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, 1999
                                                        -------------

               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                                  22-3495579
           ----------                                  ----------
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                     Identification No.)

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

                                 (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 - 1,827,707 shares outstanding as of August 11, 1999
<PAGE>
                                      INDEX

                         COMMUNITY BANCORP OF NEW JERSEY


PART I. FINANCIAL INFORMATION

Item 1.        Financial Statements

               Consolidated Condensed Balance Sheets at June 30, 1999
               (Unaudited) and December 31, 1998

               Consolidated Condensed Statements of Income for the three
               and six months ended June 30, 1999 and 1998 (Unaudited)

               Consolidated Condensed Statement of Changes in Stockholders'
               Equity at June 30, 1999 (Unaudited)

               Consolidated Condensed Statements of Cash Flows for the three
               and six months ended June 30, 1999 and 1998 (Unaudited)

               Notes to Consolidated Condensed Financial Statements (Unaudited)


Item 2.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations
        11 - 25


PART II.       OTHER INFORMATION

Item 1.        Legal Proceedings

Item 2.        Changes in Securities and Use of Proceeds

Item 3.        Defaults Upon Senior Securities

Item 4.        Submission of Matters to a Vote of Security Holders
26

Item 5.        Other Information

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


SIGNATURES


<PAGE>
<TABLE>
<CAPTION>
                             COMMUNITY BANCORP OF NEW JERSEY
                          CONSOLIDATED CONDENSED BALANCE SHEETS

                                                                 June 30,
                                                                   1999      December 31,
                                                               (Unaudited)      1998
                                                                ---------      ---------
ASSETS                                                           (Dollars in thousands)
<S>                                                             <C>            <C>
Cash and cash equivalents:
       Cash and due from banks ............................     $   5,018      $   2,541
       Federal funds sold .................................        22,470         26,025
                                                                ---------      ---------
                 Total cash and cash equivalents ..........        27,488         28,566
                                                                ---------      ---------

Investment securities held-to-maturity (fair value $9,387
       at June 30, 1999 and $6,004 at December 31, 1998) ..         9,520          6,025

Loans receivable ..........................................        63,222         45,629
Allowance for loan loss ...................................        (1,134)          (914)
                                                                ---------      ---------
                 Net loans receivable .....................        62,088         44,715
                                                                ---------      ---------
Premises and equipment, net ...............................         3,936          3,068
Accrued interest receivable ...............................           361            224
Other assets ..............................................           265            153
                                                                ---------      ---------

                 Total Assets .............................     $ 103,658      $  82,751
                                                                =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
       Non-interest bearing demand ........................     $  16,257      $  13,530
       Interest bearing - NOW .............................        15,676         14,397
       Savings and money market ...........................        37,215         32,138
       Certificates of deposit, under $100,000 ............         9,020          3,511
       Certificates of deposit, $100,000 and over .........         3,411          1,463
                                                                ---------      ---------
                 Total deposits ...........................        81,579         65,039
                                                                ---------      ---------

Short-term borrowings .....................................         3,000             --
Accrued interest payable ..................................           139            114
Other liabilities .........................................           334            209
                                                                ---------      ---------
                 Total liabilities ........................        85,052         65,362
                                                                ---------      ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                             COMMUNITY BANCORP OF NEW JERSEY
                          CONSOLIDATED CONDENSED BALANCE SHEETS
                                       (continued)

                                                                 June 30,
                                                                   1999      December 31,
                                                               (Unaudited)      1998
                                                                ---------      ---------
ASSETS                                                           (Dollars in thousands)
<S>                                                             <C>            <C>
Stockholders' equity
       Common stock - authorized 5,000,000 shares of
             no par value;  issued and outstanding
             1,796,917 at June 30, 1999 and 1,730,917
             at December 31, 1998 .........................        20,008         18,994
       Accumulated deficit ................................        (1,402)        (1,605)
                                                                ---------      ---------
                 Total stockholders' equity ...............        18,606         17,389
                                                                ---------      ---------
                 Total Liabilities and Stockholder's Equity     $ 103,658      $  82,751
                                                                =========      =========
</TABLE>
     See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                                                       Three Months Ended        Six Months Ended
                                                                             June 30,                 June 30,
                                                                    ----------------------      ------------------
                                                                        1999        1998         1999        1998
                                                                     -------     -------      -------     -------
                                                                    (Dollars in thousands, except per share data)

<S>                                                                  <C>         <C>          <C>         <C>
Loans ..........................................................     $ 1,211     $   540      $ 2,184     $   924
Fees on loans ..................................................          58          12          136          28
Federal funds sold .............................................         180         135          318         231
Investment securities - taxable ................................         144          47          337         163
                                                                     -------     -------      -------     -------
                  Total interest income ........................       1,593         734        2,975       1,346
                                                                     -------     -------      -------     -------

Interest bearing - NOW .........................................          54          36          105          68
Savings and money market .......................................         379         203          710         364
Certificates of deposit ........................................         111          31          184          52
Short-term borrowings ..........................................           1        --              1        --
                                                                     -------     -------      -------     -------
                  Total interest expense .......................         545         270        1,000         484
                                                                     -------     -------      -------     -------
                  Net interest income ..........................       1,048         464        1,975         862
                                                                         111         197          222         332
                                                                     -------     -------      -------     -------
                  Net interest income after provision
                           for loan losses .....................         937         267        1,753         530
                                                                     -------     -------      -------     -------

Service fees on deposit accounts ...............................          51          27           98          43
Other fees and commissions .....................................          22           5           33           9
                                                                     -------     -------      -------     -------
                  Total non-interest income ....................          73          32          131          52
                                                                     -------     -------      -------     -------

Salaries and wages .............................................         347         297          658         499
Employee benefits ..............................................          58          48          116          91
Occupancy expense ..............................................          61          26          108          52
Depreciation - occupancy, furniture & equipment ................          92          40          168          80
Other ..........................................................         313         225          630         403
                                                                     -------     -------      -------     -------
                  Total non-interest expense ...................         871         636        1,680       1,125
                                                                     -------     -------      -------     -------

                  Net Income (loss) ............................     $   139     $  (337)     $   204     $  (543)
                                                                     -------     =======      =======     =======


Net income (loss) - basic ......................................     $  0.08     $ (0.25)     $  0.11     $ (0.41)
Net income (loss) - diluted ....................................     $  0.08     $ (0.25)     $  0.11     $ (0.41)


Basic ..........................................................       1,833       1,330        1,838       1,330
Diluted.........................................................       1,862       1,330       1,868        1,330
</TABLE>
     See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
                           COMMUNITY BANCORP OF NEW JERSEY
          CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY


                                              Common      Accumulated   Stockholders'
                                               Stock        Deficit       Equity
                                              -------      -------       -------
                                                 (Dollars in thousands)
<S>                                           <C>          <C>           <C>
Balance December 31, 1998 ..............      $18,994      $(1,605)      $17,389

Issuance of common stock, net of
           offering expenses ...........        1,014         --           1,014

Net Income .............................         --            204           204
                                              -------      -------       -------

Balance, June 30, 1999 (Unaudited) .....      $20,008      $(1,402)      $18,606
                                              =======      =======       =======

</TABLE>

     See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                           COMMUNITY BANCORP OF NEW JERSEY
                             CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

                                                                                            Six Months Ended June 30,
                                                                                            -------------------------
                                                                                                1999           1998
                                                                                              --------      --------
                                                                                                (Dollars in thousands)

