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 September 30, 2001

                                       OR

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

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

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

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



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


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

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

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

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:


         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common  stock as of the latest  practicable  date:  October  26, 2001
                                                                ----------------

                  Class                                   Outstanding
        ---------------------------                     ----------------
        $.10 par value common stock                     2,723,538 shares


<PAGE>


                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

                                    FORM 1O-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001


                                      INDEX
<TABLE>
<CAPTION>



                                                                                                                 Page
                                                                                                                Number
                                                                                                                ------

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

Item     1.       Consolidated Financial Statements                                                                  3
Item     2.       Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                                                9
Item     3.       Quantitative and Qualitative Disclosures about Market Risk                                        18

PART II- OTHER INFORMATION

Item     1.       Legal Proceedings                                                                                 19
Item     2.       Changes in Securities and Use of Proceeds                                                         19
Item     3.       Defaults Upon Senior Securities                                                                   19
Item     4.       Submission of Matters to a Vote of Security Holders                                               19
Item     5.       Other Information                                                                                 19
Item     6.       Exhibits and Reports on Form 8-K                                                                  19

SIGNATURES                                                                                                          20

</TABLE>

                                       2
<PAGE>
                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                      Unaudited      Audited         Unaudited
                                                                                    September 30,   December 31,    September 30,
                                                                                        2001           2000             2000
                                                                                        ----           ----             ----
<S>                                                                                 <C>            <C>             <C>
                                   Assets
Cash and cash equivalents                                                               $95,847        $10,618         $10,095
Certificates of deposit in other financial institutions                                     190            191             457
Investment securities available for sale - at fair value                                 10,760         18,865          22,742
Investment securities held to maturity (fair value of $8,870, $61,919 and                 8,741         63,461          63,663
    $62,428, respectively)
Mortgage-backed securities available for sale - at fair value                            89,195         97,914         136,322
Mortgage-backed securities held to maturity (fair value of $109,866                     107,024        135,142         141,415
    $133,458, and $137,933, respectively)
Loans receivable, net                                                                   355,225        361,806         296,586
Federal Home Loan Bank stock - at cost                                                   11,368         13,042          13,042
Accrued interest receivable                                                               3,876          5,523           4,845
Goodwill and other intangible assets                                                      5,267          5,809           5,989
Premises and equipment, net                                                               7,700          9,410           9,301
Bank-owned life insurance                                                                 9,043             --              --
Other assets                                                                                385          1,516           2,282
                                                                                       --------       --------        --------
                                Total assets                                           $704,621       $723,297        $706,739
                                                                                       ========       ========        ========

                    Liabilities and stockholders' equity
Liabilities
   Deposits                                                                            $416,074       $400,851        $416,962
   Advances from the Federal Home Loan Bank                                             222,359        244,859         204,159
   Other borrowings                                                                          --         14,962          23,590
   Advances from borrowers for taxes and insurance                                          771          1,158             885
   Accrued interest payable                                                               5,208          4,670           6,565
   Other liabilities                                                                      3,063          3,688           3,472
                                                                                       --------       --------        --------
                              Total liabilities                                         647,475        670,188         655,633
                                                                                       --------       --------        --------

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; 2,468,197, 2,491,454, and 2,533,841 shares outstanding
     at September 30, 2001, December 31, 2000 and September 30, 2000, net
     treasury  shares of 2,566,462, 2,534,088, and  2,488,662, respectively.                529            529             529
   Retained earnings                                                                     54,447         51,604          50,619
   Additional paid-in capital                                                            52,244         52,161          52,139
   Unearned ESOP shares                                                                  (2,553)        (2,644)         (2,675)
   Shares acquired by MSBP                                                                   --             (4)            (21)
   Treasury stock - at cost                                                             (48,760)       (48,173)        (47,503)
   Accumulated other comprehensive income (loss)                                          1,239           (364)         (1,982)
                                                                                       --------       --------        --------
                         Total stockholders' equity                                      57,146         53,109          51,106
                                                                                       --------       --------        --------

Total liabilities and stockholders' equity                                             $704,621       $723,297        $706,739
                                                                                       ========       ========        ========

                 See notes to consolidated financial statements

</TABLE>
                                       3
<PAGE>


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

<TABLE>
<CAPTION>
                                                                           For the three months   For the nine months
                                                                           ended September 30,    ended September 30,
                                                                           -------------------    -------------------

