<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

|X|  Annual report  pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934.

For the fiscal year ended December 31, 1997

Commission file number 0-15830

                              Raritan Bancorp Inc.
             (Exact name of registrant as specified in its charter)

            Delaware                                     22-2792402
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

        454 Route 28
   Bridgewater, New Jersey                                08807
(Address of principal executive                        (Zip Code)
         offices)

                        Telephone Number: (908) 725-0080

     Indicate  by  checkmark  whether the  registrant  (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                Yes |X|   No ___

     Securities Registered Pursuant to Section 12(g) of the Exchange Act: Common
Stock

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

     The aggregate market value of the voting stock held by nonaffiliates of the
registrant, computed by reference to the last reported sales price of such stock
on the  NASDAQ  National  Market  System  on  March 9,  1998  was  approximately
$48,846,700.

     The number of shares  outstanding  of the  registrant's  Common Stock,  the
registrant's  only class of outstanding  capital stock,  as of March 9, 1998 was
2,388,289.

                       Documents Incorporated by Reference

     The following documents, in whole or in part, are specifically incorporated
by reference in the indicated Part of this Annual Report on Form 10-K:

I.   Portions of the Raritan  Bancorp Inc. 1997 Annual Report are incorporated
     by reference into certain items of Part I and Part II.

II.  Portions of the Raritan  Bancorp Inc. Proxy Statement for the 1997 Annual
     Meeting of Shareholders are incorporated by reference into certain items of
     Part III.
<PAGE>

                              RARITAN BANCORP INC.
                                    FORM 10-K

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                  Page

                                     PART I

<S>                                                                                                 <C>
Item 1.   Business.................................................................................  1
          (a) General Development of Business......................................................  1
          (b) Financial Information About Industry Segments........................................  1
          (c) Narrative Description of Business....................................................  1
              (1) General Description of Business..................................................  1
              (2) Regulation and Supervision.......................................................  2
              (3) Monetary Policies................................................................  9
              (4) Employees........................................................................  9
              (5) Statistical Information..........................................................  9
                  (a) Distribution of Assets, Liabilities and Shareholders'
                      Equity; Interest Rates and Interest Differential.............................  9
                  (b) Securities Portfolio......................................................... 10
                  (c) Loan Portfolio............................................................... 12
                  (d) Maturity of Loans............................................................ 12
                  (e) Nonperforming Assets......................................................... 15
                  (f) Summary of Loan Loss Experience and Allocation
                      of the Allowance for Loan Losses............................................. 16
                  (g) Deposits..................................................................... 17
                  (h) Maturities of Time Deposits.................................................. 17
                  (i) Return on Equity and Assets.................................................. 18
                  (j) Short-term Borrowings........................................................ 18
                  (k) Competition.................................................................. 19
                  (l) Executive Officers........................................................... 19

Item 2.   Properties............................................................................... 20

Item 3.   Legal Proceedings........................................................................ 21

Item 4.   Submission of Matters to a Vote of Security Holders...................................... 21

                                                  PART II

Item 5.   Market for Registrant's Common Equity and Related Shareholder
          Matters.................................................................................. 21
          (a) Market Information................................................................... 21
          (b) Shareholders......................................................................... 21
</TABLE>


                                                     i
<PAGE>

<TABLE>
<S>                                                                                                 <C>
          (c) Dividends............................................................................ 21

Item 6.   Selected Financial Data.................................................................. 22

Item 7.   Management's Discussion and Analysis of Financial Condition and Results
          of Operations............................................................................ 22

Item 7A.  Quantitative and Qualitative Disclosure About Market Risk................................ 22

Item 8.   Financial Statements and Supplementary Data.............................................. 23

Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure..................................................................... 23

                                                 PART III

Item 10.  Directors and Officers of the Registrant................................................. 23

Item 11.  Executive Compensation................................................................... 23

Item 12.  Security Ownership of Certain Beneficial Owners and Management........................... 23

Item 13.  Certain Relationships and Related Transactions........................................... 23

                                                  PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................... 24
          (a) (1)  Consolidated Financial Statements............................................... 24
              (2)  Consolidated Financial Statement Schedules...................................... 24
          (b) Reports on Form 8-K.................................................................. 24
          (c) Exhibits Required by Securities and Exchange Commission
              Regulation S-K....................................................................... 24
</TABLE>


                                       ii
<PAGE>

                                     PART I


Item 1. Business

     (a)  General Development of Business

          Raritan Bancorp Inc.

     Raritan Bancorp Inc. (the "Corporation"), a Delaware Corporation, is a
bank holding company whose only subsidiary is The Raritan Savings Bank (the
"Bank"), an FDIC/BIF insured, New Jersey chartered savings bank, headquartered
in Bridgewater, New Jersey. The Corporation was formed at the direction of the
Bank in connection with the Bank's conversion from a mutual to stock form of
organization (the "Conversion"). The Conversion of the Bank and its acquisition
by the Corporation was consummated on May 21, 1987. The sole activity of the
Corporation is its ownership of all of the issued and outstanding common stock
of the Bank.

          The Raritan Savings Bank

     The Bank is a New Jersey chartered stock savings bank organized in 1869.
Its main office is located at 9 West Somerset Street, Raritan, New Jersey 08869,
and its telephone number is 908-725-0080. Its corporate headquarters is located
at 454 Route 28, Bridgewater, New Jersey 08807 and its telephone number is
908-231-8100. It also operates branch offices in Bridgewater, Manville,
Martinsville, Somerville, Warren and Whitehouse Station, New Jersey. The deposit
accounts in the Bank are insured by the Federal Deposit Insurance Corporation
(the "FDIC") primarily through the Bank Insurance Fund (the "BIF").

     The Bank considers its primary market area for deposits to be the areas
serviced by these seven offices, while its primary market area for lending is
more widespread and includes Somerset and Hunterdon Counties, as well as
contiguous municipalities in Morris, Middlesex, Union and Mercer Counties, New
Jersey. These areas include mostly manufacturing and service companies.

     (b)  Financial Information About Industry Segments

          Not applicable.

     (c)  Narrative Description of Business

          (1)  General Description of Business

     The Corporation is a bank holding company whose only subsidiary is the
Bank.


                                        1
<PAGE>

     The Bank is engaged primarily in the business of attracting deposits from
the general public and originating residential mortgage, construction and
consumer loans, and small business loans. In addition, a portion of its assets
is invested in securities, including mortgage-backed securities.

     It is the Bank's policy primarily to originate adjustable-rate mortgage
loans and other loans of an adjustable or short-term nature. However, in order
to meet the demands of borrowers in the Bank's local lending area for long-term,
fixed-rate mortgage loans in the current interest rate environment, the Bank
began originating such loans (both 15 and 30 year loans) in 1991. Of the $62.1
million of first mortgage loans disbursed during 1997, $2.8 million were
fixed-rate, while the balance of $59.3 million were of an adjustable or
short-term nature. Consumer and commercial lending disbursements totaled $35.5
million for 1997 and consisted primarily of loans which are tied to the prime
lending rate and are of a short-term nature.

     The Bank offers a wide range of services to both consumer and commercial
customers. These services include consumer and commercial checking accounts, NOW
and money market accounts, regular savings accounts, prime performance accounts
whose rates are tied to the prime lending rate, market-rate certificates,
IRA/Keough accounts, automated teller machine ("ATM") accessibility using the
MAC(R) Plus(R) system, real estate mortgage loans, various consumer and
commercial time and demand loans, and home equity lines of credit.

