U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

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

                                   FORM 10-KSB

                                   (Mark One)
[ X ] ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                   For the fiscal year ended December 31, 2001

                                       or

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

 For the transition period from _______________________ to ____________________

                        Commission File Number 000-26587


                         COMMUNITY BANCORP OF NEW JERSEY
             (Exact name of registrant as specified in its charter)

          New Jersey                                        22-3666589
-------------------------------                   ------------------------------
(State of other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                              Identification No.)

3535 Highway 9 North, Freehold, New Jersey                      07728
------------------------------------------                   -------------
 (Address of principal executive offices)                     (Zip Code)

                                 (732) 863-9000
     ----------------------------------------------------------------------
                (Issuer's telephone number, including area code)

   ---------------------------------------------------------------------------
   (Former name, former address and former year, if changed since last report)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock,
                                                                    no par value

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  and 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-B is not contained herein, and will not be contained, to the
best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB[ _ ] or any amendment
to this Form 10-KSB.[ X ]

Issuer's revenues for its most recent fiscal year $15,593,000. The aggregate
market value of voting and non-voting equity held by non-affiliates was
$25,794,116.

As of March 4, 2002, there were 2,014,729 shares of common stock, no par value
per share outstanding.


<PAGE>


<TABLE>
<CAPTION>


                       DOCUMENTS INCORPORATED BY REFERENCE



                        10-KSB Item Document Incorporated

<S>             <C>                                            <C>
Item 9.          Directors and Executive Officers               Proxy Statement for Meeting of 2002
                 of the Company;  Compliance with               Annual Shareholders to be filed nolater
                 Section 16(a) of the Exchange Act              than April 30, 2002.


Item10.          Executive Compensation                         Proxy  Statement for 2002 Annual
                                                                Meeting of  Shareholders  to be
                                                                filed no later than April 30, 2002.


Item 11.         Security Ownership of Certain                  Proxy Statement for 2002 Annual
                 Beneficial Owners and Management               Meeting of Shareholders to be filed no
                                                                later than April 30, 2002.

Item 12.         Certain Relationships and Related              Proxy Statement for 2002 Annual
                 Transactions                                   Meeting of Shareholders to be filed no
                                                                later than April 30, 2002.
</TABLE>



                                       2
<PAGE>


                                     PART I

                       ITEM 1. -- DESCRIPTION OF BUSINESS

General

     The  Community  Bancorp  of  New  Jersey  is  a  one-bank  holding  company
incorporated  under the laws of New Jersey to serve as the  holding  company for
the  Community  Bank of New Jersey.  We were  organized at the  direction of the
Board of Directors  of the Bank for the purpose of acquiring  all of the capital
stock of the Bank. We are  registered  as a bank holding  company under the Bank
Holding  Company Act of 1956,  as  amended.  Our only  significant  asset is our
investment  in the Bank.  Our main  office is located  at 3535  Highway 9 North,
Freehold, New Jersey.

     The Bank is a  commercial  bank  formed  under the laws of the State of New
Jersey in 1997.  The Bank operates from its main office at 3535 Highway 9 North,
Freehold,  New Jersey  07728,  and six  branch  offices  located in Colts  Neck,
Freehold, Howell, Matawan, Manalapan and Shrewsbury, New Jersey.

     Our  deposits are insured by the Bank  Insurance  Fund (BIF) of the Federal
Deposit Insurance  Corporation (FDIC) up to applicable limits. The operations of
the Bank are subject to the  supervision  and regulation of the FDIC and the New
Jersey  Department  of Banking and  Insurance  (the  Department).  The principal
executive offices of the Bank are located at 3535 Highway 9 North, Freehold, New
Jersey 07728, and the telephone number is (732) 863-9000.

Business of the Bank

     The Bank  conducts a  traditional  commercial  banking  business and offers
services  including  personal and business  checking accounts and time deposits,
money market  accounts and regular  savings  accounts.  The Bank  structures its
specific  services  and charges in a manner  designed to attract the business of
(i) small and  medium-sized  businesses,  and the owners and  managers  of these
entities; (ii) professionals and middle managers of locally-based  corporations;
(iii) residential  real-estate tract developers;  and (iv) individuals residing,
working, and shopping in the Monmouth,  Middlesex,  and Ocean County, New Jersey
trade area  serviced  by the Bank.  The Bank  engages in a wide range of lending
activities and offers  commercial,  consumer,  residential  and  non-residential
mortgage and  construction  loans.  In  addition,  we are seeking to enhance our
non-interest income, primarily through strategic partnerships or agreements with
third party service providers.

Service Area

     Our service area primarily consists of the Monmouth,  Middlesex,  and Ocean
County,  New Jersey market,  although we make loans  throughout New Jersey.  The
Bank  operates  its main office in  Freehold  Township,  New Jersey,  and branch
offices  in  Colts  Neck,  Freehold  Borough,  Howell,  Manalapan,  Matawan  and
Shrewsbury, New Jersey.

Competition

     The  Bank  operates  in a  highly  competitive  environment  competing  for
deposits  and  loans  with  commercial  banks,   thrifts,  and  other  financial
institutions,  many of which have greater  financial  resources than we do. Many
large  financial  institutions  compete for business in the Bank's service area.
Certain of these institutions have  significantly  higher lending limits than we
do and provide services to their customers which the Bank does not offer.

     Management  believes we are able to compete  favorably with our competitors
because we provide  responsive  personalized  services through our knowledge and
awareness of the Bank's service area, customers, and business.

Employees

     At December  31, 2001,  the Bank  employed 83  full-time  employees  and 23
part-time  employees.  None of  these  employees  are  covered  by a  collective
bargaining agreement and we believe that our employee relations are good.




                                       3
<PAGE>


Supervision and Regulation

     Bank  holding  companies  and banks are  extensively  regulated  under both
federal  and state  laws.  These laws and  regulations  are  intended to protect
depositors,  not  stockholders.  To the extent  that the  following  information
describes statutory and regulatory  provisions,  it is qualified in its entirety
by reference to the particular statutory and regulatory  provisions.  Any change
in the applicable  law or regulation may have a material  effect on our business
and prospects.

                         BANK HOLDING COMPANY REGULATION

General

     As a bank holding company  registered under the Bank Holding Company Act of
1956, as amended,  (the BHCA),  we are subject to the regulation and supervision
of the Board of Governors of the Federal  Reserve System (FRB).  We are required
to file with the FRB annual reports and other information regarding our business
operations and those of our subsidiaries.

     The BHCA requires, among other things, the prior approval of the FRB in any
case where a bank holding company  proposes to (i) acquire all or  substantially
all of the assets of any other bank,  (ii) acquire direct or indirect  ownership
or control or more than 5% of the  outstanding  voting stock of any bank (unless
it owns a majority of such bank's voting  shares) or (iii) merge or  consolidate
with any other bank holding  company.  The FRB will not approve any acquisition,
merger,  or  consolidation  that  would  have a  substantially  anti-competitive
effect,  unless  the  anti-competitive  impact of the  proposed  transaction  is
clearly  outweighed by a greater public  interest in meeting the convenience and
needs of the community to be served. The FRB also considers capital adequacy and
other financial and managerial  resources and future  prospects of the companies
and the  banks  concerned,  together  with  the  convenience  and  needs  of the
community to be served, when reviewing acquisitions or mergers.

     In addition, the BHCA was amended through the Gramm-Leach-Bailey  Financial
Modernization Act of 1999 (the GLBA).  Under the terms of the GLBA, bank holding
companies whose subsidiary banks meet certain capital,  management and Community
Reinvestment  Act standards are permitted to engage in a  substantially  broader
range of non-banking  activities than is permissible for bank holding  companies
under the BHCA.  These  activities  include  certain  insurance,  securities and
merchant banking activities. In addition, the GLBA amendments to the BHCA remove
the requirement for advance regulatory  approval for a variety of activities and
acquisitions  by  financial  holding  companies.  As our  business is  currently
limited to banking activities, we have not elected to become a financial holding
company.

     There are a number of obligations and restrictions  imposed on bank holding
companies and their  depository  institution  subsidiaries by law and regulatory
policy that are designed to minimize  potential  loss to the  depositors of such
depository institutions and the FDIC insurance funds in the event the depository
institution becomes in danger of default. Under a policy of the FRB with respect
to bank holding company operations,  a bank holding company is required to serve
as a source of financial strength to its subsidiary depository  institutions and
to commit resources to support such institutions in circumstances where it might
not do so absent such policy.  The FRB also has the authority  under the BHCA to
require a bank  holding  company to  terminate  any  activity  or to  relinquish
control of a non-bank subsidiary upon the FRB's determination that such activity
or control  constitutes a serious risk to the financial  soundness and stability
of any bank subsidiary of the bank holding company.

Capital Adequacy Guidelines for Bank Holding Companies

     The  FRB  has  adopted  risk-based  capital  guidelines  for  bank  holding
companies.  The risk-based  capital  guidelines are designed to make  regulatory
capital  requirements  more sensitive to differences in risk profile among banks
and bank holding  companies,  to account for off-balance sheet exposure,  and to
minimize disincentives for holding liquid assets. Under these guidelines, assets
and  off-balance  sheet items are  assigned to broad risk  categories  each with
appropriate  weights.  The  resulting  capital  ratios  represent  capital  as a
percentage of total risk-weighted assets and off-balance sheet items.

     The risk-based  guidelines  apply on a  consolidated  basis to bank holding
companies with consolidated assets of $150 million or more. The minimum ratio of
total capital to  risk-weighted  assets  (including  certain  off-balance  sheet
activities,


                                       4
<PAGE>


such as standby  letters  of credit) is 8%. At least 4% of the total  capital is
required to be "Tier I", consisting of common  stockholders'  equity and certain
preferred stock,  less certain goodwill items and other intangible  assets.  The
remainder,  "Tier II Capital",  may consist of (a) the allowance for loan losses
of up to 1.25% of  risk-weighted  assets,  (b)  excess of  qualifying  preferred
stock,  (c) hybrid  capital  instruments,  (d) debt,  (e) mandatory  convertible
securities,  and (f) qualifying  subordinated  debt. Total capital is the sum of
Tier  I  and  Tier  II  capital  less  reciprocal   holdings  of  other  banking
organizations' capital instruments,  investments in unconsolidated  subsidiaries
and any other  deductions as determined by the FRB (determined on a case-by-case
basis or as a matter of policy after formal rule-making).

     Bank  holding  company  assets are given  risk-weights  of 0%, 20%, 50% and
100%. In addition,  certain  off-balance  sheet items are given  similar  credit
conversion  factors  to  convert  them to asset  equivalent  amounts to which an
appropriate  risk-weight  will  apply.  These  computations  result in the total
risk-weighted assets. Most loans are assigned to the 100% risk category,  except
for performing first mortgage loans fully secured by residential  property which
carry a 50% risk-weighting.  Most investment securities  (including,  primarily,
general  obligation  claims  of states or other  political  subdivisions  of the
United  States) are assigned to the 20% category,  except for municipal or state
revenue bonds, which have a 50% risk-weight,  and direct obligations of the U.S.
Treasury  or  obligations  backed  by the  full  faith  and  credit  of the U.S.
Government,  which have a 0% risk-weight. In converting off-balance sheet items,
direct credit  substitutes  including general  guarantees and standby letters of
credit backing financial  obligations are given 100% risk-weighing.  Transaction
related  contingencies  such as bid bonds,  standby  letters  of credit  backing
non-financial obligations,  and undrawn commitments (including commercial credit
lines with an initial maturity of more than one year) have a 50%  risk-weighing.
Short-term  commercial  letters of credit have a 20%  risk-weighing  and certain
short-term unconditionally cancelable commitments have a 0% risk-weighing.

     In addition to the  risk-based  capital  guidelines,  the FRB has adopted a
minimum Tier I capital (leverage) ratio, under which a bank holding company must
maintain a minimum level of Tier I capital to average total consolidated  assets
of at least  3% in the  case of a bank  holding  company  that  has the  highest
regulatory  examination  rating and is not contemplating  significant  growth or
expansion.  All other bank holding companies are expected to maintain a leverage
ratio of at least 100 to 200 basis points above the stated minimum.

Bank Regulation

     As a New  Jersey-chartered  commercial  bank,  the Bank is  subject  to the
regulation,  supervision,  and  control of the  Department.  As an  FDIC-insured
institution,  the Bank is subject to regulation,  supervision and control of the
FDIC, an agency of the federal  government.  The regulations of the FDIC and the
Department  impact  virtually all activities of the Bank,  including the minimum
level  of  capital  the  Bank  must  maintain,  the  ability  of the Bank to pay
dividends,   the  ability  of  the  Bank  to  expand  through  new  branches  or
acquisitions  and various other matters.  The FDIC also imposes a risk-based and
leverage capital  requirement on the Bank. These  requirements are substantially
similar to the capital requirements imposed by the FRB.

     In addition  to the capital  adequacy  requirements  of the FDIC  discussed
above,  pursuant to the order of the Commissioner of the Department granting the
Bank a charter,  the Bank is required  to maintain a ratio of equity  capital to
total assets of at least 10% for our first five (5) years of operations.  During
2001, the Commissioner  amended this order to reduce this capital requirement to
8%. As of December 31, 2001,  the Bank's ratio of equity capital to total assets
was 8.51%. This increased capital requirement will end in May 2002, and the Bank
will then be subject only to the standard capital requirements discussed above.

Insurance of Deposits

     The Bank's  deposits are insured up to a maximum of $100,000 per  depositor
under  the  BIF.  The  FDIC  has  established  a  risk-based  insurance  premium
assessment  system  under  which the FDIC has  developed  a matrix that sets the
assessment  premium for a particular  institution in accordance with its capital
level  and  overall  regulatory  rating  by the  institutions'  primary  federal
regulator.  Under the matrix that is currently in effect,  the  assessment  rate
ranges  from 0 to 27 basis  points of  assessed  deposits.  In  addition  to the
deposit insurance premium  assessment,  under the Deposit Insurance Funds Act of
1996 (the Deposit Act), BIF insured  institutions  like the Bank are required to
contribute  to the debt service and  principal  repayment on bonds issued by the
Federal  Finance  Corporation  (FICO) in the  mid-1980s to fund a portion of the
thrift  bailout.  This  assessment  is  currently  set at 1.82  basis  points of
assessed deposits.



                                       5
<PAGE>


                       ITEM 2. -- DESCRIPTION OF PROPERTY

     The Bank conducts its business through its main office located at 3535
Highway 9 North, Freehold, New Jersey, and its six branch offices. The following
table set forth certain information regarding the Bank's properties as of
December 31, 2001.
<TABLE>
<CAPTION>

                                                                                           Date of lease
                          Location                            Leased or owned               expiration
         -----------------------------------------            ---------------           ------------------

<S>      <C>                                                     <C>                   <C>
         26 Route 34 South, Colts Neck, NJ                        Leased                May 2021

         3535 Highway 9 North, Freehold, NJ                        Owned                N/A

         31 East Main Street, Freehold, NJ                        Leased                August 2002

         4502 Highway 9 South, Howell, NJ                         Leased                August 2013

         267 Main Street, Matawan, NJ                             Leased                February 2019

         191 Route Nine South, Manalapan, NJ                       Owned                N/A

         541 Sycamore Avenue, Shrewsbury, NJ                      Leased                June 2011
</TABLE>

                          ITEM 3. -- LEGAL PROCEEDINGS

     We are periodically a party to or otherwise  involved in legal  proceedings
arising  in the normal  course of  business,  such as claims to  enforce  liens,
claims  involving  the making and servicing of real  property  loans,  and other
issues  incident to our business.  Management does not believe that there is any
pending or threatened  proceeding  against us which,  if  determined  adversely,
would have a material effect on our business or financial position.

         ITEM 4. -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted for a vote of the registrant's shareholders
during the fourth quarter of fiscal 2001.

                                     PART II
                                     -------

       ITEM 5. -- MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock is traded on the NASDAQ  SmallCap  market under the symbol
CBNJ. The following table shows the high and low bid prices for the common stock
as reported on the Nasdaq  SmallCap market for 2000 and 2001.  These  quotations
reflect inter-dealer prices, without retail market, mark-down, or commission and
may not  represent  actual  transactions.  These  prices  have been  restated to
reflect our 5% stock dividends paid in 2001 and 2000.

