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 September 30, 2002
                                               ------------------

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

       For the transition period from ________________ to ________________


                        Commission file number 000-26587
                                               ---------

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

          New Jersey                                         22-3666589
          ----------                                         ----------
(State or other jurisdiction of                           (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-3,172,666 shares outstanding as of November 9, 2002
------------------------------------------------------------------------------


<PAGE>


<TABLE>
<CAPTION>
                                      INDEX

                         COMMUNITY BANCORP OF NEW JERSEY

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

Item 1.  Financial Statements

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

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

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

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

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


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                               11 - 24


Item 3.  CONTROLS AND PROCEDURES                                                   25


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                         25

Item 2.  Changes in Securities and Use of Proceeds                                 25

Item 3.  Defaults Upon Senior Securities                                           25

Item 4.  Submission of Matters to a Vote of Security Holders                       25

Item 5.  Other Information                                                         25

Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES                                                                         26
SECTION 302 CERTIFICATIONS                                                      27 - 28


</TABLE>


<TABLE>
<CAPTION>

                         COMMUNITY BANCORP OF NEW JERSEY
                      CONSOLIDATED CONDENSED BALANCE SHEETS


                                                                                 September 30,
                                                                                     2002       December 31,
                                                                                 (Unaudited)       2001
                                                                                  ---------      ---------
<S>                                                                               <C>            <C>
ASSETS ......................................................................      (Dollars in thousands)
     Cash and cash equivalents:
           Cash and due from banks ..........................................     $  12,750      $   9,342
           Federal funds sold ...............................................            --             --
-----------------------------------------------------------------------------     ---------      ---------
                     Total cash and cash equivalents ........................        12,750          9,342
-----------------------------------------------------------------------------     ---------      ---------

     Investment securities available-for-sale ...............................      104,023          65,439
     Investment securities held-to-maturity (fair value of $15,217 at
           December 31, 2001) ...............................................            --         15,310

     Loans receivable .......................................................       180,656        147,603
     Allowance for loan loss ................................................        (2,355)        (1,964)
-----------------------------------------------------------------------------     ---------      ---------
                     Net loans receivable ...................................       178,301        145,639
-----------------------------------------------------------------------------     ---------      ---------

     Premises and equipment, net ............................................         6,246          6,335
     Accrued interest receivable ............................................         2,004          1,457
     Other assets ...........................................................         1,842          2,116
-----------------------------------------------------------------------------     ---------      ---------

                     Total Assets ...........................................     $ 305,166      $ 245,638
-----------------------------------------------------------------------------     =========      =========

     LIABILITIES AND STOCKHOLDERS' EQUITY
     Deposits:
           Non-interest bearing demand ......................................     $  49,366      $  43,539
           Interest bearing - NOW ...........................................        26,037         24,741
           Savings and money market .........................................        95,137         66,466
           Certificates of deposit, under $100,000 ..........................        65,145         47,894
           Certificates of deposit, $100,000 and over .......................        32,328         38,488
-----------------------------------------------------------------------------     ---------      ---------
                     Total deposits .........................................       268,013        221,128
-----------------------------------------------------------------------------     ---------      ---------

     Short-term borrowings ..................................................        13,250          1,600
     Accrued interest payable ...............................................            87          1,334
     Other liabilities ......................................................           976            433
-----------------------------------------------------------------------------     ---------      ---------
                     Total liabilities ......................................       282,326        224,495
-----------------------------------------------------------------------------     ---------      ---------

     Stockholders' equity
           Common stock - authorized 10,000,000 shares of
                 no par value;  issued and outstanding, net of treasury
                 shares, 3,172,666 at September 30, 2002 and 2,014,729
                 at December 31, 2001 .......................................        25,509         23,147
           Accumulated deficit ..............................................        (2,827)        (1,889)
           Accumulated other comprehensive income ...........................           521            248
           Treasury stock, 22,357 shares, at cost ...........................          (363)          (363)
-----------------------------------------------------------------------------     ---------      ---------
                     Total stockholders' equity .............................        22,840         21,143
-----------------------------------------------------------------------------     ---------      ---------

                     Total Liabilities and Stockholder's Equity .............     $ 305,166      $ 245,638
-----------------------------------------------------------------------------     =========      =========
</TABLE>


      See accompanying notes to consolidated condensed financial statements.

                                       3



<PAGE>

<TABLE>
<CAPTION>
                                      COMMUNITY BANCORP OF NEW JERSEY
                        CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)


                                                                      Three Months Ended       Nine Months Ended
                                                                          September 30,           September 30,
                                                                     ---------------------     -------------------
                                                                         2002        2001       2002        2001
                                                                       -------     -------     -------     -------
                                                                     (Dollars in thousands, except per share data)
<S>                                                                    <C>         <C>         <C>         <C>
INTEREST INCOME
      Loans, including Fees ......................................     $ 3,156     $ 2,948     $ 8,837     $ 8,521
      Federal funds sold .........................................           7          34          12         496
      Investment securities ......................................         946         651       2,871       1,490
------------------------------------------------------------------     -------     -------     -------     -------
                Total interest income ............................       4,109       3,633      11,720      10,507
------------------------------------------------------------------     -------     -------     -------     -------

INTEREST EXPENSE
      Interest bearing - NOW .....................................          60          71         152         201
      Savings and money market ...................................         479         388       1,320       1,332
      Certificates of deposit ....................................         751         894       2,266       2,723
      Short-term borrowings ......................................          35          10          94          10
------------------------------------------------------------------     -------     -------     -------     -------
                Total interest expense ...........................       1,325       1,363       3,832       4,266
------------------------------------------------------------------     -------     -------     -------     -------
                Net interest income ..............................       2,784       2,270       7,888       6,241
Provision for loan losses ........................................         155          95         840         341
------------------------------------------------------------------     -------     -------     -------     -------
                Net interest income after provision
                      for loan losses ............................       2,629       2,175       7,048       5,900
------------------------------------------------------------------     -------     -------     -------     -------

Non-interest income:
      Service fees on deposit accounts ...........................         117         103         322         299
      Service fees on loans ......................................          63         117         295         518
      Gain on sale of investment securities ......................         554          --         554          --
      Other fees and commissions .................................         112          69         370         206
------------------------------------------------------------------     -------     -------     -------     -------
                Total non-interest income ........................         846         289       1,541       1,023
------------------------------------------------------------------     -------     -------     -------     -------

Non-interest expense:
      Salaries and wages .........................................         946         766       2,578       2,144
      Employee benefits ..........................................         132         107         415         323
      Occupancy expense ..........................................         208         165         552         409
      Depreciation - occupancy, furniture & equipment ............         216         161         653         453
      Other ......................................................         800         677       2,138       1,938
------------------------------------------------------------------     -------     -------     -------     -------
                Total non-interest expense .......................       2,302       1,876       6,336       5,267
------------------------------------------------------------------     -------     -------     -------     -------

                Income before income taxes .......................       1,173         588       2,253       1,656
Income tax expense................................................         445         214         821         601
------------------------------------------------------------------     -------     -------     -------     -------

                Net Income .......................................     $   728     $   374     $ 1,432     $ 1,055
------------------------------------------------------------------     =======     =======     =======     =======

Per Common Share:
      Net income - basic .........................................     $  0.23     $  0.12     $  0.45     $  0.33
      Net income - diluted .......................................     $  0.22     $  0.12     $  0.43     $  0.33

Weighted average shares outstanding (in thousands):
      Basic ......................................................       3,173       3,173       3,173       3,173
      Diluted ....................................................       3,313       3,253       3,315       3,237

</TABLE>


     See accompanying notes to consolidated condensed financial statements.

