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

                                   FORM 10-QSB

(Mark One)

   [X]   Quarterly report pursuant to Section 13 or 15 (d) of the Securities
         Exchange Act of 1934

         For the quarterly period ended              June 30, 2002
                                                     -------------

   [ ]   Transition report under Section 13 or 15 (d) of the Exchange Act


         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 or other jurisdiction of
    incorporation or organization)          (I.R.S. Employer Identification No.)


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


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


                                 Not Applicable
                                 --------------
              (Former name, former address and former fiscal year,
                          if changed since last report)


Indicate by check mark 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 [ ]



  Common Stock, No Par Value-2,115,237 shares outstanding as of August 9, 2002
  ----------------------------------------------------------------------------

<PAGE>


<TABLE>
<CAPTION>
                                      INDEX

                         COMMUNITY BANCORP OF NEW JERSEY

<S>                                                                        <C>
PART I.  FINANCIAL INFORMATION                                             PAGE NO.
-------  ---------------------                                             --------

Item 1.  Financial Statements

         Consolidated Condensed Balance Sheets at June 30, 2002
         (Unaudited) and December 31, 2001                                       3

         Consolidated Condensed Statements of Income for the three and six
         months ended June 30, 2002 and 2001 (Unaudited)                         4

         Consolidated Condensed Statement of Changes in Stockholders'            5
         Equity at June 30, 2002 (Unaudited)

         Consolidated Condensed Statements of Cash Flows for the six
         months ended June 30, 2002 and 2001 (Unaudited)                         6

         Notes to Consolidated Condensed Financial Statements (Unaudited)   7 - 10


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                         11 - 23


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                      24

Item 2.  Changes in Securities and Use of Proceeds                              24

Item 3.  Defaults Upon Senior Securities                                        24

Item 4.  Submission of Matters to a Vote of Security Holders                    24

Item 5.  Other Information                                                      24

Item 6.  Exhibits and Reports on Form 8-K
                  a.  Exhibits - CERTIFICATION                                  25
                  b.  Reports on Form 8-K - None                                24


SIGNATURES                                                                      26

</TABLE>
                                      2

<PAGE>

                         COMMUNITY BANCORP OF NEW JERSEY
                      CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                             June 30,
                                                                                        2002       December 31,
                                                                                    (Unaudited)        2001
                                                                                    -----------        ----
<S>                                                                                  <C>             <C>
ASSETS                                                                                (Dollars in thousands)
Cash and cash equivalents:
      Cash and due from banks .................................................      $ .13,343       $   9,342
      Federal funds sold ......................................................             --              --
                                                                                     ---------       ---------
                Total cash and cash equivalents                                         13,343           9,342
                                                                                     ---------       ---------

Investment securities available-for-sale ......................................        77,324.          65,439
Investment securities held-to-maturity (fair value of $9,646 at
      June 30, 2002 and $15,217 at December 31, 2001) .........................          9,535          15,310

Loans receivable ..............................................................        171,819         147,603
Allowance for loan loss .......................................................         (2,648)         (1,964)
                                                                                     ---------       ---------
                Net loans receivable                                                   169,171         145,639
                                                                                     ---------       ---------

Premises and equipment, net ...................................................          6,277           6,335
Accrued interest receivable ...................................................          1,603           1,457
Other assets ..................................................................          2,215           2,116
                                                                                     ---------       ---------
                Total Assets                                                         $ 279,468       $ 245,638
                                                                                     =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
      Non-interest bearing demand .............................................      $  44,978       $  43,539
      Interest bearing - NOW ..................................................         27,149          24,741
      Savings and money market ................................................         91,093          66,466
      Certificates of deposit, under $100,000 .................................         50,334          47,894
      Certificates of deposit, $100,000 and over ..............................         28,958          38,488
                                                                                     ---------       ---------
               Total deposits                                                         242,512         221,128
                                                                                     ---------       ---------

Short-term borrowings .........................................................         14,300           1,600
Accrued interest payable ......................................................            274           1,334
Other liabilities .............................................................            268             433
                                                                                     ---------       ---------
                Total liabilities                                                      257,354         224,495
                                                                                     ---------       ---------

Stockholders' equity
      Commonstock - authorized 10,000,000 shares of no par value; issued and
            outstanding, net of treasury shares, 2,115,237 at June 30, 2002 and
            December
            31, 2001 ..........................................................         25,509          23,147
      Accumulated deficit .....................................................         (3,552          (1,889)
      Accumulated other comprehensive income ..................................            520             248
      Treasury stock, 22,357 shares, at cost ..................................           (363)           (363)
                Total stockholders' equity                                              22,114          21,143
                                                                                     ---------       ---------
                Total Liabilities and Stockholder's Equity                           $ 279,468       $ 245,638
                                                                                     =========       =========
</TABLE>


     See accompanying notes to consolidated condensed financial statements.


                                        3

<PAGE>



                       COMMUNITY BANCORP OF NEW JERSEY
          CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

<TABLE>
<CAPTION>

                                                                       Three Months Ended                 Six Months Ended
                                                                       ------------------                 ----------------
                                                                            June 30,                          June 30,
                                                                            --------                          --------
                                                                     2002             2001              2002            2001
                                                                     ----             ----              ----            ----
                                                                          (Dollars in thousands, except per share data)

<S>                                                                  <C>              <C>              <C>              <C>
INTEREST INCOME
  Loans, including Fees ..........................................   $2,889           $2,847           $5,681           $5,573
  Federal funds sold .............................................        3              262                5              462
  Investment securities ..........................................      963              296            1,925              839
                                                                     ------           ------           ------           ------
            Total interest income                                     3,855            3,405            7,611            6,874
                                                                     ------           ------           ------           ------

INTEREST EXPENSE
  Interest bearing - NOW .......................................         50               68               92              130
  Savings and money market .....................................        443              410              841              944
  Certificates of deposit ......................................        704              893            1,515            1,829
  Short-term borrowings ........................................         30               --               59               --
                                                                     ------           ------           ------           ------
            Total interest expense .............................      1,227            1,371            2,507            2,903
                                                                     ------           ------           ------           ------
            Net interest income ................................      2,628            2,034            5,104            3,971
Provision for loan losses.......................................        595              100              685              246
                                                                     ------           ------           ------           ------
            Net interest income after provision
                  for loan losses                                     2,033            1,934            4,419            3,725
                                                                     ------           ------           ------           ------

Non-interest income:
  Service fees on deposit accounts .............................        109               94              205              196
  Service fees on loans ........................................         96              215              232              401
  Other fees and commissions ...................................        104               67              258              137
                                                                     ------           ------           ------           ------
            Total non-interest income                                   309              376              695              734
                                                                     ------           ------           ------           ------
Non interest expense:
  Salaries and wages ...........................................       837               729            1,632            1,378
  Employee benefits ............................................       149               113              283              216
  Occupancy expense ............................................       184               122              344              244
  Depreciation - occupancy, furniture & equipment ..............       220               146              437              292
  Other ........................................................       717               658            1,338            1,261
                                                                     ------           ------           ------           ------
            Total non-interest expense                                2,107            1,768            4,034            3,391
                                                                     ------           ------           ------           ------
            Income before income taxes .........................        235              542            1,080            1,068
Income tax expense..............................................         84              195              376              387
                                                                     ------           ------           ------           ------
            Net Income                                               $  151           $  347           $  704           $  681
                                                                     ======           ======           ======           ======
Per Common Share
  Net income - basic ...........................................     $ 0.07           .$0.16           $ 0.33           $ 0.32
  Net income - diluted .........................................     $ 0.07            $0.16           $ 0.32           $ 0.32

Weighted average shares outstanding (in thousands)
  Basic ........................................................      2,115            2,115            2,115            2,115
  Diluted ......................................................      2,228            2,163            2,210            2,153
</TABLE>



     See accompanying notes to consolidated condensed financial statements.