                                                                               2001       2000      2001       2000
                                                                               ----       ----      ----       ----

<S>                                                                         <C>       <C>      <C>         <C>
Interest income
   Loans                                                                       $7,042    $5,918   $21,355     $17,325
   Mortgage-backed securities                                                   3,322     4,676    10,670      14,387
   Investment securities                                                          542     1,607     2,452       4,679
   Interest bearing deposits and other                                            564        48     1,140         213
                                                                               ------    ------    ------      ------
       Total interest income                                                   11,470    12,249    35,617      36,604
                                                                               ------    ------    ------      ------
Interest expense
   Deposits                                                                     3,548     3,909    10,716      11,297
   Advances from the Federal Home Loan Bank and other borrowings                3,105     3,385     9,761      10,528
                                                                               ------    ------    ------      ------
       Total interest expense                                                   6,653     7,294    20,477      21,825
                                                                               ------    ------    ------      -----
       Net interest income                                                      4,817     4,955    15,140      14,779
Provision for loan losses                                                         124       100       373         264
                                                                               ------    ------    ------      ------
       Net interest income after provision for loan losses                      4,693     4,855    14,767      14,515
                                                                               ------    ------    ------      ------

Non-interest income
   Service fees, charges and other operating income                               462       400     1,232       1,150
   Gain on sale of premises and equipment                                          --        --       444          --
   Gain (loss) on sale of loans and mortgage-backed securities available
       for sale                                                                    12        --         7          --
                                                                               ------    ------    ------      ------
       Total non-interest income                                                  474       400     1,683       1,150
                                                                               ------    ------    ------      ------
Non-interest expense
   Compensation and benefits                                                    1,965     1,945     5,801       5,741
   Occupancy and equipment                                                        622       638     1,847       1,881
   Federal deposit insurance premium                                               18        21        57          64
   Professional fees                                                              128       107       445         394
   Amortization of goodwill and other intangible assets                           180       195       540         584
   Advertising                                                                    129       186       381         524
   Other operating                                                                585       678     1,853       1,921
                                                                               ------    ------    ------      ------
       Total non-interest expense                                               3,627     3,768    10,924      11,109
                                                                               ------    ------    ------      ------
       Income before income taxes                                               1,540     1,487     5,526       4,556
Income taxes                                                                      389       417     1,429       1,400
                                                                               ------    ------    ------      ------
       Net income                                                              $1,151    $1,070    $4,097      $3,156
                                                                               ======    ======    ======      ======

Basic earnings per share                                                        $0.47     $0.42     $1.66       $1.24
Diluted earnings per share                                                      $0.43     $0.41     $1.54       $1.20
Weighted average number of shares outstanding - basic                           2,462     2,533     2,466       2,547
Weighted average number of shares outstanding - diluted                         2,703     2,616     2,663       2,627

                 See notes to consolidated financial statements
</TABLE>

                                       4

<PAGE>


                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                            For the nine months ended
                                                                                                  September 30,
                                                                                                2001          2000
                                                                                                ----          ----
<S>                                                                                          <C>          <C>
Cash flows from operating activities
Net Income                                                                                       $4,097       $3,156
Adjustments to reconcile net income to net cash provided by operating activities:
                 Mortgage loan servicing rights                                                      10           10
                 Deferred loan origination fees                                                     (61)         (24)
                 Premiums and discounts on investment securities, net                                13          (35)
                 Premiums and discounts on mortgage-backed securities and loans, net               (152)          (2)
                 Amortization of goodwill and other intangible assets                               540          581
Provision for loan losses                                                                           383          264
Depreciation of premises and equipment                                                              649          778
Increase in bank-owned life insurance                                                               (43)          --
Recognition of ESOP and MSBP expenses                                                               178          204
Gain on sale of loans receivable                                                                    (28)          --
Loss on sale of mortgage backed securities available for sale                                        28           --
Gain on sale of investment securities available for sale                                             (7)          --
Gain on sale of premises and equipment                                                             (444)          --
Gain on sale of real estate acquired through foreclosure                                            (19)         (19)
(Increase) decrease in:
                 Accrued interest receivable                                                      1,647          113
                 Other assets                                                                       838       (1,054)
Increase (decrease) in:
                 Accrued interest payable                                                           538        2,816
                 Other liabilities                                                               (1,451)         419
                                                                                                -------       ------
                 Net cash provided by operating activities                                        6,716        7,207
                                                                                                -------       ------

