK BASED COMPENSATION
         The  Company  has  several  fixed stock  option  plans.  The  Company's
         employee stock option plans are accounted for using the intrinsic value
         method  under APB  Opinion  No. 25, as  permitted  by SFAS No.  123. No
         stock-based  compensation  expense is reflected  in net income,  as all
         options  granted  under the plans had an  exercise  price  equal to the
         market value of the underlying common stock on the date of the grant.

         Had  compensation  cost for the plans been determined based on the fair
         value of options at the grant dates  consistent with the method of SFAS
         No. 123,  "Accounting for Stock-Based  Compensation," the Company's net
         income and  earnings per share would have been reduced to the pro forma
         amounts indicated below (in thousands, except per share data):

<TABLE>
<CAPTION>
                    Three months ended June 30,                                            2004                 2003
                    ----------------------------                                           ----                 ----
<S>                                                                                     <C>                  <C>
                    Net income
                             As reported                                                  $1,656               $  436
                             Deduct: stock-based compensation expense
                    determined using the fair value method, net of related
                    tax effects                                                               26                   11
                                                                                          ------               ------
                             Pro forma                                                    $1,630               $  425
                                                                                          ======               ======

                    Basic earnings per share
                             As reported                                                  $ 0.62               $ 0.17
                             Pro forma                                                    $ 0.61               $ 0.17

                    Diluted earnings per share
                             As reported                                                  $ 0.58               $ 0.16
                             Pro forma                                                    $ 0.58               $ 0.16
</TABLE>

         Stock-based  compensation  expense included in net income is related to
         stock  grants  in  lieu of  salary  and the  Company's  employee  stock
         ownership  plan.  Such  expense  totaled  $106,000 and $131,000 for the
         three-month periods ended June 30, 2004 and 2003, respectively.

                                       10


<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6- STOCK BASED COMPENSATION (continued)

<TABLE>
<CAPTION>

                    Six months ended June 30,                                              2004                 2003
                    --------------------------                                             ----                 ----
<S>                                                                                     <C>                 <C>
                    Net income
                             As reported                                                  $3,265              $ 1,215
                             Deduct: stock-based compensation expense
                    determined using the fair value method, net of related
                    tax effects                                                               51                   22
                                                                                          ------               ------
                             Pro forma                                                    $3,214               $1,193
                                                                                          ======               ======

                    Basic earnings per share
                             As reported                                                  $ 1.23               $ 0.49
                             Pro forma                                                    $ 1.21               $ 0.48

                    Diluted earnings per share
                             As reported                                                  $ 1.15               $ 0.45
                             Pro forma                                                    $ 1.15               $ 0.45
</TABLE>

         Stock-based  compensation  expense included in net income is related to
         stock  grants  in  lieu of  salary  and the  Company's  employee  stock
         ownership  plan.  Such  expense  totaled  $227,000 and $227,000 for the
         six-month periods ended June 30, 2004 and 2003, respectively.

                                       11

<PAGE>

                           TF FINANCIAL CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 7- EMPLOYEE BENEFIT PLANS

         Net periodic  defined benefit  pension  expense  included the following
         components:

<TABLE>
<CAPTION>
                   Three months ended June 30,                                       2004                2003
                   ----------------------------                                      ----                ----
                                                                                          (in thousands)
<S>                                                                                <C>                 <C>
          Service cost                                                               $ 57                $ 48
          Interest cost                                                                51                  46
          Expected return on plan assets                                              (53)                (54)
          Amortization of transition (asset)/obligation                                 1                   1
          Amortization of prior service costs                                          16                  16
          Amortization of unrecognized net actual loss                                  8                   3
                                                                                     ----                ----

          Net periodic benefit cost                                                  $ 80                $ 60
                                                                                     ====                ====

</TABLE>

<TABLE>
<CAPTION>
                   Six months ended June 30,                                         2004                2003
                   --------------------------                                        ----                ----
                                                                                         (in thousands)
<S>                                                                                 <C>               <C>
          Service cost                                                               $ 115              $  95
          Interest cost                                                                 95                 93
          Expected return on plan assets                                              (105)              (109)
          Amortization of transition (asset)/obligation                                  2                  3
          Amortization of prior service costs                                           31                 31
          Amortization of unrecognized net actual loss                                  12                  7
                                                                                     -----              -----

          Net periodic benefit cost                                                  $ 150              $ 120
                                                                                     =====              =====
</TABLE>

         Management expects to make no contribution to the pension plan in 2004.
         The impact of the Pension Funding Equity Act which was enacted in April
         2004 is currently being evaluated.

