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


                                   FORM 10-KSB


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

                   For the fiscal year ended December 31, 1999

                                       or

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

              For the transition period from ________ to _________

                        Commission File Number 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)



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


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  referenced in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [_]

As of December 31, 1999,  there were  1,827,766  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 2000 Annual
                of the Company; Compliance with           Meeting of Shareholders to be filed no
                Section 16(a) of the Exchange Act         later than April 30, 2000.

Item 10.        Executive Compensation                    Proxy Statement for 2000 Annual
                                                          Meeting of Shareholders to be filed no
                                                          later than April 30, 2000.

Item 11.        Security Ownership of Certain             Proxy Statement for 2000  Annual
                Beneficial Owners and Management          Meeting of Shareholders to be filed no
                                                          later  than  April  30,  2000.


Item 12.        Certain Relationships and Related         Proxy Statement for 2000 Annual
                Transactions                              Meeting  of  Shareholders to be filed no
                                                          later than April 30, 2000.
</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 its four branch  offices  located in Freehold,
Howell, Matawan and Manalapan, 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.  We have  recently  entered  into a  Securities
Products Agreement with Salomon, Smith, Barney pursuant to which Salomon, Smith,
Barney may provide  investment and annuities products to our customers and their
customers  from  offices in the Bank,  and we will receive fee income from these
sales. We anticipate seeking additional strategic partnerships in the future.

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 Freehold Borough, Howell, Manalapan, and Matawan, 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.

                                       3

<PAGE>
Employees

     At December  31, 1999,  the Bank  employed 51  full-time  employees  and 16
part-time  employees.  None of  these  employees  are  covered  by a  collective
bargaining agreement and we believe that our employee relations are good.

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 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 Federal  Reserve Bank (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.

     Additionally,  until  March 1, 2000,  the BHCA  prohibited  a bank  holding
company, with certain limited exceptions, from (i) acquiring or retaining direct
or indirect ownership or control of more than 5% of the outstanding voting stock
of any company  which is not a bank or bank holding  company,  or (ii)  engaging
directly or indirectly in  activities  other than those of banking,  managing or
controlling  banks,  or performing  services for its  subsidiaries,  unless such
non-banking  business  is  determined  by the FRB to be so  closely  related  to
banking or managing or controlling banks as to be properly incident thereto.  In
making such  determinations,  the FRB is required to weigh the expected benefits
to the public, such as greater  convenience,  increased  competition or gains in
efficiency, against the possible adverse effects, such as undue concentration of
resources,  decreased or unfair competition,  conflicts of interest,  or unsound
banking  practices.  The BHCA was substantially  revised in late 1999 to broaden
and enhance bank holding company  activities,  however.  See "Recent  Regulatory
Enactments and Proposals" below.

     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.

                                       4

<PAGE>

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  consolidate  basis to bank holding
companies  with  consolidated  assets of $150 million or more.  For bank holding
companies  with less that $150 million in  consolidated  assets,  the guidelines
will be applied on a bank-only basis unless: (a) the parent bank holding company
is engaged in  non-bank  activity  involving  significant  leverage;  or (b) the
parent company has a significant  amount of outstanding debt that is held by the
general  public.  The minimum  ratio of total  capital to  risk-weighted  assets
(including  certain  off-balance  sheet  activities,  such as standby letters of
credit)  is 8%. At least 4% of the total  capital  is  required  to be "Tier 1",
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 1 and Tier 11
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 cancellable 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

<PAGE>

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.

                                       5

<PAGE>

     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,  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,  unless the Commission  consents to a lower ratio.
As of December 31, 1999,  the Bank's ratio of equity capital to total assets was
13.72%.

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 2.08  basis  points of
assessed deposits.

Recent Regulatory Enactments and Proposals

     On November 12, 1999, the President signed the Gramm-Leach-Bliley Financial
Modernization  Act of 1999 into law.  The  Modernization  Act will,  among other
things:

           o      allow bank holding companies meeting  management,  capital and
                  Community   Reinvestment   Act   standards   to  engage  in  a
                  substantially  broader range of  non-banking  activities  than
                  currently is permissible, including insurance underwriting and
                  making   merchant   banking   investments  in  commercial  and
                  financial companies;

           o      allow  insurers  and other  financial  services  companies  to
                  acquire banks or bank holding companies;

           o      remove  various  restrictions  that  currently  apply  to bank
                  holding company  ownership of securities firms and mutual fund
                  advisory companies; and

           o      establish the overall regulatory  structure applicable to bank
                  holding companies that also engage in insurance and securities
                  operations.

     This part of the Modernization Act will become effective on March 11, 2000.
The Modernization Act also modifies other current financial laws, including laws
related to  financial  privacy and  community  reinvestment.  The new  financial
privacy provisions will generally prohibit financial institutions, including us,
from disclosing nonpublic personal financial information to third parties unless
customers have the opportunity to "opt out" of the disclosure.

                       ITEM 2. -- DESCRIPTION OF PROPERTY
<PAGE>

     The Bank  conducts  its  business  through its main office  located at 3535
Highway  9 North,  Freehold,  New  Jersey,  and its  four  branch  offices.  The
following table set forth certain information regarding the Bank's properties as
of December 31, 1999.

                                                               Date of lease
         Location                     Leased or owned           expiration
         --------                     ---------------           ----------
         3535 Highway 9 North             Owned                   N/A
         Freehold, NJ

         31 East Main Street              Leased                 August, 2002
         Freehold, NJ


                                       6

<PAGE>
                                                              Date of lease
         Location                       Leased or owned          expiration
         --------                       ---------------          ----------
         4502 Highway 9 South               Leased               August, 2013
         Howell, NJ
         267 Main Street                    Leased               February, 2019

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

                          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 1999.

                                     PART II

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

     Since  October  27,  1998,  our common  stock has been traded on the NASDAQ
SmallCap market under the symbol CBNJ.  Previously,  our common stock was traded
on the OTC Bulletin Board under the symbol CBNG.  The following  table shows the
high and low bid prices for the common  stock as  reported  on the OTC  Bulletin
Board or Nasdaq  SmallCap  market since it began trading on May 19, 1997.  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 3% stock dividend paid in August, 1999.

                                            High             1998        Low
                                            ----             ----        ---

     1st Quarter . . . . . .               14-9/16                     12-3/8

     2nd Quarter . . . . . .               19-7/16                     14-1/16

     3rd Quarter . . . . . .               22-5/16                     15-9/16

     4th Quarter . . . . . .               18-1/16                     15-9/16


                                            High             1999        Low
                                            ----             ----        ---

     1st  Quarter . . . . ..               17                          14-5/16

     2nd Quarter . . . . . .               16-1/2                      13-1/8

     3rd Quarter . . . . . .               16-3/4                      15

     4th Quarter . . . . . .               15-5/8                      12-1/2


     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.
<PAGE>
     On July 9, 1999, our Board of Directors declared a 3% stock dividend on our
common  stock.  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, 1999, we had 506 shareholders of record.

                                        7

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

                              RESULTS OF OPERATIONS
                          Year Ended December 31, 1999

                              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.  During 1997, our Board of directors adopted
a strategy of  preparing  the Company for future  growth by putting in place the
infrastructure  necessary to support this growth.  Since it commenced operations
in 1997, the Company has increased its asset base at a rapid pace. The Company's
assets have grown from $34.8  million at December 31, 1997 to $132.8  million at
December 31, 1999, a compound annual growth rate of 95.3%.  This growth has come
both through the Company's  success in  penetrating  its original  market in the
Freehold,  New Jersey area, and through expansion into other market areas in New
Jersey. The Company opened its second office in downtown  Freehold,  New Jersey,
in September 1997, its third office in Howell, New Jersey, in November 1998, its
fourth office in Matawan,  New Jersey in February  1999, and its fifth office in
Manalapan,  New Jersey in November 1999. In addition, we have contracted for the
lease  of  sites  for two new  locations,  subject  to  regulatory  and land use
approvals.

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  used to support our interest  earning  assets.  In addition,  the Bank
earns fee  income,  primarily  through  service  fees on deposit  accounts.  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, 1999, net income increased to $507 thousand
or $0.28 net income per share for basic  earnings and $0.27 net income per share
for diluted earnings,  compared to a net loss of $610 thousand or a net loss per
share for basic and  diluted  shares of $0.45 and $0.45,  respectively,  for the
same  period in 1998.  The  increase in net income was  primarily  due to a $2.1
million,  or 100.0% increase in net interest income, an increase in non-interest
income and a decrease  in the  provision  for loan  losses  partially  offset by
higher  non-interest  expense.  The results for the year ended December 31, 1999
were  also  positively  affected  by  the  application  of  net  operating  loss
carryforwards  to reduce the Company's tax  liability.  The  improvement  in net
income is attributable to the continued rapid growth of the Company.


                                       8
<PAGE>
Net Interest Income

     For the year ended December 31, 1999,  the Company  recognized net interest
income of $4.2 million as compared to $2.1  million for the year ended  December
31, 1998.  The increase in net interest  income for the year ended  December 31,
1999,  as compared to the year ended  December 31,  1998,  was largely due to an
increase in the average  balance of interest  earning  assets,  which  increased
$43.6  million,  or 91.4%,  to $91.3  million from $47.7  million.  The increase
reflects an increase in average loans  outstanding of $33.2  million,  or 110.1%
over the 1998  period.  Primarily  as a result of the  increase  in the  average
balance of interest earning assets,  the Company's  interest income increased to
$6.7 million for the year ended  December  31,  1999,  from $3.4 million for the
year ended December 31, 1998. The  improvement in interest  income was primarily
due to volume  related  increases  in  income  from the loan  portfolio  of $2.7
million,  volume related  increases in income of $432 thousand in the investment
securities portfolio, and volume related increases in income of $173 thousand in
Federal funds sold.  In addition to the volume  related  increases,  the average
yield on our  interest  earning  assets  increased  to 7.30% for the year  ended
December 31, 1999 from 7.19% for the prior year.