Cash flows  from investing activities
Loan origination and principal payments on loans, net                                            34,396       (2,165)
Purchases of loans                                                                              (29,341)      (6,734)
Proceeds from loan sales                                                                          1,480           --
Maturities of certificates of deposit in other financial institutions, net                           --          390
Purchases of investment securities available for sale                                            (4,057)        (429)
Purchases of investment securities  held to maturity                                                 --      (82,081)
Purchases of mortgage-backed securities  available for sale                                      (8,464)     (11,079)
Proceeds from sales of investment securities available for sale                                     507           --
Proceeds from sales of mortgage backed securities available for sale                              4,309           --
Proceeds from maturities of investment securities held to maturity                               51,233       85,219
Proceeds from maturities of investment securities available for sale                             15,500           --
Principal repayments from mortgage-backed securities held to maturity                            28,009       18,361
Principal repayments from mortgage-backed securities available for sale                          14,935        8,677
Purchases and redemption of Federal Home Loan Bank Stock, net                                     1,674           --
Proceeds from sales of real estate acquired through foreclosure                                     134          318
Proceeds from sales of premises and equipment                                                     1,784           --
Purchase of premises and equipment                                                                 (119)        (902)
Purchase of Bank-owned life insurance                                                            (9,000)          --
                                                                                                -------       ------
                 Net cash provided by (used in) investing activities                            102,980        9,575
                                                                                                -------       ------

                 See notes to consolidated financial statements
</TABLE>


                                       5
<PAGE>

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


                                                                                            For the nine months ended
                                                                                                  September 30,
                                                                                                2001          2000
                                                                                                ----          ----

<S>                                                                                          <C>          <C>
Cash flows from financing activities
Net increase in deposits                                                                         15,223       15,264
Net decrease in advances from Federal Home Loan Bank                                            (22,500)     (44,374)
Net increase (decrease) in other borrowings                                                     (14,962)       7,824
Net decrease in advances from borrowers for taxes and insurance                                    (387)        (313)
Exercise of stock options                                                                           256          440
Purchase of treasury stock, net                                                                    (998)      (1,245)
Common stock cash dividend                                                                       (1,099)        (998)
                                                                                               --------      -------
                 Net cash used in financing activities                                          (24,467)     (23,402)
                                                                                               --------      -------

                 Net increase (decrease) in cash and cash equivalents                            85,229       (6,620)

Cash and cash equivalents at beginning of period                                                 10,618       16,715
                                                                                               --------      -------

Cash and cash equivalents at end of period                                                      $95,847      $10,095
                                                                                               ========      =======

Supplemental disclosure of cash flow information
Cash paid for
                 Interest on deposits and advances                                              $19,939      $19,009
                 Income taxes                                                                   $ 1,595      $ 1,100
Non-cash transactions
                 Transfers from loans to real estate acquired through foreclosure               $    --      $   103

                 See notes to consolidated financial statements
</TABLE>

                                       6

<PAGE>



                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - PRINCIPLES OF CONSOLIDATION

         The  consolidated  financial  statements  as  of  September  30,  2001,
         December  31,  2000,  September  30, 2000 and for the  three-month  and
         nine-month  periods  ended  September  30,  2001 and 2000  include  the
         accounts of TF Financial  Corporation  (the  "Company")  and its wholly
         owned  subsidiaries Third Federal Savings Bank (the "Savings Bank"), TF
         Investments  Corporation,   Penns  Trail  Development  Corporation  and
         Teragon  Financial  Corporation.  The  Company's  business is conducted
         principally  through the Savings  Bank.  All  significant  intercompany
         accounts and transactions have been eliminated in consolidation.

