SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM lO-Q
(Mark One)

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

     For the quarterly period ended March 31, 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 
 incorporation or organization)                        identification no.)

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

Registrant's telephone number, including area code         215-579-4000 
                                                  ------------------------------
                                       N/A
--------------------------------------------------------------------------------
         Former name, former address and former fiscal year, if changed
                               since last report.

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:


         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock as of the latest practicable date May 14, 1999
                                                          -------------
       Class                               Outstanding   
       -----                               -----------   
        $.10 par value common stock      2,755,279 shares

                                       1
<PAGE>



                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

                                    FORM 1O-Q

                      FOR THE QUARTER ENDED MARCH 31, 1999


                                      INDEX
<TABLE>
<CAPTION>

                                                                              Page
                                                                             Number
                                                                             ------

PART I - CONSOLIDATED FINANCIAL INFORMATION
<S>    <C>      <C>                                                           <C>
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   15

PART II- OTHER INFORMATION

Item     1.       Legal Proceedings                                            16
Item     2.       Changes in Securities                                        16
Item     3.       Defaults upon Senior Securities                              16
Item     4.       Submission of Matters to a Vote of Security Holders          16
Item     5.       Other Materially Important Events                            16
Item     6.       Exhibits and Reports on Form 8-K                             16

SIGNATURES                                                                     18
</TABLE>
                                        2
<PAGE>
                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                  Unaudited      Audited
                                                                                     March      December
                                                                                      31,           31,
                                      ASSETS                                         1999          1998
                                                                                 -----------   ----------
<S>                                                                              <C>          <C>     
Cash and cash equivalents                                                            $35,795       42,703
Certificates of deposit in other financial institutions                                2,038        2,238
Investment securities available for sale - at fair value                               5,016        9,042
Investment securities held to maturity (fair value of $96,478 and  $81,094,           96,651       80,895
   respectively)
Mortgage-backed securities available for sale - at fair value                         69,682       75,285
Mortgage-backed securities held to maturity (fair value of $191,819 and
    $182,560, respectively)                                                          191,321      180,964
Loans receivable, net                                                                302,083      240,841
Federal Home Loan Bank stock - at cost                                                12,668        9,168
Accrued interest receivable                                                            4,420        4,558
Real estate held for investment                                                        2,348        2,348
Goodwill and other intangible assets                                                   7,181        7,389
Premises and equipment, net                                                            8,924        9,017
Other assets                                                                           1,290        1,160
                                                                                   ---------     --------
                                     Total Assets                                   $739,417     $665,608
                                                                                   =========     ========

                       LABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Deposits                                                                         $424,869     $438,913
   Advances from the Federal Home Loan Bank                                          253,359      163,359
   Advances from borrowers for taxes and insurance                                     1,111        1,204
   Accrued interest payable                                                            5,557        4,166
   Other liabilities                                                                   3,256        5,306
                                                                                   ---------    ---------
                                     Total Liabilities                               688,152      612,948

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; 2,755,279 and 2,857,932 shares outstanding at March 31,
       1999 and December 31, 1998, net of treasury shares of
       2,248,990 and 2,143,319 respectively.                                             529          529
   Retained earnings                                                                  46,392       45,762
   Additional paid-in capital                                                         51,988       51,957
   Unearned ESOP shares                                                               (2,857)      (2,888)
   Shares acquired by MSBP                                                              (362)        (468)
   Treasury stock - at cost                                                          (44,311)     (42,386)
   Accumulated other comprehensive income                                               (114)         154
                                                                                   ---------     --------
                                     Total Stockholders' Equity                       51,265       52,660
                                                                                   ---------     --------