                                       4

<PAGE>


<TABLE>
<CAPTION>

                                        COMMUNITY BANCORP OF NEW JERSEY
                      CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY



                                                                                     Accumulated
                                                                          (1)           Other                            Total
                                               Common      Treasury   Accumulated   Comprehensive    Comprehensive    Stockholders'
                                                Stock        Stock      Deficit         Income          Income           Equity
                                             ----------   ----------  ------------  -------------    --------------   -------------
                                                                                (Dollars in thousands)
<S>                                           <C>         <C>          <C>            <C>               <C>              <C>
Balance December 31, 2001 ................    $ 23,147    $   (363)    $ (1,889)      $    248                           $ 21,143

5% stock dividend (100,508 shares) .......       2,362          --       (2,362)            --                                 --
Cash in lieu of fractional shares ........          --          --           (5)            --                                 (5)


Comprehensive Income:
      Net Income .........................          --          --          704             --          $    704              704
      Increase in unrealized holding
          gains on securities, net .......          --          --           --            272               272              272
                                                                                                        --------         --------

Total Comprehensive Income ...............          --          --           --             --          $    976
                                              --------    --------     --------       --------          --------         ========


Balance, June 30, 2002 (Unaudited) .......    $ 25,509    $   (363)    $ (3,552)      $    520                           $ 22,114
                                              ========    ========     ========       ========                           ========
</TABLE>


(1)  Includes  accumulated  charges for stock  dividends of $5,822 and $3,455 at
     June 30, 2002 and December 31, 2001, respectively.



     See accompanying notes to consolidated condensed financial statements.


                                       5

<PAGE>

<TABLE>
<CAPTION>

                         COMMUNITY BANCORP OF NEW JERSEY
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)



                                                                         Six Months Ended June 30,
                                                                         -------------------------
                                                                           2002           2001
                                                                         --------       --------
                                                                           (Dollars in thousands)
<S>                                                                      <C>            <C>
Cash flows from operating activities:
        Net income ................................................      $    704       $    681
        Adjustments to reconcile net income to net cash
            provided by (used in) operating activities:
                 Depreciation and amortization ....................           437            292
                 Provision for loan losses ........................           685            246
                 Accretion of investment discount .................           (11)           (71)
                 Amortization of investment premium ...............             6             13
                 (Increase) decrease in accrued interest receivable          (146)           506
                 (Increase) decrease other assets .................          (253)           207
                 (Decrease) increase in accrued interest payable ..        (1,060)           394
                 (Decrease) increase in other liabilities .........          (165)           294
-------------------------------------------------------------------      --------       --------

                       Net cash provided by operating activities ..           197          2,562
-------------------------------------------------------------------      --------       --------

Cash flows from investing activities:
        Purchases of investment securities available-for-sale .....       (30,208)       (29,288)
        Proceeds from maturities and calls of investment securities        24,529         38,980
        Net increase in loans made to customers ...................       (24,217)       (18,200)
        Purchases of premises and equipment .......................          (379)        (1,296)
-------------------------------------------------------------------      --------       --------

                       Net cash used in investing activities ......       (30,275)        (9,804)
-------------------------------------------------------------------      --------       --------

Cash flows from financing activities:
        Net increase in demand deposits and savings accounts ......        28,474         21,938
        Net (decrease) increase in certificates of deposit ........        (7,090)         8,751
        Stock dividend - cash paid in lieu of fractional shares ...            (5)            (3)
        Increase in short-term borrowings .........................        12,700             --
-------------------------------------------------------------------      --------       --------

                       Net cash provided by financing activities ..        34,079         30,686
-------------------------------------------------------------------      --------       --------

Net increase (decrease) in cash and cash equivalents ..............         4,001         23,444
Cash and cash equivalents as of beginning of year .................         9,342          9,624
-------------------------------------------------------------------      --------       --------

Cash and cash equivalents as of end of period .....................      $ 13,343       $ 33,068
-------------------------------------------------------------------      ========       ========


Supplemental disclosures of cash flow information:
        Cash paid during the period for interest ..................      $  3,567       $  2,509
        Cash paid during the period for income taxes ..............      $    694       $    545

</TABLE>

     See accompanying notes to consolidated condensed financial statements.


                                        6

<PAGE>


COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)


NOTE A - BASIS OF PRESENTATION

The  consolidated  condensed  financial  statements of Community  Bancorp of New
Jersey (the Company)  included herein have been prepared  without audit pursuant
to the rules and regulations of the Securities and Exchange Commission.  Certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance with generally accepted  accounting  principles have been
condensed or omitted pursuant to such rules and regulations.  The preparation of
financial  statements requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities  and  disclosures  of
contingent  assets and  liabilities  as of the financial  statement date and the
reported  amounts of revenues and expenses  during the reporting  period.  Since
management's  judgment  involves making  estimates  concerning the likelihood of
future events,  the actual results could differ from those  estimates which will
have a positive or negative  effect on future period results.  The  accompanying
consolidated  condensed financial  statements reflect all adjustments which are,
in the opinion of  management,  necessary to a fair statement of the results for
the  interim  periods  presented.  Such  adjustments  are of a normal  recurring
nature.  These  consolidated  condensed  financial  statements should be read in
conjunction  with the audited  financial  statements and the notes thereto as of
and for the year ended  December 31, 2001.  The results for the three months and
six months  ended June 30, 2002 are not  necessarily  indicative  of the results
that may be expected for the year ended December 31, 2002.

The  consolidated  condensed  financial  statements  include the accounts of the
Company and its wholly owned subsidiary,  the Community Bank of New Jersey.  All
significant inter-company accounts and transactions have been eliminated.

NOTE B - 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.

                                       7

<PAGE>


NOTE C - STOCK DIVIDEND

On April 9, 2002 the Company's  Board of Directors  approved a 5% stock dividend
payable May 15, 2002 to  shareholders  of record as of April 23, 2002.  Weighted
average shares outstanding and earnings per share were retroactively adjusted to
reflect the stock dividend.


                                       8

<PAGE>


COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
Continued


NOTE D - INVESTMENT SECURITIES

The following  tables present the book values,  fair values and gross unrealized
gains and losses of the Company's investment securities portfolio as of June 30,
2002 and December 31, 2001 (Dollars in thousands).

<TABLE>
<CAPTION>
                                                                       June 30, 2002 (Unaudited)
                                                         -------------------------------------------------------
                                                                          Gross           Gross
                                                         Amortized      Unrealized      Unrealized        Fair
                                                           Cost           Gains           Losses          Value
                                                         -------         -------         -------         -------
<S>                                                      <C>             <C>             <C>             <C>
Securities available-for-sale:
        U.S. Government and agency securities...         $75,698         $   816         $    --         $76,514
        Other securities .......................             810              --              --             810
                                                         -------         -------         -------         -------
                                                         $76,508         $   816         $    --         $77,324
                                                         =======         =======         =======         =======
Securities held-to-maturity:
        U.S. Government and agency securities ..         $ 8,500         $    60         $    --         $ 8,560
        Other securities .......................           1,035              51              --           1,086
                                                         -------         -------         -------         -------
                                                         $ 9,535         $   111         $    --         $ 9,646
                                                         =======         =======         =======         =======
</TABLE>