          (2)  Regulation and Supervision

     General. As a New Jersey chartered savings bank, the deposits of which are
insured by the FDIC primarily through the BIF, the Bank is subject to extensive
regulation by the FDIC and the New Jersey Department of Banking and Insurance
(the "Banking Department"). Both the Banking Department and FDIC periodically
examine the Bank for compliance with various regulatory requirements. The Bank
must file reports with the FDIC and the Banking Department describing its
activities and financial condition. The Board of Governors of the Federal
Reserve System ("FRB") approved the Corporation's application to acquire the
capital stock of the Bank and thereby to become a bank holding company. The
Corporation is therefore subject to regulation, examination, supervision by
the FRB. This supervision and regulation is intended primarily for the
protection of depositors. The regulatory structure also gives the regulatory
authorities extensive discretion in connection with their supervisory and
enforcement activities and examination policies, including policies with
respect to the classification of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such regulations could
have a material adverse impact on the Corporation, the Bank and their
operations. Certain of these regulatory requirements are referred to below or
appear elsewhere herein. The Corporation is also subject to the reporting
requirements of the Securities and Exchange Commission ("SEC").

     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 involved. In this regard, it
should be noted that there have been numerous statements by legislative


                                        2
<PAGE>

and regulatory officials and industry officials regarding the potential for
legislative and regulatory changes.

     New Jersey Law. The Bank is a stock-form savings bank organized under the
laws of the State of New Jersey, and its deposits are insured by the FDIC. The
Bank derives its lending, investment and other powers from the applicable
provisions of New Jersey law and the regulations of the Banking Department,
subject to limitations or other modifications under applicable federal laws and
regulations of such agencies as the FDIC and the Federal Reserve Board.

     The Banking Department regulates the Bank's internal organization as well
as its deposit, lending and investment activities. The Commissioner of the
Banking Department must approve changes to the Bank's Certificate of
Incorporation, establishing or relocating branch offices, mergers and the
issuance of additional stock. Many of the areas regulated by the Banking
Department are subject to similar regulation by the FDIC. New Jersey-chartered
savings banks have lending, investment and other powers similar to those
authorized for federally-chartered savings institutions, including commercial
lending authority and the ability to offer personal and commercial checking and
NOW accounts, and have virtually the same powers as commercial banks.

     The Financial Institutions Reform, Recovery and Enforcement Act of 1989. On
August 9, 1989, the President of the United States signed into law the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), a major
reform intended primarily to recapitalize the savings and loan industry.
Although the primary emphasis of the new law was to recapitalize and restructure
the regulation and insurance of the savings and loan industry, certain
provisions did affect banks and FDIC-insured savings banks. Notably, FIRREA
abolished the Federal Savings and Loan Insurance Corporation and required that
the FDIC establish two separate insurance funds, the Bank Insurance Fund ("BIF")
and the Savings Association Insurance Fund ("SAIF"). Banks, including
state-chartered savings banks, are insured under the BIF. "Savings associations"
(i.e., savings and loan associations) are insured under the SAIF. Under FIRREA,
the BIF may not be commingled with the SAIF and vice versa. See "Insurance of
Deposits." Also under FIRREA, bank holding companies now are able to acquire any
savings association without the imposition of cross-marketing restrictions on
transactions between the association and its holding company affiliates.

     The Federal Deposit Insurance Corporation Improvement Act of 1991. On
December 19, 1991 the Federal Deposit Insurance Corporation Improvement Act of
1991 (the "Act") was signed by the President. Among other things, the Act
provided additional sources of funding to the BIF, which generally insures the
deposits of banks, including state-chartered savings banks. The Act also
authorizes the FDIC to impose emergency special assessments on BIF-members where
deemed necessary, in addition to the regular insurance assessments. The Act also
adopted a number of new mandatory supervisory measures designed to reduce costs
to the deposit insurance fund. For example, effective December 19, 1992, the
regulatory agencies were required to take certain supervisory actions (the
"Prompt Corrective Action" provisions) against undercapitalized banks. The
severity of such action depends upon the degree of undercapitalization. The Act
generally requires, subject to a narrow exception, the appointment of a receiver
or conservator for banks whose


                                        3
<PAGE>

tangible capital level falls below 2%, which appointment must be made within a
maximum of 270 days after the threshold is reached. The final Prompt Corrective
Action rules generally provide that an insured institution that has total
risk-based capital of less than 8.0% or a leverage ratio that is less than 4.0%
would be considered to be "undercapitalized", an insured institution that has
total risk-based capital less than 6.0% or a leverage ratio that is less than
3.0% would be considered to be "significantly under-capitalized" and an insured
institution that has a tangible capital to assets ratio equal to or less than 2%
would be deemed to be "critically undercapitalized." Generally, under the rule,
an insured institution that is "undercapitalized," "significantly
under-capitalized," or "critically undercapitalized" becomes immediately subject
to certain regulatory restrictions, including, but not limited to, restrictions
on growth, investment activities, capital distributions, and affiliate
transactions. The filing of a capital restoration plan, which must be guaranteed
by the parent holding company, is also required. In addition, "critically
undercapitalized" institutions must receive prior written approval from the FDIC
to engage in any material transaction other than in the normal course of
business.

     Pursuant to the Act, the federal regulatory agencies adopted final
regulations prescribing standards relating to a variety of operating matters
such as internal controls, information systems and external audit systems, loan
documentation and credit underwriting, interest rate exposure, asset growth and
quality and employee compensation.

     The Act also places new restrictions on investments by, and the activities
of, insured state banks such as the Bank. Effective December 19, 1992, neither
state banks nor their subsidiaries may engage in activities not permissible for
national banks or their subsidiaries unless the FDIC determines that the
activity would pose no significant risk to the deposit insurance fund and the
bank is and continues to comply with applicable federal capital standards.
Additionally, subject to exceptions for majority-owned subsidiaries and certain
other limited exceptions, state banks may not acquire or retain any equity
investment of a type or in an amount not permissible for national banks.
Generally, nonconforming investments must be divested over a five-year
transition period.

     Insurance of Deposits. The Bank's deposit accounts primarily are insured by
the BIF up to applicable limits, generally $100,000 per insured depositor. In
September 1991, the Bank assumed $80.3 million of insured deposit liabilities
relating to the Warren and Whitehouse Station, New Jersey branch offices of a
savings association being operated by the Resolution Trust Corporation, and also
acquired deposits totaling $12.5 million as a result of the Manville Savings
Bank merger and acquisition in August, 1996. These deposits are insured by the
Savings Association Insurance Fund ("SAIF"), up to applicable limits, generally
$100,000 per insured depositor. The SAIF, like the BIF, is administered by the
FDIC. The FDIC promulgates regulations, conducts periodic examinations, requires
the filing of reports and generally supervises the operations of its insured
banks. The approval of the FDIC is required prior to a merger or consolidation
or the establishment or relocation of an office facility. This supervision and
regulation is intended primarily for the protection of depositors.