                                       4

<PAGE>

<TABLE>
<CAPTION>

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



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

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

Stock split issued - 3 for 2
      (1,057,429 shares) ................           --           --            --              --            --              --
Cash in lieu of fractional shares .......           --           --            (3)             --            --              (3)

Comprehensive Income:
      Net Income ........................           --           --         1,432              --      $  1,432           1,432
      Increase in unrealized holding
          gains on securities, net ......           --           --            --             273           273             273
                                                                                                       --------        --------

Total Comprehensive Income ..............           --           --            --              --      $  1,705
                                              --------     --------      --------        --------      ========


Balance, September 30, 2002 (Unaudited)..     $ 25,509     $   (363)     $ (2,827)       $    521      $ 22,840
                                              ========     ========      ========        ========      ========
</TABLE>


(1)  Includes  accumulated  charges for stock  dividends of $5,825 and $3,455 at
     September 30, 2002 and December 31, 2001, respectively.


     See accompanying notes to consolidated condensed financial statements.

                                       5

<PAGE>

<TABLE>
<CAPTION>
                         COMMUNITY BANCORP OF NEW JERSEY
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)



                                                                                Nine Months Ended September 30,
                                                                                -------------------------------
                                                                                     2002            2001
                                                                                   ---------      ---------
                                                                                    (Dollars in thousands)
<S>                                                                                <C>            <C>
Cash flows from operating activities:
        Net income ...........................................................     $   1,432      $   1,055
        Adjustments to reconcile net income to net cash
            provided by (used in) operating activities:
                 Depreciation and amortization ...............................           653            453
                 Provision for loan losses ...................................           840            341
                 Accretion of investment discount ............................           (19)           (82)
                 Amortization of investment premium ..........................           166             23
                 Gain on sale of investment securities .......................          (554)            --
                 (Increase) decrease in accrued interest receivable ..........          (547)           294
                 Decrease other assets .......................................            97            308
                 Decrease in accrued interest payable ........................        (1,247)           (66)
                 Increase (decrease) in other liabilities ....................           543           (313)
------------------------------------------------------------------------------     ---------      ---------

                       Net cash provided by operating activities .............         1,364          2,013
------------------------------------------------------------------------------     ---------      ---------

Cash flows from investing activities:
        Purchases of investment securities available-for-sale ................      (116,196)       (75,820)
        Proceeds from sales of investment securities .........................        15,704             --
        Proceeds from maturities and calls and of investment securities ......        78,075         67,310
        Net increase in loans made to customers ..............................       (33,502)       (25,402)
        Purchase of bank owned life insurance ................................            --         (1,500)
        Purchases of premises and equipment ..................................          (564)        (1,705)
------------------------------------------------------------------------------     ---------      ---------

                       Net cash used in investing activities .................       (56,483)       (37,117)
------------------------------------------------------------------------------     ---------      ---------

Cash flows from financing activities:
        Net increase in demand deposits and savings accounts .................        35,794         14,541
        Net increase in certificates of deposit ..............................        11,091         17,604
        Stock dividend and stock split- cash paid in lieu of fractional shares            (8)            (4)
        Increase in short-term borrowings ....................................        11,650          1,500
------------------------------------------------------------------------------     ---------      ---------

                       Net cash provided by financing activities .............        58,527         33,641
------------------------------------------------------------------------------     ---------      ---------

Net increase (decrease) in cash and cash equivalents .........................         3,408         (1,463)
Cash and cash equivalents as of beginning of year ............................         9,342          9,624
------------------------------------------------------------------------------     ---------      ---------

Cash and cash equivalents as of end of period ................................     $  12,750      $   8,161
------------------------------------------------------------------------------     =========      =========


Supplemental disclosures of cash flow information:
        Cash paid during the period for interest .............................     $   5,079      $   4,332
        Cash paid during the period for income taxes .........................     $     914      $     732

</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       6

<PAGE>

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


NOTE A - BASIS OF PRESENTATION

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

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

NOTE B - EARNINGS PER SHARE

The Company follows the provisions of SFAS No. 128, Earnings Per Share. SFAS No.
128 eliminates  primary and fully diluted  earnings per share (EPS) and requires
presentation of basic and diluted EPS in conjunction  with the disclosure of the
methodology  used in  computing  such EPS.  Basic EPS  excludes  dilution and is
computed by dividing  income  available to common  shareholders  by the weighted
average  common  shares  outstanding  during the period.  Diluted EPS takes into
account the potential dilution that could occur if securities or other contracts
to issue common stock were  exercised  and converted  into common stock.  EPS is
computed  based on the  weighted  average  number  of  shares  of  common  stock
outstanding.


NOTE C - STOCK DIVIDEND

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


NOTE D - 3 for 2 STOCK SPLIT

On August 28, 2002 the  Company's  Board of Directors  declared a  three-for-two
stock split payable September 20, 2002 to shareholders of record as of September
10,  2002.  Weighted  average  shares  outstanding  and  earnings per share were
retroactively adjusted to reflect the stock split.

                                       7

<PAGE>


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


NOTE E - INVESTMENT SECURITIES

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

<TABLE>
<CAPTION>
                                                                     September 30, 2002 (Unaudited)
                                                          -----------------------------------------------------
                                                                             Gross        Gross
                                                            Amortized     Unrealized    Unrealized      Fair
                                                               Cost          Gains        Losses       Value
                                                          -----------    ------------   ----------   ----------
<S>                                                          <C>              <C>          <C>         <C>
Securities available-for-sale:
        U.S. Government and agency securities...........     $101,456         $   840      $    --     $102,296
        Other securities................................        1,727              --           --        1,727
                                                          -----------    ------------   ----------   ----------
                                                             $103,183         $   840      $    --     $104,023
                                                          ===========    ============   ==========   ==========
Securities held-to-maturity:
        U.S. Government and agency securities.............   $     --        $     --      $    --     $     --
        Other securities..................................         --              --           --           --
                                                          -----------    ------------   ----------   ----------
                                                             $     --        $     --      $    --     $     --
                                                          ===========    ============   ==========   ==========
</TABLE>


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



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

<TABLE>
<CAPTION>
                                            Available-for-sale       Held-to-maturity
                                           ---------------------  ---------------------
                                           Amortized      Fair     Amortized     Fair
                                             Cost         Value       Cost      Value
                                           --------     --------     ------     ------
<S>                                        <C>          <C>          <C>        <C>
Due in one year or less ..............     $     --     $     --     $   --     $   --
Due after one year through five years       101,956      102,796         --         --
Due after five years through ten years           --           --         --         --
Due after ten years ..................        1,227        1,227         --         --
                                           --------     --------     ------     ------
                                           $103,183     $104,023     $   --     $   --
                                           ========     ========     ======     ======

</TABLE>

During the third  quarter  of 2002,  all  investment  securities  classified  as
Held-to-Maturity  were  reclassified  as  Available-for-Sale.  At  the  time  of
transfer,  the  aggregate  market  value  and book  value  were  $9,533,375  and
$9,480,000  respectively.  Concurrently,  a  security  with a  market  value  of
$3,053,375  and book value of $3,000,000 was sold and a realized gain on sale of
$53,375 was recorded.