NOTE 8- RECLASSIFICATIONS
         Certain  prior year  amounts have been  reclassified  to conform to the
         current period presentation.

                                       12

<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

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

GENERAL
The  Company  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 Position

The  Company's  total  assets at June 30, 2004 and December 31, 2003 were $624.7
million and $606.8 million, respectively, an increase of $17.9 million, or 3.0%,
during  the  six-month  period.  Cash and  cash  equivalents  decreased  by $1.8
million. Investment securities available for sale increased by $1.8 million, the
net effect of the purchases of $2.2 million reduced by the $0.4 million decrease
in the market value of these securities.  Investment securities held to maturity
decreased  by $2.0  million  due to  calls of such  securities.  Mortgage-backed
securities  available  for sale  increased by $9.2  million as $27.7  million in
security purchases was off-set by $17.2 million of principal payments, a decline
in the market  value of these  securities  totaling  $1.0  million  and  premium
amortization  of $0.3  million.  Mortgage-backed  securities  held  to  maturity
decreased by $5.5 million as a result of principal repayments.  Loans receivable
increased by $17.2 million for the six-month period.  Consumer  non-mortgage and
single-family  residential  mortgage loans of $43.7 million and commercial loans
of $27.4 million were  originated  during the first half of 2004.  Additionally,
$3.5 million of newly originated,  single-family residential mortgage loans were
purchased  during the  six-month  period.  Offsetting  these  increases to loans
receivable were $57.0 million of principal repayments.

                                       13

<PAGE>

Total  liabilities  increased by $16.1 million.  Deposit growth during the first
six months of 2004 was $8.4 million.  Non-interest  bearing demand deposits grew
by $4.4 million while  savings,  money  market,  and  interest-bearing  checking
accounts increased by a combined $1.4 million. Certificates of deposit decreased
by $2.6  million.  Advances  from the Federal  Home Loan Bank  increased by $6.8
million due to a $10.0  million  increase in long-term  fixed  advances and $2.9
million  of  short-term  advances.  In  addition,  there  were $6.1  million  of
long-term advance repayments.

Total  consolidated  stockholders'  equity of the Company  was $57.3  million or
9.17% of total assets at June 30, 2004.  During the first six months of 2004 the
Company  repurchased 38,359 shares of its common stock and issued 109,873 shares
pursuant  to the  exercise of stock  options.  As of June 30,  2004,  there were
approximately  113,700  shares  available for  repurchase  under the  previously
announced share repurchase plan.


Asset Quality

During the first six months of 2004, the Company's provision for loan losses was
$300,000  compared to $180,000  during the same period in 2003.  The increase in
the provision is consistent with the corresponding  increase in balance of loans
receivable. As of June 30, 2004, the Company owned one parcel of foreclosed real
estate.  This parcel has been  recorded as real estate owned at the lower of the
recorded  investment  in the loan or estimated  fair value in the amount of $0.8
million and is included in other assets in the  statement of financial  position
at June 30, 2004. Management of the Company believes that there has not been any
significant deterioration in its asset quality during the period.

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

<TABLE>
<CAPTION>
                                                       June 30,    December 31,   June 30,
                                                       --------    ------------   --------
                                                         2004         2003         2003
                                                       ---------    ---------    ---------
<S>                                                     <C>          <C>          <C>
Non-performing loans                                      $2,054       $2,282       $2,231
Ratio of non-performing loans to gross loans                0.48%        0.56%        0.62%
Ratio of non-performing loans to total assets               0.33%        0.38%        0.31%
Foreclosed property                                       $  837       $  868       $1,857
Foreclosed property to total assets                         0.13%        0.14%        0.26%
Ratio of total non-performing assets to total assets        0.46%        0.52%        0.57%
</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  portfolio  will not
exceed  the  allowance.  The  following  table sets  forth the  activity  in the
allowance for loan losses during the periods indicated (in thousands):

                                                            2004           2003
                                                            ----           ----
Beginning balance, January 1,                             $2,111         $2,047
Provision                                                    300            180
Less: charge-off's, net                                      207            304
                                                          ------         ------
Ending balance, June 30,                                  $2,204         $1,923
                                                          ======         ======

                                       14

<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003

Net Income. The Company recorded net income of $1,656,000,  or $0.58 per diluted
share,  for the three  months  ended June 30,  2004 as compared to net income of
$436,000, or $0.16 per diluted share, for the three months ended June 30, 2003.