<S>                                                                                           <C>           <C>
Cash flows from operating activities:
           Net income (loss) ............................................................     $    204      $   (543)
           Adjustments to reconcile net income (loss) to net
                   cash provided by (used in) operating activities:
                            Depreciation and amortization ...............................          168            80
                            Provision for loan losses ...................................          222           332
                            Accretion of investment discount ............................           (1)         --
                            Increase in accrued interest receivable .....................         (137)          (34)
                            Increase in other assets ....................................         (112)          (96)
                            Increase in accrued interest payable ........................           25            21
                            Increase in other liabilities ...............................          125           149
                                                                                              --------      --------

                                      Net cash provided by (used in) operating activities          494           (91)
                                                                                              --------      --------

Cash flows from investing activities:
           Purchases of investment securities held-to-maturity ..........................       (9,995)         --
           Proceeds from maturities and calls of investment securities ..................        6,500         5,500
           Net increase in loans made to customers ......................................      (17,595)      (13,843)
           Purchases of premises and equipment ..........................................       (1,036)         (385)
                                                                                              --------      --------

                                      Net cash used in investing activities .............      (22,126)       (8,728)
                                                                                              --------      --------

Cash flows from financing activities:
           Net increase in demand deposits and savings accounts .........................        9,083        15,344
           Net increase in certificates of deposit ......................................        7,457           965
           Net increase in short-term borrowings ........................................        3,000          --
           Net proceeds from common stock issued ........................................        1,014          --
                                                                                              --------      --------

                                      Net cash provided by financing activities .........       20,554        16,309
                                                                                              --------      --------

Net (decrease) increase in cash and cash equivalents ....................................       (1,078)        7,490
Cash and cash equivalents as of beginning of year .......................................       28,566         9,076
                                                                                              --------      --------

Cash and cash equivalents as of end of period ...........................................     $ 27,488      $ 16,566
                                                                                              --------      ========


Supplemental disclosures of cash flow information:
           Cash paid during the period for interest .....................................     $    975      $    463

</TABLE>
     See accompanying notes to consolidated condensed financial statements.
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)


NOTE A - BASIS OF PRESENTATION

The  consolidated  condensed  financial  statements  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, 1998.
The  results  for the three  months and six months  ended June 30,  1999 are not
necessarily  indicative  of the results  that may be expected for the year ended
December 31, 1999.

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

NOTE B - INVESTMENT SECURITIES

The Company classifies its investments in accordance with Statement of Financial
Accounting  Standards No. 115,  "Accounting for Certain  Investments in Debt and
Equity  Securities," ("SFAS 115"). SFAS 115 requires that an enterprise classify
its  investments  in debt  securities  as  either  securities  held to  maturity
(carrying amount equals amortized cost), securities available for sale (carrying
amount equals  estimated fair value;  unrealized  gains and losses recorded in a
separate component of stockholder's  equity, net of taxes) or trading securities
(carrying  amount  equals  estimated  fair  value;  unrealized  gains and losses
included in the determination of net income).

Any  security  which  is a U.S.  Government  security,  U.S.  Government  agency
security,  an agency  mortgage-backed  security,  or an obligation of a state or
political subdivision may be placed in the held-to-maturity category if acquired
with the intent and ability to maintain  the  security  in the  portfolio  until
maturity.  Premiums and discounts on these  securities are amortized or accreted
on a basis that  approximates  the effective  yield method.  Realized  gains and
losses  from the sale of  securities  available  for  sale are  determined  on a
specific identification cost basis.
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Continued

Management  determines the appropriate  classification of securities at the time
of  purchase.  At June 30, 1999 and  December  31,  1998,  all of the  Company's
investment  securities were classified as held to maturity. At June 30, 1999 and
December 31, 1998, no  investment  securities  were  classified as available for
sale or trading 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,
1999 and December 31, 1998 (Dollars in thousands).
<TABLE>
<CAPTION>
                                                                              June 30, 1999 (Unaudited)
                                                              --------------------------------------------------------
                                                                               Gross           Gross
                                                              Amortized    Unrealized        Unrealized         Fair
                                                                 Cost          Gains           Losses          Value
                                                               -------        -------         -------         -------
<S>                                                            <C>            <C>             <C>             <C>
Securities held to maturity:
           U.S. Government and agency securities ......        $ 8,995        $  --           $  (133)        $ 8,862
           Other securities ...........................            525           --              --               525
                                                               -------        -------         -------         -------

                                                               $ 9,520        $  --           $  (133)        $ 9,387
                                                               =======        =======         =======         =======
<CAPTION>

                                                                                  December 31, 1998
                                                              --------------------------------------------------------
                                                                               Gross           Gross
                                                              Amortized    Unrealized        Unrealized         Fair
                                                                 Cost          Gains           Losses          Value
                                                               -------        -------         -------         -------
<S>                                                            <C>            <C>             <C>             <C>
Securities held to maturity:
           U.S. Government and agency securities ......        $ 5,500        $  --           $   (21)        $ 5,479
           Other securities ...........................            525           --                --             525
                                                               -------        -------         -------         -------

                                                               $ 6,025        $  --           $   (21)        $ 6,004
                                                               =======        =======         =======         =======

</TABLE>
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Continued

The  following  table sets forth as of June 30, 1999 and  December  31, 1998 the
maturity   distribution  of  the  Company's  investment  portfolio  (Dollars  in
thousands).
<TABLE>
<CAPTION>
                                                          Investment Securities Held-To-Maturity
                                             -----------------------------------------------------------
                                                   June 30, 1999
                                                     (Unaudited)                   December 31, 1998
                                             -------------------------         -------------------------
                                              Amortized          Fair          Amortized           Fair
                                                Cost            Value            Cost             Value
                                               ------           ------           ------           ------
<S>                                            <C>              <C>              <C>              <C>
Due in one year or less ...................    $ --             $ --             $ --             $ --
Due after one year through five years .....     8,995            8,862            5,500            5,479
Due after five years through ten years ....       500              500              500              500
Due after ten years .......................        25               25               25               25
                                               ------           ------           ------           ------

                                               $9,520           $9,387           $6,025           $6,004
                                               ======           ======           ======           ======
</TABLE>

           Securities  with a carrying  value of $1,300,000 at June 30, 1999 and
           $500,000 at December 31, 1998 were pledged to secure  public funds on
           deposit and for other purposes as required or permitted by law.
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Continued

NOTE C - LOANS RECEIVABLE and ALLOWANCE FOR LOAN LOSSES

The following  table  summarizes the components of the loan portfolio as of June
30, 1999 and December 31, 1998 (Dollars in thousands).
<TABLE>
<CAPTION>
                                                Loan Portfolio By Type of Loan
                                    -----------------------------------------------------
                                        June 30, 1999
                                         (Unaudited)                 December 31, 1998
                                    Amount          Percent       Amount         Percent
                                    -------         ------        -------         ------
<S>                                 <C>              <C>          <C>              <C>
Commercial and industrial loans     $11,741          18.57%       $ 8,514          18.66%
Commercial mortgage loans .....      29,103          46.03%        19,413          42.55%
Residential mortgages .........       7,028          11.12%         6,941          15.21%
Construction loans ............       6,779          10.72%         3,582           7.85%
Consumer loans ................       8,347          13.20%         6,376          13.97%
Other loans ...................         224           0.36%           803           1.76%
                                    -------         ------        -------         ------

                                    $63,222         100.00%       $45,629         100.00%
                                    =======         ======        =======         ======
</TABLE>