NOTE 2 - BASIS OF PRESENTATION

         The  accompanying  unaudited  consolidated  financial  statements  were
         prepared in accordance with instructions for Form 10-Q and,  therefore,
         do  not  include  all of  the  disclosures  or  footnotes  required  by
         accounting  principles  generally  accepted  in the  United  States  of
         America. In the opinion of management,  all adjustments,  consisting of
         normal  recurring  accruals,  necessary  for fair  presentation  of the
         consolidated  financial  statements have been included.  The results of
         operations for the period ended  September 30, 2001 are not necessarily
         indicative  of the results  which may be expected for the entire fiscal
         year  or  any  other  period.   For  further   information,   refer  to
         consolidated financial statements and footnotes thereto included in the
         Company's Annual Report on Form 10-K for the fiscal year ended December
         31, 2000.

NOTE 3 - CONTINGENCIES

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

NOTE 4 - OTHER COMPREHENSIVE INCOME

         The Company's other  accumulated  comprehensive  income consists of net
         unrealized gains (losses) on investment  securities and mortgage-backed
         securities  available  for sale.  Total  comprehensive  income  for the
         three-month  periods ended  September 30, 2001 and 2000 was  $2,180,000
         and $2,106,000,  net of applicable income tax of $919,000 and $951,000,
         respectively.

         Total  comprehensive  income for the nine-month periods ended September
         30, 2001 and 2000 was  $5,700,000  and  $4,260,000,  net of  applicable
         income tax of $2,255,000 and $1,969,000, respectively.

NOTE 5- RECLASSIFICATIONS

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

                                       7
<PAGE>



                    TF FINANCIAL CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


NOTE 6- RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         On June 29,  2001,  the  Financial  Accounting  Standards  Board (FASB)
         approved for  issuance  Statement  of  Financial  Accounting  Standards
         (SFAS)  141,  Business   Combinations,   and  SFAS  142,  Goodwill  and
         Intangible Assets. Major provisions of these Statements are as follows:
         all business  combinations  initiated  after June 30, 2001 must use the
         purchase  method of  accounting;  the  pooling  of  interest  method of
         accounting is prohibited except for transactions  initiated before July
         1, 2001;  intangible  assets  acquired in a business  combination  must
         recorded  separately  from goodwill if they arise from  contractual  or
         other legal rights or are separable from the acquired entity and can be
         sold, transferred,  licensed, rented or exchanged,  either individually
         or as part of a related  contract,  asset or  liability;  goodwill  and
         intangible  assets  with  indefinite  lives are not  amortized  but are
         tested for impairment annually,  except in certain  circumstances,  and
         whenever there is an impairment  indicator;  all acquired goodwill must
         be assigned to reporting  units for purposes of impairment  testing and
         segment reporting;  effective January 1, 2002,  goodwill will no longer
         be  subject  to  amortization.  Although  it  is  still  reviewing  the
         provisions of these Statements,  management's preliminary assessment is
         that these  Statements will not have a material impact on the Company's
         financial position or results of operations.




                                       8
<PAGE>




                    TF FINANCIAL CORPORATION AND SUBSIDIARIES

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

GENERAL

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

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

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

Financial Condition

The  Company's  total assets at September 30, 2001 and December 31, 2000 totaled
$704.6 million and $723.3 million, respectively, a decrease of $18.7 million, or
2.3%, during the nine-month period. The decrease is mainly the result of a $66.7
million gross decrease in investment  securities due to the maturity or exercise
of the call feature associated with these securities.  In addition,  there was a
$6.6 million  decrease in loans  receivable,  net, a $36.8  million  decrease in
mortgage-backed  securities,  partly  due to the  sale of $4.3  million  of such
securities,  and a $1.7 million  decrease in premises and  equipment  due to the
sale of vacant land that had  originally  been  purchased by the Company  during
1993 as a possible  administrative  location.  Offsetting  these decreases was a
$85.2 million increase in cash and cash  equivalents,  and a $9 million increase
in bank-owned life insurance.

Total  liabilities  decreased by $22.7  million  during the first nine months of
2001  primarily as a result of the use of deposit  growth,  which  totaled $15.2
million,  and excess cash and cash equivalents to repay a total of $37.5 million
in maturing advances from the Federal Home Loan Bank and other borrowings.