                                       8

<PAGE>

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

NOTE F - LOANS RECEIVABLE and ALLOWANCE FOR LOAN LOSSES

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

<TABLE>
<CAPTION>
                                                    Loan Portfolio By Type of Loan
                                          ---------------------------------------------------
                                            September 30, 2002
                                               (Unaudited)                December 31, 2001
                                          ---------------------        ----------------------
                                            Amount      Percent         Amount        Percent
                                           -------      -------        --------       ------
<S>                                       <C>            <C>           <C>            <C>
Commercial and industrial loans......     $ 29,813       16.50%        $ 25,736       17.44%
Commercial mortgage loans ...........       90,467       50.08%          74,258       50.31%
Residential mortgages ...............        6,345        3.51%           6,970        4.72%
Construction loans ..................       32,317       17.89%          21,962       14.88%
Consumer loans ......................       21,679       12.00%          18,559       12.57%
Other loans .........................           35        0.02%             118        0.08%
                                          --------      ------         --------      ------

                                          $180,656      100.00%        $147,603      100.00%
                                          ========      ======         ========      ======
</TABLE>


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

<TABLE>
<CAPTION>

                                                    Allowance For Loan Losses
                                             --------------------------------------
                                                 Nine Months Ended
                                                   September 30,       Year Ended
                                                   (Unaudited)         December 31,
                                             ----------------------    -----------
                                                2002         2001           2001
                                              -------       -------       -------
<S>                                           <C>           <C>           <C>
Balance - beginning of period ...........     $ 1,964       $ 1,584       $ 1,584
Recoveries ..............................           1            --            --
Charge-offs .............................        (450)           (6)           (6)
Provision for loan losses ...............         840           341           386
                                              -------       -------       -------

Balance - end of period .................     $ 2,355       $ 1,919       $ 1,964
                                              =======       =======       =======
Balance of Allowance at period-end as a %
    of loans at period-end ..............        1.30%         1.30%         1.33%
                                              =======       =======       =======
</TABLE>

                                       9


<PAGE>

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

NOTE G - SHORT TERM BORROWINGS

Short-term  borrowings  include  federal funds  purchased  and other  short-term
advances  from the Federal  Home Loan Bank.  At September  30,  2002,  shor-term
advances  amounting to $5,000,000  with an original  maturity of one week, at an
interest rate of 1.86%, matured on October 4, 2002.


                                       10

<PAGE>


COMMUNITY BANCORP OF NEW JERSEY

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


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

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

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

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

The Company  accounts for its impaired  loans in  accordance  with SFAS No. 114.
This standard requires that a creditor measures  impairment based on the present
value of future cash flows  discounted at the loan's  effective  interest  rate,
except that as a practical expedient, a creditor may measure impairment based on
a loan's  observable  market price,  or the fair value of the  collateral if the
loan is collateral  dependent.  Regardless of the measurement method, a creditor
must  measure  impairment  based on the fair  value of the  collateral  when the
creditor determines that foreclosure is probable.

The Company  recognizes  deferred tax assets and  liabilities for the future tax
effects of temporary  differences,  net  operating  loss  carryforwards  and tax
credits.  Deferred tax assets are subject to  management's  judgment  based upon
available evidence that future realization is more likely than

                                       11

<PAGE>

not. In the event management  determines the inability to realize all or part of
net deferred tax assets in the future, a direct charge to income tax expense may
be required to reduce the  recorded  value of the net  deferred tax asset to the
expected realizable amount.

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

FINANCIAL CONDITION

Total assets at September  30, 2002  increased by $59.6  million,  or 24.3%,  to
$305.2  million  compared to $245.6  million at December 31, 2001.  Total assets
averaged  $266.8 million in the first nine months of 2002, a $63.6  million,  or
31.3%, increase from the 2001 full year average of $203.2 million. Average loans
increased $25.8 million, or 18.6%, to $164.3 million in the first nine months of
2002,  from the 2001 full year  average of $138.5  million.  Average  investment
securities  increased by $44.9 million,  or 109.5%,  to $85.9  million;  average
Federal funds sold  decreased by $9.9 million,  or 92.5%,  to $0.8 million;  the
average  of all other  assets  increased  by $3.2  million,  or 21.6%,  to $18.0
million;  and the loan loss reserve average increased $0.4 million, or 22.2%, to
$2.2 million during the first nine months of 2002 compared to the full year 2001
averages.

These increases in average assets were funded  primarily by a $57.3 million,  or
31.9%,  increase in average  deposits,  as average  deposits  for the first nine
months of 2002  increased  to $237.1  million from the full year 2001 average of
$179.8  million.  Increases  in average  assets  were  further  funded by a $5.5
million,  or 500.0%,  increase  in  average  short-term  borrowings,  as average
short-term  borrowings  for the  first  nine  months of 2002  increased  to $6.6
million from the full year 2001 average of $1.1 million.


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

Total loans at September 30, 2002 were $180.7 million, a 22.4%, or $33.1 million
increase from December 31, 2001. The loan portfolio  consists primarily of loans
secured by real estate,  and, to a lesser extent,  commercial,  construction and
consumer  loans.  Changes in the  composition of the loan  portfolio  during the
comparative  periods included increases of $16.2 million in commercial  mortgage
loans,  $10.4 million in  construction  loans,  $4.1 million in  commercial  and
industrial  loans,  $3.0  million in consumer and other loans and a reduction of
$0.6 million in residential mortgage loans.

The 22.4%  increase in loans at September 30, 2002 compared to December 31, 2001
is  partially  attributable  to  greater  penetration  of  our  marketplace  and
continued loan demand within our market area and targeted  customer base.  Since
September  1997,  we have opened six new offices.  Management  believes that the
maturation  of these branch  locations  will continue to provide us with lending
opportunities as well as funding sources for the loans.  Further  enhancing loan
growth has been our desire to provide quality customer service.  Our focus is on
the  continued  origination,  retention  and  service  of a  high  quality  loan
portfolio.

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

                                       12

<PAGE>

borrowers and  depositors.  We intend to continue to pursue quality loans in all
lending categories within our market area.