The following table represents the activity in the allowance for loan losses for
the six month periods  ended June 30, 1999 and 1998 and the year ended  December
31, 1998 (Dollars in thousands).
<TABLE>
<CAPTION>
                                                     Allowance For Loan Losses
                                              -------------------------------------
                                                Six Months Ended
                                                    June 30,            Year Ended
                                                 (Unaudited)           December 31,
                                              ---------------------    ------------
                                                1999          1998         1998
                                              -------       -------      -------
<S>                                           <C>           <C>          <C>
Balance - beginning of period ...........     $   914       $   250      $   250
Charge-offs .............................          (2)         --           --
Recoveries ..............................        --            --           --
                                              -------       -------      -------
Net (charge-offs) recoveries ............          (2)         --           --
Provision for loan losses ...............         222           332          664
                                              -------       -------      -------

Balance - end of period .................     $ 1,134       $   582      $   914
                                              =======       =======      =======
Balance of Allowance at period-end as a %
    of loans at period-end ..............        1.79%         2.00%        2.00%
                                              =======       =======      =======

</TABLE>
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Continued

NOTE D - RECLASSIFICATIONS

Certain  amounts in the  financial  statements  presented for prior periods have
been reclassified to conform with the 1999 presentation.


NOTE E - EARNINGS PER SHARE

Earnings  per common  share are  computed by dividing net income by the weighted
average  number of common shares and common share  equivalents  (when  dilutive)
outstanding  during  each  period  after  giving  retroactive  effect  to  stock
dividends  declared.  Basic EPS  excludes  dilution  and is computed by dividing
income available to common stockholders by the weighted-average number of common
shares  outstanding for the period.  Diluted EPS reflects the potential dilution
that could occur if  securities  or other  contracts  to issue common stock were
exercised or  converted  into common stock or resulted in the issuance of common
stock  that  then  shared in the  earnings  of the  Company.  The  common  share
equivalents  of options in the  computation  of  diluted  earnings  per share is
computed  utilizing the Treasury Stock method. For purposes of this computation,
the  average  market  price of common  stock  during  each  three-month  quarter
included in the period being reported upon, is used, when dilutive.

NOTE F -  SUBSEQUENT EVENTS

Effective  July 1,  1999 the  Community  Bancorp  of New  Jersey  completed  its
reorganization as the holding company for the Community Bank of New Jersey.  The
Holding Company  completed a share for share exchange of its no par value common
stock for the Bank's  $5.00 par value common  stock,  by which the Bank became a
wholly owned  subsidiary of the Holding Company.  Accordingly,  the consolidated
financial  information of the Holding  Company is presented  herwith,  and prior
periods have been restated to reflect this reorganization.

On July 9, 1999 the Company announced that its Board of Directors  approved a 3%
stock dividend  payable August 2, 1999 to  shareholders of record as of July 19,
1999.  Weighted  average  shares  outstanding  and  earnings per share have been
retroactively adjusted to reflect the stock dividend.

On April 22, 1999 the  shareholders of Community Bank of New Jersey approved the
Plan of  Acquisition,  pursuant  to which  the Bank was  acquired  by  Community
Bancorp  of  New  Jersey  effective  July  1,  1999.  In  connection  with  this
transaction,  a  shareholder  elected  to  exercise  its  dissenters  rights  of
appraisal.  On  August  6,  1999  the Bank and  this  shareholder  negotiated  a
settlement pursuant to which the shareholder relinquished all beneficially owned
equity  instruments,  consisting of 22,416 common shares and 38,700  exercisable
options,  for fair value of $673,860.  Weighted average shares  outstanding were
adjusted  as of the  effective  date of dissent  (April 22,  1999).  Capital and
outstanding  shares were reduced on the closing date of the transaction  (August
6, 1999).


NOTE G - RECENTLY ISSUED ACCOUNTING STANDARDS

Accounting for  Derivative  Instruments  and Hedging  Activity In June 1998, the
FASB issued SFAS No. 133,  "Accounting  for Derivative  Instruments  and Hedging
Activity".  SFAS No. 133  establishes  accounting  and  reporting  standards for
derivative  instruments,  including certain derivative  instruments  imbedded in
other  contracts,  and for  hedging  activities.  It  requires  that  an  entity
recognize all  derivatives  as either assets or  liabilities in the statement of
financial  position  and measure  those  instruments  at fair value.  If certain
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Continued

conditions are met, a derivative may be specifically  designated as a hedge. The
accounting  for  changes in the fair value of a  derivative  (gains and  losses)
depends on the intended use of the  derivative and resulting  designation.  SFAS
No. 133 is effective  for all fiscal  quarters of fiscal years  beginning  after
June 15, 1999. Earlier  application is permitted only as of the beginning of any
fiscal quarter.  Subsequent to SFAS No. 133, the FASB issued SFAS No. 137, which
amended  the  effective  date of SFAS No. 133 to be all fiscal  quarters  of all
fiscal years  beginning after June 15, 2000. The adoption of SFAS No. 133 is not
anticipated to have a material  impact on the Company's  consolidated  financial
position or results of operations.
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY

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


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, 1999  increased by $20.9 million,  or 25.2%,  to $103.7
million  compared to $82.8 million at December 31, 1998.  Total assets  averaged
$87.2  million  in the first  six  months of 1999,  a $35.1  million,  or 67.4%,
increase  from the 1998  full  year  average  of $52.1  million.  Average  loans
increased  $24.6 million,  or 81.7%, to $54.7 million in the first six months of
1999,  from the 1998 full year  average  of $30.1  million.  Average  investment
securities  increased by $6.9  million,  or 130.2%,  to $12.2  million;  average
Federal funds sold decreased by $1.4 million,  or 11.5%,  to $13.6 million;  the
average  of all other  assets  increased  by $2.9  million,  or  59.2%,  to $7.8
million; and the loan loss reserve average increased $453 thousand, or 81.0%, to
$1.0 million  during the first six months of 1999 compared to the full year 1998
averages.

These increases in average assets were funded  primarily by a $27.8 million,  or
68.8%,  increase in average deposits, as the first half of 1999 average deposits
increased to $68.2 million from the full year 1998 average of $40.4 million. The
increases  in average  assets  were  further  funded by an  increase  in average
stockholders'  equity  of $7.4  million,  or 67.3%,  as the  first  half of 1999
average  stockholders' equity increased to $18.4 million from the full year 1998
average of $11.0 million. The increase in average  stockholders' equity resulted
from net proceeds  received from the Bank's  secondary  public  offering of $6.6
million on  December  14,  1998 and $1.0  million on  January  11,  1999 and was
further  effected by a net operating loss amounting to $610 thousand during 1998
and net operating income of $204 thousand during the first six months of 1999.


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

Total  loans at June 30,  1999 were $63.2  million,  a 38.6%,  or $17.6  million
increase from December 31, 1998. 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 $9.7 million in commercial  mortgage
loans,  $3.2  million  in  commercial  and  industrial  loans,  $3.2  million in
construction  loans, and $2.0 million in consumer loans,  partially off-set by a
reduction of $492 thousand in residential mortgages and other loans.

The 38.6%  increase in loans at June 30, 1999  compared to December  31, 1998 is
partially  attributable to greater penetration of the Company's  marketplace and
an improvement in the general  economic  environment in New Jersey.  The Company
opened its second office in downtown  Freehold,  New Jersey,  in September 1997,
its third office in Howell,  New Jersey,  in November 1998 and its fourth office
<PAGE>
in Matawan,  New Jersey, in February 1999. In addition,  the Company anticipates
opening its newest branch in Manalapan, New Jersey, during the fourth quarter of
1999.  Management  believes that the  maturation of these branch  locations will
continue to provide the Company  with lending  opportunities  as well as funding
sources for the loans.