     Total interest expense  increased 80.6% to $2.5 million for the 1999 period
from $1.4  million for the 1998  period.  This  increase in interest  expense is
primarily  related to the  increase in the average  balance of  interest-bearing
liabilities,  which increased $31.1 million to $63.4 million for the 1999 period
compared to $32.3  million for the 1998  period.  Volume  related  increases  in
interest  expense  accounted  for $1.4  million of increased  expense  which was
partially offset by a decrease of $326 thousand attributable to net rate related
decreases.  The volume related  increases in  interest-bearing  liabilities  and
expense rate decreases  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 reduction in the
cost of interest-bearing liabilities to 3.87% for the 1999 period from 4.21% for
the 1998 period as the yield on  interest-earning  assets increased to 7.30% for
the 1999 period compared to 7.19% for the prior year.

     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.

                                       9

<PAGE>
<TABLE>
<CAPTION>

                                                                 Year ended December 31,
                                            -----------------------------------------------------------------
                                                       1999                                     1998
                                            -----------------------------------------------------------------
                                    Average           Interest      Average rates     Average      Interest       Average rates
                                    balance        income/expense    earned/paid      balance   income/expense    earned/paid

                                                           (In thousands, except Percentage)
Assets
Interest-earning assets:
    Loans (net of  unearned
<S>                                 <C>             <C>                 <C>         <C>          <C>                 <C>
    income) (1)                    $   63,427       $    5,191          8.18%       $  30,187    $    2,454          8.13%
Investment securities                  12,383              693          5.60            5,299           323          6.10
Federal funds sold                     15,451              777          5.03           12,209           652          5.34
                                     --------       ----------                       --------    ----------
       Total interest-
       Earning assets                  91,261            6,661          7.30           47,695         3,429          7.19
Non-interest-earning assets             8,690                                           4,946
Allowance for possible
       Loan losses                     (1,094)                                           (559)
                                    ---------                                       ---------
       Total assets                 $  98,857                                       $  52,082
                                    =========                                       =========
Liabilities and
    Stockholders' Equity
Interest-bearing liabilities:
NOW deposits                        $  13,227       $      225          1.70       $    7,851     $     170          2.17
Savings deposits                       34,749            1,441          4.15           19,869           960          4.83
Money market deposits                   2,719               99          3.64            1,520            59          3.88
Time deposits                          12,720              688          5.41            3,055           170          5.56
Borrowed funds                              8                1          5.94              -             -            -
                                    ---------       ----------                     ----------  ------------
       Total interest-
       bearing liabilities             63,423            2,454          3.87           32,295         1,359          4.21
Non-interest bearing
    liabilities:
    Demand deposits                    16,379                                           8,114
    Other liabilities                     734                                             686
                                    ---------                                      ----------
       Total non-interest
       bearing liabilities             17,113                                           8,809
    Stockholders' equity               18,321                                          10,978
                                    ---------                                      ----------
       Total liabilities and
       stockholders' equity         $  98,857                                       $  52,082
                                    =========                                      ==========
Net interest spread (2)                                                 3.43                                         2.98
Net interest margin (3)                                                 4.61                                         4.34
Net interest income                                 $    4,207                                   $    2,070
                                                    ==========                                    =========
</TABLE>

(1)  Included in interest income on loans is 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.

                                       10
<PAGE>

     The following table presents by category the major factors that contributed
to the changes in net interest income for the year ended 1999 as compared to the
year ended 1998. Amounts have been computed on a fully tax-equivalent basis.
<TABLE>
<CAPTION>

                                           Year ended December 31, 1999 vs. December 31, 1998
                                                          Increase (decrease)
                                                            due to change in
                                                                     (In thousands)
                                              Average volume          Average rate                   Net
                                              --------------          ------------                   ---
Interest Income
<S>                                              <C>                 <C>                       <C>
    Taxable loans (net of income)                $    2,702          $         35              $    2,737
    Investment securities                               432                   (62)                    370
    Federal funds sold                                  173                   (48)                    125
                                                 ----------           -----------              ----------
         Total interest income                        3,307                   (75)                  3,232
                                                 ----------           -----------              ----------
Interest expense
    NOW deposits                                        116                   (61)                     55
    Savings deposits                                    719                  (238)                    481
    Money market                                         47                    (7)                     40
    Time deposits                                       538                   (20)                    518
    Borrowed funds                                        1                   -                         1
                                                 ----------           -----------              ----------
         Total interest expense                       1,421                  (326)                  1,095
                                                 ----------           -----------              ----------
         Net interest income                     $    1,886           $       251              $    2,137
                                                 ==========           ===========              ==========
</TABLE>

Provision for Loan Losses

     The provision  recorded by the Company for the year ended December 31, 1999
was $325  thousand,  compared to $664  thousand for the year ended  December 31,
1998.  The provision is the result of  management's  review of several  factors,
including  increased  loan  balances  and  management's  assessment  of economic
conditions,  credit  quality  and  other  factors  that may be  inherent  in the
existing  loan  portfolio.  Although  the Company 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
totalled  $1.2  million,  or 1.50% of total loans,  at December  31,  1999.  The
decrease in the provision for 1999 reflects management's view of the adequacy of
the allowance.

Non-Interest Income

     Non-interest  income  amounted to $573 thousand for the year ended December
31, 1999,  compared to $243  thousand for the year ended  December 31, 1998,  an
increase of $330  thousand,  or 135.8%.  The  increase  was  attributable  to an
increase  in service  fees on  deposits  of $138  thousand,  or  122.1%,  and an
increase in other fees and commissions of $192 thousand,  or 147.7%.  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 fee
income on loans which was attributable to an increase in loan participations and
the fees and commissions generated on those transactions.

                                       11

<PAGE>
Non-Interest Expense

     Non-interest  expense  amounted to $3.9 million for the year ended December
31,  1999,  compared to $2.3 million for the year ended  December  31, 1998,  an
increase of $1.6 million,  or 74.8%. 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 the Company's growth. Of this
increase,  employment  costs  increased $640 thousand,  or 56.7%,  and reflected
increases in the number of employees  from 34 full-time  equivalents at December
31, 1998 to 59  full-time  equivalents  at December  31,  1999.  The increase in
personnel is  attributable  to the opening of two new branch offices during 1999
in addition to the acquisition of additional  support personnel  required due to
the Company's growth.

     Occupancy expenses increased $317 thousand, or 103.9%, to $622 thousand for
the year ended December 31, 1999. The increase was  attributable  to the opening
of new branch offices in November 1998,  February 1999, and November 1999, which
resulted in increased lease expense and increased  maintenance costs in addition
to increased  depreciation costs associated with new facilities and on purchases
of enhanced computer processing equipment.

     Other operating expenses increased $732 thousand,  or 88.7% to $1.6 million
for the year  ended  December  31,  1999 from $825  thousand  for the year ended
December 31, 1998.  The increase was  attributable  to increased  other expenses
resulting from the continued growth of the Company,  as costs of data processing
services paid to the Company's third party processors amounted to $383 thousand,
an  increase  of $246  thousand;  professional  and other fees  amounted to $292
thousand, an increase of $189 thousand; marketing and advertising costs amounted
to $247  thousand,  an  increase  of $144  thousand;  stationery,  supplies  and
printing  costs  amounted  to  $228  thousand,  an  increase  of  $93  thousand;
stockholder  related  costs  amounted  to  $116  thousand,  an  increase  of $91
thousand;  and all other expenses  amounted to $291 thousand,  a decrease of $31
thousand.

     The  Company  anticipates  that the  expense of its  expanding  bank branch
office system,  combined with increased  expenses  associated with its 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 in year 2000.

Income Tax Expenses

     The  Company  did not record an income tax  provision  for the years  ended
December 31, 1999 and 1998 because of accumulated net operating  losses incurred
during  prior  years.  The  results  for the year ended  December  31, 1999 were
positively  affected by the application of these  accumulated net operating loss
carry-forwards  to reduce the Company's tax liability.  In view of the Company's
operating  loss  history and the risks  associated  with its ability to generate
taxable income in the future, management has provided a full valuation allowance
on its net deferred  tax assets as of December 31, 1999.  The Company has no net
operating loss carry-forwards  remaining for tax return purposes. As we continue
to be  profitable,  our  valuation  allowance  on our deferred tax asset will be
reduced.  As a result of this  reduction,  our  financial  statement  income tax
expense will be reduced by approximately $1.1 million.

Financial Condition

     At December 31, 1999, our total assets were $132.8 million,  an increase of
$50.0  million,  or 60.5% over total 1998 year end assets of $82.8  million.  At
December  31,  1999,  our net loans were $81.4  million,  an  increase  of $36.7
million,  or 82.0%  from the  $44.7  million  reported  at  December  31,  1998.
Investment securities increased to $20.7 million at December 31, 1999, from $6.0
million at December 31, 1998.  Federal funds sold  decreased to $20.3 million at
December 31, 1999,  from $26.0  million at December 31, 1998, a decrease of $5.7
million or 21.9%.

                                       12
<PAGE>
Loan Portfolio

     At December  31, 1999 our total  loans were $82.6  million,  an increase of
$37.0 million,  or 81.1%,  over our total loans of $45.6 million at December 31,
1998.  Our loan  portfolio  consists  primarily of loans secured by real estate,
and, to a lesser extent, commercial, construction, and consumer loans.