                                                                  2001
                                                        ------------------------
                                                          High             Low
                                                          ----             ---

             1st  Quarter . . . . . . . . .              $ 14.51         $ 12.24
             2nd Quarter . . . . . . . . .                 20.19           13.72
             3rd Quarter . . . . . . . . .                 17.74           14.50
             4th Quarter . . . . . . . . .                 17.10           14.30

                                                                  2000
                                                        ------------------------
                                                          High             Low
                                                          ----             ---

             1st  Quarter . . . . . . . . .              $ 14.29         $ 10.88
             2nd Quarter . . . . . . . . .                 13.33           10.48
             3rd Quarter . . . . . . . . .                 14.29           12.14
             4th Quarter . . . . . . . . .                 14.29           11.90



                                       6
<PAGE>


     We have not paid cash dividends and do not anticipate paying cash dividends
in the foreseeable future as we use our retained earnings to augment our capital
and fund our future growth.

     On April 5, 2000,  our Board of Directors  declared a 5% stock  dividend on
our common stock. On April 9, 2001, our Board declared a 5% stock dividend.  Our
Board will consider the issuance of future stock dividends based upon our future
financial performance, capital standing and the market value of our stock.

     As of December 31, 2001, we had 427 shareholders of record.


                 ITEM 6. -- MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                              RESULTS OF OPERATIONS

                          Year Ended December 31, 2001

                              OVERVIEW AND STRATEGY
                              ---------------------

     Community Bancorp of New Jersey is a one bank holding company  incorporated
under the laws of New Jersey to serve as the holding  company for the  Community
Bank of New Jersey.  The Company  acquired all the capital  stock of the Bank in
July 1999.  The Bank  commenced  operations  in 1997 with the goal of  providing
first  class  banking  services  through  a  locally   headquartered   financial
institution,  offering  customers  direct access to senior officers and decision
makers. We seek to serve individuals,  professionals, small businesses, and real
estate  developers in our  Monmouth,  Middlesex,  and Ocean County,  New Jersey,
trade area,  whom we believe are not  adequately  served by larger  regional and
multi-state financial  institutions.  Since it commenced operations in 1997, the
Company has increased its asset base at a rapid pace. Our assets have grown from
$34.8  million at December  31, 1997 to $245.6  million at December  31, 2001, a
compound  annual  growth rate of 63.0%.  This  growth has come both  through our
success in penetrating our original market in the Freehold, New Jersey area, and
through  expansion  into other market areas in New Jersey.  We opened our second
office in downtown Freehold,  New Jersey, in September 1997, our third office in
Howell,  New Jersey, in November 1998, our fourth office in Matawan,  New Jersey
in February  1999,  our fifth office in Manalapan,  New Jersey in November 1999,
our sixth office in Colts Neck,  New Jersey in July 2001 and our seventh  office
in Shrewsbury, New Jersey in October 2001.

Results of Operations

     Our results of  operations  depend  primarily on our net  interest  income,
which  is  the   difference   between  the  sum  of  interest  we  earn  on  our
interest-earning  assets and loan  origination  fees and the  interest we pay on
deposits  and borrowed  funds used to support our  interest-earning  assets.  In
addition,  the Bank earns fee income,  primarily through service fees on deposit
accounts and non-interest  related service fees on loans. Net interest spread is
the  difference  between the weighted  average  rate earned on interest  earning
assets and the weighted average rate paid on interest bearing  liabilities.  Net
interest  margin is a function of the  difference  between the weighted  average
rate earned on  interest-earning  assets and the  weighted  average rate paid on
interest-bearing  liabilities,  as well as the average level of interest-earning
assets as compared with that of interest-bearing liabilities. Net income is also
affected by the amount of non-interest income and operating expenses.

Net Income

     For the year ended December 31, 2001, net income  increased to $1.5 million
or $0.75 per share for basic and $0.74 per share for diluted earnings,  compared
to net  income of $1.2  million  or $0.57 per share for both  basic and  diluted
shares for the same period in 2000.




                                       7
<PAGE>


     The increase in net income was primarily  due to a $2.3  million,  or 35.4%
increase  in  net  interest  income  and an  increase  in  non-interest  income,
partially  offset by an  increase  in the  provision  for loan losses and higher
non-interest  expense and higher  income tax  expense.  The  improvement  in net
income is attributable  to our continued rapid growth.  The results for the year
ended December 31, 2000 were also positively  affected as tax expense was offset
by the benefit from the reduction in our valuation allowance on our deferred tax
asset.  We would have reported  additional  income tax expense of  approximately
$383 thousand without the benefit from this valuation  allowance  reduction.  At
December  31,  2000,  no balance  remained  in our  valuation  allowance  on the
deferred tax asset, and our operations in 2001 were fully taxable.

Net Interest Income

     For the year ended December 31, 2001, we recognized net interest  income of
$8.6 million as compared to $6.3  million for the year ended  December 31, 2000.
The  increase  in net  interest  income was  largely  due to an  increase in the
average balance of interest  earning assets,  which increased $47.2 million,  or
33.0%, to $190.2 million from $143.0 million.  The increase reflects an increase
in average  loans  outstanding  of $40.8  million,  or 41.8% and an  increase in
average investment securities of $8.9 million, or 27.7% over the 2000 period.

     The increase in net interest  income for the year ended  December 31, 2000,
as compared to the year ended  December 31, 1999, was largely due to an increase
in the  average  balance  of  interest-earning  assets,  which  increased  $51.7
million,  or 56.6%, to $143.0 million from $91.3 million.  The increase reflects
an increase  in average  loans  outstanding  of $34.3  million,  or 54.1% and an
increase in average investment  securities of $19.7 million,  or 158.9% over the
1999 period.

     Primarily  as  a  result  of  the  increase  in  the  average   balance  of
interest-earning  assets, our interest income increased to $14.2 million for the
year ended December 31, 2001, from $11.3 million for the year ended December 31,
2000.  The  improvement in interest  income was primarily due to  volume-related
increases in income from the loan  portfolio of $3.5 million and  volume-related
increases in income of $553  thousand in the  investment  securities  portfolio,
partially  offset by  volume-related  decreases  in income of $155  thousand  in
Federal  funds  sold.  In  addition to the net  volume-related  increases,  rate
related decreases amounting to $1.0 million resulted as the average yield on our
interest-earning  assets decreased to 7.45% for the year ended December 31, 2001
from 7.89% for the year ended  December  31,  2000 from 7.30% for the year ended
December 31, 1999.

     Total interest expense  increased 14.3% to $5.6 million for the 2001 period
from $4.9  million for the 2000  period.  This  increase in interest  expense is
primarily  related to the  increase in the average  balance of  interest-bearing
liabilities, which increased $38.4 million to $144.5 million for the 2001 period
compared to $106.1  million for the 2000  period.  Volume-related  increases  in
interest  expense  accounted  for $2.0  million of  increased  expense  and were
partially  offset  by rate  reductions  amounting  to $1.4  million  in  reduced
expense.  The volume  related  increases  in  interest-bearing  liabilities  and
expense-rate  reductions were the result of marketing and pricing decisions made
by  management  in  response  to the need for cost  effective  sources of funds,
primarily to fund loan growth.  These decisions  resulted in the decrease in the
cost of interest-bearing liabilities to 3.87% for the 2001 period from 4.66% for
the 2000 period.

     The  relatively  consistent  net interest  margin of 4.51% realized in 2001
compared to 4.43% realized in 2000 resulted primarily from timely implementation
of asset/liability management strategies as the Federal Reserve Bank reduced the
target funds rate by 475 basis points in 11 rate reductions to 1.75% by December
31, 2001.

     The following table reflects, for the periods presented,  the components of
our net interest  income,  setting forth: (1) average assets,  liabilities,  and
stockholders' equity, (2) interest income earned on interest-earning  assets and
interest  expenses  paid on  interest-bearing  liabilities,  (3) average  yields
earned on  interest-earning  assets and average  rates paid on  interest-bearing
liabilities,   (4)  our  net  interest  spread  (i.e.,   the  average  yield  on
interest-earnings assets less the average rate on interest-bearing  liabilities)
and (5) our yield on  interest-earning  assets.  Rates are computed on a taxable
equivalent basis.



                                       8
<PAGE>
<TABLE>
<CAPTION>


                                                        Year ended December 31,
                                        --------------------------------------------------------------------------
                                                        2001                                   2000
                                            --------------------------              ---------------------------


                                                                   Average                               Average
                                                      Interest     rates                    Interest     rates
                                         Average      income/      earned/     Average      income/      earned/
                                         balance      expense      paid        balance      expense      paid
                                        ----------    --------    ------      ----------    --------    ------

                                                          (In thousands, except percentage)

<S>                                    <C>           <C>            <C>       <C>            <C>           <C>
Assets
Interest-earning assets
   Loans (net of unearned
   income) (1)                         $138,522      $11,388        8.22%     $  97,685      $ 8,454       8.65%

Investment securities                    41,000        2,278        5.56         32,102        1,994       6.21

Federal funds sold                       10,717          499        4.66         13,166          832       6.32
                                         ------        -----                    -------        -----

      Total interest-earning assets     190,239       14,165        7.45        142,953       11,280       7.89

Non-interest-earning assets              14,775                                  11,365

Allowance for possible loan losses       (1,799)                                 (1,363)
                                         --------                                --------

      Total assets                     $203,215                               $ 152,955
                                         =======                                ========

Liabilities and Stockholders' Equity

Interest-bearing liabilities

NOW deposits                           $ 19,578      $   260        1.33%     $  15,524      $   270       1.74%

Savings deposits                         50,972        1,461        2.87         44,263        1,891       4.27

Money market deposits                     6,482          217        3.35          6,079          292       4.80

Time deposits                            66,425        3,623        5.45         40,277        2,493       6.19

Borrowed funds                            1,063           30        2.82            --            --       --
                                         ------        -----                    -------        -----

   Total interest-bearing liabilities   144,520        5,591        3.87        106,143        4,946       4.66

Non-interest bearing liabilities

   Demand deposits                       36,296                                  26,486

   Other liabilities                      2,118                                   1,644
                                          ------                                 -------

      Total non-interest bearing
      liabilities                        38,414                                  28,130

   Stockholders' equity                  20,281                                  18,682
                                         ------                                 -------

      Total liabilities and
      stockholders' equity             $203,215                               $ 152,955
                                       =======                                ========

Net interest spread (2)                                             3.58                                   3.23

Net interest margin (3)                                             4.51                                   4.43

Net interest income                                  $ 8,574                                 $ 6,334
                                                      ======                                  ======


</TABLE>




                                                          1999
                                          ---------------------------------


                                                                    Average
                                                       Interest     rates
                                          Average      income/      earned/
                                          balance      expense      paid
                                         ----------    --------    ------



Assets
Interest-earning assets
   Loans (net of unearned
   income) (1)                          $  63,427      $ 5,191      8.18%

Investment securities                      12,383          693      5.60

Federal funds sold                         15,451          777      5.03
                                          -------        -----

      Total interest-earning assets        91,261        6,661      7.30

Non-interest-earning assets                 8,690

Allowance for possible loan losses         (1,094)
                                          --------

      Total assets                      $  98,857
                                         ========

Liabilities and Stockholders' Equity

Interest-bearing liabilities

NOW deposits                            $  13,227      $   225      1.70%

Savings deposits                           34,749        1,441      4.15

Money market deposits                       2,719           99      3.64

Time deposits                              12,720          688      5.41

Borrowed funds                                  8            1      5.94
                                          -------        -----

   Total interest-bearing liabilities      63,423        2,454      3.87

Non-interest bearing liabilities

   Demand deposits                         16,379

   Other liabilities                          734
                                           -------

      Total non-interest bearing
      liabilities                          17,113

   Stockholders' equity                    18,321
                                          -------

      Total liabilities and
      stockholders' equity              $  98,857
                                        ========

Net interest spread (2)                                             3.43

Net interest margin (3)                                             4.61

Net interest income                                       $ 4,207
                                                           ======





(1)  Included in interest income on loans are rate related loan fees.

(2)  The interest rate spread is the difference between the weighted average
     yield on average interest-earning assets and the weighted average cost of
     average interest-bearing liabilities.

(3) The interest rate margin is calculated by dividing net interest income by
average interest-earning assets.



                                       9
<PAGE>




The following  table presents by category the major factors that  contributed to
the changes in net interest income for the periods indicated below. Amounts have
been computed on a fully tax-equivalent basis.

<TABLE>
<CAPTION>
                                             Year ended December 31, 2001          Year ended December 31, 2000
                                                 vs. December 31, 2000                 vs. December 31, 1999
                                           --------------------------------      --------------------------------

                                                            Increase (decrease) due to change in
                                           ----------------------------------------------------------------------

                                            Average     Average                      Average     Average
                                            volume       rate         Net         volume       rate         Net
                                           ---------   --------   ---------      ---------   --------   ---------

                                                                       (In thousands)

<S>                                        <C>         <C>        <C>            <C>         <C>        <C>
Interest income
     Taxable loans (net of income)         $   3,534   $   (600)  $   2,934      $   2,804   $    459   $   3,263
     Investment securities                       553       (269)        284          1,104        197       1,301
     Federal funds sold                         (155)      (178)       (333)          (115)       170          55
                                             -------     ------     -------        -------     ------     -------

         Total interest income                 3,932     (1,047)      2,885          3,793        826       4,619
                                             -------     ------     -------      ---------     ------     -------

Interest expense
     NOW deposits                                 71        (81)        (10)            39          6          45
     Savings deposits                            287       (717)       (430)           395         55         450
     Money market                                 19        (94)        (75)           122         71         193
     Time deposits                             1,618       (488)      1,130          1,491        314       1,805
     Borrowed funds                               30        -            30             (1)       -            (1)
                                             -------     ------     -------        -------     ------     -------

         Total interest expense                2,025     (1,380)        645          2,046        446       2,492
                                             -------     ------     -------      ---------     ------     -------

         Net interest income               $   1,907   $    333   $   2,240      $   1,747   $    380   $   2,127
                                            ========    =======    ========       ========    =======    ========
</TABLE>

Provision for Loan Losses

     The  provision  we recorded  for the year ended  December 31, 2001 was $386
thousand  compared to $348  thousand for the year ended  December 31, 2000.  The
provision is the result of our review of several  factors,  including  increased
loan balances and management's assessment of economic conditions, credit quality
and other  risk  factors  inherent  in the loan  portfolio.  Although  we had no
non-performing  assets during each of these periods,  we established  provisions
for loan losses to create an adequate  allowance based on management's  analysis
of the loan portfolio and growth experienced over the periods. The allowance for
loan losses totaled $2.0 million,  or 1.33% of total loans at December 31, 2001,
compared to $1.6 million, or 1.30% of total loans, at December 31, 2000.

Non-Interest Income

     Non-interest  income  amounted to $1.4 million for the year ended  December
31, 2001,  compared to $909  thousand for the year ended  December 31, 2000,  an
increase  of $519  thousand,  or 57.1%.  The  increase  was  attributable  to an
increase in service fees on deposits of $44 thousand,  or 12.3%, and an increase
in other fees and commissions of $475 thousand,  or 86.2%. The growth in service
fees on deposits reflects the growth in transaction account deposits. The growth
in other fees and commissions  was primarily due to higher related  non-interest
fee income on loans which was attributable to an increase in loan participations
and the fees and commissions generated on those transactions.

Non-Interest Expense

     Non-interest expense amounted to $7.3 million for the year ended December
31, 2001, compared to $5.7 million for the year ended December 31, 2000, an
increase of $1.6 million, or 28.1%. The increase was due primarily to increases
in employment expenses as well as increases in occupancy expenses, equipment
expenses and other costs generally attributable to our growth. Of this increase,
employment costs increased $703 thousand, or 26.1%, and reflected



                                       10
<PAGE>



increases in the number of employees  from 72 full-time  equivalents at December
31, 2000 to 95  full-time  equivalents  at December  31,  2001.  The increase in
personnel is  attributable to the  acquisition of additional  support  personnel
required due to our growth and the opening of two new branch offices.

     Occupancy expenses  increased $348 thousand,  or 39.5%, to $1.2 million for
the year ended December 31, 2001. The increase was  attributable  to the opening
of two new branch  offices,  which  resulted  in  increased  lease  expense  and
increased  maintenance  costs  in  addition  to  increased   depreciation  costs
associated  with  new  facilities  and  on  purchases  of  computer   processing
equipment.