The  Company's  loans are  primarily to businesses  and  individuals  located in
Monmouth,  Middlesex,  and Ocean Counties, New Jersey.  Management believes that
its strategy of customer  service,  competitive rate  structures,  and selective
marketing  will  continue to enable the  Company to gain  market  entry to local
loans.  Bank mergers have also  contributed to the Company's  efforts to attract
borrowers. Management intends to continue to pursue quality loans in all lending
categories within the Company's market area.


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

The allowance for loan losses was $1.1 million, or 1.79% of total loans, at June
30, 1999  compared to $914  thousand,  or 2.00% of total loans,  at December 31,
1998.  At June 30, 1999 and December 31, 1998 the Company had no  non-performing
loans and no past due loans at December 31, 1998.

Management  attempts 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
management  feels deserve  recognition in establishing  an appropriate  reserve.
These  estimates are reviewed at least  quarterly,  and, as  adjustments  become
necessary,  they are  realized  in the  periods  in  which  they  become  known.
Additions to the  allowance  are made by  provisions  charged to expense and the
allowance is reduced by net charge-offs (i.e. - loans judged to be uncollectible
and charged  against the reserve,  less any recoveries on such loans).  Although
management attempts to maintain the allowance at a level deemed adequate, future
additions  to the  allowance  may be  necessary  based  upon  changes  in market
conditions.  In addition,  various regulatory  agencies  periodically review the
Company's  allowance for loan losses.  These agencies may require  management 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 $3.5  million,  or 58.0%,  at June 30, 1999
compared to December 31, 1998. During the period ended June 30, 1999 the Company
utilized its liquidity in excess of loan demand to fund additional  purchases of
investment  securities  held-to-maturity  amounting to $10.0 million,  which was
partially off-set by maturities and calls amounting to $6.5 million.
<PAGE>
Management  determines the appropriate  classification of securities at the time
of purchase.  At June 30, 1999 all  investment  securities  were  classified  as
held-to-maturity.  The  Company  had  no  investment  securities  classified  as
available-for-sale  or  as  trading  securities.  The  investment  portfolio  is
comprised  primarily of U.S. Government and agency securities with maturities of
three  years or less  and with  call  features  of one year or less.  Management
currently  maintains 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 the Company's primary source of funds.  Total deposits increased by
$16.6  million,  or 25.5%,  to $81.6  million at June 30, 1999 compared to $65.0
million at December  31, 1998.  The increase in deposits  during this period was
primarily due to the Company's greater  penetration of its marketplace.  In late
1998 and early 1999, the Company opened two new offices,  which have contributed
to its deposit growth.

Average total deposits  increased by $27.8 million,  or 68.8%,  to $68.2 million
for the six months ended June 30,1999  compared to the 1998 full year average of
$40.4 million. Changes in the deposit mix for the six months ended June 30, 1999
compared  to the 1998  full year  average  include  a $11.9  million,  or 59.9%,
increase in savings deposits; a $4.6 million, or 58.6%,  increase in NOW account
deposits; a $4.1 million, or 132.7%,  increase in time deposits; a $1.1 million,
or 75.8%,  increase in money  market  deposits;  and a $6.1  million,  or 75.2%,
increase in non-interest bearing demand deposits.

The Company does not actively  solicit  short-term  certificates  of deposits of
$100 thousand or more because of the liquidity risks posed by such deposits.  At
June 30, 1999  certificates of deposit of $100 thousand or more amounted to $3.4
million.

The Company  emphasizes  relationships  with  commercial  customers and seeks to
obtain transactional accounts, which are frequently kept in non-interest bearing
deposits. The Company also emphasizes the origination of savings deposits, which
amounted to $35.0  million at June 30, 1999,  by offering  rates higher than our
peer group institutions. The 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.  Management  may modify the  interest  rate paid  without
notice,  and the  depositor  may  withdraw  their  funds on demand.  The Company
markets this product as an alternative to time deposits and management  believes
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 which the Company serves. As of June 30, 1999 the Company did not have any
brokered deposits and neither solicited nor offered premiums for such deposits.


Liquidity
---------

Liquidity is a measurement  of the Company's  ability to meet present and future
funding obligations and commitments. The Company adjusts its liquidity levels in
order to meet funding needs for deposit outflows,  repayment of borrowings, when
applicable,  and the funding of loan  commitments.  The Company also adjusts its

<PAGE>
liquidity level as appropriate to meet its 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,  net interest
income and fee income. Liquid assets (consisting of cash and Federal funds sold)
comprised  26.5% and 34.5% of the  Company's  total  assets at June 30, 1999 and
December 31, 1998, respectively.

As shown in the Consolidated  Condensed  Statements of Cash Flows, the Company's
primary source of funds at June 30, 1999 was increased deposits, and to a lesser
extent net proceeds from common stock issued, proceeds from maturities and calls
of investment securities, and short-term borrowings.  Deposit increases amounted
to $16.5  million for the six months ended June 30, 1999 while net proceeds from
common stock issued  amounted to $1.0 million and proceeds from  maturities  and
calls of investment  securities amounted to $6.5 million.  Short-term borrowings
of $3.0  million at June 30, 1999 matured and were paid off  subsequent  to June
30, 1999. During 1999, the Company utilized deposit growth and its liquid assets
as funding  sources for  increased  loans made to  customers  amounting to $17.6
million,  securities  purchases  amounting  to $10.0  million and  purchases  of
premises and equipment  used primarily for branch  expansion,  amounting to $1.0
million as well as for asset/liability management purposes.

The  Company  also has  several  secondary  sources  of  liquidity.  Many of the
Company's  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,  the  Company  has lines of credit in the amount of $4.0  million for the
purchase of Federal funds with another financial  institution.  At June 30, 1999
the Company  utilized  $3.0  million of the lines of credit for  asset/liability
management purposes.

The Company believes that its liquidity  position is sufficient to provide funds
to meet future loan demand or the possible  outflow of deposits,  in addition to
being able to adapt to changing interest rate conditions.


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

Stockholder's  equity  increased  by $1.2  million at June 30, 1999  compared to
December 31, 1998.  The changes in  stockholders'  equity  during the six months
ended  June 30,  1999 were  comprised  of an  increase  from net  income of $204
thousand  and an  increase of $1.0  million in net  proceeds  from common  stock
issued.

The Company's  regulators,  the Board of Governors of the Federal Reserve System
(which regulates bank holding companies),  and the Bank's Federal Regulator, the
Federal Deposit Insurance  Corporation,  have issued guidelines  classifying and
defining  capital  into the  following  components:  (1) Tier I  Capital,  which
includes tangible  stockholders'  equity for common stock and certain qualifying
preferred   stock,   and   excludes   net   unrealized   gains  or   losses   on
available-for-sale  securities  and  deferred  tax assets that are  dependent on
projected  taxable income  greater than one year in the future,  and (2) Tier II
Capital  (Total  Capital),  which  includes a portion of the  allowance for loan
losses and certain  qualifying  long-term debt and preferred stock that does not
qualify for Tier I Capital.  The risk-based capital guidelines require financial
<PAGE>
institutions  to apply  certain  risk factors  ranging from 0% to 100%,  against
assets to determine total risk-based assets. The minimum Tier I and the combined
Tier I and Tier II capital  to  risk-weighted  assets  ratios are 4.0% and 8.0%,
respectively.  The  Federal  Deposit  Insurance  Corporation  also  has  adopted
regulations  which  supplement  the risk-based  capital  guidelines to include a
minimum  leverage  ratio of Tier I Capital  to total  assets of 3.0%.  For those
institutions with higher levels of risk or that are experiencing or anticipating
significant growth, the minimum leverage ratio will be proportionately increased
by 100 to 200 basis points.