     Our loans are primarily to businesses and individuals  located in Monmouth,
Middlesex,  and Ocean Countries, New Jersey. We have not made loans to borrowers
outside of the United States.  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 at December 31, 1999, and 1998.
<TABLE>
<CAPTION>
                                                                               December 31,
                                                                 -------------------------------------
                                                                 1999                             1998
                                                                 ----                             ----

                                                       Amount          Percent           Amount          Percent
                                                       ------          -------           ------          -------
                                                                     (In thousands, except for
percentages)
<S>                                                 <C>                  <C>          <C>                   <C>
Commercial and industrial                           $  15,137            18.3%        $    8,514            18.7%
Real estate - non-residential properties               38,814            47.0             19,413            42.5
Residential properties                                  7,254             8.8              6,914            15.2
Construction                                            8,895            10.7              3,582             7.9
Consumer                                               12,476            15.1              6,376            14.0
Other                                                      56             0.1                803             1.7
                                                    ---------         -------          ---------        --------
     Total loans                                    $  82,632           100.0%         $  45,629           100.0%
                                                     ========           =====          =========           =====
</TABLE>

     The  following  table  sets  forth  the  aggregate  maturities  of loans in
specified  categories and the amount of such loans which have fixed and variable
rates at December 31, 1999.
<TABLE>
<CAPTION>
                                                     Within 1          1 to 5           After 5
                                                        year           years             years
                                                   --------------  -------------     ---------
    Total

<S>                                                 <C>            <C>               <C>               <C>
Commercial and industrial                           $  11,378      $    3,380        $       379       $  15,137

Construction loans                                      7,679           1,216                  -           8,895
                                                    ---------       ---------        -----------       ---------

     Total                                          $  19,057      $    4,596        $       379       $  24,032
                                                     ========       =========         ==========        ========

Fixed rate loans                                                                                      $    5,441
Variable rate loans                                                                                       18,591
                                                                                                        --------

     Total                                                                                             $  24,032
                                                                                                        ========
</TABLE>
<PAGE>

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.

                                       13
<PAGE>

     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, 1999, we
had no  loans  past  due 30  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, 1999, 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
loan review  function  will test these  ratings in its normal course and resolve
any rating  differences.  Any loan,  including unrated consumer credits,  may be
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  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, 1999, 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

<PAGE>

appropriate reserves.  Along with the risk system,  management further evaluates
risk  characteristics  of the  loan  portfolio  under  current  and  anticipated
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  quarterly,  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 $1.2 million at December 31,
1999, or 1.50% of total loans  outstanding.  We had no  non-performing  loans or
loans past due 30 days or more at December 31, 1999.

                                       14

<PAGE>
     The following is a summary of the  reconciliation of the allowance for loan
losses for the periods indicated.
<TABLE>
<CAPTION>
                                                                                     Year ended December 31,
                                                                                     -----------------------

                                                                              1999                        1998
                                                                              ----                        ----

                                                                                (In thousands, except percentages)
<S>                                                                        <C>                       <C>
Balance at beginning of period                                             $       914               $       250
Charge-offs-consumer                                                                (2)                      -
Provision charged to expense                                                       325                       664
                                                                            ----------                ----------
Balance of allowance at end of period                                       $    1,237               $       914
                                                                            ==========                ==========
Ratio of net charge-offs to average
         loans outstanding                                                        0.00%                      N/A
                                                                               =======                   =======
Balance of allowance at period-end as
        a % of loans at period end                                                1.50%                     2.00%
                                                                               =======                   =======
</TABLE>

     The following table sets forth, for each of the Bank's major lending areas,
the amount and percentage 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.
<TABLE>
<CAPTION>

                                                            December   31,
                                                            --------------
                                                   1999                               1998
                                                  ----                               ----
                                     Allocation        % of     % of all     Allocation        % of
                                                                                                       % of all
                                       amount     allowance       loans       amount      allowance      loans
                                     ----------   ---------    -----------  ----------    ---------   ---------

                                                              (In Thousands, Except Percentages)
     Balance applicable to:
<S>                                <C>               <C>           <C>     <C>                <C>          <C>
       Commercial and industrial   $      185        15.0%         18.3%   $       96         10.5%        18.7%
       Real estate non-residential
         properties                       628        50.8          47.0           309         33.8         42.5
       Residential properties              36         2.9           8.8            35          3.8         15.2
       Construction                       178        14.4          10.7            72          7.9          7.9
       Consumer                           113         9.1          15.1            55          6.0         14.0
       Other                               14         1.1           0.1            16          1.8          1.7
                                  -----------     -------       -------      --------        -----      -------
       Subtotal                         1,154        93.3          100%           583         63.8         100%
       Unallocated reserves                83         6.7          -              331         36.2          -
                                  -----------     -------       -------      --------        -----      -------
         Total                     $    1,237        100%          100 %    $     914          100%        100 %
                                    =========      =====         ======      ========        =====       ======
</TABLE>
<PAGE>

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  U.S.  Treasury  Securities,
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.

                                       15

<PAGE>

     Management  determines  the  appropriate  classification  at  the  time  of
purchase.  At December 31, 1999 the Company classified $11.2 million,  or 54.4%,
of its investment portfolio as held-to-maturity based on management's intent and
the Company's  ability to hold them to maturity.  These securities are stated at
cost, adjusted for unamortized  purchase premiums and discounts.  As of December
31,  1999 the net  unrealized  losses  on these  securities  was $152  thousand.
Securities with a cost of $12.3 million were purchased for the  held-to-maturity
account during 1999.

    At December 31, 1999, the Company classified $9.4 million,  or 45.6%, of its
investment portfolio as available-for-sale.  These available-for-sale securities
had a cost basis of $9.4 million. The fair value adjustment at December 31, 1999
required  the  Company  to  decrease  the  carrying  value of  these  investment
securities  by $19  thousand,  increase the deferred tax benefit by $8 thousand,
and decrease  stockholders'  equity by $11 thousand.  Securities  with a cost of
$9.4 million were purchased for the available-for-sale accounting during 1999.

     Investment  securities at December 31, 1999 were $20.7 million, an increase
of $14.7 million, or 243% over investment securities of $6.0 million at December
31, 1998. This increase is  attributable to the continued  growth of the Company
and the reduction of lower  yielding  Federal funds sold balances as the Company
purchased  higher  yielding   investment   securities  and  increased  its  loan
portfolio.

     The amortized cost, gross  unrealized  gains and losses,  and fair value of
the Company's investment securities are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                           December  31, 1999
                                                                           ------------------

                                                                          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                 $  9,418         $     --       $    (19)     $  9,399
   Corporate debt securities and other                         25               --             --            25
                                                         --------         --------       --------      --------
                                                         $  9,443         $     --       $    (19)     $  9,424
                                                         ========         ========       ========      ========

Investment securities held-to-maturity
   U.S. Government and agency securities                 $ 10,745         $     --       $   (152)     $ 10,593
   Corporate debt securities and other                        500               --             --           500
                                                         --------         --------       --------      --------
                                                         $ 11,245         $     --       $   (152)     $ 11,093
                                                         ========         ========       ========      ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                         December 31, 1998
                                                                         -----------------
                                                                     Gross          Gross
                                                    Amortized      unrealized     unrealized       Fair
                                                      cost           gains          losses         value
                                                    -----------------------------------------------------------
<S>                                                <C>             <C>              <C>              <C>
       Investment securities held-to-maturity
U.S. Government and agency securities              $ 5,500         $    --          $   (21)         $ 5,479
Corporate debt securities and other                    525              --               --              525
                                                   -------         -------          -------          -------
                                                   $ 6,025         $    --          $   (21)         $ 6,004
                                                   =======         =======          =======          =======
</TABLE>


    The amortized cost and fair value of the Company's investment  securities at
    December 31,  1999,  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).

                                       16

<PAGE>
<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                             $ 3,927          $ 3,921          $   750          $   749
Due after one year through five years                 5,491            5,478            9,995            9,844
Due after five years through ten years                   --               --              500              500
Due after ten years                                      25               25               --               --
                                                    -------          -------          -------          -------
                                                    $ 9,443          $ 9,424          $11,245          $11,093
                                                    =======          =======          =======          =======
</TABLE>
Deposits

     Deposits are our primary  source of funds.  Our total  deposits at December
31, 1999, were $114.0 million, an increase of $49.0 million, or 75.3% over total
deposits of $65.0  million at December 31, 1998.  The growth in deposits  during
this period was primarily  due to the expansion and  maturation of the Company's
branch system, as well as a significant  increase in the amount of time deposits
reflecting  both  promotional  activities  at our new  Manalapan  branch and our
decision to  competitively  seek municipal  deposits at December 31, 1999.  Time
deposits  represented 7.6% of our total deposits last year and they increased to
27.3% of our total deposits at December 31, 1999.

     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  $43.5 million at December 31, 1999, by offering  rates
higher than our peer group institutions. As we have established ourselves within
our trade  area,  we have  reduced our rates to more  closely  match the market,
resulting  in our total cost of deposits  declining to 3.08% for 1999 from 3.36%
for 1998. 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.  As of
December  31,  1999,  we have no foreign  deposits,  nor are there any  material
concentrations of deposits, and we have not used brokers to acquire deposits.