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.  Yield and cost 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>
<CAPTION>
                                                                          Three months ended June 30,
                                                                  2004                                    2003
                                                    --------------------------------        -----------------------------------
                                                    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).......................    $418,545       $5,960         5.73%     $363,906       $5,625         6.20%
    Mortgage-backed securities.................     132,144        1,531         4.66%      172,259        1,845         4.30%
    Investment securities(2)...................      30,111          334         4.46%       76,608          555         2.91%
    Other interest-earning assets(3)...........       1,648            4         0.98%       64,376          168         1.05%
                                                   --------       ------                   --------       ------
      Total interest-earning assets............     582,448        7,829         5.41%      677,149        8,193         4.85%
                                                                  ------                                  ------
Non interest-earning assets....................      35,974                                  35,748
                                                   --------                                --------
      Total assets.............................    $618,422                                $712,897
                                                   ========                                ========

Liabilities and stockholders' equity:
  Interest-bearing liabilities
    Deposits...................................    $471,402        1,478         1.26%     $446,212        1,824         1.64%
    Advances from the FHLB and other
               Borrowings......................      82,984          673         3.26%      197,249        2,701         5.49%
                                                   --------       ------                   --------       ------
      Total interest-bearing liabilities.......     554,386        2,151         1.56%      643,461        4,525         2.82%
                                                                  ------                                  ------
Non interest-bearing liabilities...............       5,801                                   6,266
                                                   --------                                --------
      Total liabilities........................     560,187                                 649,727
Stockholders' equity...........................      58,235                                  63,170
                                                   --------                                --------
   Total liabilities and stockholders' equity..    $618,422                                $712,897
                                                   ========                                ========
Net interest income............................                   $5,678                                  $3,668
                                                                  ======                                  ======
Interest rate spread (4).......................                                  3.85%                                   2.03%
Net yield on interest-earning assets (5).......                                  3.92%                                   2.17%
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)  Tax  equivalent  adjustments  to interest on investment  securities for the
     quarter ended June 30, 2004 and 2003 were $54,000 and $37,000 respectively.
     Tax equivalent interest income is based upon an effective tax rate of 34%.
(3)  Includes interest-bearing deposits in other banks.
(4)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(5)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                       15

<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,
                                                           2004 vs. 2003
                                                  -----------------------------
                                                        Increase (decrease)
                                                              due to
                                                  -----------------------------
                                                   Volume       Rate        Net
                                                  -----------------------------
Interest income:

     Loans receivable, net                        $ 2,504    $(2,169)   $   335
     Mortgage-backed securities                    (1,149)       835       (314)
     Investment securities                         (1,384)     1,163       (221)
     Other interest-earning assets                   (153)       (11)      (164)
                                                  -----------------------------
        Total interest-earning assets                (182)      (182)      (364)
                                                  =============================

Interest expense:
     Deposits                                         596       (942)      (346)
     Advances from the FHLB and other borrowings   (1,192)      (836)    (2,028)
                                                  -----------------------------
        Total interest-bearing liabilitie            (596)    (1,778)    (2,374)
                                                  =============================
Net change in net interest income                 $   414    $ 1,596    $ 2,010
                                                  =============================

Total Interest Income.  Total interest income,  on a taxable  equivalent  basis,
decreased by $0.4 million or 4.4% to $7.8 million for the quarter ended June 30,
2004  compared  with the same  quarter of 2003  primarily  because of low market
interest rates which resulted in a significant amount of loan prepayments during
the intervening  period.  Increased loan originations at the Bank contributed to
loan income in a manner that largely  offset the impact caused by the low market
interest rates.  Interest  income from  mortgage-backed  securities,  investment
securities and other interest-earning  assets was lower in the second quarter of
2004 in comparison to the same period of 2003.  This decrease is consistent with
the  reduction in the  balances  maintained  in these types of  interest-earning
assets.

Total Interest Expense. Total interest expense decreased by $2.4 million to $2.2
million during the  three-month  period ended June 30, 2004 as compared with the
related  quarter of 2003.  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  Bank's  renewing  certificates  of  deposit  that  had  been
originated when market interest rates were higher. The repayment and refinancing
of the Federal  Home Loan Bank  Advances  that  occurred at the end of the third
quarter of 2003 also contributed to the overall reduction of interest expense.