                                       9
<PAGE>


Total  consolidated  stockholders'  equity of the Company  was $57.1  million or
8.11% of assets at  September  30, 2001,  compared to $53.1  million or 7.34% of
assets at December 31, 2000,  and $51.1  million or 7.23% of assets at September
30,  2000.  During the first nine months of 2001,  the net  increase in retained
earnings,  which  is net  income  less  dividends  paid,  plus the  increase  in
accumulated other comprehensive  income, was partially offset by the net cost of
treasury shares purchased.  During January of 2000 management announced that the
Company's board of directors had authorized the purchase of up to 142,638 shares
of the Company's stock in the open market.  As of September 30, 2001, there were
approximately  22,000 shares  available for repurchase  under this plan, and the
Company will  continue to  repurchase  shares as share  availability  and market
conditions permit.



                                       10
<PAGE>





Asset Quality

Non-performing  loans at September  30, 2001  increased  due to two loans to one
borrower  totaling $1.671  million,  which are secured by commercial real estate
that had been appraised at $2.5 million during the fourth quarter of 1999. These
loans became  non-performing  during the third  quarter of 2001 when they became
past due more than 90 days.  The Bank is  presently  working to recover its loan
balances or restore  these loans to performing  status,  or,  alternatively,  to
foreclose on these properties.  While management of the Bank presently  believes
that it is  adequately  secured by the value of the  collateral  securing  these
loans, there can be no assurances that the ultimate resolution of this situation
will not result in a charge to the Bank's allowance for loan losses or earnings,
or both.

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

                                                              September 30,    December 31,    September 30,
                                                              -------------    ------------    -------------
                                                                  2001             2000             2000
                                                                  ----             ----             ----
<S>                                                           <C>             <C>              <C>
     Non-performing loans                                       $3,145          $1,478           $1,303
     Ratio of non-performing loans to gross loans                 0.96%           0.41%            0.44%
     Ratio of non-performing loans to total assets                0.48%           0.20%            0.18%
     Foreclosed property                                           $51            $176             $247
     Foreclosed property to total assets                          0.01%           0.02%            0.03%
     Ratio of total non-performing assets to total assets         0.49%           0.23%            0.22%
</TABLE>

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

                                                    2001           2000
                                                    ----           ----
Beginning balance, January 1,                      $1,714        $1,917
Provision                                             373           264
Less: charge-off's (recoveries), net                  167           284
                                                  -------        ------
Ending balance, September 30,                      $1,920        $1,897
                                                  =======        ======



                                       11
<PAGE>



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

Net Income. The Company recorded net income of $1,151,000,  or $0.43 per diluted
share,  for the three months ended September 30, 2001 as compared to $1,070,000,
or $0.41 per diluted share, for the three months ended September 30, 2000.

Average Balance Sheet

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

<TABLE>
<CAPTION>

                                                                       Three months ended September 30,
                                                                       --------------------------------
                                                                 2001                                    2000
                                                  -----------------------------------      ----------------------------------
                                                  Average                    Average       Average                   Average
                                                  Balance      Interest      Yld/Cost      Balance     Interest      Yld/Cost
                                                  -------      --------      --------      -------     --------      --------
                                                                            (dollars in thousands)
<S>                                             <C>            <C>            <C>       <C>            <C>           <C>
Assets:
  Interest-earning assets:
    Loans receivable (4).......................    $361,960       $7,042         7.72%     $296,873       $5,918         7.93%
    Mortgage-backed securities.................     205,605        3,322         6.41%      282,986        4,676         6.57%
    Investment securities......................      34,769          542         6.18%      102,280        1,607         6.25%
    Other interest-earning assets(1)...........      66,116          564         3.38%        2,810           48         6.80%
                                                   --------       ------                   --------       ------
      Total interest-earning assets............     668,450       11,470         6.81%      684,949       12,249         7.11%
                                                                  ------                                  ------
Non interest-earning assets....................      28,862                                  27,351
                                                   --------                                --------
      Total assets.............................     697,312                                 712,300
                                                   ========                                ========

