SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


                                   FORM 10-K405
(Mark One)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended      July 31, 1996
                               -------------

                                    - or -

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
|_|   EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from __________________ to ________________

Commission Number:      0-25106
                        -------

                             LAKEVIEW FINANCIAL CORP.
            ------------------------------------------------------
            (Exact name of Registrant as specified in its Charter)

             New Jersey                                       22-3334052
---------------------------------------------              ------------------
(State or other jurisdiction of incorporation              (I.R.S. Employer
  or organization)                                         Identification No.)

1117 Main Street, Paterson, New Jersey                            07503
----------------------------------------                         --------
(Address of principal executive offices)                         Zip Code

Registrant's telephone number, including area code:     (201) 890-1234
                                                        --------------

Securities registered pursuant to Section 12(b) of the Act:      None
                                                             ------------

Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $2.00 per share
                    ---------------------------------------
                               (Title of Class)

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X] 

      The aggregate market value of the voting stock held by  non-affiliates  of
the Registrant,  based on the average bid price of the Registrant's Common Stock
as quoted on the National  Association  of Securities  Dealers,  Inc.,  National
Market on October 15,  1996 was  $46,221,594  (1,915,921  shares at $24.125  per
share).  As of October  15,  1996 there were  issued and  outstanding  2,265,704
shares of the Registrant's Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions of Annual  Report to  Stockholders  for the Fiscal Year Ended July
     31, 1996. (Parts I, II and IV)

2.   Portions of Proxy  Statement for the 1996 Annual  Meeting of  Stockholders.
     (Part III)


<PAGE>



PART I

Item 1.  Business

Business of the Holding Company

     Lakeview Financial Corporation  ("Corporation") is a New Jersey corporation
organized  on  March  25,  1994  at  the  direction  of  Lakeview  Savings  Bank
("Lakeview"  or the  "Savings  Bank")  to  acquire  all of the  common  stock of
Lakeview in connection with the Savings Bank's  reorganization  into the holding
company form of ownership.  The Holding Company  reorganization was completed on
August 25, 1994. The  Corporation is a unitary  savings and loan holding company
which, under existing laws, generally is not restricted in the types of business
activities  in which it may engage  provided  that the  Savings  Bank  retains a
specified amount of its assets in  housing-related  investments.  At the present
time,  since  the  Corporation  does  not  conduct  any  active  business,   the
Corporation  does not intend to employ any persons  other than officers but will
utilize the support staff of the Savings Bank from time to time. The Corporation
has various investments in service corporations which are incorporated under New
Jersey law. See "---- Subsidiary Activities."

Business of the Savings Bank

      Lakeview Savings Bank is a New Jersey chartered stock savings bank located
in West Paterson,  New Jersey.  The Savings Bank was founded in 1922 as Lakeview
Building and Loan Association. The Savings Bank has been a member of the Federal
Home Loan Bank System since 1938.  On May 5, 1993,  the Savings  Bank  converted
from a New  Jersey-chartered  mutual savings association called Lakeview Savings
Bank,  S.L.A.  to a New Jersey  chartered  mutual  savings bank, the accounts of
which are insured by the SAIF of the FDIC.  On December  22,  1993,  the Savings
Bank  completed  its  conversion to the stock form of  organization  through the
issuance of 2,420,000 shares of Bank Common Stock for a purchase price of $10.00
per share. Subsequently, the Savings Bank Common Stock was exchanged for Holding
Company Common Stock in a reorganization.

     The  principal  business of the Savings Bank is the  acceptance  of savings
deposits from the general  public and the  origination  and purchase of mortgage
loans  for  the  purpose  of  constructing,  financing  or  refinancing  one- to
four-family  residences  and the  purchase of  mortgage-backed  securities.  The
Savings  Bank also  originates  home equity  loans.  Lakeview  has eight  office
locations located in Bergen and Passaic Counties,  New Jersey.  The Savings Bank
had various investments in service corporations which are incorporated under New
Jersey law. See "---- Subsidiary Activities".

Market Area

     The Savings Bank is  authorized  to make real estate loans  throughout  the
United States. Lakeview's market area includes Passaic and Bergen Counties, both
located in  Northern  New Jersey.  The Savings  Bank's main office is located in
West Paterson, New Jersey.  Paterson, the county seat of Passaic County, is home
to numerous County,  State and Federal  government  agencies.  Lakeview's Bergen
County branch office is located in Ramsey, New Jersey. Ramsey is a predominately
residential community.  Passaic County and Bergen County are included in the New
York - Newark  metropolitan  area.  Due to the  proximity  to New York  City and
Newark, this part of northern New Jersey has historically been attractive to the
manufacturing  industry.  Employment  is also  provided  by a variety of service
industries and the wholesale/retail trade.



<PAGE>




      The New Jersey  real estate  market was  generally  depressed  in the late
1980s and early 1990s. The market has stabilized in recent periods,  but whether
such stabilization will continue is dependent upon general economic  conditions,
not just in New Jersey,  but in the United States as a whole. The Savings Bank's
business and operating results are significantly impacted by economic conditions
in its market and in the nation.

Lending Activities

      General.  Historically, the principal lending activity of the Savings Bank
has been the  origination  of mortgage  loans for the  purpose of  constructing,
financing or refinancing one-to-four family residential properties.  The Savings
Bank also originates  commercial real estate loans,  multi-family mortgage loans
and has become  active in the  origination  of home equity and home  improvement
loans since 1987.

      Loan Portfolio Composition.  The Savings Bank's loan portfolio composition
consists primarily of conventional fixed-rate and adjustable-rate first mortgage
loans  secured by one- to  four-family  residences,  home equity loans and, to a
lesser extent,  multi-family  residences and commercial real estate.  As of July
31, 1996,  the Savings  Bank's total net portfolio of loans and  mortgage-backed
securities  held to  maturity  outstanding  (the  "loan  portfolio")  was $284.9
million, of which $124.5 million, or 43.7%, consisted of first mortgage,  second
mortgage,  home equity and home improvement loans secured by one- to four-family
residential  dwellings.  At that same date, $121.5 million, or 42.6% of the loan
and   mortgage-backed   securities   portfolios   consisted  of  mortgage-backed
securities held to maturity. The mortgage-backed securities portfolio as of July
31, 1996  consisted of  pass-through  certificates  issued or  guaranteed by the
Federal  Home Loan  Mortgage  Corporation  ("FHLMC"),  and the Federal  National
Mortgage Association ("FNMA").

      Originated  mortgage  loans  in the  Savings  Bank's  portfolio  generally
include  due-on-sale clauses which provide the Savings Bank with the contractual
right  to deem  the loan  immediately  due and  payable  in the  event  that the
borrower transfers ownership of the property without the Savings Bank's consent.


                                      2

<PAGE>



      Analysis of Loan and Mortgage-Backed Securities Portfolio. Set forth below
is selected  data  relating to the  composition  of the Savings  Bank's loan and
mortgage-backed  securities  portfolios  by type of loan and type of security on
the dates indicated.


<TABLE>
<CAPTION>

                                                                                         At July 31,
                                                  ----------------------------------------------------------------------------------
                                                        1992             1993             1994              1995            1996
                                                  -------------  -----------------  ----------------  ---------------  -------------
                                                     $      %        $         %       $        %       $       %        $       %
                                                  ------  -----  -------   -------  -------  -------  ------  -------  ------ ------
                                                                                    (Dollars in Thousands)
Type of Loan:
 Real Estate Loans:
  Construction loans:
<S>                                             <C>      <C>    <C>        <C>    <C>      <C>     <C>      <C>     <C>      <C>
   Residential (1-4 family) ................... $   630    .4%  $    --      --%  $   190    --%   $    915    .3%  $  863      .3 %
   Multi-family/commercial ....................     400    .2        --      --       550     .2        --     --       --      --
                                                 -------  ----   -------   ----   -------   ----   -------  ----   -------    ----
                                                
      Total construction loans .................   1,030    .6        --      --       740     .2       915    .3       863     .3
  Residential (1-4 family)(1) ..................  84,878  47.9    76,832    42.5    79,383   25.7    84,051  26.5    84,006   29.5
  Multi-Family/Commercial ......................  20,371  11.5    19,322(1) 10.7    20,879    6.7    22,186   6.9    33,063   11.6
  Commercial loans .............................      --    --        --      --        --     --        --    --       697     .2
  Home equity, second mortgage and home
   improvement loans ...........................  41,421  23.3    43,842    24.2    36,223   11.7    37,221  11.7    46,705   16.4
Consumer Loans:
  Passbook account loans .......................     747    .4       522      .3     1,242     .4     1,022    .3     1,517     .5
  Student loans ................................       9    --         7      --         6     --         1    --        --     --
Less:
  Loans in process .............................      --    --        --      --       191     --       451    .1       101     --
  Deferred loan origination fees and ...........                                       425     .2       287    .1       220     --
    costs discounts, net .......................     686    .4       578      .3 
  Allowance for loan losses ....................   2,493   1.4     2,638     1.5     1,714     .6     2,535    .7     3,073    1.1
                                                 -------  ----   -------    ----   -------   ----   -------  ----   -------   ----
Total loans, net ............................... 145,277  81.9   137,309    75.9   136,143   44.0   142,123  44.8   163,457   57.4
Mortgage-backed securities held to maturity, net  32,137  18.1    43,579    24.1   173,067   56.0   175,375  55.2   121,462   42.6
                                                 -------  ----   -------    ----   -------   ----   -------  ----   -------   ----
  Total loans and mortgage-backed
   securities, net .............................$177,414 100.0% $180,888   100.0% $309,210 100.00% $317,498 100.00% $284,919 100.00%
                                                 ======= =====   =======   =====   ======= ======   ======= ======   ======= ====== 

</TABLE>

                                        3

<PAGE>

<TABLE>
<CAPTION>
                                                                                   At July 31,
                                                ------------------------------------------------------------------------------------
                                                      1992            1993              1994              1995             1996
                                                --------------- --------------- ----------------  ----------------- ----------------
                                                   $       %        $      %        $        %        $         %       $        %
                                                --------  ----- --------  ----- --------   -----  --------    ----- --------  ------
                                                                               (Dollars in Thousands)
Type of Security:
  Real Estate Loans
<S>                                             <C>      <C>    <C>      <C>    <C>       <C>     <C>        <C>    <C>       <C>  
    1-4 family ................................ $126,929  71.6% $120,674  66.7% $116,346   37.6%  $119,885    37.7% $124,467   43.7%
    Multi-Family/Commercial ...................   20,771  11.7    19,322  10.7    20,879    6.7     24,488     7.7    40,170   14.1
  Passbook accounts ...........................      747    .4       522    .3     1,242     .4      1,022      .3     1,517     .5
  Student loans ...............................        9    --         7    --         6     --          1      --        --     --
Commercial Loans:
  Commercial loans ............................       --    --        --    --        --     --         --      --       697     .2
Mortgage-backed securities, net ...............   32,137  18.1    43,579  24.1   173,067   56.0    175,375    55.2   121,462   42.6
Less:
  Loans in process ............................       --    --        --    --       191     --        451      .1       101     --
  Deferred loan origination fees and costs, net      686    .4       578    .3       425     .1        287      .1       220     --
  Allowance for loan losses ...................    2,493   1.4     2,638   1.5     1,714     .6      2,535      .7     3,073    1.1
                                                   -----   ---     -----   ---     -----     --      -----      --     -----    ---
  Total loans and mortgage
    -backed securities, net ................... $177,414 100.0% $180,888 100.0% $309,210  100.00% $317,498  100.00% $284,919 100.00%
                                                 ======= =====   ======= =====   =======  ======   =======  ======   ======= ====== 
</TABLE>


-----------------------

(1)  This  loan   category   includes  a   relatively   small  amount  of  loans
     collateralized by mixed-use properties that are primarily residential,  but
     have some commercial use as well.

                                              4

<PAGE>



      One- to Four-Family Mortgage Loans. The Savings Bank offers first mortgage
loans secured by one- to  four-family  residences in the Savings  Bank's lending
area.  Typically,  such  residences  are single  family  homes that serve as the
primary  residence of the owner.  Additionally,  this loan  category  includes a
relatively  small amount of loans  collateralized  by mixed use properties which
are primarily residential,  but have some commercial use as well. As of July 31,
1996,  $124.5  million or 43.7% of the Savings  Bank's loan and  mortgage-backed
securities portfolio were secured by one- to four-family residential real estate
mortgages.  The Savings Bank currently offers 15 and 30 year fixed-rate mortgage
loans, 15 year balloon  mortgage loans with five to seven year  maturities,  and
adjustable  rate mortgage  ("ARM") loans with one, three or five year adjustment
periods and 15 to 30 year  maturities.  The Savings Bank  retains ARM loans,  15
year fixed-rate mortgages and balloon mortgage loans. Fixed-rate loans with more
than 15 year maturities are sold in the secondary market.

      Monthly  payments  on  balloon  loans are based on a 15 year  amortization
schedule.  Renewal of balloon  mortgage  loans is based on the credit history as
well as current  qualification  of the borrower at time of renewal.  The Savings
Bank offers  balloon  mortgages in an effort to make its mortgage loan portfolio
more interest rate  sensitive.  Interest  rates charged on fixed-rate  loans are
competitively  priced based on the local  competitive  market.  Loan origination
fees on these loans are  generally up to 2% of the loan amount  depending on the
interest rate accepted by the borrower.

      Balloon loans pose a different  credit risk from 15 year  mortgage  loans.
The  balloon  loans  mature in five to seven years but  payments  are based on a
fifteen year  amortization  schedule.  At the time of the loan's  maturity,  the
borrower  must  either pay the balloon  payment or  refinance  the loan.  If the
borrower is ineligible  for  refinancing at the time of loan maturity and cannot
make the large balloon  payment,  the loan will go into default.  In the case of
standard  mortgage  loans,  payments  are spread out evenly over the term of the
loan, thereby decreasing this credit risk.

      The  Savings  Bank  currently  offers ARM loans with  interest  rates that
adjust every one, three or five years with a maximum rate increase cap of 2% per
year, and a lifetime cap of 6%. The interest rate on these  mortgages since 1985
has been the U.S.  Treasury  bill rate plus 3%. As of July 31,  1996,  one year,
three year, and five year ARM loans  originated by the Savings Bank  constituted
30.1%, 46.0% and 23.9% of the originated ARM loan portfolio,  respectively.  ARM
loans are originated for a term of up to 30 years.  The Savings Bank  originates
one- to  four-family  residential  mortgage  loans in  amounts  up to 80% of the
appraised  value of the  mortgaged  property.  The Savings  Bank retains the ARM
loans it originates for its loan portfolio.

      Generally,  ARM loans pose credit risks  different than the risks inherent
in fixed-rate  loans,  primarily  because as interest rates rise, the underlying
payments of the borrower rise, thereby increasing the potential for default.  At
the same time, the  marketability  of the  underlying  property may be adversely
affected by higher  interest  rates.  The Savings  Bank  attempts to reduce this
credit risk by qualifying  ARM loan  borrowers  based on the first full interest
rate adjustment. The Savings Bank does not originate ARM loans which provide for
negative amortization.

      The Savings Bank also offers 15 year fixed-rate  mortgage loans.  Interest
rates charged on fixed-rate  loans are  competitively  priced based on FHLMC buy
rates. Loan origination fees on these loans are generally 2% of the loan amount.
The Savings Bank retains these 15 year mortgage loans for its loan portfolio.

      Consumer,  Home Equity,  Second Mortgage and Home  Improvement  Loans. The
Savings Bank originates home equity,  second mortgage and home improvement loans
secured by one-family residences. The Savings Bank has been especially active in
the origination of such loans since 1987. These loans

                                      5

<PAGE>



generally are originated as adjustable  rate loans which adjust monthly and have
terms of from 15 to 30 years.  No loan  origination  fee is  usually  charged on
these loans. Loans made on owner-occupied,  one-family  residences are generally
subject  to  a  70%  combined  loan-to-value  limitation,  including  any  other
outstanding mortgages or liens, and are made at an adjustable rate of 185 points
over the prime rate. Loans on non-owner occupied properties are limited to a 65%
loan to value ratio,  and are made at an adjustable  rate of 210 points over the
prime rate.

      Consumer  loans not secured by real  estate  represent a small part of the
Savings Bank's lending activity. These types of consumer loans originated by the
Savings Bank are loans  secured by savings  deposits.  Non-real  estate  secured
consumer loans  amounted to  approximately  $1.5 million,  or .5% of the Savings
Bank's loan and mortgage-backed securities portfolio as of July 31, 1996.