                                       16
<PAGE>

Non-interest  income. Total non-interest income was $681,000 for the three-month
period ended June 30, 2004  compared  with $648,000 for the same period in 2003.
Retail banking fees  increased by $104,000 as a result of a $79,000  increase in
overdraft and uncollected fees. Also, the collection of mortgage  brokerage fees
and a growth in other loan fees  contributed to the increase  during the period.
Net gains on sales of mortgage-backed  securities  available for sale during the
second  quarter of 2003 totaled  $79,000 while,  conversely,  there were no such
sales during the same period in 2004.

Non-interest  expense.  Total non-interest expense increased by $270,000 to $3.9
million for the three  months ended June 30, 2004 in contrast to the same period
in 2003.  Compensation  and benefit  expenses  were  higher by  $211,000  due to
increases  in  salary  and  compensation  costs of the  Company.  Occupancy  and
equipment  costs rose  $42,000  largely due  increases  in the costs  associated
office  and  equipment  maintenance.   Additionally,  other  operating  expenses
increased  $26,000  between the two quarters as a result of the increase in loan
originations for the quarter.

                                       17
<PAGE>

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003

Net Income. The Company recorded net income of $3,265,000,  or $1.15 per diluted
share,  for the six months  ended  June 30,  2004 as  compared  to net income of
$1,215,000, or $0.45 per diluted share, for the six months ended June 30, 2003.

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.  Yield and cost 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>
<CAPTION>
                                                                           Six months ended June 30,
                                                                           -------------------------
                                                                  2004                                    2003
                                                    --------------------------------        ----------------------------------
                                                    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).......................    $414,761      $11,950         5.79%     $365,226      $11,676         6.45%
    Mortgage-backed securities.................     131,400        2,988         4.57%      167,985        3,697         4.44%
    Investment securities (2)..................      30,282          663         4.40%       66,670        1,093         3.31%
    Other interest-earning assets(3)...........       1,609            7         0.87%       79,297          414         1.05%
                                                   --------      -------                   --------      -------
      Total interest-earning assets............     578,052       15,608         5.43%      679,178       16,880         5.01%
                                                                 -------                                 -------
Non interest-earning assets....................      36,133                                  35,356
                                                   --------                                --------
      Total assets.............................    $614,185                                $714,534
                                                   ========                                ========

Liabilities and stockholders' equity:
  Interest-bearing liabilities
    Deposits...................................    $468,073        2,984         1.28%     $444,459        3,868         1.75%
    Advances from the FHLB and other
               Borrowings......................      83,149        1,319         3.19%      200,619        5,480         5.51%
                                                   --------      -------                   --------      -------
      Total interest-bearing liabilities.......     551,222        4,303         1.57%      645,078        9,348         2.92%
                                                                 -------                                 -------
Non interest-bearing liabilities...............       5,517                                   6,344
                                                   --------                                --------
      Total liabilities........................     556,739                                 651,422
Stockholders' equity...........................      57,446                                  63,112
                                                   --------                                --------
   Total liabilities and stockholders' equity..    $614,185                                $714,534
                                                   ========                                ========
Net interest income............................                  $11,305                                  $7,532
                                                                 =======                                  ======
Interest rate spread (4).......................                                  3.86%                                   2.09%
Net yield on interest-earning assets (5).......                                  3.93%                                   2.24%
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)  Tax equivalent adjustments to interest on investment securities for the six
     months ended June 30, 2004 and 2003 were $103,000 and $67,000 respectively.
     Tax equivalent interest income is based upon an effective tax rate of 34%.
(3)  Includes interest-bearing deposits in other banks.
(4)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(5)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                       18

<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,
                                                          2004 vs. 2003
                                                 -----------------------------
                                                       Increase (decrease)
                                                             due to
                                                 -----------------------------
                                                  Volume       Rate        Net
                                                 -----------------------------
Interest income:
     Loans receivable, net                        $ 2,887    $(2,613)   $   274
     Mortgage-backed securities                    (1,020)       311       (709)
     Investment securities                         (1,177)       747       (430)
     Other interest-earning assets                   (347)       (60)      (407)
                                                 ------------------------------
        Total interest-earning assets                 343     (1,615)    (1,272)
                                                 ==============================

Interest expense:
     Deposits                                         547     (1,431)      (884)
     Advances from the FHLB and other borrowings   (2,421)    (1,740)    (4,161)
                                                 ------------------------------
        Total interest-bearing liabilities         (1,874)    (3,171)    (5,045)
                                                 ==============================

Net change in net interest income                 $ 2,217    $ 1,556    $ 3,773
                                                 ==============================

Total Interest Income.  Total interest income,  on a taxable  equivalent  basis,
decreased by $1.3 million or 7.5% to $15.6 million for the six months ended June
30, 2004  compared with the first half of 2003  primarily  because of low market
interest rates which resulted in a significant amount of loan prepayments during
the intervening  period.  Increased loan originations at the Bank contributed to
loan income in a manner that largely  offset the impact caused by the low market
interest rates.  Interest  income from  mortgage-backed  securities,  investment
securities  and other  interest-earning  assets  was lower  during the first six
months of 2004 in  comparison  to the same  period  of 2003.  This  decrease  is
consistent  with the  reduction  in the  balances  maintained  in these types of
interest-earning assets.

