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

   ----   Transition report under Section 13 or 15 (d) of the Exchange Act
          For the transition period from               to
                                        ---------------  -----------------


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


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


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

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

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

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


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


                         Yes   X           No
                             -----            -----


 Common Stock, No Par Value -1,827,707 shares outstanding as of November 5, 1999
 -------------------------------------------------------------------------------
<PAGE>
                                      INDEX

                         COMMUNITY BANCORP OF NEW JERSEY
<TABLE>
<CAPTION>
PART I.           FINANCIAL INFORMATION                                              PAGE NO.
<S>               <C>                                                                  <C>

Item 1.           Financial Statements

                  Consolidated Condensed Balance Sheets at September 30, 1999
                  (Unaudited) and December 31, 1998                                    3

                  Consolidated Condensed Statements of Income for the three and
                  nine months ended September 30, 1999 and 1998 (Unaudited)            4

                  Consolidated Condensed Statement of Changes in Stockholders'         5
                  Equity at September 30, 1999 (Unaudited)

                  Consolidated  Condensed Statements of Cash Flows for the three
                  and nine months ended September 30, 1999 and 1998  (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 - 26


PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings                                                    27

Item 2.           Changes in Securities and Use of Proceeds                            27

Item 3.           Defaults Upon Senior Securities                                      27

Item 4.           Submission of Matters to a Vote of Security Holders                  27

Item 5.           Other Information                                                    27

Item 6.           Exhibits and Reports on Form 8-K
                           a.  Exhibits - None                                         27
                           b.  Reports on Form 8-K                                     27


SIGNATURES                                                                             28
</TABLE>
                                       2
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY
                      CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                 September 30,
                                                                     1999      December 31,
                                                                  (Unaudited)     1998
ASSETS                                                             (Dollars in thousands)
Cash and cash equivalents:
<S>                                                              <C>            <C>
      Cash and due from banks ..............................     $   5,614      $   2,541
      Federal funds sold ...................................        14,625         26,025
                                                                 ---------      ---------
                Total cash and cash equivalents                     20,239         28,566

Investment securities held-to-maturity (fair value $11,714
      at September 30, 1999 and $6,004 at December 31, 1998)        11,826          6,025

Loans receivable ...........................................        71,709         45,629
Allowance for loan loss ....................................        (1,179)          (914)
                                                                 ---------      ---------
                Net loans receivable .......................        70,530         44,715
                                                                 ---------      ---------

Premises and equipment, net ................................         4,271          3,068
Accrued interest receivable ................................           526            224
Other assets ...............................................           359            153
                                                                 ---------      ---------
                Total Assets                                     $ 107,751      $  82,751
                                                                 =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
      Non-interest bearing demand ..........................     $  19,016      $  13,530
      Interest bearing - NOW ...............................        16,821         14,397
      Savings and money market .............................        40,075         32,138
      Certificates of deposit, under $100,000 ..............        10,167          3,511
      Certificates of deposit, $100,000 and over ...........         2,255          1,463
                                                                 ---------      ---------
                Total deposits .............................        88,334         65,039
                                                                 ---------      ---------

Accrued interest payable ...................................           162            114
Other liabilities ..........................................         1,162            209
                                                                 ---------      ---------
                Total liabilities                                   89,658         65,362
                                                                 ---------      ---------

Stockholders' equity
      Common stock - authorized 5,000,000 shares of
            no par value;  issued and outstanding
            1,850,123 less 22,416 Treasury shares at
            September 30, 1999 and 1,730,917 at
            December 31, 1998 ..............................        20,523         18,994
      Treasury stock, at cost - 22,416 shares ..............          (364)            --
      Accumulated deficit ..................................        (2,066)        (1,605)
                                                                 ---------      ---------
                Total stockholders' equity                          18,093         17,389
                                                                 ---------      ---------

                Total Liabilities and Stockholder's Equity       $ 107,751      $  82,751
                                                                 =========      =========
</TABLE>

      See accompanying notes to consolidated condensed financial statements

                                        3
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                              Three Months Ended       Nine Months Ended
                                                                 September 30,           September 30,
                                                             --------------------------------------------
                                                              1999        1998         1999       1998
                                                             -------     -------      -------     -------
                                                            (Dollars in thousands, except per share data)
<S>                                                         <C>         <C>          <C>         <C>
INTEREST INCOME
      Loans, including Fees ...........................     $ 1,404     $   672      $ 3,617     $ 1,623
      Federal funds sold ..............................         198         219          516         450
      Investment securities - taxable .................         142          41          479         204
                                                            -------     -------      -------     -------
                    Total interest income .............       1,744         932        4,612       2,277
                                                            -------     -------      -------     -------

INTEREST EXPENSE
      Interest bearing - NOW ..........................          57          48          162         116
      Savings and money market ........................         402         301        1,112         664
      Certificates of deposit .........................         169          48          353         100
      Short-term borrowings ...........................          --          --            1          --
                    Total interest expense ............         628         397        1,628         880
                                                            -------     -------      -------     -------
                    Net interest income ...............       1,116         535        2,984       1,397
Provision for loan losses .............................          45         198          267         530
                                                            -------     -------      -------     -------
                    Net interest income after provision
                           for loan losses ............       1,071         337        2,717         867
                                                            -------     -------      -------     -------

Non-interest income:
      Service fees on deposit accounts ................          67          32          165          75
      Other fees and commissions ......................         102          60          242          69
                                                            -------     -------      -------     -------
                    Total non-interest income .........         169          92          407         144
                                                            -------     -------      -------     -------

Non-interest expense:
      Salaries and wages ..............................         404         225        1,062         724
      Employee benefits ...............................          60          26          176         117
      Occupancy expense ...............................          81          39          189          91
      Depreciation - occupancy, furniture & equipment .          91          67          259         147
      Other ...........................................         444         177        1,074         580
                                                            -------     -------      -------     -------
                    Total non-interest expense ........       1,080         534        2,760       1,659
                                                            =======     =======      =======     =======

                    Net Income (loss) .................     $   160     $  (105)     $   364     $  (648)
                                                            =======     =======      =======     =======

Per Common Share:
      Net income (loss) - basic .......................     $   009     $  (008)     $   020     $  (049)
      Net income (loss) - diluted .....................     $   009     $  (008)     $   020     $  (049)

Weighted average shares outstanding (in thousands):
      Basic ...........................................       1,828       1,330        1,834       1,330
      Diluted .........................................       1,858       1,330        1,864       1,330
</TABLE>
See accompanying notes to consolidated condensed financial statements

                                       4

<PAGE>

                     COMMUNITY BANCORP OF NEW JERSEY
       CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                                   Total
                                                        Common       Treasury     Accumulated   Stockholders'
                                                        Stock         Stock         Deficit       Equity
                                                       --------      --------      --------      --------
                                                                      (Dollars in thousands)
<S>                                                    <C>           <C>           <C>           <C>
Balance December 31, 1998 ........................     $ 18,994                    $ (1,605)     $ 17,389

3% stock dividend issued (53, 206 shares) ........          825                        (825)           --

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

Purchase and retire stock options ................         (310)                                     (310)

Purchase treasury stock - 22,416 shares ..........                       (364)                       (364)

Net Income .......................................           --            --           364           364
                                                       --------      --------      --------      --------
Balance, September 30, 1999 (Unaudited) ..........     $ 20,523      $   (364)     $ (2,066)     $ 18,093
                                                        ========     =========      ========      ========
</TABLE>
     See accompanying notes to consolidated condensed financial statements.