      Commercial and Multi-Family Real Estate.  To a lesser degree,  the Savings
Bank  originates  multi-family  real estate  loans  usually  secured by property
located in the Savings  Bank's primary  lending area. To a very limited  degree,
the Savings Bank  originates  commercial  real estate loans.  The Savings Bank's
commercial  real  estate  loans are  secured by such  property  as mixed use and
office  buildings,  small retail stores and  industrial  buildings.  The Savings
Bank,  in the past,  originated  land loans,  secured by improved or  unimproved
lots.  In recent  years,  the Savings Bank has not pursued land loans,  but will
consider making such loans, subject to certain underwriting considerations.  The
Savings Bank's  commercial and multi-family  real estate loans are five or seven
year balloon mortgages with amortization  periods typically of 15 years and loan
to value ratios of 80% or less.

     During the early 1980's, the Savings Bank purchased participation interests
in large  commercial  real estate  projects  located outside of its market area.
Several of these loans experienced problems, and since 1989 the Savings Bank, as
a matter  of  policy,  ceased  purchasing  commercial  real  estate  loans.  See
"Non-Performing Assets."

      As of July 31, 1996,  the Savings Bank had 158 loans secured by commercial
and  multi-family  real estate,  totalling $40.2 million or 14.1% of the Savings
Bank's loan and  mortgage-backed  securities  portfolio.  The largest commercial
real estate loan is a loan secured by a nursing home in Dover, New Jersey with a
balance  of $3.0  million  on July  31,  1996.  See  "Business  --  Loans to One
Borrower."

      Loan Underwriting Risks. While commercial and multi-family real estate and
consumer loans provide benefits to the Savings Bank's asset/liability management
program and assist in reducing  exposure to interest  rate  changes due to their
shorter terms or adjustable rates, such loans may entail significant  additional
credit and  interest  rate  risks  compared  to  residential  mortgage  lending.
Commercial and  multi-family  real estate  mortgage loans may involve large loan
balances to single borrowers or groups of related  borrowers.  In addition,  the
payment experience on loans secured by income producing  properties is typically
dependent on the successful  operation of the properties and thus may be subject
to a greater  extent to adverse  conditions  in the real estate market or in the
general economy.

      Mortgage-Backed  Securities  Held  to  Maturity.  The  Savings  Bank  also
purchases  mortgage-backed  securities  issued by GNMA,  FNMA, FHLMC and private
corporations  which are  secured  by balloon  and  fixed-rate  mortgages.  These
mortgage-backed  securities consist of pass-through certificates and real estate
mortgage  investment  conduits  ("REMICs")  secured  by  interests  in  pools of
mortgages.  As of July 31, 1996, these  mortgage-backed  securities  amounted to
$121.5 million,  or 42.6% of the loan and mortgage-backed  securities  portfolio
and  are  held  to  maturity.  All  of the  $121.5  million  of  mortgage-backed
securities  are of such  securities  whose  principal  and interest are directly
insured or guaranteed by GNMA, FNMA or FHLMC.


                                      6

<PAGE>



      The Bank also  purchases  mortgage-backed  securities  and CMOs  issued by
government agencies,  private issuers and financial institutions,  some of which
are  qualified  under  the  Code as Real  Estate  Mortgage  Investment  Conduits
("REMICs").  CMOs and REMICs (collectively CMOs) have been developed in response
to investor concerns regarding the uncertainty of cash flows associated with the
prepayment  option  of the  underlying  mortgagor  and are  typically  issued by
governmental  agencies,  governmental  sponsored enterprises and special purpose
entities, such as trusts, corporations or partnerships, established by financial
institutions or other similar  institutions.  Some CMO and REMIC instruments are
most like  traditional  debt  instruments  because  they have  stated  principal
amounts and traditionally  defined  interest-rate  terms.  Purchasers of certain
other CMO and REMIC  instruments  are  entitled  to the  excess,  if any, of the
issuer's cash inflows,  including reinvestment earnings,  over the cash outflows
for debt service and administrative expenses. These mortgage related instruments
may include  instruments  designated as residual  interests,  which represent an
equity  ownership  interest in the underlying  collateral,  subject to the first
lien of the  investors  in the other  classes of the CMO.  Certain  residual CMO
interests may be riskier than many regular CMO interests to the extent that they
could result in the loss of a portion of the original investment. Moreover, cash
flows from  residual  interests are very  sensitive to  prepayments  and,  thus,
contain a high degree of interest-rate risk.

      At July 31,  1996,  all of the  Bank's  investment  in CMOs  consisted  of
regular  interests.  As of July 31,  1996,  the Bank's  CMOs did not include any
residual interests or interest-only or principal-only  securities.  The CMOs and
REMICS held by the Bank at July 31, 1996  consisted  of floating  rate and fixed
rate  tranches.  The  interest  rate of a majority  of the Bank's  floating-rate
securities adjusts monthly and provides the institution with net interest margin
protection in an increasing market interest rate environment. The securities are
backed by  mortgages  on one- to  four-family  residential  real estate and have
contractual  maturities up to 30 years.  The  securities  are primarily PACs and
TACs  (Planned  and  Targeted  Amortization  Classes)  are designed to provide a
specific principal and interest cash-flow.

      Private  issued CMOs tend to have greater  prepayment and credit risk than
those issued by government agencies or government  sponsored  enterprises (e.g.,
FHLMC,  FNMA and GNMA)  generally  because they often are secured by jumbo loans
(currently,  loans  with an  aggregate  outstanding  balances  of  greater  than
$203,150).  At July 31, 1996,  the Bank held for  maturity no  privately  issued
CMO's.

     Loans to One  Borrower.  SAIF-insured  savings banks are subject to certain
lending  limitations to a single  borrower or group of borrowers.  Under current
law, the Savings Bank lending  limit equals an amount equal to 15% of unimpaired
capital and unimpaired  surplus on an unsecured  basis and an additional  amount
equal to 10% of unimpaired capital and unimpaired surplus if the loan is secured
by readily marketable collateral. It is the Savings Bank's policy to limit loans
to a single  borrower to  $1,500,000.  The Savings  Bank's  largest  loan to one
borrower  was a loan  participation  of  approximately  $3.0  million  of a $5.0
million  loan made in 1996 which was secured by a nursing home located in Dover,
New Jersey.  The second  largest  loan to one  borrower  relationship  is a loan
participation of approximately  $2.4 million of a $5.0 million loan made in 1986
which was secured by a ski resort  located in Vernon,  New Jersey.  The loan was
classified as substandard as of July 31, 1996. See  "--Non-performing  Loans and
Asset Classification."


                                      7

<PAGE>



Loan and Mortgage-Backed Securities Maturity Tables

      The  following  table sets forth the maturity of Lakeview  Savings  Bank's
loan and mortgage-backed securities held to maturity portfolio at July 31, 1996.
The table  does not  include  prepayments  or  scheduled  principal  repayments.
Prepayments  and scheduled  principal  repayments  on loans and  mortgage-backed
securities  totalled $40.7 million,  $36.2 million,  and $45.3 million,  for the
three years ended July 31, 1994, 1995, and 1996,  respectively.  Adjustable-rate
mortgage loans are shown as maturing based on contractual maturities.


                                                       Home Equity,
                                                      Second Mortgage
                         1-4 Family   Multi-Family,      and Home
                         Real Estate    Commercial      Improvement
                         Mortgage(1)   Real Estate       Loans (2)       Total
                         -----------  -------------   ---------------  ---------

                                               (In Thousands)
Amounts Due:
Within 3 months........   $    387      $ 4,670          $ 2,894       $  7,951
3 months to 1 Year.....      4,539          691            1,491          6,721

After 1 year:
  1 to 3 years.........     16,363        2,105            1,128         19,596
  3 to 5 years.........     34,912        8,022            6,536         49,470
  5 to 10 years........     14,502        7,886           15,009         37,397
  10 to 20 years.......     65,596        5,244           18,278         89,118
  Over 20 years........     68,050        5,310            1,688         75,048
                           -------       ------           ------        -------
Total due after one year   199,423       28,567           42,639        270,629
                           -------       ------           ------        -------
Non-performing loans...      1,118          595            1,198          2,911
Total amount due.......   $205,467      $34,523          $48,222       $288,212
                           =======       ======           ======        ------- 

Less:
Allowance for loan loss                                                   3,073
Deferred loan fees and
discounts, net........                                                      220
                                                                        -------
  Loans receivable and
   mortgage-backed
   securities..........                                                $284,919
                                                                        =======

------------------
(1)  Includes mortgage-backed securities held to maturity.
(2)  Also includes passbook and student loans.



                                      8

<PAGE>



      The following  table sets forth the dollar amount of all performing  loans
due after July 31, 1997, which have pre-determined interest rates and which have
floating or adjustable interest rates.


                                                        Floating or
                                       Fixed Rates    Adjustable Rates    Total
                                       -----------    ----------------  --------
                                                      (In Thousands)

One-to-four family(1)..................  $137,140         $ 62,283      $199,423
Multi-family and commercial real estate    17,194           11,373        28,567
Home equity, second mortgage and
  home improvement loans (2)...........    17,105           25,534        42,639
                                          -------          -------      --------
  Total................................  $171,439         $ 99,190      $270,629
                                          =======          =======       =======

-----------------------
(1)  Includes mortgage-backed securities held to maturity.
(2)  Also includes passbook and student loans.

      The  following  table sets for the  contractual  maturities of the Savings
Bank's  mortgage-backed  securities  held to maturity  portfolio  as of July 31,
1996.

          Contractual Maturities Due in Year(s) Ended July 31,
  -------------------------------------------------------------------
                                  2000 to     2007 to       2017 and
  1997      1998       1999         2006       2016        Thereafter
  ----      ----       ----       --------    -------      ----------
                             (In Thousands)

 $4,185     $ 0      $14,719      $50,227     $17,689        $34,642
  =====      ==       ======       ======      ======         ======



      Loan  Solicitation  and  Processing.  The Savings  Bank's  sources of loan
applications   include   existing  or  past  customers,   real  estate  brokers,
accountants,   attorneys,  consultants,  call-ins  and  walk-ins  and  newspaper
advertisements.

      Upon receipt of any loan application from a prospective borrower, a credit
report and verifications are ordered to confirm specific information relating to
the loan applicant's employment, income and credit standing. An appraisal of the
real estate  intended to secure a first mortgage  proposed loan is undertaken by
an independent fee appraiser  approved by the Board of Directors.  In connection
with the loan approval  process,  the Savings  Bank's loan officers  analyze the
loan  applications  and the property  involved.  All loans are  processed at the
Savings  Bank's  office by the Savings  Bank's loan  servicing  department.  The
Savings Bank  originates  residential  first  mortgage loans that conform to the
FHLMC and FNMA  guidelines,  so that such loans can be sold if the Savings  Bank
desires to do so.

      Lakeview  staff  underwrites  all  mortgage  loans  under  guidelines  and
policies  issued by the Board of Directors.  The Savings  Bank's Loan  Committee
reviews all loans and the full Board of Directors  then  ratifies the actions of
the  staff and  committee  in regard  to all  loans  except  consumer  loans and
passbook  loans.  Fixed rate loans with terms of 30 years are  immediately  sold
after funding to FHLMC or other private  secondary  mortgage  market  purchasers
depending on the attractiveness of the pricing.


                                      9

<PAGE>



     Loan  applicants are promptly  notified of the decision of the Savings Bank
by a letter setting forth the terms and conditions of the decision. If approved,
these terms and conditions include the amount of the loan,  interest rate basis,
amortization  term,  a brief  description  of real estate to be mortgaged to the
Savings  Bank,  and the  notice  of  requirement  of  insurance  coverage  to be
maintained  to protect the Savings  Bank's  interest.  The Savings Bank requires
title,  fire and casualty  insurance for all first mortgage loans, as well as an
escrow  account for the payment of real estate  taxes.  Disability  insurance is
available but not required for Lakeview loans.

      Loan Originations, Purchases and Sales. The Savings Bank's activity in the
secondary mortgage market consists of the purchase of loans and  mortgage-backed
securities.   In  fiscal  1995,  the  Savings  Bank  sold  no  GNMA   fixed-rate
mortgage-backed securities.

      The Savings Bank originates  residential first mortgage loans that conform
to the FHLMC and FNMA  guidelines.  It is the  Savings  Bank's  intent to retain
servicing  for loans  originated  for sale or  subsequently  packaged to another
buyer.  Primary  markets for loans sold are FHLMC and private  secondary  market
purchasers.  For the year ended July 31,  1996,  $630,000  of loans were sold to
FHLMC.

      Because the Savings Bank's savings  deposits  generally  exceed the demand
for  loans  from  its  customers  in its  local  market  area,  in  addition  to
originating loans for its portfolio, the Savings Bank has purchased a portion of
its real estate loan  portfolio  in the  secondary  market.  The Savings  Bank's
purchases in the  secondary  market are  dependent  upon the demand for mortgage
credit  in the  local  market  area and the  inflow  of funds  from  traditional
sources.  Purchases of loans enable the Savings Bank to utilize  available funds
more  quickly and to obtain a yield  higher than could  generally be obtained in
the Savings  Bank's  primary  market  area.  The  Savings  Bank  purchases  both
fixed-rate  and  adjustable  mortgage-backed  securities.  The  purchase of such
securities  is part of the Savings  Bank's  strategy  to make its  overall  loan
portfolio more sensitive to current market conditions and interest rates.

      The Savings Bank reviews each purchased loan as if it were originating the
loan according to its own underwriting standards.  All loans must be documented,
including an original  appraisal that substantiates the value of the property at
the time of  origination of the loan. The Savings Bank obtains from the seller a
duplicate  copy  of  each  loan  file,  which  generally  includes  an  executed
application,  financial statements, credit reports, title insurance, real estate
tax  information,  appraisal and a mortgage  note. The Savings Bank requires the
original note be included with its file.



                                      10

<PAGE>



Origination, Purchase and Sale of Loans

      The following table sets forth total loans and mortgage-backed  securities
originated, purchased and sold during the periods indicated.

<TABLE>
<CAPTION>


                                                                 Year Ended July 31,
                                             --------------------------------------------------------
                                               1992          1993       1994       1995       1996
                                             --------      --------   --------   --------   ---------
                                                                 (In Thousands)
Total gross loans and mortgage-backed
<S>                                          <C>           <C>        <C>        <C>        <C>     
  securities at beginning of period ......   $169,230      $180,776   $183,831   $311,348   $320,320
                                              =======       =======    =======    =======    =======

Loans originated:
  1 to 4 family residential ..............   $ 15,713      $ 21,114   $ 18,560   $ 14,245   $ 10,581

  Commercial real estate, other
    residential ..........................      3,509(1)      3,049      1,682      5,941      9,695

  Construction ...........................        585          --          549        664       --
  Consumer (2) ...........................     10,117        11,620      7,531      9,692     20,507
                                              -------       -------    -------    -------   --------
Total loans originated ...................   $ 29,924      $ 35,783   $ 28,322   $ 30,542   $ 40,783
                                              =======       =======    =======    =======    =======

Loans and mortgage-backed securities
purchased:
  1 to 4 family residential ..............   $   --        $  5,752   $  1,123   $    137   $  2,687

  Mortgage-backed securities .............     15,981        19,237    146,941     18,762      2,773
                                              -------       -------    -------    -------   --------
Total loans and mortgage-backed
   securities purchased ..................   $ 15,981      $ 24,989   $148,064   $ 18,899   $  5,460
                                              =======       =======    =======    =======    =======

Loans and mortgage-backed securities
sold:
  Whole loans ............................   $  4,487      $ 12,712   $  5,334   $  1,172   $    925

  Mortgage-backed securities .............         --            --         --         --         --
                                              -------       -------    -------    -------   --------

Total loans and mortgage-backed
   securities held to maturity sold.......   $  4,487      $ 12,712   $  5,334   $  1,172   $    925
                                              =======       =======    =======    =======    =======

Principal repayment on loan and
mortgage-backed securities ...............   $ 25,644      $ 39,029   $ 40,693   $ 36,213   $ 45,347
                                              -------       -------    -------    -------   --------
Mortgage loans transferred to real
  estate owned ...........................   $  4,228      $  5,976   $  2,842   $  3,084   $    332
                                              -------       -------    -------    -------   --------
Transfer of mortgage-backed securities
  held to maturity to investment
  securities available for sale ..........         --            --         --         --   $ 31,747
                                              -------       -------    -------    -------   --------
Net loan and mortgage-backed securities
  activity ...............................   $ 11,546      $  3,055   $127,517   $  8,972   $(32,108)
                                              =======       =======    =======    =======    =======

Total gross loans and mortgage-backed
  securities receivable at end of period..   $180,776      $183,831   $311,348   $320,320   $288,212
                                              =======       =======    =======    =======    =======

</TABLE>


----------------------
(1)   The increase resulted from the  reclassification  of multi-use  properties
      from one- to four- family residential to commercial real estate.
(2)   Includes home equity, home improvement and second mortgage loans.