     Other operating expenses increased $520 thousand,  or 24.6% to $2.6 million
for the year  ended  December  31,  2001 from $2.1  million  for the year  ended
December  2000.  The  increase was  attributable  to  increased  other  expenses
resulting  from our  continued  growth,  as costs  of data  processing  services
amounted to $739 thousand, an increase of $129 thousand;  professional and other
fees  amounted to $382  thousand,  an increase of $42  thousand;  marketing  and
advertising  costs  amounted to $417  thousand,  an  increase  of $55  thousand;
stationery,  supplies and printing costs amounted to $320 thousand,  an increase
of $62 thousand; stockholder related costs amounted to $49 thousand, an increase
of $14 thousand;  communications and office costs amounted to $267 thousand,  an
increase of $46 thousand;  one time systems conversion related costs amounted to
$217 thousand during 2001; and all other expenses  amounted to $244 thousand,  a
decrease of $45 thousand.

     We anticipate  that the expense of our expanding bank branch office system,
combined  with  increased   expenses   associated  with  our  expanding  lending
activities,  as well as increased  costs  associated with our ongoing efforts to
penetrate our target  markets,  will continue to increase  non-interest  expense
next year.

Income Tax Expenses

     We recognized  $844 thousand and $53 thousand in income tax expense for the
years ended December 31, 2001 and 2000,  respectively.  We were fully taxable in
the twelve  months of 2001 while tax  expense  was  substantially  offset in the
twelve  months  of  2000  because  of  the  utilization  of net  operating  loss
carryforward. These carryforwards were exhausted in 2000.

Financial Condition

     At December 31, 2001, our total assets were $245.6 million,  an increase of
$63.5 million,  or 34.9% over total 2000 year end assets of $182.1  million.  At
December  31,  2001,  our net loans were  $145.6  million,  an increase of $25.2
million,  or 20.9%  from the $120.4  million  reported  at  December  31,  2000.
Investment securities increase to $80.7 million at December 31, 2001, from $44.6
million at December 31, 2000, an increase of $36.1 million or 80.9%. At December
31, 2001,  we had no Federal Funds sold compared to $3.9 million at December 31,
2000.

Loan Portfolio

     At December  31, 2001 our total loans were $147.6  million,  an increase of
$25.6 million,  or 21.0%, over our total loans of $122.0 million at December 31,
2000.  Our loan  portfolio  consists  primarily of loans secured by real estate,
and, to a lesser extent, commercial, construction, and consumer loans.

     Our loans are granted  primarily to businesses and  individuals  located in
Monmouth,  Middlesex,  and Ocean Counties, New Jersey. We have not made loans to
borrowers outside of the United States of America.  We believe that our strategy
of customer service,  competitive rate structures,  and selective marketing have
enabled  us to gain  market  entry  to  local  loans.  Bank  mergers  have  also
contributed to our efforts to attract borrowers.

     The  following  table sets forth the  classification  of our loans by major
category,  net of  unearned  discounts  and  deferred  loan fees for the periods
indicated below.




                                       11
<PAGE>

<TABLE>
<CAPTION>

                                                                 December 31,
                                ---------------------------------------------------------------------------------------
                                  2001              2000                 1999              1998              1997
                             ----------------   ----------------  -----------------  ----------------  ----------------
                             Amount   Percent  Amount   Percent   Amount   Percent   Amount   Percent    Amount   Percent
                             ------  --------- ------  ---------  ------  ---------  ------  ---------   ------  ---------
                                                    (In thousands, except for percentages)
<S>                         <C>        <C>    <C>       <C>      <C>        <C>      <C>       <C>     <C>       <C>
Commercial and industrial   $ 25,736   17.4%  $24,865   20.4%    $ 15,137   18.3%    $ 8,514   18.7    $ 3,413   22.4%
Real estate-non-residential
     properties               74,258   50.3    56,849   46.6       38,814   47.0      19,413   42.5      7,561   49.6
Residential properties         6,970    4.7     7,867    6.4        7,254    8.8       6,941   15.2      1,534   10.1
Construction                  21,962   14.9    17,046   14.0        8,895   10.7       3,582    7.9        809    5.3
Consumer                      18,559   12.6    14,275   11.7       12,476   15.1       6,376   14.0      1,913   12.6
Other                            118    0.1     1,064    0.9           56    0.1         803    1.7          3     -
                              -------------     ------------       -------------       ------------      ----- -------
     Total loans            $147,603  100.0%  $121,966 100.0%    $ 82,632  100.0%    $45,629  100.0%   $15,233  100.0%
                             =======  =====    ======= =====      =======  =====      ======  =====     ======  =====
</TABLE>

     The  following  table sets forth the  aggregate  maturities of loans net of
unearned  discounts  and deferred  loan fees,  in specified  categories  and the
amount of such loans which have fixed and variable rates at December 31, 2001.

<TABLE>
<CAPTION>
                                                   Within 1           1 to 5           After 5
                                                     year              years            years             Total
                                                  ----------        ----------       -----------       ----------

<S>                                               <C>               <C>              <C>               <C>
     Loans secured by 1-4 family residential
         properties                               $   12,676        $    6,935       $    11,206       $   30,817
     All other loans secured by real estate           29,645            53,532            15,627           98,804
     All other loans                                   9,694             7,839               449           17,982
                                                    --------          --------         ---------         --------

         Total                                    $   52,015        $   68,306       $    27,282       $  147,603
                                                   =========         =========        ==========        =========

     Fixed rate loans                                                                                  $   67,115
     Variable rate loans                                                                                   80,488
                                                                                                         --------

         Total                                                                                         $  147,603
                                                                                                        =========
</TABLE>

Asset Quality

     Our  loans  are our  principal  earning  assets.  Inherent  in the  lending
function  is the risk of the  borrower's  inability  to repay its loan under its
existing terms.  Risk elements in a loan portfolio  include  non-accrual  loans,
past due and restructured  loans,  potential problem loans, loan  concentrations
and other real estate owned,  acquired through  foreclosure or a deed in lieu of
foreclosure.

     Non-performing   assets  include  loans  that  are  not  accruing  interest
(non-accruing loans) as a result of principal or interest being in default for a
period of 90 days or more and other real estate owned.  At December 31, 2001 and
2000,  we had no  loans  past  due  90  days.  When  a  loan  is  classified  as
non-accrual,  interest  accruals  cease  and all  past due  interest,  including
interest  applicable  to prior years,  is reversed and charged  against  current
income.  Until the loan becomes current, any payments received from the borrower
are applied to outstanding  principal  until such time as management  determines
that the financial condition of the borrower and other factors merit recognition
of such payments as interest.

     At December 31, 2001 and 2000, we had no non-performing assets. We maintain
a risk rating system for grading all non-consumer credit facilities. The purpose
of the system is to detect  changes in loan quality for  individual  credits and
for homogenous pools of loans in the portfolio.  All such credits are assigned a
numerical  rating in accordance  with criteria  established in eight  categories
ranging from  #1-Excellent  to #8-Loss.  Definitions  for categories  #5-Special
Mention Loans,  #6-Substandard,  #7-Doubtful,  and #8-Loss are  consistent  with
those established by federal regulatory agencies. The initial rating is assigned
at inception and reviewed annually when financial statements are received and at
other times when  deterioration  in a relationship  is detected.  An independent
outsourced  loan review  function  tests these  ratings in its normal course and
resolves any rating differences.  Any loan,  including unrated consumer credits,
may be


                                       12
<PAGE>


assigned  to a watch  list of  credits,  identified  by  management  as  credits
warranting  special  attention  for a variety  of  reasons  which  might bear on
ultimate collectibility.

     In addition to our internal rating system,  our federal  regulators provide
for the  classification  of certain  loans into  substandard,  doubtful  or loss
categories.  A  loan  is  classified  as  substandard  when  it is  inadequately
protected  by the  current  value and paying  capacity  of the obligor or of the
collateral pledged, if any. Loans so classified have a well-defined  weakness or
weaknesses that  jeopardize the liquidation of the debt. They are  characterized
by the distinct  possibility  that we will sustain some loss if the deficiencies
are not corrected.

     A loan is classified as doubtful when it has all the weaknesses inherent in
one classified as substandard with the added characteristics that the weaknesses
make  collection  or  liquidation  in full,  on the basis of currently  existing
factors, conditions, and values, highly questionable and improbable.

     A loan is  classified as loss when it is  considered  uncollectible  and of
such little value that the asset's  continuance as an asset on the balance sheet
is not warranted.

     As of December 31, 2001 and 2000, no loans were  classified as substandard,
doubtful, or loss.

Allowance for Loan Losses

     We attempt to maintain an allowance  for loan losses at a sufficient  level
to provide for potential  losses in the loan portfolio.  Loan losses are charged
directly to the  allowance  when they occur and any  recovery is credited to the
allowance. Risks within the loan portfolio are analyzed on a continuous basis by
our officers,  by outside  independent loan review auditors,  our Directors Loan
Committee,  and the Board of  Directors.  A risk system,  consisting of multiple
grading  categories,  is utilized as an  analytical  tool to assess risk and set
appropriate reserves.  Along with the risk system,  management further evaluates
risk characteristics of the loan portfolio under current economic conditions and
considers  such factors as the  financial  condition of the  borrower,  past and
expected loss experience, and other factors management feels deserve recognition
in  establishing an appropriate  reserve.  These estimates are reviewed at least
monthly, and, as adjustments become necessary,  they are realized in the periods
in which they become  known.  Additions to the  allowance are made by provisions
charged to expense and the allowance is reduced by net charge-offs  (i.e., loans
judged to be uncollectible and charged against the reserve,  less any recoveries
on such loans).  Although  management  attempts to maintain  the  allowance at a
level deemed adequate,  future additions to the allowance may be necessary based
upon changes in market  conditions.  In addition,  various  regulatory  agencies
periodically review our allowance for loan losses. These agencies may require us
to take  additional  provisions  based  on  their  judgments  about  information
available to them at the time of their examination.

     Our allowance for possible loan losses totaled $2.0 million at December 31,
2001, or 1.33% of total loans  outstanding.  We had no  non-performing  loans or
loans past due 90 days or more at December 31, 2001 and 2000.

     The following is a summary of the  reconciliation of the allowance for loan
losses for the periods indicated.

<TABLE>
<CAPTION>
                                                                              Year ended December 31,
                                                                 ------------------------------------------------
                                                                   2001      2000      1999      1998       1997
                                                                 -------   -------   --------   -------   -------
                                                                        (In thousands, except percentages)

<S>                                                              <C>       <C>       <C>        <C>       <C>
     Balance at beginning of period                              $ 1,584   $ 1,237   $    914   $   250   $   -
     Charge-offs-consumer                                             (6)       (1)        (2)      -         -
     Provision charged to expense                                    386       348        325       664       250
                                                                   -----     -----     ------     -----     -----

     Balance of allowance at end of period                       $ 1,964   $ 1,584   $  1,237   $   914   $   250
                                                                  ======    ======    =======    ======    ======

     Ratio of net charge-offs to average loans outstanding          -  %      -  %       -  %       N/A       N/A
                                                                ========  ========   ========   =======   =======

     Balance of allowance at period-end as a percent of loans
         at period end                                             1.33%     1.30%      1.50%     2.04%     1.64%
                                                                   =====     =====      =====     =====     =====

</TABLE>

                                       13
<PAGE>


     The following table sets forth, for each of the Bank's major lending areas,
the  amount  of the  Bank's  allowance  for  loan  losses  attributable  to such
category,  and the percentage of total loans represented by such category, as of
the periods  indicated.  The  allocation of the allowance for loan losses to the
respective loan  classifications is not necessarily  indicative of future losses
or future allocations.

<TABLE>

<CAPTION>
                                                                December 31,
                       ----------------------------------------------------------------------------------------------
                              2001                2000               1999                1998                 1997
                       ------------------  ------------------ ------------------  ------------------  ------------------

                       Allocation %of all  Allocation %of all  Allocation %of all  Allocation %of all  Allocation %of all
                        amount     loans    amount     loans    amount     loans    amount     loans    amount     loans
                       --------- -------- ----------  ------- ---------  --------  --------- -------- --------- --------
                                                   (In thousands, except percentages)
Balance applicable to

<S>                  <C>          <C>      <C>         <C>   <C>          <C>   <C>            <C>    <C>         <C>
   Commercial loans  $     346    17.4%    $  281      20.4% $     185    18.3% $     96       18.7%  $   18      22.4%

   Real estate non-
     Residential
     properties            996    50.3        641      46.6        628    47.0       309       42.5       90      49.6

   Residential
     properties             65     4.7         39       6.4         36     8.8        35       15.2        8      10.1

   Construction            295    14.9        377      14.0        178    10.7        72        7.9       12       5.3

   Consumer loans          234    12.6        128      11.7        113    15.1        55       14.0       18      12.6

   Other                     2     0.1         27       0.9         14     0.1        16        1.7        1       --
                       ------- -------    --------- -------    ------- -------   ------- -   ------     ------  -------

   Subtotal              1,938   100.0      1,493     100.0      1,154   100.0       583      100.0      147     100.0

   Unallocated reserves     26    --           91      --           83    --         331       --        103      --
                       ------- -------    ------- - - -----    ------- -------   ------- -   ------     ------  -------

      Total          $   1,964   100.0% $   1,584     100.0% $   1,237   100.0% $    914      100.0%  $  250     100.0%
                     =========   =====  =========     =====  =========   =====  =========      =====   ======     =====
</TABLE>

Investment Securities

     We maintain an investment  portfolio to fund  increased  loans or decreased
deposits  and other  liquidity  needs and to  provide  an  additional  source of
interest income. The portfolio is composed of obligations of U.S. Government and
agencies,  government sponsored entities, and a limited amount of corporate debt
securities.

     We follow  Statement  of  Financial  Accounting  Standards  (SFAS) No. 115,
Accounting  for Certain  Investments in Debt and Equity  Securities.  Under SFAS
115,  securities  are  classified  as  securities  held  to  maturity  based  on
management's  intent and our ability to hold them to maturity.  Such  securities
are stated at cost,  adjusted for unamortized  purchase  premiums and discounts.
Securities not classified as securities  held to maturity or trading  securities
are  classified as securities  available for sale, and are stated at fair value.
Unrealized  gains and losses on securities  available for sale are excluded from
results of operations, and are reported as a separate component of stockholders'
equity,  net of taxes.  Securities  classified  as  available  for sale  include
securities that may be sold in response to changes in interest rates, changes in
prepayment  risks,  the need to increase  regulatory  capital,  or other similar
requirements. The Bank has no trading securities.

     Management  determines  the  appropriate  classification  at  the  time  of
purchase.  At December 31, 2001, we classified  $15.3 million,  or 19.0%, of our
investment portfolio as held-to-maturity based on our intent and ability to hold
these securities to maturity.  These securities are stated at cost, adjusted for
unamortized  purchase  premiums and discounts.  As of December 31, 2001, the net
unrealized losses on these securities was $93 thousand.  Securities amounting to
$14.8 million were purchased for the held-to-maturity account during 2001.

     At December  31,  2001,  we  classified  $65.4  million,  or 81.0%,  of our
investment portfolio as available-for-sale.  These available-for-sale securities
had a cost basis of $65.0  million.  The fair value  adjustment  at December 31,
2001 required us to increase the carrying value of these  investment  securities
by $390  thousand,  decrease  the  deferred  tax benefit by $142  thousand,  and
increase stockholders' equity by $248 thousand. Securities with a cost of $102.6
million were purchased for the available-for-sale account during 2001.



                                       14
<PAGE>


     Total  investment  securities at December 31, 2001 were $80.7  million,  an
increase of $36.1 million,  or 80.9% over total  investment  securities of $44.6
million at December 31, 2000.  The increase  during 2001 resulted as we utilized
our  liquidity  in  excess  of loan  demand  to  fund  additional  purchases  of
investment  securities.  This  strategy  developed  from our analysis of several
economic  scenarios,   including  reduced  loan  growth  and  deposit  repricing
opportunities. We maintain an investment portfolio of short duration in order to
fund projected  increased loan volume and to provide for other liquidity uses as
needed, and secondarily as an additional source of interest income.