                                       5
<PAGE>
                         COMMUNITY BANCORP OF NEW JERSEY
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
                                                                                  Nine Months Ended
                                                                                    September 30,
                                                                               ----------------------
                                                                                 1999          1998
                                                                               --------      --------
                                                                               (Dollars in thousands)
<S>                                                                            <C>           <C>
Cash flows from operating activities:
          Net income (loss) ..............................................     $    364      $   (648)
          Adjustments to reconcile net income (loss) to net
                 cash provided by (used in) operating activities:
                       Depreciation and amortization .....................          259           140
                        Provision for loan losses ........................          267           530
                        Accretion of investment discount .................           (1)           --
                        Amortization of investment premium ...............            2            --
                        Increase in accrued interest receivable ..........         (302)          (71)
                        Increase in other assets .........................         (206)          (50)
                        Increase in accrued interest payable .............           48            44
                        Increase in other liabilities ....................          953            95
                                                                               --------      --------

                                Net cash provided by operating activities         1,384            40
                                                                               --------      --------

Cash flows from investing activities:
          Purchases of investment securities held-to-maturity ............      (12,302)       (4,998)
          Proceeds from maturities and calls of investment securities ....        6,500         6,500
          Net increase in loans made to customers ........................      (26,082)      (21,488)
          Purchases of premises and equipment ............................       (1,462)         (693)
                                                                               --------      --------

                                Net cash used in investing activities ....      (33,346)      (20,679)
                                                                               --------      --------

Cash flows from financing activities:
          Net increase in demand deposits and savings accounts ...........       15,847        26,599
          Net increase in certificates of deposit ........................        7,448         2,855
          Net proceeds from common stock issued ..........................        1,014            --
          Purchase of common stock for treasury and options for retirement         (674)           --
                                                                               --------      --------

                                Net cash provided by financing activities        23,635        29,454
                                                                               --------      --------

Net (decrease) increase in cash and cash equivalents .....................       (8,327)        8,815
Cash and cash equivalents as of beginning of year ........................       28,566         9,076
                                                                               --------      --------

Cash and cash equivalents as of end of period ............................     $ 20,239      $ 17,891
                                                                               ========      ========


Supplemental disclosures of cash flow information:
          Cash paid during the period for interest .......................     $  1,580      $    836
                                                                               --------      --------
          Cash paid during the period for income taxes ...................     $     --      $      1

</TABLE>
      See accompanying notes to consolidated condensed financial statements

                                      6
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY

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


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

FINANCIAL CONDITION

Total assets at September  30, 1999  increased by $25.0  million,  or 30.2%,  to
$107.8  million  compared to $82.8  million at December 31,  1998.  Total assets
averaged  $92.0  million in the first nine months of 1999, a $39.9  million,  or
76.6%, increase from the 1998 full year average of $52.1 million.  Average loans
increased $29.0 million,  or 96.0%, to $59.2 million in the first nine months of
1999,  from the 1998 full year  average  of $30.2  million.  Average  investment
securities  increased by $6.2  million,  or 117.0%,  to $11.5  million;  average
Federal funds sold increased by $2.0 million,  or 16.4%,  to $14.2 million;  the
average  of all other  assets  increased  by $3.2  million,  or  65.3%,  to $8.1
million; and the loan loss reserve average increased $500 thousand, or 89.4%, to
$1.1 million during the first nine months of 1999 compared to the full year 1998
averages.

These increases in average assets were funded  primarily by a $32.6 million,  or
80.7%,  increase in average  deposits,  as the first nine months of 1999 average
deposits  increased  to $73.0  million  from the full year 1998 average of $40.4
million.  The increases in average  assets were further funded by an increase in
average stockholders' equity of $7.4 million, or 67.3%, as the first nine months
of 1999 average  stockholders'  equity  increased to $18.4 million from the full
year 1998 average of $11.0 million. The increase in average stockholders' equity
resulted from net proceeds received from the Bank's secondary public offering of
$6.6  million on December  14, 1998 and $1.0 million on January 11, 1999 and was
further  effected by a net operating loss amounting to $610 thousand during 1998
and net operating  income of $364 thousand during the first nine months of 1999.
Stockholders'  equity was further  reduced  during the third  quarter of 1999 by
$364 thousand  resulting  from the purchase of treasury  stock and $310 thousand
for the purchase and  retirement  of a stock option,  both in connection  with a
settlement  with  a  shareholder   which  dissented  from  the  holding  company
reorganization.

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

Total loans at September 30, 1999 were $71.7 million,  a 57.2%, or $26.1 million
increase from December 31, 1998. The loan portfolio  consists primarily of loans
secured by real estate,  and, to a lesser extent,  commercial,  construction and
consumer  loans.  Changes in the  composition of the loan  portfolio  during the
comparative  periods included increases of $12.5 million in commercial  mortgage
loans,  $5.2  million  in  commercial  and  industrial  loans,  $4.9  million in
construction  loans and $3.5 million in consumer  loans.  These  increases  were
partially  off-set by a reduction of $66 thousand in  residential  mortgages and
other loans.

The 57.2%  increase in loans at September 30, 1999 compared to December 31, 1998
is partially  attributable to greater  penetration of the Company's  marketplace
and an improvement in the

                                        7
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
Continued

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, 1999 and December 31, 1998 (Dollars in thousands).
<TABLE>
<CAPTION>
                                                             September 30, 1999 (Unaudited)
                                                  ------------------------------------------------
                                                                Gross         Gross
                                                  Amortized   Unrealized    Unrealized      Fair
                                                    Cost        Gains         Losses        Value
                                                  --------     --------      --------      --------
<S>                                               <C>          <C>           <C>           <C>
Securities held to maturity:
          US Government and agency securities     $ 11,301     $      2      $   (114)     $ 11,189
          Other securities ..................          525           --            --           525
                                                  --------     --------      --------      --------

                                                  $ 11,826     $      2      $   (114)     $ 11,714
                                                  ========     ========      ========      ========
</TABLE>
(continued)
<PAGE>
<TABLE>
<CAPTION>
                                                                 December 31, 1998
                                                  ---------------------------------------------
                                                                Gross         Gross
                                                  Amortized   Unrealized    Unrealized   Fair
                                                    Cost        Gains         Losses     Value
                                                  --------     --------      --------   -------
<S>                                               <C>         <C>          <C>          <C>
Securities held to maturity:
          US Government and agency securities     $ 5,500     $    --      $   (21)     $ 5,479
          Other securities ..................         525          --           --          525
                                                  -------     -------      -------      -------

                                                  $ 6,025     $    --      $   (21)     $ 6,004
                                                  =======     =======      =======      =======
</TABLE>

The  following  table sets forth as of September  30, 1999 and December 31, 1998
the maturity  distribution  of the Company's  investment  portfolio  (Dollars in
thousands).

