SECURITIES AND EXCHANGE COMMISSION
                       ----------------------------------

                              Washington, DC 20549
                              --------------------

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


                                    FORM 10-Q

(Mark One)

  X               Quarterly report pursuant to section 13 or 15(d) of the
-----             Securities Exchange Act of 1934


                  For the quarterly period ended March 31, 2000

                                       OR

                  Transition report pursuant to section 13 or 15(d) of the
-----             Securities Exchange Act of 1934


                         Commission file number 0-17353

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

New Jersey                                                  22-2916440
----------                                                  ----------
(State or other jurisdiction of                             (IRS Employer
incorporation or organization)                              Identification No.)

3 Sunset Road, Burlington, New Jersey                         08016
-------------------------------------                       ---------
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code: (609) 386-2400

     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  reports),  and (2) has been
subject to such filing  requirements  for the past 90 days. YES  X   NO     .
                                                                ---     ----

     As of May 5, 2000 there were issued and outstanding 7,063,026 shares of the
registrant's Common Stock, par value $.10 per share.


<PAGE>






                    FMS FINANCIAL CORPORATION AND SUBSIDIARY
                    ----------------------------------------

                          QUARTERLY REPORT ON FORM 10-Q
                          -----------------------------

                                 MARCH 31, 2000
                                 --------------

                                TABLE OF CONTENTS
                                -----------------

                                                                       Page
                                                                       ----
PART I - Financial Information
------------------------------

    Item 1 - Financial Statements

       Consolidated Statements of Financial Condition as of
             March 31, 2000 (unaudited) and December 31, 1999............1

       Consolidated Statements of Income (unaudited)
             for the three months ended
             March 31, 2000 and March 31, 1999...........................2

       Consolidated Statements of Cash Flows (unaudited)
            for the three months ended March 31, 2000
            and March 31, 1999...........................................3

       Consolidated Statements of Changes in Stockholders' Equity
            for the three months ended March 31, 2000 (unaudited)........4

    Item 2 - Management's Discussion and Analysis of
             Financial Condition and Results of Operations...............5 - 15

    Item 3 - Disclosure about Market Risk................................15

PART II - Other Information
---------------------------

    Item 1 - Legal Proceedings...........................................16

    Item 2 - Changes in Securities.......................................16

    Item 3 - Defaults Upon Senior Securities.............................16

    Item 4 - Submission of Matters to a Vote of Security Holders.........16

    Item 5 - Other Information...........................................16

    Item 6 - Exhibits and Reports on Form 8-K............................16






<PAGE>
<TABLE>
<CAPTION>
FMS FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
-----------------------------------------------------------------------------------------
                                                       March 31, 2000   December 31, 1999
-----------------------------------------------------------------------------------------
                                                         (Unaudited)
ASSETS
-----------------------------------------------------------------------------------------
<S>                                                   <C>                <C>
Cash and amounts due from depository institutions      $  20,970,552      $  20,489,516
  Interest-bearing deposits                                  133,308             82,493
  Short term funds                                        17,855,733         25,703,862
                                                       --------------     --------------
     Total cash and cash equivalents                      38,959,593         46,275,871
  Investment securities held to maturity                 251,114,313        220,307,242
  Investment securities available for sale                46,111,438         49,307,116
  Loans, net                                             297,196,979        299,694,517
  Mortgage-backed securities held to maturity            119,468,807        121,424,419
  Accrued interest receivable:
     Loans                                                 1,500,442          1,398,470
     Mortgage-backed securities                              844,877            836,699
     Investments                                           3,179,706          3,628,622
  Federal Home Loan Bank stock                             4,861,410          4,861,410
  Real estate held for development, net                       87,926             87,926
  Real estate owned,  net                                    531,541            448,541
  Office properties and equipment, net                    22,980,888         20,686,272
  Deferred income taxes                                    2,339,289          2,264,587
  Excess cost over fair value of net assets acquired          48,412             55,328
  Prepaid expenses and other assets                        1,109,425            959,819
  Subordinated debentures issue cost,  net                   249,428            263,765
                                                       --------------     --------------
TOTAL ASSETS                                           $ 790,584,474      $ 772,500,604
                                                       ==============     ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
----------------------------------------------------------------------------------------

