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, 1999
                               -------------------------------------------------

                                       OR

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

For the transition period from                      to
                               --------------------    -------------------

         Commission file number      0-24168
                                     -------

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



               Delaware                                    74-2705050
--------------------------------------------------------------------------------
(State or other jurisdiction of                 (I.R.S. employer identification
incorporation or organization)                  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: August 13, 1999
                                                   ---------------

                     Class                                  Outstanding
        ---------------------------                      ----------------
        $.10 par value common stock                      2,757,798 shares


<PAGE>

                   TF FINANCIAL CORPORATION AND SUBSIDIARIES

                                   FORM 1O-Q

                      FOR THE QUARTER ENDED JUNE 30, 1999


INDEX


                                                                            Page
                                                                          Number
                                                                          ------

PART I - CONSOLIDATED FINANCIAL INFORMATION

Item     1.       Consolidated Financial Statements                            3
Item     2.       Management's Discussion and Analysis of Financial
                           Condition and Results of Operations                 8
Item     3.       Quantitative and Qualitative Disclosures about Market Risk  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,
                                                                                          1999        1998          1998
                                                                                          ----        ----          ----
                         Assets

<S>                                                                                 <C>          <C>          <C>
Cash and cash equivalents                                                             $  16,467    $  42,703    $  43,478
Certificates of deposit in other financial institutions                                   1,745        2,238        2,437
Investment securities available for sale - at fair value                                 22,692        9,042       37,898
Investment securities held to maturity
  (fair value of $81,126, $81,094 and                                                    80,731       80,895       61,015
    $60,945, respectively)

Mortgage-backed securities available for sale - at fair value                            95,273       75,285       41,723
Mortgage-backed securities held to maturity
  (fair value of $176,574,                                                              179,670      180,964      234,144
  $182,560, and $235,901, respectively)




Loans receivable, net                                                                   291,363      240,841      237,407
Federal Home Loan Bank stock - at cost                                                   12,668        9,168        8,918
Accrued interest receivable                                                               5,114        4,558        4,463
Real estate held for investment                                                           2,348        2,348         --
Goodwill and other intangible assets                                                      6,972        7,389        7,823
Premises and equipment, net                                                               8,765        9,017        8,523
Other assets                                                                              1,359        1,160        1,455
                                                                                      ---------    ---------    ---------
          Total Assets                                                                $ 725,167    $ 665,608    $ 689,284
                                                                                      =========    =========    =========

                      Liabilities and Stockholders' Equity

Liabilities
   Deposits                                                                           $ 416,925    $ 438,913    $ 448,625
   Advances from the Federal Home Loan Bank                                             248,359      163,359      178,356
   Advances from borrowers for taxes and insurance                                        1,304        1,204        1,721
   Accrued interest payable                                                               4,275        4,166        5,750
   Other liabilities                                                                      3,088        5,306        3,194
                                                                                      ---------    ---------    ---------
Total Liabilities                                                                       673,951      612,948      637,646
                                                                                      ---------    ---------    ---------
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; 2,763,318,  2,857,932, and 2,892,522  shares
       outstanding at June 30, 1999, December 31, 1998 and June 30, 1998,
       net of treasury shares of 2,243,990, 2,143,319, and 2,098,551, respectively          529          529          529
   Retained earnings                                                                     47,052       45,762       44,438
   Additional paid-in capital                                                            52,026       51,957       51,888
   Unearned ESOP shares                                                                  (2,827)      (2,888)      (2,943)
   Shares acquired by MSBP                                                                 (255)        (468)        (682)
   Treasury stock - at cost                                                             (44,212)     (42,386)     (41,565)
   Accumulated other comprehensive income                                                (1,097)         154          (27)
                                                                                      ---------    ---------    ---------
Total Stockholders' Equity                                                               51,216       52,660       51,638
                                                                                      ---------    ---------    ---------
Total Liabilities and Stockholders' Equity                                            $ 725,167    $ 665,608    $ 689,284
                                                                                      =========    =========    =========
</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,
                                                                        1999        1998       1999        1998
<S>                                                                 <C>         <C>        <C>         <C>
Interest income
   Loans                                                             $  5,707    $  4,605   $ 10,796    $  9,509
   Mortgage-backed securities                                           4,199       4,335      8,296       7,573
   Investment securities                                                1,817       1,750      3,398       3,327
   Interest bearing deposits and other                                    221         308        547         730
                                                                     --------    --------   --------    --------
TOTAL INTEREST INCOME                                                  11,944      10,998     23,037      21,139
                                                                     --------    --------   --------    --------
Interest expense
   Deposits                                                             3,707       4,364      7,564       8,678
   Borrowings                                                           3,438       2,226      6,213       3,574
TOTAL INTEREST EXPENSE                                                  7,145       6,590     13,777      12,252
                                                                     --------    --------   --------    --------
NET INTEREST INCOME                                                     4,799       4,408      9,260       8,887
Provision for loan losses                                                  60          15         90          30
                                                                     --------    --------   --------    --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                     4,739       4,393      9,170       8,857
                                                                     --------    --------   --------    --------
Non-interest income
   Gain (loss) on sale of real estate acquired through foreclosure        (10)         25         (4)         24
   Gain on sale of loans and securities                                  --           362       --           436
   Service fees, charges and other operating income                       307         299        625         646
                                                                     --------    --------   --------    --------
      TOTAL NON-INTEREST INCOME                                           297         686        621       1,106
                                                                     --------    --------   --------    --------
Non-interest expense
   Compensation and benefits                                            1,692       1,620      3,332       3,285
   Occupancy and equipment                                                511         484      1,005         923
   Federal deposit insurance premium                                       65          70        133         140
   Data processing                                                          4         274          9         449
   Professional fees                                                      184         149        349         284
   Amortization of goodwill and other intangible assets                   209         225        418         450
   Advertising                                                             91          90        181         180
   Other operating                                                        678         541      1,227       1,117
                                                                     --------    --------   --------    --------
TOTAL NON-INTEREST EXPENSE                                              3,434       3,453      6,654       6,828
                                                                     --------    --------   --------    --------
     INCOME BEFORE INCOME TAXES                                         1,602       1,626      3,137       3,135
Income taxes                                                              577         637      1,128       1,153
                                                                     --------    --------   --------    --------
NET INCOME                                                           $  1,025    $    989   $  2,009    $  1,982
                                                                     ========    ========   ========    ========