                                      11

<PAGE>



      Loan  Commitments.  The Savings Bank generally grants  commitments to fund
real estate  mortgage loans for periods of up to 90 days at a specified term and
interest rate. These are primarily for fixed-rate loans. The total amount of the
Savings  Bank's  commitments  to  originate  loans as of July 31, 1996 was $13.3
million.

      Loan Fees and Service  Charges.  The Savings Bank  services all of its own
loans.  The Savings Bank  generally  retains  servicing on the loans it sells to
others.  As of July 31,  1996,  the  Savings  Bank had  $13.8  million  of loans
serviced for others. During the fiscal years ended July 31, 1994, 1995 and 1996,
loan fees and service charges totalled $815,000, $1,235,000 and $1,153,000.

      In addition to interest  earned on loans,  the Savings Bank  receives loan
origination and commitment fees for originating loans.

      Loan origination and commitment fees are volatile sources of income.  Such
fees vary with the volume and type of loans and  commitments  made and purchased
and with competitive  conditions in mortgage  markets,  which in turn respond to
the demand for and  availability  of money.  The Savings Bank has  experienced a
decrease in loan fee income during  periods of unusually high interest rates due
to the resulting lack of demand for mortgage loans.

      The Savings Bank's loan  origination fees generally up to 2% of the amount
borrowed on residential mortgages,  commercial real estate, home equity and home
improvement  loans,  depending  upon the interest rate accepted by the borrower.
The  total  amount of  unamortized  deferred  loan fees as of July 31,  1996 was
$219,862.

      The Savings Bank also receives other fees and charges relating to existing
loans, which include prepayment  penalties,  late charges, and fees collected in
connection  with a change in borrower or other loan  modifications.  The Savings
Bank amortizes all loan origination  fees net of certain loan origination  costs
over the related life of the loan. These fees and charges have not constituted a
material source of income.

      Non-Performing  Loans  and  Asset   Classification.   The  Savings  Bank's
collection  policy provides for a late charge to be added to the amount due when
a loan  is 15 days  past  due.  The  borrower  is  immediately  notified  of the
assessment  and  payment  is  requested.  Periodic  contacts  are made at 30 day
intervals. At 60 days past due, a letter is sent by the Savings Bank's attorney.
At 120 days, the attorney is authorized to take final action up to initiation of
foreclosure proceedings, if deemed warranted.

      Loans are  reviewed  on a monthly  basis and are  placed on a  non-accrual
status when, in the opinion of management, the collection of additional interest
is doubtful.  Loans are placed on a non-accrual  status when either principal or
interest is 90 days or more past due.  Interest accrued and unpaid at the time a
loan is placed  on  non-accrual  status  is  charged  against  interest  income.
Subsequent  payments are either applied to the outstanding  principal balance or
recorded  as  interest  income,  depending  on the  assessment  of the  ultimate
collectibility of the loan.


                                      12

<PAGE>



      The  following  table sets forth  information  with respect to the Savings
Bank's  non-performing  assets for the  periods  indicated.  During the  periods
indicated  the  Savings  Bank had no  restructured  loans  within the meaning of
Statement  of Financial  Accounting  Standards  No. 15 ("SFAS 15").  The amounts
shown are net of specific loss reserves where appropriate.

<TABLE>
<CAPTION>


                                                                         At July 31,
                                                  ----------------------------------------------------
                                                     1992        1993       1994       1995       1996
                                                     ----        ----      -----       ----       ----
                                                                      (In Thousands)
Loans accounted for on a non-accrual basis:
Mortgage loans:
<S>                                               <C>         <C>         <C>        <C>       <C>    
  Construction loans ......................       $      --   $      --   $     --   $   --    $    --
 Permanent loans secured by 1-4
    dwelling units(1) .....................          13,010      12,373      8,362    3,143      2,316
  All other mortgage loans ................           3,367       1,167        566      229        101
                                                   --------    --------    -------    -----     ------  
Total .....................................       $  16,377   $  13,540   $  8,928   $3,372    $ 2,417
                                                   ========    ========    =======    =====     ======   

Accruing loans which are contractually past
 due 90 days or more ......................          $   --   $      --   $     --   $   --    $    --
                                                   ========    ========    =======    =====     ======   
Total non-accrual and accrual loans
  (non-performing loans)(2) ...............       $  16,377   $  13,540   $  8,928   $3,372    $ 2,417
                                                   ========    ========    =======    =====     ======   
Real estate owned (net of allowance) ......       $   3,525   $   5,752   $  3,574   $3,608    $ 1,667
                                                   ========    ========    =======    =====     ======   
Other non-performing assets ...............       $    --     $    --     $   --     $  850    $   494
                                                   ========    ========    =======    =====     ======   
Total non-performing assets ...............       $  19,902   $  19,292   $ 12,501   $7,830    $ 4,578
                                                   ========    ========    =======    =====     ======   
Total non-performing loans to
  net loans ...............................           11.27%       9.86%      6.56%    2.37%       1.5%
                                                   ========    ========    =======    =====     ======   
Total non-performing loans to
  total assets ............................            8.25%       6.53%      2.16%     .80%       .53%
                                                   ========    ========    =======    =====     ======   
Total non-performing assets to tota1 assets           10.03%       9.30%      3.02%    1.87%       1.0%
                                                   ========    ========    =======    =====     ======   
</TABLE>


------------------------
(1)   Includes home equity, home improvement and second mortgage loans.
(2)   Loans delinquent for three months or more.

      Management  of the Savings Bank  regularly  reviews the loan  portfolio in
order to identify  potential problem loans, and classifies any potential problem
loan as a special mention, substandard, doubtful, or loss asset according to the
Department classification of asset regulations. The Savings Bank does not accrue
interest on any loan that is 90 days or more delinquent. Potential problem loans
that had not been  recorded as  non-accrual  as of July 31, 1996,  totalled $7.6
million, or 1.7% of total assets. These loans are accruing but classified by the
Savings  Bank as  substandard  and $951,000 of the Savings  Bank's  general loss
allowance has been allocated to these loans.

      For the years  ended  July 31,  1994,  1995 and 1996  additional  interest
income before taxes amounting to approximately $703,000,  $234,000 and $201,000,
respectively, would have been recognized if interest on loans 90 days or more in
arrears had been recorded based on original contract terms.

      New Jersey and federal  regulations  provide for savings banks to classify
their loans and other assets as  substandard,  doubtful or loss  assets.  Assets
classified as substandard  are  inadequately  protected by the current net worth
and  paying  capacity  of  the  obligor  or the  pledged  collateral.  They  are
characterized by the distinct  possibility that a savings bank will sustain some
loss if the deficiencies are not corrected.  Assets  classified as doubtful have
all the weaknesses of those classified as substandard

                                      13

<PAGE>



with the  additional  characteristic  that the  weaknesses  make  collection  or
liquidation in full highly  questionable  and improbable.  Assets  classified as
loss  are  considered   uncollectible  and  of  such  little  value  that  their
continuance as assets  without the  establishment  of a specific  reserve is not
warranted.  Assets  that do not  currently  expose a  savings  association  to a
sufficient  degree  of risk to  warrant  classification  but do  possess  credit
deficiencies or potential weaknesses deserving  management's close attention are
designated  "special  mention." Special mention assets have a potential weakness
or pose an unwarranted  financial risk that, if not corrected,  could weaken the
asset and increase risk in the future.

     New Jersey  banking law requires the Board of Directors of the Savings Bank
to prepare,  within 60 days after the presentation of the annual audit report to
the Board by its  independent  external  auditor,  a detailed  statement  of the
assets of the Savings Bank, other than loans, which in the judgment of the Board
of Directors,  have a value less than the value at which they are carried on the
books of the Savings Bank. The statement  shall present the value of such assets
in the judgment of the Board.  The statement  shall also include a list of loans
which in the judgment of the Board of Directors, are (i) loss; (ii) doubtful, or
(iii) insufficiently  secured. This statement must be filed with the Department,
along  with a  certified  copy  of the  audit  report,  within  60  days  of the
completion of the audit report.

      The following table sets forth the aggregate  amount of the Savings Bank's
classified assets at July 31, 1995 and 1996.

                                          At July 31,
                                    ---------------------
                                      1995          1996
                                    -------       -------
                                        (In Thousands)

Special mention...............      $ 5,668       $ 4,073
Substandard...................       10,187        11,061
Doubtful assets...............          261           609
Loss assets...................           17            --
                                      -----        ------
        Total.................      $16,133       $15,743
                                     ======        ======

General loss allowance........        2,535         3,073
Specific loss allowance.......           --            --
                                     ------        ------
         Total allowances.....      $ 2,535        $3,073
                                     ======         =====



                                14

<PAGE>



      The  following  table sets forth the type and dollar amount of the Savings
Bank's  delinquent  loans more than 60 days  delinquent  as of July 31, 1995 and
1996.

                                                  At July 31,
                                              ------------------
                                               1995        1996
                                              ------     -------
                                                (In Thousands)
Delinquent residential mortgage loans
  (60 days or more delinquent)..........      $6,217     $ 5,805
Commercial real estate loans (60 days
  or more delinquent)...................         451         545
Home equity, second mortgage and
  home improvement loans (60 days or
  more delinquent)......................         667       1,255
                                              ------       -----
     Total..............................      $7,335      $7,605
                                              ======       =====



      The following is a summary of the Savings  Bank's  classified  assets with
balances in excess of $400,000 as of July 31,  1996.  There can be no  assurance
that additional  reserves will not be required or additional  losses will not be
incurred on these loans.

      Ski Resort in Vernon,  New Jersey.  The outstanding loan balance of $2.397
million at July 31, 1996,  represents  Lakeview's 50 percent  participation in a
$5.0  million  loan.  The loan  consists of a March 1989  refinancing  of a $2.3
million  mortgage  (originally  made by Lakeview in July 1986) and an additional
$2.7 million of working capital.  The loan is secured by a first lien on the ski
resort as well as all equipment and rental  inventory  utilized in the operation
of the  premises.  Another  unrelated  lender  has a second  mortgage  of $19.65
million on the property.  The borrower  corporation  and its parent  corporation
filed for protection  under Chapter 11 of the Bankruptcy  Code on April 2, 1996.
The loan has exhibited  chronic  delinquency  throughout  its history but, as of
July 31, 1996,  the loan was current as a result of payments being received from
an  individual  guarantor  of the loan.  Both the borrower  corporation  and its
parent corporation have experienced operating losses in recent years. As of July
31, 1996, the loan was classified  substandard  and continues to be monitored by
Management.

      Apartment Building,  Paterson, New Jersey. The outstanding loan balance of
$609,834 at July 31, 1996 is secured by a twelve unit apartment building and was
classified  substandard  due to its  past  slow pay  history  but  remains  in a
performing loan status.  The loan was in the 60-89 day  delinquency  category on
July 31, 1996.

      Mortgage  Loans  Purchased from Capital  Resources.  At July 31, 1996, the
Savings Bank had  approximately  $4.5 million of residential  real estate second
mortgage loans that were acquired from Capital Resources, a now defunct mortgage
company.  At July 31,  1996,  the  total  balance  of loans  more  than 120 days
delinquent was $782,523,  with $563,984  classified as substandard  and $218,539
classified  as  doubtful.  As of July 31, 1996,  the Savings Bank had  allocated
$1,423,012 of general loss allowance reserves for losses against this portfolio.

     Deposit with Nationar. On February 6, 1995, the Superintendent of Banks for
the State of New York took  possession  of  Nationar,  a state  chartered  trust
company. The Bank placed the deposit of

                                      15

<PAGE>



$850,000  with  Nationar on  non-accrual  status and  charged  $425,000 to other
expense,  reflecting  the risk of recovery of such deposit.  During June 1996, a
payment of $356,418 was received in this matter.

      Car Wash in Paterson,  New Jersey with two stores and two  residences.  At
July 31,  1996,  the  outstanding  total  balance  of this  loan on a mixed  use
building  made to one borrower in 1987 was  $459,936.  The loan has  experienced
periods of slow payment but has remained a  performing  asset.  The Savings Bank
classified  the loan as  substandard  at July 31, 1996,  due to an  inconsistent
payment history.

      Allowance  for Losses on Loans and Real Estate Owned.  The Savings  Bank's
management  evaluates  the need and is  responsible  for  establishing  reserves
against losses on loans and other assets each year based on estimated  losses on
specific loans and on any REO or real estate held for sale or investment  when a
finding is made that a loss is estimable and probable.  Such evaluation includes
a review  of all  loans  for which  full  collectibility  may not be  reasonably
assured and considers,  among other matters,  the estimated  market value of the
underlying  collateral  of  problem  loans,  prior  loss  experience,   economic
conditions  and  overall  portfolio  quality.  These  provisions  for losses are
charged  against  earnings in the year they are  established.  The Savings  Bank
established  provisions  for losses on loans for the years ended July 31,  1994,
1995 and 1996 of $2.0 million, $1.8 million and $664,000,  respectively. At July
31, 1996,  the Savings Bank had an  allowance  for loan losses of $3.1  million,
which  represented  1.9% of total loans and 40.4% of total loans delinquent more
than 60 days.

      When REO is acquired or otherwise  deemed REO, it is recorded at the lower
of the unpaid  principal  balance of the related  loan or its fair  value,  less
estimated  selling  expenses,  through  the  provision  for real  estate  owned.
Valuations are periodically performed by management,  and any subsequent decline
in fair value is charged to operations.

      The Savings Bank  established  provisions  for losses on REO for the years
ended  July 31,  1994,  1995  and  1996 of  $713,000,  $502,000,  and  $654,000,
respectively.  At July 31, 1996, the Savings Bank had no allowance for losses on
REO. The balance of REO at July 31, 1996, was $1.7 million.  From August 1, 1995
to July 31, 1996, $332,000 was transferred from mortgage loans to REO.

     Management is continuing  its efforts to increase  earning  assets  through
early  identification  of problem  assets and the  work-out  or  disposition  of
non-performing  assets  (including  conversion of  non-performing  loans to real
estate  owned where such  course is an  appropriate  means of  avoiding  further
loss). To this end,  management has hired a consultant to handle  non-performing
assets.  Partly as a result of these  efforts,  the Savings Bank's asset quality
has improved,  as evidenced by the  decreased  level of  non-performing  assets,
which totalled $4.6 million at July 31, 1996, down from $7.8 million at July 31,
1995.  The Savings  Bank  intends to  continue to work to reduce  non-performing
assets;  however, its ability to dispose of REO at current estimated fair values
depends on market  conditions,  and no  assurances  can be made that the Savings
Bank's level of non-performing assets will continue to improve.

      As a  result  of the  declines  in  real  estate  market  values  and  the
significant losses experienced by many financial institutions in the late 1980's
and early  1990's,  there has been a greater  level of  scrutiny  by  regulatory
authorities  of  the  loan  portfolios  of  financial  institutions  nationwide,
undertaken as part of the examination of the institution by the Department, FDIC
or other  federal  or  state  regulators.  Results  of  regulatory  examinations
indicate that these  regulators  may be applying more  conservative  criteria in
evaluating real estate values,  requiring significantly increased provisions for
potential  loan losses and losses on REO. While the Savings Bank believes it has
established its existing  allowance for loan losses in accordance with Generally
Accepted  Accounting  Principles  ("GAAP"),  there  can  be  no  assurance  that

                                      16

<PAGE>

regulators, in reviewing the Savings Bank's loan portfolio, will not request the
Savings Bank to significantly  increase its allowance for loan losses, or that a
deteriorating  real estate  market will cause the Savings Bank to  significantly
increase its  allowance  for loans losses,  therefore  negatively  affecting the
Savings Bank's financial condition and earnings.  The relatively large amount of
non-performing  assets held by the Savings Bank increases the  possibility  that
its reserves may not be adequate to provide for future losses,  or reductions in
the value of real estate owned.

      In making loans,  the Savings Bank  recognizes  that credit losses will be
experienced  and that the risk of loss will vary with,  among other things,  the
type of loan being made, the  creditworthiness  of the borrower over the term of
the loan and, in the case of a secured loan, the quality of the security for the
loan.

      During the years ended July 31,  1994,  1995 and 1996,  the  Savings  Bank
charged-off  $3.1  million,  $1.4  million  and  $429,000  of loans  receivable,
respectively,   and  $1.3  million,   $690,000  million  and  $654,000  of  REO,
respectively.  It is the  Savings  Bank's  policy  to  review  its  loan and REO
portfolios,  in  accordance  with  statutory  classification  procedures,  on  a
quarterly basis. Additionally, the Savings Bank maintains a program of reviewing
loan applications  prior to making the loan and immediately after loans are made
in an effort to maintain loan quality.