Liabilities:
  Deposits                                             $ 631,974,715      $ 603,892,117
  Securities sold under agreements to repurchase          80,000,000         90,000,000
  Advances from the Federal Home Loan Bank                16,337,031         16,337,031
  10% Subordinated debentures, due 2004                   10,000,000         10,000,000
  Advances by borrowers for taxes and insurance            2,242,859          2,204,704
  Accrued interest payable                                 1,213,029          1,437,348
  Dividends payable                                          211,888            215,519
  Other liabilities                                        2,564,215          2,316,882
                                                       --------------     --------------
Total liabilities                                        744,543,737        726,403,601
                                                       --------------     --------------
Commitments and contingencies
Stockholders' Equity:
  Preferred stock - $.10 par value 5,000,000 shares
     authorized;  none issued
  Common stock - $.10 par value 10,000,000 shares
     authorized; shares issued 7,897,791 and
     7,897,791 and shares outstanding 7,062,926
     and 7,183,978 as of March 31, 2000 and
     December 31, 1999, respectively                         789,779            789,779
  Paid-in capital in excess of par                         8,217,535          8,217,535
  Accumulated comprehensive loss - net of deferred
     income taxes                                         (1,263,768)        (1,167,810)
  Retained earnings                                       43,222,256         42,108,955
  Less:  Treasury stock (834,865 and 713,813 shares,
     at cost, as of March 31, 2000 and December 31,
     1999, respectively)                                  (4,925,065)        (3,851,456)
                                                       --------------     --------------
Total stockholders' equity                                46,040,737         46,097,003
                                                       --------------     --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 790,584,474      $ 772,500,604
                                                       ==============     ==============
</TABLE>
See notes to consolidated financial statements
<PAGE>
FMS FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
                                                    Three Months ended
                                                         March 31,
                                            ------------------------------------
                                                2000                   1999
--------------------------------------------------------------------------------
INTEREST  INCOME:                                        (Unaudited)
Interest income on:
   Loans                                  $     5,755,540       $     5,659,643
   Mortgage-backed securities                   2,043,851             1,496,043
   Investments                                  4,977,229             3,997,879
                                            --------------      ----------------
Total interest income                          12,776,620            11,153,565
                                            --------------      ----------------
INTEREST EXPENSE:
Interest expense on:
   Deposits                                     4,941,263             4,333,906
   Subordinated debentures                        264,337               264,337
   Borrowings                                   1,410,220             1,359,622
                                            --------------      ----------------
Total interest expense                          6,615,820             5,957,865
                                            --------------      ----------------
NET INTEREST INCOME                             6,160,800             5,195,700
PROVISION FOR LOAN LOSSES                          60,000                60,000
                                            --------------      ----------------
NET INTEREST INCOME AFTER PROVISION
  FOR LOAN LOSSES                               6,100,800             5,135,700
                                            --------------      ----------------
OTHER INCOME (EXPENSE):
   Loan service charges and other fees             35,744                33,145
   Gain on sale of loans                              258                   113
   Loss on disposal of fixed assets                  (122)                    0
   Real estate owned operations, net               13,201                (6,965)
   Service charges on accounts                    616,582               572,508
   Other income                                    49,037                52,402
                                            --------------      ----------------
Total other income                                714,700               651,203
                                            --------------      ----------------
OPERATING EXPENSES:
   Salaries and employee benefits               2,809,787             2,419,921
   Occupancy and equipment                        973,123               884,126
   Purchased services                             428,945               366,996
   Federal deposit insurance premiums              30,128                75,388
   Professional fees                              117,723                78,611
   Advertising                                     55,869                48,448
   Other                                          333,881               364,415
                                            --------------      ----------------
Total operating expenses                        4,749,456             4,237,905
                                            --------------      ----------------
INCOME BEFORE INCOME TAXES                      2,066,044             1,548,998

INCOME TAXES:
  Current                                         761,626               469,997
  Deferred                                        (20,771)               92,371
                                            --------------      ----------------
Total income taxes                                740,855               562,368

NET INCOME                                $     1,325,189       $       986,630
                                            ==============      ================
BASIC EARNINGS PER COMMON SHARE           $          0.19       $          0.14
                                            ==============      ================
DILUTED EARNINGS PER COMMON SHARE         $          0.18       $          0.13
                                            ==============      ================
Weighted average common shares
  outstanding                                   7,150,644             7,231,767
Potential dilutive effect of the
 exercise of stock options                         76,853                82,409
                                            --------------      ----------------
Adjusted weighted average
  common shares outstanding                     7,227,497             7,314,176
                                            ==============      ================

See notes to consolidated financial statements.