Basic earnings per share                                             $   0.37    $   0.34   $   0.72    $   0.68
Diluted earnings per share                                           $   0.35    $   0.30   $   0.67    $   0.61
Weighted average number of shares outstanding - Basic                   2,759       2,896      2,790       2,893
Weighted average number of shares outstanding - Diluted                 2,967       3,254      2,981       3,249
</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,
                                                                                     --------
                                                                               1999         1998
                                                                               ----         ----
<S>                                                                       <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                 $   2,009    $   1,982
Adjustments to reconcile net income to
net cash provided by operating activities:
     Mortgage loan servicing rights                                                7            9
     Deferred loan origination fees                                              (39)         (91)
     Premiums and discounts on investment securities, net                         16           36
     Premiums and discounts on mortgage-backed securities and loans, net         379          291
     Amortization of goodwill and other intangible assets                        417          451
     Provision for loan losses and provision for losses on real estate            90           30
Depreciation of premises and equipment                                           456          387
Recognition of ESOP and MSBP expenses                                            342          411
(Gain) loss on sale of real estate acquired through foreclosure                    4          (24)
(Gain) loss on sale of loans and securities                                     --           (436)
Decrease (increase) in
     Accrued interest receivable                                                (556)        (506)
     Other assets                                                               (270)        (337)
Increase (decrease) in
     Accrued interest payable                                                    109        3,280
     Other liabilities                                                        (2,218)      (1,140)
                                                                            --------     --------
     NET CASH PROVIDED BY OPERATING ACTIVITIES                                   746        4,343
                                                                            --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES
Loan origination and principal payments on loans, net                         25,893       (6,142)
Purchases of loans                                                           (76,553)        --
Proceeds from loan sales                                                        --         19,496
Maturities (purchases) of certificates of deposit
  in other financial institutions, net                                           493          300
Purchases of investment securities available for sale                        (18,059)    (137,644)
Purchases of investment securities  held to maturity                        (144,494)     (23,030)
Purchases of mortgage-backed securities  available for sale                  (34,541)     (16,244)
Purchase of mortgage-backed securities  held to maturity                     (35,412)    (114,358)
Proceeds from sale of investment securities available for sale                  --          7,445
Proceeds from sale of mortgage backed securities available for sale             --          5,683
Proceeds from maturities of investment securities  held to maturity          147,447       23,989
Proceeds from maturities of investment securities  available for sale          2,000      115,472
Principal repayments from mortgage-backed securities held to maturity         36,542       24,192
Principal repayments from mortgage-backed securities available for sale       12,779        5,627
Purchases and redemption of Federal Home Loan Bank Stock, net                 (3,500)      (4,000)
Proceeds from sales of real estate acquired through foreclosure                   61          114
Purchase of premises and equipment                                              (204)      (1,021)
                                                                            --------     --------
     NET CASH USED IN  INVESTING ACTIVITIES                                  (87,548)    (100,121)
                                                                            --------     --------
</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,
                                                                                     --------
                                                                                 1999        1998
                                                                                 ----        ----
<S>                                                                         <C>          <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits                                           (21,988)     (1,804)
Advances from Federal Home Loan Bank , net                                     85,000      89,997
Net (decrease) increase in advances from borrowers for taxes and insurance        100         130
Exercise of stock options                                                          97        --
Purchase of treasury stock                                                     (1,970)       --
Common stock cash dividend                                                       (673)       (692)
                                                                             --------    --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                            60,566      87,631
                                                                             --------    --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          (26,236)     (8,147)