     On September 30, 1996, legislation was enacted which, among other things,
imposed a special one-time assessment on SAIF Insured Deposits, including
approximately $83.0 million in


                                        4
<PAGE>

"Oakar" and "Sasser" deposits held by the Bank, to recapitalize the SAIF and
spread the obligations for payment of Financing Corporation (FICO) bonds across
all SAIF and Bank Insurance Fund (BIF) members. The Federal Deposit Insurance
Corporation (FDIC) special assessment levied amounted to 65.7 basis points on
SAIF assessable deposits held as of March 31, 1995. The Bank recorded a charge
of $436,000 before tax-effect, as a result of the special assessment. This
legislation eliminated the substantial disparity between the amount that BIF and
SAIF member institutions had been paying for deposit insurance premiums.

     Currently, BIF members paid a portion of the FICO payment equal to 1.3
basis points on BIF-insured deposits compared to 6.4 basis points on SAIF
insured deposits and will pay a pro-rata share of the FICO payment on the
earlier of January 1, 2000, or the date upon which the last savings association
ceases to exist. The legislation also requires BIF and SAIF to be merged by
January 1, 1999, provided that subsequent legislation is adopted to eliminate
the savings association charter and no savings associations remain as of that
time.

     During 1997, SAIF assessment rates ranged from 0 to 27 basis points, based
upon an institution's regulatory risk classification and capital group. Based
upon its current classification the rate applicable to the SAIF deposits held by
the Bank was zero.

     Capital Requirements. Both the FRB and the FDIC have issued regulations
which require both the Corporation and the Bank, respectively, to maintain
minimum levels of capital. In general, the regulations require a leverage
capital ratio of 4% of total assets to be maintained. At December 31, 1997, the
Corporation's and Bank's leverage capital ratio was 7.330% and 7.319%,
respectively.

     The FDIC and the FRB also have adopted a risk-based capital policy which
imposes an additional capital standard on insured banks and bank holding
companies. Under this regulation, the Corporation and Bank must classify its
assets and certain off-balance sheet activities into categories, and maintain
specified levels of capital for each category. The least capital is required for
the category having the least risk, and the most capital is required for the
category deemed to have the greatest risk. At December 31, 1997, the Corporation
and the Bank were required to have a Tier 1 risk-based capital ratio of 4% and
total-risk-based capital ratio of 8%. At December 31, 1997, the Corporation's
Tier 1 and total risk-based capital ratios were 12.255% and 13.507%,
respectively. The Bank's Tier 1 and total risk-based capital ratios were 12.235%
and 13.486%, respectively.

     Under the Act, the capital regulations of the FDIC and the FRB are required
eventually to include a component that takes into account, and may require
additional capital as a result of, the interest rate risk inherent in an
institution's portfolio.

     Any insured bank which does not operate in accordance with or conform to
FDIC regulations, policies and directives may be sanctioned for noncompliance.
For example, enforcement proceedings may be instituted against any insured bank,
or any director, officer or employee thereof who engages in unsafe and unsound
practices including the violation of applicable


                                        5
<PAGE>

laws and regulations. The FDIC has the authority to terminate or suspend
insurance of accounts pursuant to procedures established for that purpose.

     Federal Reserve System. Under the FRB regulations, the Bank is required to
maintain reserves against its transaction accounts (primarily checking and NOW
accounts), nonpersonal money market deposit accounts, and nonpersonal time
deposits. Because reserves must generally be maintained in cash or in
noninterest bearing accounts, the effect of the reserve requirement is to reduce
the Bank's level of investable funds. These regulations generally require
reserves of 3% of total transaction accounts of up to $49.3 million. Total
transaction accounts amounting to over $49.3 million require a reserve of $1.5
million plus 10% (subject to adjustment by the FRB of between 8% and 14%) of
that portion of total transaction accounts in excess of such amount. In
addition, reserves in the amount of 3% must be maintained on nonpersonal money
market deposit accounts and on nonpersonal time deposits that have original
maturities of less than one and one half years and Eurocurrency liabilities.
Institutions are permitted to designate and exempt $4.4 million of reservable
liabilities from these reserve requirements. These amounts and percentages are
subject to adjustment by the FRB. The Bank was in compliance with these
requirements at December 31, 1997.

     The Corporation received the approval of the FRB under the BHCA for the
acquisition of the Bank. As a condition for obtaining FRB approval, the
Corporation has agreed that it will not engage in real estate investment
activities unless it provides the FRB with 30 days notice of such activities and
the FRB notifies the Corporation of its nonobjections.

     The Corporation will be required to obtain the prior approval of the FRB to
acquire all, or substantially all, of the assets of any bank or bank holding
company. Prior FRB approval will be required for the Corporation to acquire
direct or indirect ownership or control of any voting securities of any bank or
bank holding company if, after giving effect to such acquisition, it would,
directly or indirectly, own or control more than 5% of any voting shares of such
bank or bank holding company. In addition to the approval of the FRB, before any
bank acquisition can be completed, prior approval thereof may also be required
to be obtained from other agencies having supervisory jurisdiction over the bank
to be acquired.

     In addition, a bank holding company is generally prohibited from engaging
in, or acquiring direct or indirect control of any company engaged in nonbanking
activities. One of the principal exceptions to this prohibition is for
activities found by the FRB to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. Some of the principal
activities that the FRB has determined by regulation to be so closely related to
banking are: (i) making or servicing loans; (ii) performing certain data
processing services; (iii) providing discount brokerage services; (iv) acting as
fiduciary, investment or financial advisor; (v) leasing personal or real
property; (vi) making investments in corporations or projects designed primarily
to promote community welfare; and (vii) acquiring a savings and loan
association. Legislation has been proposed in Congress to relax, and even
eliminate, the restrictions on activities that may be engaged in by nonbank
subsidiaries of a bank holding company.


                                        6
<PAGE>

     Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on any extension of credit to
the bank holding company or any of its subsidiaries, on investments in the stock
or other securities of such holding company or its subsidiaries, and on the
acceptance of such stocks or securities as collateral for loans. Moreover,
subsidiaries of bank holding companies are prohibited from engaging in certain
tie-in arrangements (with the Corporation or any of its subsidiaries) in
connection with any extension of credit, lease or sale of property or furnishing
of services.

     The Corporation and its subsidiary Bank are affected by the monetary and
fiscal policies of various agencies of the United States Government, including
the Federal Reserve System. In view of changing conditions in the national
economy and in the money markets, it is impossible for the management of the
Corporation to accurately predict future changes in monetary policy or the
effect of such changes on the business or financial condition of the Corporation
and the Bank.

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

     Acquisition of the Corporation. Under the Federal Change in Bank Control
Act ("CIBCA"), a notice must be submitted to the FRB if any person or group
acting in concert seeks to acquire 10% or more of the Corporation's shares of
Common Stock outstanding, unless the FRB finds that the acquisition will not
result in a change in control of the Corporation. Under the CIBCA, the FRB has
60 days within which to act on such notices, taking into consideration certain
factors, including the financial and managerial resources of the acquiror, the
convenience and needs of the communities served by the Corporation and the Bank,
and the antitrust effects of the acquisition. Under the BHCA, any company would
be required to obtain prior approval from the FRB before it may obtain control
of the Corporation. Control generally is defined to mean the beneficial
ownership of 25% or more of any class of voting securities of the Corporation.
Under New Jersey law, the Commissioner is required to approve in advance any
acquisition of the Corporation's Common Stock in excess of 25% of the shares
outstanding.