<TABLE>
<CAPTION>
                                                                            December 31, 2001
                                                         -------------------------------------------------------
                                                                          Gross           Gross
                                                         Amortized      Unrealized      Unrealized        Fair
                                                           Cost           Gains           Losses          Value
                                                         -------         -------         -------         -------
<S>                                                      <C>             <C>             <C>             <C>
Securities available-for-sale:
        U.S. Government and agency securitiesvvv         $ 64,569         $    510       $   (120)       $ 64,959
        Other securities .......................              480               --             --             480
                                                         --------         --------       --------        --------
                                                         $ 65,049         $    510       $   (120)       $ 65,439
                                                         ========         ========       ========        ========
Securities held-to-maturity:
        U.S. Government and agency securities ..         $ 14,275         $      6       $   (145)       $ 14,136
        Other securities .......................            1,035               46             --           1,081
                                                         --------         --------       --------        --------
                                                         $ 15,310         $     52       $   (145)       $ 15,217
                                                         ========         ========       ========        ========
</TABLE>


The following table sets forth as of June 30, 2002 the maturity  distribution of
the Company's investment portfolio (Dollars in thousands).
<TABLE>
<CAPTION>


                                                            Available-for-sale             Held-to-maturity
                                                        -----------------------       -------------------------
                                                        Amortized          Fair        Amortized         Fair
                                                          Cost            Value           Cost           Value
                                                        -------         -------         -------         -------
      <S>                                               <C>             <C>             <C>             <C>
      Due in one year or less .................         $    --         $    --         $   535         $   535
      Due after one year through five years....          75,698          76,514           8,500           8,560
      Due after five years through ten years ..              --              --             500             551
      Due after ten years .....................             810             810              --              --
                                                        -------         -------         -------         -------
                                                        $76,508         $77,324         $ 9,535         $ 9,646
                                                        =======         =======         =======         =======
</TABLE>



                                       9

<PAGE>





COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
Continued

NOTE E - LOANS RECEIVABLE and ALLOWANCE FOR LOAN LOSSES

The following  table  summarizes the components of the loan portfolio as of June
30, 2002 and December 31, 2001 (Dollars in thousands).

<TABLE>
<CAPTION>
                                                              Loan Portfolio By Type of Loan
                                                   ---------------------------------------------------
                                                       June 30, 2002
                                                        (Unaudited)              December 31, 2001
                                                   --------------------      -------------------------
                                                    Amount      Percent        Amount        Percent
                                                   -------      -------       -------        -------
      <S>                                          <C>           <C>          <C>             <C>
      Commercial and industrial loans.....         $31,240       18.18%       $25,736         17.44%
      Commercial mortgage loans ..........          84,367       49.10%        74,258         50.31%
      Residential mortgages ..............           7,161        4.17%         6,970          4.72%
      Construction loans .................          28,869       16.80%        21,962         14.88%
      Consumer loans .....................          20,137       11.72%        18,559         12.57%
      Other loans ........................              45        0.03%           118          0.08%
                                                  --------      ------       --------         ------
                                                  $171,819      100.00%      $147,603         100.00%
                                                  ========      ======       ========         ======
</TABLE>

The following table represents the activity in the allowance for loan losses for
the six month periods  ended June 30, 2002 and 2001 and the year ended  December
31, 2001 (Dollars in thousands).

<TABLE>
<CAPTION>
                                                                     Allowance For Loan Losses
                                                           -----------------------------------------------
                                                               Six Months Ended
                                                                   June 30,
                                                                  (Unaudited)                Year Ended
                                                           -------------------------         December 31,
                                                             2002              2001              2001
                                                           -------           -------           -------
      <S>                                                  <C>               <C>               <C>
      Balance - beginning of period ..............         $ 1,964           $ 1,584           $ 1,584
      Charge-offs ................................              (1)               (3)               (6)
      Provision for loan losses ..................             685               246               386
                                                           -------           -------           -------

      Balance - end of period ....................         $ 2,648           $ 1,827           $ 1,964
                                                           =======           =======           =======
      Balance of Allowance at period-end as a %
          of loans at period-end .................            1.54%             1.30%             1.33%
                                                           =======           =======           =======
</TABLE>




                                       10
<PAGE>

COMMUNITY BANCORP OF NEW JERSEY

Management's Discussion and Analysis of Financial Condition and Results of
Operations

CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

The  accounting  and  reporting  policies of the Company  conform to  accounting
principles  generally  accepted  in the United  States of America  (US GAAP) and
predominant practices within the banking industry. The accompanying consolidated
financial  statements  include the accounts of the  Company,  and all its wholly
owned  subsidiaries.  All  intercompany  balances  and  transactions  have  been
eliminated.

The principal estimate that is particularly susceptible to significant change in
the near term relates to the  allowance for loan losses.  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 allowance for loan loss is maintained at an amount management deems adequate
to cover estimated losses. In determining the level to be maintained, management
evaluates many factors including current economic trends,  industry  experience,
historical loss experience, industry loan concentrations, the borrowers' ability
to repay and repayment  performance,  and estimated  collateral  values.  In the
opinion of management,  the present allowance is adequate to absorb  reasonable,
foreseeable  loan  losses.  While  management  uses  available   information  to
recognize  losses on loans,  future  additions to the allowance may be necessary
based on changes in  economic  conditions  or any of the other  factors  used in
management's  determination.  In addition,  various regulatory  agencies,  as an
integral part of their examination  process,  periodically  review the Company's
allowance  for  losses on loans.  Such  agencies  may  require  the  Company  to
recognize  additions to the allowance based on their judgments about information
available to them at the time of their examination.

Loans are placed on  non-accrual  when a loan is  specifically  determined to be
impaired or when  principal or interest is delinquent  for 90 days or more.  Any
unpaid  interest  previously  accrued on those  loans is reversed  from  income.
Interest  income  generally is not recognized on specific  impaired loans unless
the  likelihood of further loss is remote.  Interest  payments  received on such
loans are applied as a reduction of the loan principal balance.  Interest income
on other non-accrual loans is recognized only to the extent of interest payments
received.

The Company  accounts for its impaired  loans in  accordance  with SFAS No. 114.
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
rat,  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  recognizes  deferred tax assets and  liabilities for the future tax
effects of temporary  differences,  net  operating  loss  carryforwards  and tax
credits.  Deferred tax assets are subject to  management's  judgment  based upon
available evidence that future realization is more likely than not. In the event
management  determines  the inability to realize all or part of net deferred tax
assets in the future,  a direct  charge to income tax expense may be required to
reduce  the  recorded  value  of the net  deferred  tax  asset  to the  expected
realizable amount.

This financial review presents management's discussion and analysis of financial
condition and results of operations.  It should be read in conjunction  with the
consolidated  condensed financial statements and the accompanying notes included
elsewhere herein.

FINANCIAL CONDITION

Total assets at June 30, 2002  increased by $33.8 million,  or 13.8%,  to $279.5
million  compared to $245.6 million at December 31, 2001.  Total assets averaged
$256.3  million  in the first six  months of 2002,  a $53.1  million,  or 26.1%,
increase  from the 2001  full year  average  of $203.2  million.  Average  loans
increased $20.0 million,  or 14.4%, to $158.5 million in the first six months of
2002,  from the 2001 full year  average of $138.5  million.  Average  investment
securities  increased by $40.4  million,  or 98.5%,  to $81.4  million;  average
Federal funds sold decreased by $10.1 million,  or 94.4%, to $600 thousand;  the
average  of all other  assets  increased  by $3.1  million,  or 20.9%,  to $17.9
million; and the loan loss reserve average increased $242 thousand, or 11.1%, to
$2.0 million  during the first six months of 2002 compared to the full year 2001
averages.

These increases in average assets were funded  primarily by a $47.2 million,  or
26.3%,  increase  in average  deposits,  as average  deposits  for the first six
months of 2002  increased  to $227.0  million from the full year 2001 average of
$179.8  million.  Increases  in average  assets  were  further  funded by a $5.1
million,  or 463.6%,  increase  in  average  short-term  borrowings,  as average
short-term borrowings for the first six months of 2002 increased to $6.2 million
from the full year 2001 average of $1.1 million.