Cash and cash equivalents at beginning of period                               42,703      51,625
                                                                             --------    --------
Cash and cash equivalents at end of period                                   $ 16,467    $ 43,478
                                                                             ========    ========

Supplemental disclosure of cash flow information
Cash paid for
     Interest on deposits and advances                                       $ 13,669    $  8,972
     Income taxes                                                            $    911    $  1,692
Non-cash transactions
     Transfers from loans to real estate acquired through foreclosure            --      $     61

</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, 1999,  December 31,
     1998,  June 30, 1998 and for the three and six month periods ended June 30,
     1999 and  1998  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 generally accepted
     accounting  principles.  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  periods  ended  June  30,  1999  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, 1998.


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

     On  January  1,  1998,  the  Company  adopted  SFAS  No.  130,   "Reporting
     Comprehensive Income". The Company's other comprehensive income consists of
     net unrealized  gains on investment  securities  available for sale.  Total
     comprehensive  income for the  three-month  periods ended June 30, 1999 and
     1998 was $43,000 and $766,000,  net of  applicable  income tax (benefit) of
     ($51,000) and $494,000, respectively.

     Total  comprehensive  income for the six-month  periods ended June 30, 1999
     and 1998 was  $758,000  and  $1,786,000,  net of  applicable  income tax of
     $329,000 and $1,028,000, respectively.


                                       7

<PAGE>


                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

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

GENERAL

TF Financial  Corporation  (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 Condition

The Company's total assets at June 30, 1999 and December 31, 1998 totaled $725.2
million and $665.6 million, respectively, an increase of $59.6 million, or 9.0%,
during the six month  period.  This increase was primarily the result of a $50.5
million  increase in loans  receivable,  an $13.5 million increase in investment
securities, a $18.7 million increase in mortgage-backed  securities,  and a $3.5
million increase in Federal Home Loan Bank stock. These increases were partially
offset by the $26.2 million decrease in cash and cash equivalents.  The increase
in total assets was primarily  funded by the $85.0 million  increase in advances
from the Federal Home Loan Bank.

The net increase in loans  receivable of $50.5  million,  or 20.0%,  from $240.8
million at December  31, 1998 to $291.4  million at June 30, 1999 was  primarily
the  result of the  purchase  of $ 71.9  million  of  single-family  residential
mortgage  loans and the purchase of $4.5 million of commercial  mortgage  loans,
partially  offset  by  loan  repayments.  While  it is  management's  intent  to
originate  the majority of its  portfolio  loans,  similar loan products will be
purchased in the secondary  markets  during  periods when  in-house  originating
capacity is being added or when  opportunities to originate in local markets are
not sufficient to satisfy portfolio loan capacity.


                                       8
<PAGE>

Investment securities at June 30, 1999 totaled $103.4 million,  which represents
an increase of $13.5  million or 15.0% as compared to $89.9  million at December
31, 1998.  Mortgage-backed securities aggregated $274.9 million at June 30, 1999
compared to $256.2 million at December 31, 1998.  These  increases in securities
balances are due to the  reinvestment of cash and cash flow caused by repayments
of mortgage  loans and mortgage  securities,  and the  reinvestment  of maturing
investment securities.

The  increase  in Federal  Home Loan Bank stock  balances  was the result of the
purchase  of  $3.5  million  of  stock  required  to  support  the  increase  in
outstanding advances from the Federal Home Loan Bank.

Total  liabilities  increased  by $61.0  million  during  the first half of 1999
primarily as a result of the $85.0 million, or 52.0%,  increase in advances from
the Federal  Home Loan Bank.  This  increase was offset by a $22.0  million,  or
5.0%,  decrease in total  deposits  balances.  The increase in advances from the
Federal  Home Loan Bank  funded the  purchase of loans and  securities,  and the
decrease in deposit balances.