                     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $739,417     $665,608
                                                                                   =========     ========
</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
                                                                     Ended March 31,
                                                                   1999             1998
                                                                ----------      -----------
<S>                                                             <C>              <C>   
Interest income
   Loans                                                           $5,089           $4,904
   Mortgage-backed securities                                       4,097            3,238
   Investment securities                                            1,581            1,577
   Interest bearing deposits and other                                326              422
                                                                 --------         --------   
TOTAL INTEREST INCOME                                              11,093           10,141
Interest expense
   Deposits                                                         3,857            4,314
   Borrowings                                                       2,775            1,348
                                                                 --------         --------  
TOTAL INTEREST EXPENSE                                              6,632            5,662
NET INTEREST INCOME                                                 4,461            4,479
Provision for loan losses                                              30               15
                                                                 --------         --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                 4,431            4,464
Non-interest income
   Gain on sale of real estate acquired through foreclosure             6               (1)
   Gain on sale of loans                                                0               74
   Service fees, charges and other operating income                   318              347
                                                                 --------         --------
       TOTAL NON-INTEREST INCOME                                      324              420
Non-interest expense
   Employee compensation and benefits                               1,640            1,665
   Occupancy and equipment                                            494              439
   Federal deposit insurance premium                                   68               70
   Data processing                                                      5              175
   Professional fees                                                  165              135
   Amortization of goodwill and other intangible assets               209              225
   Advertising                                                         90               90
   Other operating                                                    549              576
                                                                 --------         --------
TOTAL NON-INTEREST EXPENSE                                          3,220            3,375
     INCOME BEFORE INCOME TAXES                                     1,535            1,509
Income taxes                                                          551              516
                                                                 --------         --------
NET INCOME                                                           $984             $993
                                                                 ========         ========

Basic earnings per share                                          $  0.35           $ 0.34
Diluted earnings per share                                        $  0.33           $ 0.31
Weighted average number of shares outstanding - Basic               2,822            2,888
Weighted average number of shares outstanding - Diluted             2,996            3,242
</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 Three Months
                                                                                                 Ended March 31,
                                                                                               1999         1998
                                                                                            ----------  ----------
<S>                                                                                     <C>           <C>     
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                                     $984         $993
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of:
       Mortgage loan servicing rights                                                             3            6
       Deferred loan origination fees                                                           (25)         (59)
       Premiums and discounts on investment securities, net                                      23           31
       Premiums and discounts on mortgage-backed securities and loans, net                      230           85
       Amortization of goodwill and other intangible assets                                     209          225
Provision for loan losses and provision for losses on real estate                                30           15
Depreciation of premises and equipment                                                          231          179
Recognition of ESOP and MSBP expenses                                                           167          206
(Gain) loss on sale of real estate acquired through foreclosure                                 (12)           1
(Gain) loss on sale of mortgage loans                                                             -          (74)
Decrease (increase) in
       Accrued interest receivable                                                              138         (105)
       Other assets                                                                            (167)        (334)
Increase (decrease) in
       Accrued interest payable                                                               1,391        2,096
       Other liabilities                                                                     (2,222)        (711)
                                                                                           --------     --------
       NET CASH PROVIDED BY OPERATING ACTIVITIES                                                980        2,554

CASH FLOWS FROM INVESTING ACTIVITIES
Loan origination and principal payments on loans, net                                        15,253       (4,271)
Purchases of loans                                                                          (76,553)           -
Proceeds from loan sales                                                                          -       14,527
Maturities (purchases) of certificates of deposit in other financial institutions, net          200          200
Maturities (purchases) of securities purchased under agreements to resell, net                    -       10,000
Purchases of investment securities available for sale                                             -      (73,998)
Purchases of investment securities  held to maturity                                       (102,576)     (16,415)
Purchases of mortgage-backed securities  available for sale                                  (2,346)     (10,154)
Purchase of mortgage-backed securities  held to maturity                                    (41,632)     (54,734)
Proceeds from maturities of investment securities  held to maturity                          89,140       14,582
Proceeds from maturities of investment securities  available for sale                         2,000       62,265
Principal repayments from mortgage-backed securities held to maturity                        31,162        9,072
Principal repayments from mortgage-backed securities available for sale                       7,458        1,664
Purchases and redemption of Federal Home Loan Bank Stock, net                                (3,500)      (1,500)
Proceeds from sales of real estate acquired through foreclosure                                  60           50
Purchase of premises and equipment                                                             (138)        (403)
                                                                                           --------     --------
       NET CASH USED IN  INVESTING ACTIVITIES                                               (81,472)     (49,115)
</TABLE>
                                       5
<PAGE>

                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                 For the Three Months
                                                                                    Ended March 31,
                                                                                    1999          1998