Lending Activity
----------------

Total loans at June 30,  2002 were $171.8  million,  a 16.4%,  or $24.2  million
increase from December 31, 2001. The loan portfolio  consists primarily of loans
secured by real estate,  and, to a lesser extent,  commercial,  construction and
consumer  loans.  Changes in the  composition of the loan  portfolio  during the
comparative  periods included increases of $10.1 million in commercial  mortgage
loans,  $6.9  million in  construction  loans,  $5.5 million in  commercial  and
industrial  loans, $1.5 million in consumer and other loans and $191 thousand in
residential mortgage loans.

The 16.4%  increase in loans at June 30, 2002  compared to December  31, 2001 is
partially  attributable to greater  penetration of our marketplace and continued
loan demand within our market area and targeted  customer base.  Since September
1997, we have opened six new offices. Management believes that the maturation of
these branch locations will continue to provide us with lending opportunities as
well as funding  sources for the loans.  Further  enhancing loan growth has been
our desire to provide quality  customer  service.  Our focus is on the continued
origination, retention and service of a high quality loan portfolio.

Our loans are  primarily  to  businesses  and  individuals  located in Monmouth,
Middlesex,  and Ocean  Counties,  New Jersey.  We believe  that our  strategy of
customer  service,  competitive  rate structures,  and selective  marketing will
continue to enable us to gain market  entry to local  loans

                                       11

<PAGE>

and  deposits.  Bank mergers and  consolidations  have also  contributed  to our
efforts to attract  borrowers  and  depositors.  We intend to continue to pursue
quality loans in all lending categories within our market area.


Allowance for Loan Losses
-------------------------

The allowance for loan losses was $2.6 million, or 1.54% of total loans, at June
30, 2002  compared to $2.0  million,  or 1.33% of total  loans,  at December 31,
2001. At June 30, 2002 we had $2.4 million in  non-accrual  loans compared to no
non-accrual  loans at  December  31,  2001.  The  increase in the balance of the
allowance  for loan  losses is the  result of our  review  of  several  factors,
including  the  continued  growth of our loan  portfolio  and our  assessment of
economic conditions, credit quality, and other loss factors that may be inherent
in the existing loan portfolio.  During the second  quarter,  the Company placed
$2.4 million of commercial loans issued to this borrower on non-accrual, and has
subsequently  been negotiating a settlement of these problem loans.  Although no
settlement   has  yet  been   finalized,   based  upon  the  current  facts  and
circumstances regarding these loans, the Company added $480,000 to its loan loss
reserve  to fully  cover  anticipated  losses on these  credits.  We also  added
$480,000 to our loan loss  reserve at June 30,  2002 to fully cover  anticipated
losses  associated with a series of credit  facilities to a single borrower,  an
insurance premium financer.

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
Review  Committee  and the Board of  Directors.  A risk  system,  consisting  of
multiple  grading  categories,  is utilized as an analytical tool to assess risk
and set appropriate  reserves.  Along with the risk system,  management  further
evaluates  risk   characteristics  of  the  loan  portfolio  under  current  and
anticipated  economic  conditions  and  considers  such factors as the financial
condition of the borrower, past and expected loss experience,  and other factors
we feel 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 we attempt 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 judgements
about information available to them at the time of their examination.

Investment Securities Activity
------------------------------

Investment  securities  increased by $6.2 million,  or 7.7%, to $86.9 million at
June 30, 2002  compared to $80.7  million at December 31, 2001.  During the last
three quarters of 2001 and first two quarters of 2002, we utilized our liquidity
in excess of loan demand to fund additional  purchases of investment  securities
available-for-sale.  This  strategy  resulted  from  Asset/Liability  management
considerations arising from our analysis of several economic scenarios including
reduced  loan growth and deposit  repricing  opportunities  starting  within the
second  quarter  of 2001.  During  the  first  six  months  of 2002,  forecasted
maturities and calls of $24.5 million in investment securities were used to fund
loan growth  amounting to $24.2 million as loan demand increased and we utilized
excess  liquidity with  additional  purchases of investment  securities of $30.2
million.

                                       12

<PAGE>


Management  determines the appropriate  classification of securities at the time
of purchase.  At June 30, 2002, investment securities of $77.3 million, or 89.0%
of   the   total   investment   securities   portfolio,   were   classified   as
available-for-sale  and investment  securities of $9.5 million,  or 11.0% of the
total investment securities portfolio,  were classified as held-to-maturity.  We
had no investment  securities  classified as trading securities.  The investment
portfolio is comprised  primarily of U.S.  Government and agency securities with
maturities of four years or less and with call features of two years or less. We
currently  maintain an investment  portfolio of short  duration in order to fund
projected  increased  loan  volume and to provide  for other  liquidity  uses as
needed, and secondarily as an additional source of interest income.


Deposits
--------

Deposits  are our primary  source of funds.  Total  deposits  increased by $21.4
million,  or 9.7%, to $242.5 million at June 30, 2002 compared to $221.1 million
at December 31, 2001. The increase in deposits  during this period was primarily
due to greater  penetration of our marketplace  and the continued  growth of our
new locations.  As we adjusted the mix of our deposit base through marketing and
pricing  initiatives,   lower  costing  demand  deposits  and  savings  accounts
increased  by $28.5  million,  while  higher  costing  certificates  of  deposit
decreased by $7.1 million.

Average total deposits  increased by $47.2 million,  or 26.3%, to $227.0 million
for the six months ended June 30, 2002 compared to the 2001 full year average of
$179.8  million.  Changes in the deposit mix  averages  for the six months ended
June 30, 2002 compared to the 2001 full year averages  include a $24.4  million,
or 47.8%,  increase in savings deposits;  a $807 thousand,  or 4.1%, decrease in
NOW account deposits;  a $15.8 million, or 23.8%,  increase in time deposits;  a
$605 thousand,  or 9.2%, increase in money market deposits;  and a $7.3 million,
or 20.1%,  increase in  non-interest  bearing  demand  deposits.  Short duration
certificate of deposit  promotions,  targeted to retain maturing deposits and to
gain market penetration,  have contributed to deposit growth. Management intends
to  continue to promote  targeted  deposit  products as funding  needs and other
balance sheet management considerations arise.

We  emphasize  relationships  with  commercial  customers  and  seek  to  obtain
transactional  accounts,  which  are  frequently  kept in  non-interest  bearing
deposits. We also emphasize the origination of savings deposits,  which amounted
to $83.7 million at June 30, 2002, by offering  rates higher than our peer group
institutions.  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 paid without  notice,  and the
depositor  may  withdraw  their funds on demand.  We market  this  product as an
alternative  to time deposits and we believe it has resulted in a higher rate of
core deposits and lower cost of funds than our peer group institutions. Deposits
are obtained primarily from the market areas that we serve.

Liquidity
---------

Liquidity is a  measurement  of our ability to meet  present and future  funding
obligations  and  commitments.  We adjust our liquidity  levels in order to meet
funding needs for deposit  outflows,  repayment of borrowings,  when applicable,
and the  funding of loan  commitments.  We also  adjust our  liquidity  level as
appropriate  to  meet  our  asset/liability  objectives.  Principal  sources  of
liquidity  are  deposit  generation,   access  to  purchased  funds,   including
borrowings from other financial institutions,  repurchase agreements, maturities
and repayments of loans and investment  securities,  and net interest income and
fee income.  Liquid assets (consisting of cash and Federal funds sold) comprised
4.8% and 3.8% of our  total  assets  at June 30,  2002 and  December  31,  2001,
respectively.