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

The  allowance  for loan losses was $2.4  million,  or 1.30% of total loans,  at
September  30,  2002  compared  to $2.0  million,  or 1.33% of total  loans,  at
December  31,  2001.  At  September  30,  2002 and  December  31, 2001 we had no
non-accrual  loans  compared to no  non-accrual  loans at December 31, 2001. The
increase  in the balance of the  allowance  for loan losses is the result of our
review of several factors,  including the continued growth of our loan portfolio
and our  assessment  of  economic  conditions,  credit  quality,  and other loss
factors that may be inherent in the existing loan  portfolio.  During the second
quarter,  the Company placed $2.4 million of commercial loans issued to a single
borrower,  an  insurance  premium  financer,  on  non-accrual.  We  subsequently
negotiated a settlement  of these  problem loans as of August 26, 2002. We added
$480  thousand  to our  loan  loss  reserve  at June  30,  2002 to  fully  cover
anticipated  losses  associated  with this loan and  charged-off  $450  thousand
during the third quarter when the cash settlement was received.

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


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

Investment securities increased by $23.3 million, or 28.9%, to $104.0 million at
September 30, 2002  compared to $80.7  million at December 31, 2001.  During the
last three  quarters of 2001 and first three  quarters of 2002,  we utilized our
liquidity in excess of loan demand to fund  additional  purchases of  investment
securities  available-for-sale.  This  strategy  resulted  from  Asset/Liability
management   considerations  arising  from  our  analysis  of  several  economic
scenarios  including  reduced  loan growth and deposit  repricing  opportunities
starting  within the second  quarter  of 2001.  During the first nine  months of
2002,  forecasted maturities and calls of $78.1 million in investment securities


                                       13
<PAGE>


and proceeds from sales of investment securities amounting to $15.7 million were
used to fund loan growth amounting to $33.5 million as loan demand increased and
we utilized excess liquidity with additional purchases of investment  securities
of $116.2 million.

During the third  quarter  of 2002,  all  investment  securities  classified  as
Held-to-Maturity  were  reclassified  as  Available-for-sale.  At  the  time  of
transfer,  the  aggregate  market  value  and  book  value  were  $9.5  million.
Concurrently,  a  security  with a book  vale of $3.0  million  was  sold  and a
realized gain on sale of $53 thousand was recorded.

At September 30, 2002, investment securities of $104.0 million, or 100.0% of the
total investment securities portfolio, were classified as available-for-sale. We
had no  investment  securities  classified  as  held-to-maturity  or as  trading
securities.  The investment  portfolio is comprised primarily of U.S. Government
and  agency  securities  with  maturities  of five  years or less and with  call
features of two years or less. We currently maintain an investment  portfolio of
short duration in order to fund  projected  increased loan volume and to provide
for other liquidity uses as needed,  and secondarily as an additional  source of
interest income.


Deposits
--------

Deposits  are our primary  source of funds.  Total  deposits  increased by $46.9
million,  or 21.2%,  to $268.0  million at September 30, 2002 compared to $221.1
million at December  31, 2001.  The increase in deposits  during this period was
primarily due to greater penetration of our marketplace and the continued growth
of our new  locations.  As we  adjusted  the  mix of our  deposit  base  through
marketing  and pricing  initiatives,  lower  costing  demand  deposits,  savings
accounts, money market and NOW accounts increased by $35.8 million, while higher
costing certificates of deposit decreased by $11.1 million.

Average total deposits  increased by $57.3 million,  or 31.9%, to $237.1 million
for the nine months  ended  September  30,  2002  compared to the 2001 full year
average of $179.8  million.  Changes in the  deposit mix  averages  for the nine
months ended September 30, 2002 compared to the 2001 full year averages  include
a $28.3 million,  or 55.5%,  increase in savings  deposits;  a $0.5 million,  or
2.6%, increase in NOW account deposits;  a $19.5 million, or 29.4%,  increase in
time deposits; a $0.8 million, or 12.3%, increase in money market deposits;  and
a $8.2 million,  or 22.6%,  increase in  non-interest  bearing demand  deposits.
Short duration  certificate of deposit  promotions,  targeted to retain maturing
deposits and to gain market  penetration,  have  contributed to deposit  growth.
Management  intends to continue to promote  targeted deposit products as funding
needs and other balance sheet management considerations arise.

We  emphasize  relationships  with  commercial  customers  and  seek  to  obtain
transactional  accounts,  which  are  frequently  kept in  non-interest  bearing
deposits. We also emphasize the origination of savings deposits,  which amounted
to $87.4 million at September  30, 2002, by offering  rates higher than our peer
group  institutions.  Our primary  savings  product is the stepped  rate savings
account.  The interest rate is based upon the amount on deposit, and the deposit
amount can be changed.  We may modify the interest rate paid without notice, and
the depositor may withdraw  their funds on demand.  We market this product as an
alternative  to time deposits and we believe it has resulted in a higher rate of
core deposits and lower cost of funds than our peer group institutions. Deposits
are obtained primarily from the market areas that we serve.

Liquidity
---------

Liquidity is a  measurement  of our ability to meet  present and future  funding
obligations  and  commitments.  We adjust our liquidity  levels in order to meet
funding needs for deposit  outflows,  repayment of borrowings,  when applicable,
and the  funding of loan  commitments.  We also  adjust our  liquidity  level as
appropriate  to  meet  our  asset/liability  objectives.  Principal  sources  of
liquidity  are  deposit  generation,   access  to  purchased  funds,   including
borrowings from


                                       14
<PAGE>

other financial institutions,  repurchase agreements,  maturities and repayments
of loans and  investment  securities,  and net  interest  income and fee income.
Liquid assets  (consisting  of cash and Federal funds sold)  comprised  4.2% and
3.8%  of our  total  assets  at  September  30,  2002  and  December  31,  2001,
respectively.

As shown in the  Consolidated  Condensed  Statements of Cash Flows,  our primary
source of funds at September 30, 2002 was increased  targeted deposit  products,
proceeds from  maturities,  calls and sales of investment  securities,  and to a
lesser extent,  short-term  borrowed funds.  Deposit increases amounted to $46.9
million  for the  nine  months  ended  September  30,  2002  and  proceeds  from
maturities,  calls and sales of investment securities amounted to $93.8 million.
These  sources of funds were  augmented  with an  increase  of $11.7  million in
short-term  borrowings as of September 30, 2002. During the first nine months of
2002, we utilized deposit growth, matured investment securities, and to a lesser
extent,  short-term  borrowings as funding  sources for increased  loans made to
customers  amounting  to $33.5  million and  securities  purchases  amounting to
$116.2 million.

We  also  have  several   additional   sources  of   liquidity,   including  the
available-for-sale  investment securities portfolio, which at September 30, 2002
amounted to $104.0 million.  Also, many of our loans are originated  pursuant to
underwriting  standards  which make them readily  marketable to other  financial
institutions or investors in the secondary market. In addition, in order to meet
liquidity needs on a temporary basis, we have  established  lines of credit with
other  financial  institutions  to purchase up to $11.0 million in Federal funds
and may borrow  funds at the Federal  Reserve  discount  window,  subject to our
ability to supply collateral. We are also a member of the Federal Home Loan Bank
of New York and have an additional  combined overnight  borrowing line term line
of $21.4  million.  In  addition,  subject  to  certain  Federal  Home Loan Bank
requirements,  we  may  also  obtain  longer-term  advances  of up to 30% of our
assets. As of September 30, 2002, we had $13.3 million in short-term borrowings.