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

<TABLE>
<CAPTION>
<PAGE>



                                                                          Year ended December 31,
                                                              --------------------------------------------
                                                               1999                                 1998
                                                               ----                                 ----
                                                     Average          Average            Average         Average
                                                     Balance            Cost             Balance           Cost
                                                    ------------------------------------------------------------
                                                               (In Thousands, Except for Percentages)
<S>                                                <C>                 <C>             <C>                <C>
     Non-interest-bearing demand                   $  16,379              - %          $    8,114            -  %
     Interest-bearing demand (NOW)                    13,227           1.70                 7,851         2.17
     Savings deposit                                  34,749           4.15                19,869         4.83
     Money Market Deposits                             2,719           3.64                 1,520         3.88
     Time deposits                                    12,720           5.41                 3,055         5.56
                                                    --------                            ---------
         Total                                     $  79,794           3.08%            $  40,409         3.36%
                                                    ========                             ========
</TABLE>
                                       17
<PAGE>
     The following table summarizes the maturity distribution of certificates of
deposits as of December 31, 1999.
<TABLE>
<CAPTION>
                                                                     Year ended December 31, 1999
                                                          --------------------------------------------------
                                                              Time CD's                     Time CD's
                                                         $100,000 and over               under $100,000
                                                     Amount         Percent       Amount      Percent
                                                    -----------------------------------------------------------
                                                              (In Thousands, Except for Percentages)

<S>                                                 <C>              <C>         <C>          <C>
Due in 90 days or less                              $ 6,492          56.4%       $ 1,083        5.5%
Due between 91 days and 180 days                        798           6.9          2,436       12.5
Due between 181 days and one year                     3,216          28.0          7,317       37.4
Due after one year                                    1,003           8.7          8,738       44.6
                                                    -------         -----        -------      -----
    Total certificates of deposit                   $11,509         100.0%       $19,574      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,  the
Company seeks to manage, to the extent possible,  the repricing  characteristics
of its  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  practices  of measuring  and
reporting interest rate risk exposure,  particularly  regarding the treatment of
non-contractual  assets and  liabilities.  In addition,  we annually  review the
interest rate risk policy,  which includes limits on the impact to earnings from
shifts in interest rates.

     To manage the  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.

                                       18
<PAGE>
     At December 31, 1999, we maintained a one year positive  cumulative  gap of
12.6% of total  assets,  or $16.7  million,  which  was  within  Board  approved
guidelines.
<TABLE>
<CAPTION>

                                                      Interest Sensitivity Gap at December 31, 1999
                                                -------------------------------------------------------
                                                             Mature or repricing in  (1)
                                                   -------------------------------------------
                                       3 months      3 through    1 through       Over      Non-interest
                                        or less      12 months     3 Years       3 Years       bearing    Total
                                      --------------------------------------------------------------------------
     Assets
<S>                                   <C>           <C>         <C>         <C>          <C>           <C>
        Federal funds sold            $  20,275$            -   $       -   $       -    $        -    $ 20,275
        Investment securities
             available-for-sale             501         3,420       5,478          25             -       9,424
        Investment securities
             held-to-maturity                 -           750       9,995         500             -      11,245
        Loans                            28,151        15,334      17,065      22,217             -      82,767
        Valuation reserves (2)                -             -           -           -        (1,372)     (1,372)
        Non-interest earning
             assets                           -             -           -           -        10,472      10,472
                                       --------      --------    --------    --------      --------    ---------
             Total assets             $  48,927     $  19,504   $  32,538   $  22,742      $  9,100    $132,811
                                       ========      ========    ========    ========      ========    =========
     Liabilities and
             Stockholders' Equity
        NOW accounts                  $   4,944     $       -   $  11,546   $       -      $      -    $  16,490
        Money market accounts             1,230             -       1,903           -             -        3,133
        Savings deposits                 24,215             -      16,144           -             -       40,359
        CD's $100,000 and over            6,492         4,014       1,003           -             -       11,509
        CD's under $100,000               1,083         9,753       8,656          82             -       19,574
        Non-interest bearing
             Deposits                         -             -           -           -        22,963       22,963
        Other liabilities                     -             -           -           -           557          557
        Stockholders' equity                  -             -           -           -        18,226       18,226
                                      ---------     ---------   ---------   ---------      --------    ---------
             Total liabilities
               and stockholders'
               equity                 $  37,964     $  13,767   $  39,252   $      82      $ 41,746    $ 132,811
                                      =========     =========   =========   =========      ========    =========
     Interest rate sensitivity gap    $  10,963     $   5,737   $  (6,714)  $  22,660        $(32,646)
     Cumulative Gap                   $  10,963     $  16,700   $   9,986   $   2,646
     Cumulative Gap to total assets       8.25%         12.57%       7.52%      24.58%
</TABLE>

     (1) The  following  are the  assumptions  that were used to prepare the Gap
         analysis:
         a.  Investment  securities are included at carrying value in the period
             in which they mature.
         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   changes  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.
<PAGE>

         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 deferred loan
         fees.

                                       19
<PAGE>
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 and loan  prepayments  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 26.1% and 34.5% of the
Company's total assets at December 31, 1999 and 1998, respectively.

     We have been a net seller of federal  funds,  as our liquidity has exceeded
our need to fund new loan  demand.  Should  the need  arise,  we would  have the
capability to sell securities classified as available-for-sale,  and to purchase
federal funds as alternative sources of liquidity.  We have established a credit
line with another bank to purchase up to $4.0  million in federal  funds.  As of
December 31, 1999, we have no purchased funds.

     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.

     The  following  table  summarizes  our  risk-based  and leverage  ratios at
December 31, 1999, as well as the required minimum regulatory capital ratios.

<PAGE>

<TABLE>
<CAPTION>
                                                                                                 To be well
                                                                                              capitalized under
                                                                                             prompt corrective
                                                   Actual            adequacy purposes       action provisions
                                             ---------------------------------------------------------------------
                                             Amount      Ratio         Amount    Ratio        Amount        Ratio
                                             ------      -----         ------    -----        ------        -----
As of December 31, 1999
        Total capital (to risk-
<S>                                       <C>            <C>      <C>             <C>      <C>               <C>
           weighted assets)               $  19,362      21.54%   $    7,189    =>8.00%    $    8,986      =>10.00%
        Tier I capital (to risk-
           weighted assets)                  18,237      20.29%        3,595    =>4.00%         5,393      => 6.00%
        Tier I capital (to average
           assets)                           18,237      15.28%        3,580    =>3.00%         5,967      => 5.00%

</TABLE>
                                       20


<PAGE>

     In  addition  to the capital  adequacy  requirements  of the FDIC set forth
above, pursuant to the order of the New Jersey Commissioner of the Department of
Banking and Insurance granting our charter,  we are required to maintain a ratio
of equity  capital to total  assets of at least 10% for our first five (5) years
of operations, unless the Commissioner consents to a lower ratio. As of December
31, 1999 and  December 31,  1998,  the Bank's  ratio of equity  capital to total
assets was 21.01% and 32.74%, respectively.

Impact of Inflation and Changing Prices

     Our financial  statements and notes thereto,  presented  elsewhere  herein,
have been prepared in accordance with generally accepted accounting  principles,
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.

Recently Issued Accounting Standards

Accounting For Derivative Instruments and Hedging Activity

     In June 1998,  SFAS No. 133,  Accounting  for  Derivative  Instruments  and
Hedging  Activities was issued.  Subsequent to this statement,  SFAS No. 137 was
issued,  which  amended  the  effective  date of SFAS No.  133 to be all  fiscal
quarters  of all  fiscal  years  beginning  after  June 15,  2000.  Based on the
Company's  minimal use of derivatives at the current time,  management  does not
anticipate  the  adoption  of SFAS No.  133 will  have a  significant  impact on
earnings or financial position of the Company. However, the impact from adopting
SFAS  No.  133  will  depend  on the  nature  and  purpose  of  the  derivatives
instruments in use by the Company at that time.


                         ITEM 7. -- FINANCIAL STATEMENTS


     The information require by this item is filed herewith.


                       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 Bank's 1999 Annual Meeting under the captions
"PROPOSAL 1. -- 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,
2000.

                                       21

<PAGE>
     The following  table sets forth certain  information  about each  executive
officer of the company who is not also a director.

                                                       Principal occupation
     Name, age and position       Officer since       during past five
     ----------------------       -------------      ----------------
     Robert Babin, 47                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, 51                 1999          Chief Financial Officer of
     Vice President and                            the 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 Bank's 2000 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, 2000.


                    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 Bank's 2000
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, 2000.


                    ITEM 12. -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information  concerning certain  relationships and related  transactions is
included in the  definitive  Proxy  Statement for the Bank's 2000 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, 2000.

                    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
             27                             Financial data schedule

     (b)  Reports on Form 8-K

                                       22
<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
                                                  President and Chief Executive
     Dated: March 27, 2000                        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 27, 2000

/s/ Michael Bis
--------------------------
    Michael Bis                     Chief Financial Officer            March 27, 2000

/s/ Howard Schoor
--------------------------
    Howard Schoor                   Chairman of the Board              March 27, 2000

/s/ Eli Kramer
--------------------------
    Eli Kramer                      Vice Chairman of the Board         March 27, 2000

/s/ Charles P. Kaempffer
-----------------------------
    Charles P. Kaempffer, CPA       Vice Chairman of the Board         March 27, 2000

/s/ Morris Kaplan
--------------------------
    Morris Kaplan                   Director                           March 27, 2000

/s/ Robert M. Kaye
--------------------------
    Robert M. Kaye                  Director                           March 27, 2000

/s/ William J. Mehr
--------------------------
    William J. Mehr, Esq.           Director                           March 27, 2000

/s/ Arnold Silverman
--------------------------
    Arnold Silverman                Director                           March 27, 2000

/s/ Lewis Wetstein
--------------------------
    Lewis Wetstein, M.D.            Director                           March 27, 2000
</TABLE>

                                       23
<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 (formerly,  the Community Bank of New Jersey) as of December 31, 1999
and 1998,  and the related  consolidated  statements of  operations,  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 generally  accepted auditing
standards.  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,  1999 and 1998,  and the
consolidated  results of their operations and their  consolidated cash flows for
the  years  then  ended,  in  conformity  with  generally  accepted   accounting
principles.