The following  table  summarizes the risk-based and leverage  capital ratios for
the Company and the Bank at June 30, 1999,  as well as the  regulatory  required
minimum and "well capitalized" capital ratios:
<TABLE>
<CAPTION>
                                         June 30, 1999                            Regulatory Requirement
                                     ---------------------              ---------------------------------------
                                     Company        Bank                 Minimum            "Well Capitalized"
                                     -------        ----                 -------            ------------------
<S>                                  <C>            <C>                      <C>                         <C>
Risk-based Capital:
Tier I capital ratio...........      27.06%         27.06%                   4.00%                       6.00%
Total capital ratio...........       28.32%         28.32%                   8.00%                      10.00%

Leverage ratio..................     20.04%         20.04%             3.00%-5.00%            5.00% or greater

</TABLE>

In addition,  pursuant to the order of the New Jersey  Department of Banking and
Insurance  approving the Bank's charter,  for its first five years of operation,
the Bank is required  to maintain a ratio of equity to total  assets of at least
10.00%.  As of June 30, 1999 the Bank's ratio of equity  capital to total assets
was 17.95%.

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

The  Company's  financial  statements  and notes  thereto,  presented  elsewhere
herein,  have been prepared in accordance  with  generally  accepted  accounting
principles,  which require the  measurement of financial  position and operating
results in terms of historical  dollars  without  considering  the change in the
relative purchasing power of money over time and due to inflation. The impact of
inflation is reflected in the increased cost of the Company's operations. Unlike
most industrial  companies,  nearly all of the Company's  assets and liabilities
are monetary. As a result, interest rates have a greater impact on the Company's
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.
<PAGE>
Year 2000
---------

Rapid and accurate data  processing  is essential to the  Company's  operations.
Many  computer  programs that can only  distinguish  the final two digits of the
year entered (a common programing  practice in prior years) are expected to read
entries for the year 2000 as the year 1900 or as zero and incorrectly attempt to
compute  payment,  interest,  delinquency,  and other data. The Company has been
evaluating both information  technology  (computer systems) and  non-information
technology  systems  (e.g.,  vault  timer,  electronic  door lock,  and heating,
ventilation,  and air conditioning control). The Company has examined all of its
non-information  technology  systems and has either received  certifications  of
Year  2000  compliance  for  systems  controlled  by third  party  providers  or
determined that the systems should not be impacted by the Year 2000. The Company
expects  to further  test the  systems  it  controls  and  receive  third  party
certifications,  when appropriate, that these systems will continue to function.
The Company  does not expect any material  costs to address its  non-information
technology  systems and has not had any material  costs to date.  With regard to
the Company's  information  technology systems, the Company also does not expect
any  future  material  costs  and has not had any  material  costs to date.  The
Company's data processing is provided by a single service bureau,  NCR. Although
NCR is not Year 2000 compliant, it has advised the Company that it expects to be
compliant  before  the year 2000.  The  Company is  monitoring  NCR to  evaluate
whether the Company's  data  processing  system will fail.  The Company is being
provided with periodic  updates on the status of testing and upgrades being made
by NCR. If this problem is not solved by the year 2000, the Company would likely
experience significant delays, mistakes, or failures. These delays, mistakes, or
failures could have a significant impact on the Company'ss  financial  condition
and results of operations.
<PAGE>
RESULTS OF OPERATIONS for the six months ended June 30, 1999 compared to the six
months ended June 30, 1998


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

The Company earned $204  thousand,  or $0.11 net income per share on a basic and
diluted basis, for the six months ended June 30, 1999, compared to a net loss of
$543 thousand,  or $0.41 for both basic and diluted net loss per share,  for the
six months ended June 30, 1998.  The increase in net income was primarily due to
a $1.1 million, or 129.1%,  increase in net interest income, a $79 thousand,  or
151.9%,  increase in non-interest income and a $110 thousand, or 33.1%, decrease
in the provision for loan losses;  these items were  partially  offset by a $555
thousand,  or  49.3%,  increase  in  non-interest  expenses.  In  addition,  the
Company's  net income for the six months ended June 30, 1999 was  benefitted  by
the   application  of  net  operating  loss   carryforwards   to  eliminate  tax
liabilities.

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

Net interest income increased $1.1 million,  or 129.1%,  to $2.0 million for the
six  months  ended  June 30,  1999 from $862  thousand  for the same  prior year
period.  The  increase  in net  interest  income  was due  primarily  to  volume
increases as average  interest  earning assets,  net of average interest bearing
liabilities,  increased by $12.6 million,  or 91.1%, for the first six months of
1999 compared to the same prior year period.  Also  contributing to the increase
in net interest income was the decrease in the average cost of interest  bearing
liabilities  to 3.73% during the first half of 1999 compared to 4.29% during the
same prior year  quarter.  The  reduction  in the average  rate paid on deposits
resulted from  management's  adjustment of the Company's  rate structure to more
closely reflect the current economic  environment and  competition.  The Company
held no tax-exempt investments during these comparable periods.

The Company's net interest  margin  (annualized  net interest  income divided by
average interest earning assets) for the six months ended June 30, 1999 improved
to 4.95% from 4.74% for the same prior year quarter.  The improvement in the net
interest  margin  resulted  primarily  from the  decrease  in the rates  paid on
deposits,  as the yield earned on interest earning assets remained consistent at
7.46% for the first half of 1999  compared  to 7.40% for the first half of 1998,
despite falling market rates of interest.

Interest income increased $1.6 million,  or 121.0%,  to $3.0 million for the six
months ended June 30, 1999 compared to $1.3 million for the same period in 1998.
The  improvement  in interest  income was primarily  due to volume  increases in
income from the loan  portfolio of $1.3  million,  volume  related  increases in
income of $218  thousand  in the  investment  securities  portfolio,  and volume
related  increases  in income of $140  thousand  in  Federal  funds  sold as the
Company's  growth  resulted in an increase  in average  earning  assets of $44.0
million,  or 121.0%,  to $80.4  million  for the six months  ended June 30, 1999
compared to $36.4 million for the same period in 1998.

The $1.7 million volume related increase in total interest income was reduced by
$52 thousand from rate related  reductions as interest  rates on new  investment
securities  purchases  and  investments  in Federal funds sold repriced to lower
current yields.
<PAGE>
Interest  expense for the first six months of 1999 increased  $516 thousand,  or
106.6%, compared to the same prior year period. The increase in interest expense
was due primarily to net volume  increases in interest  bearing  deposits  which
accounted for $668 thousand of the expense increase and was offset by a decrease
of $152 thousand attributable to net rate related decreases.  The volume related
increases in interest  bearing  liabilities  and expense rate  decreases are the
result of marketing and pricing  decisions made by management in response to the
need for cost effective sources of funds,  primarily to provide for loan growth.
These  decisions  resulted  in the  reduction  in the cost of  interest  bearing
liabilities  to 3.73% for the six months  ended June 30, 1999  compared to 4.29%
for the six months ended June 30, 1998.