                                      17

<PAGE>



Analysis of the Allowances for Losses on Loans and Real Estate Owned

      The  following  tables set forth  information  with respect to the Savings
Bank's allowance for loan losses and REO at the dates indicated:


<TABLE>
<CAPTION>

                                                        At or for the year ended July 31,
                                            --------------------------------------------------------
                                              1992       1993        1994          1995       1996
                                              ----       ----        ----          ----       ----
                                                              (Dollars in Thousands)

<S>                                         <C>        <C>         <C>          <C>         <C>     
Total loans outstanding, net of allowance   $145,277   $137,309    $136,143     $142,123    $163,457
                                             =======    =======     =======      =======     =======
Average loans outstanding..............     $148,502   $142,935    $136,165     $139,442    $155,497
                                             =======    =======     =======      =======     =======
Allowance balance (at beginning of
  period)..............................     $  1,782    $ 2,493    $  2,638      $ 1,714     $ 2,535
Provision (credit):
  Residential..........................          821      1,347       1,842        1,493         384
  Commercial real estate...............          541        673         (77)        (145)        278
  Consumer.............................          (27)        11         282           28           2
  Transfer to real estate owned........         (208)        --          --           --          --
Charge-offs:
  Residential..........................         (401)    (1,514)     (3,069)      (1,381)       (418)
  Commercial real estate...............           --       (361)         --           --          --
  Consumer.............................          (15)       (11)         (1)         (24)        (11)
Recoveries:
  Residential..........................           --         --          99          850         303
  Commercial Real Estate...............           --         --          --           --          --
  Consumer.............................           --         --          --           --          --
                                              ------     ------      ------       ------      ------
Allowance balance (at end of period)...      $ 2,493    $ 2,638     $ 1,714       $2,535     $ 3,073
                                              ======     ======      ======        =====      ======
Allowance for loan losses as a percent
  of total loans outstanding, net......        1.72%      1.92%       1.26%        1.78%       1.88%
Net loans charged off as a percent of
  average loans outstanding............         .28%      1.32%       2.18%        0.40%        .09%

</TABLE>

<TABLE>
<CAPTION>

                                                               At or for the year ended July 31,
                                                   -------------------------------------------------------
                                                     1992        1993        1994        1995       1996
                                                     ----        ----        ----        ----       ----
                                                                     (Dollars in Thousands)
Total real estate owned and in judgment, net of
<S>                                                <C>         <C>         <C>         <C>         <C>    
 allowance .....................................   $ 3,525     $ 5,752     $ 3,574     $ 3,608     $ 1,667
                                                   =======     =======     =======     =======     =======
Allowance balance - beginning ..................   $   605     $   709     $   823     $   188     $  --
                                                   =======     =======     =======     =======     =======
Provision ......................................       201         847         713         502         654
Transfer from the allowance for loan losses ....       208        --          --          --          --
Net charge-offs ................................      (305)       (733)     (1,348)       (690)        654
                                                   -------     -------     -------     -------     -------
Allowance balance - ending .....................   $   709     $   823     $   188     $  --       $  --
                                                   =======     =======     =======     =======     =======
Allowance for losses on real estate owned and in
  judgment to net real estate owned and in
  judgment .....................................      20.1%       14.3%       5.26%          0%          0%
                                                   =======     =======     =======     =======     =======
</TABLE>


Investment Activities

      Income from investment  securities provides a significant source of income
for the Savings  Bank.  The Savings  Bank  maintains a portfolio  of  investment
securities  such as U.S.  government  and  agency  securities,  non-governmental
securities,  and  interest-bearing  deposits,  in addition to the Savings Bank's
mortgage-backed  securities held to maturity portfolio, which is discussed above
under " -- Lending  Activities  --  Mortgage-Backed  Securities."  The amount of
short-term investments reflects management's

                                      18

<PAGE>



response to the  significantly  increasing  percentage of savings  deposits with
short  maturities.  It is  the  intention  of  management  to  maintain  shorter
maturities in the Savings Bank's  investment  portfolio in order to better match
the interest rate sensitivities of its assets and liabilities.  However,  during
periods of rapidly declining  interest rates, such investments also decline at a
faster rate than does the yield on long-term investments.

      Investment decisions are made within policy guidelines  established by the
Board of Directors. The investment policy of the Savings Bank established by the
Board of Directors is based on its asset/liability  management goals. The intent
of  the  policy  is to  establish  a  portfolio  of  high  quality,  diversified
investments in order to optimize net interest income within acceptable limits of
safety and liquidity.

      Purchases of securities  other than equity  securities  are generally made
with the intent of holding them to maturity.  Currently, the policy is to invest
in instruments with an expected average life of five to ten years, to be held to
maturity.  Investments  and  mortgage-backed  securities  held to  maturity  are
recorded at amortized cost.  Premiums are amortized and discounts  accreted on a
level yield method over the life of the investment.

      The Savings Bank maintains a portfolio of  investments  available for sale
to enhance total return on investments and reduce interest rate and credit risk.
These  investments are accounted at market value. The Savings Bank's  Investment
Policy  designates what  securities may be maintained in this  portfolio.  As of
July 31, 1996,  the  portfolio  was  comprised  of the stock of U.S.  government
agencies and U.S. financial corporations.  As of July 31, 1996, the market value
of investment securities available for sale was $90.0 million, with a cost basis
of $92.9 million.

      In addition, the Savings Bank may, from time to time, maintain a portfolio
held for trading. During the fiscal year ended July 31, 1996, the portfolio held
for  trading  did not exceed an  investment  of $2.8  million.  This  account is
maintained  to  enhance  total  return on  investments.  These  investments  are
accounted  for at market  value.  At July 31,  1996,  the  Savings  Bank held no
investments for trading.



                                      19

<PAGE>



Investment Portfolio

      The following  table sets forth the carrying  value of the Savings  Bank's
investment  portfolio,  short-term  investments,  and  Federal  Home  Loan  Bank
("FHLB") stock at the dates indicated.

<TABLE>
<CAPTION>

                                                                           At July 31,
                                                      -----------------------------------------------------
                                                       1992      1993         1994       1995         1996
                                                      ------   -------     --------    --------    --------
                                                                        (In Thousands)
Investment Securities:
<S>                                               <C>          <C>         <C>         <C>         <C>
 U.S. Agency Securities available for sale(1)...         --    $    --     $     --    $    --     $ 58,045
 U.S. Agency Securities ........................        900         --       61,662     55,738       40,821
 Equity securities available for sale(1)........      8,359     12,898       11,269      8,567       12,601
 Municipal Bonds available for sale(1) .........         --         --           --         --        3,083
 GNMA Mortgage-backed securities
   available for sale(1) .......................         --         --           --         --        4,684
 FNMA/FHLMC CMO securities
   available for sale(1) .......................         --         --           --         --        2,034
 Private Issue CMO securities
   available for sale(1) .......................         --         --           --         --        9,521
 Equity securities restricted for sale(2) ......         --         --           --         --        7,806
 Other Securities ..............................         16         16          975         --           --
                                                     ------     ------       ------     ------      -------
   Total Investment Securities .................      9,275     12,914       73,906     64,305      138,595
 Interest-bearing Deposits .....................         99         99           --      5,632           --
 Federal Funds Sold ............................         --         --          850         --           --
 FHLB Stock ....................................      1,445      1,511        1,856      2,587        2,587
                                                     ------     ------       ------     ------      -------
   Total Investments ...........................   $ 10,819   $ 14,524     $ 76,612   $ 72,524     $141,182
                                                     ======     ======       ======     ======      =======
</TABLE>

---------------------
(1)  Carried at market value.
(2)  The equity  securities are carried at cost due to a restriction on the sale
     or  transfer  of  these  shares  of  Common  Stock.  See  "----  Subsidiary
     Activities - Branchview".

                                      20

<PAGE>



      The following table sets forth certain information  regarding the carrying
values,  weighted average yields and maturities of the Savings Bank's investment
securities portfolio at July 31, 1996.

<TABLE>
<CAPTION>


                                                             After One Through After Five Through
                                           One Year or Less       Five Years       Ten Years        Over Ten Years       Totals
                                          ------------------ ----------------- ----------------- ----------------- -----------------
                                          Carrying  Average  Carrying  Average Carrying  Average Carrying Average  Carrying  Average
                                           Value    Yield(4)  Value     Yield   Value     Yield   Value    Yield    Value   Yield(4)
                                          --------  -------- --------  ------- --------  ------- -------- -------  -------- --------
                                                                      (Dollars in Thousands)

U. S. Agency Securities available
<S>                                       <C>        <C>    <C>         <C>    <C>       <C>    <C>         <C>    <C>        <C>  
 for sale ..............................  $    --     --%   $  7,917    6.27%  $25,226   7.09%  $ 24,902    7.43%  $ 58,045   7.11%
U.S. Agency Securities held to maturity.       --     --          --      --     18,329   7.82     22,492   7.64     40,821   7.72
Equity Securities available for sale(1).   12,601    1.70         --      --         --     --         --     --     12,601   1.70
Equity securities held to maturity(1)(2)       --              7,806      --         --     --         --     --      7,806     --
Municipal Bonds available for sale .....       --      --         --      --        289   4.50      2,794   5.56      3,083   5.45
FHLB Stock(1)(3) .......................    2,587    6.90         --      --         --     --         --     --      2,587   6.90
GNMA Mortgage-backed securities
  available for sale ...................       --      --         --      --         --     --      4,684   8.27      4,684   8.27
FNMA/FHLMC CMO's
  available for sale ...................       --      --         --      --         --     --      2,034   6.57      2,034   6.57
Private issue CMO's
  available for sale ...................       --      --         --      --         --     --      9,521   6.38      9,521   6.38
                                           ------    ----     ------    ----     ------   ----     ------   ----    -------   ----
  Total ................................ $ 15,188    2.58%  $ 15,723    6.27%   $43,844   7.38%  $ 66,427   7.30%  $141,182   6.36%
                                           ======    ====     ======    ====     ======   ====     ======   ====    =======   ====
</TABLE>

------------------
(1)  Equity  securities and other securities have been classified as maturing in
     one year or less, since they have no stated maturity.
(2)  This  stock  has  some  restrictions.   See  "--  Subsidiary  Activities  -
     Branchview."
(3)  Represents stock in FHLB of New York.
(4)  Excluding dividend yield on equity and other securities.







                                      21

<PAGE>



Sources of Funds

      General.  Deposits  are the major  source of the Savings  Bank's funds for
lending and other investment purposes. In addition to deposits, the Savings Bank
derives funds from loan and mortgage-backed securities principal repayments, and
maturities  of  investment  securities.   Loan  and  mortgage-backed  securities
payments are a relatively  stable  source of funds,  while  deposit  inflows are
significantly influenced by general interest rates and money market conditions.

      Deposits.  The  Savings  Bank offers a wide  variety of deposit  accounts,
although a majority of such deposits are in fixed-term,  market-rate certificate
accounts.  Deposit  account  terms vary,  primarily as to the  required  minimum
balance amount, the amount of time that the funds must remain on deposit and the
applicable interest rate.

      Fixed-term  certificates have been the primary sources of new deposits for
the Savings Bank and as of July 31, 1996, such certificates  represented  $210.0
million or 59.1% of the Savings  Bank's deposit  accounts.  As of July 31, 1996,
$44.0 million, or 12.4% of the Savings Bank's deposit portfolio, consisted of 13
to 30 month fixed-term,  fixed-rate  certificates and $106.0 million,  or 29.9%,
consisted of 7 to 12 month fixed-term, fixed-rate certificates.  Regular savings
and club  accounts are a large source of deposit  funds for the Savings Bank and
as of July  31,  1996,  represented  $74.6  million,  or  21.0%  of the  deposit
portfolio.

      The  Savings  Bank  intends to  continue  to  emphasize  retail  deposits,
including  checking,  certificates of deposit,  savings  accounts and Individual
Retirement Accounts ("IRAs"). The Savings Bank's deposits are typically obtained
from the area in  which  its  offices  are  located.  The  Savings  Bank  relies
primarily on customer service and long standing  relationships with customers to
attract  and retain  deposits.  At July 31,  1996,  the  Savings  Bank had jumbo
certificates  deposits in excess of $100,000 of $17.5 million.  The Savings Bank
had no brokered certificates of deposits as of July 31, 1996.

      The Savings  Bank pays  interest  on its  certificate  accounts  which are
competitive in its market. Interest rates on deposits are reviewed weekly by the
Savings Bank based on a combination of factors  including (i) the Savings Bank's
internal  cost  of  funds;  (ii)  the  rates  offered  by  competing   financial
institutions  in the Savings  Bank's market area;  (iii)  investment and lending
opportunities; and (iv) the Savings Bank's liquidity position.



                                      22

<PAGE>



     Deposit  Portfolio.  Deposits in the Savings Bank as of July 31, 1996, were
represented by various types of savings programs described below.

<TABLE>
<CAPTION>


                                                                                    Balance                             Average
                                                                    Minimum          as of       Percentage of     Balances For the
Category                          Term        Interest Rate(1)   Balance Amount  July 31, 1996   Total Deposit   Twelve Months Ended
--------                          ----        ----------------   --------------  -------------   -------------   -------------------
                                                                                (In Thousands)                    (In Thousands)
<S>                               <C>              <C>              <C>        <C>                <C>                    <C>
NOW Accounts ..................   None             2.00%$             250      $    39,720          11.2%                $ 36,812
Regular Savings and Club
Accounts ......................   None             2.40                10           74,613          21.0                   73,643
Money Market Checking
Accounts ......................   None             2.55             2,500            8,830           2.5                    9,103
Money Market Passbook
Accounts ......................   None             2.35             7,500           21,039           5.9                   21,415

Certificates of Deposit:

Fixed Term, Fixed Rate.........   3-6 Months       3.21-            2,500           30,700           8.6                   28,308
                                                   4.21
Fixed Term, Fixed Rate.........   7-12 Months      4.48-              500          106,095          29.9                  116,889
                                                   4.75
Fixed Term, Fixed Rate.........   13-30 Months     4.89-              500           43,994          12.4                   32,087
                                                   5.04
Fixed Term, Fixed Rate.........   31-120 Months    4.89               500           28,238           7.9                   30,787

Fixed Term, Variable Rate......   18 Months        4.21               500            1,018            .3                      913

Accrued interest on deposits ..                                                      1,106            .3                       --
                                                                                   -------        ------                  -------
                       Total ..                                                $   355,353        100.00%                $349,957
                                                                                   =======        ======                  =======
</TABLE>

------------------
(1)   Current interest rate offerings as of July 31, 1996.

      Time Deposits by Rate. The following table sets forth the time deposits in
the Savings Bank classified by interest rate as of the dates indicated.


<TABLE>
<CAPTION>


                                                           As of July 31,
                                    --------------------------------------------------------
                                       1992        1993        1994       1995        1996
                                    ---------    --------   ---------   --------   ---------
                                                          (In Thousands)
Interest Rate
<C>                                  <C>         <C>        <C>         <C>        <C>      
2.00% or less..................      $     --    $    585   $     618   $     18   $     106
2.01-4.00%.....................        15,370      62,275     143,794     27,977       4,119
4.01-6.00%.....................        64,951      26,419      40,897    138,965     189,310
6.01-8.00%.....................        17,191       3,387       1,353     36,548      16,499
8.01-10.00%....................         4,754       1,437         312        170          11
10.01-12.00%...................             8          --          --         --          --
Accrued interest on certificate
  accounts.....................           768         481         421      1,030         975
                                      -------      ------     -------     ------      ------
  Total........................      $103,042     $94,584    $187,395   $204,708    $211,020
                                      =======      ======     =======    =======     =======
</TABLE>



                                      23

<PAGE>



     Time Deposits Maturity Schedule.  The following table sets forth the amount
and maturities of time deposits at July 31, 1996.


<TABLE>
<CAPTION>

                                              Amount Due
                        --------------------------------------------------------
                                                   After       After
                        July 31,      July 31,    July 31,    July 31,
Interest Rate             1997         1998         1999        2000        Total
-------------            ------       -------     -------     -------       -----
                                                 (In Thousands)
<S>                      <C>          <C>       <C>           <C>        <C>
2.00% or less........          93          13         --      $    --    $    106
2.01-4.00%...........       3,919         101         51           48       4,119
4.01-6.00%...........     156,493      26,542      5,559          716     189,310
6.01-8.00%...........      13,622       2,570         64          243      16,499
8.01-10.00%..........          --          --         --           11          11
                          -------     -------     ------       ------    --------
                          174,127      29,226      5,674        1,018     210,045
Accrued Interest on
  Certificate Accounts        975          --         --                      975
                          -------     -------    -------       ------     -------
  Total..............    $175,102     $29,226   $  5,674      $ 1,018    $211,020
                          =======     =======    =======       ======     =======

</TABLE>



      Certificates of Deposit with Balances Greater Than $100,000. The following
table  indicates  the amount of the Savings  Bank's  certificates  of deposit of
$100,000 or more by time remaining until maturity as of July 31, 1996.