                                       2
<PAGE>


<TABLE>
<CAPTION>
FMS FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------------------------------------------
                                                                             Three Months ended
                                                                                  March 31
                                                                       -------------------------------
                                                                            2000           1999
------------------------------------------------------------------------------------------------------
                                                                                (Unaudited)
<S>                                                                   <C>             <C>
OPERATING ACTIVITIES:
Net income                                                             $  1,325,189    $    986,630
Adjustments to reconcile net income to net
   cash provided by operating activities:
Provision for loan losses                                                    60,000          60,000
Depreciation and amortization                                               487,432         638,767
Realized (gains) and losses on:
     Sale of loans and loans held for sale                                     (258)            (13)
     Disposal and sale of fixed assets                                          525          11,756
     Sale of real estate owned                                              (26,633)              0
Decrease in accrued interest receivable                                     338,766         288,596
(Increase) Decrease in prepaid expenses and other assets                   (149,606)        150,360
Decrease in accrued interest payable                                       (224,319)       (238,629)
Increase (Decrease) in other liabilities                                    247,333        (133,080)
Deferred income taxes                                                       (20,772)         16,556
                                                                       ------------    ------------
     Net cash provided by operating activities                            2,037,657       1,780,943
                                                                       ------------    ------------
INVESTING ACTIVITIES:
Proceeds from sale of:
     Education loans                                                         74,614             126
     Real estate owned                                                      157,633               0
Principal collected and proceeds from maturities of investment
  securities held to maturity                                             1,176,300      21,961,317
Proceeds from maturities of investment securities available for sale      3,041,603      31,033,583
Principal collected on mortgage-backed securities held to maturity        5,148,569       7,684,565
Principal collected on loans, net                                        14,389,009      14,310,843
Loans originated or acquired                                            (12,239,936)    (13,231,290)
Purchase of investment securities and mortgage-backed
  securities held to maturity                                           (35,246,579)    (49,165,133)
Purchase of investment securities and mortgage-backed
  securities available for sale                                                   0      (1,000,000)
Purchase of office property and equipment                                (2,686,773)       (781,478)
                                                                       ------------    ------------
     Net cash (used) provided by investing activities                   (26,185,560)     10,812,533
                                                                       ------------    ------------
FINANCING ACTIVITIES:
Net increase in demand deposits and savings accounts                     13,812,961       5,656,165
Net increase in time deposits                                            14,269,637       3,938,363
Net decrease in FHLB advances                                                     0         (31,290)
Proceeds from securities sold under agreements to repurchase            (10,000,000)              0
Increase in advances from borrowers for taxes and insurance                  38,155          40,708
Purchase of treasury stock                                               (1,073,609)       (208,010)
Dividends paid on common stock                                             (215,519)       (216,953)
                                                                       ------------    ------------
     Net cash provided by financing activities                           16,831,625       9,178,983
                                                                       ------------    ------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                         (7,316,278)     21,772,459
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                           46,275,871      29,896,391
                                                                       ------------    ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                               $ 38,959,593    $ 51,668,850
                                                                       ============    ============
Supplemental Disclosures:
     Cash paid for:
        Interest on deposits, advances, and other borrowings           $  6,840,139    $  6,196,494
        Income taxes                                                        159,143         425,238
     Non-cash investing and financing activities:
        Dividends declared and not paid at quarter end                      211,888         216,953
        Non-monetary transfers from loans to real estate acquired
        through foreclosure                                                 214,000               0
</TABLE>

See notes to consolidated financial statements


                                       3
<PAGE>
<TABLE>
<CAPTION>
FMS FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
---------------------------------------------------------------------------------------------------------------------------------
                                                                          Accumulated                                  Total
                                Common shares     Common     Paid-in     comprehensive    Retained     Treasury    Stockholders'
                                 outstanding      stock      capital         income       earnings       stock        Equity
--------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>           <C>        <C>          <C>            <C>          <C>            <C>
Balances at December 31, 1999      7,183,978     $789,779   $8,217,535   $ (1,167,810)  $42,108,955  $(3,851,456)   $46,097,003
Net Income                                                                                1,325,189                   1,325,189
Other comprehensive income
  Unrealized loss on securities
    available for sale                                                        (95,958)                                  (95,958)
                                                                                                                    ------------
Total comprehensive income                                                                                            1,229,231
                                                                                                                    ------------
Dividends declared                                                                         (211,888)                   (211,888)
Purchase of common stock            (121,052)                                                         (1,073,609)    (1,073,609)

--------------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 2000         7,062,926     $789,779   $8,217,535   $ (1,263,768)  $43,222,256  $(4,925,065)   $46,040,737
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.

                                       4
<PAGE>

ITEM 2:  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000.

FMS Financial Corporation (the "Corporation") may from time to time make written
or oral  "forward-looking  statements",  including  statements  contained in the
Corporation's  filings with the  Securities and Exchange  Commission  (including
this quarterly report on FORM 10-Q and the exhibits thereto),  in its reports to
stockholders and in other  communications by the Corporation,  which are made in
good faith by the  Corporation  pursuant to the "safe harbor"  provisions of the
Private Securities Litigation Reform Act of 1995.

These  forward-looking  statements  involve  risks  and  uncertainties,  such as
statements of the Corporation's plans, objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Corporation's  control).  The following  factors,  among
others, could cause the Corporation's financial performance to differ materially
from the plans, objectives,  expectations, estimates and intentions expressed in
such  forward-looking  statements:  the strength of the United States economy in
general  and the  strength  of the  local  economies  in which  the  Corporation
conducts operations;  the effects of, and changes in, trade, monetary and fiscal
policies and laws, including interest rate policies of the board of governors of
the federal  reserve  system,  inflation,  interest  rate,  market and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the  Corporation  and the perceived  overall value of these products
and services by users,  including the features,  pricing and quality compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Corporation's  products and services;
the success of the  Corporation in gaining  regulatory  approval of its products
and services,  when required;  the impact of changes in financial  services laws
and  regulations  (including  laws  concerning  taxes,  banking,  securities and
insurance);  technological changes,  acquisitions;  changes in consumer spending
and saving  habits;  year 2000  issues and the  success  of the  Corporation  at
managing the risks involved in the foregoing.