<TABLE>
<CAPTION>
                                             Investment Securities Held-To-Maturity
                                           -------------------------------------------
                                           September 30, 1999
                                               (Unaudited)          December 31, 1998
                                           -------------------     -------------------
                                           Amortized     Fair      Amortized    Fair
                                             Cost       Value       Cost        Value
                                           -------     -------     -------     -------
<S>                                        <C>         <C>         <C>         <C>
Due in one year or less ..............     $ 1,306     $ 1,307     $    --     $    --
Due after one year through five years        9,995       9,882       5,500       5,479
Due after five years through ten years         500         500         500         500
Due after ten years ..................          25          25          25          25
                                           -------     -------     -------     -------

                                           $11,826     $11,714     $ 6,025     $ 6,004
                                           =======     =======     =======     =======
</TABLE>
Securities  with a  carrying  value of  $1,300,000  at  September  30,  1999 and
$500,000 at December 31, 1998 were pledged to secure public funds on deposit and
for other purposes as required or permitted by law.

                                       8
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
Continued

NOTE C - LOANS RECEIVABLE and ALLOWANCE FOR LOAN LOSSES

The  following  table  summarizes  the  components  of the loan  portfolio as of
September 30, 1999 and December 31, 1998 (Dollars in thousands).
<TABLE>
<CAPTION>
                                          Loan Portfolio By Type of Loan
                                    ------------------------------------------
                                    September 30, 1999
                                         (Unaudited)         December 31, 1998
                                    Amount       Percent    Amount      Percent
                                    -------     ------      -------      ------
<S>                                 <C>           <C>       <C>           <C>
Commercial and industrial loans     $13,687      19.09%     $ 8,514       18.66%
Commercial mortgage loans .....      31,945      44.55%      19,413       42.55%
Residential mortgages .........       7,200      10.04%       6,941       15.21%
Construction loans ............       8,529      11.89%       3,582        7.85%
Consumer loans ................       9,870      13.76%       6,376       13.97%
Other loans ...................         478       0.67%         803        1.76%
                                    -------     ------      -------      ------

                                    $71,709     100.00%     $45,629      100.00%
                                    =======     ======      =======      ======
</TABLE>
(continued)
<PAGE>
The following table represents the activity in the allowance for loan losses for
the nine month  periods  ended  September  30,  1999 and 1998 and the year ended
December 31, 1998 (Dollars in thousands).
<TABLE>
<CAPTION>
                                                       Allowance For Loan Losses
                                              ---------------------------------------------
                                                Nine Months Ended
                                                  September 30,
                                                   (Unaudited)                  Year Ended
                                              ---------------------------       December 31,
                                                  1999            1998              1998
                                              ------------     -----------      -----------
<S>                                           <C>              <C>              <C>
Balance - beginning of period ...........     $        914     $       250      $       250
Charge-offs .............................               (2)             --               --
Recoveries ..............................               --              --               --
                                              ------------     -----------      -----------
Net (charge-offs) recoveries ............               (2)             --               --
Provision for loan losses ...............              267             530              664
                                              ------------     -----------      -----------

Balance - end of period .................     $      1,179     $       780      $       914
                                              ============     ===========      ===========
Balance of Allowance at period-end as a %
    of loans at period-end ..............             1.64%           2.12%            2.00%
                                              ============     ===========      ===========
</TABLE>
NOTE D - EARNINGS PER SHARE

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

                                        9
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
Continued

NOTE E - RECLASSIFICATIONS

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

NOTE F - SUBSEQUENT EVENTS

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

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

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

NOTE G - RECENTLY ISSUED ACCOUNTING STANDARDS

Accounting for Derivative Instruments and Hedging Activity
In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  and Hedging  Activity".  SFAS No. 133  establishes  accounting  and
reporting  standards for derivative  instruments,  including certain  derivative
instruments imbedded in other contracts, and for hedging activities. It requires
that an entity  recognize all derivatives as either assets or liabilities in the
statement of financial  position and measure those instruments at fair value. If
certain  conditions  are met, a derivative may be  specifically  designated as a
hedge.  The accounting for changes in the fair value of a derivative  (gains and
losses) depends on the intended use of the derivative and resulting designation.
SFAS No. 133 is  effective  for all fiscal  quarters of fiscal  years  beginning
after June 15, 1999.  Earlier  application is permitted only as of the beginning
of any fiscal quarter. Subsequent to SFAS No. 133, the FASB issued SFAS No. 137,
which  amended the effective  date of SFAS No. 133 to be all fiscal  quarters of
all fiscal years  beginning after June 15, 2000. The adoption of SFAS No. 133 is
not  anticipated  to  have  a  material  impact  on the  Company's  consolidated
financial position or results of operations.

                                       10
<PAGE>
COMMUNITY BANCORP OF NEW JERSEY

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


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

FINANCIAL CONDITION

Total assets at September  30, 1999  increased by $25.0  million,  or 30.2%,  to
$107.8  million  compared to $82.8  million at December 31,  1998.  Total assets
averaged  $92.0  million in the first nine months of 1999, a $39.9  million,  or
76.6%, increase from the 1998 full year average of $52.1 million.  Average loans
increased $29.0 million,  or 96.0%, to $59.2 million in the first nine months of
1999,  from the 1998 full year  average  of $30.2  million.  Average  investment
securities  increased by $6.2  million,  or 117.0%,  to $11.5  million;  average
Federal funds sold increased by $2.0 million,  or 16.4%,  to $14.2 million;  the
average  of all other  assets  increased  by $3.2  million,  or  65.3%,  to $8.1
million; and the loan loss reserve average increased $500 thousand, or 89.4%, to
$1.1 million during the first nine months of 1999 compared to the full year 1998
averages.

These increases in average assets were funded  primarily by a $32.6 million,  or
80.7%,  increase in average  deposits,  as the first nine months of 1999 average
deposits  increased  to $73.0  million  from the full year 1998 average of $40.4
million.  The increases in average  assets were further funded by an increase in
average stockholders' equity of $7.4 million, or 67.3%, as the first nine months
of 1999 average  stockholders'  equity  increased to $18.4 million from the full
year 1998 average of $11.0 million. The increase in average stockholders' equity
resulted from net proceeds received from the Bank's secondary public offering of
$6.6  million on December  14, 1998 and $1.0 million on January 11, 1999 and was
further  effected by a net operating loss amounting to $610 thousand during 1998
and net operating  income of $364 thousand during the first nine months of 1999.
Stockholders'  equity was further  reduced  during the third  quarter of 1999 by
$364 thousand  resulting  from the purchase of treasury  stock and $310 thousand
for the purchase and  retirement  of a stock option,  both in connection  with a
settlement  with  a  shareholder   which  dissented  from  the  holding  company
reorganization.

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

Total loans at September 30, 1999 were $71.7 million,  a 57.2%, or $26.1 million
increase from December 31, 1998. The loan portfolio  consists primarily of loans
secured by real estate,  and, to a lesser extent,  commercial,  construction and
consumer  loans.  Changes in the  composition of the loan  portfolio  during the
comparative  periods included increases of $12.5 million in commercial  mortgage
loans,  $5.2  million  in  commercial  and  industrial  loans,  $4.9  million in
construction  loans and $3.5 million in consumer  loans.  These  increases  were
partially  off-set by a reduction of $66 thousand in  residential  mortgages and
other loans.