Total Interest Expense. Total interest expense decreased by $5.0 million to $4.3
million  during the  six-month  period ended June 30, 2004 as compared  with the
first half of 2003.  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 Bank's  renewing  certificates  of deposit that had been  originated
when market  interest  rates were higher.  The repayment and  refinancing of the
Federal Home Loan Bank Advances that occurred at the end of the third quarter of
2003 also contributed to the overall reduction of interest expense.

                                       19
<PAGE>

Non-interest  income. Total non-interest income was $1,390,000 for the six-month
period ended June 30, 2004 in contrast  with  $1,732,000  for the same period in
2003.  The  decrease  was  primarily  due to  $585,000  in net gains on sales of
mortgage-backed  securities  available  for sale during 2003 while,  conversely,
there were no such sales  during the same period in 2004.  Retail  banking  fees
were  $235,000  greater  over the period as a result of a $154,000  increase  in
overdraft and uncollected fees. Also, the collection of mortgage  brokerage fees
and a growth in other loan fees contributed to the increase during the period.

Non-interest  expense.  Total non-interest expense increased by $448,000 to $7.8
million for the six months  ended June 30,  2004  compared to the same period in
2003. Compensation and benefit expenses were higher by $461,000 due to increases
in salary and compensation  costs of the Company.  In contrast,  other operating
expenses decreased $76,000 between the two periods mostly as a result of various
deposit item and reconciling losses of $94,000 which were expensed during 2003.

                                       20
<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 the  six-month  period
ended June 30, 2004 in the ability of the Company and its  subsidiaries  to fund
their operations.

At June 30,  2004,  the Company had  commitments  outstanding  under  letters of
credit of $1.4 million,  commitments to originate  loans of $12.0  million,  and
commitments  to fund  undisbursed  balances of closed  loans and unused lines of
credit of $49.8 million. There has been no material change during the six months
ended June 30, 2004 in any of the Company's  other  contractual  obligations  or
commitments to make future payments.

Capital Requirements

The Bank was in compliance  with all of its capital  requirements as of June 30,
2004.



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, 2004.


CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on their  evaluation of the Company's  disclosure  controls and procedures
(as defined in Rule  13a-15(e)  under the  Securities  Exchange Act of 1934 (the
"Exchange  Act")),  the  Company's  principal  executive  officer and  principal
financial  officer have  concluded  that as of the end of the period  covered by
this Quarterly  Report on Form 10-Q such disclosure  controls and procedures are
effective to ensure that information  required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded,  processed,
summarized  and reported  within the time periods  specified in  Securities  and
Exchange Commission rules and forms.

Changes in Internal Controls over Financial Reporting

During the quarter under report,  there was no change in the Company's  internal
control over financial reporting that has materially affected,  or is reasonably
likely to materially  affect,  the  Company's  internal  control over  financial
reporting.

                                       21

<PAGE>

CRITICAL ACCOUNTING POLICIES

Certain  critical  accounting  policies  of  the  Company  require  the  use  of
significant  judgment  and  accounting  estimates  in  the  preparation  of  the
consolidated  financial  statements  and  related  data  of the  Company.  These
accounting  estimates require  management to make assumptions about matters that
are highly  uncertain at the time the  accounting  estimate is made.  Management
believes  that  the  most  critical  accounting  policy  requiring  the  use  of
accounting estimates and judgment is the determination of the allowance for loan
losses.  If the  financial  position of a significant  amount of debtors  should
deteriorate  more than the  Company has  estimated,  present  reserves  for loan
losses may be  insufficient  and  additional  provisions  for loan losses may be
required. The allowance for loan losses was $2,204,000 at June 30, 2004.