     The  amortized  cost and fair  value of our  investment  securities  are as
follows (in thousands):

<TABLE>
<CAPTION>
                                            December 31, 2001        December 31, 2000        December 31, 1999
                                         ----------------------   ----------------------   ----------------------
                                           Amortized     Fair       Amortized     Fair       Amortized    Fair
                                             Cost        value        cost        value        cost       value
                                         ----------- ----------   ----------- ----------   ----------  ----------

<S>                                      <C>         <C>          <C>         <C>          <C>         <C>
Investment securities available-for-sale
     U.S. Government and agency
         securities                      $    64,569 $   64,959   $    33,798 $   33,842   $    9,418  $    9,399
     Corporate debt securities and other         480        480           264        264           25          25
                                           ---------   --------     ---------   --------     --------    --------

                                         $    65,049 $   65,439   $    34,062 $   34,106   $    9,443  $    9,424
                                          ==========  =========    ==========  =========    =========   =========

Investment securities held-to-maturity
     U.S. Government and agency
         securities                      $    14,275 $   14,136   $     9,998 $    9,955   $   10,745  $   10,593
     Corporate debt securities and other       1,035      1,081           500        514          500         500
                                           ---------   --------     ---------   --------     --------    --------

                                         $    15,310 $   15,217   $    10,498 $   10,469   $   11,245  $   11,093
                                          ==========  =========    ==========  =========    =========   =========
</TABLE>

     The amortized cost and fair value of our investment  securities at December
31, 2001, by contractual  maturity,  are shown below.  Expected  maturities will
differ from contractual  maturities because borrowers may have the right to call
or  prepay  obligations  with  or  without  call  or  prepayment  penalties  (in
thousands).
<TABLE>
<CAPTION>

                                                              Available-for-sale             Held-to-maturity
                                                           -------------------------    -------------------------
                                                            Amortized        Fair        Amortized     Fair
                                                              Cost           value         cost           value
                                                           ----------     ----------    -----------    ----------

<S>                                                        <C>            <C>           <C>            <C>
     Due in one year or less                               $      --      $      --     $       535    $      535
     Due after one year through five years                     64,569         64,959         14,275        14,136
     Due after five years through ten years                       --             --             500           546
     Due after ten years                                          480            480            --            --
                                                             --------       --------      ---------      --------

                                                           $   65,049     $   65,439    $    15,310    $   15,217
                                                            =========      =========     ==========     =========
</TABLE>

Deposits

     Our total deposits at December 31, 2001, were $221.1  million,  an increase
of $60.6 million, or 37.8% over total deposits of $160.5 million at December 31,
2000.  Deposits are our primary source of funds.  The growth in deposits  during
this period was  primarily  due to the  expansion  and  maturation of our branch
system,  as  well as a  significant  increase  in the  amount  of time  deposits
reflecting  promotional  activities  at  our  branches.  These  promotions  were
targeted  to  retain   maturing   deposits  and  to  gain  market   penetration.
Additionally,  at December  31,  2001,  we  maintained  $5.0 million in brokered
deposits, which mature in June 2002. These deposits were obtained as part of our
2002  asset/liability  management  strategies,  as  higher  costing  promotional
certificates of deposit matured.  Time deposits  represented  35.2% of our total
deposits last year and they increased to 39.1% of our total deposits at December
31, 2001.




                                       15
<PAGE>


     We seek to emphasize  relationships  with commercial  customers and seek to
obtain transactional accounts, which are frequently kept in non-interest bearing
deposits.  During our startup phase,  we emphasized  the  origination of savings
deposits,  which equaled  $61.1 million at December 31, 2001, by offering  rates
higher than our peer group institutions. As we have established ourselves within
our trade  area,  we have  managed our rates to more  closely  match the market,
resulting in our total cost of deposits of 3.09% for 2001.  Our primary  savings
product is the stepped rate savings account. The interest rate is based upon the
amount on  deposit,  and the deposit  amount can be  changed.  We may modify the
interest rate amount paid without  notice,  and the depositor may withdraw their
funds on demand.  We market this product as an  alternative to time deposits and
believe it has  resulted  in a higher  rate of core  deposits  and lower cost of
funds than our peer group institutions.

     The  following  table sets forth the  average  amounts of various  types of
deposits at the periods indicated.

<TABLE>
<CAPTION>
                                                                  Year ended December 31,
                                         ------------------------------------------------------------------------
                                                  2001                     2000                     1999
                                         ----------------------   ----------------------   ----------------------
                                            Average     Average      Average    Average       Average       Average
                                            Balance      Cost        Balance      Cost        Balance        Cost
                                         ----------- ----------   ----------- ----------   ------------     -------
                                                            (In thousands, except percentages)

<S>                                      <C>              <C>     <C>              <C>     <C>             <C>
     Non-interest-bearing demand         $    36,296       -- %   $    26,486       -- %   $   16,379        -- %
     Interest-bearing demand (NOW)            19,578      1.33         15,524      1.74        13,227       1.70
     Savings deposits                         50,972      2.87         44,263      4.27        34,749       4.15
     Money Market Deposits                     6,482      3.35          6,079      4.80         2,719       3.64
     Time deposits                            66,425      5.45         40,277      6.19        12,720       5.41
                                           ---------                ---------                --------

         Total                           $   179,753      3.09%   $   132,629      3.73%   $   79,794       3.08%
                                          ==========               ==========               =========
</TABLE>

     The following table summarizes the maturity distribution of certificates of
deposits as of December 31, 2001.
<TABLE>
<CAPTION>

                                                                    Year ended December 31, 2001
                                                  ---------------------------------------------------------------
                                                            Time CD's                          Time CD's
                                                        $100,000 and over                   under $100,000
                                                  ----------------------------       ----------------------------
                                                    Amount            Percent          Amount            Percent
                                                  ----------        ----------       -----------       ----------
                                                                 (In thousands, except percentages)

<S>                                               <C>                   <C>          <C>                   <C>
     Due in three months or less                  $   20,337            52.9%        $    16,492           34.4%
     Due over three months through twelve
         months                                       16,327            42.4              27,328           57.1
     Due over one year through three years             1,824             4.7               4,061            8.5
     Due over three years                                -              -                     13           -
                                                    --------       --------            ---------      --------

         Total certificates of deposit            $   38,488           100.0%        $    47,894          100.0%
                                                   =========           =====          ==========          =====
</TABLE>

Interest Rate Risk Management

     Interest  rate  risk  management  involves  managing  the  extent  to which
interest-sensitive  assets  and  interest-sensitive   liabilities  are  matched.
Interest rate sensitivity is the relationship  between market interest rates and
earnings  volatility  due  to  the  repricing   characteristics  of  assets  and
liabilities.  Our net  income  is  affected  by  changes  in the level of market
interest rates. In order to maintain consistent earnings performance, we seek to
manage, to the extent possible, the repricing  characteristics of our assets and
liabilities. The ratio between assets and liabilities repricing in specific time
intervals is referred to as an interest  rate  sensitivity  gap.  Interest  rate
sensitivity  gaps can be  managed  to take  advantage  of the slope of the yield
curve as well as forecasted changes in the level of interest rate changes.

     One of our major  objectives  when  managing  the rate  sensitivity  of our
assets and  liabilities is to stabilize net interest  income.  The management of
and  authority  to  assume  interest  rate  risk  is the  responsibility  of the
Asset/Liability  Committee  (ALCO),  which is comprised of senior management and
Board  members.  We have  instituted  policies and


                                       16
<PAGE>


practices of measuring and reporting  interest rate risk exposure,  particularly
regarding the treatment of non-contractual assets and liabilities.  In addition,
we annually  review our interest rate risk policy,  which includes limits on the
impact to earnings from shifts in interest rates.

     To manage our  interest  sensitivity  position,  an  asset/liability  model
called "gap  analysis"  is used to monitor the  difference  in the volume of our
interest  sensitive  assets and liabilities  that mature or reprice within given
periods.  A positive gap (asset  sensitive)  indicates  that more assets reprice
during a given period compared to  liabilities,  while a negative gap (liability
sensitive) has the opposite effect.  We employ  computerized net interest income
simulation modeling to assist in quantifying  interest rate risk exposure.  This
process  measures  and  quantifies  the impact on net  interest  income  through
varying  interest rate changes and balance sheet  compositions.  The use of this
model  assists the ALCO to gauge the  effects of the  interest  rate  changes on
interest  sensitive  assets and  liabilities  in order to determine  what impact
these rate changes will have upon the net interest spread.

     At December 31, 2001, we maintained a one year negative  cumulative  gap of
16.90%  of total  assets,  or $41.5  million,  which  was  within  our  Board of
Directors approved guidelines.
<TABLE>
<CAPTION>

                                             Interest Sensitivity Gap at December 31, 2001
                                        ------------------------------------------------------
                                                  Mature or repricing in (1)
                                       -----------------------------------------------   Non-
                                        3 months   3 through   1 through     Over       interest
                                         or less   12 months   3  years     3 years     bearing       Total
                                       ---------- ----------  ----------  ----------   ----------  -----------

<S>                                   <C>         <C>         <C>         <C>         <C>          <C>
     Assets
    Federal funds sold                $      --   $      --   $      --   $      --   $      --    $      --
    Investment securities
         available-for-sale (2)          11,294      16,148          --      37,607          --       65,049
    Investment securities
         held-to-maturity                    --         535          --      14,775          --       15,310
    Loans                                47,874       4,141      20,822      74,766          --      147,603
    Valuation reserves (2)                   --          --          --          --      (1,574)      (1,574)
    Non-interest earning assets              --          --          --          --      19,250       19,250
                                      ---------   ---------   ---------   ---------   ---------    ---------

         Total assets                 $  59,168   $  20,824   $  20,822   $ 127,148   $  17,676    $ 245,638
                                      =========   =========   =========   =========   =========    =========


Liabilities and stockholders'
         equity
    NOW accounts                      $   6,185   $      --   $  18,556   $      --   $      --    $  24,741
    Money market accounts                 2,692          --       2,691          --          --        5,383
    Savings deposits                     30,542          --      30,541          --          --       61,083
    CD's $100,000 and over               20,337      16,327       1,824          --          --       38,488
    CD's under $100,000                  16,492      27,328       4,061          13          --       47,894
    Short-term borrowings                 1,600          --          --          --          --        1,600
    Non-interest bearing
         deposits                            --          --          --          --      43,539       43,539
    Other liabilities                        --          --          --          --       1,767        1,767
    Stockholders' equity                     --          --          --          --      21,143       21,143
                                      ---------   ---------   ---------   ---------   ---------    ---------
         Total liabilities
             and stockholders'
             equity                   $  77,848   $  43,655   $  57,673   $      13   $  66,449    $ 245,638
                                      =========   =========   =========   =========   =========    =========

     Interest rate sensitivity gap    $ (18,680)  $ (22,831)  $ (36,851)  $ 127,135   $ (48,773)

     Cumulative gap                   $ (18,680)  $ (41,511)  $ (78,362)  $  48,773

     Cumulative gap to total assets      (7.60)%    (16.90)%    (31.90)%     19.86%

</TABLE>
                                       17
<PAGE>


     (1) The following are the assumptions that were used to prepare the gap
         analysis:
         a. Investment securities are included at amortized cost in the period
            in which they mature at stated maturity, except for government
            agency securities with coupon rates of 5.00% and above and with call
            provisions of one year or less, which are stated as maturing at the
            call date.
         b. Loans are spread through the maturity buckets based on the earlier
            of their actual maturity date or the date of their first potential
            rate adjustment.
         c. Non-maturing NOW accounts, money market accounts and savings
            deposits typically change rates more slowly than maturing balances.
            The rate change speed of these accounts compared to the economic
            rate change, has been adjusted based upon the Company's experience.
         d. Certificates of deposits are spread through the maturity buckets
            based on their actual maturity date.
     (2) Valuation reserves include allowance for loan losses and the investment
         securities available-for-sale mark-to-market adjustment.

Liquidity

     Our  liquidity  is a measure of our ability to fund loans,  withdrawals  or
maturities of deposits,  and other cash outflows in a cost-effective manner. Our
principal  sources  of  liquidity  are  deposits,   scheduled  amortization  and
prepayments of loan principal,  maturities of investment  securities,  access to
purchased funds, and funds provided by operations. While scheduled loan payments
and maturing  investments are relatively  predictable sources of funds,  deposit
flows,  loan  prepayments  and  callable   investment   securities  are  greatly
influenced by general interest rates, economic conditions and competition.

     Liquid  assets  (consisting  of cash,  federal  funds  sold and  investment
securities  classified as  available-for-sale)  comprised 30.4% and 24.0% of our
total assets at December 31, 2001 and 2000, respectively.

     Should  liquidity  needs  arise  to fund  new  loan  demand,  we  have  the
capability to sell securities classified as available-for-sale,  and to purchase
federal funds as alternative  sources of liquidity.  We have established  credit
lines with other  financial  institutions  to  purchase  up to $11.0  million in
federal  funds and may borrow  funds at the  Federal  Reserve  discount  window,
subject to our ability to supply collateral.  During 2000, we became a member of
the Federal Home Loan Bank of New York and have an overnight  borrowing  line of
$10.0 million and a term  borrowing  line of an  additional  $11.4  million.  In
addition,  subject to  certain  requirements,  we may also  obtain  longer  term
advances  of up to 30% of our  assets.  As of December  31,  2001,  we have $1.6
million in overnight borrowings.

     Management  believes  that our current  sources of funds  provide  adequate
liquidity for our current cash flow needs.

Capital

     A  significant  measure of the strength of a financial  institution  is its
capital base. Our federal  regulators  have  classified and defined capital into
the following  components:  (1) Tier I capital,  which includes common stock and
qualifying preferred stock, and (2) Tier II capital, which includes a portion of
the allowance for possible loan losses,  certain  qualifying  long-term debt and
preferred  stock  which does not  qualify  for Tier I capital.  Minimum  capital
levels are regulated by risk-based  capital adequacy  guidelines which require a
financial institution to maintain capital as a percent of its assets and certain
off-balance   sheet  items   adjusted   for   predefined   credit  risk  factors
(risk-adjusted  assets). A financial  institution is required to maintain,  at a
minimum,  Tier I capital as a  percentage  of  risk-adjusted  assets of 4.0% and
combined Tier I and Tier II capital as a percentage of  risk-adjusted  assets of
8.0%.

     In addition to the risk-based  guidelines,  the federal  regulators require
that a financial institution which meets the regulators' highest performance and
operation  standards  maintain  a minimum  leverage  ratio  (Tier I capital as a
percentage of tangible assets) of 3%. For those  institutions with higher levels
of risk or that are experiencing or anticipating significant growth, the minimum
leverage  ratio will be  proportionately  increased by 100 to 200 basis  points.
Minimum  leverage  ratios  for  the  Bank  are  evaluated  through  the  ongoing
regulatory examination process.




                                       18
<PAGE>


     The  following  table  summarizes  our  risk-based  and leverage  ratios at
December 31, 2001, as well as the required minimum regulatory capital ratios.
<TABLE>
<CAPTION>

                                                                                                  To be well
                                                                                               capitalized under
                                                                       For capital             prompt corrective
                                                Actual              adequacy purposes          action provisions
                                       -----------------------  ------------------------    ----------------------
                                         Amount         Ratio      Amount        Ratio        Amount        Ratio
                                       -----------   ---------  -----------   ---------     -----------   ---------

As of December 31, 2001

<S>                                    <C>            <C>        <C>              <C>        <C>           <C>
       Total capital (to risk-weighted
          assets)                      $   22,864     13.40%     $   13,654      >8.00%      $   17,067   >10.00%
                                                                                 -                        -
       Tier I capital (to risk-weighted
          assets)                          20,900     12.25           6,827      >4.00           10,240  >  6.00
                                                                                 -                       -
       Tier I capital (to average assets)  20,900      9.17           6,836      >3.00           11,394  >  5.00
                                                                                 -                       -
</TABLE>

     In addition  to the capital  adequacy  requirements  of the FDIC  discussed
above, pursuant to the order of the New Jersey Commissioner of the Department of
Banking and Insurance granting the Bank a charter, as amended during April 2001,
the Bank is required to maintain a ratio of equity capital to total assets of at
least 8% for our  first  five (5) years of  operations,  unless  the  Commission
consents to a lower ratio. As of December 31, 2001 and 2000, the Bank's ratio of
equity capital to total assets was 8.51% and 10.65%, representatively.  The Bank
will have been in operation for five years in May 2002.

Impact of Inflation and Changing Prices

     Our financial  statements and notes thereto,  presented  elsewhere  herein,
have been prepared in accordance with accounting  principles  generally accepted
in the United  States of America,  which  require the  measurement  of financial
position  and  operating   results  in  terms  of  historical   dollars  without
considering the change in the relative  purchasing  power of money over time and
due to inflation.  The impact of inflation is reflected in the increased cost of
the  Company's  operations.  Unlike most  industrial  companies,  nearly all our
assets and liabilities are monetary. As a result,  interest rates have a greater
impact on our  performance  than do the effects of general  levels of inflation.
Interest  rates do not  necessarily  move in the same  direction  or to the same
extent as the prices of goods and services.