Total consolidated stockholders' equity of the Company decreased by $1.4 million
or 2.7%, to $51.2 million,  or 7.1% of total assets at June 30, 1999, from $52.7
million or 8.0 % of total  assets at December 31,  1998.  The decrease  resulted
from the repurchase of 107,937 shares of common stock at a cost of approximately
$1.8  million,  a decrease of $1.3 million in  accumulated  other  comprehensive
income,  partially offset by a net increase to retained earnings of $1.3 million
for the six month period.  During the first quarter of 1999 management announced
the  completion  of its then  current  share  repurchase  program,  and that the
Company's  board of  directors  had  authorized  the  purchase  of up to 152,052
additional  shares  of  the  Company's  stock  in the  open  market  during  the
subsequent twelve months.

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,
1999.

The following table sets forth information regarding the Company's asset quality
(dollars in thousands):
<TABLE>
<CAPTION>
                                                             June 30,  December 31,   June 30,
                                                             --------  ------------   --------
                                                              1999         1998         1998
                                                              ----         ----         ----
<S>                                                       <C>          <C>          <C>
Non-performing loans                                      $   2,199    $   1,594    $   1,746
Ratio of non-performing loans to gross loans                   0.75%        0.65%        0.73%
Ratio of non-performing loans to total assets                  0.30%        0.24%        0.25%
Foreclosed property                                             243          308          322
Foreclosed property to total assets                            0.03%        0.05%        0.05%
Ratio of total non-performing assets to total assets           0.34%        0.28%        0.30%

</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)

                                                             1999      1998
                                                             ----      ----
Beginning balance, January 1,                             $ 1,909   $ 2,029
Provision                                                      90        30
Charge-off's, net                                              83        (4)
                                                          -------   -------
Ending balance, June 30,                                  $ 1,916   $ 2,063
                                                          =======   =======


                                       9
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999

Net Income. The Company recorded net income of $1,025,000,  or $0.35 per diluted
share,  for the three  months  ended June 30, 1999 as compared to  $989,000,  or
$0.30 per diluted share, for the three months ended June 30, 1998.

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,
                                                                           ---------------------------
                                                              1999                             1998
                                                              ----                             ----
                                                 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) ....................   $300,809    $  5,707       7.59%   $232,336   $  4,605      7.93%
    Mortgage-backed securities ..............    264,431       4,199       6.35%    269,285      4,335      6.44%
    Investment securities ...................    116,534       1,817       6.24%    116,558      1,750      6.01%
    Other interest-earning assets(1) ........     21,783         221       4.06%     29,984        308      4.11%
                                                --------    --------               --------   --------
      Total interest-earning assets .........    703,557      11,944       6.79%    648,163     10,998      6.79%
                                                            --------                          --------
Non interest-earning assets .................     34,760                             23,002
                                                --------                           --------
      Total assets ..........................    738,317                            671,165
                                                 =======                            =======

Liabilities and stockholders' equity:
  Interest-bearing liabilities:
    Savings deposits ........................    423,038       3,707       3.51%    447,435      4,364      3.90%
    Advances from the FHLB ..................    250,027       3,438       5.50%    161,691      2,226      5.51%
                                                --------    --------               --------   --------
      Total interest-bearing liabilities ....    673,065       7,145       4.25%    609,126      6,590      4.33%
                                                --------    --------               --------   --------
Non interest-bearing liabilities ............     13,725      10,615
      Total liabilities .....................    686,790     619,741

Stockholders' equity ........................     51,527                             51,424
                                                --------                           --------
   Total liabilities and stockholders' equity   $738,317                           $671,165
                                                ========                           ========
Net interest income .........................               $  4,799                          $  4,408
                                                            ========                          ========
Interest rate spread (2) ....................                              2.54%                            2.46%
Net yield on interest-earning assets (3) ....                              2.73%                            2.72%
Ratio of average interest-earning assets to
average interest bearing liabilities ........                                105%                            106%


</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.