                                       13
<PAGE>


As shown in the  Consolidated  Condensed  Statements of Cash Flows,  our primary
source  of funds  at June 30,  2002 was  increased  targeted  deposit  products,
proceeds from  maturities  and calls of investment  securities,  and to a lesser
extent,  short-term borrowed funds.  Deposit increases amounted to $21.4 million
for the six months ended June 30, 2002 and proceeds from maturities and calls of
investment  securities  amounted to $24.5  million.  These sources of funds were
augmented with an increase of $12.7 million in short-term  borrowings as of June
30,  2002.  During the first six months of 2002,  we  utilized  deposit  growth,
matured investment securities,  and to a lesser extent, short-term borrowings as
funding sources for increased loans made to customers amounting to $24.2 million
and securities purchases amounting to $30.2 million.

We  also  have  several   additional   sources  of   liquidity,   including  the
available-for-sale  investment  securities  portfolio,  which at June  30,  2002
amounted to $77.3 million.  Also,  many of our loans are originated  pursuant to
underwriting  standards  which make them readily  marketable to other  financial
institutions or investors in the secondary market. In addition, in order to meet
liquidity needs on a temporary basis, we have  established  lines of credit with
other  financial  institutions  to purchase up to $11.0 million in Federal funds
and may borrow  funds at the Federal  Reserve  discount  window,  subject to our
ability to supply collateral. We are also a member of the Federal Home Loan Bank
of New York and have an additional  combined overnight  borrowing line term line
of $21.4  million.  In  addition,  subject  to  certain  Federal  Home Loan Bank
requirements,  we  may  also  obtain  longer-term  advances  of up to 30% of our
assets. As of June 30, 2002, we had $14.3 million in short-term borrowings.

We believe that our  liquidity  position is  sufficient to provide funds to meet
future loan demand or the possible outflow of deposits,  in addition to enabling
us to adapt to changing interest rate conditions.

Capital Resources
-----------------

Stockholder's  equity  increased  by $1.0  million at June 30, 2002  compared to
December 31, 2001.  The changes in  stockholders'  equity  during the six months
ended  June 30,  2002 were  comprised  of an  increase  from net  income of $704
thousand and an increase of $272 thousand in the unrealized gains, net of taxes,
in the available-for-sale  investment securities portfolio. These increases were
partially  off-set by a payment  of $5  thousand  of cash in lieu of  fractional
shares associated with our second quarter 5% stock dividend.

Our  regulators,  the Board of Governors of the Federal  Reserve  System  (which
regulates  bank  holding   companies),   and  the  Federal   Deposit   Insurance
Corporation, have issued guidelines classifying and defining capital.

The following  table  summarizes the risk-based and leverage  capital ratios for
the  Company and the Bank at June 30,  2002 as well as the  regulatory  required
minimum and "well capitalized" capital ratios:

<TABLE>
<CAPTION>

                                   June 30, 2002                   Regulatory Requirement
                                -------------------           --------------------------------
                                Company        Bank           Minimum       "Well Capitalized"
                                -------        ----           -------       ------------------
<S>                             <C>            <C>             <C>                 <C>
Risk-based Capital:
Tier I capital ratio........... 10.98%         10.99%          4.00%               6.00%
Total capital ratio............ 12.23%         12.24%          8.00%              10.00%

Leverage ratio.................. 8.22%          8.23%       3.00%-5.00%      5.00% or greater

</TABLE>


                                       14
<PAGE>

As noted in the above table,  the Company's and the Bank's capital ratios exceed
the minimum regulatory and "well capitalized" requirements.


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 our  operations.  Unlike  most  industrial
companies,  nearly all of 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.





RESULTS OF OPERATIONS for the six months ended June 30, 2002 compared to the six
months ended June 30, 2001

Net Income
----------

For the six months ended June 30, 2002, we earned $704 thousand compared to $681
thousand  in net income for the same  period  last year.  Basic and  diluted net
income  per share for the six months  ended  June 30,  2002 was $0.33 and $0.32,
respectively,  compared  to basic and  diluted net income per share of $0.32 for
the same prior year period.  The marginal  increase in net income was  primarily
due to a $1.1  million,  or  28.5%,  increase  in net  interest  income,  an $11
thousand,  or 2.8% reduction in income tax expense,  and was partially offset by
an increase in loan loss provision of $439 thousand,  or 178.5%,  a reduction in
non-interest  income  of $39  thousand,  or  5.3%,  and  increased  non-interest
expenses of $643 thousand, or 19.0%.

Net Interest Income
-------------------

Net interest  income  increased $1.1 million,  or 28.5%, to $5.1 million for the
six months ended June 30, 2002 from $4.0 million for the same prior year period.
The  increase  in net  interest  income  was due  primarily  to  volume  related
increases  amounting to $1.3 million as average interest earning assets,  net of
average interest bearing  liabilities,  increased by $6.8 million, or 15.5%, for
the first six months of 2002 compared to the same prior year period.  The volume
related  increases in net interest income were partially  offset by rate related
decreases in net interest income amounting to $151 thousand.

Our net  interest  margin  (annualized  net interest  income  divided by average
interest  earning  assets) for the six months  ended June 30, 2002  decreased to
4.28%  compared  to 4.53% for the same prior year  period.  The  decrease in net
interest  margin of 25 basis points resulted from a change in the mix of average
interest earning assets, as average investment securities increased by 211.8% to
$81.4 million from $26.1 million. The relatively  consistent net interest margin
resulted  primarily from timely  implementation  of  asset/liability  management
strategies as the Federal Reserve Bank reduced the target funds rate to 1.75%.

                                       15
<PAGE>


Interest income  increased $737 thousand,  or 10.7%, to $7.6 million for the six
months ended June 30, 2002 compared to $6.9 million for the same period in 2001.
The improvement in interest income was primarily due to volume related increases
in income from the loan portfolio of $1.8 million and volume  related  increases
in  income  of $1.777  million  in  investment  securities  and was  offset by a
reduction in Federal funds sold income of $448 thousand,  as our growth resulted
in an increase in average  earning assets of $63.9 million,  or 36.2%, to $240.5
million for the six months  ended June 30, 2002  compared to $176.6  million for
the same period in 2001.

In addition to the volume  related net  increase  amounting  to $2.5  million,
total interest income decreased by $1.8 million from rate related decreases as
interest  rates on earning assets  repriced to current lower yields  compared to
yields in the same period in 2001.

Interest  expense for the first six months of 2002 decreased  $396 thousand,  or
13.6%,  compared to the same prior year period. The decrease in interest expense
was due primarily to net rate related  decreases in interest  bearing  deposits,
which  accounted  for $1.6 million of the expense  decrease,  and was  partially
offset by $1.2 million attributable to net volume related increases.  The volume
related increases in interest bearing liabilities and net expense rate decreases
are the result of marketing and pricing decisions made by management in response
to  changing  market  rates and the need to provide  cost  effective  sources of
funds.

The following tables titled  "Consolidated  Average Balance Sheet with Resultant
Interest  and  Average  Rates" and  "Analysis  of Changes  in  Consolidated  Net
Interest  Income" present by category the major factors that  contributed to the
changes in net interest  income for the quarter  ended June 30, 2002 compared to
the quarter  ended June 30, 2001 and the six months ended June 30, 2002 compared
to the same prior year period.