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

GENERAL

In the opinion of management,  the accompanying unaudited consolidated financial
statements of FMS Financial  Corporation contain all adjustments,  consisting of
normal recurring  accruals,  necessary for a fair  presentation of its financial
condition, results of operations, cash flows and changes in stockholders' equity
for the periods and dates  indicated.  The results of  operations  for the three
months  ended March 31, 2000 are not  necessarily  indicative  of the  operating
results for the full fiscal year or any other interim period.

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with the instructions for FORM 10-Q, and therefore, do not include
all  information  and  notes  necessary  for a fair  presentation  of  financial
condition, results of operations and statements of cash flows in conformity with
generally  accepted  accounting  principles.  These statements should be read in
conjunction  with the  consolidated  statements  and  related  notes  which  are
incorporated  by reference to the  Corporation's  annual report on FORM 10-K for
the year ended December 31, 1999. The consolidated  financial statements include
the Corporation's sole subsidiary, Farmers & Mechanics Bank ("the Bank").

                                       5
<PAGE>


FINANCIAL CONDITION -

Total  Assets - at March 31,  2000 were $790.6  million as  compared  with total
assets at December 31, 1999 of $772.5 million.

Investment  Securities  Held to  Maturity -  increased  $30.8  million to $251.1
million at March 31, 2000 from $220.3 million at December 31, 1999 primarily due
to the net purchase of $30.0 million of reverse  repurchase  agreements and $2.0
million in U.S. Agency notes,  partially  offset by $1.2 million in CMO paydowns
during the three  months  ended March 31, 2000.  Investment  securities  held to
maturity  at March 31,  2000  consisted  entirely  of fixed rate  securities.  A
comparison of cost and approximate  market values of investment  securities held
to maturity as of March 31, 2000 and December 31, 1999 follows:

<TABLE>
<CAPTION>
                                                March 31, 2000                                    December 31, 1999
                       -----------------------------------------------------------------  ----------------------------------
                                              Gross          Gross         Estimated                           Estimated
                           Amortized       Unrealized      Unrealized        Market           Amortized          Market
                              Cost            Gains          Losses          Value               Cost            Value
                       -----------------------------------------------------------------  ----------------------------------
<S>                   <C>               <C>           <C>              <C>                <C>                <C>
U. S. Gov't Agencies   $172,612,764      $       0     $  (8,374,429)   $ 164,238,335      $ 170,610,811      $ 161,851,452
CMOs                     46,992,238              0        (1,919,718)      45,072,520         48,187,121         46,481,467
Reverse Repurchase       30,000,000              0                 0       30,000,000                  0                  0
Municipal bonds           1,509,311          2,268                 0        1,511,579          1,509,310          1,509,954
                        --------------------------------------------------------------     ---------------------------------

Total                  $251,114,313      $   2,268     $  (10,294,147)  $ 240,822,434      $ 220,307,242      $ 209,842,873
                       ===============================================================     =================================
</TABLE>


Investment  Securities  Available  for Sale -  decreased  $3.2  million to $46.1
million at March 31, 2000 from $49.3 million at December 31, 1999 as a result of
$3.0 million of  principal  paydowns on CMOs during the three months ended March
31, 2000. Investment securities available for sale consisted of $42.4 million in
fixed rate  securities and $3.7 million in adjustable  rate  securities at March
31, 2000. A  comparison  of cost and  approximate  market  values of  investment
securities  available  for  sale as of March  31,  2000 and  December  31,  1999
follows:

<TABLE>
<CAPTION>
                                            March 31, 2000                                  December 31, 1999
                      -----------------------------------------------------------  -------------------------------
                                         Gross          Gross        Estimated                        Estimated
                         Amortized     Unrealized    Unrealized       Market          Amortized        Market
                            Cost         Gains         Losses          Value             Cost           Value
                      -----------------------------------------------------------  -------------------------------
<S>                  <C>            <C>          <C>            <C>               <C>            <C>
U. S. Gov't Agencies  $   10,292,101 $          0 $    (511,084) $     9,781,017   $   10,291,646 $     9,725,031
CMOs                      35,063,413       11,201    (1,409,223)      33,665,391       38,024,766      36,816,550
MBSs                       2,732,240            0       (67,210)       2,665,030        2,817,131       2,765,535
                      -----------------------------------------------------------  -------------------------------
Total                 $   48,087,754 $     11,201 $  (1,987,517) $    46,111,438   $   51,133,543 $    49,307,116
                      ===========================================================  ===============================

</TABLE>


                                       6

<PAGE>



Loans,  net - decreased  $2.5  million to $297.2  million at March 31, 2000 from
$299.7  million  at  December  31,  1999.   This  decrease  was  the  result  of
approximately $14.4 million of principal collected on loans, partially offset by
$12.2 million of loans originated  during the three months ended March 31, 2000.
The  following  table shows loans  receivable  by major  categories at the dates
indicated.