                                        7
<PAGE>

     Federal Income Taxation. For Federal income tax purposes, the Corporation
files a consolidated return with its subsidiary Bank, using the accrual method
of accounting. The Bank is, with certain exceptions, subject to the rules of
Federal income taxation generally applicable to corporations. The maximum
Federal corporate income tax rate for all taxable income including capital gains
is currently 34%.

     Based upon 1996 Federal tax law changes, thrift institutions are generally
required to recapture into income the portion of its bad debt reserve (other
than supplemental reserve) that exceeds its base year (December 31, 1987)
reserves. The recapture amount generally will be taken into income ratably (on a
straight-line basis) over a six-year period. Under a small thrift exception, the
Corporation's tax reserves for bad debts equaled its allowable experience
reserve method and therefore, the Corporation will have no recapture.

     The Corporation has not recognized a deferred tax liability of
approximately $746,000 for bad debt reserves for tax purposes which arose in tax
years beginning before December 31, 1987 (i.e., base year). A deferred tax
liability will be recognized if the Corporation expects that charges to the bad
debt reserves, other than the losses on loans or recomputations of bad debt
deductions resulting from operating loss carrybacks to prior years, would result
in taxable income. The Corporation does not anticipate any such recognition in
the foreseeable future.

     To the extent that (i) the Bank's reserve for losses on qualifying real
property loans exceeds the amount that would have been allowed under the
experience method and (ii) the Bank makes distributions to shareholders (as
dividends or redemptions of stock or in partial or complete liquidation) that
are considered to result in distributions from the excess bad debt reserve or
the supplemental reserve for losses on loans ("Excess Distributions"), then the
amounts considered distributed will be included in the Bank's taxable income.
The amount considered distributed includes the federal income tax payable on the
Excess Distribution. In contrast, dividends paid out of the Bank's current or
accumulated earnings and profits, as calculated for federal income tax purposes,
will not be considered to result in distributions from the Bank's bad debt
reserves. Distributions in excess of the Bank's current and accumulated earnings
and profits, distributions in redemption of stock and distributions in partial
or complete liquidation of the Bank generally are considered, in whole or in
part, to result in distributions from the Bank's bad debt reserves and the
supplemental reserve for losses on loans.


                                        8
<PAGE>

State Income Taxation

     The Bank is taxed under the New Jersey Savings Institutions Tax Act. The
tax is an annual privilege tax imposed at the rate of 3% on the net income of
the Bank as reported for federal income tax purposes with certain modifications.
The Corporation is taxed under the New Jersey Corporation Business Tax Act. If
it meets certain tests, the Corporation would be taxed as an investment company
at an effective annual rate of 2.34% of New Jersey taxable income. If it fails
to meet such test, it will be taxed at an annual rate of 9.375% of New Jersey
taxable income. As a Delaware business corporation, the Corporation is subject
to an annual Delaware franchise tax.

          (3)  Monetary Policies

     The Corporation and its subsidiary Bank are affected by the monetary and
fiscal policies of various agencies of the United States Government, including
the Federal Reserve System. In view of changing conditions in the national
economy and in the money markets, it is impossible for the management of the
Corporation to accurately predict future changes in monetary policy or the
effect of such changes on the business or financial condition of the
Corporation.

          (4)  Employees

     The Corporation had 85 full-time and 10 part-time employees on December 31,
1997

          (5)  Statistical Information

     The statistical information on the Corporation set forth in the following
sections is furnished pursuant to Industry Guide 3 under the Securities Exchange
Act of 1934.

               (a)  Distribution of Assets, Liabilities and Shareholders'
                    Equity; Interest Rates and Interest Differential.

     Information regarding the distribution of assets, liabilities and
shareholders' equity; interest rates and interest differential appear on pages
14 and 15 of the Annual Report to Shareholders for the year ended December 31,
1997, and are incorporated herein by reference.


                                        9
<PAGE>

               (b)  Securities Portfolio

     The following table sets forth the carrying amount of securities at the
dates indicated.

<TABLE>
<CAPTION>
                                                                                     At December 31,
                                                              -----------------------------------------------------
                                                                  1997                    1996             1995
                                                              -----------            -----------        -----------
                                                                                     (In thousands)
  U.S. government obligations and obligations
<S>                                                           <C>                    <C>                <C>
    of U.S. government agencies......................         $    10,197            $    17,143        $    12,584
  Obligations of states and political
    subdivisions.....................................                 747                    748                804
  Mortgage-backed securities issued
    by Federal agencies..............................              79,056                 81,111             98,565
  Federal Home Loan Mortgage
    Corporation common stock.........................                 258                    170                 --
                                                              -----------            -----------        -----------
                                                              $    90,258            $    99,172        $   111,953
                                                              ===========            ===========        ===========
</TABLE>

     The mortgage-backed securities owned by the Bank are issued and guaranteed
by the Government National Mortgage Association, ("GNMA"), the Federal National
Mortgage Association, ("FNMA"), or the Federal Home Loan Mortgage Corporation,
("FHLMC") . These securities consist of pools of underlying mortgages with
similar interest rates and similar maturities. The Bank receives a pro rata
share (based on its percentage ownership in each individual pool) in the
principal and interest cash flows to be received as the underlying mortgages are
repaid by the mortgagors.

     The overall return (i.e. yield) earned on mortgage backed securities is
highly sensitive to repayments on the underlying mortgage loans which can be
made before their scheduled maturity date. In periods of falling market interest
rates, prepayment of the underlying mortgages may accelerate and reduce the
yield on a particular mortgage backed security.

     The credit risk associated with mortgage backed securities is nonexistent
because payment of interest and ultimate repayment of principal is guaranteed by
the Government National Mortgage Association, the Federal National Mortgage
Association, or the Federal Home Loan Mortgage Corporation as applicable.

     The following table sets forth the maturities and average weighted yields
for the securities available-for-sale and investment securities, net, portfolios
at December 31, 1997. Yields on tax-exempt securities are shown on a fully
tax-equivalent basis assuming an approximate 36% combined Federal and New Jersey
State income tax rates:


                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                                                   Mortgage-
                                                               Obligations of        backed
                                                 U.S.Gov't       State and      Securities Issued     FHLMC
                                U.S. Gov't.        Agency        Political         by Federal         Common
                                Obligations     Obligations     Subdivisions        Agencies          Stock        Total
                                -----------     -----------     ------------        --------          -----        -----
<S>                               <C>             <C>               <C>             <C>                <C>        <C>
Due within 1 year
  Amount.................         $1,197          $4,003              $--               $--             $--        $5,200
  Yield..................           5.70%           5.83%              --                --              --          5.80%
Due from 1-5 years:
  Amount.................          1,003           3,994               --                --              --         4,997
  Yield..................           5.81%           6.72%              --                --              --          6.54%
Due after 10 years:
  Amount.................             --              --              747                --              --           747
  Yield..................             --              --            10.70%               --              --         10.70%
Mortgage-backed
securities issued by
Federal agencies:
  Amount.................             --              --               --            79,056              --        79,056
  Yield..................             --              --               --              6.31%             --          6.31%
FHLMC Common Stock
  Amount                              --              --               --                --             258           258
  Yield                               --              --               --                --            1.90%         1.90%
Total:
  Amount.................         $2,200          $7,997             $747           $79,056            $258       $90,258
  Yield..................           5.75%           6.27%           10.70%             6.31%           1.90%         6.32%
</TABLE>

     Mortgage-backed securities issued by Federal agencies are disclosed
separately because the principal balance is not due at a single maturity date.