                                       16
<PAGE>


CONSOLIDATED AVERAGE BALANCE SHEETS
With Resultant Interest And Average Rates

<TABLE>
<CAPTION>

                                                                   Three Months Ended                      Three Months Ended
                                                                      June 30, 2002                          June 30, 2001
                                                          -------------------------------------  -----------------------------------
                                                           Average      Interest       Average     Average      Interest     Average
                                                           Balance    Income/Expense    Rate       Balance   Income/Expense   Rate
                                                          ----------  --------------  ---------  ----------  --------------  -------
                                                                               (In thousands, except percentages)
<S>                                                        <C>          <C>             <C>     <C>          <C>             <C>
ASSETS
Interest Earning Assets:
        Federal Funds Sold .............................   $     738    $       3       1.63%   $  23,694    $     262       4.44%
        Investment Securities ..........................      81,789          963       4.71%      19,589          296       6.04%
        Loans (net of unearned income) (1) (2) .........     164,194        2,889       7.06%     135,481        2,847       8.43%
                                                           ---------    ---------               ---------    ---------

                  Total Interest Earning Assets ........     246,721        3,855       6.27%     178,764        3,405       7.64%
                                                           ---------    ---------               ---------    ---------

Non-Interest Earning Assets:
        Loan Loss Reserve ..............................      (2,103)                                           (1,772)
        All Other Assets ...............................      17,994                                            13,526
                                                                                                             ---------

                  Total Assets .........................   $ 262,612                                         $ 190,518
                                                           =========                                         =========

LIABILITIES & STOCKHOLDERS' EQUITY
Interest-Bearing Liabilities:
        NOW Deposits ...................................   $  19,107           50       1.05%   $  19,307           68       1.41%
        Savings Deposits ...............................      79,897          402       2.02%      48,113          356       2.97%
        Money Market Deposits ..........................       7,279           41       2.26%       6,829           54       3.17%
        Time Deposits ..................................      81,220          704       3.48%      59,201          893       6.05%
        Short-term Borrowings ..........................       6,291           30       1.91%          --           --       0.00%
                                                           ---------    ---------               ---------    ---------

                  Total Interest Bearing Liabilities ...     193,794        1,227       2.54%     133,450        1,371       4.12%
                                                           ---------    ---------               ---------    ---------


Non-Interest Bearing Liabilities:
        Demand Deposits ................................      45,961                               34,466
        Other Liabilities ..............................         953                                2,576
                                                           ---------                            ---------

                  Total Non-Interest Bearing Liabilities      46,914                               37,042
                                                           ---------                            ---------

Stockholders' Equity ...................................      21,904                               20,026
                                                           ---------                            ---------

                  Total Liabilities and Stockholders'
                  Equity ...............................   $ 262,612                            $ 190,518
                                                           =========                            =========


NET INTEREST INCOME ....................................                $   2,628                            $   2,034
                                                                        =========                            =========


NET INTEREST SPREAD (3) ................................                                3.73%                                 3.52%

NET INTEREST MARGIN (4) ................................                                4.27%                                 4.56%

</TABLE>


(1)  Included in interest income on loans are loan fees.
(2)  Includes  non-performing  loans.  Average non-accrual loans for the periods
     presented amounted to $2.38 million for the quarter ended June 30, 2002.
(3)  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.
(4)  The interest rate margin is calculated by dividing  annualized net interest
     income by average interest earning assets.



                                       17
<PAGE>


CONSOLIDATED AVERAGE BALANCE SHEETS
With Resultant Interest And Average Rates

<TABLE>
<CAPTION>

                                                                   Six Months Ended                      Six Months Ended
                                                                     June 30, 2002                        June 30, 2001
                                                         --------------------------------------  -----------------------------------
                                                             Average      Interest      Average    Average      Interest    Average
                                                             Balance   Income/Expense    Rate      Balance   Income/Expense   Rate
                                                            ---------- --------------  --------  ----------  -------------- --------
                                                                              (In thousands, except percentages)
<S>                                                         <C>          <C>             <C>     <C>          <C>            <C>
ASSETS
Interest Earning Assets:
        Federal Funds Sold .............................    $     598    $       5       1.69%   $  19,436    $     462      4.79%
        Investment Securities ..........................       81,418        1,925       4.73%      26,113          839      6.43%
        Loans (net of unearned income) (1) (2) .........      158,488        5,681       7.23%     131,036        5,573      8.58%
                                                            ---------    ---------               ---------    ---------

                  Total Interest Earning Assets ........      240,504        7,611       6.38%     176,585        6,874      7.85%
                                                            ---------    ---------               ---------    ---------

Non-Interest Earning Assets:
        Loan Loss Reserve ..............................       (2,041)                              (1,700)
        All Other Assets ...............................       17,855                               12,992
                                                            ---------                            ---------

                  Total Assets .........................    $ 256,318                            $ 187,877
                                                            =========                            =========


LIABILITIES & STOCKHOLDERS' EQUITY
Interest-Bearing Liabilities:
        NOW Deposits ...................................    $  18,771           92       0.99%   $  17,284          130      1.52%
        Savings Deposits ...............................       75,330          762       2.04%      47,600          788      3.34%
        Money Market Deposits ..........................        7,087           79       2.25%       8,372          156      3.76%
        Time Deposits ..................................       82,227        1,515       3.72%      59,286        1,829      6.22%
        Short-term Borrowings ..........................        6,246           59       1.90%          --           --      0.00%
                                                            ---------    ---------               ---------    ---------

                  Total Interest Bearing Liabilities ...      189,661        2,507       2.67%     132,542        2,903      4.42%
                                                            ---------    ---------               ---------    ---------

Non-Interest Bearing Liabilities:
        Demand Deposits ................................       43,562                               33,114
        Other Liabilities ..............................        1,405                                2,381
                                                            ---------                            ---------

                  Total Non-Interest Bearing Liabilities       44,967                               35,495
                                                            ---------                            ---------

Stockholders' Equity ...................................       21,690                               19,840
                                                            ---------                            ---------

                  Total Liabilities and Stockholders'
                  Equity ...............................    $ 256,318                            $ 187,877
                                                            =========                            =========


NET INTEREST INCOME ....................................                 $   5,104                            $   3,971
                                                                         =========                            =========


NET INTEREST SPREAD (3) ................................                                 3.72%                               3.43%

NET INTEREST MARGIN (4) ................................                                 4.28%                               4.53%

</TABLE>


(1)  Included in interest income on loans are loan fees.
(2)  Includes  non-performing  loans.  Average non-accrual loans for the periods
     presented amounted to $1.19 million for the six months ended June 30, 2002.
(3)  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.
(4)  The interest rate margin is calculated by dividing  annualized net interest
     income by average interest earning assets.



                                       18
<PAGE>


ANALYSIS OF CHANGES IN CONSOLIDATED NET INTEREST INCOME

<TABLE>
<CAPTION>
                                            Three Months Ended June 30, 2002     Six Months Ended June 30, 2002
                                             Compared to Three Months Ended       Compared to Six Months Ended
                                                     June 30, 2001                       June 30, 2001
                                            -------------------------------     --------------------------------
                                                Increase (Decrease) Due To         Increase (Decrease) Due To
                                            -------------------------------     --------------------------------
                                             Volume      Rate         Net       Volume        Rate         Net
                                            -------     -------     -------     -------      -------     -------
                                                     (In thousands)                      (In thousands)
<S>                                         <C>         <C>         <C>         <C>         <C>         <C>
Interest Earned On:
        Federal Funds Sold .............    $  (254)    $    (5)    $  (259)    $  (448)    $    (9)    $  (457)
        Investment Securities ..........        940        (273)        667       1,777        (691)      1,086
        Loans (net of unearned income) .        603        (561)         42       1,168      (1,060)        108
                                            -------     -------     -------     -------     -------     -------

                  Total Interest Income       1,289        (839)        450       2,497      (1,760)        737
                                            -------     -------     -------     -------     -------     -------

Interest Paid On:
        NOW Deposits ...................         (1)        (17)        (18)         11         (49)        (38)
        Savings Deposits ...............        235        (189)         46         459        (485)        (26)
        Money Market Deposits ..........          4         (17)        (13)        (24)        (53)        (77)
        Time Deposits ..................        332        (521)       (189)        708      (1,022)       (314)
        Short-term Borrowings ..........         30          --          30          59          --          59
                                            -------     -------     -------     -------     -------     -------

                  Total Interest Expense        600        (744)       (144)      1,213      (1,609)       (396)
                                            -------     -------     -------     -------     -------     -------

                  Net Interest Income ..    $   689     $   (95)    $   594     $ 1,284     $  (151)    $ 1,133
                                            =======     =======     =======     =======     =======     =======
</TABLE>


                                       19
<PAGE>


Provision for Loan Losses
-------------------------

The  provision  for loan losses  increased  to $685  thousand  for the first six
months of 2002  compared to a provision of $246  thousand for the same period in
2001.  The provision is the result of our review of several  factors,  including
increased  loan  balances  and our  assessment  of economic  conditions,  credit
quality  and other  loss  factors  that may be  inherent  in the  existing  loan
portfolio.  We had $2.4  million  of  non-accrual  loans at June 30,  2002,  and
established  $480  thousand in provisions  for loan losses to cover  anticipated
losses  associated with these loans.  The allowance for loan losses totaled $2.6
million, or 1.54% of total loans, at June 30, 2002.