                                        March 31,        December 31,
                                           2000              1999
                                   -------------------------------------

Mortgage loans (1-4  dwelling)      $    234,585,317  $     236,912,182
Construction loans                           251,355            972,533
Commercial construction                    3,975,726          3,934,937
Consumer loans                             3,160,182          3,273,792
Commercial real estate                    53,218,751         52,543,711
Commercial business                        6,646,852          6,790,348
                                   -------------------------------------
Subtotal                                 301,838,183        304,427,503
                                   -------------------------------------
Less:
    Deferred loan fees                       838,506            892,019
    Allowance for possible
     loan losses                           3,802,698          3,840,967
                                   -------------------------------------
Net Loans Receivable                $    297,196,979  $     299,694,517
                                   =====================================

At March 31, 2000,  the recorded  investment in loans for which  impairment  has
been recognized in accordance with SFAS Nos. 114 and 118 totaled $3.2 million of
which  $1.1  million  related  to loans  that  were  individually  measured  for
impairment with a valuation allowance of $425 thousand and $2.1 million of loans
that were collectively measured for impairment with a valuation allowance of $75
thousand.  For the three  months  ended March 31,  2000,  the  average  recorded
investment in impaired loans was approximately $3.2 million. The Bank recognized
$33 thousand of interest income on impaired  loans,  all of which was recognized
on the cash basis. The Bank had $3.8 million in total reserves for possible loan
losses at March 31, 2000,  representing  approximately 119% of non-accrual loans
and 1.26% of total loans.

As of March 31, 2000 the Bank had outstanding  loan commitments of $5.7 million,
of  which  $2.8  million  represented  variable  rate  loans  and  $2.9  million
represented fixed rate loans. The Bank intends to fund these commitments through
scheduled  amortization  of loans  and  mortgage-backed  securities,  additional
borrowings  and if necessary  the sale of  investment  securities  available for
sale.

                                       7
<PAGE>

Non-Performing  Assets.  The following  table sets forth  information  regarding
non-accrual  loans,  troubled debt  restructured and real estate owned assets by
the Bank.


Non-Performing Assets:
                                                       March 31,    December 31,
                                                         2000           1999
--------------------------------------------------------------------------------
                                                        (Dollars in Thousands)
Loans accounted for on a non-accrual basis:
Mortgage loans:
     One-to-four family                                  $1,257         $1,386
     Commercial real estate                               1,895          1,510
     Consumer and other                                       1            237
                                                         ------         ------
         Total mortgage non-accrual loans                $3,153         $3,133
                                                         ------         ------
     Troubled debt restructuring                           $406           $462
     Real estate owned, net                                 532            449
     Other non-performing assets                             88             88
                                                         ------         ------
     Total non-performing assets                         $4,179         $4,132
                                                         ------         ------

     Total non-accrual loans to net loans                  1.06%          1.05%
                                                         ======         ======
     Total non-accrual loans to total assets               0.40%          0.41%
                                                         ======         ======
     Total non-performing assets to total assets           0.53%          0.53%
                                                         ======         ======

                                       8
<PAGE>

Mortgage-Backed  Securities  Held to Maturity - decreased $1.9 million to $119.5
million at March 31, 2000 from $121.4 million at December 31, 1999. The decrease
is the result of principal  paydowns of $5.1  million,  partially  offset by the
purchase  of $3.2  million  FNMA  adjustable  rate  securities.  Mortgage-backed
securities at March 31, 2000 consisted of $72.5 million in fixed rate securities
and $47.0 million in adjustable rate securities. Mortgage-backed securities held
to maturity at March 31, 2000 and December 31, 1999 are summarized below:


<TABLE>
<CAPTION>
                              March 31, 2000                            December 31, 1999
        ---------------------------------------------------------  ----------------------------
                            Gross        Gross
           Amortized      Unrealized   Unrealized     Estimated      Amortized      Estimated
              Cost          Gains       Losses      Market Value       Cost        Market Value
        ---------------------------------------------------------  ----------------------------
<S>    <C>            <C>            <C>           <C>            <C>             <C>
GNMA    $ 36,734,283   $    208,682   $ (1,074,570) $ 35,868,395   $ 37,742,389    $ 36,940,635

FNMA      51,177,968        199,590     (1,210,945)   50,166,613     50,801,575      49,845,090

FHLMC     31,556,556        324,401       (132,438)   31,748,519     32,880,455      33,029,307
        --------------------------------------------------------   ----------------------------

Total   $119,468,807   $    732,673   $ (2,417,953) $117,783,527   $121,424,419    $119,815,032
        ========================================================   ============================
</TABLE>


                                       9
<PAGE>

Office  Properties  and  Equipment - increased  $2.3 million to $23.0 million at
March 31, 2000 from $20.7 million at December 31, 1999.  The increase was due to
the purchase of a 24,000 square foot building in Burlington,  NJ, which is to be
renovated into a new larger operations  center and a bank branch.  The Bank also
purchased a bank building in Mount Laurel,  NJ, which will be opened as a branch
in May 2000.