Recent Accounting Pronouncements

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 retains the existing requirements
to recognize and measure the impairment of long-lived assets to be held and used
or to be disposed of by sale.  However,  SFAS No. 144 makes changes to the scope
and certain measurement  requirements of existing accounting guidance.  SFAS No.
144 also  changes  the  requirements  relating  to  reporting  the  effects of a
disposal  or  discontinuation  of a  segment  of a  business.  SFAS  No.  144 is
effective  for  financial  statements  issued for fiscal years  beginning  after
December 15, 2001 and interim periods within those fiscal years. The adoption of
this  statement is not expected to have a  significant  impact on the  financial
condition or results of operations of the Bank.

     On July 6, 2001, the Securities and Exchange  Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 102, Selected Loan Loss Allowance  Methodology and
Documentation  Issues.  SAB  No.  102  provides  guidance  on  the  development,
documentation,  and application of a systematic  methodology for determining the
allowance for loans and leases in accordance  with US GAAP.  The adoption of SAB
No. 102 did not have an impact on the Company's  consolidated financial position
or results of operations.


                         ITEM 7. -- FINANCIAL STATEMENTS

     The information required by this item is filed herewith.



                                       19
<PAGE>


            ITEM 8. -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.


               ITEM 9. -- DIRECTORS AND EXECUTIVE OFFICERS OF THE
                    REGISTRANT; COMPLIANCE WITH SECTION 16(a)

     Information  concerning directors and executive officers is included in the
definitive  Proxy  Statement  for the  Company's  2002 Annual  Meeting under the
captions  "ELECTION OF DIRECTORS" and  information  concerning  compliance  with
Section 16(a) of the Exchange Act is included under the caption "COMPLIANCE WITH
SECTION  16(A)  OF THE  SECURITIES  EXCHANGE  ACT OF  1934,"  each of  which  is
incorporated herein by reference.  It is expected that such Proxy Statement will
be filed with the  Securities  and Exchange  Commission  no later than April 30,
2002.

     The  following  table  sets  forth  certain  information  about each of our
executive officers who are not also a director.

                                                Principal occupation
 Name, age and position       Officer since     during past five years
 ----------------------      -------------- -------------------------------

 James A. Kinghorn, 53            2000          Senior Lending Officer and
 Executive Vice-President and                   Director of the Bank; formerly a
 Senior Lending Officer                         senior officer of Commerce Bank
                                                (Successor toTinton Falls
                                                State Bank by acquisition)

 Robert Babin, 49                 1999          Chief Information Officer of
 Senior Vice President and                      the Bank; formerly Vice
 Chief Information Officer                      President Information
                                                Technology at Lockport
                                                Savings Bank and Amboy
                                                National Bank

 Michael Bis, 53                  1999          Chief Financial Officer of the
 Senior Vice President and                      Bank; formerly Controller
 Chief Financial Officer                        of Carnegie Bank N.A.


                       ITEM 10. -- EXECUTIVE COMPENSATION

     Information concerning executive compensation is included in the definitive
Proxy  Statement  for the  Company's  2002  Annual  Meeting  under the  captions
"PROPOSAL  1  --  EXECUTIVE   COMPENSATION  AND  ALL  OTHER   COMPENSATION"  and
"COMPENSATION OF DIRECTORS",  which is incorporated by reference  herein.  It is
expected  that  such  Proxy  Statement  will be filed  with the  Securities  and
Exchange Commission no later than April 30, 2002.


                    ITEM 11. -- SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT

     Information  concerning security ownership of certain beneficial owners and
management is included in the definitive  Proxy statement for the Company's 2002
Annual  Meeting under the caption  "PROPOSAL 1 -- SECURITY  OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT", which is incorporated herein by reference. It
is expected  that such Proxy  statement  will be filed with the  Securities  and
Exchange Commission no later than April 30, 2002.



                                       20
<PAGE>


           ITEM 12. -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information  concerning certain  relationships and related  transactions is
included in the definitive Proxy Statement for the Company's 2002 Annual Meeting
under the caption  "PROPOSAL 1 -- INTEREST OF  MANAGEMENT  AND OTHERS IN CERTAIN
TRANSACTIONS",  which is incorporated  herein by reference.  It is expected that
such Proxy  statement will be filed with the Securities and Exchange  Commission
no later than April 30, 2002.


                ITEM 13. -- EXHIBITS LIST AND REPORTS ON FORM 8-K

     (a)  Exhibits

     Exhibit number                            Description of Exhibits
                                            ----------------------------------
         21                                 Subsidiaries of the Registrant
         23                                 Consent of Grant Thornton LLP

     (b)  Reports on Form 8-K

         (i)      None



                                       21
<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.

                               COMMUNITY BANCORP OF NEW JERSEY

                               By:/s/     Robert D. O'Donnell
                                  ---------------------------------------------
                                        Robert D. O'Donnell
     Dated: March 28, 2002              President and Chief Executive Officer


     Pursuant to the  requirements 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.

<TABLE>
<CAPTION>

     NAME                               TITLE                                            DATE

<S>                                    <C>                                         <C>
/s/    Robert D. O'Donnell
-------------------------------
     Robert D. O'Donnell                President and Chief Executive Officer       March 28, 2002

/s/    Michael Bis
-------------------------------
     Michael Bis                        Chief Financial Officer                     March 28, 2002

/s/    Howard M. Schoor
-------------------------------
    Howard M. Schoor                    Chairman of the Board                       March 28, 2002

/s/    Eli Kramer
-------------------------------
     Eli Kramer                         Vice Chairman of the Board                  March 28, 2002

/s/    Charles P. Kaempffer
-------------------------------
     Charles P. Kaempffer, CPA          Vice Chairman of the Board                  March 28, 2002

/s/    Morris Kaplan
-------------------------------
     Morris Kaplan                      Director                                    March 28, 2002

/s/    Robert M. Kaye
-------------------------------
     Robert M. Kaye                     Director                                    March 28, 2002

/s/    William J. Mehr
-------------------------------
    William J. Mehr, Esq.              Director                                    March 28, 2002

/s/    Arnold G. Silverman
-------------------------------
     Arnold G. Silverman                Director                                    March 28, 2002

/s/    Lewis Wetstein
-------------------------------
    Lewis Wetstein, M.D.                Director                                    March 28, 2002

</TABLE>


                                       22
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

                           Consolidated Balance Sheets

                      (In thousands, except per share data)

<TABLE>
<CAPTION>


                                                                                      December 31,
                                                                              ----------------------------
          ASSETS                                                                 2001              2000
                                                                              -----------       ----------

<S>                                                                               <C>              <C>
    Cash and due from banks                                                   $     9,342       $    5,764
    Federal funds sold                                                                --             3,860
                                                                                ---------         --------

          Total cash and cash equivalents                                           9,342            9,624

    Investment securities available-for-sale                                       65,439           34,106
    Investment securities held-to-maturity (fair value of
       $15,217 and $10,469 at December 31, 2001 and
       2000, respectively)                                                         15,310           10,498

    Loans receivable                                                              147,603          121,966
    Less allowance for loan losses                                                 (1,964)          (1,584)
                                                                                ---------         --------

          Net loans receivable                                                    145,639          120,382

    Premises and equipment, net                                                     6,335            5,002
    Accrued interest receivable                                                     1,457            1,497
    Other assets                                                                    2,116              943
                                                                                ---------         --------

          Total assets                                                        $   245,638       $  182,052
                                                                               ==========        =========

          LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
    Deposits
       Non-interest bearing - demand                                          $    43,539       $   30,090
       Interest bearing - NOW                                                      24,741           15,368
       Savings and money market                                                    66,466           58,587
       Certificates of deposit, under $100,000                                     47,894           34,291
       Certificates of deposit, $100,000 and over                                  38,488           22,179
                                                                                ---------         --------

          Total deposits                                                          221,128          160,515

    Short-term borrowings                                                           1,600              --
    Accrued interest payable                                                        1,334            1,491
    Other liabilities                                                                 433              631
                                                                                ---------         --------

          Total liabilities                                                       224,495          162,637
                                                                                ---------         --------

STOCKHOLDERS' EQUITY
    Common stock - authorized, 10,000,000 shares of no par value; issued and
       outstanding, net of treasury shares, 2,014,729 and
       2,014,905 shares at December 2001 and 2000, respectively                    23,147           21,663
    Accumulated deficit                                                            (1,889)          (1,913)
    Accumulated other comprehensive income                                            248               28
    Treasury stock, 22,357 shares, at cost                                           (363)            (363)
                                                                                ---------         --------

          Total stockholders' equity                                               21,143           19,415
                                                                                ---------         --------

          Total liabilities and stockholders' equity                          $   245,638       $  182,052
                                                                               ==========        =========
</TABLE>

The accompanying notes are an integral part of these statements.


                                       23
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

                        Consolidated Statements of Income

                      (In thousands, except per share data)

<TABLE>
<CAPTION>



                                                                                  Year ended December 31,
                                                                               ----------------------------
                                                                                  2001              2000
                                                                               -----------       ----------
INTEREST INCOME
<S>                                                                            <C>               <C>
    Loans, including fees                                                      $    11,388       $    8,454
    Federal funds sold                                                                 499              832
    Investment securities                                                            2,278            1,994
                                                                                 ---------         --------

          Total interest income                                                     14,165           11,280

INTEREST EXPENSE
    Deposits                                                                         5,561            4,946
    Short-term borrowings                                                               30              -
                                                                                 ---------         --------

          Total interest expense                                                     5,591            4,946
                                                                                 ---------         --------

          Net interest income                                                        8,574            6,334

PROVISION FOR LOAN LOSSES                                                              386              348
                                                                                 ---------         --------

          Net interest income after provision for loan losses                        8,188            5,986
                                                                                 ---------         --------

NON-INTEREST INCOME
    Service charges on deposit accounts                                                402              358
    Other service charges and fees                                                     749              401
    Other income                                                                       277              150
                                                                                 ---------         --------

          Total non-interest income                                                  1,428              909
                                                                                 ---------         --------

NON-INTEREST EXPENSE
    Salaries and employee benefits                                                   3,397            2,694
    Occupancy expense                                                                1,229              881
    Other operating expenses                                                         2,635            2,115
                                                                                 ---------         --------

          Total non-interest expense                                                 7,261            5,690
                                                                                 ---------         --------

          Income before income taxes                                                 2,355            1,205

Income tax expense                                                                     844               53
                                                                                 ---------         --------

          Net income                                                           $     1,511       $    1,152
                                                                                ==========        =========

Per share data
    Net income - basic                                                         $      0.75       $     0.57
                                                                                ==========        =========
    Net income - diluted                                                       $      0.74       $     0.57
                                                                                ==========        =========

</TABLE>



The accompanying notes are an integral part of these statements.


                                       24
<PAGE>




                         COMMUNITY BANCORP OF NEW JERSEY

            Consolidated Statement of Changes in Stockholders' Equity

                     Years ended December 31, 2001 and 2000

                      (In thousands, except per share data)


<TABLE>
<CAPTION>


                                                                                        Accumulated
                                                                                           other
                                                        Common         Accumulated     comprehensive         Treasury
                                                         Stock           deficit       income (loss)         stock          Total
                                                      ----------      -------------   -------------------    -----------   -------

<S>                                                  <C>                <C>                <C>              <C>            <C>
Balance at January 1, 2000                           $ 20,523           $ (1,923)          $    (11)        $   (363)      $ 18,226

    5% stock dividend (91,191 shares)                   1,140             (1,140)                --               --             --
    Cash in lieu of fractional shares                      --                 (2)                --               --             (2)
    Net income                                             --              1,152                 --               --          1,152
    Accumulated other comprehensive income, net of
       reclassification adjustments and taxes              --                 --                 39               --             39
          Total comprehensive income                       --                 --                 --               --          1,191
                                                     --------           --------           --------         --------       --------


Balance at December 31, 2000                           21,663             (1,913)                28             (363)        19,415

    5% stock dividend (95,772 shares)                   1,484             (1,484)                --               --             --
    Cash in lieu of fractional shares                      --                 (3)                --               --             (3)
    Net income                                             --              1,511                 --               --          1,511
    Accumulated other comprehensive income, net of
       reclassification adjustments and taxes              --                 --                220               --            220

          Total comprehensive income                       --                 --                 --               --          1,731
                                                      --------           --------             --------         --------     --------


Balance at December 31, 2001                         $ 23,147           $ (1,889)          $    248         $   (363)      $ 21,143
                                                     =========          ========           ========         ========       ========



</TABLE>


The accompanying notes are an integral part of this statement.


                                       25
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

                      Consolidated Statements of Cash Flows

                                 (In thousands)

<TABLE>
<CAPTION>



                                                                                        Year ended December 31,
                                                                                     ----------------------------
                                                                                        2001              2000
                                                                                     -----------       ----------
<S>                                                                                     <C>               <C>
OPERATING ACTIVITIES
    Net income                                                                       $     1,511       $    1,152
    Adjustments to reconcile net income to net cash provided by
          operating activities
       Depreciation and amortization                                                         656              499
       Provision for loan losses                                                             386              348
       Accretion of investment discount                                                      (86)            (153)
       Amortization of investment premium                                                     24               10
       Loss on disposal of equipment                                                          98              -
       Decrease (increase) in accrued interest receivable                                     40             (854)
       Decrease (increase) in other assets                                                   201             (760)
       (Decrease) increase in accrued interest payable                                      (157)           1,199
       (Decrease) increase in other liabilities                                             (198)             366
                                                                                       ---------         --------

              Net cash provided by operating activities                                    2,475            1,807
                                                                                       ---------         --------

INVESTING ACTIVITIES
    Purchases of investment securities held-to-maturity                                  (14,810)             -
    Purchase of investment securities available-for-sale                                (102,577)         (32,434)
    Net increase in loans receivable                                                     (25,643)         (39,335)
    Proceeds from maturities and calls of investment securities                           81,650            8,705
    Purchase of bank owned life insurance                                                 (1,500)             -
    Purchases of premises and equipment                                                   (2,087)            (870)
                                                                                       ---------         --------

              Net cash used in investing activities                                      (64,967)         (63,934)
                                                                                       ---------         --------

FINANCING ACTIVITIES
    Increase in short-term borrowings                                                      1,600              -
    Stock dividends - cash paid in lieu of fractional shares                                  (3)              (2)
    Net increase in demand deposits and savings accounts                                  30,701           21,100
    Net increase in certificates of deposits                                              29,912           25,387
                                                                                       ---------         --------

              Net cash provided by financing activities                                   62,210           46,485
                                                                                       ---------         --------

              Net decrease in cash and cash equivalents                                     (282)         (15,642)

Cash and cash equivalents, beginning of period                                             9,624           25,266
                                                                                       ---------         --------

Cash and cash equivalents, end of period                                             $     9,342       $    9,624
                                                                                      ==========        =========

Supplemental disclosures of cash flow information
    Cash paid for interest                                                           $     5,748       $    3,747
                                                                                      ==========        =========

    Cash paid for income taxes                                                       $       981       $      436
                                                                                      ==========        =========

</TABLE>

The accompanying notes are an integral part of these statements.



                                       26
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000




NOTE A - ORGANIZATION

     Community Bancorp of New Jersey (the Company) is a one-bank holding company
     incorporated  under the laws of New Jersey to serve as the holding  company
     for  the  Community  Bank  of New  Jersey  (the  Bank).  The  Company  is a
     registered bank holding company under the Bank Holding Company Act of 1956,
     as amended.  The Bank is a New Jersey  state-chartered  banking institution
     and a member of the Federal  Reserve  System and Federal  Home Loan Bank of
     New York.

     The Bank provides banking  services to small and  medium-sized  businesses,
     professionals,  and individual consumers in the area of central New Jersey.
     Additionally,  the  Company  competes  with  other  banking  and  financial
     institutions in its market communities,  including  financial  institutions
     with resources substantially greater than its own. Commercial banks, credit
     unions,  and money  market  funds  actively  compete  for  savings and time
     deposits  and for similar  types of loans.  Such  institutions,  as well as
     consumer finance and insurance companies,  may be considered competitors of
     the Company with respect to one or more of the services it provides.