Non-Interest Income
-------------------

Total  non-interest  income was $695  thousand  for the first six months of 2002
compared to $734  thousand  for the first six months of 2001,  a decrease of $39
thousand,  or 5.3%.  The  decrease was  attributable  primarily to a decrease in
non-interest  service fees on loans, which amounted to $232 thousand for the six
months ended June 30, 2002 compared to $401  thousand  earned for the same prior
year  period,  a  decrease  of  $169  thousand,   or  42.1%.  This  decrease  in
non-interest  service fees on loans resulted  primarily from reduced activity in
loan  participations.  All other non-interest income increased by $130 thousand,
or 39.0%,  to $463  thousand,  and  resulted  from the  continued  growth of the
Company.


Non-Interest Expense
--------------------

Total  non-interest  expense  amounted to $4.0  million for the six months ended
June 30, 2002, an increase of $643 thousand,  or 19.0%, over the same prior year
period.  The increase was due primarily to increases in  employment  expenses as
well as increases in occupancy  expenses,  equipment expenses and other expenses
generally  attributable  to our  growth.  Of  this  increase,  employment  costs
increased  $321  thousand,  or 20.1%,  and reflected  increases in the number of
employees from 87 full-time equivalents for the period ended June 30, 2001 to 96
full-time  equivalents  for the period  ended June 30,  2002.  The  increase  in
personnel is primarily  attributable  to the  acquisition of additional  support
personnel  required  due to the  Company's  growth,  including  the  transfer of
deposit services  processing from a service bureau  environment to an "in-house"
environment  and the opening of our Colts Neck, New Jersey and  Shrewsbury,  New
Jersey branches.

Occupancy and depreciation  expenses increased $245 thousand,  or 45.7%, for the
first six months of 2002  compared to the same period in 2001.  The increase was
attributable  primarily to increased  lease  expense and  increased  common area
maintenance  costs  due  on  new  branch  offices,   in  addition  to  increased
depreciation  costs  associated  with new  deposit  services  facilities  and on
purchases of enhanced computer processing equipment.

Other expenses increased $77 thousand, or 6.1%, for the first six months of 2002
compared  to the first six months of 2001.  The  increase  was  attributable  to
increased other expenses resulting from our continued growth. In addition,  2001
expenses were increased by $130 thousand due to systems related conversion costs
as  we  prepared  for  a  bank-wide   operating  systems  conversion  which  was
successfully completed during July, 2001.


                                       20
<PAGE>

Income Tax Expense
------------------

For the six months ended June 30, 2002,  we  recognized  $376 thousand in income
tax expense compared to $387 thousand in income tax expense during the first six
months of 2001.  The  effective  tax rate for the  first six  months of 2002 was
34.8% compared to 36.2% for the same period during 2001.


Return on  Average Assets and Average Equity
--------------------------------------------

Two industry measures of performance by a banking  institution are its return on
average  assets and return on average  equity.  Return on average assets ("ROA")
measures  net  income in  relation  to total  average  assets  and  indicates  a
company's ability to employ its resources  profitably.  For the six months ended
June 30, 2002,  our ROA was 0.55%  compared to 0.74% for the year ended December
31, 2001.  Return on average equity ("ROE") is determined by dividing annual net
income by average  stockholders'  equity and indicates how effectively a company
can  generate  net  income on the  capital  invested  by its  stockholders.  ROE
decreased to 6.55% for the six months ended June 30, 2002, compared to 7.45% for
the year ended  December 31, 2001.  The  decrease in both  performance  measures
resulted from the addition of $480 thousand to our loan loss reserve at June 30,
2002 to fully  cover  anticipated  losses  associated  with a series  of  credit
facilities to a single borrower.




RESULTS OF  OPERATIONS  for the three months ended June 30, 2002 compared to the
three months ended June 30, 2001

Net Income
----------

For the three months ended June 30, 2002,  we earned $151  thousand  compared to
$347  thousand in net income for the same  period last year,  a decrease of $196
thousand,  or 56.5%. Basic and diluted net income per share for the three months
ended June 30,  2002 was $0.07,  compared  to basic and  diluted  net income per
share of $0.16 for the same prior year  quarter.  The decrease in net income was
primarily due to a $594 thousand,  or 29.2%,  increase in net interest income, a
$111  thousand,  or 56.9%  reduction  in income  tax  expense,  and was  further
effected by an increase in loan loss  provision of $495 thousand,  or 495.0%,  a
reduction  in  non-interest  income of $67  thousand,  or 17.8%,  and  increased
non-interest expenses of $339 thousand, or 19.2%.

Net Interest Income
-------------------

Net interest income increased $594 thousand, or 29.2%, to $2.6 million for the
three  months  ended June 30, 2002 from  $2.0  million for the same prior year
period.  The increase in net interest income was due primarily to volume related
increases  amounting to $689 thousand as average interest earning assets, net of
average interest bearing  liabilities,  increased by $7.6 million, or 16.8%, for
the second  quarter of 2002  compared to the same prior year period.  The volume
related  increases in net interest income were partially  offset by rate related
decreases in net interest income amounting to $95 thousand.

Our net  interest  margin  (annualized  net interest  income  divided by average
interest  earning  assets) for the three months ended June 30, 2002 decreased to
4.27%  compared  to 4.56% for the same prior year  period.  The  decrease in net
interest  margin of 29 basis points resulted from a change in the mix of average
interest earning assets, as average investment securities increased by 317.5% to
$81.8 million from $19.6 million. The relatively consistent net interest margin


                                       21
<PAGE>

resulted  primarily from timely  implementation  of  asset/liability  management
strategies as the Federal Reserve Bank reduced the target funds rate to 1.75%.

Interest income increased $450 thousand, or 13.2%, to $3.9 million for the three
months ended June 30, 2002 compared to $3.4 million for the same period in 2001.
The improvement in interest income was primarily due to volume related increases
in income from the loan portfolio of $603 thousand and volume related  increases
in  income  of $940  thousand  in  investment  securities  and was  offset  by a
reduction in Federal funds sold income of $254 thousand,  as our growth resulted
in an increase in average  earning assets of $67.9 million,  or 38.0%, to $246.7
million for the quarter ended June 30, 2002  compared to $178.8  million for the
same period in 2001.

In addition to the volume related net increase amounting to $1.3 million,  total
interest  income  decreased  by $839  thousand  from rate  related  decreases as
interest  rates on earning assets  repriced to current lower yields  compared to
yields in the same period in 2001.