                                       10
<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,
                                                     1999 vs. 1998
                                            -------------------------------
                                                   Increase (Decrease)
                                            -------------------------------
                                                          Due to
                                            -------------------------------
                                              Volume       Rate       Net
                                            -------------------------------
Interest income:
     Loans receivable, net                   $ 2,341    ($1,239)   $ 1,102
     Mortgage-backed securities                  (77)       (59)      (136)
     Investment securities                        (3)        70         67
     Other interest-earning assets               (83)        (4)       (87)
                                             ------------------------------
        Total interest-earning assets          2,179     (1,233)       946
                                              =============================

Interest expense
   Interest-bearing liabilities:
     Savings deposits                           (232)      (425)      (657)
     Advances from the FHLB                    1,240        (28)     1,212
        Total interest-bearing liabilities     1,008       (437)       555
                                             ------------------------------
Net change in net interest income            $ 1,170    ($  779)   $   391
                                              =============================

Total Interest  Income.  Total interest  income  increased by $946 thousand,  or
8.6%,  to $11.9  million for the three months ended June 30, 1999  compared with
the second quarter of 1998 primarily because of increases in the average balance
of loans  receivable.  The  increase  in the  interest  on loans  receivable  is
primarily attributable to the purchase of $76.4 million of mortgage loans in the
first  quarter  of 1999.  The  increased  interest  income  attributable  to the
purchase of mortgage  loans was partially  offset by the decrease to the average
yield on loans  receivable  resulting from the early repayment during the period
of higher yielding mortgage loans. In addition,  the yield on the mortgage loans
purchased  was less than the average  yield on the portfolio due to the interest
rate environment that existed at the time of the purchase.

Total Interest Expense. Total interest expense increased to $7.1 million for the
three-month  period ended June 30, 1999 from $6.6 million for the same period in
1998  primarily due to increased  advances from the Federal Home Loan Bank which
were used to fund asset  growth and deposit  outflows.  The average rate paid on
Federal Home Loan Bank  advances  decreased  due to the effect of lower rates on
new advances,  and the Company's  use of lower cost  convertible  advances for a
portion of its funding needs.

 The average balance of savings deposits decreased $24.4 million,  or 5.5%, from
$447.4  million for the three month period ended June 30, 1998 to $423.0 million
for the three-month period ended June 30, 1999. The average rate paid on savings
deposits  decreased from 3.90% for the three month period ended June 30, 1998 to
3.51% for the three  month  period  ended June 30,  1999.  The  decrease  in the
average balances and the average


                                       11
<PAGE>

rate paid on savings deposits were the consequences of decreased market interest
rates and management's efforts to price deposits at lower rates.

Non-interest  income.  Total  non-interest  income  was  $297  thousand  for the
three-month  period ended June 30, 1999 compared with $686 thousand for the same
period in 1998. The decrease is attributable to a $362 thousand  decrease in the
gain on sale of loans and investments.

Non-interest  expense.  Total non-interest  expense decreased by $19 thousand to
$3.4  million  for the three  months  ended June 30,  1999  compared to the same
period  in 1998.  Data  processing  decreased  by $270  thousand  as a result of
conversion to an in-house data  processing  system,  which  occurred  during the
second quarter of 1998.  Professional fees increased by $35 thousand as a result
of consulting fees associated with Year 2000 compliance remediation and testing.
In addition,  compensation  and  benefits,  occupancy and  equipment,  and other
expenses increased by a combined $236 thousand, also due to the conversion to an
in-house data processing system.


                                       12
<PAGE>

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999

Net Income.  The Company  recorded net income of $2,009,000 or $0.67 per diluted
share for the six months ended June 30, 1999 as compared to  $1,982,000 or $0.61
per diluted share for the six months ended June 30, 1998.

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,
                                                                         -------------------------
                                                              1999                                1998
                                                              ----                                ----
                                                 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) .......................   $282,033    $ 10,796       7.66%    $238,592   $  9,509      7.97%
  Mortgage-backed securities .................    263,025       8,296       6.31%     236,119      7,573      6.41%
  Investment securities ......................    110,459       3,398       6.15%     110,302      3,327      6.03%
  Other interest-earning assets(1) ...........     25,416         547       4.30%      33,014        730      4.42%
                                                 --------    --------                --------   --------
    Total interest-earning assets ............    680,933      23,037       6.77%     618,027     21,139      4.68%
                                                             --------                           --------
Non interest-earning assets ..................     33,682                              22,266                 6.84%
                                                 --------                            --------
    Total assets .............................    714,615                             609,420
                                                 ========                            ========
Liabilities and stockholders' equity:
  Interest-bearing liabilities:
    Savings deposits .........................    427,373       7,564       3.54%     449,193      8,678      3.86%
    Advances from the FHLB ...................    224,630       6,213       5.53%     130,025      3,574      5.50%
                                                 --------    --------                --------   --------
      Total interest-bearing liabilities .....    652,003      13,777       4.23%     579,218     12,252      4.23%
                                                 --------    --------                --------   --------
Non interest-bearing liabilities .............     10,742                              10,034
      Total liabilities ......................    662,745                             589,252
Stockholders' equity .........................     51,870                              51,041
                                                 --------                            --------
    Total liabilities and stockholders' equity    714,615                             640,293
                                                 ========                            ========
Net interest income ..........................               $  4,461                           $  8,887
                                                             ========                           ========