     At December 31, 1997, there were no securities held of a single issuer
(excluding U.S. Government Obligations and U.S. Government Agency Obligations)
which exceeded 10% of shareholders' equity.


                                       11
<PAGE>

               (c)  Loan Portfolio

     The following table sets forth the composition of the Corporation's loan
portfolio.

<TABLE>
<CAPTION>
                                                                        At December 31,
                                             1997           1996            1995            1994            1993
                                          ---------       ---------      ----------      ---------       ---------
                                                                        (In thousands)
<S>                                       <C>             <C>            <C>             <C>             <C>
Real estate-mortgage................      $ 246,438       $ 216,946      $  181,626      $ 173,242       $ 157,852
Real estate-construction............          8,695          11,019           8,536          6,454           4,379
Consumer............................          7,235           3,532           3,811          3,363           3,256
Commercial..........................          5,396           3,977           1,666            738             822
                                          ---------       ---------      ----------      ---------       ---------
    Total loans.....................        267,764         235,474         195,639        183,797         166,309

Less:   Unearned income.............            (64)           (404)           (467)          (474)           (514)
        Allowance for loan losses...         (3,305)         (2,965)         (2,582)        (2,729)         (3,094)
                                          ---------       ---------      ----------      ---------       ---------
Net loans...........................      $ 264,395       $ 232,105      $  192,590      $ 180,594       $ 162,701
                                          =========       =========      ==========      =========       =========
</TABLE>

               (d)  Maturity of Loans

     The following table sets forth the maturities and sensitivities of loans to
changes in interest rates at December 31, 1997. The table does not take into
consideration scheduled loan amortization or prepayments.

<TABLE>
<CAPTION>
                                                                                       Maturing
                                                One Year           One Through          After
                                                 or Less           Five Years         Five Years           Total
                                                 -------           ----------         ----------           -----
                                                                          (In thousands)
<S>                                             <C>                 <C>                 <C>             <C>
Real estate-mortgage....................        $ 61,753            $110,305            $74,380         $  246,438
Real estate-construction................           8,695                 --                  --              8,695
Consumer................................           5,693               1,524                 18              7,235
Commercial..............................           3,699               1,697                 --              5,396
                                                --------            --------            -------         ----------
        Total loans.....................        $ 79,840            $113,526            $74,398         $  267,764
                                                ========            ========            =======         ==========

Loans due after 1 year with:
  Predetermined interest rates..........                            $  8,567            $43,612         $   52,179
  Floating or adjustable interest rates.                             104,959             30,786            135,745
                                                                    --------            -------         ----------
                                                                    $113,526            $74,398         $  187,924
                                                                    ========            =======         ==========
</TABLE>

The following loan products are currently being offered by the Bank:

     Residential First Real Estate Loans: The Bank makes available to potential
borrowers in its primary consumer area a various range of residential loans
including adjustable rate mortgage loans ("ARMS") and fixed rate loans up to
terms of 30 years. ARMS are considered by management to


                                       12
<PAGE>

be advantageous to the Bank because adjustable-rate loans better match its
shorter-term liability base.

     Under the Bank's current ARM programs, the potential borrower may choose
among loans that have the initial interest rate fixed for one, three, five or
ten years before the adjustments begin. Currently, ARMS are indexed to the one,
three or five year U.S. Treasury constant maturities. All of the Bank's
residential mortgage lending is subject to non-discriminatory underwriting
standards. All loans are subject to underwriting review and approval by various
levels of Bank personnel, depending on the size of the loan. Generally, the Bank
requires a loan to value ratio of no more than 80%. However, circumstances may
allow a loan to value ratio as high as 90%. The collateral for these loans are
borrowers who own primary residences. These loans represent the least degree of
credit risk of all loan products offered (except loans secured by customers'
deposits) by the Bank.

     In addition to interest earned on loans, the Bank receives fees for
originating loans and for providing loan commitments. The Bank also charges fees
for late payments and other miscellaneous services. Fees received in connection
with loan originations are deferred and amortized into interest income over the
estimated life of the loan. The Bank may also purchase such loans (servicing
also acquired) for which a fee may be paid. These fees are deferred and
amortized as charges to interest income over the estimated life of the loan.

     Construction Loans: The Bank provides financing for basically two different
categories of construction loans. An individual construction loan is made to the
intended occupant of a house to finance its construction. Construction loans are
also made to developers who are in the business of improving lots and building
homes for resale. Generally, the Bank requires a loan to value ratio of not more
than 75% for these type of loans. These loans involve somewhat more risk than
residential real estate loans. Loans to developers are riskier than an
individual construction loan since payment of interest and repayment depends
upon the sale of the individual houses in the development. Construction loans
require approval by various levels of Bank personnel, depending on the size of
the loan.

     Commercial (Small Business) Loans: As part of the overall diversification
of the loan portfolio, the Bank will entertain loan requests from entities that
manufacture wholesale or retail products and/or provide services in our market
area. The Bank will consider the following types of credits: real estate loans,
working capital lines of credit, and equipment/vehicle loans. Since commercial
lending entails greater risks than residential and construction lending and
repayment generally depends upon the cash flows of the borrowing entity,
interest rates are generally of a variable nature. Maturities or repricings are
of shorter terms (generally no longer than five years). Depending on the types
of collateral and repayment terms, loan to value ratios generally cannot be
greater than 80%. Depending on the nature of the loan requests, commercial loans
require approval at various levels of Bank personnel.

     Second Mortgage and Other Consumer Loans: The Bank also offers consumer
loans which include second mortgage loans for a variety of purposes including
the renovation or remodeling of property, or for uses unrelated to the security.
Consumer loans for the purchases of automobiles are


                                       13
<PAGE>

also originated. These type loans, in addition to being an important part of the
Bank's orientation toward consumer financial services, help promote increased
net interest income stability because of their somewhat shorter maturities and
faster prepayment characteristics. These loans are made based on an evaluation
of the collateral and potential borrower's creditworthiness, including such
factors as income, other indebtedness and credit history. Generally, second
mortgage loans do not exceed 80% of the value of the collateral, less the
outstanding balance of any fixed mortgage loan. These loans pose more credit
risk than residential first real estate loans, but is offset by higher interest
rates and are of a variable nature and shorter-term.

     Other Types of Lending: The Bank will also offer collateral loans (secured
by deposit at the Bank or readily marketable securities) and personal loans to
individuals. These are generally loans of small dollar amounts and shorter
terms. Collateral loans offer no credit risk because of their 100% secured
status, and personal loans offer minimal credit risk because of their small
balances (average balance was approximately $8,000 at December 31, 1997).

     The Bank will from time to time issue (for a fee) a standby letter of
credit which is an obligation of the Bank to a third party that in the event a
particular act or deed of one of the Bank's borrowers is not performed, then the
Bank will reimburse that third party. The most common purpose is to guaranty the
workmanship within a housing tract. Standby letters of credit are issued to the
Bank's most credit-worthy customers and require the same diligence as the Bank
would exercise in underwriting a loan in the amount of the guaranty. At December
31, 1997 the total amount of standby letters of credit outstanding totaled $1.7
million.