NEW ACCOUNTING PRONOUNCEMENTS

On March 31, 2004,  the  Financial  Accounting  Standards  Board (FASB) issued a
proposed Statement, "Share-Based Payment an Amendment of FASB Statements No. 123
and  APB  No.  95",  that  addresses  the  accounting  for  share-based  payment
transaction in which an enterprise  receives  employee  services in exchange for
(a) equity  instruments of the enterprise or (b)  liabilities  that are based on
the fair value of the enterprise's  equity instruments or that may be settled by
the issuance of such equity instruments. Under the FASB's proposal, all forms of
share-based payments to employees, including stock options, would be treated the
same as other forms of  compensation  by  recognizing  the  related  cost in the
income  statement.  The expense of the award would generally be measured at fair
value at the grant date. Current  accounting  guidance requires that the expense
relating to so-called fixed plan employee stock options only be disclosed in the
footnotes to the financial  statements.  The proposed  Statement would eliminate
the  ability to account  for  share-based  compensation  transactions  using APB
Opinion  No. 25,  "Accounting  for Stock  Issued to  Employees."  The Company is
currently  evaluating this proposed  statement and its effects on its results of
operations.

In March 2004 the  Securities  and  Exchange  Commission  staff  released  Staff
Accounting  Bulletin  (SAB) 105, "Loan  Commitments  Accounted for as Derivative
Instruments."  SAB 105 requires  that a lender  should not consider the expected
cash  flows  related  to loan  servicing  or include  any  internally  developed
intangible  assets in determining the fair value of loan  commitments  accounted
for as  derivatives.  Companies  will be required to adopt SAB 105 effective for
commitments  entered into after June 30, 2004. The  requirements of SAB 105 will
apply to the Company's mortgage interest rate lock commitments  related to loans
held for sale.  At June 30,  2004,  the  Company  did not have such  commitments
subject  to  the  provisions  of SAB  105.  The  Company  anticipates  that  the
application  of SAB 105 will not have a  material  impact  on the  effect on the
Company's financial position or results of operations.

                                       22

<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

                                     PART II

ITEM 1. LEGAL PROCEEDINGS

        Not applicable.

ITEM 2. CHANGES IN  SECURITIES,  USE OF PROCEEDS AND ISSUER  PURCHASES OF EQUITY
        SECURITIES

        The following table provides information on repurchases by  the  Company
        of its common  stock in each  month for the  six months  ended  June 30,
        2004:

<TABLE>
<CAPTION>

                                                                   Total Number of        Maximum Number
                                                                 Shares Purchased         of Shares that may
                            Total Number                         as Part of Publicly      yet be Purchased
                             of Shares         Average Price      Announced Plan of       Under the Plans or
        Period               Purchased        Paid per Share           Program                 Programs
        ------                                --------------           -------                 --------
<S>                         <C>               <C>                    <C>                   <C>
January 1, 2004
through
January 31, 2004                ---                 ---                  ---                   114,082
February 1, 2004
through
February 29, 2004               ---                 ---                  ---                   114,082
March 1
Through
March  31, 2004              38,000              $32.00                  ---                   114,082
April 1, 2004
through
April 30, 2004                  ---                 ---                  ---                   114,082
May 1, 2004
through
May 31, 2004                    ---                 ---                  ---                   114,082
June 1
Through
June  30, 2004                  359              $28.63                  359                   113,723

</TABLE>


         The total number of shares  repurchased during the quarter was directly
related to the exercise of stock options.  The repurchase  poses no modification
to the  rights  of  stockholders.  Furthermore,  there has been no change in the
ability of the Company to pay  dividends or any  material  change in the working
capital  of the  Company.  The stock  repurchase  did not  alter the  previously
approved stock repurchase plan of the Company.

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


                                       23
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) Exhibits

               31.  Certification  pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 2003.

               32.  Certification  pursuant to Section 906 of the Sarbanes-Oxley
                    Act of 2003.

        (b) Reports on Form 8-K

               On July 23, 2004 the Company filed a Form 8-K wherein the Company
               included the press release  announcing the Company's earnings for
               the second quarter of 2004.


                                       24

<PAGE>

                            TF FINANCIAL CORPORATION



                                   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.








Date: August 13, 2004              /s/ Kent C. Lufkin
                                   ---------------------------------------------
                                   Kent C. Lufkin
                                   President and CEO
                                   (Principal Executive Officer)



Date: August 13, 2004              /s/ Dennis R. Stewart
                                   ---------------------------------------------
                                   Dennis R. Stewart
                                   Executive Vice President and
                                   Chief Financial Officer
                                   (Principal Financial & Accounting Officer)

                                       25