     The  Company  and Bank are  subject to  regulations  of  certain  state and
     federal agencies and, accordingly,  they are periodically examined by those
     regulatory  authorities.  As a consequence  of the extensive  regulation of
     commercial  banking  activities,  the Company's and Bank's  businesses  are
     susceptible  to  being  affected  by  state  and  federal  legislation  and
     regulations.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    1.  Basis of Financial Statement Presentation

     The accounting and reporting  policies of the Company conform to accounting
     principles   generally  accepted  in  the  United  States  of  America  and
     predominant practices within the banking industry. The financial statements
     include the  accounts of the Company and its wholly owned  subsidiary,  the
     Bank. All intercompany  balances and  transactions  have been eliminated in
     the financial statements.

     In  preparing  the  financial  statements,  management  is required to make
     estimates and  assumptions  that affect the reported  amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the balance  sheet and the  reported  amounts of revenues  and  expenses
     during the reporting periods.  Therefore,  actual results could differ from
     those estimates.

     The estimate and the  evaluation  of the adequacy of the allowance for loan
     losses  includes  an  analysis of the  individual  loans and  overall  risk
     characteristics  and size of the different loan portfolios,  and takes into
     consideration  current  economic and market  conditions,  the capability of
     specific  borrowers to pay specific  loan  obligations,  as well as current
     loan collateral  values.  However,  actual losses on specific loans,  which
     also are encompassed in the analysis, may vary from estimated losses.

    2.  Segment Reporting

     SFAS No. 131 establishes  standards for the way public business enterprises
     report information about operating segments in annual financial  statements
     and requires  that those  enterprises  report  selected  information  about
     operating  segments  in  subsequent  interim  financial  reports  issued to
     shareholders.  It also establishes  standards for related disclosures about
     products and services, geographic areas, and major customers. The statement
     requires that a public


                                   (Continued)



                                       27
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     business enterprise report financial and descriptive  information about its
     reportable  operating  segments.  Operating  segments are  components of an
     enterprise about which separate financial  information is available that is
     elevated regularly by the chief operating decision maker in deciding how to
     allocate resources and assess performance. The statement also requires that
     public  enterprises  report a measure  of segment  profit or loss,  certain
     specific  revenue and expense  items and segment  assets.  It also requires
     that  information be reported about revenues  derived from the enterprises'
     products or services,  or about the countries in which the enterprises earn
     revenues and hold assets, and about major customers,  regardless of whether
     that information is used in making operating decisions.

     The Company has one  reportable  segment,  "Community  Banking." All of the
     Company's  activities are interrelated,  and each activity is dependent and
     assessed  based on how each of the  activities of the Company  supports the
     others.  For example,  commercial  lending is dependent upon the ability of
     the Bank to fund itself with retail  deposits and other  borrowings  and to
     manage  interest rate and credit risk.  This  situation is also similar for
     consumer and residential  mortgage  lending.  Accordingly,  all significant
     operating decisions are based upon analysis of the Company as one operating
     segment or unit.

    3.  Cash and Cash Equivalents

     Cash and cash equivalents include cash on hand, amounts due from banks, and
     federal funds sold with maturities of three months or less.

    4.  Investment Securities

     The Company accounts for its investment  securities in accordance with SFAS
     No. 115,  Accounting for Certain Investments in Debt and Equity Securities.
     This standard requires, among other things, that debt and equity securities
     classified as available-for-sale be reported at fair value, with unrealized
     gains  and  losses  excluded  from  earnings  and  reported  as a  separate
     component,  net of income  taxes.  The net  effect of  unrealized  gains or
     losses, caused by marking an available-for-sale  portfolio to market, could
     cause  fluctuations  in the level of undivided  profits and  equity-related
     financial  ratios  as  market  interest  rates  cause  the  fair  value  of
     fixed-rate securities to fluctuate.

     Investment  and  mortgage-backed  securities,  which  the  Company  has the
     ability and intent to hold to maturity,  are held for  investment  purposes
     and carried at cost,  adjusted for amortization of premium and accretion of
     discount over the terms of the maturity in a manner which  approximates the
     interest method. At the time of purchase, the Company makes a determination
     as to whether or not it will hold the  investment  securities  to  maturity
     based upon an evaluation  of the  probability  of the  occurrence of future
     events. Gains or losses on the sales of securities  available-for-sale  are
     recognized upon realization utilizing the specific identification method.

     SFAS No. 133, Accounting for Derivative  Instruments and Hedging Activities
     (SFAS No. 133), was amended in June, 1999, by SFAS No. 137,  Accounting for
     Derivative  Instruments and Hedging  Activities - Deferral of the Effective
     Date of FASB  Statement  No.  133,  and in June,  2000,  by SFAS  No.  138,
     Accounting  for  Certain   Derivative   Instruments   and  Certain  Hedging
     Activities,  (collectively  SFAS No.  133).  SFAS  No.  133  requires  that
     entities  recognize all  derivatives as either assets or liabilities in the
     statement of financial  condition  and measure  those  instruments  at fair
     value.  Under SFAS No. 133, an entity may designate a derivative as a hedge
     of exposure to either changes in: (a) fair value of a recognized  assets or
     liability or firm commitment,  (b) cash flows of a recognized or forecasted
     transaction,  or (c)  foreign  currencies  of a net  investment  in foreign
     operations, firm commitments,


                                   (Continued)



                                       28
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     available-for-sale  securities or a forecasted transaction.  Depending upon
     the  effectiveness  of the hedge and/or the transaction  being hedged,  any
     changes in the fair value of the derivative instrument is either recognized
     in earnings in the current year,  deferred to future periods, or recognized
     as hedge accounting.  The Company adopted SFAS No. 133 effective January 1,
     2001.  No  adjustment  was required as a result of the change in accounting
     principle.

     Statement of  Financial  Accounting  Standards  No. 119,  Disclosure  About
     Derivative Financial  Instruments and Fair Value of Financial  Instruments,
     (SFAS No. 119) required disclosures about financial instruments,  which are
     defined as futures, forwards, swap and option contracts and other financial
     instruments with similar characteristics.  On-balance-sheet receivables and
     payables are excluded  from this  definition.  The Company did not hold any
     derivative financial instruments as defined by SFAS No. 119 at December 31,
     2001 or 2000.

    5.  Loans Receivable and Allowance for Loan Losses

     Loans receivable that management has the intent and ability to hold for the
     foreseeable  future or until  maturity  or  payoff  are  reported  at their
     outstanding principal, adjusted for any charge-offs, the allowance for loan
     losses,  and any deferred  fees or costs on originated  loans.  Interest on
     loans is accrued  and  credited  to  operations  based  upon the  principal
     amounts  outstanding.  The  allowance  for loan losses is  maintained at an
     amount  management deems adequate to cover estimated losses. In determining
     the level to be maintained,  management  evaluates many factors,  including
     current economic trends,  industry experience,  historical loss experience,
     industry loan concentrations, the borrowers' ability to repay and repayment
     performance, and estimated collateral values. In the opinion of management,
     the present  allowance is adequate to absorb  reasonable,  foreseeable loan
     losses. While management uses available  information to recognize losses on
     loans,  future additions to the allowance may be necessary based on changes
     in economic  conditions  or any of the other  factors used in  management's
     determination.  In addition,  various regulatory  agencies,  as an integral
     part of  their  examination  process,  periodically  review  the  Company's
     allowance  for losses on loans.  Such  agencies  may require the Company to
     recognize  additions  to the  allowance  based  on  their  judgments  about
     information available to them at the time of their examination.

     Loans are placed on non-accrual  when a loan is specifically  determined to
     be impaired or when  principal  or  interest is  delinquent  for 90 days or
     more.  Any unpaid  interest  previously  accrued on those loans is reversed
     from  income.  Interest  income  generally  is not  recognized  on specific
     impaired  loans unless the  likelihood of further loss is remote.  Interest
     payments  received  on such loans are  applied as a  reduction  of the loan
     principal balance. Interest income on other non-accrual loans is recognized
     only to the  extent of  interest  payments  received.  The  Company  had no
     non-accrual loans as of December 31, 2001 or 2000.

     The Company  accounts for its impaired  loans in  accordance  with SFAS No.
     114,  Accounting by Creditors for  Impairment of a Loan, as amended by SFAS
     No  118,  Accounting  by  Creditors  for  Impairment  of a  Loan  -  Income
     Recognition and Disclosures. This standard requires that a creditor measure
     impairment  based  on the  present  value of  expected  future  cash  flows
     discounted  at  the  loan's  effective  interest  rate,  except  that  as a
     practical  expedient,  a creditor may measure  impairment based on a loan's
     observable market price, or the fair value of the collateral if the loan is
     collateral dependent. Regardless of the measurement method, a creditor must
     measure  impairment  based on the fair  value  of the  collateral  when the
     creditor determines that foreclosure is probable.  The Company had no loans
     that would be defined as impaired at December 31, 2001 or 2000.




                                   (Continued)


                                       29
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     6.   Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
         -----------------------------------------------------------------------
          Extinguishments of Liabilities
          ------------------------------

     In September  2000, the Financial  Accounting  Standards  Board has adopted
     SFAS No. 140,  Accounting  for Transfers and Servicing of Financial  Assets
     and Extinguishments of Liabilities, which replaces SFAS No. 125, Accounting
     for  Transfers  and Servicing of Financial  Assets and  Extinguishments  of
     Liabilities,  revises the standards for accounting for the  securitizations
     and other transfers of financial  assets and collateral.  This new standard
     also requires certain disclosures,  but carries over most of the provisions
     of SFAS No. 125.  SFAS No. 140 is effective  for transfers and servicing of
     financial assets and  extinguishments of liabilities  occurring after March
     31, 2001. However,  for recognition and  reclassification of collateral and
     for disclosures  relating to securitizations,  transactions and collateral,
     this statement is effective for fiscal years ending after December 15, 2000
     with earlier  application  not allowed and is to be applied  prospectively.
     The  adoption  of this  statement  did not have a  material  impact  on the
     Company's consolidated financial statements.

    7.  Premises and Equipment
        ----------------------

     Premises and equipment are stated at cost less accumulated depreciation and
     amortization.  Depreciation and amortization are charged to operations on a
     straight-line basis over the estimated useful lives of the assets.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
     or  Disposal  of  Long-Lived  Assets.  SFAS No. 144  retains  the  existing
     requirements  to recognize and measure the impairment of long-lived  assets
     to be held and used or to be  disposed  of by sale.  However,  SFAS No. 144
     makes changes to the scope and certain measurement requirements of existing
     accounting guidance. SFAS No. 144 also changes the requirements relating to
     reporting  the effects of a disposal or  discontinuation  of a segment of a
     business.  SFAS No. 144 is effective  for financial  statements  issued for
     fiscal years  beginning  after December 15, 2001 and interim periods within
     those fiscal years.  The adoption of this statement is not expected to have
     a significant impact on the financial condition or results of operations of
     the Bank.

    8.  Income Taxes
        ------------

     Under the  liability  method,  deferred  tax  assets  and  liabilities  are
     determined based on the difference between the financial  statement and tax
     basis of assets and  liabilities,  as  measured  by the  enacted tax rates,
     which  will be in  effect  when  these  differences  reverse.  The  primary
     temporary  differences  are  allowance  for loan loss  recognition  and net
     unrealized gains on investment securities available-for-sale.

    9.  Earnings Per Share
     -  ------------------

     The Company  follows the  provisions  of SFAS No. 128,  Earnings Per Share.
     Basic EPS excludes dilution and is computed by dividing income available to
     common  shareholders  by the weighted  average  common  shares  outstanding
     during the period.  Diluted EPS takes into account the  potential  dilution
     that could occur if  securities  or other  contracts  to issue common stock
     were  exercised and converted  into common stock.  EPS is computed based on
     the weighted average number of shares of common stock outstanding.





                                   (Continued)



                                       30
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

    10.  Advertising Costs
         -----------------

     The Company expenses advertising costs as incurred.

    11.  Comprehensive Income
         --------------------

     The  Company  followed  SFAS  No.  130,  Reporting   Comprehensive  Income.
     Comprehensive  income consists of net income or loss for the current period
     and income,  expenses,  gains,  and losses that bypass the income statement
     and are reported directly in a separate component of equity.

     The income tax effects  allocated to  comprehensive  income at December 31,
     are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                               2001
                                                              ---------------------------------------
                                                                Before          Tax            Net
                                                                  Tax        (expense)       of tax
                                                                amount        benefit        amount
                                                              ----------    -----------    ----------

       Unrealized gains on securities
<S>                                                           <C>           <C>            <C>
          Unrealized holding gains arising during period      $      346    $      (126)   $      220

       Less reclassification
          Adjustment for gain realized in net income                 --             --            --
                                                                --------      ---------    ----------

       Other comprehensive income, net                        $      346    $      (126)   $      220
                                                               =========     ==========     =========

<CAPTION>

                                                                               2000
                                                              ---------------------------------------
                                                                Before          Tax            Net
                                                                  Tax        (expense)       of tax
                                                                amount        benefit        amount
                                                              ----------    -----------    ----------

       Unrealized gains on securities
<S>                                                           <C>           <C>            <C>
          Unrealized holding gains arising during period      $       63    $       (24)   $       39

       Less reclassification
          Adjustment for gain realized in net income                 --             --            --
                                                                --------      ---------    ----------

       Other comprehensive income, net                        $       63    $       (24)   $       39
                                                               =========     ==========     =========
</TABLE>

    12.  Reclassification
         ----------------

          Certain  reclassifications  have  been  made  to  the  2000  financial
          statements to conform to the 2001 presentation.


                                       31
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000



NOTE C - INVESTMENT SECURITIES

     The  following  tables  present  the book  values,  fair  values  and gross
     unrealized  gains  and  losses  of  the  Company's  investment   securities
     portfolio as of December 31, 2001 and 2000 (in thousands):

<TABLE>
<CAPTION>
                                                                              December 31, 2001
                                                           ------------------------------------------------------
                                                                             Gross         Gross
                                                           Amortized      unrealized    unrealized        Fair
                                                              Cost           gains        losses          value
                                                           ----------     ----------    -----------    ----------
       Investment securities available-for-sale
<S>                                                        <C>                   <C>           <C>         <C>
          U.S. Government and agency securities            $   64,569            510           (120)       64,959
          Corporate debt securities and other                     480            --             --            480
                                                             --------       --------      ---------      --------

                                                           $   65,049     $      510    $      (120)   $   65,439
                                                            =========      =========     ==========     =========

       Investment securities held-to-maturity
          U.S. Government and agency securities            $   14,275     $        6    $      (145)   $   14,136
          Corporate debt securities and other                   1,035             46            --          1,081
                                                             --------       --------      ---------      --------

                                                           $   15,310     $       52    $      (145)   $   15,217
                                                            =========      =========     ==========     =========
<CAPTION>

                                                                              December 31, 2000
                                                           ------------------------------------------------------
                                                                             Gross         Gross
                                                           Amortized      unrealized    unrealized        Fair
                                                              Cost           gains        losses          value
                                                           ----------     ----------    -----------    ----------
       Investment securities available-for-sale
<S>                                                        <C>                   <C>           <C>         <C>
          U.S. Government and agency securities            $   33,798     $       48    $        (4)   $   33,842
          Corporate debt securities and other                     264            --             --            264
                                                             --------       --------      ---------      --------

                                                           $   34,062     $       48    $        (4)   $   34,106
                                                            =========      =========     ==========     =========

       Investment securities held-to-maturity
          U.S. Government and agency securities            $    9,998     $      --     $       (43)   $    9,955
          Corporate debt securities and other                     500             14            --            514
                                                             --------       --------      ---------      --------

                                                           $   10,498     $       14    $       (43)   $   10,469
                                                            =========      =========     ==========     =========
</TABLE>

    The amortized cost and fair value of the Company's investment securities at
    December 31, 2001, by contractual maturity, are shown below. Expected
    maturities will differ from contractual maturities because borrowers may
    have the right to call or prepay obligations with or without call or
    prepayment penalties (in thousands).
<TABLE>
<CAPTION>

                                                              Available-for-sale             Held-to-maturity
                                                           -------------------------    -------------------------
                                                            Amortized        Fair        Amortized     Fair
                                                           Cost           value         cost           value
                                                           ----------     ----------     ---------      ---------

<S>                                                            <C>            <C>            <C>           <C>
       Due in one year or less                             $      --      $      --     $       535    $      535
       Due after one year through five years                   64,569         64,959         14,275        14,136
       Due after five years through ten years                     -              --             500           546
       Due after ten years                                        480            480            --            --
                                                             --------       --------      ---------      --------

                                                           $   65,049     $   65,439    $    15,310    $   15,217
                                                            =========      =========     ==========     =========
</TABLE>

    A portion of the Company's U.S. Government and agency securities, totaling
    approximately $1,300,000 at December 31, 2001 and 2000, was pledged as
    collateral to secure deposits as required or permitted by law.