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, 1999 compared to
the quarter  ended June 30, 1998 and the six months ended June 30, 1999 compared
to the same prior year period.


<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED AVERAGE BALANCE SHEETS
With Resultant Interest And Average Rates

                                                                               Three Months Ended
                                                                                 June 30, 1999
                                                                      ---------------------------------------
                                                                       Average      Interest         Average
                                                                       Balance    Income/Expense       Rate
                                                                       -------    --------------       ----
<S>                                                                   <C>            <C>             <C>
ASSETS
Interest Earning Assets:
            Federal Funds Sold ..................................     $ 15,214       $    180          4.75%
            Investment Securities ...............................       10,389            144          5.48%
            Loans (net of unearned income) (1) (2) ..............       60,049          1,269          8.48%
                                                                      --------       --------

                           Total Interest Earning Assets ........       85,652          1,593          7.46%
                                                                      --------       --------

Non-Interest Earning Assets:
            Loan Loss Reserve ...................................       (1,066)
            All Other Assets ....................................        8,239
                                                                      --------
                           Total Assets .........................     $ 92,825
                                                                      ========

LIABILITIES & STOCKHOLDERS' EQUITY Interest-Bearing Liabilities:
            NOW Deposits ........................................     $ 13,094             54          1.65%
            Savings Deposits ....................................       33,943            354          4.18%
            Money Market Deposits ...............................        2,707             26          3.79%
            Time Deposits .......................................        8,820            111          5.05%
            Short-term Borrowings ...............................           34              1          5.93%
                                                                      --------       --------

                           Total Interest Bearing Liabilities ...       58,598            545          3.73%
                                                                      --------       --------
Non-Interest Bearing Liabilities:
            Demand Deposits .....................................       15,266
            Other Liabilities ...................................          558
                                                                      --------

                           Total Non-Interest Bearing Liabilities       15,824
                                                                      --------

Stockholders' Equity ............................................       18,403
                                                                      --------
                            Total Liabilities and Stockholders'
                           Equity ...............................     $ 92,825
                                                                      ========

NET INTEREST INCOME .............................................                    $  1,048
                                                                                     ========
NET INTEREST SPREAD (3) .........................................                                      3.73%

NET INTEREST MARGIN (4) .........................................                                      4.91%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                                June 30, 1998
                                                                      -----------------------------------
                                                                       Average      Interest      Average
                                                                        Balance   Income/Expense    Rate
                                                                        -------   --------------    ----
<S>                                                                   <C>          <C>            <C>
ASSETS
Interest Earning Assets:
            Federal Funds Sold ..................................     $  9,750     $    135        5.54%
            Investment Securities ...............................        3,199           47        5.88%
            Loans (net of unearned income) (1) (2) ..............       26,707          552        8.27%
                                                                      --------     --------
                           Total Interest Earning Assets ........       39,656          734        7.40%
                                                                      --------     --------
Non-Interest Earning Assets:
            Loan Loss Reserve ...................................         (433)
            All Other Assets ....................................        4,448
                                                                      --------
                           Total Assets .........................     $ 43,671
                                                                      ========

LIABILITIES & STOCKHOLDERS' EQUITY Interest-Bearing Liabilities:
            NOW Deposits ........................................     $  6,161           36        2.34%
            Savings Deposits ....................................       16,119          198        4.91%
            Money Market Deposits ...............................          637            5        3.14%
            Time Deposits .......................................        2,233           31        5.55%
            Short-term Borrowings ...............................         --           --          0.00%
                                                                      --------     --------

                           Total Interest Bearing Liabilities ...       25,150          270        4.29%
                                                                      --------     --------
Non-Interest Bearing Liabilities:
            Demand Deposits .....................................        7,125
            Other Liabilities ...................................          312
                                                                      --------
                           Total Non-Interest Bearing Liabilities        7,437
                                                                      --------

Stockholders' Equity ............................................       11,084
                                                                      --------
                           Total Liabilities and Stockholders'
                           Equity ...............................     $ 43,671
                                                                      ========

NET INTEREST INCOME .............................................     $    464
                                                                      ========
NET INTEREST SPREAD (3) .........................................                                  3.11%

NET INTEREST MARGIN (4) .........................................                                  4.68%
</TABLE>
    (1)     Included in interest income on loans are loan fees.
    (2)     Includes non-performing loans.
    (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.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED AVERAGE BALANCE SHEETS
With Resultant Interest And Average Rates

                                                                                Six Months Ended
                                                                                  June 30, 1999
                                                                      ---------------------------------------
                                                                       Average       Interest         Average
                                                                       Balance     Income/Expense      Rate
                                                                       -------     --------------      ----
                                                                        (In thousands, except percentages)
<S>                                                                   <C>            <C>               <C>
ASSETS
Interest Earning Assets:
            Federal Funds Sold ..................................     $ 13,555       $    318          4.73%
            Investment Securities ...............................       12,175            337          5.51%
            Loans (net of unearned income) (1) (2) ..............       54,665          2,320          8.56%
                                                                      --------       --------
                           Total Interest Earning Assets ........       80,395          2,975          7.46%
                                                                      --------       --------
Non-Interest Earning Assets:
            Loan Loss Reserve ...................................       (1,012)
            All Other Assets ....................................        7,798
                                                                      --------
                           Total Assets .........................     $ 87,181
                                                                      ========

LIABILITIES & STOCKHOLDERS' EQUITY Interest-Bearing Liabilities:
            NOW Deposits ........................................     $ 12,453            105          1.70%
            Savings Deposits ....................................       31,780            660          4.19%
            Money Market Deposits ...............................        2,672             50          3.81%
            Time Deposits .......................................        7,110            184          5.22%
            Short-term Borrowings ...............................           17              1          5.93%
                                                                      --------       --------
                           Total Interest Bearing Liabilities ...       54,032          1,000          3.73%
                                                                      --------       --------
Non-Interest Bearing Liabilities:
            Demand Deposits .....................................       14,213
            Other Liabilities ...................................          540
                                                                      --------

                           Total Non-Interest Bearing Liabilities       14,753
                                                                      --------

Stockholders' Equity ............................................       18,396
                                                                      --------
                           Total Liabilities and Stockholders'
                           Equity ...............................     $ 87,181
                                                                      ========

NET INTEREST INCOME .............................................                    $  1,975
                                                                                     ========
NET INTEREST SPREAD (3) .........................................                                     3.73%

NET INTEREST MARGIN (4) .........................................                                     4.95%

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                Six Months Ended
                                                                                 June 30, 1998
                                                                      -----------------------------------
                                                                        Average     Interest      Average
                                                                        Balance   Income/Expense    Rate
                                                                        -------   --------------    ----
<S>                                                                   <C>          <C>             <C>
ASSETS
Interest Earning Assets:
            Federal Funds Sold ..................................     $  8,418     $    231        5.49%
            Investment Securities ...............................        5,190          163        6.29%
            Loans (net of unearned income) (1) (2) ..............       22,766          952        8.36%
                                                                      --------     --------
                           Total Interest Earning Assets ........       36,374        1,346        7.40%
                                                                      --------     --------
Non-Interest Earning Assets:
            Loan Loss Reserve ...................................         (365)
            All Other Assets ....................................        4,034
                                                                      --------
                           Total Assets .........................     $ 40,043
                                                                      ========