Deposits -  increased  $28.1  million to $632.0  million at March 31,  2000 from
$603.9  million at December 31, 1999 as a result of an increase in  certificates
of deposit of $14.3 million,  non-interest  bearing  checking  accounts of $12.4
million,  savings  accounts of $5.4 million,  and money market  accounts of $804
thousand  partially  offset by a decrease in checking  accounts of $4.8 million.
Non-interest  checking  accounts  increased  due  to  the  promotions  of  "Free
Personal" and "Free Business" checking accounts. Interest credited to depositors
accounts for the three months ended March 31, 2000 amounted to $4.9 million. The
following tables set forth certain information  concerning deposits at the dates
indicated.

<TABLE>
<CAPTION>
                                       March 31, 2000                    December 31, 1999
                           -------------------------------------------------------------------------
                                          Percent    Weighted                  Percent    Weighted
                                          of Total   Average                   of Total    Average
                               Amount     Deposits     Rate         Amount     Deposits     Rate
                           -------------------------------------------------------------------------
<S>                        <C>           <C>         <C>        <C>             <C>        <C>
Non-interest checking       $94,940,821   15.02%      0.00%      $ 82,504,184    13.66%     0.00%
Checking accounts           101,740,105   16.10%      2.88%       106,541,028    17.64%     2.26%
Savings accounts            112,580,406   17.81%      2.68%       107,207,225    17.75%     2.67%
Money market accounts        66,387,770   10.50%      2.74%        65,583,704    10.86%     2.76%
Certificates                256,325,613   40.57%      4.92%       242,055,976    40.09%     4.92%
                       -----------------------------------------------------------------------------
   Total Deposits          $631,974,715  100.00%      3.27%      $603,892,117   100.00%     3.20%
                       =============================================================================
</TABLE>





Borrowings - at March 31, 2000 amounted to $106.3 million.  Borrowings consisted
of $10.0  million of 10%  Subordinated  Debentures,  $80.0 million in securities
sold under the agreement to repurchase with a weighted  average interest rate of
5.57% and $16.3  million  in  Federal  Home Loan Bank  Advances  with a weighted
average  interest  rate of 6.0%.  At December 31, 1999  borrowings  consisted of
$10.0 million of 10%  Subordinated  Debentures,  $90.0 million  securities  sold
under  agreements to repurchase with a weighted  average rate of 5.62% and $16.3
million in Federal Home Loan Bank Advances with a weighted average interest rate
of 6.00%.

                                       10
<PAGE>
RESULTS OF OPERATIONS -

General

The earnings of the Corporation  depend primarily upon the level of net interest
income,  which is the difference between interest earned on its interest-earning
assets such as loans and investments,  and the interest paid on interest-bearing
liabilities,  such as deposits  including  non-interest  checking  accounts  and
borrowings. Net interest income is a function of the interest rate spread, which
is the difference between the weighted average yield earned on  interest-earning
assets and the weighted average rate paid on  interest-bearing  liabilities,  as
well  as  the  average  balance  of  interest-earning   assets  as  compared  to
interest-bearing  liabilities.  Net  income  is also  affected  by  non-interest
income,  such as gains (losses) on the sale of loans and investments,  provision
for loan  losses and real estate  owned,  service  charges  and other fees,  and
operating  expenses:  such as salaries and employee benefits,  deposit insurance
premiums,  depreciation,  occupancy and equipment expense and purchased services
expense.

The Corporation recorded net income for the three months ended March 31, 2000 of
$1.3 million,  or $.18 diluted  earnings per share as compared to $987 thousand,
or $.13 diluted earnings per share for the comparable period in 1999.

                                       11
<PAGE>

Interest Rate Spread

The Bank's  interest  income is affected by the  difference  or  "interest  rate
spread" between yields received by the Bank on its  interest-earning  assets and
the  interest  rates  paid  by  the  Bank  on its  interest-bearing  liabilities
including non-interest checking accounts. Net interest income is affected by (i)
the spread between the yield earned on interest-earning  assets and the interest
rates paid on interest-bearing  savings deposits including non-interest checking
accounts  and  borrowings   (liabilities)  and  (ii)  the  relative  amounts  of
interest-earning assets versus interest-bearing liabilities. The Bank's interest
rate spread varies over time because money fund accounts and other flexible rate
accounts  have  become  significant  sources of savings  deposits.  Income  from
investment  securities and  mortgage-backed  securities  depends upon the amount
invested during the period and the yields earned on such  securities.  The yield
on loans receivable  changes  principally as a result of existing  mortgage loan
repayments,  adjustable rate loan adjustments,  sales and the interest rates and
volume of new mortgage loans.