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

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

Stockholder's equity increased by $1.7 million at September 30, 2002 compared to
December 31, 2001.  The changes in  stockholders'  equity during the nine months
ended  September 30, 2002 were  comprised of an increase from net income of $1.4
million and an increase of $273 thousand in the unrealized  gains, net of taxes,
in the available-for-sale  investment securities portfolio. These increases were
partially  off-set by a payment  of $8  thousand  of cash in lieu of  fractional
shares  associated  with our  second  quarter  5% stock  dividend  and our third
quarter 3 for 2 stock split.

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

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


                                       15
<PAGE>

<TABLE>
<CAPTION>
                                   September 30, 2002                 Regulatory Requirement
                                   ------------------                 ----------------------
                                  Company         Bank            Minimum         "Well Capitalized"
                                  -------         ----            -------         ------------------
<S>                               <C>            <C>               <C>                  <C>
Risk-based Capital:
Tier I capital ratio...........   10.56%         10.57%            4.00%                6.00%
Total capital ratio............   11.68%         11.69%            8.00%               10.00%

Leverage ratio..................   7.77%          7.77%         3.00%-5.00%        5.00% or greater

</TABLE>


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


Impact of Inflation and Changing Prices
---------------------------------------

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





RESULTS OF OPERATIONS  for the nine months ended  September 30, 2002 compared to
the nine months ended September 30, 2001

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

For the nine months ended September 30, 2002, we earned $1.4 million compared to
$1.1 million in net income for the same period last year.  Basic and diluted net
income per share for the nine  months  ended  September  30,  2002 was $0.45 and
$0.43, respectively, compared to basic and diluted net income per share of $0.33
for the same prior year period.  The increase in net income was primarily due to
a $1.6 million,  or 26.4%,  increase in net interest income and a $518 thousand,
or 50.6%,  increase  in  non-interest  income,  and was  partially  offset by an
increase in loan loss  provision  of $499  thousand,  or 146.3%,  an increase in
non-interest expense of $1.1 million, or 20.3%, and increased income tax expense
of $220 thousand, or 36.6%.

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

Net interest  income  increased $1.6 million,  or 26.4%, to $7.9 million for the
nine months ended  September  30, 2002 from $6.2 million for the same prior year
period.  The increase in net interest income was due primarily to volume related
increases  amounting to $1.8 million as average interest earning assets,  net of
average interest bearing  liabilities,  increased by $6.8 million, or 15.1%, for
the first nine months of 2002 compared to the same prior year period. The volume
related  increases in net interest income were partially  offset by rate related
decreases in net interest income amounting to $148 thousand.


                                       16
<PAGE>


Our net  interest  margin  (annualized  net interest  income  divided by average
interest  earning assets) for the nine months ended September 30, 2002 decreased
to 4.20%  compared to 4.57% for the same prior year period.  The decrease in net
interest  margin of 37 basis points resulted from a change in the mix of average
interest earning assets, as average investment securities increased by 158.0% to
$85.9  million  from $33.3  million.  Excess  liquidity  was  utilized  in lower
yielding  short-term  investment  securities as an alternative due to lower loan
funding  needs.  The changes in net  interest  margin  resulted  primarily  from
implementation of asset/liability  management  strategies as the Federal Reserve
Bank reduced the target funds rate to 1.75% as of September 30, 2002 and further
reduced the target funds rate to 1.25% on November 6, 2002.

Interest income increased $1.2 million,  or 11.5%, to $11.7 million for the nine
months ended September 30, 2002 compared to $10.5 million for the same period in
2001.  The  improvement  in interest  income was primarily due to volume related
increases in income from the loan  portfolio of $1.8 million and volume  related
increases in income of $2.4 million in investment securities and was offset by a
reduction in Federal funds sold income of $468 thousand,  as our growth resulted
in an increase in average  earning assets of $68.2 million,  or 37.3%, to $250.9
million for the nine months ended  September 30, 2002 compared to $182.7 million
for the same period in 2001.

In addition to the volume related net increase amounting to $3.7 million,  total
interest  income  decreased  by $2.5  million  from rate  related  decreases  as
interest  rates on earning assets  repriced to current lower yields  compared to
yields in the same period in 2001.

Interest  expense for the first nine months of 2002 decreased $434 thousand,  or
10.2%,  compared to the same prior year period. The decrease in interest expense
was due primarily to net rate related  decreases in interest  bearing  deposits,
which  accounted  for $2.3 million of the expense  decrease,  and was  partially
offset by $1.9 million attributable to net volume related increases.  The volume
related increases in interest bearing liabilities and net expense rate decreases
are the result of marketing and pricing decisions made by management in response
to  changing  market  rates and the need to provide  cost  effective  sources of
funds.

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


                                       17
<PAGE>



CONSOLIDATED AVERAGE BALANCE SHEETS
With Resultant Interest And Average Rates

<TABLE>
<CAPTION>
                                                                   Three Months Ended                      Three Months Ended
                                                                   September 30, 2002                      September 30, 2001
                                                         ------------------------------------    -----------------------------------
                                                          Average      Interest       Average     Average       Interest     Average
                                                          Balance    Income/Expense    Rate       Balance    Income/Expense   Rate
                                                         ----------  --------------   -------    ---------   --------------  -------
                                                                              (In thousands, except percentages)
<S>                                                      <C>           <C>              <C>      <C>           <C>            <C>
ASSETS
Interest Earning Assets:
        Federal Funds Sold ............................  $   1,209     $       7        2.30%    $   3,564     $      34      3.78%
        Investment Securities .........................     94,586           946        4.00%       47,311           651      5.50%
        Loans (net of unearned income) (1) (2) ........    175,685         3,156        7.13%      143,916         2,948      8.13%
                                                         ---------     ---------                 ---------     ---------

                 Total Interest Earning Assets ........    271,480         4,109        6.00%      194,791         3,633      7.40%
                                                         ---------     ---------                 ---------     ---------

Non-Interest Earning Assets:
        Loan Loss Reserve .............................     (2,514)                                 (1,852)
        All Other Assets ..............................     18,406                                  15,738
                                                         ---------                               ---------

                 Total Assets .........................  $ 287,372                               $ 208,677
                                                         =========                               =========

LIABILITIES & STOCKHOLDERS' EQUITY
Interest-Bearing Liabilities:
        NOW Deposits ..................................  $  22,584            60        1.05%    $  22,089            71      1.28%
        Savings Deposits ..............................     87,104           436        1.99%       51,565           354      2.72%
        Money Market Deposits .........................      7,777            43        2.19%        4,505            34      2.99%
        Time Deposits .................................     93,036           751        3.20%       68,533           894      5.18%
        Short-term Borrowings .........................      7,370            35        1.88%        1,145            10      3.46%
                                                         ---------     ---------                 ---------     ---------

                 Total Interest Bearing Liabilities ...    217,871         1,325        2.41%      147,837         1,363      3.66%
                                                         ---------     ---------                 ---------     ---------

Non-Interest Bearing Liabilities:
        Demand Deposits ...............................     46,432                                  38,544
        Other Liabilities .............................        521                                   1,879
                                                         ---------                               ---------