Philadelphia, Pennsylvania
January 14, 2000


<PAGE>
<TABLE>
<CAPTION>
                                           COMMUNITY BANCORP OF NEW JERSEY

                                             Consolidated Balance Sheets

                                        (In thousands, except per share data)

                                                     December 31,

           ASSETS                                                                      1999             1998
                                                                                   ------------     ------------
<S>                                                                                    <C>             <C>
    Cash and due from banks                                                            $  4,991        $   2,541
    Federal funds sold                                                                   20,275           26,025
                                                                                       --------         --------
                  Total cash and cash equivalents                                        25,266           28,566
    Investment securities available for sale                                              9,424                -
    Investment securities held-to-maturity (fair value of
       $11,093 and $6,004 at December 31, 1999 and
       1998, respectively)                                                               11,245            6,025
    Loans receivable                                                                     82,632           45,629
    Less allowance for loan losses                                                       (1,237)            (914)
                                                                                       --------        ---------
           Net loans receivable                                                          81,395           44,715
    Premises and equipment, net                                                           4,631            3,068
    Accrued interest receivable                                                             643              224
    Other assets                                                                            207              153
                                                                                       --------        ---------
           Total assets                                                                $132,811        $  82,751
                                                                                       ========        =========
           LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
    Deposits
       Non-interest bearing - demand                                                   $ 22,963        $  13,530
       Interest bearing - NOW                                                            16,490           14,397
       Savings and money market                                                          43,492           32,138
       Certificates of deposit, under $100,000                                           19,574            3,511
       Certificates of deposit, $100,000 and over                                        11,509            1,463
                                                                                       --------        ---------
           Total deposits                                                               114,028           65,039
    Accrued interest payable                                                                292              114
    Other liabilities                                                                       265              209
                                                                                       --------        ---------

           Total liabilities                                                            114,585           65,362
                                                                                       --------        ---------
STOCKHOLDERS' EQUITY
    Common stock -  authorized,  5,000,000  shares of no par  value;  issued and
       outstanding, net of treasury shares, 1,827,766 and
       1,730,917 shares at December 1999 and 1998, respectively                          20,523           18,994
    Accumulated deficit                                                                  (1,923)          (1,605)
    Accumulated other comprehensive income (loss)                                           (11)               -
    Treasury stock, 22,357 shares, at cost                                                 (363)               -
                                                                                       ---------       ---------
           Total stockholders' equity                                                    18,226           17,389
                                                                                       ---------       ---------
           Total liabilities and stockholders' equity                                  $132,811        $  82,751
                                                                                       =========       =========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       24
<PAGE>
<TABLE>
<CAPTION>
                                           COMMUNITY BANCORP OF NEW JERSEY

                                        Consolidated Statements of Operations

                                               Years ended December 31,

                                        (In thousands, except per share data)



                                                                         1999            1998
                                                                      ----------     -----------
INTEREST INCOME
<S>                                                                    <C>             <C>
    Loans, including fees                                              $ 5,191         $ 2,454
    Federal funds sold                                                     777             652
    Investment securities                                                  693             323
                                                                       -------         -------

           Total interest income                                         6,661           3,429

INTEREST EXPENSE
    Deposits                                                             2,453           1,359
    Short-term borrowings                                                    1              --
                                                                       -------         -------

           Total interest expense                                        2,454           1,359

           Net interest income                                           4,207           2,070

PROVISION FOR LOAN LOSSES                                                  325             664
                                                                       -------         -------

           Net interest income after provision for loan losses           3,882           1,406
                                                                       -------         -------

NON-INTEREST INCOME
    Service fees on deposit accounts                                       251             113
    Other income                                                           322             130
                                                                       -------         -------

           Total non-interest income                                       573             243
                                                                       -------         -------

NON-INTEREST EXPENSE
    Salaries and employee benefits                                       1,769           1,129
    Occupancy expense                                                      622             305
    Other operating expenses                                             1,557             825
                                                                       -------         -------

           Total non-interest expense                                    3,948           2,259
                                                                       -------         -------

           Net income (loss)                                           $   507         $  (610)
                                                                       =======         =======

Per share data
    Net income (loss) - basic                                          $  0.28         $ (0.45)
                                                                       =======         =======
    Net income (loss) - diluted                                        $  0.27         $ (0.45)
                                                                       =======         =======
</TABLE>

The accompanying notes are an integral part of these statements.

                                       25
<PAGE>
<TABLE>
<CAPTION>

                                              COMMUNITY BANCORP OF NEW JERSEY

                                 Consolidated Statement of Changes in Stockholders' Equity

                                          Years ended December 31, 1999 and 1998

                                           (In thousands, except per share data)

                                                                          Accumulated
                                                            Additional      other
                                                 Common     paid-in     Comprehensive  Treasury  Accumulated Comprehensive
                                                 stock      capital     income (loss)   stock     deficit       income      Total
                                                 -----      -------     -------------   -----     -------       ------      -----
Balance at January 1, 1998,
<S>                                              <C>         <C>         <C>         <C>          <C>          <C>         <C>
    as previously reported                       $  6,454    $  5,930    $     -     $       -    $   (995)                $ 11,389
    Stock conversion                                5,930      (5,930)         -             -           -                        -
                                                 --------    --------    -------     ---------    ----------               --------
Balance at January 1, 1998, as restated            12,384           -          -             -        (995)                  11,389
    Issuance of common stock,
       net of offering expenses                     6,610           -          -             -           -                    6,610
    Net loss                                            -           -          -             -        (610)    $    (610)      (610)
    Accumulated other comprehensive
       income (loss), net of reclassification
       adjustments and taxes                            -           -          -             -           -             -          -
                                                                                                               ---------   --------
    Total comprehensive income                          -           -          -             -           -     $    (610)
                                                 --------    --------    -------     ---------    -----------  =========
Balance at December 31, 1998                       18,994           -          -             -      (1,605)                  17,389
    Issuance of common stock, net
       of offering expenses                         1,014           -          -             -           -                    1,014
    3% stock dividend (53,206 shares)                 825           -          -             -         (825)                      -
    Purchase and retirement of stock options         (310)          -          -             -            -                    (310)
    Purchase of treasury stock (22,416 shares)          -           -          -          (364)           -                    (364)
    Stock award to employees (59 shares)                -           -          -             1            -                       1
    Net income                                          -           -          -             -          507    $     507        507
    Accumulated other comprehensive
       income (loss), net of reclassification
       adjustments and taxes                            -           -        (11)            -            -          (11)       (11)
                                                                                                               ---------   --------
    Total comprehensive income                          -           -          -             -            -    $     496
                                                 --------    --------    -------     ---------    -----------  =========
Balance at  December 31, 1999                    $ 20,523    $      -    $   (11)    $  (363)     $ (1,923)                $ 18,226
                                                 ========    ========    =======     =========    =========                ========

</TABLE>

        The  accompanying  notes are an  integral  part of this statement.

                                       26
<PAGE>
<TABLE>
<CAPTION>
                                           COMMUNITY BANCORP OF NEW JERSEY

                                        Consolidated Statements of Cash Flows

                                               Year ended December 31,

                                                    (In thousands)


                                                                                1999              1998
                                                                            ------------      ------------
OPERATING ACTIVITIES
<S>                                                                         <C>                <C>
    Net income (loss)                                                       $    507           $   (610)
    Adjustments to reconcile net loss to net cash provided by
          operating activities
       Depreciation and amortization                                             354                206
       Provision for loan losses                                                 325                664
       Accretion of investment discount                                           (6)                --
       Amortization of investment premium                                          6                 --
       Increase in accrued interest receivable                                  (419)               (95)
       (Increase) decrease in other assets                                       (45)                 2
       Increase in accrued interest payable                                      178                 93
       Increase in other liabilities                                              56                 97
                                                                            --------           --------
              Net cash provided by operating activities                          956                357
                                                                            --------           --------
INVESTING ACTIVITIES
    Purchases of investment securities held
       to maturity                                                           (12,302)           (10,000)
    Purchase of investment securities available-for-sale                      (9,416)                --
    Net increase in loans receivable                                         (37,005)           (30,396)
    Proceeds from maturities and calls of
       investment securities                                                   7,055             12,499
    Purchases of premises and equipment                                       (1,917)            (1,358)
                                                                            --------           --------
              Net cash used in investing activities                          (53,585)           (29,255)
                                                                            --------           --------
FINANCING ACTIVITIES
    Net proceeds from common stock issued                                      1,014              6,610
    Purchase of common stock for treasury                                       (364)                --
    Purchase of options for retirement                                          (310)                --
    Net increase in demand deposits and
       savings accounts                                                       22,880             38,131
    Net increase in certificates of deposits                                  26,109              3,647
                                                                            --------           --------
              Net cash provided by financing activities                       49,329             48,388
                                                                            --------           --------
              Net (decrease) increase in cash and cash equivalents            (3,300)            19,490
Cash and cash equivalents, beginning of period                                28,566              9,076
                                                                            --------           --------
Cash and cash equivalents, end of period                                    $ 25,266           $ 28,566
                                                                            ========           ========

Supplemental disclosures of cash flow information
    Cash paid for interest                                                  $  2,632           $  1,266
                                                                            ========           ========
    Cash paid for income taxes                                              $     --           $      1
                                                                            ========           ========
</TABLE>


The accompanying notes are an integral part of these statements.

                                       27
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


NOTE A - ORGANIZATION

    On July 1, 1999, after obtaining the appropriate  stockholder and regulatory
    approval,  Community  Bancorp  of New  Jersey  (the  Company)  was formed to
    operate  as a bank  holding  company.  Concurrent  with its  formation,  the
    Company  issued one share of its common  stock in exchange  for one share of
    common stock of The Community Bank of New Jersey (the Bank). These financial
    statements have been retroactively adjusted to reflect this conversion.