The following table sets forth certain information relating to the Corporation's
average balance sheet and reflects the average yield on assets and average rates
paid on liabilities for the periods indicated. Such yields and rates are derived
by dividing income or expense by the average balance of interest-earning  assets
or interest-bearing liabilities, respectively, for the periods presented:

<TABLE>
<CAPTION>
                                                        Year-to-Date-Ended March 31,
                                 ---------------------------------------------------------------------------
                                                2000                                    1999
                                 -----------------------------------    ------------------------------------
                                  Average                  Average        Average                  Average
                                  Balance     Interest   Yield/Rate       Balance    Interest    Yield/Rate
                                 ---------   ----------  -----------    ---------   ------------  ----------
                                                           (Dollars in Thousands)
<S>                              <C>        <C>          <C>            <C>         <C>          <C>
Interest-earning assets:
     Loans receivable             $302,777   $  5,756       7.60%        $300,466    $  5,659       7.53%
     Mortgage-backed securities    122,551      2,044       6.67%          86,147       1,496       6.95%
     Investment securities         305,142      4,977       6.52%         257,112       3,998       6.22%
                                  --------   --------     -------        --------    --------     -------
Total interest-earning
        assets                     730,470     12,777       7.00%         643,725      11,153       6.93%
                                  --------   --------     -------        --------    --------     -------
Interest-bearing liabilities:
     Deposits                      605,920      4,941       3.26%         534,038       4,334       3.25%
     Borrowings                     99,678      1,410       5.66%          96,572       1,360       5.63%
     Subordinated debentures        10,000        264      10.56%          10,000         264      10.56%
                                  --------   --------     -------        --------    --------     -------
Total interest-bearing
        liabilities               $715,598      6,615       3.70%        $640,610       5,958       3.72%
                                  ========   ========     =======        ========    ========     =======
Net interest income                          $  6,162                                $  5,195
                                             =========                               ========
Interest rate spread                                        3.30%                                   3.21%
                                                          =======                                 =======
Net yield on average
  interest-earning assets                                   3.37%                                   3.23%
                                                          =======                                 =======
Ratio of average interest-
  earning assets to average
  interest-bearing liabilities                            102.08%                                 100.49%
                                                          =======                                 =======
</TABLE>

                                       12
<PAGE>


Rate/Volume Analysis

The following  table describes the extent to which changes in interest rates and
changes in volume of interest-earning  assets and  interest-bearing  liabilities
have affected the Bank's interest income and interest expense during the periods
indicated.  For each category of  interest-earning  assets and  interest-bearing
liabilities,  information is provided on changes  attributable to (i) changes in
rate,  (ii)  changes in volume and (iii)  total  changes in rate and volume (the
combined  effect of changes in both volume and rate, not separately  identified,
has been  allocated  to rate).  Due to the fact that  average  balances on loans
include  non-performing loans which reduce the computed yield, a higher level of
non-performing loans affects both the changes due to volume and rate.

                                               Three Months Ended
                                                     March 31,
                                               2000 compared to 1999
                                        ----------------------------------
                                            Increase (Decrease) due to:
                                           Rate         Total      Volume
                                        ----------------------------------
                                                 (In Thousands)
Interest income:
  Loans receivable                      $    53        $   44      $   97
  Mortgage-backed securities                (84)          632         548
  Investment securities                     232           747         979
                                        ----------------------------------

   Total change - interest income           201         1,423       1,624
                                        ----------------------------------
Interest expense:
  Deposits                                   24           583         607
  Borrowings                                  6            44          50
  Subordinated debentures                     0             0           0
                                        ----------------------------------

   Total change - interest expense           30           627         657
                                        ----------------------------------

Net change in net interest income       $   171        $  796      $  967
                                        ==================================


                                       13
<PAGE>


Net Interest  Income - the increase in net interest  income for the three months
ended March 31, 2000 totaled $967  thousand was  primarily due to an increase in
interest  income of $1.6  million,  partially  offset by an increase in interest
expense of $657 thousand.

The  increase  in  interest  income was  primarily  the result of an increase in
investment  securities interest income of $979 thousand.  The average balance of
investment  securities  increased  $48.0 million to $305.1 million for the three
months  ended March 31,  2000 from  $257.1  million for the same period in 1999,
which resulted in a volume  increase of $747 thousand.  The average yield of the
investment  portfolio  increased 30 basis points to 6.52% for the quarter  ended
March 31,  2000 from 6.22% for the same  period in 1999,  which  resulted  in an
interest income  increase of $232 thousand due to rate changes.  The increase in
average  balance  during these  periods was  primarily  due to $74.7  million of
purchases  of U.S.  Agency  Notes,  partially  offset  by $32.8  million  of CMO
principal paydowns.

The average  balance of the MBSs  increased  $36.5 million to $122.6 million for
the three months ended March 31, 2000 from $86.1  million for the same period in
1999,  which resulted in a volume  increase in interest income of $632 thousand,
partially  offset by a decrease in the average  yield of 28 basis point to 6.67%
for the three  months  ended March 31, 2000 from 6.95% during the same period in
1999,  which resulted in a $84 thousand  decrease in interest  income from lower
rates. The increase in the average volume during these periods was primarily due
to $49.5 million of purchase of mortgage backed securities,  partially offset by
principal paydowns of $23.9 million.