                 Total Non-Interest Bearing Liabilities     46,953                                  40,423
                                                         ---------                               ---------

Stockholders' Equity ..................................     22,548                                  20,417
                                                         ---------                               ---------

                 Total Liabilities and Stockholders'
                 Equity ...............................  $ 287,372                               $ 208,677
                                                         =========                               =========

NET INTEREST INCOME ...................................                $   2,784                               $   2,270
                                                                       =========                               =========

NET INTEREST SPREAD (3) ...............................                                 3.59%                                 3.74%

NET INTEREST MARGIN (4) ...............................                                 4.07%                                 4.62%

</TABLE>

(1)  Included in interest income on loans are loan fees.
(2)  Includes  non-performing  loans.  Average non-accrual loans for the periods
     presented  amounted to $1.5  million for the quarter  ended  September  30,
     2002.
(3)  The interest  rate spread is the  difference  between the weighted  average
     yield on average  interest  earning assets and the weighted average cost of
     average interest bearing liabilities.
(4)  The interest rate margin is calculated by dividing  annualized net interest
     income by average interest earning assets.


                                       18



<PAGE>

CONSOLIDATED AVERAGE BALANCE SHEETS
With Resultant Interest And Average Rates


<TABLE>
<CAPTION>
                                                                   Three Months Ended                      Three Months Ended
                                                                   September 30, 2002                      September 30, 2001
                                                         ------------------------------------    -----------------------------------
                                                          Average      Interest       Average     Average       Interest     Average
                                                          Balance    Income/Expense    Rate       Balance    Income/Expense   Rate
                                                         ----------  --------------   -------    ---------   --------------  -------
                                                                              (In thousands, except percentages)
<S>                                                      <C>           <C>              <C>      <C>           <C>            <C>
ASSETS
Interest Earning Assets:
        Federal Funds Sold ............................  $     804       $      12      2.00%     $  14,087     $     496     4.71%
        Investment Securities .........................     85,856           2,871      4.46%        33,257         1,490     5.97%
        Loans (net of unearned income) (1) (2) ........    164,284           8,837      7.19%       135,376         8,521     8.42%
                                                         ---------       --------                 ---------     ---------     ----

                 Total Interest Earning Assets ........    250,944          11,720      6.24%       182,720        10,507     7.69%
                                                         ---------       --------                 ---------     ---------     ----

Non-Interest Earning Assets:
        Loan Loss Reserve .............................     (2,200)                                  (1,751)
        All Other Assets ..............................     18,039                                   13,938
                                                         ---------                                ---------

                 Total Assets .........................  $ 266,783                                $ 194,907
                                                         =========                                =========

LIABILITIES & STOCKHOLDERS' EQUITY
Interest-Bearing Liabilities:
        NOW Deposits ..................................  $  20,056             152      1.01%     $  18,903           201     1.42%
        Savings Deposits ..............................     79,298           1,198      2.02%        48,937         1,142     3.12%
        Money Market Deposits .........................      7,320             122      2.23%         7,068           190     3.59%
        Time Deposits .................................     85,869           2,266      3.53%        62,402         2,723     5.83%
        Short-term Borrowings .........................      6,625              94      1.90%           386            10     3.46%
                                                         ---------       ---------                ---------     ---------

                 Total Interest Bearing Liabilities ...    199,168           3,832      2.57%       137,696         4,266     4.14%
                                                         ---------       ---------                ---------     ---------

Non-Interest Bearing Liabilities:
        Demand Deposits ...............................     44,529                                   34,973
        Other Liabilities .............................      1,106                                    2,212
                                                                                                  ---------
                 Total Non-Interest Bearing Liabilities     45,635                                   37,185
                                                                                                  ---------
Stockholders' Equity ..................................     21,980                                   20,026
                                                         ---------                                ---------


                 Total Liabilities and Stockholders'
                 Equity ...............................  $ 266,783                                              $ 194,907
                                                         =========                                              =========


NET INTEREST INCOME ...................................                  $   7,888                              $   6,241
                                                                         =========                              =========


NET INTEREST SPREAD (3) ...............................                                 3.67%                                 3.55%

NET INTEREST MARGIN (4) ...............................                                 4.20%                                 4.57%

</TABLE>

(1)  Included in interest income on loans are loan fees.
(2)  Includes  non-performing  loans.  Average non-accrual loans for the periods
     presented amounted to $716 thousand for the nine months ended September 30,
     2002.
(3)  The interest  rate spread is the  difference  between the weighted  average
     yield on average  interest  earning assets and the weighted average cost of
     average interest bearing liabilities.
(4)  The interest rate margin is calculated by dividing  annualized net interest
     income by average interest earning assets.


                                       19
<PAGE>



ANALYSIS OF CHANGES IN CONSOLIDATED NET INTEREST INCOME

<TABLE>
<CAPTION>
                                           Three Months Ended September 30, 2002   Nine Months Ended September 30, 2002
                                              Compared to Three Months Ended          Compared to Nine Months Ended
                                                    September 30, 2001                      September 30, 2001
                                          --------------------------------------  --------------------------------------
                                                Increase (Decrease) Due To              Increase (Decrease) Due To
                                           -------------------------------------  --------------------------------------
                                            Volume         Rate         Net        Volume        Rate          Net
                                            -------      -------      -------      -------      -------      -------
                                                      (In thousands)                        (In thousands)
<S>                                         <C>          <C>          <C>          <C>          <C>          <C>
Interest Earned On:
        Federal Funds Sold ............     $   (22)     $    (5)     $   (27)     $  (468)     $   (16)     $  (484)
        Investment Securities .........         651         (356)         295        2,357         (976)       1,381
        Loans (net of unearned income)          651         (443)         208        1,820       (1,504)         316
                                            -------      -------      -------      -------      -------      -------

                 Total Interest Income        1,280         (804)         476        3,709       (2,496)       1,213
                                            -------      -------      -------      -------      -------      -------

Interest Paid On:
        NOW Deposits ..................           2          (13)         (11)          12          (61)         (49)
        Savings Deposits ..............         244         (162)          82          709         (653)          56
        Money Market Deposits .........          25          (16)           9            7          (75)         (68)
        Time Deposits .................         320         (463)        (143)       1,024       (1,481)        (457)
        Short-term Borrowings .........          54          (29)          25          162          (78)          84
                                            -------      -------      -------      -------      -------      -------

                 Total Interest Expense         645         (683)         (38)       1,914       (2,348)        (434)
                                            -------      -------      -------      -------      -------      -------

                 Net Interest Income ..     $   635      $  (121)     $   514      $ 1,795      $  (148)     $ 1,647
                                            =======      =======      =======      =======      =======      =======
</TABLE>


                                       20
<PAGE>

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

The  provision  for loan losses  increased  to $840  thousand for the first nine
months of 2002  compared to a provision of $341  thousand for the same period in
2001.  The provision is the result of our review of several  factors,  including
increased  loan  balances  and our  assessment  of economic  conditions,  credit
quality  and other  loss  factors  that may be  inherent  in the  existing  loan
portfolio.  We had $2.4  million  of  non-accrual  loans at June 30,  2002,  and
established  $480  thousand  in  provisions  for  loan  losses  to  fully  cover
anticipated  losses  associated with these loans and  charged-off  $450 thousand
during the third quarter when the cash  settlement  was received.  The allowance
for loan losses totaled $2.4 million,  or 1.30% of total loans, at September 30,
2002.