<S>                                                                           <C>           <C>       
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits                                             $   (14,044)  $      200
Advances from Federal Home Loan Bank , net                                           90,000       40,000
Net (decrease) increase in advances from borrowers for taxes and insurance              (93)        (149)
Exercise of stock options                                                                34            -
Purchase of treasury stock                                                           (1,970)           -
Common stock cash dividend                                                             (343)        (322)

       NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                           73,584       39,729

       NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 
                                                                                     (6,908)      (6,832)

Cash and cash equivalents at beginning of period                                     42,703       41,625
                                                                                -----------   ----------
Cash and cash equivalents at end of period                                      $    35,795   $   34,793

Supplemental disclosure of cash flow information
       Cash paid for
       Interest on deposits and advances                                        $     5,241   $    3,565
       Income taxes                                                             $       512   $    1,112
Non-cash transactions
       Transfers from loans to real estate acquired through foreclosure         $        13   $        -

</TABLE>

See notes to consolidated financial statements

                                       6

<PAGE>



                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - PRINCIPLES OF CONSOLIDATION

         The consolidated  financial  statements as of March 31, 1999,  December
         31, 1998, and for the three month periods ended March 31, 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 period ended March 31, 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  comprehensive income consists of
         net unrealized gains on investment securities available for sale. Total
         comprehensive  income for the three-month  periods ended March 31, 1999
         and 1998 was $716,000 and $1,020,000, net of applicable income taxes of
         $172,000 and $18,000, 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 March 31, 1999 and  December  31, 1998  totaled
$739.4 million and $665.6 million,  respectively,  an increase of $73.8 million,
or 11.1%,  during the three month period. This increase was primarily the result
of a $61.3 million  increase in loans  receivable,  an $11.8 million increase in
investment  securities,  a $4.7 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 $6.9 million decrease in cash and cash equivalents.
The increase in total assets was primarily  funded by the $90.0 million increase
in advances from the Federal Home Loan Bank.

The net increase in loans  receivable of $61.3  million,  or 25.5%,  from $240.8
million at December 31, 1998 to $302.1  million at March 31, 1999 was  primarily
the result of the  purchase  of $ 71.9  million of  residential  mortgage  loans
coupled  with  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.

Investment securities at March 31, 1999 totaled $101.7 million, which represents
an increase of $11.8  million or 13.1% as compared to $89.9  million at December
31, 1998.  This increase is primarily due to the  reinvestment  of cash and cash
flow caused by repayments  of mortgage  loans and mortgage  securities,  coupled
with  the  reinvestment  of  maturing  investment  securities.   Mortgage-backed


                                       8
<PAGE>

securities  aggregated  $261.0  million at March 31, 1999  compared  with $256.2
million at December 31, 1998.

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 $75.3 million  during the first quarter of 1999
primarily as a result of the $90.0 million, or 55.1%,  increase in advances from
the Federal  Home Loan Bank.  This  increase was offset by a $14.0  million,  or
3.2%,  decrease in total  deposits  balances.  The increase in advances from the
Federal Home Loan Bank primarily funded the purchase of loans.

Total consolidated stockholders' equity of the Company decreased by $1.4 million
or 2.7%, to $51.3  million,  or 6.94% of total assets,  at March 31, 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  $2.0  million,  partially  offset by a net  increase  to retained
earnings  of $600  thousand  for the  three  month  period.  On March  19,  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.

                                       9
<PAGE>




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 March 31,
                                                                  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).......................      $282,072       $5,089         7.22%     $244,847       $4,904         8.01%
  Mortgage-backed securities.................       261,124        4,097         6.28%      202,952        3,238         6.38%
  Investment securities......................       113,605        1,581         5.57%      104,046        1,577         6.06%
  Other interest-earning assets(1)...........        34,181          326         3.81%       36,046          422         4.68%
                                                     ------          ---                     ------          ---
    Total interest-earning assets............       690,982       11,093         6.42%      587,891       10,141         6.90%
                                                                  ------                                  ------
Non interest-earning assets..................        24,562                                  21,529
                                                     ------                                  ------
    Total assets.............................       715,544                                 609,420
                                                    =======                                 =======