The 57.2%  increase in loans at September 30, 1999 compared to December 31, 1998
is partially  attributable to greater  penetration of the Company's  marketplace
and an improvement in the

                                       11
<PAGE>
general economic environment in New Jersey. The Company opened its second office
in downtown Freehold, New Jersey, in September 1997, its third office in Howell,
New Jersey,  in November 1998 and its fourth office in Matawan,  New Jersey,  in
February 1999. In addition, the Company anticipates opening its newest branch in
Manalapan,  New Jersey,  during  November,  1999.  Management  believes that the
maturation of these branch  locations  will continue to provide the Company with
lending opportunities as well as funding sources for the loans.

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


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

The  allowance  for loan losses was $1.2  million,  or 1.64% of total loans,  at
September  30,  1999  compared to $914  thousand,  or 2.00% of total  loans,  at
December 31, 1998. At September 30, 1999 the Company had no non-performing loans
and $247 thousand in loans past due 90 days or more and still accruing  compared
to no non-performing  loans and no past due loans at December 31, 1998. The $247
thousand  past due loan at September  30, 1999  represented a matured note which
was renewed during the subsequent  quarter and which is performing in accordance
with its terms.

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

                                       12
<PAGE>
Investment Securities Activity
------------------------------

Investment securities increased by $5.8 million, or 96.7%, at September 30, 1999
compared to December 31, 1998.  During the period ended  September  30, 1999 the
Company  utilized  its  liquidity  in excess of loan  demand to fund  additional
purchases of investment securities  held-to-maturity amounting to $12.3 million,
which was partially off-set by maturities and calls amounting to $6.5 million.

Management  determines the appropriate  classification of securities at the time
of purchase.  At September 30, 1999 all investment securities were classified as
held-to-maturity.  The  Company  had  no  investment  securities  classified  as
available-for-sale  or  as  trading  securities.  The  investment  portfolio  is
comprised  primarily of U.S. Government and agency securities with maturities of
three  years or less  and with  call  features  of one year or less.  Management
currently  maintains an investment  portfolio of short duration in order to fund
projected  increased  loan  volume and to provide  for other  liquidity  uses as
needed, and secondarily as an additional source of interest income.

Deposits
--------

Deposits are the Company's primary source of funds.  Total deposits increased by
$23.3  million,  or 35.8%,  to $88.3  million at September  30, 1999 compared to
$65.0 million at December 31, 1998. The increase in deposits  during this period
was primarily due to the Company's  greater  penetration of its marketplace.  In
late 1998 and early  1999,  the  Company  opened  two new  offices,  which  have
contributed to its deposit growth.

Average total deposits  increased by $32.6 million,  or 80.7%,  to $73.0 million
for the nine  months  ended  September  30,1999  compared  to the 1998 full year
average of $40.4  million.  Changes in the deposit mix for the nine months ended
September  30,  1999  compared  to the 1998  full year  average  include a $13.5
million,  or 67.9%,  increase in savings  deposits;  a $5.0  million,  or 64.2%,
increase in NOW account deposits;  a $6.1 million,  or 198.1%,  increase in time
deposits;  a $1.1 million,  or 72.4%,  increase in money market deposits;  and a
$6.9 million, or 84.7%, increase in non-interest bearing demand deposits.

The Company does not actively  solicit  short-term  certificates  of deposits of
$100 thousand or more because of the liquidity risks posed by such deposits.  At
September 30, 1999  certificates of deposit of $100 thousand or more amounted to
$2.3 million.

The Company  emphasizes  relationships  with  commercial  customers and seeks to
obtain transactional accounts, which are frequently kept in non-interest bearing
deposits. The Company also emphasizes the origination of savings deposits, which
amounted to $37.1 million at September  30, 1999, by offering  rates higher than
our peer group  institutions.  The primary  savings  product is the stepped rate
savings account.  The interest rate is based upon the amount on deposit, and the
deposit  amount can be changed.  Management  may modify the  interest  rate paid
without  notice,  and the  depositor  may  withdraw  their funds on demand.  The
Company  markets this product as an  alternative to time deposits and management
believes it has  resulted in a higher  rate of core  deposits  and lower cost of
funds than our peer group institutions. Deposits are obtained primarily from the
market areas which the Company serves. As of September 30,

                                       13
<PAGE>

1999 the Company did not have any brokered  deposits and neither  solicited  nor
offered premiums for such deposits.



Liquidity
---------

Liquidity is a measurement  of the Company's  ability to meet present and future
funding obligations and commitments. The Company adjusts its liquidity levels in
order to meet funding needs for deposit outflows,  repayment of borrowings, when
applicable,  and the funding of loan  commitments.  The Company also adjusts its
liquidity level as appropriate to meet its asset/liability objectives. Principal
sources  of  liquidity  are  deposit  generation,  access  to  purchased  funds,
including borrowings from other financial  institutions,  repurchase agreements,
maturities  and  repayments  of loans and  investment  securities,  net interest
income and fee income. Liquid assets (consisting of cash and Federal funds sold)
comprised  18.8% and 34.5% of the  Company's  total assets at September 30, 1999
and December 31, 1998, respectively.

As shown in the Consolidated  Condensed  Statements of Cash Flows, the Company's
primary source of funds at September 30, 1999 was increased  deposits,  and to a
lesser extent  proceeds from  maturities and calls of investment  securities and
net  proceeds  from common stock  issued.  Deposit  increases  amounted to $23.3
million  for the nine  months  ended  September  30,  1999 while  proceeds  from
maturities and calls of investment  securities  amounted to $6.5 million and net
proceeds  from common stock issued  amounted to $1.0 million.  During 1999,  the
Company  utilized  deposit  growth and its liquid assets as funding  sources for
increased  loans  made to  customers  amounting  to  $26.1  million,  securities
purchases  amounting to $12.3  million and  purchases of premises and  equipment
used primarily for branch expansion, amounting to $1.5 million. In addition, the
Company utilized $674 thousand for the purchase of common stock for treasury and
options for retirement.

The  Company  also has  several  secondary  sources  of  liquidity.  Many of the
Company's  loans are originated  pursuant to  underwriting  standards which make
them readily  marketable  to other  financial  institutions  or investors in the
secondary market.  In addition,  in order to meet liquidity needs on a temporary
basis,  the Company  has a line of credit in the amount of $4.0  million for the
purchase of Federal funds with another financial institution.