Liabilities and stockholders' equity:
  Interest-bearing liabilities
    Deposits...................................     411,985        3,548         3.42%      417,960        3,909         3.72%
    Advances from the FHLB and other
      borrowings...............................     222,368        3,105         5.54%      235,682        3,385         5.71%
                                                   --------       ------                   --------       ------
      Total interest-bearing liabilities.......     634,353        6,653         4.16%      653,642        7,294         4.44%
                                                                  ------                                  ------
Non interest-bearing liabilities...............       7,414                                   9,935
                                                   --------                                --------
      Total liabilities........................     641,767                                 663,577
Stockholders' equity...........................      55,545                                  48,723
                                                   --------                                --------
   Total liabilities and stockholders' equity..    $697,312                                $712,300
                                                   ========                                ========
Net interest income............................                   $4,817                                  $4,955
                                                                  ======                                  ======
Interest rate spread (2).......................                                  2.65%                                   2.68%
Net yield on interest-earning assets (3).......                                  2.86%                                   2.88%
Ratio of average interest-earning assets to
      average interest bearing liabilities.....                                   105%                                    105%
</TABLE>


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

                                       12
<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
                                                                                       September 30,
                                                                                       2001 vs. 2000
                                                                   ------------------------------------------------------
                                                                                    Increase (decrease)
                                                                                          due to
                                                                   ------------------------------------------------------
                                                                         Volume              Rate              Net
                                                                   ------------------------------------------------------
<S>                                                                        <C>                <C>            <C>
    Interest income:
          Loans receivable, net                                                 $2,121             $(997)         $1,124
          Mortgage-backed securities                                            (1,243)             (111)         (1,354)
          Investment securities                                                 (1,048)              (17)         (1,065)
          Other interest-earning assets                                            693              (177)            516
                                                                   ------------------------------------------------------
             Total interest-earning assets                                         523            (1,302)           (779)
                                                                   ======================================================

     Interest expense:
          Deposits                                                                 (54)             (307)           (361)
          Advances from the FHLB and other borrowings                             (183)              (97)           (280)
                                                                   ------------------------------------------------------
             Total interest-bearing liabilities                                   (237)             (404)           (641)
                                                                   ======================================================

     Net change in net interest income                                            $760             $(898)          $(138)
                                                                   ======================================================

</TABLE>

Total interest  income.  Total interest income  decreased by $779,000 or 6.4% to
$11.5  million for the three months ended  September  30, 2001 compared with the
third quarter of 2000.  Average earning assets decreased by $16.5 million during
the same  periods.  However,  because of the change in the mix of the  Company's
interest-earning  assets the Company's  interest  income  experienced a positive
$523,000  volume-based  improvement.  During the third  quarter  of 2001,  loans
receivable, which carried higher yields than other earning assets, were 54.1% of
total  interest-earning  assets  compared to 43.3%  during the third  quarter of
2000.  The increase in loans is the direct  result of the  Company's  successful
efforts to increase its purchases of seasoned,  single-family residential loans.
Offsetting the volume-based interest income increase was a $1,302,000 rate-based
decrease in interest  income,  primarily  the direct  result of generally  lower
market  interest rates and the lowering by the Federal  Reserve Board of the fed
funds rate during 2001 by 400 basis points. A lower fed funds rate resulted in a
lowering of the prime rate, and thus the interest income earned on the Company's
prime rate-based loans. In addition, the Corporation's cash and cash equivalents
earn approximately the federal funds rate of 2.50% at September 30, 2001.

Total Interest Expense. Total interest expense decreased to $6.7 million for the
three-month  period  ended  September  30,  2001 from $7.3  million for the same
period in 2000  primarily  due to generally  lower market  interest  rates which
resulted in a lowering of the Company's deposit interest  expense.  In addition,
decreased advances from the Federal Home Loan Bank and other borrowings resulted
in an overall decrease in average interest-bearing liabilities.

Non-interest  income. Total non-interest income was $474,000 for the three-month
period ended  September  30, 2001  compared with $400,000 for the same period in
2000. The increase is due to a $62,000 increase in service fees.

                                       13
<PAGE>

Non-interest  expense.  Total non-interest expense decreased by $141,000 to $3.6
million for the three  months  ended  September  30,  2001  compared to the same
period in 2000. Operating expenses decreased in part due to the consolidation of
one branch during the first quarter of 2001,  thus enabling the Company to avoid
the personnel, occupancy, and other costs associated with operating that branch.
In addition,  the Company spent less for its marketing and sales personnel,  and
reduced its expenditures for direct advertising.

                                       14
<PAGE>



RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

Net Income. The Company recorded net income of $4,097,000,  or $1.54 per diluted
share,  for the nine months ended  September 30, 2001 as compared to $3,156,000,
or $1.20 per diluted share, for the nine months ended September 30, 2000.