                                                  Certificates
Maturity Period                                   of Deposits
---------------                                  --------------
                                                 (In Thousands)
Within three months............................      $ 5,882
Three through six months.......................        4,727
Six through twelve months......................        4,297
Over twelve months.............................        2,606
                                                      ------
                                                     $17,512
                                                      ======





                                      24

<PAGE>



     Savings  Deposit  Activity.  The  following  table sets  forth the  savings
activities of the Savings Bank for the periods indicated:

<TABLE>
<CAPTION>


                                                           Year Ended July 31,
                                      -------------------------------------------------------------
                                         1992        1993         1994         1995         1996
                                         ----        ----         ----         ----         ----
                                                            (In Thousands)

Net increase (decrease) before
  interest credited and acquisition
<S>                                   <C>         <C>          <C>          <C>          <C>       
  of deposits .....................   $   1,287   $  (4,614)   $ (17,837)   $ (14,348)   $  (3,289)

Proceeds from acquisition of
  deposits ........................          --          --      191,428           --           --
Interest credited .................       9,694       7,152        7,193       12,923       14,046
                                       --------    --------     --------     --------     --------
Net increase (decrease) in
  savings deposits ................   $  10,981   $   2,538    $ 180,784    $  (1,425)   $  10,757
                                       ========    ========     ========     ========     ========

</TABLE>


      Borrowings.  Although  deposits are the Savings  Bank's  primary source of
funds,  the  Savings  Bank's  policy  has  been  to  utilize  borrowings  as  an
alternative  or less costly source of funds.  The Savings Bank obtains  advances
from the FHLB of New York.  See  "Regulation  -- Federal Home Loan Bank System".
Such advances are made pursuant to several  different credit  programs,  each of
which has its own interest rate and range of maturities. The maximum amount that
the FHLB of New York will advance to member institutions,  including the Savings
Bank, for purposes other than meeting withdrawals,  fluctuates from time to time
in accordance  with the policies of the FHLB of New York.  The maximum amount of
FHLB of New York  advances  to a member  institution  generally  is  reduced  by
borrowings from any other source.

      The Savings Bank has in the past utilized the Regular  Advance  Program of
the  FHLB of New  York  under  an  advances,  collateral,  pledge  and  security
agreement.  The program  offers a wide range of interest rates and maturities on
advances  that are  collateralized  by various  assets.  At July 31,  1996,  the
Savings Bank had no advances  outstanding under the Regular Advance Program. The
Savings  Bank will  continue to use this program in the future to meet long term
operating needs.

      The  Savings  Bank's  primary  method of  borrowing  since  August 1991 is
through  the FHLB  Overnight  Line of Credit  Program.  The line of credit has a
variable  rate of interest  and matures  daily.  The maximum  amount that can be
borrowed under this program is approximately $42 million. The line of credit has
a term of one year and  expired  in  August,  1996.  This  program  has the same
collateral  requirement as the Regular  Advance  Program.  At July 31, 1996, the
line of credit had an outstanding balance of $14 million and an interest rate of
6.0%.

      The  Savings  Bank has a blanket  pledge with the FHLB of New York and has
pledged  all  of  its  stock  in the  FHLB,  federal  funds  sold,  U.S.  agency
securities, certain qualifying loans, and mortgage-backed securities.


                                      25

<PAGE>



     The following tables set forth certain information  regarding borrowings by
the Savings Bank.
                                             
<TABLE>
<CAPTION>

                                                    As of July 31,
                                      -------------------------------------------
                                      1992     1993      1994      1995      1996
                                      ----     ----      ----      ----      ----
Weighted average rate paid on:
<S>                                   <C>      <C>       <C>       <C>       <C>  
  FHLB advances.................      5.20%    3.13%     4.44%     5.81%     5.79%

  Reverse Repurchase Agreements.        --       --        --        --      6.33%
  ESOP..........................        --       --      7.54%     8.96%     9.12%

</TABLE>


<TABLE>
<CAPTION>


                                                          During the Year Ended July 31,
                                                   -------------------------------------------------
                                                     1992      1993      1994       1995       1996
                                                     ----      ----      ----       ----       ----
                                                                    (In Thousands)
Maximum amount of borrowings outstanding 
 during the year:
<S>                                                <C>       <C>       <C>         <C>       <C>    
  FHLB advances ................................   $15,775   $22,775   $51,909     $32,000   $50,460

  Reverse Repurchase Agreement .................     6,000        --        --          --    20,000
  ESOP .........................................        --        --     1,100       1,021       859

Maximum  amount  of  short-term  borrowings  
 outstanding  at any  month end with respect to:
  FHLB advances ................................    11,700    18,500    36,000    30,500      49,450
  Reverse Repurchase Agreement .................     4,000        --        --        --      20,000
  ESOP .........................................        --        --     1,100     1,021         859

</TABLE>

Subsidiary Activities.

     General.  The  Corporation  has  two  service   corporations   subsidiaries
incorporated under New Jersey law, Branchview,  Inc. ("Branchview") and Lakeview
Mortgage Depot, Inc. ("LMD").

     The  Savings  Bank  is  generally  permitted  by New  Jersey  law  and  the
regulations  of the  Department to invest an amount equal to 3% of its assets in
subsidiary  service  corporations.  In  addition to the  investment  limitations
imposed on New Jersey-chartered  institutions by New Jersey law and regulations,
the Savings Bank, as a SAIF-insured  institution,  is also subject to investment
limitations  imposed under FDIC regulations.  The Savings Bank has three service
corporations  subsidiaries  incorporated  under New Jersey law, LVS  Corporation
("LVS"),  Lakeview Investment Services,  Inc. ("LISI"), and Lakeview Credit Card
Services, Inc. ("LCCS"). At July 31, 1996, LVS had no assets and no liabilities.

      Branchview.  Branchview  was formed in 1989 for the  purpose of becoming a
1/3 partner in Residential  Money Center,  Inc.,  based in Montvale,  New Jersey
("RMC").  On  February  6,  1995,  Branchview  sold its equity  interest  in the
mortgage  banking  operation  of  RMC,  a  residential  mortgage  company  which
originates and sells  mortgages in the secondary  market,  to an unrelated third
party for a gain of $3.8  million,  of which $3.4 million was recorded as a gain
in 1995 and was reflected in other operating income. Under the terms of the sale
the  balance  has been  deferred  and will  remain in  escrow 18 months  pending
resolution of normal contingencies. In July 1995, Branchview purchased the

                                      26

<PAGE>



remaining  interest of RMC, for $1.5 million,  and became the sole owner of RMC.
RMC owned a 9.09% limited  partnership  interest in Industry Mortgage,  Company,
L.P. ("IMC").  Prior to February 1996, Branchview was a wholly-owned  subsidiary
of the  Savings  Bank.  In  February  1996,  Branchview  became a wholly-  owned
subsidiary of the Corporation.

      On June 25, 1996, IMC completed a reorganization  plan whereby the limited
partners  received  restricted  common stock in exchange  for their  partnership
interest in  connection  with a public  offering of  unrestricted  common stock.
Immediately  prior  to  the  reorganization,   Branchview  purchased  a  limited
partner's half share interest in IMC for $4,778,000.  For this acquisition,  the
Savings Bank loaned to Branchview $4,000,000. As a result of the reorganization,
Branchview  received  830,928 shares of restricted  common stock in exchange for
its limited partnership  interest. As of July 31, 1996, Branchview owns 8.87% of
IMC and the market value of such  investment  was  approximately  $19.9 million,
based on the quoted market price per share of unrestricted  stock. In accordance
with SFAS 115, Accounting for Certain Investments in Debt and Equity Securities,
due to  restrictions  on the sale or  transfer of these  shares of common  stock
under Rule 144 of the 1933  Securities  Act,  Lakeview  is required to carry the
stock at the  historical  basis of $7.8  million,  until  the  restrictions  are
removed,  or within  one year of the  restriction  expiring,  at which  time the
shares will be carried at fair value.

      LISI.  LISI was formed in June 1993. The purpose of the  corporation is to
facilitate  the  licensing  of  representatives  of the  Savings  Bank  to  sell
annuities and insurance  products to Savings Bank  customers.  At July 31, 1996,
LISI  provided  fees to the  Savings  Bank in the amount of $7,400 and had total
assets of approximately $1,000.

     LMD. LMD is a mortgage  company  which is 90% owed by the  Corporation  and
began  operations in October 1995. At July 31, 1996,  the Corporation  had a net
loss of $124,000.

      LCCS. LCCS was formed on January 17, 1996 and is a wholly owned subsidiary
of the Savings  Bank.  On October 1, 1996,  LCCS  entered  into a Joint  Venture
agreement with IMC Credit Card,  Inc., a wholly owned subsidiary of IMC to offer
a co-branded secured credit card through a 280 broker relationship network.

Asset/Liability Management

      General. The difference between an institution's  interest-earning  assets
and interest-bearing  liabilities that mature or reprice within a specified time
period, based on certain estimates and assumptions, is called its "gap." At July
31, 1996,  the Savings Bank's  cumulative  one-year gap as a percentage of total
assets was a negative 11.7%,  making the Savings Bank vulnerable to increases in
interest  rates.  A negative gap position in a period of rising  interest  rates
generally  results in a  decrease  in net  interest  income.  Management  of the
Savings Bank  believes  that  interest  rates may continue to rise and that this
could have a material impact on net interest  income.  When interest rates rise,
interest   income   increases  may  only  occur  through  the  addition  of  new
interest-earning  assets at current  rates  and/or,  to the extent that existing
assets can be repriced,  principally  through  prepayment  and repayment of loan
principal with reinvestment in higher rates. Because a higher volume of existing
liabilities  reprice  relative to the assets,  interest  expense  increases more
rapidly than interest  income.  The opposite  effect is realized on net interest
margin and  earnings  when  interest  rates fall.  Generally,  the rates paid on
existing   interest-earning  assets  decrease  more  slowly  than  the  rate  on
interest-bearing  liabilities due to the difference in shorter  repricing terms,
with the result that net interest margin and earnings improve.

                                      27

<PAGE>




      The  Savings  Bank,  like many other  thrift  institutions,  is subject to
interest  rate  risk  as  a  result  of  the   difference  in  the  maturity  on
interest-bearing  liabilities and interest-earning  assets and the volatility of
interest  rates.  Because  most  deposit  accounts  react more quickly to market
interest rate  movements  than do  traditional  mortgage  loans because of their
shorter  terms to maturity,  sharp  increases in interest  rates will  generally
adversely  affect the Savings Bank's  earnings.  Conversely,  this mismatch will
generally  benefit  the  Savings  Bank  during  periods of  declining  or stable
interest  rates.  To reduce  the  potential  volatility  of the  Savings  Bank's
earnings,  management  has  adopted a strategy  designed  to  improve  the match
between  asset  and  liability   maturities  and  rates,  while  maintaining  an
acceptable interest rate spread. Pursuant to this strategy, the Savings Bank has
been actively  originating for retention in its portfolio fixed-rate and balloon
mortgage  loans with terms to  maturity  of five,  seven and 15 years,  and one,
three  and  five  year  adjustable-rate   mortgage  loans.  At  July  31,  1996,
approximately  $68.8  million  or 42.1% of the  Savings  Bank's  loan  portfolio
consisted  of  adjustable-rate  loans.  All 30 year  fixed-rate  mortgage  loans
originated by the Savings Bank are sold into the secondary  mortgage market. The
Savings Bank's  strategy is designed to maintain a mix of  adjustable-rate,  and
15-year or less fixed-rate  mortgage loans in its loan  portfolio.  In addition,
the  Savings  Bank has  purchased  five and seven year  balloon  mortgage-backed
securities and has increased its emphasis on making home equity loans which have
15 year terms to maturity and provide for adjustable interest rates.

      Gap  Analysis.  As rates on sources of funds have become  deregulated  and
subject to competitive pressures,  savings associations have become increasingly
concerned  with the  extent  to which  they  are  able to  match  maturities  of
interest-earning  assets and  interest-bearing  liabilities.  Such  matching  is
facilitated  by examining  the extent to which such assets and  liabilities  are
"interest  rate  sensitive"  and by  monitoring an  institution's  interest rate
sensitivity  gap.  An asset or  liability  is  considered  to be  interest  rate
sensitive  if it will  mature or reprice  within a  specific  time  period.  The
interest  rate  sensitivity  gap is defined  as the  excess of  interest-earning
assets maturing or repricing within a specific time period over interest-bearing
liabilities maturing or repricing within that time period.

      The following table sets forth the amount of  interest-earning  assets and
interest-bearing liabilities outstanding at July 31, 1996, which are expected to
reprice or mature in each of the future time periods shown. The amount of assets
or  liabilities  shown which reprice or mature  during a particular  period were
determined in accordance  with the  contractual  terms of the asset or liability
and assumed  loan  prepayments  and  deposit  withdrawals.  The  Savings  Bank's
analysis of its interest-rate  sensitivity,  which is prepared  quarterly by the
Savings Bank,  incorporates  certain  assumptions  developed by the Savings Bank
based on its actual  experience  concerning the  amortization  and prepayment of
loans and other  interest-earning  assets and the  withdrawal  of deposits.  For
adjustable  rate loans,  and adjustable  rate  mortgage-backed  securities  will
reprice  at  contractual   repricing   intervals.   Fixed  rate  mortgage-backed
securities are assumed to have an annual  prepayment  rate of 8%. For fixed-rate
mortgage  loans  with  the  following   interest  rates,  the  following  annual
prepayment  rates are assumed:  4% for  interest  rates of less than 8%; 12% for
interest  rates between 8.01% to 10%; 13% for interest  rates between  10.01% to
12%; 12% for interest rates of greater than 12%. For other residential loans and
all  non-residential  loans, an annual prepayment rate of 9% was assumed.  Decay
rates for NOW, money market  accounts,  and savings accounts were established at
17% to 37%, 14% to 17%, and 14% to 17%,  respectively.  These assumptions change
over time based upon the current  economic  outlook.  Management  believes  that
these assumptions  approximate  actual experience and considers them appropriate
and  reasonable.  However,  the interest rate  sensitivity of the Savings Bank's
assets  and   liabilities   illustrated  in  the  following   table  would  vary
substantially if different assumptions were used or if actual experience differs
from that indicated by such assumptions.  No consideration has been provided for
the impact of future commitments and loans in process.

                                      28

<PAGE>

<TABLE>
<CAPTION>



                                                                                At July 31, 1996
                                             ------------------------------------------------------------------------------------
                                                         Three                                         Over Ten
                                             Less Than  Months    Over One    Over Three  Over Five    Through      Over
                                               Three    Through    Through     Through    Through      Twenty      Twenty
                                               Months  One Year  Three Years  Five Years  Ten Years     Years      Years    Total
                                               ------  --------  -----------  ----------  ---------    --------    -----    -----
                                                                              (Dollars in Thousands)
Interest-earning assets:
  Mortgage loans and mortgage-backed
<S>                                       <C>         <C>         <C>        <C>         <C>         <C>        <C>       <C>      
    securities ...........................$  48,673   $  26,076   $  53,159  $  45,896   $  32,540   $  32,489  $     460 $ 239,293
  Other loans ............................   26,446       3,301       4,455      4,895       6,724       3,053         45    48,919
  Investment securities(1) ...............       --      18,821       2,000       --         3,000      17,000         --    40,821
  Investment securities available for sale   16,126      76,429       7,806       --            --          --         --   100,361
                                          ---------   ---------   ---------  ---------   ---------   ---------  --------- ---------
    Total interest-earning assets ........$  91,245   $ 124,627   $  67,420  $  50,791   $  42,264   $  52,542  $     505 $ 429,394
                                          =========   =========   =========  =========   =========   =========  =========  ========

Interest-bearing liabilities:
 NOW and money market checking ...........$   7,594   $  18,156   $  23,567  $   6,306  $   8,465   $   4,649  $     852  $  69,589
 Savings, clubs and money market passbook
  accounts ...............................    5,934      12,421      17,910     11,501     14,355       9,741      2,751     74,613
 Certificates of deposit .................   62,598     107,789      35,069      4,589         --          --         --    210,045
 Advances from FHLB of New York ..........   34,000          --          --         --         --          --         --     34,000
Reverse Repurchase Agreements ............   20,000          --          --         --         --          --         --     20,000
 ESOP debt ...............................      721          --          --         --         --          --         --        721
                                          ---------   ---------   ---------  ---------   ---------   ---------  ---------  --------
   Total interest-bearing liabilities ....$ 130,847   $ 138,366   $  76,546  $  22,396  $  22,820   $  14,390  $   3,603  $ 408,968
                                          =========   =========   =========  =========   =========   =========  =========  ========

Interest sensitivity gap .................$ (39,602)  $ (13,739)  $  (9,126) $  28,395  $  19,444   $  38,152  $  (3,098) $  20,426
                                          =========   =========   =========  =========   =========   =========  =========  ========
Cumulative interest rate sensitivity gap  $ (39,602)  $ (53,341)  $ (62,467) $ (34,072) $ (14,628)  $  23,524  $  20,426  $  20,426
                                          =========   =========   =========  =========   =========   =========  =========  ========
Ratio of interest-earning assets to
  interest-bearing liabilities ...........     69.7 %      90.1 %      88.1 %    149.1 %    185.2 %     365.1%     (13.8)%    105.0%
                                          =========   =========   =========  =========   ========    ========    =======   ========
Ratio of cumulative gap to total
  assets .................................     (8.6)%     (11.7)%     (13.6)%     (7.4)%     (3.2)%       5.1%       4.5 %      4.5%
                                          =========   =========   =========  =========   ========    ========    =======   ========
        
</TABLE>

-------------------
 (1) Includes investment in stock of Federal Home Loan Bank of New York totaling
     $2.6 million.