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


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

Stockholder's  equity  increased by $704 thousand at September 30, 1999 compared
to December 31, 1998. The changes in stockholders' equity during the nine months
ended  September  30, 1999 were  comprised of increases  from net income of $364
thousand,  and $1.0 million in net proceeds from common stock issued, reduced by
$674  thousand  used for the  purchase of common  stock for treasury and options
designated for retirement.
                                       14
<PAGE>

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

The following  table  summarizes the risk-based and leverage  capital ratios for
the  Company  and the Bank at  September  30,  1999,  as well as the  regulatory
required minimum and "well capitalized" capital ratios:
<TABLE>
<CAPTION>
                              September 30, 1999        Regulatory Requirement
                              ------------------       ------------------------------
                              Company        Bank      Minimum     "Well Capitalized"
                              -------        ----      ---------   ------------------
<S>                           <C>             <C>        <C>          <C>
Risk-based Capital:
Tier I capital ratio...........23.69%         23.69%     4.00%        6.00%
Total capital ratio............24.94%         24.94%     8.00%       10.00%

Leverage ratio.................17.85%         17.85%   3.00%-5.00%    5.00% or greater
</TABLE>

In addition,  pursuant to the order of the New Jersey  Department of Banking and
Insurance  approving the Bank's charter,  for its first five years of operation,
the Bank is required  to maintain a ratio of equity to total  assets of at least
10.00%.  As of September  30, 1999 the Bank's  ratio of equity  capital to total
assets was 16.79%.

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


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

The  Company's  financial  statements  and notes  thereto,  presented  elsewhere
herein,  have been prepared in accordance  with  generally  accepted  accounting
principles,  which require the  measurement of financial  position and operating
results in terms of historical  dollars  without  considering  the change in the
relative purchasing power of money over time and due to inflation. The impact of
inflation is reflected in the increased cost of the Company's operations. Unlike
most industrial  companies,  nearly all of the Company's  assets and liabilities
are monetary. As a result, interest rates have a greater impact on the Company's
performance than do the effects of
                                       15
<PAGE>
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.





Year 2000
---------

Rapid and accurate data  processing  is essential to the  Company's  operations.
Many  computer  programs that can only  distinguish  the final two digits of the
year entered (a common programing  practice in prior years) are expected to read
entries for the year 2000 as the year 1900 or as zero and incorrectly attempt to
compute  payment,  interest,  delinquency,  and other data. The Company has been
evaluating both information  technology  (computer systems) and  non-information
technology  systems  (e.g.,  vault  timer,  electronic  door lock,  and heating,
ventilation,  and air conditioning control). The Company has examined all of its
non-information  technology  systems and has either received  certifications  of
Year  2000  compliance  for  systems  controlled  by third  party  providers  or
determined that the systems should not be impacted by the Year 2000. The Company
does not expect any  material  costs to address its  non-information  technology
systems and has not had any material costs to date. With regard to the Company's
information  technology  systems,  the  Company  also does not expect any future
material  costs and has not had any material  costs to date.  The Company's data
processing  is provided by a single  service  bureau,  NCR. The Company has been
advised by NCR that it is Year 2000  compliant.  If NCR were to experience  year
2000  processing  problems,  the Company  would  likely  experience  significant
delays,  mistakes, or failures. These delays, mistakes, or failures could have a
significant  impact  on  the  Company's   financial  condition  and  results  of
operations.

                                       16
<PAGE>

RESULTS OF OPERATIONS  for the nine months ended  September 30, 1999 compared to
the nine months ended September 30, 1998


Net Income
----------
The Company earned $364  thousand,  or $0.20 net income per share on a basic and
diluted basis,  for the nine months ended September 30, 1999,  compared to a net
loss of $648  thousand,  or $0.49 for both basic and diluted net loss per share,
for the nine months ended  September  30,  1998.  The increase in net income was
primarily due to a $1.6 million,  or 113.6%,  increase in net interest income, a
$263 thousand,  or 182.6%,  increase in non-interest income and a $263 thousand,
or 49.6%,  decrease in the provision for loan losses; these items were partially
offset by a $1.1  million,  or 66.4%,  increase  in  non-interest  expenses.  In
addition,  the Company's net income for the nine months ended September 30, 1999
was  benefited  by  the  application  of net  operating  loss  carryforwards  to
eliminate tax liabilities.

Net Interest Income
-------------------
Net interest income increased $1.6 million,  or 113.6%,  to $3.0 million for the
nine months ended  September  30, 1999 from $1.4 million for the same prior year
period.  The  increase  in net  interest  income  was due  primarily  to  volume
increases as average  interest  earning assets,  net of average interest bearing
liabilities,  increased by $12.7 million, or 89.4%, for the first nine months of
1999 compared to the same prior year period.  Also  contributing to the increase
in net interest income was the decrease in the average cost of interest  bearing
liabilities  to 3.75%  during the first nine  months of 1999  compared  to 4.29%
during the same prior year  period.  The  reduction  in the average rate paid on
deposits resulted from  management's  adjustment of the Company's rate structure
to more closely reflect the current economic  environment and  competition.  The
Company held no tax-exempt investments during these comparable periods.

The Company's net interest  margin  (annualized  net interest  income divided by
average  interest  earning  assets) for the nine months ended September 30, 1999
improved to 4.70% from 4.48% for the same prior year period.  The improvement in
the net interest margin  resulted  primarily from the decrease in the rates paid
on deposits,  as the yield earned on interest earning assets remained consistent
at 7.26% for the first nine months of 1999  compared to 7.30% for the first nine
months of 1998.

Interest income increased $2.3 million,  or 102.5%, to $4.6 million for the nine
months ended  September 30, 1999 compared to $2.3 million for the same period in
1998.  The  improvement  in interest  income was primarily due to volume related
increases in income from the loan  portfolio  of $2.0  million,  volume  related
increases in income of $340 thousand in the investment securities portfolio, and
volume related increases in income of $138 thousand in Federal funds sold as the
Company's  growth  resulted in an increase  in average  earning  assets of $43.3
million,  or 104.1%,  to $84.9  million for the nine months ended  September 30,
1999 compared to $41.6 million for the same period in 1998.

The $2.5 million volume related increase in total interest income was reduced by
$152 thousand from rate related  reductions as interest  rates on new investment
securities  purchases  and  investments  in Federal funds sold repriced to lower
current yields.

Interest  expense for the first nine months of 1999 increased $748 thousand,  or
85.0%,  compared to the same prior year period. The increase in interest expense
was due primarily to net volume

                                       17
<PAGE>
increases in interest  bearing  deposits which accounted for $1.0 million of the
expense  increase and was offset by a decrease of $274 thousand  attributable to
net rate related  decreases.  The volume related  increases in interest  bearing
liabilities  and expense rate  decreases are the result of marketing and pricing
decisions made by management in response to the need for cost effective  sources
of funds,  primarily to provide for loan growth. These decisions resulted in the
reduction  in the cost of  interest  bearing  liabilities  to 3.75% for the nine
months  ended  September  30, 1999  compared to 4.29% for the nine months  ended
September 30, 1998.


The following tables titled  "Consolidated  Average Balance Sheet with Resultant
Interest  and  Average  Rates" and  "Analysis  of Changes  in  Consolidated  Net
Interest  Income" present by category the major factors that  contributed to the
changes in net interest income for the quarter ended September 30, 1999 compared
to the quarter ended  September 30, 1998 and the nine months ended September 30,
1999 compared to the same prior year period.