                                       32
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE D - LOANS RECEIVABLE

    Major loan classifications at December 31 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                           2001           2000
                                                                                        -----------    ----------

<S>                                                                                     <C>            <C>
       Consumer loans                                                                   $    18,562    $   14,278
       Residential mortgages                                                                  6,980         7,880
       Commercial and industrial loans                                                       25,736        24,925
       Construction loans                                                                    21,962        17,046
       Commercial mortgages                                                                  74,470        57,030
       Other                                                                                    118         1,064
                                                                                          ---------      --------
                                                                                            147,828       122,223
       Less
          Unearned discounts and deferred loan fees                                            (225)         (257)
          Allowance for loan losses                                                          (1,964)       (1,584)
                                                                                          ---------      --------

                                                                                        $   145,639    $  120,382
                                                                                         ==========     =========
</TABLE>

     The  Company  had no  non-accrual  loans or loans  that would be defined as
     impaired at December 31, 2001 or 2000.

     The Company defines non-performing assets to include loans past due 90 days
     or more,  impaired  loans and other real estate  owned.  The Company had no
     non-performing  assets at December 31, 2001 or 2000. There were no loans to
     directors or executive officers at or during the periods ended December 31,
     2001 or 2000.

     Changes in the allowance for loan losses is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                           2001           2000
                                                                                        -----------    ----------

<S>                                                                                     <C>            <C>
       Balance, beginning of year                                                       $     1,584    $    1,237
       Provision charged to expenses                                                            386           348
       Loans charged-off                                                                         (6)           (1)
                                                                                          ---------      --------

       Balance, end of period                                                           $     1,964    $    1,584
                                                                                         ==========     =========
</TABLE>

NOTE E - PREMISES AND EQUIPMENT

    Premises and equipment at December 31 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                         Estimated
                                                                       useful lives        2001           2000
                                                                     ---------------    -----------    ----------

       Land                                                             Indefinite      $       443    $      443
<S>                                                                    <C>  <C>               <C>           <C>
       Buildings and leasehold improvements                            10 - 39 years          4,369         3,391
       Furniture, fixtures and equipment                                3 -  7 years          1,350         1,075
       Computer equipment and software                                  3 -  5 years          1,501         1,076
       Construction in progress                                                                 68           163
                                                                                          ---------      --------
                                                                                              7,731         6,148
       Less accumulated depreciation and amortization                                        (1,396)       (1,146)
                                                                                          ---------      --------

                                                                                        $     6,335    $    5,002
                                                                                         ==========     =========
</TABLE>

     Depreciation   and   amortization   charged  to   operations   amounted  to
     approximately  $656,000 and  $499,000 for year ended  December 31, 2001 and
     2000, respectively.



                                       33
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE F - DEPOSITS

    At December 31, 2001, the scheduled maturities of certificates of deposit
are summarized as follows (in thousands):

       2002                                                      $    80,484
       2003                                                            5,854
       2004                                                               31
       2005                                                               13
                                                                   ---------

                                                                 $    86,382

    Interest expense on deposits is as follows (in thousands):

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

       Savings                                    $     1,461    $    1,891
       NOW and money market                               477           562
       Time deposits                                    3,623         2,493
                                                    ---------      --------

                                                  $     5,561    $    4,946
                                                   ==========     =========

NOTE G - EQUITY TRANSACTIONS

    The Company paid shareholders a 5% stock dividend in 2001 and a 5% stock
dividend in 2000.

    On April 27, 2000, the shareholders of the Company approved an Amendment to
    the Company's Certificate of Incorporation to provide for 1,000,000 shares
    of series preferred stock, the terms, conditions and designations of which
    may be set by the Board of Directors at the time of issuance; and to
    increase the authorized shares of common stock, no par value, to 10,000,000.
    No shares of any series of preferred stock have been issued.

NOTE H - INCOME TAXES

    The components of the provision for income taxes (benefit) are as follows
(in thousands):

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

       Current
          Federal                                     $       893    $      467
          State                                                70            56
                                                        ---------      --------
                                                              963           523
                                                        ---------      --------

       Deferred
          Federal (benefit)                                  (114)         (450)
          State (benefit)                                      (5)          (20)
                                                        ---------      --------
                                                             (119)         (470)
                                                        ---------      --------

                                                      $       844    $       53
                                                       ==========     =========

                                   (Continued)



                                       34
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE H - INCOME TAXES - Continued

    A reconciliation between the reported income tax expense and the amount
    computed by multiplying income before income tax by the Federal statutory
    income tax rate is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                               2001           2000
                                                                            -----------    ----------

<S>                                                                         <C>            <C>
       Expected statutory income tax expense                                $       801    $      410
       Increase (decrease) in taxes resulting from:
          State taxes on income                                                      44            24
          Benefit from valuation allowance decrease                                  --          (384)
          Other, net                                                                  1             3
                                                                              ---------      --------

       Total income tax provision                                           $       844    $       53
                                                                             ==========     =========

    Net deferred tax assets consist of the following (in thousands):

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

       Allowance for loan loss                                              $       631    $      494
       Organizational and start-up costs                                             12            43
       Unrealized gains on investment securities
          available-for-sale                                                       (142)          (16)
       Other                                                                        (51)          (64)
                                                                              ---------      --------

          Net deferred tax asset, included in other assets                  $       450    $      457
                                                                             ==========     =========
</TABLE>

     Management  believes  that it is more likely than not that the deferred tax
     assets will be realized; therefore, no valuation allowance was recorded for
     deferred tax assets at December 31, 2001.

NOTE I - OTHER EXPENSES

    Other expenses consist of the following (in thousands):

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

       Communications and office expense      $       267    $      221
       Stationery and printing                        320           258
       Data processing                                739           610
       Systems conversion costs                       217            --
       Professional fees                              324           340
       Marketing and advertising                      417           362
       Stockholder expense                             49            35
       Directors' fees                                 58            --
       Other                                          244           289
                                                ---------      --------

                                              $     2,635    $    2,115
                                               ==========     =========




                                       35
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE J - EARNINGS PER SHARE

    The following table illustrates the required disclosure of the
    reconciliation of the numerators and denominators of the basic and diluted
    earnings per share (EPS) computations (in thousands, except per share data).
    Weighted average shares for 2001 and 2000 have been retroactively adjusted
    to reflect the 5% stock dividend in 2001 and the 5% stock dividend in 2000:

<TABLE>
<CAPTION>
                                                                               Year ended December 31, 2001
                                                                          ---------------------------------------
                                                                                         Weighted
                                                                                          Average       Per share
                                                                            Income        shares         amount
                                                                          ----------    -----------    ----------
       Basic EPS
<S>                                                                       <C>             <C>          <C>
          Net income available to common stockholders                     $    1,511      2,014,729    $     0.75
       Effect of dilutive securities
          Options                                                                --          40,422            (0.01)
                                                                            --------    -----------      -----------
       Diluted EPS
          Net income available to common stockholders plus
              assumed conversion                                          $    1,511      2,055,151    $     0.74
                                                                           =========    ===========     =========
</TABLE>

     15,454  options to purchase  shares of common  stock with  exercise  prices
     ranging  from  $14.86  to  $16.30  per  share  were  not  included  in  the
     computation of 2001 diluted EPS because the exercise price was greater than
     the average market price of the common stock.

<TABLE>
<CAPTION>
                                                                               Year ended December 31, 2000
                                                                          ---------------------------------------
                                                                                         Weighted
                                                                                          Average       Per share
                                                                            Income        shares         amount
                                                                          ----------    -----------    ----------
       Basic EPS
<S>                                                                       <C>             <C>          <C>
          Net income available to common stockholders                     $    1,152      2,014,905    $     0.57
       Effect of dilutive securities
          Options                                                                --          13,522           --
                                                                            --------    -----------      --------
       Diluted EPS
          Net income available to common stockholders plus
              assumed conversion                                          $    1,152      2,028,427    $     0.57
                                                                           =========    ===========     =========
</TABLE>

     125,477  options to purchase  shares of common stock with  exercise  prices
     ranging  from  $12.50  to  $15.29  per  share  were  not  included  in  the
     computation of 2000 diluted EPS because the exercise price was greater than
     the average market price of the common stock.

NOTE K - STOCK OPTIONS

     Under the Company's 1997 Stock Option Plan for Non-Employee  Directors (the
     1997 Stock  Option Plan for  Non-Employee  Directors),  options to purchase
     51,101  common  stock shares may be issued.  Each of the nine  non-employee
     directors were automatically granted 5,678 common stock options exercisable
     at $10.12 per share  (110% of market  value on date of grant) in July 1997.
     The options vest  one-third each year. The option may be exercised up to 10
     years after the grant.  At December 31, 2001,  49,208  options were granted
     under this plan.


                                   (Continued)



                                       36
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE K - STOCK OPTIONS - Continued

     Under the  Company's  1997 Stock Option Plan (the 1997 Stock Option  Plan),
     options to purchase  63,808  common stock shares may be issued.  Options to
     purchase  48,640  common  stock  shares were  granted to nine  non-employee
     directors  at $10.12 per share  (110% of market  value on date of grant) in
     July 1997, in varying amounts to each non-employee director.  Additionally,
     17,034  options  were  granted to the  President at $13.00 per share in May
     1999. The options vest one-third each year. The options may be exercised up
     to 10 years after the grant.  At December  31,  2001,  65,674  options were
     granted under this plan.

     Under the  Company's  1997  Employee  Stock Option Plan (the 1997  Employee
     Stock Option Plan),  options to purchase  56,779 common stock shares may be
     issued.  The plan is  designed  to reserve  options  for  employees  of the
     Company.  The discretion of the board is very broad in determining to whom,
     how  many,  and at what  price  options  may be  issued.  Under  the  Plan,
     employees may be awarded either incentive stock options, which must have an
     exercise  price of no less than 100% of the fair market value of the common
     stock on the date of grant,  or  non-qualified  options,  which may have an
     exercise price to be determined by the Board of Directors at grant, but not
     less than 85% of the fair market  value of the common  stock on the date of
     grant.  The options under this plan vest from 3 to 5 years. At December 31,
     2001, 52,590 options were granted under this plan.

     Under the 1998 Stock Option Plan (the 1998 Stock  Option  Plan)  options to
     purchase  up to 56,779  shares of common  stock may be issued to members of
     management. The Board adopted this stock option plan in connection with the
     retention  of the  President  and Chief  Executive  Officer of the Company.
     Under the terms of the  President's  employment,  he is entitled to receive
     options to purchase  85,168 shares of common stock.  The options under this
     plan vest from 3 to 5 years.  At December  31,  2001,  44,262  options were
     granted under this plan.

     The Board of Directors approved and received  shareholder approval in April
     2000 for the 2000  Director  Stock  Option  Plan (the 2000  Director  Stock
     Option  Plan),  pursuant to which  options to purchase  93,713 common stock
     shares may be issued.  Options to purchase  89,250  common  stock have been
     granted to eight non-employee directors at $12.50 per share (110% of market
     value on date of grant) in varying amounts to each  non-employee  director.
     The options vest over a two year period. The options may be exercised up to
     10 years after the grant. At December 31, 2001, 80,483 options were granted
     under this plan.

     The Board of Directors approved and received  shareholder approval in April
     2000 for the 2000  Employee  Stock  Option  Plan (the 2000  Employee  Stock
     Option Plan). Options to purchase 77,175 shares of the common stock will be
     reserved for issuance  under this Plan.  Options to purchase  22,429 common
     stock shares have been granted to key  employees,  including  13,628 to the
     President at prices  ranging from $11.91 to $16.30.  The options under this
     plan vest from 2 to 5 years.  The options may be  exercised  up to 10 years
     after grant.  At December 31, 2001,  36,053 options were granted under this
     plan.

     The Company follows SFAS No. 123, Accounting for Stock-Based  Compensation,
     which  allows  an  entity  to use a fair  value-based  method  for  valuing
     stock-based  compensation,  which measures  compensation  cost at the grant
     date based on the fair value of the award.  Compensation is then recognized
     over  the  service   period,   which  is  usually   the   vesting   period.
     Alternatively,  the  statement  permits  entities to elect  accounting  for
     employee stock options and similar instruments under Accounting  Principles
     Board (APB) Opinion No. 25,  Accounting for Stock Issued to Employees,  and
     its  related  interpretations.  Entities  that elect to  account  for stock
     options using APB Opinion No. 25 are required to make pro forma disclosures
     of net  income and EPS,  as if the fair  value-based  method of  accounting
     defined in SFAS No. 123 had been applied.  The Company's stock option plans
     are accounted for under APB Opinion No. 25.


                                   (Continued)


                                       37
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE K - STOCK OPTIONS - Continued

     Had compensation cost of the above stock option plans been determined based
     on the fair value of the  options at the grant  dates  consistent  with the
     method of SFAS No. 123, the Company's  net income and diluted  earnings per
     share would have been reduced to the pro forma amounts  indicated below (in
     thousands, except per share data).

                                                       December 31,
                                                -------------------------
                                                   2001           2000
                                                -----------    ----------

       Net income
          As reported                           $     1,511    $    1,152
          Pro forma                                   1,068           630

       Net income per share - basic
          As reported                           $      0.75    $     0.57
          Pro forma                                    0.53          0.31

       Net income per share - diluted
          As reported                           $      0.74    $     0.57
          Pro forma                                    0.52          0.31

    The fair value of each option grant is estimated on the date of grant using
    the Black-Scholes options-pricing model with the following weighted-average
    assumptions used for grants in 2001 and 2000, dividend yield of 0% for both
    years; expected volatility of 25% in both years; risk-free interest rate of
    5.65% in 2001 and 6.34% in 2000; and expected lives of 5 years in 2001 and
    2000.

    A summary of the status of the Company's stock option plans as of December
    31, 2001, and the change during the years then ended is represented below.

<TABLE>
<CAPTION>
                                                                     2001                          2000
                                                           -------------------------    -------------------------
                                                                           Weighted                     Weighted
                                                                            Average                      Average
                                                                           Exercise                     Exercise
                                                             Shares          Price        Shares          Price
                                                           ----------     ----------    -----------    ----------

<S>                                                           <C>          <C>              <C>         <C>
       Outstanding, beginning of year                         315,370      $  12.33         218,391     $  12.30
       Granted                                                 12,900         16.30         112,560        12.61
       Cancelled/forfeited                                        -                         (15,581)       14.05
                                                           ----------                   -----------

       Outstanding, end of year                               328,270         12.48         315,370        12.33
                                                           ==========                   ===========

       Weighted average fair value of
          options granted during the year                                  $   5.49                     $   4.23
                                                                            =======                      =======
</TABLE>





                                   (Continued)



                                       38
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE K - STOCK OPTIONS - Continued

     The following  table  summarizes  information  about  nonqualified  options
     outstanding at December 31, 2001:

<TABLE>
<CAPTION>
                                                   Options outstanding                       Options exercisable
                                    ---------------------------------------------    ------------------------------
                                                        Weighted
                                        Number           average       Weighted        Number            Weighted
                                    outstanding at     remaining       average         outstanding at    average
            Range of                 December 31,      contractual     exercise        December 31,      exercise
         exercise prices                 2001             life          price           2001               price
       ------------------           --------------     -----------     ----------    ---------------    -----------

<S>    <C>      <C>                     <C>             <C>              <C>              <C>              <C>
       $10.13 - $14.88                  271,376         7.5 years        $11.30           177,777          $11.30
       $15.24 - $16.30                   56,894         7.8 years        $15.38            26,226          $15.38
                                       --------                                         ---------

                                        328,270                                           204,003
                                       ========                                         =========
</TABLE>

NOTE L - COMMITMENTS

    Lease Commitments
    -----------------

     The Company leases several banking facilities under noncancelable operating
     lease agreements  expiring through 2021. At the end of the lease terms, the
     leases are  renewable  at the then fair rental value for periods of 5 to 20
     years.  Rent expense was $193,000 and $93,000 for the years ended  December
     31, 2001 and 2000, respectively.