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

Total  non-interest  income was $1.5  million  for the first nine months of 2002
compared to $1.0 million for the first nine months of 2001,  an increase of $518
thousand, or 50.6%. The increase was attributable  primarily to $554 thousand in
realized gain on sales of investment securities during the third quarter of 2002
compared to no realized  gains as of September 30, 2001. The security gains were
realized as a result of our Asset/Liability  Committee recommendation to shorten
the  duration  of our  investment  security  portfolio.  Part  of  the  strategy
implementation  required that during the third quarter of 2002,  all  investment
securities    classified    as    Held-to-Maturity    were    reclassified    as
Available-for-Sale. At the time of transfer, the aggregate market value and book
value were $9.5  million.  Concurrently,  a  security  with a book value of $3.0
million was sold and a realized gain on sale of $53 thousand was recorded. Other
non-interest income category changes include a decrease in non-interest  service
fees on  loans,  which  amounted  to $295  thousand  for the nine  months  ended
September  30,  2002  compared to $518  thousand  earned for the same prior year
period,  a decrease of $223 thousand,  or 43.1%.  This decrease in  non-interest
service  fees  on  loans  resulted  primarily  from  reduced  activity  in  loan
participations.  All other  non-interest  income increased by $187 thousand,  or
37.0%, to $692 thousand, and resulted from the continued growth of the Company.


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

Total  non-interest  expense  amounted to $6.3 million for the nine months ended
September 30, 2002, an increase of $1.1 million,  or 20.3%,  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 our growth.  Of this increase,  employment
costs increased $526 thousand,  or 21.3%, and reflected  increases in the number
of employees from 86 full-time  equivalents  for the period ended  September 30,
2001 to 96 full-time  equivalents  for the period ended  September 30, 2002. The
increase in personnel is primarily attributable to the acquisition of additional
support personnel  required due to the Company's growth,  including the transfer
of  deposit  services  processing  from  a  service  bureau  environment  to  an
"in-house"  environment  and the  opening  of our Colts  Neck,  New  Jersey  and
Shrewsbury, New Jersey branches.

Occupancy and depreciation  expenses increased $343 thousand,  or 39.8%, for the
first nine months of 2002 compared to the same period in 2001.  The increase was
attributable  primarily to increased  lease  expense and  increased  common area
maintenance  costs  due  on  new  branch  offices,   in  addition  to  increased
depreciation  costs  associated  with new  deposit  services  facilities  and on
purchases of enhanced computer processing equipment.

Other expenses  increased $200 thousand,  or 10.3%, for the first nine months of
2002 compared to the first nine months of 2001. The increase was attributable to
increased other expenses resulting from our continued growth. In addition,  2001
expenses were increased by $130 thousand due to systems related conversion costs
as  we  prepared  for  a  bank-wide   operating



                                       21
<PAGE>

systems conversion which was successfully  completed during July, 2001, and 2002
expenses were increased by $70 thousand due to the disposal of non-useable fixed
assets.


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

For the nine months ended  September 30, 2002,  we  recognized  $821 thousand in
income tax expense  compared to $601  thousand in income tax expense  during the
first nine months of 2001.  The  effective tax rate for the first nine months of
2002 was 36.4% compared to 36.3% for the same period during 2001.


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

Two industry measures of performance by a banking  institution are its return on
average  assets and return on average  equity.  Return on average assets ("ROA")
measures  net  income in  relation  to total  average  assets  and  indicates  a
company's ability to employ its resources profitably.  For the nine months ended
September  30,  2002,  our ROA was 0.72%  compared  to 0.74% for the year  ended
December 31, 2001.  Return on average  equity  ("ROE") is determined by dividing
annual net income by average  stockholders' equity and indicates how effectively
a company can generate net income on the capital  invested by its  stockholders.
ROE increased to 8.71% for the nine months ended September 30, 2002, compared to
7.45% for the year ended  December  31, 2001.  Both  performance  measures  were
effected  by  non-recurring  transactions  resulting  from the  addition of $480
thousand  to our loan  loss  reserve  at June 30,  2002 to  fully  cover  losses
associated  with a series of credit  facilities  to a single  borrower  and from
gains on sale of  securities  amounting to $554  thousand as the duration of the
investment security portfolio was shortened.




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

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

For the three months ended September 30, 2002, we earned $728 thousand  compared
to $374  thousand in net income for the same  period  last year,  an increase of
$354  thousand,  or 94.7%.  Basic and diluted net income per share for the three
months ended September 30, 2002 was $0.23 and $0.22,  respectively,  compared to
basic and diluted net income per share of $0.12 for the same prior year quarter.
The  increase  in net income was  primarily  due to a $514  thousand,  or 22.6%,
increase  in net  interest  income,  a $557  thousand,  or  192.7%  increase  in
non-interest  income,  and was  further  effected  by an  increase  in loan loss
provision of $60 thousand,  or 63.2%,  increased  non-interest  expenses of $426
thousand,  or 22.7%,  and  increased  income tax  expense of $231  thousand,  or
107.9%.

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

Net interest income  increased $514 thousand,  or 22.6%, to $2.8 million for the
three months ended  September 30, 2002 from $2.3 million for the same prior year
period.  The increase in net interest income was due primarily to volume related
increases  amounting to $635 thousand as average interest earning assets, net of
average interest bearing  liabilities,  increased by $6.6 million, or 14.0%, for
the third  quarter of 2002  compared to the same prior year  period.  The



                                       22
<PAGE>

volume related  increases in net interest  income were partially  offset by rate
related decreases in net interest income amounting to $121 thousand.

Our net  interest  margin  (annualized  net interest  income  divided by average
interest earning assets) for the three months ended September 30, 2002 decreased
to 4.07%  compared to 4.62% for the same prior year period.  The decrease in net
interest  margin of 55 basis points resulted from a change in the mix of average
interest earning assets, as average investment securities increased by 100.0% to
$94.6 million from $47.3 million.  The decrease in net interest  margin resulted
primarily  from   implementation  of   asset/liability   management   leveraging
strategies  in order to increase net income as the Federal  Reserve Bank reduced
the target funds rate to 1.75% and quality loan demand lagged deposit growth.

Interest income increased $476 thousand, or 13.1%, to $4.1 million for the three
months ended  September 30, 2002 compared to $3.6 million for the same period in
2001.  The  improvement  in interest  income was primarily due to volume related
increases in income from the loan  portfolio of $651 thousand and volume related
increases in income of $651 thousand in investment  securities and was offset by
a reduction in Federal funds sold income of $22 thousand, as our growth resulted
in an increase in average  earning assets of $76.7 million,  or 39.4%, to $271.5
million for the quarter ended  September 30, 2002 compared to $194.8 million for
the same period in 2001.