                                            29

<PAGE>



      The table  above  indicates  the time  periods  in which  interest-earning
assets and interest-bearing liabilities will mature or may reprice in accordance
with their contractual terms.  However,  the table does not necessarily indicate
the impact of general interest rate movements on the Savings Bank's net interest
yield because the repricing of various  categories of assets and  liabilities is
discretionary  and is subject to competitive and other  pressures.  As a result,
various assets and liabilities indicated as repricing within the same period may
in fact reprice at different times and at different rate levels.

Net Interest Income

      The Savings Bank's earnings depend  primarily on its net interest  income.
Net interest income is affected by (i) the amount of interest-earning assets and
interest-bearing  liabilities, (ii) rates of interest earned on interest-earning
assets and rates paid on  interest-bearing  liabilities and (iii) the difference
("interest rate spread")  between rates of interest  earned on  interest-earning
assets and rates paid on  interest-bearing  liabilities.  When  interest-earning
assets approximate or exceed interest-bearing liabilities, any positive interest
rate spread will generate net interest income.


                                      30

<PAGE>



Average Balance Sheet

      The following table sets forth certain information relating to the Savings
Bank's  average  balance  sheet and  reflects  the  average  yield on assets and
average cost of  liabilities  for the periods  indicated and the average  yields
earned and rates paid.  Such yields and costs are derived by dividing  income or
expense by the average balance of assets or liabilities,  respectively,  for the
periods  presented.  Average  balances  are  derived  from  month-end  balances.
Management does not believe that the use of month-end  balances instead of daily
average  balances  has  caused  any  material  differences  in  the  information
presented.

<TABLE>
<CAPTION>


                                                                          Year Ended July 31,
                                     -----------------------------------------------------------------------------------------------
                                            1994                               1995                           1996
                                     -------------------------------- -------------------------------  -----------------------------

                                      Average               Average    Average              Average    Average             Average
                                      Balance   Interest   Yield/Cost  Balance    Interest Yield/Cost  Balance   Interest Yield/Cost
                                      --------  --------   ----------  -------    -------- ----------  -------   -------- ----------
Interest-earning assets:
<S>                                  <C>        <C>           <C>    <C>          <C>          <C>    <C>        <C>         <C>  
 Loans receivable(1).............    $136,165   $11,749       8.63%  $139,442     $12,509      8.97%  $155,497   $14,131     9.09%
 Mortgage-backed securities......      89,630     5,514       6.15%   171,867      11,163       6.50   149,373     9,605     6.43
 Investment securities(2)........      22,152     1,367       6.17%    66,204       4,535       6.85    47,672     3,004     6.30
 Investment and mortgage-backed
   securities available for sale(6)    12,472       317       2.54%     8,060         223      2.77%    58,719     4,232     7.21%
                                      -------    ------      -----    -------      ------     -----    -------    ------     ----
  Total interest-earning assets..    $260,419   $18,947       7.28%  $385,573     $28,430      7.37%  $411,261   $30,972     7.53%
                                      =======    ======       ====    =======      ======     =====    =======    ======     ====

Non-interest-earning assets......      19,997                          31,983                           29,502
                                      -------                         -------                          -------
  Total assets...................    $280,416                        $417,556                         $440,763
                                      =======                         =======                          =======

Interest-bearing liabilities:
 Savings accounts................    $219,233   $ 6,860       3.13%  $339,945     $11,944      3.51%  $349,957   $14,064       4.02%
 Borrowings......................      21,693       875       4.03%    26,902       1,595      5.93%    42,162     2,485       5.89%
                                      -------    ------       ----     ------      ------      ----    -------    ------       ----
  Total interest-bearing liabilities $240,926   $ 7,735       3.21%  $366,847     $13,539      3.69%  $392,119   $16,549       4.22%
                                      =======    ======       ====    =======      ======      ====    =======    ======       ====

Non-interest bearing liabilities.    $  2,603                        $  2,592                         %  3,026
                                      -------                          ------                          -------
 Total liabilities...............    $243,529                        $369,439                         $395,145
                                      =======                         =======                          =======
Stockholders' equity.............    $ 36,887                        $ 48,117                         % 45,618
                                      -------                         -------                          -------
 Total liabilities and stockholders  $280,416                        $417,556                         $440,763
                                      =======                         =======                          =======
Net interest income..............               $11,212                           $14,891                        $14,423
                                                 ======                            ======                         ======
Interest rate spread(3)..........                             4.07%                            3.68%                           3.31%
                                                              ====                             ====                            ====
Net yield on interest-earning assets(4)                       4.31%                            3.86%                           3.51%
                                                              ====                             ====                            ====
Ratio of average interest-earning assets to
  average interest-bearing liabilities                        1.08X                            1.05X                           1.05X

</TABLE>

---------------------------------
(1)   Average balances include non-accrual loans.
(2)  Includes  interest-bearing  deposits in other  financial  institutions  and
     Federal Home Loan Bank of New York stock.
(3)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(4)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.
(5)  Annualized (where  appropriate) for purposes of comparability with year-end
     data.
(6)  At market value.

                                      31

<PAGE>



Rate/Volume Analysis

      The table  below  sets  forth  certain  information  regarding  changes in
interest  income  and  interest  expense  of the  Savings  Bank for the  periods
indicated.  For each category of  interest-earning  assets and  interest-bearing
liabilities,  information is provided on changes  attributable to (i) changes in
volume (changes in average volume multiplied by old rate); (ii) changes in rates
(changes in rate multiplied by old average volume); (iii) changes in rate-volume
(changes in rate multiplied by the change in average volume).

<TABLE>
<CAPTION>


                                                                      Year Ended July 31,
                                        --------------------------------------------------------------------------
                                                    1994 vs. 1995                           1995 vs. 1996
                                        -----------------------------------     ----------------------------------
                                                  Increase (Decrease)                    Increase (Decrease)
                                                        Due to                                 Due to
                                        -----------------------------------     ----------------------------------
                                                              Rate/                                  Rate/
                                        Volume     Rate      Volume     Net     Volume    Rate      Volume     Net
                                        ------     ----      ------     ---     ------    ----      ------     ---
                                                                    (Dollars in Thousands)
Interest income:
<S>                                     <C>       <C>      <C>        <C>     <C>       <C>       <C>       <C>    
 Loans receivable..........             $  283    $  466   $    11    $  760  $ 1,440   $   163   $    19   $ 1,622
 Mortgage-backed securities              5,059       308       282     5,649   (1,461)     (112)      (15)   (1,558)
 Investment securities.....              2,719       150       299     3,168   (1,269)     (363)     (101)   (1,531)
Investment and mortgage-backed
   securities available for sale          (112)       28      (10)      (94)    1,402       358     2,249     4,009
                                         -----    ------    ------     -----    -----    ------     -----    ------
  Total interest-earning assets         $7,949   $   952   $   582    $9,483  $   112   $    46   $ 2,384    $2,542
                                         =====    ======    ======     =====    =====    ======     =====     =====

Interest expense:
 Savings accounts..........             $3,777   $   843   $  464     $5,084  $   352   $ 1,718   $    50    $2,120

 Borrowings................                210       411       99        720      905        (9)       (5)      891
                                        ------   -------   -------    ------    -----   -------    ------    ------
   Total interest-bearing liabilities   $3,987   $ 1,254   $  563    $5,804   $ 1,257   $ 1,709   $    45   $ 3,011
                                         =====     =====     =====     =====    =====     =====     =====    ======

Net change in interest income           $3,962   $  (302)  $    19    3,679   $(1,145)  $(1,663)  $ 2,339     $(469)
                                         =====     ====     ======     =====    ======   =======    =====     =====
</TABLE>



Competition

      The Savings Bank faces strong  competition  in its  attraction  of savings
deposits,  which  are its  primary  source  of  funds  for  lending,  and in the
origination  of real estate loans.  The Savings Bank's  competition  for savings
deposits and loans  historically  has come from other savings  institutions  and
commercial  banks located in the Savings  Bank's  market area.  The Savings Bank
also competes with mortgage  banking  companies for real estate loans, and faces
competition  for investor  funds from  short-term  money market  securities  and
corporate and government securities.

      The Savings  Bank's  market  area  generally  includes  Passaic and Bergen
Counties. The Savings Bank also makes loans in all other counties in New Jersey.

      The Savings Bank maintains  competitive  interest rates and loan fees, but
relies  more on  providing  personalized  community  bank  services  in order to
attract and maintain  customers.  The Savings  Bank offers all consumer  banking
services  such  as  checking  accounts,   certificates  of  deposit,  retirement
accounts,  consumer and mortgage  loans and  ancillary  services  such as direct
deposit and safe deposit boxes. These services help the Savings Bank compete for
deposits.


                                      32

<PAGE>



      The  Savings  Bank also  competes  with  several  other  larger  financial
institutions, headquartered outside of New Jersey, which maintain offices in the
Savings Bank's market area.  These  competitors may be able to offer better loan
rates from time to time due to their size, financial resources,  and competitive
strategy.

                                  REGULATION

General

      The Corporation owns all of the capital stock of the Savings Bank and is a
savings  and loan  holding  company  because  it has  elected to be treated as a
savings and loan holding  company  pursuant to Section 10(l) of Home Owners Loan
Act ("HOLA").  As a savings and loan holding company, the Corporation is subject
to regulation by the Office of Thrift  Supervision  ("OTS").  As a company whose
stock is  publicly-traded,  the  Corporation  is also subject to the  reporting,
proxy  solicitation,  and  other  regulations  of the  Securities  and  Exchange
Commission ("SEC").

      The Savings Bank is a New Jersey-chartered capital stock savings bank, the
accounts  of which are  insured  by the FDIC,  and as such,  is  subject  to the
regulation,  supervision and examination of the New Jersey Department of Banking
and the FDIC.

New Jersey Law

      The New Jersey  Department  of Banking (the  "Department")  regulates  the
Savings  Bank's  internal  organization  as well  as its  deposit,  lending  and
investment activities. The Department must approve changes to the Savings Bank's
certificate of incorporation, the establishment or relocations of branch offices
and mergers  involving the Savings Bank. In addition,  the  Department  conducts
periodic  examinations  of the Savings Bank.  Many of the areas regulated by the
Department are subject to similar regulation by the FDIC.

      Recent   federal  and  state   legislative   developments   have   reduced
distinctions  between  commercial  banks and  savings  banks in New Jersey  with
respect  to  lending  and   investment   authority  as  well  as  interest  rate
limitations.  As federal law has expanded the  authority of federally  chartered
savings institutions to engage in activities  previously reserved for commercial
banks, New Jersey legislation and regulations ("parity  legislation") have given
New Jersey-chartered savings institutions,  such as the Savings Bank, the powers
of federally chartered savings institutions, including the authority to make ARM
loans,  consumer loans, second mortgage loans,  checking advances and commercial
loans.

      In addition,  under New Jersey law, the Savings Bank has the  authority to
invest  the  lesser  of 3% of the  Savings  Bank's  total  assets  or 50% of its
capital, surplus,  reserves,  undivided profits and capital notes in any type of
asset.  The scope of this  authority is,  however,  significantly  restricted by
federal statute and regulation. See "--Restrictions on Certain Activities."

      New Jersey law  provides  that no dividend may be paid by the Savings Bank
unless after the payment of such dividend, the capital stock of the Savings Bank
will not be impaired and either the Savings Bank will have a surplus of not less
than 50% of its capital  stock,  or the payment of such dividend will not reduce
the statutory surplus of the Savings Bank.




                                      33

<PAGE>



Restrictions on Certain Activities

      Section 24 of the Federal  Deposit  Insurance  Act  ("FDIA"),  as amended,
generally  limits  the  activities  and  equity   investments  of  FDIC-insured,
state-chartered  banks to those that are permissible  for national banks.  Under
regulations dealing with equity investments, an insured state bank generally may
not directly or indirectly acquire or retain any equity investment of a type, or
in an amount, that is not permissible for a national bank. An insured state bank
is not  prohibited  from,  among other  things,  (i)  acquiring  or  retaining a
majority  interest in a  subsidiary,  (ii)  investing as a limited  partner in a
partnership,  the sole purpose of which is direct or indirect  investment in the
acquisition,  rehabilitation or new construction of a qualified housing project,
provided  that such  limited  partnership  investments  may not exceed 2% of the
bank's total assets,  (iii) acquiring up to 10% of the voting stock of a company
that solely provides or reinsures directors',  trustees' and officers' liability
insurance  coverage or bankers blanket bond group insurance coverage for insured
depository institutions,  and (iv) acquiring or retaining the voting shares of a
depository institution if certain requirements are met.

      In addition,  FDIC regulations  generally require an insured state bank to
obtain the  FDIC's  prior  consent  before  directly,  or  indirectly  through a
subsidiary,  engaging as principal in any activity that is not permissible for a
national bank or a subsidiary of a national bank.

Insurance of Deposit Accounts

      The FDIC charges an annual  assessment for the insurance of deposits based
on the risk a particular  institution  poses to its deposit  insurance fund. The
risk-related  assessment  program provided a transition period between the prior
flat-rate system and the final  risk-related  system that took effect on January
1,  1994,  in  accordance  with  the  Federal  Deposit   Insurance   Corporation
Improvement  Act of 1991  ("FDICIA").  This risk  classification  is based on an
institution's capital group and supervisory subgroup assignment.

      On September  30, 1996,  H.R.  1362 was signed into law by the  President.
Title II of H.R. 1362 is titled the Economic Growth and Paperwork  Reduction Act
of 1996 (the "Act").  Among its many provisions,  the Act provides for resolving
the BIF/SAIF premium disparity.  Currently, most insured depository institutions
holding BIF-assessable  deposits pay the statutory minimum of $2,000 for deposit
insurance on these  deposits  while most insured  depository  institutions  with
SAIF-assessable  deposits  pay 23 basis  points per $100 of these  deposits  for
deposit  insurance.  The Savings Bank currently pays an insurance premium to the
FDIC equal to 0.22% of its total deposits.

      The  BIF/SAIF   legislation   provides  for  a  one-time   assessment   to
recapitalize   the  SAIF.  The  assessment  will  be  based  on  the  amount  of
SAIF-assessable  deposits  held by an  institution  as of March 31,  1995  (with
certain  exceptions).  The  assessment is effective on September 30, 1996 and is
payable on November 27, 1996.

      The BIF/SAIF  legislation does not specify an actual assessment but states
that the total  assessment will be equal to the amount necessary to recapitalize
the SAIF as of October  1,  1996.  A recent  report of the  America's  Community
Bankers estimated the assessment at approximately  65.7 basis points per $100 of
SAIF-assessable deposits as of March 31, 1995. The BIF/SAIF legislation provides
that the amount of the special assessment is deductible under section 162 of the
Internal  Revenue Code (the "Code") in the year in which the assessment is paid.
The BIF/SAIF  legislation also provides that section 172(f) of the Code will not
apply  to  deductions  taken  under  section  162 of the  Code  for the  special
assessment.  The Savings Bank has estimated  the amount of the  assessment to be
approximately  $2.2  million  before tax  benefit and such amount was accrued on
September 30, 1996.