Interest rate spread (2) .....................                              2.54%                            2.61%
Net yield on interest-earning assets (3) .....                              2.72%                            2.88%
Ratio of average interest-earning assets to
Average interest bearing liabilities .........                               104%                             107%

</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.

                                       13
<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,
                                                       1999 vs. 1998
                                             -----------------------------
                                                    Increase (Decrease)
                                                         Due to
                                             -----------------------------
                                              Volume      Rate       Net
                                             -----------------------------
Interest income:
     Loans receivable, net                   $ 2,279    ($  992)   $ 1,287
     Mortgage-backed securities                1,051       (328)       723
     Investment securities                         5         66         71
     Other interest-earning assets              (164)       (19)      (183)
                                             -----------------------------
        Total interest-earning assets          3,172     (1,274)     1,898
                                             =============================
Interest expense
   Interest-bearing liabilities:
     Savings deposits                           (412)      (702)    (1,114)
     Advances from the FHLB                    2,619         20      2,639)
        Total interest-bearing liabilities     2,207       (682)     1,525
                                             -----------------------------
Net change in net interest income            $   964    ($  591)   $   373
                                             =============================

Total Interest Income. Total interest income increased by $1.9 million, or 9.0%,
to $23.0  million for the six months ended June 30, 1999 compared with the first
six months of 1998  primarily  because of  increases  in the average  balance of
loans  receivable and  mortgage-backed  securities.  The increase in the average
balances of loans receivable is primarily  attributable to the purchase of $76.4
million of mortgage loans in the first quarter of 1999.  The increased  interest
income  attributable  to the purchase of mortgage loans was partially  offset by
the decrease to the average yield on loans  receivable  resulting from the early
repayment during the period of higher yielding mortgage loans. In addition,  the
yield on the mortgage  loans  purchased  was less than the average  yield on the
portfolio due to the interest rate  environment  that existed at the time of the
purchase.

Total Interest  Expense.  Total interest expense  increased to $13.8 million for
the six-month  period ended June 30, 1999 from $12.3 million for the same period
in 1998  primarily  due to  increased  advances  from the Federal Home Loan Bank
which were used to fund asset growth and deposit outflows.

The average balance of savings deposits  decreased $21.8 million,  or 4.9%, from
$449.2  million for the six month period  ended June 30, 1998 to $427.4  million
for the six-month  period ended June 30, 1999.  The average rate paid on savings
deposits  decreased  from 3.86% for the six month  period ended June 30, 1998 to
3.54% for the six month period ended June 30, 1999.  The decrease in the average
balances and the average rate paid on savings  deposits  resulted from decreased
market interest rates and management's efforts to price deposits at lower rates.


                                       14
<PAGE>

Non-interest  income.  Total  non-interest  income  was  $621  thousand  for the
six-month  period  ended June 30, 1999  compared  with $1.1 million for the same
period in 1998. The decrease of $485 thousand is primarily  attributable  to the
decrease in the gain on sale of loans and securities

Non-interest expense. Total non-interest expense decreased $174 thousand to $6.7
million for the six months  ended June 30,  1999  compared to the same period in
1998. Data processing decreased by $440 thousand as a result of conversion to an
in-house data  processing  system,  which occurred  during the second quarter of
1998. Professional fees increased by $64 thousand as a result of consulting fees
associated  with Year 2000  compliance  remediation  and  testing.  In addition,
compensation and benefits, occupancy and equipment, and other expenses increased
by a combined  $239  thousand,  also due to the  conversion  to an in-house data
processing system.


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.  There has been no material adverse change during six-month period ended
June 30, 1999 in the ability of the Company and its  subsidiaries  to fund their
operations.

The Savings  Bank is required  under  federal  regulations  to maintain  certain
specified  levels of "liquid  investments",  which include certain United States
government  obligations  and other  approved  investments.  Current  regulations
require the Savings  Bank to maintain  liquid  assets of not less than 4% of its
net withdrawable  accounts plus short term borrowings.  Short-term liquid assets
must consist of not less than 1% of such accounts and  borrowings,  which amount
is also  included  within the 4%  requirement.  These levels may be changed from
time to time by the  regulators  to reflect  current  economic  conditions.  The
Savings  Bank's  regulatory  liquidity  was 22.6% and 17.6% at June 30, 1999 and
1998, respectively.