In addition to the volume related net increase amounting to $1.3 million,  total
interest  income  decreased  by $804  thousand  from rate  related  decreases as
interest  rates on earning assets  repriced to current lower yields  compared to
yields in the same period in 2001.

Interest expense for the third quarter of 2002 decreased $38 thousand,  or 2.8%,
compared to the same prior year period. The decrease in interest expense was due
primarily to net rate  related  decreases in interest  bearing  deposits,  which
accounted for $683 thousand of the expense decrease, and was partially offset by
$645 thousand  attributable to net volume related increases.  The volume related
increases in interest bearing liabilities and net expense rate decreases are the
result of marketing  and pricing  decisions  made by  management  in response to
changing market rates and the need to provide cost effective sources of funds.

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

The provision  for loan losses  increased to $155 thousand for the third quarter
of 2002 compared to a provision of $95 thousand for the same period in 2001. The
provision is the result of our review of several  factors,  including  increased
loan balances and our  assessment  of economic  conditions,  credit  quality and
other loss factors that may be inherent in the existing loan  portfolio.  We had
no  non-accrual  loans at September  30,  2002.  The  allowance  for loan losses
totaled $2.4 million, or 1.30% of total loans, at September 30, 2002.


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

Total  non-interest  income  was $846  thousand  for the third  quarter  of 2002
compared to $289  thousand  for the third  quarter of 2001,  an increase of $557
thousand,  or 192.7%.  The increase was attributable  primarily to third quarter
2002  realized gain on sale of investment  securities  of $554  thousand.  These
security  gains  resulted  from  implementation  of  Asset/Liability  management
strategies  as the Company  restructured  its  portfolio to shorten  maturities.
Additionally,  non-interest  service fees on loans  amounted to $63 thousand for
the three months ended  September 30, 2002 compared to $117 thousand  earned for
the same prior year period, a decrease of $54 thousand,  or 46.2%. This decrease
in non-interest  service fees on loans resulted  primarily from reduced activity
in loan participations. All other non-



                                       23
<PAGE>

interest  income  increased by $57 thousand,  or 33.1%,  to $229  thousand,  and
resulted from the continued growth of the Company.


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

Total  non-interest  expense  amounted to $2.3  million  for the  quarter  ended
September 30, 2002, an increase of $426 thousand,  or 22.7%, over the same prior
year period. The increase was due primarily to increases in employment  expenses
as well as  increases  in  occupancy  expenses,  equipment  expenses  and  other
expenses  generally  attributable  to our growth.  Of this increase,  employment
costs increased $205 thousand,  or 23.5%, and reflected  increases in the number
of employees from 86 full-time  equivalents  for the period ended  September 30,
2001 to 96 full-time  equivalents  for the period ended  September 30, 2002. The
increase in personnel is primarily attributable to the acquisition of additional
support personnel  required due to the Company's growth,  including the transfer
of  deposit  services  processing  from  a  service  bureau  environment  to  an
"in-house"  environment  and the  opening  of our Colts  Neck,  New  Jersey  and
Shrewsbury, New Jersey branches.

Occupancy and depreciation  expenses  increased $98 thousand,  or 30.1%, for the
third  quarter of 2002  compared to the same period in 2001.  The  increase  was
attributable  primarily to increased  lease  expense and  increased  common area
maintenance  costs  due  on  new  branch  offices,   in  addition  to  increased
depreciation  costs  associated  with new  deposit  services  facilities  and on
purchases of enhanced computer processing equipment.

Other expenses increased $123 thousand,  or 18.2%, for the third quarter of 2002
compared  to the  third  quarter  of 2001.  The  increase  was  attributable  to
increased other expenses resulting from our continued growth. In addition,  2002
expenses were  increased by $41 thousand due to disposals of  non-useable  fixed
assets.


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

For the three months ended  September 30, 2002,  we recognized  $445 thousand in
income tax expense  compared to $214  thousand in income tax expense  during the
third quarter of 2001.  The effective tax rate for the third quarter of 2002 was
37.9% compared to 36.4% for the same period during 2001.


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

Two industry measures of performance by a banking  institution are its return on
average  assets and return on average  equity.  Return on average assets ("ROA")
measures  net  income in  relation  to total  average  assets  and  indicates  a
company's ability to employ its resources profitably. For the three months ended
September  30,  2002,  our ROA was 1.01%  compared  to 0.74% for the year  ended
December 31, 2001.  Return on average  equity  ("ROE") is determined by dividing
annual net income by average  stockholders' equity and indicates how effectively
a company can generate net income on the capital  invested by its  stockholders.
ROE  increased to 12.91% for the quarter ended  September 30, 2002,  compared to
7.45% for the year ended  December  31, 2001.  The increase in both  performance
measures  resulted  primarily  from the gains on sales of investment  securities
during the third quarter.


                                       24
<PAGE>

PART I.
-------

Item 3.   CONTROLS AND PROCEDURES
          -----------------------

          (a)  Within the 90 days prior to the date of this report,  the Company
               carried out an  evaluation,  under the  supervision  and with the
               participation   of  the  Company's   management,   including  the
               Company's Chief Executive Officer,  Chief Lending Officer,  Chief
               Information   Officer  and  Chief  Financial   Officer,   of  the
               effectiveness  of the  design  and  operation  of  the  Company's
               disclosure  controls and procedures pursuant to Exchange Act Rule
               13a-14. Based upon that evaluation,  the Chief Executive Officer,
               Chief  Lending  Officer,  Chief  Information  Officer  and  Chief
               Financial  Officer   concluded  that  the  Company's   disclosure
               controls and procedures are effective in timely  alerting them to
               material  information  relating  to the  Company  (including  its
               consolidated   subsidiaries)  required  to  be  included  in  the
               Company's periodic SEC filings.


          (b)  Changes in internal controls
               ----------------------------

               Not Applicable.


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 - 99 - section 906 Certification

                 (b)    Reports on Form 8-K

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


                                       25
<PAGE>


                                    SIGNATURE


Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                             COMMUNITY BANCORP OF NEW JERSEY
                                        (Issuer)




Date: November 12, 2002      By: /s/ Robert D. O'Donnell
                                 ---------------------------------------------
                                 ROBERT D. O'DONNELL
                                 President and Chief Executive Officer






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



                                       26




<PAGE>



                                  CERTIFICATION

I,  Robert D.  O'Donnell,  President & CEO of  Community  Bancorp of New Jersey,
certify that:

1.   I have reviewed this quarterly  report on Form 10-QSB of Community  Bancorp
     of New Jersey;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date: November 14, 2002             /s/ Robert D. O'Donnell
      -----------------             ------------------------------------
                                    Robert D. O'Donnell, President & CEO



                                       27
<PAGE>


                                  CERTIFICATION

I, Michael Bis, Vice President & CFO of Community Bancorp of New Jersey, certify
that:

1.   I have reviewed this quarterly  report on Form 10-QSB of Community  Bancorp
     of New Jersey;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: November 14, 2002           /s/ Michael Bis
      ------------------          --------------------------------------------
                                  Michael Bis, Senior Vice President & CEO


                                       28