                                       18
<PAGE>
ONSOLIDATED AVERAGE BALANCE SHEETS
With Resultant Interest And Average Rates
<TABLE>
<CAPTION>
                                                                        Three Months Ended               Three Months Ended
                                                                        September 30, 1999               September 30, 1998
                                                                 --------------------------------  ---------------------------------
                                                                  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 ................................... $  15,374   $     198      5.11%   $  15,643  $     219       5.60%
          Investment Securities ................................    10,274         142      5.53%       2,588         41       6.34%
          Loans (net of unearned income) (1) (2) ...............    68,091       1,404      8.18%      33,597        672       8.00%
                                                                 ---------   ---------              ---------  ---------

                       Total Interest Earning Assets ...........    93,739       1,744      7.38%      51,828        932       7.19%
                                                                 ---------   ---------              ---------  ---------

Non-Interest Earning Assets:
          Loan Loss Reserve ....................................    (1,154)                                         (674)
          All Other Assets .....................................     8,793                                         5,523
                                                                 ---------                                     ---------

                       Total Assets ............................ $ 101,378                                     $  56,677
                                                                 =========                                     =========

LIABILITIES & STOCKHOLDERS' EQUITY Interest-Bearing Liabilities:
          NOW Deposits ......................................... $  13,698          57      1.65%   $   9,294         48       2.07%
          Savings Deposits .....................................    36,469         379      4.12%      22,238        282       5.07%
          Money Market Deposits ................................     2,585          23      3.53%       1,848         19       4.11%
          Time Deposits ........................................    13,038         169      5.14%       3,441         48       5.58%
          Short-term Borrowings ................................        --          --      0.00%          --         --       0.00%
                                                                 ---------   ---------              ---------  ---------

                       Total Interest Bearing Liabilities ......    65,790         628      3.79%      36,821        397       4.31%
                                                                 ---------   ---------              ---------  ---------

Non-Interest Bearing Liabilities:
          Demand Deposits ......................................    16,513                              8,590
          Other Liabilities ....................................       723                                463
                                                                 ---------                          ---------

                       Total Non-Interest Bearing Liabilities ..    17,236                              9,053
                                                                 ---------                          ---------

Stockholders' Equity ...........................................    18,352                             10,803
                                                                 ---------                          ---------

                       Total Liabilities and Stockholders'
                       Equity .................................. $ 101,378                          $  56,677
                                                                 =========                          =========

NET INTEREST INCOME ............................................             $   1,116              $     535
                                                                             =========              =========

NET INTEREST SPREAD (3) ........................................                            3.59%                              2.88%

NET INTEREST MARGIN (4) ........................................                            4.72%                              4.13%
</TABLE>
(1)  Included in interest income on loans are loan fees.
(2)  Includes non-performing loans.
(3)  The interest  rate spread is the  difference  between the weighted  average
     yield on average  interest  earning assets and the weighted average cost of
     average interest bearing liabilities.
(4)  The interest rate margin is calculated by dividing  annualized net interest
     income by average interest earning assets.

                                       19
<PAGE>

CONSOLIDATED AVERAGE BALANCE SHEETS
With Resultant Interest And Average Rates
<TABLE>
<CAPTION>
                                                                       Nine Months Ended                  Nine Months Ended
                                                                       September 30, 1999                 September 30, 1998
                                                                -------------------------------   ----------------------------------
                                                                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 ................................... 14,168    $    516       4.87%    $ 10,845   $    450     5.53%
          Investment Securities ................................ 11,535         479       5.54%       4,314        204     6.30%
          Loans (net of unearned income) (1) (2) ............... 59,185       3,617       8.17%      26,407      1,623     8.19%
                                                                -------    --------                --------   --------

                       Total Interest Earning Assets ........... 84,888       4,612       7.26%      41,566      2,277     7.30%
                                                                -------    --------                --------   --------

Non-Interest Earning Assets:
          Loan Loss Reserve .................................... (1,059)                               (468)
          All Other Assets .....................................  8,132                               4,532
                                                                -------                            --------

                       Total Assets ............................ 91,961                            $ 45,630
                                                                =======                            ========

LIABILITIES & STOCKHOLDERS' EQUITY Interest-Bearing Liabilities:
          NOW Deposits ......................................... 12,895         162       1.68%    $  6,787        116     2.28%
          Savings Deposits ..................................... 33,360       1,039       4.16%      17,136        637     4.96%
          Money Market Deposits ................................  2,620          73       3.75%         994         27     3.62%
          Time Deposits ........................................  9,108         353       5.19%       2,447        100     5.45%
          Short-term Borrowings ................................     11           1       5.94%          --         --     0.00%
                                                                -------    --------                --------   --------

                       Total Interest Bearing Liabilities ...... 57,994       1,628       3.75%      27,364        880     4.29%
                                                                -------    --------                --------   --------

Non-Interest Bearing Liabilities:
          Demand Deposits ...................................... 14,989                               6,910
          Other Liabilities ....................................    602                                 348
                                                                -------                            --------

                       Total Non-Interest Bearing Liabilities .. 15,591                               7,258
                                                                -------                            --------

Stockholders' Equity ........................................... 18,376                              11,008
                                                                -------                            --------

                       Total Liabilities and Stockholders'
                       Equity .................................. 91,961                            $ 45,630
                                                                =======                            ========

NET INTEREST INCOME ............................................           $  2,984                $  1,397
                                                                           ========                ========

NET INTEREST SPREAD (3) ........................................                          3.51%                            3.01%

NET INTEREST MARGIN (4) ........................................                          4.70%                            4.48%
</TABLE>
(1)  Included in interest income on loans are loan fees.
(2)  Includes non-performing loans.
(3)  The interest  rate spread is the  difference  between the weighted  average
     yield on average  interest  earning assets and the weighted average cost of
     average interest bearing liabilities.
(4)  The interest rate margin is calculated by dividing  annualized net interest
     income by average intere st earning assets.

                                       20
<PAGE>
ANALYSIS OF CHANGES IN CONSOLIDATED NET INTEREST INCOME
<TABLE>
<CAPTION>

                                              Three Months Ended September 30, 1999    Nine Months Ended September 30, 1999
                                                  Compared to Three Months Ended           Compared to Nine Months Ended
                                                        September 30, 1998                      September 30, 1998
                                                  ------------------------------           -----------------------------
                                                    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 ................     $   (4)     $  (17)     $  (21)          $  138     $  (72)     $   66
          Investment Securities .............        123         (22)        101              340        (65)        275
          Loans (net of unearned income) ....        696          36         732            2,009        (15)      1,994
                                                  ------      ------      ------           ------     ------      ------

                       Total Interest Income         815          (3)        812            2,487       (152)      2,335
                                                  ------      ------      ------           ------     ------      ------

Interest Paid On:
          NOW Deposits ......................         23         (14)          9              104        (58)         46
          Savings Deposits ..................        182         (85)         97              601       (199)        402
          Money Market Deposits .............          8          (4)          4               44          2          46
          Time Deposits .....................        135         (14)        121              272        (19)        253
          Short-term Borrowings .............         --          --          --                1         --           1
                                                  ------      ------      ------           ------     ------      ------

                       Total Interest Expense        348        (117)        231            1,022       (274)        748
                                                  ------      ------      ------           ------     ------      ------

                       Net Interest Income ..     $  467      $  114      $  581           $1,465     $  122      $1,587
                                                  ======      ======      ======           ======     ======      ======
</TABLE>

                                       21
<PAGE>
Provision for Loan Losses
-------------------------
The  provision  for loan losses  decreased  to $267  thousand for the first nine
months of 1999  compared to a provision of $530  thousand for the same period in
1998.  The provision is the result of  management's  review of several  factors,
including  increased  loan  balances  and  management's  assessment  of economic
conditions,  credit  quality and other loss  factors that may be inherent in the
existing loan portfolio.  Although the Company had no non-accrual loans and past
due loans of only $247  thousand at September 30, 1999,  management  established
provisions for loan losses to create an adequate allowance based on management's
analysis of the loan  portfolio  and growth  experienced  over the periods.  The
allowance  for loan losses  totaled $1.2  million,  or 1.64% of total loans,  at
September 30, 1999.