    The Bank is a New Jersey state-chartered banking institution. The Bank filed
    an application  for a commercial  company  charter with the New Jersey State
    Commissioner of Banking and Insurance (the Charter  Application) on June 14,
    1996,  to charter  the Bank as a New Jersey  commercial  bank.  The  Charter
    Application  was  conditionally  approved on  December 6, 1996.  On July 11,
    1996, the organizers  filed an  application  for federal  insurance with the
    Federal Deposit Insurance  Corporation  (FDIC). The application was approved
    by the FDIC on March 21,  1997.  The Bank  commenced  operations  on May 15,
    1997.

    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 with generally
    accepted accounting  principles 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.

                                   (Continued)


                                       28
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

    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.

    The  Company  adopted  SFAS  No.  131,  Disclosures  about  Segments  of  an
    Enterprise  and Related  Information  in 1998.  SFAS No. 131  redefines  how
    operating  segments  are  determined  and  requires  disclosures  of certain
    financial  and  descriptive   information  about  the  Company's   operating
    segments.  Under current  conditions,  management has determined the Company
    operates in one business segment, community banking.

    2.  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.

    3.  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.  The  Company  had no  securities  classified  as
    available-for-sale at December 31, 1998.

    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.

    In June 1998,  SFAS No.  133,  Accounting  for  Derivative  Instruments  and
    Hedging  Activities was issued.  Subsequent to this statement,  SFAS No. 137
    was  issued,  which  amended  the  effective  date of SFAS No. 133 to be all
    fiscal quarters of all fiscal years beginning after June 15, 2000.  Based on
    the Company's  minimal use of  derivatives  at the current time,  management
    does not  anticipate  the  adoption of SFAS No. 133 will have a  significant
    impact on earnings or financial position of the Company. However, the impact
    from  adopting  SFAS No. 133 will  depend on the  nature and  purpose of the
    derivatives instruments in use by the Company at that time.


                                   (Continued)

                                       29
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

    4.  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.

    Interest  on loans is accrued  and  credited  to  operations  based upon the
    principal amounts  outstanding.  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, 1999 or
    1998.

    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, 1999 or 1998.
<PAGE>

    5.  Accounting   for  Transfers  and  Servicing  of  Financial   Assets  and
        Extinguishments of Liabilities

    The Company  accounts for its transfers and  servicing  financial  assets in
    accordance  with SFAS No. 125,  Accounting  for  Transfers  and Servicing of
    Financial Assets and Extinguishments of Liabilities,  as amended by SFAS No.
    127,  Deferral of the Effective Date of Certain  Provisions of SFAS No. 125.
    This standard provides accounting guidance on transfers of financial assets,
    servicing of financial assets, and extinguishments of liabilities.



                                   (Continued)

                                       30

<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

    6.  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.

    7.  Income Taxes

    Under the liability method specified by SFAS No. 109,  Accounting for Income
    Taxes,  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
    organizational and start-up costs and net operating loss carryforwards.

    8.  Earnings Per Share

    The Company follows the provisions of SFAS No. 128, Earnings Per Share. SFAS
    No. 128  eliminates  primary and fully diluted  earnings per share (EPS) and
    requires  presentation  of basic and  diluted  EPS in  conjunction  with the
    disclosure of the methodology used in computing such EPS. 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.

    9.  Advertising Costs

    The Company expenses advertising costs as incurred.

    10.  Comprehensive Income

    The Company adopted SFAS No. 130, Reporting  Comprehensive Income on January
    1, 1998.  This  standard  requires  entities  presenting  a complete  set of
    financial  statements to include  details of  comprehensive  income or loss.
    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 Company did not
    have any  components  of  comprehensive  income at or during  the year ended
    December 31, 1998.


                                   (Continued)

                                       31
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

    The income tax effects allocated to comprehensive  income (loss) at December
31, are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                               1999
                                                                               ----
                                                              Before            Tax              Net
                                                                tax         (expense)          of tax
                                                             amount           benefit          amount
                                                           ----------       -----------       --------
      Unrealized gains (losses) on securities
<S>                                                         <C>               <C>             <C>
   Unrealized holding losses arising during period          $   (19)          $    8          $   (11)

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

Other comprehensive income (loss), net                      $   (19)          $    8          $   (11)
                                                            =======           ======          =======
</TABLE>
    11.  Reclassification

    Certain reclassifications have been made to the 1998 financial statements to
conform to the 1999 presentation.

NOTE C - INVESTMENT SECURITIES

    The amortized cost, gross unrealized gains and losses, and fair value of the
    Company's investment securities are as follows (in thousands):
<PAGE>
<TABLE>
<CAPTION>
                                                                         December 31, 1999
                                                      -------------------------------------------------------
                                                                      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          $  9,418          $     --           $    (19)          $  9,399
   Corporate debt securities and other                  25                --                 --                 25
                                                  --------          --------           --------           --------

                                                  $  9,443          $     --           $    (19)          $  9,424
                                                  ========          ========           ========           ========

Investment securities held-to-maturity
   U.S. Government and agency securities          $ 10,745          $     --           $   (152)          $ 10,593
   Corporate debt securities and other                 500                --                 --                500
                                                  --------          --------           --------           --------

                                                  $ 11,245          $     --           $   (152)          $ 11,093
                                                  ========          ========           ========           ========
</TABLE>

                                                     (Continued)

                                       32
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE C - INVESTMENT SECURITIES - Continued
<TABLE>
<CAPTION>
                                                                         December 31, 1998
                                                     -------------------------------------------------------

                                                                         Gross           Gross
                                                         Amortized     unrealized     unrealized          Fair
                                                           cost          gains          losses           value
                                                           ----          -----          ------           -----
       Investment securities held-to-maturity
<S>                                                  <C>          <C>              <C>                 <C>
          U.S. Government and agency securities      $     5,500  $          -     $         (21)      $     5,479
          Corporate debt securities and other                525             -               -                 525
                                                     -----------   -------------  --------------       -----------
                                                     $     6,025  $          -     $         (21)      $     6,004
                                                      ==========   =============    ============        ==========
</TABLE>

    The amortized cost and fair value of the Company's investment  securities at
    December 31,  1999,  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                        $    3,927      $    3,921     $       750     $       749
       Due after one year through five years               5,491           5,478           9,995           9,844
       Due after five years through ten years                -               -               500             500
       Due after ten years                                    25              25             -               -
                                                     -----------     -----------    ------------    ----------
                                                      $    9,443      $    9,424       $  11,245       $  11,093
                                                       =========       =========        ========        ========
</TABLE>

    A portion of the Company's U.S. Government and agency securities,  totalling
    approximately  $1,300,000  and  $500,000  at  December  31,  1999 and  1998,
    respectively,  was pledged as collateral  to secure  deposits as required or
    permitted by law.

NOTE D - LOANS RECEIVABLE
<PAGE>

    Major loan classifications at December 31 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                         1999              1998
                                                                                     ------------      ------------
<S>                                                                                   <C>             <C>
       Consumer loans                                                                 $  12,479       $    6,376
       Residential mortgages                                                              7,268            6,956
       Commercial and industrial loans                                                   15,197            8,532
       Construction loans                                                                 8,895            3,582
       Commercial mortgages                                                              38,872           19,454
       Other          56                                                                    803
             -----------                                                             ----------
                                                                                         82,767           45,703
       Less
          Unearned discounts and deferred loan fees                                        (135)             (74)
          Allowance for loan losses                                                      (1,237)            (914)
                                                                                      ---------       ----------
                                                                                      $  81,395        $  44,715
                                                                                       ========         ========
</TABLE>

                                                     (Continued)

                                       33
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE D - LOANS RECEIVABLE - Continued

    The  Company  had no  non-accrual  loans or loans  that  would be defined as
impaired at December 31, 1999 or 1998.

    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, 1999 or 1998.  There were no loans to
    directors,  officers,  or employees at or during the periods ended  December
    31, 1999 or 1998.

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

                                         1999              1998
                                         ----              ----

Balance, beginning of year             $   914           $   250
Provision charged to expenses              325               664
Loans charged-off                           (2)               --
                                       -------           -------

Balance, end of period                 $ 1,237           $   914
                                       =======           =======

NOTE E - PREMISES AND EQUIPMENT

    Premises and equipment at December 31 are as follows (in thousands):
<TABLE>
<CAPTION>
                                              Estimated
                                             useful lives           1999              1998
                                          ------------------    ------------      ------------

<S>                                           <C>                    <C>               <C>
Land                                          Indefinite             $   443           $   176
Buildings and leasehold improvements          10 - 39 years            3,306             1,846
Furniture, fixtures and equipment                   5 years              782               460
Computer equipment and software                 3 - 5 years              741               452
Construction in progress                                 --                6               427
                                                                     -------           -------
                                                                       5,278             3,361
Less accumulated depreciation and
    amortization                                                        (647)             (293)
                                                                     -------           -------

                                                                     $ 4,631           $ 3,068
                                                                     =======           =======
</TABLE>
    Depreciation   and   amortization   charged  to   operations   amounted   to
    approximately  $354,000 and  $206,000  for year ended  December 31, 1999 and
    1998, respectively.

                                       34

<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998

NOTE F - DEPOSITS

    At December 31, 1999, the scheduled  maturities of  certificates  of deposit
    are summarized as follows (in thousands):
<TABLE>
<CAPTION>

<S>   <C>                                                           <C>
      2000                                                          $  21,342
      2001                                                              9,659
      2002                                                                -
      2003                                                                 82
                                                                  -----------
                                                                    $  31,083

    Interest expense on deposits is as follows (in thousands):
                                                                       1999              1998
                                                                   ------------      ------------

      Savings                                                      $    1,441      $       960
      NOW and money market                                                324              229
      Time deposits                                                       688              170
                                                                   ----------       ----------
                                                                   $    2,453       $    1,359
                                                                    =========        =========
</TABLE>

NOTE G - EQUITY TRANSACTIONS

    On  April  22,  1999,  the  shareholders  of the Bank  approved  the Plan of
    Acquisition, pursuant to which the Bank was acquired by Community Bancorp of
    New Jersey  effective July 1, 1999. In connection with this  transaction,  a
    shareholder  elected to exercise its  dissenter's  rights of  appraisal.  On
    August 6, 1999,  the Company and this  shareholder  negotiated  a settlement
    pursuant to which the dissenting  shareholder  relinquished all beneficially
    owned equity  instruments,  consisting  of 22,416  common  shares and 38,700
    exercisable options, for fair value of approximately $674,000.