Average Balance Sheet

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

<TABLE>
<CAPTION>

                                                                        Nine months ended September 30,
                                                                 2001                                    2000
                                                  ------------------------------------      ---------------------------------
                                                  Average                     Average       Average                   Average
                                                  Balance       Interest      Yld/Cost      Balance     Interest      Yld/Cost
                                                  -------       --------      --------      -------     --------      --------
                                                                            (dollars in thousands)
<S>                                             <C>           <C>             <C>       <C>           <C>             <C>
Assets:
  Interest-earning assets:
    Loans receivable (4).......................    $360,781      $21,355         7.91%     $293,647      $17,325         7.88%
    Mortgage-backed securities.................     218,401       10,670         6.53%      288,866       14,387         6.65%
    Investment securities......................      54,614        2,452         6.00%      101,202        4,679         6.18%
    Other interest-earning assets(1)...........      39,088        1,140         3.90%        4,724          213         6.02%
                                                   --------      -------                   --------      -------
      Total interest-earning assets............     672,884       35,617         7.08%      688,439       36,604         7.10%
                                                                 -------                                 -------
Non interest-earning assets....................      27,432                                  29,150
                                                   --------                                --------
      Total assets.............................     700,316                                 717,589
                                                   ========                                ========

Liabilities and stockholders' equity:
  Interest-bearing liabilities
    Deposits...................................     405,332       10,716         3.53%      412,351       11,297         3.66%
    Advances from the FHLB and other
      borrowings...............................     232,679        9,761         5.61%      247,887       10,528         5.67%
                                                   --------      -------                   --------      -------
      Total interest-bearing liabilities.......     638,011       20,477         4.29%      660,238       21,825         4.42%
                                                                 -------                                 -------
Non interest-bearing liabilities...............       7,986                                   9,197
                                                   --------                                --------
      Total liabilities..........................   645,997                                 669,435
Stockholders' equity...........................      54,319                                  48,154
                                                   --------                                --------
   Total liabilities and stockholders' equity....  $700,316                                $717,589
                                                   ========                                ========
Net interest income............................                  $15,140                                 $14,779
                                                                 =======                                 =======

Interest rate spread (2).......................                                  2.79%                                   2.69%
Net yield on interest-earning assets (3).......                                  3.01%                                   2.87%
Ratio of average interest-earning assets to
      average interest bearing liabilities.....                                   105%                                    104%

</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.

                                       15
<PAGE>
     Rate/Volume Analysis

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

<TABLE>
<CAPTION>

                                                                                      Nine months ended
                                                                                          September 30,
                                                                                         2001 vs. 2000
                                                                   ------------------------------------------------------
                                                                                      Increase (decrease)
                                                                                             due to
                                                                   ------------------------------------------------------
                                                                               Volume              Rate              Net
                                                                   ------------------------------------------------------
<S>                                                                         <C>                  <C>          <C>
     Interest income:
          Loans receivable, net                                                 $3,956               $74          $4,030
          Mortgage-backed securities                                            (3,465)             (252)         (3,717)
          Investment securities                                                 (2,096)             (131)         (2,227)
          Other interest-earning assets                                          1,075              (148)            927
                                                                   ------------------------------------------------------
             Total interest-earning assets                                        (530)             (457)           (987)
                                                                   ======================================================

     Interest expense:
          Deposits                                                               (193)              (388)           (581)
          Advances from the FHLB and other borrowings                            (652)              (115)           (767)
                                                                   ------------------------------------------------------
             Total interest-bearing liabilities                                  (845)              (503)         (1,348)
                                                                   ======================================================

     Net change in net interest income                                           $315                $46            $361
                                                                   ======================================================
</TABLE>

Total Interest  Income.  Total interest income  decreased by $987,000 or 2.7% to
$35.6  million for the nine months ended  September  30, 2001  compared with the
first nine months of 2000.  Average  earning  assets  decreased by $15.6 million
during the same periods.  However,  there was a substantial change in the mix of
the  Company's  interest-earning  assets.  During the first nine months of 2001,
loans  receivable,  which carried higher yields than other earning assets,  were
53.6% of total  interest-earning  assets compared to 42.7% during the first nine
months of 2000.  The  increase  in loans is the direct  result of the  Company's
successful  efforts  to  increase  its  purchases  of  seasoned,   single-family
residential loans.