     New Jersey's employment roll continued to grow with approximately 87,500
jobs added during 1997 which represents the most jobs added since 1984. The
state's average unemployment rate was 5.1%, the lowest since 1990. Of the new
jobs added in 1997, 48,400 were in the service sector, 7,200 were added in
finance, insurance and real estate, 5,700 were added in transportation,
communications and utilities, 3,600 were added in construction, and 22,600 jobs
were added in other segments.



                                       14
<PAGE>

               (e)  Nonperforming Assets

     The following table sets forth information with respect to nonperforming
assets, which includes ninety days or more past due loans, nonaccrual loans, and
real estate acquired by foreclosure:

<TABLE>
<CAPTION>
                                                                                         At December 31,
                                                             ----------------------------------------------------------------------
                                                              1997            1996            1995            1994            1993
                                                             ------          ------          ------          ------          ------
                                                                                      (Dollars in thousands)
<S>                                                          <C>             <C>             <C>             <C>             <C>
Loans:
  90 days or more past due
    (nonaccruing) ..................................         $  905          $1,317          $1,055          $1,022          $1,759
Nonaccrual loans (less than
  90 days past due) ................................            146              66              --             197             734
                                                             ------          ------          ------          ------          ------
  Total non-performing loans .......................          1,051           1,383           1,055           1,219           2,493
Real estate acquired by
  foreclosure ......................................             40             103             170           1,083           1,828
                                                             ------          ------          ------          ------          ------
    Total nonperforming assets .....................          1,091           1,486           1,225           2,302           4,321
Loans with modified terms ..........................             --              --              --              --              --
                                                             ------          ------          ------          ------          ------
                                                             $1,091          $1,486          $1,225          $2,302          $4,321
                                                             ======          ======          ======          ======          ======

Total non-performing loans as
  a percentage of total net loans ..................           0.40%           0.60%           0.55%           0.67%           1.53%
Non-performing assets as a
  percentage of total net loans
  and real estate acquired by
  foreclosure ......................................           0.41%           0.64%           0.64%           1.27%           2.63%
</TABLE>

     Gross interest on loans charged-off, non-performing loans, real estate
acquired by foreclosure, non-accrual loans and impaired loans at December 31,
1997 that would have been recorded in accordance with the original terms of
these loans had they been performing totaled $94,000 for 1997. There was no
interest income recognized on non-performing loans at December 31, 1997.

     The accrual of income on loans is generally discontinued and all interest
income previously accrued and unpaid is deducted from income when a loan becomes
more than ninety days delinquent, or when certain factors indicate reasonable
doubt as to the timely collectibility of such income. Income is recognized
subsequently only in the period collected.

     At December 31, 1997, there were no loans, other than those referred to
above or included in the above table, which could be considered potential
problem loans. It is management's policy to review all delinquent loans to
determine future collectibility of both principal and interest.


                                       15
<PAGE>

     At December 31, 1997, there were no concentrations of loans exceeding 10%
total loans outstanding.

               (f)  Summary of Loan Loss Experience and Allocation of the
                    Allowance for Loan Losses

     The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management believes the collectibility of the principal is unlikely.
The allowance is an amount that management believes will be adequate to absorb
inherent losses on existing loans that may become uncollectible. The
determination of the balance of the allowance for loan losses is based on an
analysis of the loan portfolio, economic conditions, historical loan loss
experience, the borrower's ability to repay, collateral value and other factors
that warrant recognition in providing an adequate allowance. While management
uses available information to recognize losses on loans, future additions may be
necessary based on changes in economic conditions. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowance for losses on loans. Such agencies may
require the Bank to recognize additions to the allowance based on their
judgments of information available to them at the time of their examination.

     The following table analyzes the allowance for loan losses for the years
indicated.

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                       ---------------------------------------------------------------------------
                                                        1997             1996             1995             1994              1993
                                                       -------          -------          -------          -------          -------
                                                                                  (Dollars in Thousands)
<S>                                                    <C>              <C>              <C>              <C>              <C>
Beginning balance .............................        $ 2,965          $ 2,582          $ 2,729          $ 3,094          $ 1,797
Loans charged off:
        Real estate ...........................           (374)            (247)            (213)            (787)            (891)
        Consumer and commercial ...............            (35)            (133)            (252)             (38)            (128)
                                                       -------          -------          -------          -------          -------
                                                          (409)            (380)            (465)            (825)          (1,019)
Recoveries:
        Real estate ...........................            143               --                9                4               --
        Consumer ..............................              6               10                9                6               26
                                                       -------          -------          -------          -------          -------
                                                           149               10               18               10               26
                                                       -------          -------          -------          -------          -------

Net charge-offs ...............................           (260)            (370)            (447)            (815)            (993)
Provision for loan losses .....................            600              450              300              450            2,290
Manville Savings' acquisition .................             --              303               --               --               --
                                                       -------          -------          -------          -------          -------
Ending balance ................................        $ 3,305          $ 2,965          $ 2,582          $ 2,729          $ 3,094
                                                       =======          =======          =======          =======          =======

Ratio of net charge-offs
        during the period to
        average loans outstanding
        during the period .....................           0.10%            0.18%            0.24%            0.47%            0.63%
</TABLE>


                                       16
<PAGE>

     The following table presents the allocation of the allowance for loan
losses by loan category at the dates indicated.

<TABLE>
<CAPTION>
                                                                                       At December 31,
                                                          -------------------------------------------------------------------------
                                                           1997             1996             1995             1994            1993
                                                          ------           ------           ------           ------          ------
                                                                                       (In thousands)
<S>                                                       <C>              <C>              <C>              <C>             <C>
Real estate ...................................           $2,558           $1,824           $1,432           $2,198          $1,968
Consumer and other ............................              747            1,141            1,150              531           1,126
                                                          ------           ------           ------           ------          ------
Total allowances for loan
        losses ................................           $3,305           $2,965           $2,582           $2,729          $3,094
                                                          ======           ======           ======           ======          ======
</TABLE>

     The percentage of loans in each category to total loans is as follows:

<TABLE>
<CAPTION>
                                                                                       At December 31,
                                                          -------------------------------------------------------------------------
                                                           1997             1996             1995             1994            1993
                                                          ------           ------           ------           ------          ------
                                                                                       (In thousands)
<S>                                                       <C>              <C>              <C>              <C>             <C>
Real estate-mortgage ...............................       92.03%           92.13%           92.84%           94.26%          94.91%
Real estate-construction ...........................        3.25             4.68             4.36             3.51            2.64
Consumer ...........................................        2.70             1.50             1.95             1.83            1.96
Commercial .........................................        2.02             1.69             0.85             0.40             .49
                                                          ------           ------           ------           ------          ------
        Total ......................................      100.00%          100.00%          100.00%          100.00%         100.00%
                                                          ======           ======           ======           ======          ======
</TABLE>

               (g)  Deposits

     The average balance of deposits and the average rates paid thereon are
summarized in Distribution of Assets, Liabilities and Shareholders' Equity;
Interest Rates and Interest Differential, on pages 14 and 15 of the Annual
Report to Shareholders for the year ended December 31, 1997, and are
incorporated herein by reference.

               (h)  Maturities of Time Deposits

The following table summarizes the maturity distribution of all time market rate
certificates in amounts of $100,000 or more, at December 31, 1997. There are no
other time deposits in amounts of $100,000 or more.