The amount of  certificate  accounts  that are  scheduled  to mature  during the
twelve-month period ending June 30, 2000 is approximately $110.8 million. To the
extent that these deposits do not remain at the Savings Bank upon maturity,  the
Savings Bank  believes  that it can replace  these funds with  deposits,  broker
deposits,  excess liquidity, or advances from the Federal Home Loan Bank. It has
been the Savings Bank's  experience that a substantial  portion of such maturing
deposits remains at the Savings Bank.

At June 30, 1999,  the Savings  Bank had  outstanding  commitments  to originate
loans of $3.7 million, to purchase investment  securities of $2.0 million and to
fund undisbursed  balances of closed loans and lines of credit of $20.1 million.
Funds  required to fill these  commitments  will be derived from current  excess
liquidity, loan and security repayments,  deposit growth, or borrowings from the
Federal Home Loan Bank.

Capital Requirements

The Savings Bank is in  compliance  with all of its capital  requirements  as of
June 30, 1999.


                                       15
<PAGE>

YEAR 2000

Readiness Efforts

The following  discussion of the  implications  of the Year 2000 problem for the
Company  contains  numerous  forward-  looking  statements  based on  inherently
uncertain  information.  The cost of the project is based on  management's  best
estimates,  which are derived utilizing a number of assumptions regarding future
events including the continued  availability of internal and external resources,
third party modifications and other factors.  However, there can be no guarantee
that these  events  will  occur as planned  and  actual  results  could  differ.
Moreover,  although  management  believes it will be able to make the  necessary
systems  modifications  in advance,  there can be no  guarantee  that failure to
modify the systems would not have a material adverse effect on the Company.

In 1998, a comprehensive  project plan ("Plan") to address the Year 2000 problem
and related  issues as those relate to the Company's  operations  was developed,
approved by the Board of Directors  and  implemented.  The  Company's  Year 2000
effort is proceeding in accordance with the written Plan.  Progress  reports are
provided to the Board at least monthly.

The Year 2000  issue is the  result of  potential  problems  with  software  and
computer  systems  or any  equipment  with  computer  chips  that store the year
portion of the date as just  two-digits.  Systems using this two-digit  approach
may not be able to determine  whether 00 represents  the year 2000 or 1900.  The
problem, if not corrected,  could make those systems fail altogether or possibly
cause them to generate  incorrect  calculations  resulting  in a  disruption  of
normal computer and related operations.

The  Company's  Plan is divided  into four  broad  areas of  concern:  hardware,
software,  service providers and customers.  Year 2000 issues being addressed in
each  of  these  areas   include   both   information-related   technology   and
non-information related technology.  A project team that consists of key members
of the Company's technology staff,  representatives of functional business units
and senior management was developed. From the assessment, the Company identified
and prioritized those systems deemed to be mission critical or those that have a
significant  impact on  normal  operations.  Formal  communications  with  those
providers of data processing  capabilities and other external service  providers
were  initiated  in 1997 and 1998 to  assess  the Year 2000  readiness  of their
products and services.

Thus far,  responses  indicate  that the  significant  providers  are  currently
following  plans  developed  to address  processing  of  transactions  beginning
January 1, 2000. The Company has contacted all significant  commercial borrowers
to ensure that each one is following a plan intended to mitigate Year 2000 risks
to their  business.  In  addition,  the Company has used  statement  inserts and
direct mailings in order to make its depositors  aware of Year 2000 issues.  The
Company  contacted  all  non-information  technology  suppliers  (i. e.  utility
systems,  telephone systems, etc.) regarding their Year 2000 state of readiness.
These parties have indicated that they have  established Year 2000 plans and are
in various  stages of  remediation  and testing.  We are unable to test the Year
2000 readiness of our significant suppliers of utilities.  We are relying on the
utility companies' internal testing and representations in order for the Company
to conclude  that they will be able to deliver the  resources  necessary for the
Company to operate its systems. The Company is unable to determine what recourse
it will have should these utilities fail to successfully resolve their Year 2000
issues.