    On January 11, 1999, the Company  completed the sale of the overallotment of
    shares  associated with its secondary public offering.  An additional 66,000
    shares were sold at $16.50 per share for  $1,089,000.  Gross proceeds of the
    overallotment were reduced by offering costs of approximately $75,000.

NOTE H - INCOME TAXES

    The  components  of the  provision  for  income  taxes  are as  follows  (in
thousands):
                                                     1999           1998
                                                     ----           ----
       Current
          Federal                                 $       7     $       -
          State                                           4
       Deferred (benefit)                               (11)            -
                                                 ----------     ---------
                                                 $        -     $       -
                                                 ==========     =========


                                                     (Continued)

                                       35
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE H - INCOME TAXES - Continued

    The  Company  did not record an income  tax  provision  for the years  ended
    December 31, 1999 and 1998, because of its net operating loss carryforwards.

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

                                            1999              1998
                                            ----              ----

Allowance for loan loss                    $ 368           $ 329
Organizational and start-up costs             73             115
Net operating loss carryforwards              --             200
Other                                        (46)            (19)
                                           -----           -----
                                             395             625
Less valuation allowance                    (384)           (625)
                                           -----           -----

   Net deferred tax asset                  $  11           $  --
                                           =====           =====

    In view of the  Company's  operating  loss history and the risks  associated
    with its ability to generate  taxable  income in the future,  management has
    provided for the valuation  allowance  reflected in the schedule above.  The
    Company had no net operating loss carryovers remaining at December 31, 1999.
    As the Company  continues to be profitable,  the valuation  allowance on the
    deferred tax asset will be reduced.  As a result of this  reduction,  income
    tax expense in future years will be reduced by approximately $1.1 million.

NOTE I - OTHER EXPENSES

    Other expenses consist of the following (in thousands):

                                      1999           1998
                                      ----           ----


Office expense                     $  178          $  197
Stationery and printing               228             135
Data processing                       383             137
Professional fees                     292             103
Marketing and advertising             247             103
Insurance expense                      63              59
Stockholder expense                   116              25
Other                                  50              66
                                   ------          ------

                                   $1,557          $  825
                                   ======          ======

                                       36

<PAGE>

                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


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):
<TABLE>
<CAPTION>
                                                                        Year ended December 31,  1999
                                                               -----------------------------------------------

                                                                                Weighted          Per share
                                                                Loss         average shares         amount
                                                                ----         --------------         ------
       Basic EPS
<S>                                                          <C>                <C>                <C>
   Net income available to common stockholders               $     507          1,832,781          $   0.28
Effect of dilutive securities
   Options                                                          --             25,442             (0.01)
                                                             ---------          ---------          --------
Diluted EPS
   Net income available to common stockholders plus
       Assumed conversion                                    $     507          1,858,223          $   0.27
                                                             =========          =========          ========
</TABLE>


    62,985  options to purchase  shares of common stock with an exercise  prices
    ranging from $15.34 to $16.86 per share were not included in the computation
    of 1999 diluted EPS because the exercise  price was greater than the average
    market price of the common stock.
<TABLE>
<CAPTION>
                                                                     Year ended December 31, 1998
                                                           -----------------------------------------------
                                                                              Weighted            Per share
                                                               Loss         average shares         amount
                                                               ----         --------------         ------
Basic EPS
<S>                                                        <C>                 <C>                <C>
   Net loss available to common stockholders               $    (610)          1,351,994          $  (0.45)
Effect of dilutive securities
   Options                                                        --                  --                --
                                                           ---------           ---------          --------
Diluted EPS
   Net loss available to common stockholders plus
       Assumed conversion                                  $    (610)          1,377,289          $  (0.45)
                                                           =========           =========          ========
</TABLE>

    187,975  options to purchase  shares of common stock with an exercise  price
    ranging from $11.17 to $16.86 per share were not included in the computation
    of 1998 diluted EPS because the Company is in a loss position.

<PAGE>

NOTE K - STOCK OPTIONS

    In July 1997,  the Board of  Directors  of the Company  adopted  three stock
    option plans for the members of the board,  executive officers,  and certain
    employees of the Company. In April 1998, the Company's shareholders approved
    all three stock option plans.

    Under the Company's 1997 Stock Option Plan for  Non-Employee  Directors (the
    1997 Stock  Option  Plan for  Non-Employee  Directors),  options to purchase
    46,350  common  stock  shares may be issued.  Each of the nine  non-employee
    directors were automatically  granted 5,000 common stock options exercisable
    at $11.17  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, 1999,  44,633  options were granted
    under this plan.


                                   (Continued)

                                       37
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE K - STOCK OPTIONS - Continued

    Under the  Company's  1997 Stock Option Plan (the 1997 Stock  Option  Plan),
    options to purchase  60,770  common stock  shares may be issued.  Options to
    purchase  45,320  common  stock  shares  were  granted to nine  non-employee
    directors  at $11.17  per share  (110% of market  value on date of grant) in
    July 1997, in varying  amounts to each  non-employee  director in July 1997.
    Additionally,  15,450  options were  granted to the  President at $14.33 per
    share in May 1998.  The options vest one-third each year. The options may be
    exercised  up to 10 years after the grant.  At  December  31,  1999,  59,568
    options were granted under this plan.

    Under the Company's 1997 Employee Stock Option Plan (the 1997 Employee Stock
    Option Plan),  options to purchase 51,500 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.  They may be
    priced as low as 85% of market value. Options to purchase 51,500 shares were
    granted in May 1998 at prices  ranging from $15.03 to $16.86,  which include
    25,750 options  granted to the  President.  The options under this plan vest
    from 3 to 5 years. At December 31, 1999, all options were granted under this
    plan.

    The Board of Directors approved in May 1998, the 1998 Stock Option Plan (the
    1998 Stock Option Plan)  pursuant to which  options to purchase up to 51,500
    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 77,250
    shares  of  common  stock,  more than was  previously  authorized  under the
    Company's existing stock option plans. The options under this plan vest from
    3 to 5 years. Since this stock option plan is subject to the approval of the
    Company's  shareholders at its annual meeting to be held April 22, 1999, the
    options granted in 1998 were valued in accordance with SFAS No. 123 in 1999.
    At December 31, 1999, 42,385 options were granted under this plan.

    The Board of Directors  approved and will be  recommending  for  shareholder
    approval  in April  2000 the 2000  Director  Stock  Option  Plan  (the  2000
    Director  Stock Option Plan),  pursuant to which options to purchase  85,000
    common stock shares may be issued.  Options to purchase  85,000 common stock
    have been granted to eight non-employee  directors at $13.78 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 exercised
    up to 10 years after the grant.
<PAGE>

    The Board of Directors  approved and will be  recommending  for  shareholder
    approval  in April  2000 the 2000  Employee  Stock  Option  Plan  (the  2000
    Employee Stock Option Plan). Options to purchase 70,000 shares of the common
    stock will be reserved  for  issuance  under this Plan.  Options to purchase
    21,000  common stock shares have been  granted to key  employees,  including
    11,000 to the President at prices ranging from $13.13 to $13.78. The options
    under this plan vest from 2 to 5 years.  The options may be  exercised up to
    10 years after grant.


                                   (Continued)

                                       38
<PAGE>

                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE K - STOCK OPTIONS - Continued

    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.

    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,
                                                       ---------------------
                                                     1999                1998
                                                     ----                ----
       Net income (loss)
          As reported                              $     507      $      (610)
          Pro forma                                      168             (809)
       Net income (loss) per share - basic
          As reported                              $    0.28            (0.45)
          Pro forma                                     0.09            (0.63)
       Net income (loss) per share - diluted
          As reported                              $    0.27            (0.45)
          Pro forma                                     0.08            (0.63)

    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 1999 and 1998,  dividend yield of 0% in both
    years; expected volatility of 25% in both years;  risk-free interest rate of
    5.79% in 1999 and  5.54% in  1998;  and  expected  lives of 10 years in both
    years.

    A summary of the status of the  Company's  stock option plans as of December
    31, 1999, and the change during the years then ended is represented below.
<TABLE>
<CAPTION>
<PAGE>

                                                                1998                         1999
                                                                ----                         ----
                                                                      Weighted                        Weighted
                                                                      Average                         Average
                                                                      Exercise                        Exercise
                                                     Shares            Price         Shares            Price
                                                     ------            -----         ------            -----
<S>                                                  <C>            <C>                         <C>
       Outstanding, beginning of year                187,975        $  13.37              -     $        -
       Granted                                        24,875           15.58          210,635          13.17
       Cancelled/forfeited                           (14,764)          14.67          (22,660)         11.56
                                                     -------                          -------
       Outstanding, end of year                      198,086           13.57          187,975          13.37
                                                     =======                          =======

       Weighted average fair value of
          Options granted during the year                          $    8.20                       $    6.88
                                                                    ========                        ========
</TABLE>


                                   (Continued)

                                       39
<PAGE>

                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE K - STOCK OPTIONS - Continued

    The  following  table  summarizes  information  about  nonqualified  options
outstanding at December 31, 1999:
<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                    1999             life          price             1999           price
      ---------------                    ----             ----          -----             ----           -----
<S>   <C>       <C>                       <C>           <C>            <C>                <C>            <C>
      $ 11.17 - $16.38                    162,036       8.07 years     $  12.84           69,353         $  11.54
      $ 16.86                              36,050       8.36 years     $  16.86            7,210         $  16.86
                                         --------                                        -------
                                          198,086                                         76,563
                                         ========                                        =======
</TABLE>

NOTE L - COMMITMENTS

    Lease Commitments

    The Company leases several banking facilities under noncancellable operating
    lease  agreements  expiring through 2019. 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 $89,000 and $24,000 for the year ended December 31,
    1999 and 1998, respectively.