     The  approximate  minimum  rental  commitments  under  operating  leases at
     December 31, 2001, are as follows (in thousands):

       2002                                                 $     255
       2003                                                       250
       2004                                                       220
       2005                                                       216
       2006                                                       222
       Thereafter                                               2,267
                                                              -------

                                                            $   3,430

NOTE M - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATIONS OF
     CREDIT RISK

     The Company is a party to financial instruments with off-balance-sheet risk
     in the  normal  course  of  business  to meet  the  financing  needs of its
     customers. These financial instruments include commitments to extend credit
     and  standby  letters  of credit.  Those  instruments  involve,  to varying
     degrees,  elements of credit and interest rate risk in excess of the amount
     recognized in the financial  statements.  The Company's  exposure to credit
     loss in the event of  non-performance  by the other party to the  financial
     instrument for  commitments to extend credit and standby  letters of credit
     is represented by the contractual amount of those instruments.  The Company
     uses the  same  credit  policies  in  making  commitments  and  conditional
     obligations as it does for on-balance-sheet instruments.


                                   (Continued)


                                       39
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE M - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATIONS OF
     CREDIT RISK - Continued

     The  Company  had the  following  approximate  off-balance-sheet  financial
     instruments whose contract amounts represent credit risk (in thousands):

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

       Commitments to extend credit                 $    31,355    $   28,847
       Letters of credit - standby and performance        3,344         2,313
                                                      ---------      --------

                                                    $    34,699    $   31,160
                                                     ==========     =========

     Commitments  to extend credit are  agreements to lend to a customer as long
     as there is no  violation of any  condition  established  in the  contract.
     Commitments  generally  have fixed  expiration  dates or other  termination
     clauses and may require payment of a fee. Since many of the commitments are
     expected to expire without being drawn upon, the total  commitment  amounts
     do  not  necessarily  represent  future  cash  requirements.   The  Company
     evaluates each customer's  creditworthiness  on a  case-by-case-basis.  The
     amount of  collateral  obtained,  if deemed  necessary  by the Company upon
     extension of credit,  is based on  management's  credit  evaluation  of the
     customer.  Collateral held varies but may include  guarantees,  personal or
     commercial real estate, accounts receivable, inventory, and equipment.

     Standby letters of credit are conditional commitments issued by the Company
     to  guarantee  the  performance  of a  customer  to a  third  party.  Those
     guarantees  are  primarily  issued to  support  contracts  entered  into by
     customers. Most guarantees extend for one year. The credit risk involved in
     issuing  letters  of credit is  essentially  the same as that  involved  in
     extending loan facilities to customers.

     Substantially  all of the Company's loans are secured by real estate in New
     Jersey. Accordingly,  the Company's primary concentration of credit risk is
     related  to  the  real  estate  market  in New  Jersey,  and  the  ultimate
     collectibility   of  this  portion  of  the  Company's  loan  portfolio  is
     susceptible to changes in economic conditions in that area.

NOTE N - FAIR VALUE OF FINANCIAL INSTRUMENTS

     SFAS No. 107 requires disclosure of the estimated fair value of an entity's
     assets and  liabilities  considered  to be financial  instruments.  For the
     Company, as for most financial institutions, the majority of its assets and
     liabilities  are  considered  financial  instruments.  However,  many  such
     instruments lack an available trading market, as characterized by a willing
     buyer and seller  engaging  in an  exchange  transaction.  Also,  it is the
     Company's general practice and intent to hold its financial  instruments to
     maturity  and not to engage in  trading  or sales  activities,  except  for
     certain loans.  Therefore,  the Company had to use significant  estimations
     and present value calculations to prepare this disclosure.

     Changes in the  assumptions or  methodologies  used to estimate fair values
     may materially affect the estimated amounts.  Also, management is concerned
     that there may not be reasonable  comparability between institutions due to
     the wide range of permitted assumptions and methodologies in the absence of
     active  markets.  This lack of  uniformity  gives rise to a high  degree of
     subjectivity in estimating financial instrument fair values.

     Estimated  fair values have been  determined  by the Company using the best
     available data and an estimation  methodology suitable for each category of
     financial  instruments.  The estimation  methodologies  used, the estimated
     fair values,  and recorded book balances at December 31, 2001 and 2000, are
     outlined below.

                                   (Continued)



                                       40
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE N - FAIR VALUE OF FINANCIAL INSTRUMENTS - Continued

     For cash and  cash  equivalents,  including  cash  and due from  banks  and
     federal funds sold the recorded book values of $9,342,000 and $9,624,000 as
     of December 31, 2001 and 2000,  respectively,  approximate fair values. The
     estimated  fair values of investment  securities are based on quoted market
     prices,  if  available.  Estimated  fair values are based on quoted  market
     prices of comparable instruments if quoted market prices are not available.

     The net loan portfolio at December 31, 2001 and 2000, has been valued using
     a  present  value  discounted  cash  flow  where  market  prices  were  not
     available.  The discount rate used in these  calculations  is the estimated
     current market rate adjusted for credit risk. The carrying value of accrued
     interest approximates fair value.

     The  estimated  fair  values  of  demand  deposits  (i.e.,   interest-  and
     noninterest-bearing  checking accounts, savings, and certain types of money
     market accounts) are, by definition,  equal to the amount payable on demand
     at the reporting date (i.e.,  their carrying  amounts).  The fair values of
     certificates  of  deposit  are  estimated  using  a  discounted  cash  flow
     calculation  that  applies  interest  rates  currently  being  offered to a
     schedule of aggregated expected monthly time deposit maturities. Based upon
     the current time deposit  maturities,  the carrying value  approximates its
     fair value. The carrying amount of accrued  interest  payable  approximates
     its fair value.

<TABLE>
<CAPTION>
                                                                     2001                          2000
                                                           -------------------------    -------------------------
                                                            Carrying       Estimated         Carrying       Estimated
                                                             Amount       fair value         amount         fair value
                                                           ----------     --------------     ----------     ---------------
                                                                               (in thousands)

<S>                                                        <C>            <C>           <C>            <C>
       Investment securities available-for-sale            $   65,439     $   65,439    $    34,106    $   34,106
       Investment securities held-to-maturity                  15,310         15,217         10,498        10,469
       Loans receivable                                       147,603        149,650        121,966       121,362
       Certificates of deposits                                86,382         86,382         56,470        56,470
</TABLE>

     The fair value of  commitments  to extend credit is estimated  based on the
     amount of  unamortized  deferred loan  commitment  fees.  The fair value of
     letters  of  credit  is based  on the  amount  of  unearned  fees  plus the
     estimated  cost  to  terminate  the  letters  of  credit.  Fair  values  of
     unrecognized  financial  instruments including commitments to extend credit
     and the fair value of letters of credit are considered immaterial.

NOTE O - REGULATORY MATTERS

     The Bank is subject to various regulatory capital requirements administered
     by  federal   regulatory   agencies.   Failure  to  meet  minimum   capital
     requirements  can  initiate  certain  mandatory--and   possibly  additional
     discretionary--  actions by regulators  that, if  undertaken,  could have a
     direct material effect on the Bank's  financial  statements.  Under capital
     adequacy  guidelines  and the  regulatory  framework for prompt  corrective
     action,  the Bank  must  meet  specific  capital  guidelines  that  involve
     quantitative  measures  of  the  Bank's  assets,  liabilities  and  certain
     off-balance-sheet   items  as  calculated   under   regulatory   accounting
     practices.  The Bank's capital amounts and  classification are also subject
     to  qualitative   judgments  by  the  regulators  about  components,   risk
     weightings, and other factors.

     Quantitative measures established by regulations to ensure capital adequacy
     require the Company to  maintain  minimum  amounts and ratios (set forth in
     the  table  below)  of  total  and  Tier  I  capital  (as  defined  in  the
     regulations) to  risk-weighted  assets (as defined),  and of Tier I capital
     (as  defined) to average  assets (as  defined).  As of December  31,  2001,
     management  believes that the Bank meets all capital adequacy  requirements
     to which it is subject and considers the Bank to be "well capitalized".

                                   (Continued)



                                       41
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE O - REGULATORY MATTERS - Continued

     As of June 27, 2000, the most recent  notification from the Federal Deposit
     Insurance  Corporation  categorized the Bank as well capitalized  under the
     regulatory  framework for prompt  corrective  action.  To be categorized as
     well capitalized,  the Bank must maintain minimum total risk-based,  Tier I
     risk-based and Tier I leverage ratios as set forth in the table.  There are
     no conditions or events since that  notification  that management  believes
     have changed the institution's category.

     The Bank's  actual  capital  amounts and ratios are also  presented  in the
     following table (in thousands, except percentages).

<TABLE>
<CAPTION>
                                                                                                   To be well
                                                                                                capitalized under
                                                                            For capital         prompt corrective
                                                       Actual            adequacy purposes      action provisions
                                               ---------------------   --------------------   ---------------------
                                                 Amount      Ratio      Amount       Ratio      Amount      Ratio
                                               ---------   ---------   ---------  ---------   ---------   ---------

       As of December 31, 2001

          Total capital (to risk-
<S>                                              <C>         <C>         <C>          <C>       <C>         <C>
              weighted assets)                   $22,864     13.40%      $13,654    =>8.00%     $17,067   =>10.00%
          Tier I capital (to risk-
              weighted assets)                    20,900     12.25         6,827    =>4.00       10,240  =>  6.00
          Tier I capital (to average
              assets)                             20,900      9.17         6,836    =>3.00       11,394  =>  5.00

       As of December 31, 2000

          Total capital (to risk-
              weighted assets)                   $20,972     15.66%      $10,715    =>8.00%     $13,393   =>10.00%
          Tier I capital (to risk-
              weighted assets)                    19,388     14.48         5,357    =>4.00        8,036  =>  6.00
          Tier I capital (to average
              assets)                             19,388     11.13         5,224    =>3.00        8,707  =>  5.00

</TABLE>

     In addition,  pursuant to the order of the New Jersey  Commissioner  of the
     Department of Banking and Insurance granting the Bank a charter, as amended
     during  April  2001,  the Bank is required to maintain a ratio of equity to
     total assets of at least 8% for its first five years of  operations.  As of
     December  31, 2001 and 2000,  the Bank's  ratio of equity  capital to total
     assets was 8.51% and 10.65%, respectively.



                                       42
<PAGE>



                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE P - PARENT COMPANY FINANCIAL INFORMATION

     The condensed  financial  information for Community  Bancorp of New Jersey,
     parent company only, has been presented as follows (in thousands).


                                  BALANCE SHEET
<TABLE>
<CAPTION>


                                                                            December 31,
                                                                     -------------------------
                                                                        2001           2000
                                                                     -----------    ----------
       ASSETS

<S>                                                                  <C>            <C>
          Investment in subsidiary                                   $    21,148    $   19,417
          Other assets                                                       --            120
                                                                       ---------      --------

              Total assets                                           $    21,148    $   19,537
                                                                      ==========     =========

       LIABILITIES AND STOCKHOLDERS' EQUITY
          Other liabilities                                          $         5    $      122
          Stockholders' equity                                            21,143        19,415
                                                                       ---------      --------

              Total liabilities and stockholders' equity             $    21,148    $   19,537
                                                                      ==========     =========

<CAPTION>

                             STATEMENT OF OPERATIONS


                                                                       Year ended December 31,
                                                                        2001           2000
                                                                     -----------    ----------

<S>                                                                  <C>            <C>
          Services fee from subsidiary                               $       129    $      120
          Other operating expenses                                          (129)         (120)
                                                                       ---------      --------

              Income before undistributed income from subsidiary             --            --

          Equity in undistributed income of subsidiary                     1,511         1,152
                                                                       ---------      --------

              Net income                                             $     1,511    $    1,152
                                                                      ==========     =========

</TABLE>

                                   (Continued)



                                       43
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE P - PARENT COMPANY FINANCIAL INFORMATION - Continued


                             STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                          Year ended December 31,
                                                                                           2001           2000
                                                                                        -----------    ----------

<S>                                                                                     <C>            <C>
    Cash flows from operating activities
       Net income                                                                       $     1,511    $    1,152
       Adjustments to reconcile net income to net cash provided by operations
          Equity in undistributed earnings of subsidiary                                     (1,511)       (1,152)
          Net (increase) decrease in other assets                                               119           (73)
          Net increase (decrease) in other liabilities                                         (117)           76
                                                                                          ---------      --------

              Net cash provided by operating activities                                           2             3
                                                                                          ---------      --------

       Cash flows from investing activities
          Contributions to subsidiary                                                           --            --
          Proceeds to fund treasury stock and option transactions                               --            --
                                                                                          ---------      --------

              Net cash used in investing activities                                             --            --
                                                                                          ---------      --------

       Cash flows from financing activities
          Stock dividends - cash paid in lieu of fractional shares                               (3)           (2)
          Effect of treasury stock and option transactions                                      --            --
          Issuance of common stock                                                              --            --
                                                                                          ---------      --------

              Net cash used in financing activities                                              (3)           (2)

              Net increase (decrease) in cash and cash equivalents                               (1)            1
                                                                                          ---------      --------

       Cash and cash equivalents at beginning of period                                           1           --
                                                                                          ---------      --------

       Cash and cash equivalents at end of year                                         $       --     $        1
                                                                                         ==========     =========

</TABLE>



                                       44
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 2001 and 2000




NOTE Q - SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

    The following summarizes the consolidated results of operations during 2001
    and 2000, on a quarterly basis, for Community Bancorp of New Jersey (in
    thousands except per share data):

<TABLE>
<CAPTION>
                                                                                    2001
                                                           ------------------------------------------------------
                                                             Fourth          Third        Second          First
                                                             Quarter        Quarter       Quarter        Quarter
                                                           ----------     ----------    -----------    ----------

<S>                                                        <C>            <C>           <C>            <C>
       Interest income                                     $    3,658     $    3,633    $     3,405    $    3,469
       Interest expense                                         1,325          1,363          1,371         1,532
                                                             --------       --------      ---------      --------

          Net interest income                                   2,333          2,270          2,034         1,937

       Provision for loan losses                                   45             95            100           146
                                                             --------       --------      ---------      --------

          Net interest after provisions for loan losses         2,288          2,175          1,934         1,791

       Non-interest income                                        405            289            376           358
       Non-interest expense                                     1,994          1,876          1,768         1,623
                                                             --------       --------      ---------      --------

          Income before income taxes                              699            588            542           526

       Income taxes                                               243            214            195           192
                                                             --------       --------      ---------      --------

          Net income                                       $      456     $      374    $       347    $      334
                                                            =========      =========     ==========     =========

       Net income per share
          Basic                                            $     0.23     $     0.18    $      0.17    $     0.17
          Diluted                                          $     0.23     $     0.18    $      0.17    $     0.16
<CAPTION>

                                                                                    2000
                                                           ------------------------------------------------------
                                                             Fourth          Third        Second          First
                                                             Quarter        Quarter       Quarter        Quarter
                                                           ----------     ----------    -----------    ----------

<S>                                                        <C>            <C>           <C>            <C>
       Interest income                                     $    3,323     $    3,048    $     2,605    $    2,304
       Interest expense                                         1,544          1,375          1,060           967
                                                             --------       --------      ---------      --------

          Net interest income                                   1,779          1,673          1,545         1,337

       Provision for loan losses                                  155             55             80            58
                                                             --------       --------      ---------      --------

          Net interest after provisions for loan losses         1,624          1,618          1,465         1,279

       Non-interest income                                        296            196            265           152
       Non-interest expense                                     1,464          1,451          1,490         1,285
                                                             --------       --------      ---------      --------

          Income before income taxes                              456            363            240           146

       Income taxes                                                41             12            -             -
                                                             --------       --------      ---------      --------

          Net income                                       $      415     $      351    $       240    $      146
                                                            =========      =========     ==========     =========

       Net income per share
          Basic                                            $     0.20     $     0.18    $      0.12    $     0.07
          Diluted                                          $     0.20     $     0.18    $      0.12    $     0.07

</TABLE>

                                       45
<PAGE>
               Report of Independent Certified Public Accountants
               --------------------------------------------------


 Board of Directors and Stockholders
 Community Bancorp of New Jersey


     We have audited the consolidated balance sheets of Community Bancorp of New
Jersey as of December 31, 2001 and 2000, and the related consolidated statements
of income,  changes in stockholders'  equity,  and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  consolidated  financial  position of Community
Bancorp of New Jersey as of  December  31,2001  and 2000,  and the  consolidated
results of its consolidated operations and consolidated cash flows for the years
then ended, in conformity with accounting  principles  generally accepted in the
United States of America.

/s/ Grant Thornton LLP
----------------------
Grant Thornton LLP
Philadelphia, Pennsylvania
January 11,2002


                                       46