LIABILITIES & STOCKHOLDERS' EQUITY Interest-Bearing Liabilities:
            NOW Deposits ........................................     $  5,519           68        2.45%
            Savings Deposits ....................................       14,548          356        4.90%
            Money Market Deposits ...............................          565            8        2.80%
            Time Deposits .......................................        1,946           52        5.33%
            Short-term Borrowings ...............................         --           --          0.00%
                                                                      --------      -------
                           Total Interest Bearing Liabilities ...       22,578          484        4.29%
                                                                      --------      -------
Non-Interest Bearing Liabilities:
            Demand Deposits .....................................        4,979
            Other Liabilities ...................................          271
                                                                      --------

                           Total Non-Interest Bearing Liabilities        5,250
                                                                      --------

Stockholders' Equity ............................................       11,316
                                                                      --------
                           Total Liabilities and Stockholders'
                           Equity ...............................     $ 39,144
                                                                      ========

NET INTEREST INCOME .............................................                   $   862
                                                                                    =======
NET INTEREST SPREAD (3) .........................................                                  3.11%

NET INTEREST MARGIN (4) .........................................                                  4.74%
</TABLE>
    (1)     Included in interest income on loans are loan fees.
    (2)     Includes non-performing loans.
    (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.
<PAGE>
<TABLE>
<CAPTION>
ANALYSIS OF CHANGES IN CONSOLIDATED NET INTEREST INCOME

                                                    Three Months Ended June 30, 1999         Six Months Ended June 30, 1999
                                                     Compared to Three Months Ended           Compared to Six Months Ended
                                                              June 30, 1998                            June 30, 1998
                                                    --------------------------------        -------------------------------
                                                        Increase (Decrease) Due To              Increase (Decrease) Due To
                                                    --------------------------------        -------------------------------
                                                      Volume       Rate        Net            Volume       Rate         Net
                                                      ------       ----        ---            ------       ----         ---
                                                            (In thousands)                             (In thousands)
Interest Earned On:
<S>                                                   <C>        <C>         <C>               <C>        <C>         <C>
            Federal Funds Sold ..................     $   75     $  (30)     $   45            $  140     $  (53)     $   87
            Investment Securities ...............        105         (8)         97               218        (44)        174
            Loans (net of unearned income) ......        687         30         717             1,323         45       1,368
                                                      ------     ------      ------            ------     ------      ------

                           Total Interest Income         867         (8)        859             1,681        (52)      1,629
                                                      ------     ------      ------            ------     ------      ------

Interest Paid On:
            NOW Deposits ........................         40        (22)         18                84        (47)         37
            Savings Deposits ....................        218        (62)        156               419       (115)        304
            Money Market Deposits ...............         17          4          21                29         14          43
            Time Deposits .......................         91        (11)         80               136         (4)        132
            Short-term Borrowings ...............          1       --             1                 1       --             1
                                                      ------     ------      ------            ------     ------      ------

                           Total Interest Expense        367        (91)        275               669       (152)        516
                                                      ------     ------      ------            ------     ------      ------

                           Net Interest Income ..     $  500     $   83      $  584            $1,013     $  100      $1,113
                                                      ======     ======      ======            ======     ======      ======
</TABLE>
<PAGE>
Provision for Loan Losses
-------------------------

The  provision  for loan losses  decreased  to $222  thousand  for the first six
months of 1999  compared to a provision of $332  thousand for the same period in
1998.  The provision is the result of  management's  review of several  factors,
including  increased  loan  balances  and  management's  assessment  of economic
conditions,  credit  quality and other factors that may have an impact on future
possible losses in the loan  portfolio.  Although the Company had no non-accrual
loans and no past due loans at June 30, 1999, management  established provisions
for loan losses to create an adequate  allowance based on management's  analysis
of the loan portfolio and growth experienced over the periods. The allowance for
loan losses totaled $1.1 million, or 1.79% of total loans, at June 30, 1999.


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

Total  non-interest  income was $131  thousand  for the first six months of 1999
compared to $52  thousand  for the first six months of 1998,  an increase of $79
thousand,  or 151.9%. The increase was attributable to an increase in first half
1999  service fees on deposits of $55 thousand and an increase in other fees and
commissions  of $24 thousand.  The growth in  non-interest  income  reflects the
growth in deposits, which increased to $81.6 million at June 30, 1999, from 39.6
million at June 30, 1998.


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

Total  non-interest  expenses  amounted to $1.7 million for the six months ended
June 30, 1999, an increase of $555 thousand,  or 49.3%, 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 the Company's  growth.  Of this increase,  employment
costs increased $184 thousand,  or 31.2%, and reflected  increases in the number
of  employees  from 21  full-time  equivalents  at June 30, 1998 to 46 full-time
equivalents   at  June  30,  1999.   The  increase  in  personnel  is  primarily
attributable  to the opening of the Howell,  New Jersey  office in November 1998
and the  Matawan,  New  Jersey  office  in  February,  1999 in  addition  to the
acquisition  of  additional  support  personnel  required  due to the  Company's
growth.

Occupancy expenses  increased $56 thousand,  or 107.7%, for the first six months
of 1999  compared  to the same period in 1998.  The  increase  was  attributable
primarily to increased lease expense and increased  maintenance costs due to the
additional branch offices.

Depreciation  expenses  on  leasehold  improvements,  furniture,  and  equipment
increased  $88 thousand,  or 110.0%,  for the first half of 1999 compared to the
first half of 1998 due primarily to depreciation  costs  associated with the new
facilities and on purchases of enhanced computer processing equipment.

Other expenses  increased $227 thousand,  or 56.3%,  for the first six months of
1999 compared to the first six months of 1998. The increase was  attributable to
increased other expenses resulting from the continued growth of the Company,  as
costs of data processing  services paid to the Company's third party  processors
<PAGE>
amounted  to $163  thousand,  an  increase of $56  thousand;  professional  fees
amounted to $94 thousand, an increase of $23 thousand; marketing and advertising
costs  amounted  to $67  thousand,  an  increase  of $28  thousand;  stationery,
supplies  and  printing  costs  amounted  to $104  thousand,  an increase of $38
thousand;  stockholder  costs  amounted  to $54  thousand,  an  increase  of $42
thousand;  and all other expenses amounted to $148 thousand,  an increase of $40
thousand.


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

The Company did not record an income tax provision for the six months ended June
30, 1999. The results for the first half of 1999 were positively affected by the
application  of net operating  loss  carry-forwards  to reduce the Company's tax
liabilities.  At June 30, 1999, the Company had  approximately  $300 thousand in
remaining net operating loss  carry-forwards  to offset future tax  liabilities.
These  carry-forwards  will expire  through 2018.  Additionally,  in view of the
Company's  operating  loss  history  and risks  associated  with its  ability to
generate taxable income in the future,  management has provided a full valuation
allowance on its net deferred tax assets as of June 30, 1999.

<PAGE>
RESULTS OF  OPERATIONS  for the three months ended June 30, 1999 compared to the
three months ended June 30, 1998


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

The Company earned $139  thousand,  or $0.08 net income per share on a basic and
diluted basis, for the three months ended June 30, 1999,  compared to a net loss
of $337  thousand,  or $0.25 for both basic and diluted net loss per share,  for
the three months ended June 30, 1998.  The increase in net income was  primarily
due to a $584  thousand,  or 125.9%,  increase  in net  interest  income,  a $41
thousand,  or 128.1%,  increase in  non-interest  income and a $86 thousand,  or
43.7%,  decrease in the  provision for loan losses;  these items were  partially
offset by a $235 thousand, or 36.9%, increase in non-interest expenses.