    The  approximate  minimum  rental  commitments  under  operating  leases  at
    December 31, 1999, are as follows (in thousands):

             2000          $   93
             2001             100
             2002              96
             2003              80
             2004              85
       Thereafter           1,224
                           ------
                           $1,678

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

<PAGE>

    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)

                                       40
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


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):

                                                            1999          1998
                                                            ----          ----


       Commitments to extend credit                      $  22,558     $  11,651
       Letters of credit - standby and performance           1,298         1,102
                                                         ---------      --------

                                                         $  23,856     $  12,753
                                                          ========      ========

    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.


                                   (Continued)

                                       41
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE N - FAIR VALUE OF FINANCIAL INSTRUMENTS - Continued

    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, 1999 and 1998,  are
    outlined below.

    For cash and cash equivalents, including cash and due from banks and federal
    funds sold the recorded book values of  $25,266,000  and  $28,566,000  as of
    December  31, 1999 and 1998,  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, 1999 and 1998, 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.
<PAGE>
<TABLE>
<CAPTION>

                                                                      1998                          1999
                                                                      ----                          ----
                                                            Carrying      Estimated       Carrying       Estimated
                                                             amount       fair value       amount       fair value
                                                       --------------   --------------    -----------    ------------
                                                                            (in thousands)

<S>                                                      <C>             <C>             <C>           <C>
       Investment securities available-for-sale          $    9,424      $    9,424      $       -     $       -
       Investment securities held-to-maturity                11,245          11,093          6,025         6,004
       Loans receivable                                      82,632          81,489         45,629        45,123
       Certificates of deposits                              31,083          31,083          4,974         4,974
</TABLE>


    There  was no  material  difference  between  the  notional  amount  and the
    estimated   fair   value  of   off-balance-sheet   items,   which   totalled
    approximately  $23,856,000  and  $12,753,000  at December 31, 1999 and 1998,
    respectively,  and primarily  comprise unfunded loan commitments,  which are
    generally priced at market at the time of funding.


                                       42
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE O - REGULATORY MATTERS

    The Bank is subject to various regulatory capital requirements  administered
    by  the  federal  companying  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, 1999,  management  believes
    that the Bank meets all capital adequacy requirements to which it is subject
    and considers the Bank to be "well capitalized".

    As of June 7, 1999, the most recent  notification  from the Federal  Deposit
    Insurance Corporation  categorized the Bank as adequately  capitalized under
    the regulatory  framework for prompt corrective action. To be categorized as
    adequately  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, 1999
         Total capital (to risk-
<S>                                       <C>            <C>      <C>           <C>        <C>           <C>
             weighted assets)             $  19,362      21.54%   $    7,189    =>8.00%    $    8,986    =>10.00%
         Tier I capital (to risk-
             weighted assets)                18,237      20.29         3,595    =>4.00          5,393    => 6.00
         Tier I capital (to average
             assets)                         18,237      15.28         3,580    =>3.00          5,967    => 5.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


      As of December 31, 1998
         Total capital (to risk-
<S>                                       <C>            <C>      <C>           <C>        <C>           <C>
             weighted assets)             $  18,021      35.84%   $    4,022    =>8.00%    $    5,028    =>10.00%
         Tier I capital (to risk-
             weighted assets)                17,389      34.59         2,011    =>4.00          3,017    => 6.00
         Tier I capital (to average
             assets)                         17,389      24.41         2,137    =>3.00          3,562    => 5.00
</TABLE>


                                   (Continued)

                                       43
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE O - REGULATORY MATTERS - Continued

    In  addition,  pursuant to the order of the New Jersey  Commissioner  of the
    Department of Banking and Insurance granting the Bank a charter, the Bank is
    required to  maintain a ratio of equity to total  assets of at least 10% for
    its first five years of  operations.  As of December 31, 1999 and 1998,  the
    Bank's  ratio of equity  capital to total  assets  was  13.72%  and  21.01%,
    respectively.

NOTE P - PARENT COMPANY FINANCIAL INFORMATION

    Although  the  consolidated  financial  statements  have been  retroactively
    adjusted  to  reflect  the  formation  of  the  holding  company,  condensed
    financial  information for Community  Bancorp of New Jersey,  parent company
    only,  has only been  presented at and for the year ended  December 31, 1999
    (in thousands).

                                  BALANCE SHEET

                                December 31, 1999

       ASSETS
   Investment in subsidiary                                    $18,225
   Other assets                                                     47
                                                               -------
       Total assets                                            $18,272
                                                               =======
LIABILITIES AND STOCKHOLDERS' EQUITY
   Other liabilities                                           $    46
   Stockholders' equity                                         18,226
                                                               -------
       Total liabilities and stockholders' equity              $18,272
                                                               =======

                      STATEMENT OF OPERATIONS

                   Year ended December 31, 1999

Services fee from subsidiary                                   $    47
Other operating expenses                                            47
                                                               -------
   Income before undistributed income from subsidiary               --
Equity in undistributed income of subsidiary                       507
                                                               -------
   Net income                                                  $   507
                                                               =======
                                   (Continued)

                                       44
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE P - PARENT COMPANY FINANCIAL INFORMATION - Continued
<TABLE>
<CAPTION>

                             STATEMENT OF CASH FLOWS

                          Year ended December 31, 1999

       Cash flows from operating activities
<S>                                                                                <C>
   Net income                                                                      $   507
   Adjustments to reconcile net income to net cash provided by operations
       Equity in undistributed (earnings) losses of subsidiary                        (507)
       Net increase in other assets                                                     47
       Net increase in other liabilities                                                46
                                                                                   -------
          Net cash used in operating activities                                         (1)
                                                                                   -------
Cash flows from investing activities
   Contributions to subsidiary                                                      (1,014)
   Proceeds to fund treasury stock and option transactions                             674
                                                                                   -------
          Net cash use in investing activities                                        (340)
                                                                                   -------
Cash flows from financing activities
   Effect of treasury stock and option transactions                                   (673)
   Issuance of common stock                                                          1,014
                                                                                   -------
          Net increase (decrease) in cash and cash equivalents                         341
                                                                                   -------
Cash and cash equivalents at beginning of period                                        --
                                                                                   -------
Cash and cash equivalents at end of year                                           $    --
                                                                                   =======
</TABLE>

NOTE Q - SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

    The following  summarizes the consolidated results of operations during 1999
    and 1998,  on a quarterly  basis,  for  Community  Bancorp of New Jersey (in
    thousands except per share data):

<TABLE>
<CAPTION>
                                                                            1999
                                                                            ----
                                                        Fourth        Third       Second         First
                                                        Quarter      Quarter      Quarter       Quarter
                                                      -----------  -----------  -----------   -----------
<S>                                                     <C>           <C>           <C>           <C>
Interest income                                         $1,942        $1,744        $1,593        $1,382
Interest expense                                           826           628           545           455
                                                                      ------        ------        ------
   Net interest income                                   1,116         1,116         1,048           927
</TABLE>
<TABLE>
<CAPTION>
<S>                                                     <C>           <C>           <C>           <C>
Provision for loan losses                                   58            45           111           111
                                                                      ------        ------        ------
   Net interest after provisions for loan losses         1,058         1,071           937           816
Other non-interest income                                  273           169            73            58
Other non-interest expense                               1,188         1,080           871           809
                                                                      ------        ------        ------
   Net income                                           $  143        $  160        $  139        $   65
                                                                      ======        ======        ======
Net income per share
   Basic                                                $ 0.08        $ 0.09        $ 0.08        $ 0.03
   Diluted                                              $ 0.07        $ 0.09        $ 0.08        $ 0.03
</TABLE>


                                   (Continued)

                                       45
<PAGE>


                         COMMUNITY BANCORP OF NEW JERSEY

             Notes to Consolidated Financial Statements - Continued

                           December 31, 1999 and 1998


NOTE Q - SUMMARY OF QUARTERLY RESULTS (UNAUDITED) - Continued
<TABLE>
<CAPTION>


                                                                                     1998
                                                                                     ----
                                                                 Fourth        Third       Second          First
                                                                 Quarter      Quarter      Quarter       Quarter
                                                               -----------  -----------  -----------   -----------

<S>                                                           <C>         <C>          <C>          <C>
       Interest income                                        $    1,152  $       932  $       734  $       611
       Interest expense                                              479          397          270          213
                                                              ----------   ----------   ----------   ----------
          Net interest income                                        673          535          464          398
       Provision for loan losses                                     134          198          197          135
                                                              ----------   ----------   ----------   ----------
          Net interest after provisions for loan losses              539          337          267          263
       Other non-interest income                                      99           92           32           20
       Other non-interest expense                                    600          534          636          489
                                                              ----------   ----------   ----------   ----------
          Net income (loss)                                 $         38  $      (105) $      (337) $      (206)
                                                             ===========   ==========   ==========   ==========
       Net income (loss) per share
          Basic                                             $      0.03   $     (0.08) $    (0.25)  $     (0.15)
          Diluted                                           $      0.03   $     (0.08) $    (0.25)  $     (0.15)
</TABLE>

                                       46