<TABLE>
<CAPTION>
              Maturity                                                Amount
              --------                                                ------
                                                                  (In thousands)
<S>                                                                  <C>
         3 months or less .......................................    $ 5,935
         Over 3 through 6 months ................................      4,375
         Over 6 through 12 months ...............................      1,956
         Over 12 months .........................................      6,089
                                                                     -------
                 Total ..........................................    $18,355
                                                                     =======
</TABLE>


                                       17
<PAGE>

     The above table includes accounts in domestic bank offices. The Bank does
not have any foreign banking offices.

               (i)  Return on Equity and Assets

     The following table shows the operating and capital ratios for the
Corporation for the years indicated.

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                  ------------------------------
                                                   1997        1996        1995
                                                  ------      ------      ------
<S>                                               <C>         <C>         <C>
Net income to average assets ...............       1.02%       0.89%       0.80%
Net income to average shareholders
    equity .................................      13.13       11.71       10.53
Dividend payout ratio ......................      30.52       31.50       32.11
Average shareholders' equity to
    average total assets ...................       7.78        7.60        7.64
</TABLE>

               (j)  Short-term Borrowings

<TABLE>
<CAPTION>
                                                           At December 31,
                                                   -----------------------------
                                                     1997       1996       1995
                                                   -------    -------    -------
                                                          (in thousands)
<S>                                                <C>        <C>        <C>
Federal Home Loan Bank of
  New York Advances:
  Interest rate based on LIBOR: 5.656%;
    matured on 3/6/98 .........................    $10,000    $    --    $    --
  Fixed interest rate: 5.86%; matures
    on 8/21/98 ................................     10,000         --         --
  Fixed interest rate: 6.875%; matured
    on 1/2/97 .................................         --     10,000         --
  Fixed interest rate: 5.375%; matured
    on 1/2/96 .................................         --         --     10,000
                                                   -------    -------    -------
                                                   $20,000    $10,000    $10,000
                                                   =======    =======    =======
</TABLE>


                                       18
<PAGE>

               (k)  Competition

     The Bank faces significant competition both in making mortgage and consumer
loans and in attracting deposits. The Bank's competition for loans comes
principally from savings and loan associations and savings banks, mortgage
banking companies (many of which are subsidiaries of major commercial banks),
insurance companies and other institutional lenders. Its most direct competition
for deposits has historically come from savings and loan associations, savings
banks, commercial banks, credit unions and other financial institutions. The
Bank faces additional competition for deposits from short-term money market
funds, stock funds, and other corporate and government securities funds. In
light of the elimination of federal interest rate controls on deposits, the Bank
may face increasing competition among financial institutions for deposits.
Competition may increase as a result of the continuing reduction in the
effective restrictions on the interstate operations of financial institutions.
Many of the Bank's competitors, whether traditional financial institutions or
otherwise, have much greater financial and marketing resources than those of the
Bank.

     The Bank competes for loans principally through the interest rates and loan
fees it charges and the efficiency and quality of services it provides borrowers
and their real estate brokers and print media. It competes for deposits through
pricing and the offering of a variety of deposit accounts.

               (l)  Executive Officer

     Information concerning the executive officer of the Corporation during
fiscal year 1997, who was not also director of the Corporation, is also provided
below.

                                         Position with Corporation and
Name and Age                       Business Experience for Past Five Years
------------                       ---------------------------------------

Lucille H. Daniel             Vice President and Secretary of the Corporation
Age 63                        and the Bank.

John J. Lukens                Senior Vice President of the Corporation and
Age 50                        Senior Vice President, Senior Loan Officer of the
                              Bank since June, 1992.


                                       19
<PAGE>

Item 2. Properties

     The following table sets forth certain information to each of the Bank's
offices. The total net book value of the Bank's premises and equipment at
December 31, 1997, was $5.9 million. See Note 5 to the Consolidated Financial
Statements. The Corporation believes that its facilities are adequate for
conduct of its current business.

<TABLE>
<CAPTION>
                                                                                 Expiration
                                                                               Date of Current        Lease
Location:                             Opened         Owned       Leased          Lease Term       Renewal Option
---------                             ------         -----       ------          ----------       --------------
<S>                                    <C>             <C>          <C>             <C>         <C>
Corporate Headquarters,                1997                         X               2007         two 5-year options
Operations Center, Loan
Production Office:
454 Route 28
Bridgewater, NJ 08807

Main office:
9 West Somerset Street                 1869            X
Raritan, NJ  08869

Branches:

454 Route 28                           1997                         X               2007         two 5-year options
Bridgewater, NJ 08807

339 South Main Street                  1996                         X               2006        three 5-year options
Manville, NJ 08835

1921 Washington Valley Road            1976            X
Martinsville, NJ  08836

151 Adamsville Road                    1980                         X               2001          one 6-year option
Somerville, NJ  08876

51 Mountain Boulevard                  1991            X
Warren, NJ  07059

Whitehouse Mall                        1991                         X               2001          one 5-year option
Routes 22 East and 523
Whitehouse Station, NJ  08889
</TABLE>


                                       20
<PAGE>

Item 3. Legal Proceedings

     Not applicable.

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

     Not applicable.

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Shareholder Matters

     (a)  Market Information

     Raritan Bancorp's common stock is quoted on the NASDAQ National Market
System under the symbol "RARB."

     The following table presents the range of the high and low prices for
Raritan Bancorp's common stock as obtained from NASDAQ.

<TABLE>
<CAPTION>
                                              1997                                    1996
                                     ---------------------------             --------------------------
Quarter Ending                        High                 Low                High                 Low
--------------                        ----                 ---                ----                 ---
<S>                                  <C>                  <C>                <C>                 <C>
March 31.......................      $29.50               $25.50             $15.67              $14.17
June 30........................       25.75                19.50              14.67               13.50
September 30...................       20.50                16.33              14.67               13.83
December 31....................       17.00                15.50              14.83               14.00
</TABLE>

NOTE: The above prices reflect the three-for-two stock split paid in the form of
      a stock dividend on July 1, 1997.

     (b)  Shareholders

     At March 9, 1998 Raritan Bancorp, Inc. had approximately 550 shareholders
of record, including brokerage firms, banks and registered clearing agencies
acting as nominees for an indeterminate number of beneficial owners.

     (c)  Dividends

     Subject to applicable law, the Board of Directors of the Corporation and
the Bank may each provide for the payment of dividends.


                                       21
<PAGE>

     The Bank will not be permitted to pay dividends on its capital stock if its
retained earnings would thereby be reduced below the amount required for the
liquidation account established at the time of its conversion to stock form and
the issuance of stock resulting from the Manville merger and acquisition
(approximately $712,000 at December 31, 1997), or applicable regulatory capital
requirements. New Jersey law provides that no dividend may be paid unless, after
the payment of such dividend, the capital stock of the Bank will not be impaired
and either the Bank will have a statutory surplus of not less than 50% of its
capital stock or the payment of such dividend will not reduce the statutory
surplus of the Bank. The Bank has designated a capital surplus of $2.0 million,
which is not available for the payment of dividends.