Interest  expense for the second quarter of 2002  decreased  $144  thousand,  or
10.5%,  compared to the same prior year period. The decrease in interest expense
was due primarily to net rate related  decreases in interest  bearing  deposits,
which  accounted  for $744 thousand of the expense  decrease,  and was partially
offset by $600 thousand attributable to net volume related increases. The volume
related increases in interest bearing liabilities and net expense rate decreases
are the result of marketing and pricing decisions made by management in response
to  changing  market  rates and the need to provide  cost  effective  sources of
funds.

Provision for Loan Losses
-------------------------

The provision for loan losses  increased to $595 thousand for the second quarter
of 2002  compared to a provision  of $100  thousand for the same period in 2001.
The  provision  is the  result  of our  review  of  several  factors,  including
increased  loan  balances  and our  assessment  of economic  conditions,  credit
quality  and other  loss  factors  that may be  inherent  in the  existing  loan
portfolio.  We had $2.4  million  of  non-accrual  loans at June 30,  2002,  and
established  $480  thousand  in  provisions  for  loan  losses  to   cover
anticipated  losses  associated with these loans.  The allowance for loan losses
totaled $2.6 million, or 1.54% of total loans, at June 30, 2002.


Non-Interest Income
-------------------

Total  non-interest  income was $309  thousand  for the  second  quarter of 2002
compared  to $376  thousand  for the second  quarter of 2001,  a decrease of $67
thousand,  or 17.8%.  The decrease was  attributable  primarily to a decrease in
non-interest service fees on loans, which amounted to $96 thousand for the three
months ended June 30, 2002 compared to $215  thousand  earned for the same prior
year  period,  a  decrease  of  $119  thousand,   or  55.3%.  This  decrease  in
non-interest  service fees on loans resulted  primarily from reduced activity in
loan participations. All other non-interest income increased by $52 thousand, or
32.3%, to $213 thousand, and resulted from the continued growth of the Company.


Non-Interest Expense
--------------------

Total  non-interest  expense amounted to $2.1 million for the quarter ended June
30,  2002,  an increase  of $339  thousand,  or 19.2%,  over the same prior year
period.  The increase was due primarily to increases in  employment  expenses as
well as increases in occupancy expenses,



                                       22
<PAGE>

equipment expenses and other expenses  generally  attributable to our growth. Of
this increase, employment costs increased $144 thousand, or 17.1%, and reflected
increases  in the number of  employees  from 87  full-time  equivalents  for the
period ended June 30, 2001 to 96 full-time equivalents for the period ended June
30, 2002. The increase in personnel is primarily attributable to the acquisition
of additional support personnel required due to the Company's growth,  including
the transfer of deposit services processing from a service bureau environment to
an  "in-house"  environment  and the opening of our Colts  Neck,  New Jersey and
Shrewsbury, New Jersey branches.

Occupancy and depreciation  expenses increased $136 thousand,  or 50.7%, for the
second  quarter of 2002  compared to the same period in 2001.  The  increase was
attributable  primarily to increased  lease  expense and  increased  common area
maintenance  costs  due  on  new  branch  offices,   in  addition  to  increased
depreciation  costs  associated  with new  deposit  services  facilities  and on
purchases of enhanced computer processing equipment.

Other expenses increased $59 thousand,  or 9.0%, for the second three quarter of
2002 compared to the second  quarter of 2001. The increase was  attributable  to
increased other expenses resulting from our continued growth. In addition,  2001
expenses were increased by $60 thousand due to systems related  conversion costs
as  we  prepared  for  a  bank-wide   operating  systems  conversion  which  was
successfully completed during July, 2001.



Income Tax Expense
------------------

For the three months ended June 30, 2002, we  recognized  $84 thousand in income
tax expense  compared to $195  thousand in income tax expense  during the second
quarter of 2001. The effective tax rate for the second quarter of 2002 was 35.7%
compared to 36.0% for the same period during 2001.


Return on  Average Assets and Average Equity
--------------------------------------------

Two industry measures of performance by a banking  institution are its return on
average  assets and return on average  equity.  Return on average assets ("ROA")
measures  net  income in  relation  to total  average  assets  and  indicates  a
company's ability to employ its resources profitably. For the three months ended
June 30, 2002,  our ROA was 0.23%  compared to 0.74% for the year ended December
31, 2001.  Return on average equity ("ROE") is determined by dividing annual net
income by average  stockholders'  equity and indicates how effectively a company
can  generate  net  income on the  capital  invested  by its  stockholders.  ROE
decreased to 2.76% for the quarter  ended June 30,  2002,  compared to 7.45% for
the year ended  December 31, 2001.  The  decrease in both  performance  measures
resulted from the addition of $480 thousand to our loan loss reserve at June 30,
2002 to fully  cover  anticipated  losses  associated  with a series  of  credit
facilities to a single borrower.


                                       23
<PAGE>

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

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

           The Bank is periodically  involved in various legal  proceedings as a
           normal  incident to its business.  In the opinion of  management,  no
           material loss is expected from any such pending lawsuit.


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

           Not Applicable.


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

           Not Applicable.


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

           The annual meeting of shareholders of Community Bancorp of New Jersey
           was held on April 18, 2002.  The following were the results of voting
           on the one proposal presented:

           Note:    Shares Outstanding were.....................      2,014,729
                    Shares Voted were............................     1,658,757

           Proposal No. 1 - The re-election of three nominees to the Board of
                            Directors for a three year term.

           Note:    Each Director received at least 97% of the shares voted, in
                    favor of their appointment.

                   Elected Director      Votes For   Votes Withheld      %
           -------------------------  ------------- ----------------  ---------
           Charles Kaempffer             1,656,165       2,592          99.8%
           William Mehr                  1,655,598       3,159          99.8%
           Robert O'Donnell              1,623,719      35,159          97.9%


Item 5.    Other Information
           -----------------
           Not Applicable.


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

             (a)    Exhibits - CERTIFICATION (page 25)

             (b)    Reports on Form 8-K

                    The Registrant filed no Form 8-K's during the second
                    quarter 2002.





                                       24
<PAGE>





                      CERTIFICATION PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002




The  undersigned,  Robert D. O'Donnell and Michael Bis hereby  jointly  certify,
Pursuant to U.S. C. Section 1350,as adopted to Section 906 of the Sarbanes-Oxley
Act of 2002 as follows:

     (a)  They are the Chief Executive Officer and the Chief Financial  Officer,
          respectively, of Community Bancorp of New Jersey (the "Company");

     (b)  To the best of their knowledge, the Company's Quarterly Report on Form
          10-QSB for the quarter ended June 30, 2002 (the "Report")  complies in
          all material  respects with the  requirements  of Section 13(a) of the
          Securities Exchange Act of 1934, as amended; and

     (c)  To the best of their knowledge, based upon a review of the Report, the
          information  contained in the Report fairly presents,  in all material
          respects,  the  financial  condition  and results of operations of the
          Company.



                               /s/ Robert D. O'Donnell
                               -------------------------
                               Robert D. O'Donnell


                               President and Chief Executive Officer
                               -------------------------------------
                               Title

                               August 13, 2002
                               ---------------
                               Date


                               /s/ Michael Bis
                               ---------------------------
                               Michael Bis

                               Sr. Vice President and Chief Financial Officer
                               ----------------------------------------------
                               Title

                               August 13, 2002
                               ---------------
                               Date




                                       25
<PAGE>



                                    SIGNATURE


Pursuant to the  requirements  of the  Securities  and 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
                            -------------------------------
                                      (Issuer)






Date: August 13, 2002       By:   /s/ Robert D. O'Donnell
      ---------------             -------------------------------------
                                  ROBERT D. O'DONNELL
                                  President and Chief Executive Officer






                            By:   /s/ Michael Bis
                                  ----------------------------------------------
                                  MICHAEL BIS
                                  Sr. Vice President and Chief Financial Officer




                                       26
<PAGE>