Liabilities and Stockholders' Equity:
  Interest-bearing liabilities:
    Savings deposits.........................       430,115       $3,857         3.59%      450,952       $4,314         3.83%
    Advances from the FHLB...................       223,359        2,775         4.97%       98,359        1,348         5.48%
                                                    -------        -----                     ------        -----
      Total interest-bearing liabilities.....       653,474        6,632         4.06%      549,311        5,662         4.12%
                                                    -------        -----                    -------        -----
Non interest-bearing liabilities.............         9,964                                   9,451
      Total liabilities......................       663,438                                 558,762
Stockholders' equity.........................        52,106                                  50,658
                                                     ------                                  ------
      Total liabilities and                        $715,544                                $609,420
                                                   ========                                ========
Stockholders'             equity.............
Net interest income..........................                     $4,461                                  $4,479
                                                                  ======                                  ======
Interest rate spread (2).....................                                    2.36%                                   2.78%
Net yield on interest-earning assets (3).....                                    2.58%                                   3.05%
Ratio of average interest-earning assets to
average interest bearing liabilities.........                                     106%                                    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.


                                       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.
<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                            March 31,
                                                                          1999 vs. 1998
                                                           --------------------------------------------
                                                                       Increase (Decrease)
                                                                             Due to
                                                           --------------------------------------------
                                                             Volume              Rate              Net
                                                           --------------------------------------------
<S>                                                          <C>               <C>               <C>
     Interest income:                                                 
          Loans receivable, net                                 $527            $(342)            $185
          Mortgage-backed securities                             909              (50)             859
          Investment securities                                   33              (29)               4
          Other interest-earning assets                          (21)             (75)             (96)
                                                           --------------------------------------------
             Total interest-earning assets                     1,448             (496)             952
                                                           ============================================


     Interest expense Interest-bearing liabilities:
          Savings deposits                                      (194)            (263)            (457)
          Advances from the FHLB                               1,540             (113)           1,427
                                                           --------------------------------------------
             Total interest-bearing liabilities                1,346             (376)             970
                                                           ============================================


     Net change in net interest income                          $102            $(120)           $(18)
                                                           ============================================


</TABLE>
                                       11
<PAGE>



RESULTS OF OPERATIONS

Net Income.  The Company  recorded net income of $984,000,  or $0.33 per diluted
share,  for the three months  ended March 31, 1999 as compared to  $993,000,  or
$0.31 per diluted share, for the three months ended March 31, 1998.

Total Interest  Income.  Total interest  income  increased by $992 thousand,  or
9.9%,  to $11.1  million for the three months ended March 31, 1999 compared with
the first quarter of 1998 primarily  because of increases in the average balance
of loans receivable,  mortgage-backed  securities and investment securities. 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  repayment  during  the period of higher  yielding  mortgage
loans.  In addition,  the yield on the $75.4 million of mortgage loans purchased
was less than the average yield on the  portfolio.  Interest on  mortgage-backed
securities  increased $900 thousand,  or 28.1%, for the three-month period ended
March 31,  1999,  primarily  as a result  of a 28.6%  increases  in the  average
balances of mortgage-backed securities during the first quarter of 1999 compared
with the first quarter of 1998.

Total Interest Expense. Total interest expense increased to $6.6 million for the
three-month period ended March 31, 1999 from $5.7 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.  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 $20.9 million,  or 4.6%, from
$451.0 million for the three month period ended March 31, 1998 to $430.1 million
for the three month period ended March 31, 1999, as a result of deposit outflows
associated with the decrease in market rates during the period. The average rate
paid on savings  deposits  decreased from 3.83% for the three month period ended
March 31, 1998 to 3.59% for the three month  period  ended March 31,  1999.  The
decrease in the average rate paid on savings  deposits  resulted from  decreased
market interest rates and management's efforts to price deposits at lower rates.