                                      34

<PAGE>




Capital Requirements

      Under FDIC regulations,  state-chartered banks that are not members of the
Federal  Reserve  System ("state  non-member  banks") are required to maintain a
minimum leverage capital requirement  consisting of a ratio of Tier 1 capital to
total  assets  of  3% if  the  FDIC  determines  that  the  institution  is  not
anticipating or experiencing  significant growth and has well-diversified  risk,
including no undue interest rate risk exposure,  excellent  asset quality,  high
liquidity, good earnings and is in general a strong banking organization,  rated
composite 1 under the Uniform Financial  Institutions  Ranking System (the CAMEL
rating system)  established by the Federal  Financial  Institutions  Examination
Council.  For all but the most highly rated institutions  meeting the conditions
set forth above,  the minimum  leverage  capital  ratio is 3% plus an additional
"cushion" amount of at least 100 to 200 basis points.  Tier 1 capital is the sum
of  common  stockholders'  equity,   noncumulative   perpetual  preferred  stock
(including   any  related   surplus)   and  minority   investments   in  certain
subsidiaries,  less most intangible  assets. As a SAIF-insured,  state-chartered
bank,  the Savings Bank must currently also deduct from Tier 1 capital an amount
equal to its investments in, and extensions of credit to,  subsidiaries  engaged
in  activities  not  permissible  for national  banks,  other than  subsidiaries
engaged in activities  undertaken as agent for customers or in mortgage  banking
activities or in subsidiary depository institutions or their holding companies.

      In addition to the leverage  ratio,  state nonmember banks must maintain a
minimum ratio of qualifying  total capital to  risk-weighted  assets of at least
8.0%,  of  which  at  least  four  percentage  points  must be  Tier 1  capital.
Qualifying total capital consists of Tier 1 capital plus Tier 2 or supplementary
capital  items which  include  allowances  for loan losses in an amount of up to
1.25% of risk-weighted  assets,  cumulative  preferred stock and preferred stock
with a maturity  of over 20 years and certain  other  capital  instruments.  The
includable  amount of Tier 2 capital  cannot  exceed  the  institution's  Tier 1
capital. Qualifying total capital is further reduced by the amount of the bank's
investments in banking and finance  subsidiaries  that are not  consolidated for
regulatory  capital purposes,  reciprocal  cross-holdings of capital  securities
issued by other banks and certain other deductions. Under the FDIC risk-weighted
system,  all of a bank's balance sheet assets and the credit equivalent  amounts
of certain off-balance sheet items are assigned to one of four broad risk weight
categories.  The  aggregate  dollar amount of each category is multiplied by the
risk weight  assigned to that category.  The sum of these weighted valued equals
the bank's risk-weighted assets.

      The Corporation  evaluates various interest rate analysis  scenarios based
upon various assumptions and past experience in accordance with the Joint Policy
Statement on Interest Rate Risk published by the Federal Reserve Board, the OCC,
and the FDIC in June 1996.  The policy  statement  requires each  institution to
develop  internal  policies and  procedures  for managing  interest rate risk in
accordance with the principles provided in the policy statement.  The regulatory
agencies  examine,  as  part  of  their  normal  supervisory  examination,   the
Corporation's  policies and procedures relating to interest rate risk management
to ensure that the Savings Bank's  policies and  procedures are consistent  with
safe and sound banking practices.

      Pursuant  to New Jersey  banking law the  minimum  leverage  capital for a
depository  institution  is a ratio of Tier 1  capital  to total  assets of four
percent.  However, the Commissioner may establish for a depository institution a
minimum  ratio of Tier 1 capital to total assets of more than four percent based
on the following factors:

      1.    The financial history and condition of a depository institution, and
            its future earnings prospects;

      2.    The managerial resources of the depository institution;

      3.    The funding and liquidity of the depository institution;

                                      35

<PAGE>




      4.    The interest-rate risk exposure of the depository institution;

      5.    The concentration of assets of the depository institution; and/or

      6.    The volume of assets classified as substandard, doubtful or loss, or
            subject to special mention.

      New Jersey  banking law requires  that a depository  institution  maintain
qualifying  capital of at least eight  percent of its risk weighted  assets.  At
least four  percent of this  qualifying  capital  shall be in the form of Tier 1
capital.  For purposes of New Jersey banking law, risk weighted  assets,  Tier 1
capital,  and  total  assets  are  defined  in the  same  manner  as in the FDIC
regulations.

      The  Savings  Bank was in  compliance  with  both the FDIC and New  Jersey
capital requirements at July 31, 1996.

      Capital  Distributions.  Earnings of the Savings Bank  appropriated to bad
debt reserves and deducted for Federal income tax purposes are not available for
payment of cash dividends or other distributions to stockholders without payment
of taxes at the then  current  tax rate by the  Savings  Bank on the  amount  of
earnings  removed  from the reserves  for such  distributions.  See "Federal and
State Taxation." The Savings Bank intends to make full use of this favorable tax
treatment and does not  contemplate  use of any earnings in a manner which would
limit the Savings Bank's bad debt deduction or create federal tax liabilities.

      Dividends  payable by the Savings Bank to the  Corporation  and  dividends
payable by the  Corporation to  stockholders  are subject to various  additional
limitations imposed by federal and state laws,  regulations and policies adopted
by federal  and state  regulatory  agencies.  The  Savings  Bank is  required by
federal law to obtain FDIC approval for the payment of dividends if the total of
all  dividends  declared by the Savings Bank in any year exceed the total of the
Savings  Bank's net  profits (as  defined)  for that year and the  retained  net
profits (as defined) for the preceding two years, less any required transfers to
surplus.  Under New Jersey law, the Savings Bank may not pay  dividends  unless,
following payment, the capital stock of the Savings Bank would be unimpaired and
(a) the  Savings  Bank will have a surplus  of not less than 50% of its  capital
stock, or, if not, (b) the payment of such dividends will not reduce the surplus
of the Savings Bank.

     If,  in the  opinion  of the  FDIC,  a  depository  institution  under  its
jurisdiction  is  engaged  in or is about to  engage  in an  unsafe  or  unsound
practice (which depending on the financial  condition of the institution,  could
include  the  payment  of  dividends),  such  authority  may  require  that such
depository institution cease and desist from such practice or, as a result of an
unrelated practice, require the institution to limit dividends in the future. In
addition,  the FDIC has issued a policy  statement  which  provides that insured
institutions  should  generally  only pay  dividends  out of  current  operating
earnings.  Regulatory  pressures  to  reclassify  and  charge-off  loans  and to
establish  additional loan loss reserves could reduce current operating earnings
and affect an institution's  ability to pay dividends.  Finally,  the regulatory
authorities  have  established  guidelines,  and under  FDICIA are  expected  to
establish additional guidelines,  with respect to the maintenance of appropriate
levels of capital by depository institutions.  Compliance with the standards set
forth in such  policy  statements  and  guidelines  could  limit  the  amount of
dividends which the Corporation may pay to stockholders.

     The Savings  Bank's  dividends  will be subject to  restrictions  under New
Jersey Law. See "--New Jersey Law."

     Under  applicable  regulations,  the Savings Bank would be prohibited  from
making any capital distributions if, after making the distribution,  the Savings
Bank would have: (i) a total risk-based capital

                                      36

<PAGE>



ratio of less than 8.0%;  (ii) a Tier 1  risk-based  capital  ratio of less than
4.0%; or (iii) a leverage ratio of less than 4.0%.

      Prompt  Corrective Action and Other  Enforcement  Mechanisms.  Federal law
requires each federal banking agency to take prompt corrective action to resolve
the problems of insured  depository  institutions,  including but not limited to
those that fall below one or more prescribed  minimum  capital  ratios.  The law
requires  each federal  banking  agency to promulgate  regulations  defining the
following five  categories in which an insured  depository  institution  will be
placed,  based on the level of its capital ratios: well capitalized,  adequately
capitalized,  undercapitalized,  significantly undercapitalized,  and critically
undercapitalized. In September 1992, the federal banking agencies issued uniform
final  regulations  implementing  the prompt  corrective  action  provisions  of
federal law.

      An institution  that, based upon its capital levels, is classified as well
capitalized,  adequately  capitalized,  or  undercapitalized  may be  treated as
though it were in the next lower  capital  category if the  appropriate  federal
banking agency,  after notice and  opportunity  for hearing,  determines that an
unsafe or unsound  condition  or an unsafe or  unsound  practice  warrants  such
treatment.  At each successive  lower capital  category,  an insured  depository
institution  is subject to more  restrictions.  The  federal  banking  agencies,
however, may not treat an institution as critically  undercapitalized unless its
capital ratio actually warrants such treatment.

      In  addition  to  restrictions  and  sanctions  imposed  under the  prompt
corrective action provisions, commercial banking organizations may be subject to
potential  enforcement  actions by the federal  regulators for unsafe or unsound
practices in conducting  their  businesses or for  violations of any law,  rule,
regulation  or any  condition  imposed in  writing by the agency or any  written
agreement with the agency.  Enforcement  actions may include the imposition of a
conservator  or  receiver,  the issuance of a cease and desist order that can be
judicially enforced,  the termination of insurance of deposits (in the case of a
depository  institution),  the imposition of civil money penalties, the issuance
of  directives  to  increase  capital,  the  issuance  of  formal  and  informal
agreements,   the   issuance  of  removal   and   prohibition   orders   against
institution-affiliated  parties  and the  enforcement  of such  actions  through
injunctions or restraining  orders based upon a judicial  determination that the
agency would be harmed if such  equitable  relief was not  granted.  The Savings
Bank is currently a well capitalized institution.

      Safety and Soundness Standards. In July 1995, the federal banking agencies
adopted final guidelines  establishing  standards for safety and soundness.  The
guidelines set forth operational and managerial  standards  relating to internal
controls,  information  systems and internal audit systems,  loan documentation,
credit underwriting, interest rate exposure, asset growth and compensation, fees
and  benefits.  Guidelines  for asset  quality and  earnings  standards  will be
adopted in the  future.  The  guidelines  establish  the  safety  and  soundness
standards that the agencies will use to identify and address problems at insured
depository institutions before capital becomes impaired. If an institution fails
to comply with a safety and soundness standard,  the appropriate federal banking
agency may require  the  institution  to submit a  compliance  plan.  Failure to
submit  a  compliance  plan or to  implement  an  accepted  plan may  result  in
enforcement action.

Loans to One Borrower

      Generally, a savings bank may not make a loan or extend credit to a single
or related  group of  borrowers in excess of 15% of its  unimpaired  capital and
surplus.  See  "Business of the Savings Bank - - Lending  Activities -- Loans to
One Borrower."


                                      37

<PAGE>



Community Reinvestment

      Under the  Community  Reinvestment  Act  ("CRA"),  as  implemented  by OTS
regulations,  a savings association has a continuing and affirmative  obligation
consistent  with its safe and sound  operation  to help meet the credit needs of
its entire community,  including low and moderate income neighborhoods.  The CRA
does not  establish  specific  lending  requirements  or programs for  financial
institutions nor does it limit an institution's  discretion to develop the types
of products  and  services  that it believes  are best suited to its  particular
community, consistent with the CRA. The CRA requires the OTS, in connection with
its examination of a savings institution,  to assess the institution's record of
meeting the credit needs of its  community  and to take such record into account
in its  evaluation  of certain  applications  by such  institution.  Current law
requires public  disclosure of an institution's CRA rating and requires the FDIC
to provide a written evaluation of an institution's CRA performance  utilizing a
four  tiered  descriptive  rating  system  in lieu of the  existing  five-tiered
numerical  rating system.  The Savings Bank received a satisfactory  rating (the
second highest rating  available) as a result of its last evaluation in February
1996.

Federal Home Loan Bank System

      The Savings  Bank is a member of the FHLB of New York,  which is one of 12
regional FHLBs that  administers  the home financing  credit function of savings
associations.  Each FHLB  serves as a reserve  or central  bank for its  members
within its assigned  region.  It is funded  primarily from proceeds derived from
the sale of  consolidated  obligations  of the FHLB  System.  It makes  loans to
members (i.e.,  advances) in accordance with policies and procedures established
by the Board of Directors of the FHLB.

      As a member,  the Savings Bank is required to purchase and maintain  stock
in the FHLB of New  York in an  amount  equal  to at  least 1% of its  aggregate
unpaid   residential   mortgage  loans,  home  purchase   contracts  or  similar
obligations  at the beginning of each year.  At July 31, 1996,  the Savings Bank
had $2.6 million in FHLB stock, which was in compliance with this requirement.

      As a result of FIRREA,  the FHLBs are  required  to provide  funds for the
resolution  of troubled  savings  institutions  and to  contribute to affordable
housing programs through direct loans or interest subsidies on advances targeted
for community  investment and low- and moderate-income  housing projects.  These
contributions have adversely affected the level of FHLB dividends paid and could
continue to do so in the  future.  For the year ended July 31,  1996,  dividends
paid by the FHLB of New York to the Savings Bank totalled $177,891.

Federal Reserve System

      The Federal Reserve Board requires all depository institutions to maintain
non-interest  bearing  reserves at specified  levels  against their  transaction
accounts  (primarily  checking,   NOW  and  Super  NOW  checking  accounts)  and
non-personal  time  deposits.  The  balances  maintained  to  meet  the  reserve
requirements  imposed by the  Federal  Reserve  Board may be used to satisfy the
liquidity requirements that are imposed by the Department. At July 31, 1996, the
Savings Bank's reserve requirements are satisfied by cash on hand.

      State-chartered  savings  banks have  authority to borrow from the Federal
Reserve Bank "discount  window," but Federal Reserve policy  generally  requires
savings banks to exhaust all reasonable  alternative  sources  before  borrowing
from the  Federal  Reserve  System.  The  Savings  Bank had no  discount  window
borrowings at July 31, 1996.

     Transactions With Affiliates.  Generally, restrictions on transactions with
affiliates  require  that  transactions  between  a savings  association  or its
subsidiaries  and its affiliates be on terms as favorable to the Savings Bank as
transactions with non-affiliates. In addition, certain of these transactions are

                                      38

<PAGE>



restricted  to a percentage  of the Savings  Bank's  capital.  Affiliates of the
Savings Bank include the Corporation and any company which would be under common
control with the Savings Bank.

      The Savings  Bank's  authority  to extend  credit to  executive  officers,
directors and 10%  shareholders,  as well as entities  such persons  control are
currently  governed by Sections  22(g) and 22(h) of the Federal  Reserve Act and
Regulation O promulgated by the Federal Reserve Board. Among other things, these
regulations  require  such  loans to be made on terms  substantially  similar to
those offered to unaffiliated  individuals,  place limits on the amount of loans
the Savings Bank may make to such persons based,  in part, on the Savings Bank's
capital position, and require certain approval procedures to be followed.

Holding Company Regulation

      General. The Holding Company is a unitary savings and loan holding company
subject to  regulatory  oversight  by the OTS. As such,  the Holding  Company is
required to register and file reports with the OTS and is subject to  regulation
and examination by the OTS. In addition, the OTS will have enforcement authority
over the Holding Company and its non-savings association subsidiaries which also
permits the OTS to restrict or prohibit  activities  that are determined to be a
serious  risk  to  the  subsidiary  savings  association.  This  regulation  and
oversight is intended  primarily  for the  protection  of the  depositors of the
Savings Bank and not for stockholders of the Holding Company.

      QTL Test.  As a unitary  savings  and loan  holding  company,  the Holding
Company generally is not subject to activity restrictions,  provided the Savings
Bank satisfies the QTL test. If the Holding Company  acquires control of another
savings association as a separate subsidiary, it would become a multiple savings
and loan holding  company,  and the activities of the Holding Company and any of
its subsidiaries (other than the Savings Bank or any other SAIF-insured  savings
association)  would  become  subject  to such  restrictions  unless  such  other
associations   each  qualify  as  a  QTL  or  were  acquired  in  a  supervisory
acquisition.

      Restrictions  on  Acquisitions.  The Holding  Company must obtain approval
from the OTS before  acquiring  control of any other  SAIF-insured  association.
Such acquisitions are generally  prohibited if they result in a multiple savings
and loan  holding  company  controlling  savings  associations  in more than one
state.  However,  such interstate  acquisitions  are permitted based on specific
state  authorization  or  in a  supervisory  acquisition  of a  failing  savings
association.

      Federal  law  generally  provides  that no  "person,"  acting  directly or
indirectly or through or in concert with one or more other persons,  may acquire
"control",  as that term is defined in OTS regulations,  of a  federally-insured
savings  institution  without giving at least 60 days' written notice to the OTS
and providing the OTS an  opportunity  to disapprove  the proposed  acquisition.
Such acquisitions of control may be disapproved if it is determined, among other
things,  that (i) the acquisition would substantially  lessen competition;  (ii)
the financial  condition of the acquiring  person might jeopardize the financial
stability  of  the  savings  institution  or  prejudice  the  interests  of  its
depositors;  or (iii) the  competency,  experience or integrity of the acquiring
person or the proposed  management  personnel  indicates that it would not be in
the  interest  of the  depositors  or the public to permit the  acquisitions  of
control by such person.

      Subject to appropriate  regulatory  approvals,  a bank holding company can
acquire  control of a savings  association  or its  holding  company,  and if it
controls a savings association,  merge or consolidate the assets and liabilities
of the savings  association  with, or transfer  assets and  liabilities  to, any
subsidiary  bank  which  is a  member  of  the  BIF  with  the  approval  of the
appropriate  federal  banking agency and the Federal  Reserve Board.  Generally,
savings associations and savings banks can acquire or be acquired by any insured
depository institution.