                                       16

<PAGE>

Costs

The total cost to the Company of these Year 2000  compliance  activities has not
been and is not anticipated to be material to its financial  position or results
of operations in any given year. In total, the Company estimates that its costs,
excluding  personnel  expenses,  for Year 2000  remediation  and  testing of its
computer  systems  will amount to less than $90  thousand  for the twelve  month
period ending December 31, 1999. Approximately $10,000 of these expenses had not
been incurred at June 30, 1999.

Risk Assessment

Based upon current  information related to the progress of its major vendors and
service  providers,  management has determined that the Year 2000 issue will not
pose   significant   operational   problems  for  its  computer   systems.   The
determination  is based on the  ability  of vendors  and  service  providers  to
renovate,  in a timely manner,  the products and services on which the Company's
systems rely. To date, management has received assurances by the majority of its
vendors and service providers that they will be Year 2000 compliant.  While most
are on  schedule,  the Company can give no  assurance  that the systems of these
suppliers  will be timely  renovated.  The  Company is  exposed  to  operational
disruptions  from  external  entities  that  have  direct or  indirect  business
relationships with the Company,  such as  telecommunications  service providers,
customers,  vendors,  payment  systems  providers  and others.  Despite the best
efforts of  management  to address  these  issues,  the vast  number of external
business  relationships  makes it impossible to assure that a failure to achieve
compliance by one or more of these  entities  would not have a material  adverse
impact on the operations of the Company.

Contingency Plans

Realizing that some  disruption may occur despite its best efforts,  the Company
has developed  contingency  plans for each critical system in the event that one
or more of those systems fail. While this is an ongoing  process,  the Company's
contingency  plan is  substantially  complete.  The Company's  contingency  plan
provides  for  the  replacement  of  a  service  provider,  or  substitution  of
alternative  procedures in the case of a process, as soon as it becomes apparent
that any service  provider  will fail to perform or that any process  will fail.
This phase of the plan will be tested and validated  during the third quarter of
1999.

In addition,  the Savings  Bank has  developed a currency  availability  plan in
order to address the anticipated but unknown amount of additional  currency that
could be needed to fund cash  withdrawals  requested  by customers as the end of
1999 approaches. The need for additional currency poses significant risks to the
Company,  its employees,  and customers.  There can be no assurances  that these
risks  can be  entirely  mitigated  or that  the  Company  will  not  experience
significant adverse consequences resulting from the need to have available large
amounts of  currency  during the periods  immediately  preceding  and  following
January 1, 2000.



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 ending June 30, 1999.

                                       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
          The 1999 Annual Meeting of Stockholders (the "Meeting") of the Company
          was held on April 28,  1999.  There were  outstanding  and entitled to
          vote at the Meeting  3,041,010  shares of Common Stock of the Company.
          There were present at the meeting or by proxy the holders of 2,815,387
          shares of Common Stock representing 92.58% of the total eligible votes
          to be cast.  Proposal 1 was to elect John R.  Stranford as director of
          the Company.  Proposal 2 was a shareholder proposal to repeal or amend
          various  provisions of the Company's  Certificate of Incorporation and
          by-laws.  Proposal 3 was a shareholder proposal  recommending that the
          Board of Directors  take certain action to initiate a possible sale of
          the  Company.  The results of the voting at the Meeting are as follows
          (percentages in terms of votes cast):

          Proposal 1      FOR:     2,610,220        PERCENT FOR:     92.7%

          Proposal 2      FOR:       452,739        PERCENT FOR:     21.4%
                          AGAINST: 1,636,953        PERCENT AGAINST: 77.8%
                          ABSTAIN:    16,510        PERCENT ABSTAIN:  0.8%

          Proposal 3      FOR:       302,492        PERCENT FOR:     14.4%
                          AGAINST: 1,774,032        PERCENT AGAINST: 84.2%
                          ABSTAIN:    29,678        PERCENT ABSTAIN:  1.4%


ITEM 5.  OTHER INFORMATION
                  None


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         (a)      Exhibits
                  Exhibit 27-Financial Data Schedule(In Electronic Filing Only)
         (b)      Reports on Form 8-K

On April 30, 1999, a Current Report on Form 8-K was filed with the SEC to report
the results of voting at the Company's 1999 Annual Meeting of  Stockholders  and
the appointment of a new Senior Vice President and Chief  Financial  Officer for
the Company.

                                       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 13, 1999           John R. Stranford
                                     President and CEO
                                     (Principal Executive Officer)


                                      /s/ Dennis R. Stewart
                                      ------------------------------------------
Date:      August 13, 1999            Dennis R. Stewart
                                      Senior Vice President and
                                      Chief Financial Officer
                                      (Principal Financial & Accounting Officer)


                                       19