The  increase in interest  expense  was  primarily  the result of an increase in
interest  expense on deposits of $607 thousand.  The average balance of deposits
increased $71.9 million, which resulted in a volume increase in interest expense
of $583  thousand for the three months ended March 31, 2000 compared to the same
period in 1999.  The weighted  average rates paid on deposits  increased 1 basis
point to 3.26% for the three months ended March 31, 2000 from 3.25% for the same
period in 1999,  which  resulted  in an  increase  in  interest  expense  of $24
thousand.

Provision for Loan Losses - for the first  quarter of 2000 remained  constant at
$60 thousand.  At March 31, 2000 the allowance for possible loan losses amounted
to $3.8 million compared to $3.4 million at March 31, 1999. The determination of
the  allowance  level for loan losses is based on  management's  analysis of the
risk  characteristics of various  classifications  of loans,  previous loan loss
experience,  estimated  fair  value of the  underlying  collateral  and  current
economic conditions.  The Corporation will continue to monitor its allowance for
loan losses and make future  adjustments to the allowance  through the provision
for loan losses as economic conditions dictate.  Management continues to offer a
wider variety of loan products  coupled with the continued  change in the mix of
the products  offered in the loan portfolio from lower yielding loans (i.e., one
to four family loans) to higher  yielding  loans (i.e.,  commercial  real estate
mortgage, commercial construction, consumer, and commercial business) which have
a higher degree of risk than one to four family loans.  Although the Corporation
maintains  its  allowance  for loan  losses at a level that it  considers  to be
adequate to provide for the inherent risk of loss in its loan  portfolio,  there
can be no assurance that future losses will not exceed estimated amounts or that
additional provisions for loan losses will not be required in future periods due
to the higher  degree of credit risk which  might  result from the change in the
mix of the loan portfolio. Most of the Bank's lending activity is with customers
located  within  southern New Jersey.  Generally,  the loans are secured by real
estate consisting of single family residential properties. While this represents
a  concentration  of credit risk,  the credit  losses  arising from this type of
lending  compare  favorably  with  the  Bank's  credit  loss  experience  on its
portfolio as a whole.  The  ultimate  repayment of these loans is dependent to a
certain degree on the local economy and real estate market.

                                       14
<PAGE>

Operating Expenses - for the first quarter of 2000 totaled $4.7 million, as
compared to $4.2 million for the same period in 1999.

Salaries  and  Employee  Benefits  - for the  first  quarter  of 2000  were $2.8
million,  as compared to $2.4 million for the same period in 1999.  The increase
was due to additional staff in three new branches opened since the first quarter
of 1999.  Average full time  equivalent  employees at March 31, 2000 were 413 as
compared to 378 at March 31, 1999.

Occupancy  and  Equipment  - for the  first  quarter  of 2000  amounted  to $973
thousand,  compared  to $884  thousand  for the same  period  in  1999.  The $89
thousand  increase  is the  result of  additional  depreciation  and  occupation
expenses on the new branches opened as well as other facility  improvements  and
new computer  equipment  additions between the quarters ended March 31, 2000 and
March 31, 1999.

Purchased  Services - for the first quarter of 2000  amounted to $429  thousand,
compared to $367 thousand for the same period of 1999. ATM charges increased $27
thousand,  compared to the same period in 1999 and check  processing  costs have
increased  $26  thousand  for three  months  ended  March 31, 2000 due to higher
transaction volumes.

Federal  Deposit  Insurance  Premiums - for the first  quarter  amounted  to $30
thousand  compared to $75  thousand  for the same period in 1999.  Beginning  in
January 2000, the FDIC reduced deposit  insurance  premiums  assessments from an
annual rate of .061% to an annual rate of .021 % on total deposits.

ITEM 3:  DISCLOSURE ABOUT MARKET RISK

There were no significant changes for the three months ended March 31, 2000 from
the  information  presented in the annual report on Form 10-K for the year ended
December 31, 1999.

                                       15
<PAGE>



PART II.          OTHER INFORMATION
                  -----------------



    Item 1:       Legal Proceedings
    -------       -----------------

                  None


    Item 2:       Changes in Securities
    -------       ---------------------

                  None


    Item 3:       Defaults Upon Senior Securities
    -------       -------------------------------

                  None


    Item 4:       Submission of Matters to Vote of Security of Holders
    -------       ----------------------------------------------------

                  None

    Item 5:       Other Information
    -------       -----------------

                  None


    Item 6:       Exhibits and Reports on Form 8-K
    -------       --------------------------------

       (a)        (27) Financial Data Schedule (Electronic data filing only)




                                       16

<PAGE>








                                S I G N A T U R E





     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.





FMS FINANCIAL CORPORATION




Date: May 11, 2000                        /s/ Craig W. Yates
          --                              -------------------------------------
                                          Craig W. Yates
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)



Date: May 11, 2000                        /s/ Channing L. Smith
          --                              -------------------------------------
                                          Channing L. Smith
                                          Vice President and
                                          Chief Financial Officer
                                          (Principal Financial Officer)