                                      39

<PAGE>




      In addition,  federal regulations  governing conversions of mutual savings
institutions to the stock form of  organization  prohibit the direct or indirect
acquisition  without prior OTS approval of more than 10% of any equity  security
of a  savings  institution  within  three  years  of the  savings  institution's
conversion to stock form.  Such  acquisition  may be disapproved if it is found,
among other  things,  that the  proposed  acquisition  (a) would  frustrate  the
purposes of the provisions of the regulations regarding  conversions;  (b) would
be manipulative or deceptive;  (c) would subvert the fairness of the conversion;
(d) would be likely to result in injury to the  savings  institution;  (e) would
not be consistent with economical  home financing;  (f) would otherwise  violate
law or regulation;  or (g) would not contribute to the prudent deployment of the
savings institution's conversion proceeds.

      Interstate  Banking and  Branching.  In September  1994,  the  Riegle-Neal
Interstate  Banking and Branching  Efficiency Act of 1994 (the "Interstate Act")
became  law.  Under the  Interstate  Act,  beginning  one year after the date of
enactment, a bank holding company that is adequately capitalized and managed may
obtain  approval  under the BHCA to acquire an existing  bank located in another
state without regard to state law. A bank holding company would not be permitted
to make such an  acquisition  if, upon  consummation,  it would control (a) more
than 10% of the total amount of deposits of insured  depository  institutions in
the United  States or (b) 30% or more of the  deposits in the state in which the
bank is  located.  A state may  increase  or decrease  the  percentage  of total
deposits that may be held in that state by any one bank or bank holding  company
if application of such percentage  does not  discriminate  against  out-of-state
banks.  An  out-of-state  bank  holding  company may not acquire a state bank in
existence for less than a minimum length of time that may be prescribed by state
law  except  that a  state  may  not  impose  more  than a five  year  existence
requirement.

      Federal Securities Law. The Corporation is subject to filing and reporting
requirement by virtue of having its common stock registered under the Securities
Exchange  Act of  1934.  Furthermore,  company  stock  held by  persons  who are
affiliates  (generally  officers,  directors and principal  stockholders) of the
Corporation may not be resold without  registration or unless sold in accordance
with certain resale  restrictions.  If the Corporation  meets specified  current
public  information  requirements,  each affiliate of the Corporation is able to
sell in the public market,  without registration,  a limited number of shares in
any three-month period.

                          FEDERAL AND STATE TAXATION

      Recapture of Post-1987  Bad-Debt  Reserves.  Prior to the enactment of the
Small  Business  Jobs  Protection  Act,  which was signed into law on August 21,
1996,  certain thrift  institutions such as the Bank were allowed deductions for
bad debts under methods more  favorable  than those granted to other  taxpayers.
Qualified  thrift  institutions  could  compute  deductions  for bad debts using
either the  specific  charge off method of Section 166 of the  Internal  Revenue
Code of 1986,  as amended (the  "Code") or the reserve  method of Section 593 of
the  Code.  For tax years  1995,  1994 and  1993,  the Bank used the  experience
method.

      The Small  Business  Job  Protection  Act  repealed  the Code  Section 593
reserve method of accounting for bad debts by thrift institutions, effective for
taxable years  beginning  after 1995.  Thrift  institutions  that are treated as
small banks are  allowed to utilize the  experience  method  applicable  to such
institutions,  while  thrift  institutions  that are  treated as large banks are
required to use only the specific  charge off method.  The percentage of taxable
income  method  of  accounting  for bad  debts is no  longer  available  for any
financial institution.

      The amount of the  applicable  excess  reserves will be taken into account
ratably over a six taxable year period,  beginning  with the first  taxable year
beginning after 1995,  subject to the  residential  loan  requirement  described
below.


                                      40

<PAGE>



      A small bank,  like the Bank, the amount of the  institution's  applicable
excess  reserves  generally is the excess of (i) the balances of its reserve for
losses  on  qualifying  real  property  loans  and its  reserve  for  losses  on
nonqualifying  loans as of the close of its last taxable year  beginning  before
January  1, 1996,  over (ii) the  greater  of the  balance  of (a) its  pre-1988
reserves  or (b) what the  Bank's  reserves  would have been at the close of its
last tax year  beginning  before  January 1, 1996,  had the Bank always used the
experience  method.  At July 31,  1996,  the Bank had $3.6  million  of pre 1988
bad-debt  reserves.  Since the  percentage of taxable  income method for tax bad
debt  deduction  and the  corresponding  increase in the tax bad debt reserve in
excess of the base year have been recorded as temporary  differences pursuant to
SFAS 109,  this change in the tax law is not expected to have a material  effect
on the Company's or the Bank's financial statements.

      For taxable years that begin after  December 31, 1995,  and before January
1, 1998, if a thrift meets the residential  loan requirement for a tax year, the
recapture of the applicable excess reserves  otherwise required to be taken into
account as a Code Section 481(a)  adjustment  for the year will be suspended.  A
thrift  institution meets the residential loan requirement if, for the tax year,
the principal amount of residential  loans made by the thrift during the year is
not less than its base amount.

      State  Taxation.  The  Savings  Bank is also  taxed  under the New  Jersey
Savings  Institution  Tax Act.  This Act exempts the Savings Bank from all other
taxes  imposed by the State for state  income tax  purposes,  and from all local
taxation imposed by political  subdivisions.  The Savings Institutions Tax is an
excise tax upon the  privilege  of doing  business in the State of New Jersey at
the rate of 3% per annum on net  income  as  reported  for  federal  income  tax
purposes, with certain modifications.

      The  Corporation is also taxed under the New Jersey  Corporation  Business
Tax  Act.  If it  meets  certain  tests,  the  Corporation  would be taxed as an
investment  company at an effective  annual rate of  approximately  2.25% of New
Jersey  taxable  income.  If it fails to meet such  tests it will be taxed at an
approximate annual rate of 9% of New Jersey taxable income.

      The Savings  Bank's State income tax returns have not been audited  during
the past five years.

Personnel

      As of July 31,  1996,  the  Corporation  and Saving Bank had 62  full-time
employees and 39 part-time  employees.  The employees are not  represented  by a
collective  bargaining  unit.  The  Corporation  and Savings Bank believe  their
relationship with employees to be satisfactory.



                                      41

<PAGE>



Executive Officers of the Registrant

      The executive officers of the Corporation are as follows:


Name                    Ages(1)     Position
-----                   -------     --------

Kevin J. Coogan           47        President and Chief Executive
                                    Officer

Anthony G. Gallo          43        Vice President and Chief Financial Officer

Kevin M. McCloskey        38        Vice President and Chief Operating Officer

---------------------
(1)  At July 31, 1996.

      The principal  occupation of each executive  officer of the Corporation is
set forth below.  Unless noted otherwise,  each executive  officer has held such
position for the past five years.

     Kevin J. Coogan has been the President and Chief  Executive  Officer of the
Savings  Bank since 1986.  Mr.  Coogan  began his service as an officer with the
Savings Bank in 1982. Mr. Coogan has served as a director since 1987.

      Kevin M.  McCloskey  has been employed with the Savings Bank for more than
10 years as Vice  President and Chief  Operating  Officer.  Mr.  McCloskey  also
serves as officer in charge of compliance with the Community Reinvestment Act.

      Anthony G. Gallo has been the Chief  Financial and  Accounting  Officer of
the Savings Bank since March 1989.

Item  2.  Properties and Equipment

      The Company is located  and  conducts  the  majority  its  business at the
Savings  Bank's main office.  The Savings Bank  primarily  conducts its business
through its office located at 1117 Main Street in Paterson, New Jersey and seven
other branch offices located in Ramsey, West Paterson,  Totowa,  Haledon,  North
Haledon and  Hawthorne,  New Jersey.  The Savings  Bank also owns a three family
home which  provides  rental income and which has a parking area utilized by the
Savings Bank's employees.

      The following  table sets forth the location of the Savings Bank's offices
and property,  the year the office or property was first acquired or rented, and
the net book  value at July  31,  1996 and  square  footage  of each  office  or
property.



                                      42

<PAGE>

<TABLE>
<CAPTION>


                                             Year        Net Book    Furniture &     Square
Description           Address           Open/Acquired      Value       Fixtures     Footage
-----------           -------           -------------    --------    -----------    ------- 

<S>                <C>                       <C>        <C>            <C>          <C>   
Main Office        1117 Main Street          1945       $ 799,115      $ 61,653     13,500
                   Paterson, NJ
                   Owned

Branch Office      14-18 N. Spruce St.       1989          52,492         6,628      4,820(1)
                   Ramsey, NJ
                   Owned

Future Main        111 Genessee Avenue       1989         139,338            --      2,400(2)
Office Expansion   Paterson, NJ
                   Owned

Branch Office      989 McBride Avenue        1994       1,254,778       225,810     21,228
                   West Paterson, NJ
                   Owned

Branch Office      169 Union Boulevard       1994         155,255        15,263      2,300
                   Totowa, NJ (3)

Branch Office      325 Belmont Avenue        1994          39,900         4,407      1,500
                   Haledon, NJ (3)

Branch Office      33 Sicomac Road           1994           6,000        14,013      4,121
                   North Haledon, NJ (3)

Branch Office      396 Haledon Avenue        1994         815,936        29,740      4,950
                   Haledon, NJ
                   Owned

Branch Office      571 Lafayette Avenue      1994         488,723        11,370      3,500
                   Hawthorne, NJ
                   Owned
</TABLE>

----------------------------
(1)   56% of  building  has been  leased to three  commercial  tenants for total
      income to the Savings bank of $3,899 per month.
(2)   100% of the building on this property has been temporarily leased to three
      tenants for total income to the Savings Bank of $1,735 per month.
(3)   Leased facility.

      The Savings  Bank's  accounting  and record  keeping  departments  utilize
personal  computers.  The  Savings  Bank's  general  ledger  is on  an  in-house
multi-user  computer.  The  savings,  checking and lending  data  processing  is
performed by Bisys,  Cherry Hill, New Jersey. Each of the Savings Bank's tellers
and customer  service  stations are provided  with a personal  computer  that is
connected to the data base at Bisys. At July 31, 1996, the net book value of the
Savings Bank's computer equipment totalled $83,000.


                                      43

<PAGE>



     As of  July  31,  1996,  the  book  value  of  the  Savings  Bank's  office
properties,  land,  furniture,   fixtures  and  equipment,  net  of  accumulated
depreciation  of $1.6 million,  totalled  $4.2 million.  See Note 10 of Notes to
Consolidated Financial Statements.

Item 3.  Legal Proceedings

      Neither the Company nor its subsidiaries are involved in any pending legal
proceedings,  other than routine legal matters  occurring in the ordinary course
of  business,  which in the  aggregate  involve  amounts  which are  believed by
management to be immaterial to the consolidated  financial  condition or results
of operations of the Company.

Item 4.  Submission of Matters to a Vote of Security Holders

      None.

                                    PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

      Information  relating  to the market for  Registrant's  common  equity and
related  stockholder  matters appears in the Registrant's  1996 Annual Report to
Stockholders on page 10, and is incorporated herein by reference.

Item 6.  Selected Financial Data

      The above-captioned information appears under "Selected Financial Data" in
the  Registrant's  1996  Annual  Report  to  Stockholders  on  page  1,  and  is
incorporated herein by reference.

Item 7.  Management's Discussion and Analysis or Plan of Operation

     The above-captioned  information appears under "Management's Discussion and
Analysis of Financial  Condition and Results of Operations" in the  Registrant's
1996 Annual  Report to  Stockholders  on pages 9 through 13 and is  incorporated
herein by reference.

Item 8.  Financial Statements

     The Consolidated  Financial  Statements of Lakeview Financial Corp. and its
subsidiaries,  together with the auditors'  report  thereon by KPMG Peat Marwick
LLP appears in the  Registrant's  1996 Annual Report to Stockholders on pages 14
through 40 and are incorporated herein by reference.

Item 9.  Change In and Disagreements with Accountants on Accounting and 
         Financial Disclosure

      None.


                                      44

<PAGE>



                                   PART III


Item 10.  Directors and Executive Officers
------------------------------------------

     The  information  contained  under the sections  captioned  "Section  16(a)
Beneficial   Ownership  Reporting  Compliance,"  "Proposal I - Information  with
Respect to Nominees for Directors;  Directors Whose Terms Continue and Executive
Officers" and "Biographical  Information" in the Proxy Statement is incorporated
herein by  reference.

Item 11.  Executive Compensation
--------------------------------

     The   information   contained  under  the  section   captioned   "Executive
Compensation" in the Proxy Statement is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

     The information  contained under the section captioned  "Voting  Securities
and Principal Holders Thereof" in the Proxy Statement is incorporated  herein by
reference.

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

     The   information   contained   under  the   section   captioned   "Certain
Relationships  and Related  Transactions" in the Proxy Statement is incorporated
herein by reference.


                                      45

<PAGE>



                                    PART IV

Item 13.  Exhibits and Reports on Form 8-K

(a)   The following documents are filed as a part of this report:

      (1) Consolidated  Financial  Statements of the Company are incorporated by
reference  to the  following  indicated  pages  of the  1996  Annual  Report  to
Stockholders.
                                                                         PAGE

Independent Auditors' Report.........................................   40

Consolidated Balance Sheets as of
  July 31, 1995 and 1996.............................................   14

Consolidated Statements of Income for the Years Ended
  July 31, 1994, 1995 and 1996.......................................   15

Consolidated Statements of Cash Flows for the Years
  Ended July 30, 1994, 1995 and 1996.................................   16-17

Consolidated Statements of Stockholders' Equity for the Years
  Ended July 31, 1994, 1995 and 1996.................................   18-19

Notes to Consolidated Financial Statements...........................   20-39



      The remaining  information  appearing in the Annual Report to Stockholders
is not deemed to be filed as part of this report,  except as expressly  provided
herein.

      (2) All schedules are omitted because they are not required or applicable,
or the required information is shown in the consolidated financial statements or
the notes thereto.



                                      46

<PAGE>



      (3)   Exhibits

      The following exhibits are filed as part of this report.

       3.1  Certificate of Incorporation of Lakeview Financial Corp.*
       3.2  Bylaws of Lakeview Financial Corp.*
       4.0  Stock Certificate of Lakeview Financial Corp.*
      10.1  Form of Lakeview Savings Bank 1993 Stock Option Plans*
      10.2  Lakeview Savings Bank Management Stock Bonus Plan and Trust 
            Agreement*
      10.3  Employment Agreements**
      10.4  Supplemental Retirement Plan for Senior Officers
      13.0  1996 Annual Report to Stockholders (filed herewith).
      21.0  Subsidiary information is incorporated herein by reference to "Part
            I - Subsidiaries."
      23.0  Independent Auditors' Conent
      27.0  Financial Data Schedule***


*     Incorporated herein by reference into this document from the Exhibits to 
      Form S-4, Registration Statement, initially filed on April 13, 1994, 
      Registration No. 33-77646.

**    Incorporated herein by reference into this document from the Form 10-K for
      fiscal year ended July 31, 1994.

***   This schedule is only required to be filed via EDGAR pursuant to Item 
      601(c) of Regulation S-K.

            (b)   Reports on Form 8-K.

                  A Form 8-K was filed on June 20, 1996 regarding a subsidiary's
                  interest in a public offering of common shares by IMC.



                                      47

<PAGE>



                                  SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) 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.

                                          LAKEVIEW FINANCIAL CORP.



Dated:  October 29, 1996                  By:/s/ Kevin J. Coogan
                                             ---------------------------
                                             President, Chief Executive
                                             Officer and Director

      Pursuant to the  requirement of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

By:  /s/ Kevin J. Coogan                  By:   /s/ Leo J. Dean
     -----------------------------------        -------------------------------
      Kevin J. Coogan                           Leo J. Dean
      President, Chief Executive Officer        Director
        and Director

Date: October 29, 1996                   Date: October 29, 1996


By:                                       By:                          
      ---------------------------------         -------------------------------
      Leo J. Costello                           Michael R. Rowe
      Chairman of the Board                     Director

Date: ________ __, 1996                   Date: ________ __, 1996


By:  /s/ Robert J. Davenport              By:   /s/ Dennis D. Pedra
     ----------------------------               -------------------------------
      Robert J. Davenport                       Dennis D. Pedra
      Director                                  Director

Date: October 29, 1996                    Date: October 29, 1996


By:                                       By:   /s/ Anthony G. Gallo
      ---------------------------               -------------------------------
      Vincent A. Scola                          Anthony G. Gallo
      Director                                  Vice President and Chief 
                                                 Financial Officer

Date: ________ __, 1996                   Date: October 29, 1996