Allowance for Loan Losses.  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                                 30              15
Charge-off's, net                          -              (5)
Ending balance, March 31,             $1,939         $ 2,049
                                     =======         =======

The following table sets forth  additional  information  regarding the Company's
asset quality (dollars in thousands):
                                                               At March 31,
                                                             1999       1998
                                                          -------    -------
 Non-performing loans                                     $ 1,561    $ 1,616
 Ratio of non-performing loans to gross loans               0.51%      0.66%
 Ratio of non-performing loans to total assets              0.21%      0.25%
 Foreclosed property                                        $ 274      $ 301
 Foreclosed property to total assets                        0.04%      0.05%
 Ratio of total non-performing assets to total assets       0.25%      0.30%



                                       12
<PAGE>

Non-interest  income.  Total non-interest income was $324 thousand for the three
month  period  ended March 31, 1999  compared  with $420  thousand  for the same
period in 1998.  The decrease of $96 thousand is primarily  attributable  to the
decrease  in the gain on sale of loans of $74  thousand  caused  by the  Company
discontinuing,  during the second quarter of 1998, the  origination of loans for
sale  into the  secondary  market.  In  addition,  there was a  decrease  of $29
thousand in service fees,  charges and other operating income,  which was caused
by a reduction, due to loan prepayments, in fee producing loan servicing.


Non-interest expense. Total non-interest expense decreased $155 thousand to $3.2
million for the three months ended March 31, 1999 compared to the same period in
1998. Data processing decreased by $170 thousand as a result of conversion to an
in-house data processing system.  Professional fees increased by $30 thousand as
a result of consulting fees associated with Year 2000 compliance remediation and
testing,  while office occupancy and equipment increased by $55 thousand also as
a result of the conversion to an in-house data processing system.

Liquidity and Capital Resources

Liquidity

The Savings  Bank'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  three month period
ended March 31, 1999 in the ability of the Savings Bank to fund its 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 27.8% and 19.8% at March 31, 1999 and
1998, respectively.

The amount of  certificate  accounts  that are  scheduled  to mature  during the
twelve month period ending March 31, 2000 is  approximately  $122.0 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 remain at the Savings Bank.

At March 31, 1999,  the Savings Bank had  outstanding  commitments  to originate
loans  of  $19.7  million,  to  purchase  loans  of  $194  thousand  and to fund
undisbursed balances of closed loans and lines of credit of $22.0 million. Funds
required to fill these  commitments  are derived  primarily  from current excess
liquidity or loan and security  repayments.  At March 31, 1999, the Savings Bank
had no outstanding commitments to sell loans.

Capital Requirements

The Savings Bank is in  compliance  with all of its capital  requirements  as of
March 31, 1999.


                                       13
<PAGE>



Year 2000

Readiness Efforts

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  counter parties
were  initiated  in 1997 and 1998 to  assess  the Year 2000  readiness  of their
products and services. Thus far, responses indicate that most of the significant
providers  are  currently  following  plans  developed to address  processing of
transactions  beginning  January  1,  2000.  At March  31,  1999,  there  are no
material, incomplete tasks pursuant to the Company's Plan.


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.

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 by June 30,
1999.  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 Plan

Realizing that some  disruption may occur despite its best efforts,  the Company
is in the process of developing  contingency 


                                       14
<PAGE>



plans for each  critical  system in the event that one or more of those  systems
fail.  While  this is an  ongoing  process,  the  Company  expects  to have  the
contingency  plan  substantially  completed  by July  31,  1999.  The  Company's
contingency  plan will provide for the replacement,  as soon as practicable,  of
any service provider that has not demonstrated compliance by June 30, 1999.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Asset and Liability Management

The  Company's  market risk  exposure is  predominately  caused by interest rate
risk,  which is defined as the  sensitivity of the Company's  current and future
earnings, the values of its assets and liabilities, and the value of its capital
to changes in the level of market  interest  rates.  Management  of the  Company
believes that there has not been a material adverse change in market risk during
the three months ending March 31, 1999.


                                       15
<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




                                       16

<PAGE>

                    None

(b)      Reports on Form 8-K

                    On March  19,  1999 a  Current  Report on Form 8-K was filed
                    with the SEC to report the  completion  of the then existing
                    common  stock  repurchase  program and the adoption of a new
                    common stock  repurchase  program.  The new program provides
                    for the repurchase,  during the subsequent  twelve months in
                    the open market, of up to 5% of the Company's common stock.

                    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.






                                       17
<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:      May 17, 1999                       John R. Stranford
                                              President and CEO
                                              (Principal Executive Officer)

                                               /s/ Dennis R. Stewart   
                                               ---------------------------------
Date:      May 17, 1999                        Dennis R. Stewart
                                               Senior Vice President and
                                               Chief Financial Officer
                                              (Principal Financial & 
                                                 Accounting Officer)





                                       18