     The Bank may pay cash dividends when its Board of Directors determines that
dividend payments are appropriate, taking into account factors including,
without limitation, the Bank's net income, capital requirements, financial
condition, alternative investment options, tax implications, prevailing economic
conditions, industry practices, and other factors deemed to be relevant at the
time. The Corporation expects to follow the same dividend policy as that of the
Bank. The Corporation is subject to the requirements of Delaware law, which
generally limit dividends to an amount equal to the excess of the net assets of
the Corporation (the amount by which total assets exceed total liabilities) over
its statutory capital, or if there is no such excess, to its net profits for the
current and/or immediately preceding fiscal year.

     During the years ended December 31, 1997 and 1996, the Corporation declared
and paid cash dividends totaling $0.47 and $0.40, respectively, per common
share (as adjusted for the three-for-two stock split paid in the form of a stock
dividend on July 1, 1997).

     On January 20, 1998, the Board of Directors of the Corporation declared a
quarterly cash dividend in the amount of $0.15 per common share. The dividend
was paid on March 1, 1998 to shareholders of record as of February 15, 1998.

Item 6. Selected Financial Data

     Information relating to Selected Consolidated Financial Data on page 17 of
the Annual Report to Shareholders for the year ended December 31, 1997 is
incorporated herein by reference.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

     Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 8 to 17 of the Annual Report to Shareholders for the year
ended December 31, 1997, is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

     Information required hereunder is incorporated by reference to pages 11 and
12 of the Annual Report to Shareholders for the year ended December 31, 1997


                                       22
<PAGE>

Item 8. Financial Statements and Supplementary Data

     The Consolidated Financial Statements and Report by KPMG Peat Marwick LLP
dated January 16, 1998, appear on pages 17 to 42 of the Annual Report to
Shareholders for the year ended December 31, 1997 and are incorporated herein by
reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

     None.

                                    PART III

Item 10. Directors and Officers of the Registrant

     Information is contained in "Election of Directors" on pages 4 to 6
inclusive of Raritan Bancorp Inc.'s Proxy Statement dated March 25, 1998, and is
incorporated herein by reference. Information regarding executive officers who
are not also directors of the Corporation or the Bank is contained in Part I of
this report in reliance of General Instruction G.

Item 11. Executive Compensation

     Information is contained in Compensation of Directors and Officers on pages
6 through 10, inclusive, of Raritan Bancorp Inc.'s Proxy Statement dated March
25, 1998 and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     Information is contained on pages 4 to 6 inclusive of Raritan Bancorp
Inc.'s Proxy Statement dated March 25, 1998 and is incorporated herein by
reference.

Item 13. Certain Relationships and Related Transactions

     Information is contained in Certain Relationships and Related Transactions
on page 13 of Raritan Bancorp Inc.'s Proxy Statement dated March 25, 1998, and
is incorporated herein by reference.


                                       23
<PAGE>

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

     (a)  (1) Consolidated Financial Statements

     The following financial statements are incorporated herein by reference to
the Annual Report to Shareholders for the year ended December 31, 1997, a copy
of which is attached hereto.

<TABLE>
<CAPTION>
                                                                  Annual Report
                                                                 Page Reference
                                                                 --------------
<S>                                                                   <C>
     Consolidated Balance Sheets..........................             17

     Consolidated Statements of Income....................             18

     Consolidated Statements of Changes in
         Shareholders' Equity.............................             19

     Consolidated Statements of Cash Flows................             20

     Notes to Consolidated Financial
         Statements.......................................            21-41

     Independent Auditors' Report.........................             42
</TABLE>

          (2)  Consolidated Financial Statement Schedules

     All statement schedules are omitted as the information, if applicable, is
presented in the above financial statements or notes thereto.

     (b)  Reports on Form 8-K

     None

     (c)  Exhibits Required by Securities and Exchange Commission Regulation
          S-K.


                                       24
<PAGE>

Exhibit
Number

3.1         Certificate of Incorporation of Raritan Bancorp Inc. (filed as
            Exhibit 3.1 to the Form S-1 Registration Statement filed by Raritan
            Bancorp, Inc. on March 10, 1987, Registration No. 33-12539).

3.1(a)      Certificate of Amendment to the Certificate of Incorporation of
            Raritan Bancorp Inc. (Filed as Exhibit 3.1(a) to the Annual Report
            on Form 10-K for the year ended December 31, 1995).

3.2         Bylaws of Raritan Bancorp Inc. (filed as Exhibit 3.2 to the Form
            S-1 Registration Statement filed by Raritan Bancorp, Inc., Statement
            No. 33-12539 and Exhibit 28.1 to the Form 8-K filed on December 21,
            1990).

10.1        Raritan Bancorp Inc. Incentive Stock Option Plans (see Annex A to
            the Proxy Statement dated March 23, 1988 and Exhibit A to the Proxy
            Statement dated March 24, 1993).

10.2        Raritan Bancorp Inc. Stock Option Plan for Outside Directors (see
            Exhibit B to the Proxy Statement dated March 24, 1993).

10.3        Employment Agreement with Arlyn D. Rus (filed as Exhibit 10.2 to the
            Form S-1 Registration Statement filed by Raritan Bancorp Inc.,
            Registration No. 33-12539).

10.4        Employment Agreement with Thomas F. Tansey (filed as Exhibit 10.3 to
            the Form S-1 Registration Statement filed by Raritan Bancorp Inc.,
            Registration No. 33-12539).

10.5        Amended and Restated Special Termination Agreements with Lucille H.
            Daniel (the original Special Termination Agreements were filed as
            Exhibit 10.4 to the Form S-1 Registration Statement filed by Raritan
            Bancorp Inc., Registration No. 33-12539; the Restated Termination
            Agreements were filed as Exhibit 10.5 to the Annual Report on Form
            10-K for the year ended December 31, 1995).

10.6        Special Termination Agreement with John J. Lukens (filed as Exhibit
            10.6 to the Annual Report on Form 10-K for the year ended December
            31, 1994).

10.7        Form of Restated Supplemental Executive Retirement.

11          Computation of net income per share (Incorporated by reference to
            "Financial Highlights" on the inside cover, and the Consolidated
            Statements of Income on page 18, of the Annual Report to
            Stockholders for the year ended December 31, 1997).


                                       25
<PAGE>

13          Annual Report to Shareholders for the year ended December 31, 1997.

22          Subsidiaries of Raritan Bancorp, Inc.*

23          Accountants' Consent.

----------
*    See Part 1, Item 1(a) of Form 10-K.


                                       26
<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 in
its behalf by the undersigned, thereunto duly authorized.

                                             RARITAN BANCORP INC.



                                             By: /s/ Arlyn D. Rus
                                                --------------------------------
                                                     Arlyn D. Rus, President and
                                                     Chief Executive Officer

Date: March 16, 1998

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 16, 1998, by the following persons on
behalf of the Registration and in the capacities indicated.


/s/ Arlyn D. Rus                           /s/ Thomas F. Tansey
-------------------------------------      -------------------------------------
Arlyn D. Rus, Chairman of the Board,       Thomas F. Tansey, Executive Vice
President and Chief Executive Officer      President, Chief Operating Officer
                                           and Treasurer Director
                                           (Principal Financial and Accounting
                                           Officer)

/s/ William T. Anderson                    /s/ Willliam W. Crouse
-------------------------------------      -------------------------------------
William T. Anderson, Director              William W. Crouse

/s/ William T. Kelleher, Jr.               /s/ Peter S. Johnson
-------------------------------------      -------------------------------------
William T. Kelleher, Jr., Director         Peter S. Johnson, Director


                                       27