Non-Interest Income
-------------------
Total  non-interest  income was $407  thousand for the first nine months of 1999
compared to $144 thousand for the first nine months of 1998, an increase of $263
thousand,  or 182.6%.  The increase was  attributable  to an increase in service
fees on deposits of $90 thousand,  or 120.0%,  and an increase in other fees and
commissions of $173 thousand,  or 250.7%. The growth in service fees on deposits
reflects the growth in transaction account average deposits,  which increased to
$27.9 million from $13.7  million,  or an increase of 103.7% for the nine months
ended  September 30, 1999 compared to the same prior year period.  The growth in
other fees and  commissions  is primarily  due to higher  non-yield  related fee
income on loans which  increased to $190 thousand at September 30, 1999 compared
to $52  thousand  for the same prior year  period.  The  increase  in  non-yield
related  fee income on loans is  primarily  attributable  to an increase in loan
participations and the fees and commissions generated on these transactions.


Non-Interest Expense
--------------------
Total  non-interest  expense  amounted to $2.8 million for the nine months ended
September 30, 1999, an increase of $1.1 million,  or 66.4%,  over the same prior
year period. The increase was due primarily to increases in employment  expenses
as well as  increases  in  occupancy  expenses,  equipment  expenses  and  other
expenses  generally  attributable  to the Company's  growth.  Of this  increase,
employment costs increased $397 thousand,  or 47.2%, and reflected  increases in
the average  number of employees  from 21 full-time  equivalents  for the period
ended  September  30,  1998 to 43  full-time  equivalents  for the period  ended
September 30, 1999. The increase in personnel is primarily  attributable  to the
opening of the Howell,  New Jersey office in November 1998 and the Matawan,  New
Jersey  office in February,  1999 in addition to the  acquisition  of additional
support personnel required due to the Company's growth.

Occupancy expenses increased $98 thousand,  or 107.7%, for the first nine months
of 1999  compared  to the same period in 1998.  The  increase  was  attributable
primarily to increased lease expense and increased  maintenance costs due to the
additional branch offices.

Depreciation  expenses  on  leasehold  improvements,  furniture,  and  equipment
increased $112 thousand, or 76.2%, for the first nine months of 1999 compared to
the first nine months of 1998 due  primarily to  depreciation  costs  associated
with  the new  facilities  and on  purchases  of  enhanced  computer  processing
equipment.  Average  depreciable assets amounted to $3.3 million during the nine
months ended September 30, 1999 compared to $2.0 million for the same prior year
period, an increase of 65.0%.
                                       22
<PAGE>
Other expenses  increased $494 thousand,  or 85.2%, for the first nine months of
1999 compared to the first nine months of 1998. The increase was attributable to
increased other expenses resulting from the continued growth of the Company,  as
costs of data processing  services paid to the Company's third party  processors
amounted  to $258  thousand,  an increase of $169  thousand;  professional  fees
amounted  to  $161  thousand,  an  increase  of  $47  thousand;   marketing  and
advertising  costs  amounted to $145  thousand,  an  increase  of $85  thousand;
stationery,  supplies and printing costs amounted to $153 thousand,  an increase
of $60 thousand;  stockholder costs amounted to $70 thousand, an increase of $51
thousand;  and all other expenses amounted to $287 thousand,  an increase of $82
thousand.


Income Tax Expense
------------------
The Company  did not record an income tax  provision  for the nine months  ended
September  30,  1999.  The  results  for the  first  nine  months  of 1999  were
positively  affected by the application of net operating loss  carry-forwards to
reduce the Company's  tax  liabilities.  At September 30, 1999,  the Company had
approximately  $162 thousand in remaining net operating loss  carry-forwards  to
offset future taxes  payable.  These  carry-forwards  will expire  through 2018.
Additionally,  in  view  of the  Company's  operating  loss  history  and  risks
associated with its ability to generate taxable income in the future, management
has provided a full  valuation  allowance  on its net  deferred tax assets.  Net
operating  loss  carry-forwards  for book  purposes  amounted to $1.2 million at
September 30, 1999.




RESULTS OF OPERATIONS for the three months ended  September 30, 1999 compared to
the three months ended September 30, 1998


Net Income
----------
The Company earned $160  thousand,  or $0.09 net income per share on a basic and
diluted basis, for the three months ended September 30, 1999,  compared to a net
loss of $105  thousand,  or $0.08 for both basic and diluted net loss per share,
for the three months ended  September  30, 1998.  The increase in net income was
primarily due to a $581 thousand, or 108.6%,  increase in net interest income, a
$77 thousand,  or 83.7%, increase in non-interest income and a $153 thousand, or
77.3%,  decrease in the  provision for loan losses;  these items were  partially
offset by a $546 thousand, or 102.2%, increase in non-interest expenses.

Net Interest Income
-------------------
Net interest  income for the third quarter of 1999 increased  $581 thousand,  or
108.6%, to $1.1 million, compared to the third quarter of 1998. This improvement
in net interest income resulted  primarily from a higher level of earning assets
as average interest earning assets, net of average interest bearing liabilities,
increased by $12.9 million,  or 86.2%, for the third quarter of 1999 compared to
the same prior year period.  Also  contributing  to the increase in net interest
income was a decrease in the average  rate paid on deposits to 3.79%  during the
third  quarter of 1999  compared to 4.31%  during the same prior year quarter as
management adjusted the Company's
                                       23
<PAGE>
rate  structure to more closely  reflect the current  economic  environment  and
competition.  The average rate earned on interest  earning  assets  increased to
7.38%  during  the third  quarter  of 1999  compared  to 7.19%  during the third
quarter of 1998 due to a greater  proportion of higher yielding  loans.  Average
loans comprised 72.6% of average  interest  earning assets for the third quarter
of 1999 compared to 64.8% for the same prior year quarter.  The The Company held
no tax-exempt investments during these comparable periods.

The Company's net interest  margin  (annualized  net interest  income divided by
average  interest  earning assets) for the three months ended September 30, 1999
improved to 4.72% from 4.13% for the same prior year quarter. The improvement in
the net interest margin  resulted  primarily from the decrease in the rates paid
on deposits and a change in the mix of earning  assets.  The average rate earned
on interest  earning assets  increased to 7.38% during the third quarter of 1999
compared to 7.19% during the third  quarter of 1998 due to a greater  proportion
of higher  yielding loans.  Average loans  comprised  72.6% of average  interest
earning  assets  for the third  quarter of 1999  compared  to 64.8% for the same
prior year quarter.  The effects of two 25 basis point increases in market rates
during  the  third  quarter  of 1999 also  contributed  to the  increase  in net
interest margin as rate sensitive  assets adjusted up while deposit rates lagged
behind.  The Company held no  tax-exempt  investments  during  these  comparable
periods.