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

Net interest  income for the second quarter of 1999 increased $584 thousand,  or
125.9%,  to  $1.0  million,  compared  to  the  second  quarter  of  1998.  This
improvement  in net interest  income  resulted  primarily from a higher level of
earning  assets as average  interest  earning  assets,  net of average  interest
bearing  liabilities,  increased  by $12.5  million,  or 86.5%,  for the  second
quarter of 1999 compared to the same prior year period. Also contributing to the
increase in net interest income was the decrease in the average cost of interest
bearing liabilities to 3.73% during the second quarter of 1999 compared to 4.29%
during the same prior year  quarter.  The  reduction in the average rate paid on
deposits resulted from  management's  adjustment of the Company's rate structure
to more closely reflect the current economic  environment and  competition.  The
Company held no tax-exempt investments during these comparable periods.

The Company's net interest  margin  (annualized  net interest  income divided by
average  interest  earning  assets)  for the three  months  ended June 30,  1999
improved to 4.91% from 4.68% for the same prior year quarter. The improvement in
the net interest margin  resulted  primarily from the decrease in the rates paid
on deposits,  as the yield earned on interest earning assets remained consistent
at 7.46% for the second quarter of 1999 compared to 7.40% for the second quarter
of 1998.

Interest  income  increased  $859 thousand,  or 117.0%,  to $1.6 million for the
three months ended June 30, 1999  compared to $734  thousand for the same period
in 1998.  The  improvement  in  interest  income  was  primarily  due to  volume
increases in income from the loan  portfolio of $687  thousand,  volume  related
increases in income of $105 thousand in the investment securities portfolio, and
volume related  increases in income of $75 thousand in Federal funds sold as the
Company's  growth  resulted in an increase  in average  earning  assets of $46.0
million,  or 116.0%,  to $85.7  million for the three months ended June 30, 1999
compared to $39.7 million for the same period in 1998.

The $867 thousand  volume related  increase in total interest income was reduced
by $8 thousand from rate related  reductions as interest rates on new investment
securities  purchases  and  investments  in Federal funds sold repriced to lower
current yields.
<PAGE>
Interest  expense for the second quarter of 1999  increased  $275  thousand,  or
101.9%, compared to the same prior year period. The increase in interest expense
was due primarily to net volume  increases in interest  bearing  deposits  which
accounted for $367 thousand of the expense increase and was offset by a decrease
of $91 thousand  attributable to net rate related decreases.  The volume related
increases in interest  bearing  liabilities  and expense rate  decreases are the
result of marketing and pricing  decisions made by management in response to the
need for cost effective sources of funds,  primarily to provide for loan growth.
These  decisions  resulted  in the  reduction  in the cost of  interest  bearing
liabilities  to 3.73% for the quarter  ended June 30, 1999 compared to 4.29% for
the quarter ended June 30, 1998.


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

The provision  for loan losses was $111 thousand for the second  quarter of 1999
compared  to a  provision  of $197  thousand  for the same  period in 1998.  The
provision is the result of  management's  review of several  factors,  including
increased  loan balances and  management's  assessment  of economic  conditions,
credit  quality  and other  factors  that may have an impact on future  possible
losses in the loan portfolio.  Although the Company had no non-accrual loans and
no past due loans at June 30, 1999, management  established  provisions for loan
losses to create an adequate  allowance  based on  management's  analysis of the
loan portfolio and growth  experienced over the periods.  The allowance for loan
losses totaled $1.1 million, or 1.79% of total loans, at June 30, 1999.


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

Total  non-interest  income  was $73  thousand  for the  second  quarter of 1999
compared  to $32  thousand  for the second  quarter of 1998,  an increase of $41
thousand,  or 128.1%.  The  increase was  attributable  to an increase in second
quarter  1999  service fees on deposits of $24 thousand and an increase in other
fees and commissions of $17 thousand. The growth in non-interest income reflects
the growth in deposits,  which increased to $81.6 million at June 30, 1999, from
39.6 million at June 30, 1998.


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

Total non-interest expenses amounted to $871 thousand for the three months ended
June 30, 1999, an increase of $235 thousand,  or 36.9%, 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 the Company's  growth.  Of this increase,  employment
costs increased $60 thousand, or 17.4%, and reflected increases in the number of
employees  from 21  full-time  equivalents  at  June  30,  1998 to 46  full-time
equivalents   at  June  30,  1999.   The  increase  in  personnel  is  primarily
attributable  to the opening of the Howell,  New Jersey  office in November 1998
and the  Matawan,  New  Jersey  office  in  February,  1999 in  addition  to the
acquisition  of  additional  support  personnel  required  due to the  Company's
growth.
<PAGE>
Occupancy expenses increased $35 thousand,  or 134.6%, for the second quarter of
1999  compared  to the  same  period  in 1998.  The  increase  was  attributable
primarily to increased lease expense and increased  maintenance costs due to the
additional branch offices.

Depreciation  expenses  on  leasehold  improvements,  furniture,  and  equipment
increased $52 thousand,  or 130.0%,  for the second  quarter of 1999 compared to
the second quarter of 1998 due primarily to depreciation  costs  associated with
the new facilities and on purchases of enhanced computer processing equipment.

Other expenses increased $88 thousand,  or 39.1%, for the second quarter of 1999
compared  to the second  quarter  of 1998.  The  increase  was  attributable  to
increased other expenses resulting from the continued growth of the Company,  as
costs of data processing services,  professional fees, marketing and advertising
costs,  supplies and printing costs,  stockholder costs, and miscellaneous other
expenses increased.


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

The Company did not record an income tax  provision  for the three  months ended
June 30,  1999 and the three  months  ended June 30,  1998.  The results for the
first half of 1999 were positively  affected by the application of net operating
loss  carry-forwards to reduce the Company's tax liabilities.  At June 30, 1999,
the Company had  approximately  $300 thousand in remaining  net  operating  loss
carry-forwards  to offset  future tax  liabilities.  These  carry-forwards  will
expire  through  2018.  Additionally,  in view of the Company's  operating  loss
history and risks  associated with its ability to generate taxable income in the
future,  management has provided a full valuation  allowance on its net deferred
tax assets as of June 30, 1999.

<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
                             ---------------------------------------------------

                             Not Applicable.

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

                             Not Applicable.

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

                                  (a)       Exhibits - None

                                  (b)       Reports on Form 8-K

                                            The   Registrant   filed  a  Current
                                            Report  on Form  8-K  dated  July 1,
                                            1999  announcing that effective July
                                            1, 1999, the Registrant acquired the
                                            Community  Bank of New  Jersey  (the
                                            "Bank")    in   a    share-for-share
                                            exchange  pursuant to which the Bank
                                            became a wholly owned  subsidiary of
                                            the Registrant.

                                            The   Registrant   filed  a  Current
                                            Report  on Form  8-K  dated  July 9,
                                            1999 announcing a 3% stock dividend.

                                            The   Registrant   filed  a  Current
                                            Report  on Form  8-K  dated  July 9,
                                            1999  announcing  its second quarter
                                            1999 results of operations.

<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 BANK OF NEW JERSEY
                                              (Issuer)






Date:  August 11, 1999            By:  /s/  ROBERT D. O'DONNELL
       ---------------                 ------------------------
                                       ROBERT D. O'DONNELL
                                       President and Chief Executive Officer

                                  By:  /s/  MICHAEL BISS
                                       -----------------
                                       MICHAEL BISS
                                       Controller and Chief Accounting Officer