Total Interest  Expense.  Total interest expense  decreased to $20.5 million for
the nine-month  period ended  September 30, 2001 from $21.8 million for the same
period in 2000  primarily  due to decreased  advances from the Federal Home Loan
Bank and other  borrowings,  which  resulted  in an overall  decrease in average
interest-bearing liabilities. In addition, generally lower market interest rates
resulted  in a lowering  of the  Company's  deposit  interest  expense,  and the
Company's  average  deposits  decreased  by $7.0  million  due  mainly  to lower
balances in certificates of deposit.

Non-interest income. Total non-interest income was $1,683,000 for the nine-month
period ended  September 30, 2001 compared with $1,150,000 for the same period in
2000.  The increase is mainly due to a $444,000  gain on the sale of vacant land
that  the  Company  had   purchased   during  1993  for   potential  use  as  an
administrative location.

Non-interest expense.  Total non-interest expense decreased by $185,000 to $10.9
million for the nine months ended September 30, 2001 compared to the same period
in 2000.  Operating  expenses  decreased in part due to the consolidation of one
branch during the first quarter of 2001,  thus enabling the Company to

                                       16

<PAGE>

avoid the personnel,  occupancy,  and other costs associated with operating that
branch. In addition, the Company reduced its expenditures for direct advertising
by $143,000  during the first nine months of 2001  compared with the same period
in 2000.

                                       17
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

The  Company's  liquidity  is a  measure  of its  ability  to  fund  loans,  pay
withdrawals of deposits, and other cash outflows in an efficient, cost-effective
manner.  The  Company's   short-term  sources  of  liquidity  include  maturity,
repayment and sales of assets,  excess cash and cash equivalents,  new deposits,
broker deposits,  other borrowings,  and new advances from the Federal Home Loan
Bank. There has been no material adverse change during  nine-month  period ended
September  30, 2001 in the ability of the Company and its  subsidiaries  to fund
their operations.

At September 30, 2001, the Company had commitments  outstanding under letters of
credit of $1.6 million,  commitments to originate  loans of $13.1  million,  and
commitments  to fund  undisbursed  balances of closed  loans and unused lines of
credit of $25.7 million.

Capital Requirements

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



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Asset and Liability Management

The  Company's  market risk  exposure is  predominately  caused by interest rate
risk,  which is defined as the  sensitivity of the Company's  current and future
earnings, the values of its assets and liabilities, and the value of its capital
to changes in the level of market  interest  rates.  Management  of the  Company
believes that there has not been a material adverse change in market risk during
the nine months ended September 30, 2001.

                                       18
<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
                         Not applicable

      ITEM 5.            OTHER INFORMATION
                         On October  22, 2001 TF  Financial  Corporation
                         announced  that its  subsidiary  Third  Federal
                         Savings  Bank  had  entered  into a  definitive
                         purchase and  assumption  agreement  with First
                         County Bank,  Doylestown,  Pennsylvania for the
                         sale    of    Third    Federal's    Warminster,
                         Pennsylvania  branch office. The transaction is
                         expected  to close in 2001  and is  subject  to
                         banking regulatory  approval.  At September 30,
                         2001 the deposits at Third Federal's Warminster
                         branch totaled  approximately $12.9 million. No
                         loans   are  to  be   sold   as  part  of  this
                         transaction.  The  branch is a leased  location
                         and  the  lease  is   scheduled  to  expire  at
                         December 31, 2001.


      ITEM 6.            EXHIBITS AND REPORTS ON FORM 8-K
                         (a)     Exhibits
                         Exhibit 99--Press Release dated October 26, 2001
                         (b)     Reports on Form 8-K
                         None


                                       19
<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:      October 26, 2001                 John R. Stranford
    --------------------------------
                                            President and CEO
                                            (Principal Executive Officer)


                                            /s/ Dennis R. Stewart
                                            ----------------------------
Date:      October 26, 2001                 Dennis R. Stewart
     -------------------------------
                                            Senior Vice President and
                                             Chief Financial Officer
                                            (Principal Financial &
                                             Accounting Officer)



                                       20