Interest income increased $812 thousand, or 87.1%, to $1.7 million for the three
months ended September 30, 1999 compared to $932 thousand for the same period in
1998. The improvement in interest  income was primarily due to volume  increases
in income from the loan  portfolio of $696  thousand,  and $123  thousand in the
investment securities portfolio, offset by volume related decreases in income of
$4  thousand  in  Federal  funds sold as the  Company's  growth  resulted  in an
increase in average earning assets of $41.9 million,  or 80.9%, to $93.7 million
for the three months ended  September 30, 1999 compared to $51.8 million for the
same period in 1998.

The $815 thousand  volume related  increase in total interest income was reduced
by $3 thousand from rate related  reductions as interest rates on new investment
securities  purchases  and  investments  in Federal funds sold repriced to lower
current  yields  while  loan  rates  increased  due to the  two 25  basis  point
increases in market rates during the current quarter.

Interest  expense for the third  quarter of 1999  increased  $231  thousand,  or
58.2%,  compared to the same prior year period. The increase in interest expense
was due primarily to net volume  increases in interest  bearing  deposits  which
accounted for $348 thousand of the expense increase and was offset by a decrease
of $117 thousand attributable to net rate related decreases.  The volume related
increases in interest  bearing  liabilities  and expense rate  decreases are the
result of marketing and pricing  decisions made by management in response to the
need for cost effective sources of funds,  primarily to provide for loan growth.
These  decisions  resulted  in the  reduction  in the cost of  interest  bearing
liabilities to 3.79% for the quarter ended  September 30, 1999 compared to 4.31%
for the quarter ended September 30, 1998.


Provision for Loan Losses
-------------------------
The  provision  for loan losses was $45 thousand  for the third  quarter of 1999
compared  to a  provision  of $198  thousand  for the same  period in 1998.  The
provision is the result of  management's  review of several  factors,  including
increased  loan balances and  management's  assessment  of economic  conditions,
credit quality and other loss factors that may be inherent in

                                       24
<PAGE>



the existing loan portfolio. Although the Company had no non-performing loans at
September 30, 1999, management  established provisions for loan losses to create
an adequate  allowance based on management's  analysis of the loan portfolio and
growth experienced over the periods.  The allowance for loan losses totaled $1.2
million, or 1.64% of total loans, at September 30, 1999.


Non-Interest Income
-------------------
Total  non-interest  income  was $169  thousand  for the third  quarter  of 1999
compared  to $92  thousand  for the third  quarter of 1998,  an  increase of $77
thousand,  or 83.7%.  The  increase  was  attributable  to an  increase in third
quarter  1999  service  fees on  deposits  of $35  thousand,  or 109.4%,  and an
increase in other fees and commissions of $42 thousand,  or 70.0%. The growth in
service fees on deposits  reflects  the growth in  transaction  account  average
deposits,  which  increased to $30.2 million for the quarter ended September 30,
1999,  compared to $17.9  million at September  30,  1998,  an increase of $12.3
million,  or 68.7%. The growth in other fees and commissions is primarily due to
higher non-yield related fee income on loans.


Non-Interest Expense
--------------------
Total non-interest  expenses amounted to $1.1 million for the three months ended
September 30, 1999, an increase of $546 thousand, or 102.2%, over the same prior
year period. The increase was due primarily to increases in employment  expenses
as well as  increases  in  occupancy  expenses,  equipment  expenses  and  other
expenses  generally  attributable  to the Company's  growth.  Of this  increase,
employment costs increased $213 thousand,  or 84.9%, and reflected  increases in
the average  number of employees from 22 full-time  equivalents  for the quarter
ended  September  30, 1998 to 47  full-time  equivalents  for the quarter  ended
September 30, 1999. The increase in personnel is primarily  attributable  to the
opening of the Howell,  New Jersey office in November 1998 and the Matawan,  New
Jersey  office in February,  1999 in addition to the  acquisition  of additional
support personnel required due to the Company's growth.

Occupancy expenses  increased $42 thousand,  or 107.7%, for the third quarter of
1999  compared  to the  same  period  in 1998.  The  increase  was  attributable
primarily to increased lease expense and increased  maintenance costs due to the
additional branch offices.

Depreciation  expenses  on  leasehold  improvements,  furniture,  and  equipment
increased $24 thousand,  or 35.8%, for the third quarter of 1999 compared to the
third quarter of 1998 due primarily to  depreciation  costs  associated with the
new facilities and on purchases of enhanced computer processing equipment.

Other expenses increased $267 thousand, or 150.8%, for the third quarter of 1999
compared  to the  third  quarter  of 1998.  The  increase  was  attributable  to
increased other expenses resulting from the continued growth of the Company,  as
costs of data processing services,  professional fees, marketing and advertising
costs,  supplies and printing costs,  stockholder costs, and miscellaneous other
expenses increased.
                                     25
<PAGE>
Income Tax Expense
------------------
The Company did not record an income tax  provision  for the three  months ended
September 30, 1999 and the three months ended  September  30, 1998.  The results
for the first nine months of 1999 were positively affected by the application of
net operating loss  carry-forwards  to reduce the Company's tax liabilities.  At
September 30, 1999, the Company had approximately $162 thousand in remaining net
operating   loss   carry-forwards   to  offset  future  taxes   payable.   These
carry-forwards will expire through 2018. Additionally,  in view of the Company's
operating loss history and risks associated with its ability to generate taxable
income in the future,  management has provided a full valuation allowance on its
net deferred tax assets.  Net operating  loss  carry-forwards  for book purposes
amounted to $1.2 million at September 30, 1999.





                                       26
<PAGE>
PART II.                 OTHER INFORMATION

Item 1.                  Legal Proceedings
                         -----------------
                         The Bank is  periodically  involved  in  various  legal
                         proceedings  as a normal  incident to its business.  In
                         the opinion of management, no material loss is expected
                         from any such pending lawsuit.



Item 2.                  Changes in Securities
                         ---------------------
                         Not Applicable.



Item 3.                  Defaults Upon Senior Securities
                         -------------------------------
                         Not Applicable.



Item 4.                  Submission of Matters to a Vote of Security Holders
                         ---------------------------------------------------
                         Not Applicable.



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



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

                             (b)      Reports on Form 8-K - None

                                       27
<PAGE>
                                    SIGNATURE


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


                                     COMMUNITY BANK OF NEW JERSEY
                                     ----------------------------
                                             (Issuer)






Date:       November 5, 1999         By: Robert D. O'Donnell
            ----------------             ---------------------------------------
                                         ROBERT D. O'DONNELL
                                         President and Chief Executive Officer






                                     By: Michael Bis
                                         ---------------------------------------
                                         MICHAEL BIS
                                         Controller and Chief Accounting Officer

                                       28