In 2004, the median household income for the State of New Jersey was $61,779, ranking first among the states and above the national median of $46,475. The March 2005 unemployment rate for New Jersey of 4.3% was lower than the United States rate of 5.2%.

The market area has a high concentration of financial institutions including large money center and regional banks, community banks and credit unions.

The Company offers a variety of consumer loans, most of which consist of home equity loans and home equity lines of credit. Home equity loans and home equity lines of credit are secured by residences located in the Company’s market area. The underwriting standards the Company uses for home equity loans and home equity lines of credit include a determination of the applicant’s credit history, an assessment of the applicant’s ability to meet existing obligations, the payment on the proposed loan and the value of the collateral securing the loan.

The Company recently began offering mortgages on commercial and multi-family real estate properties. Commercial real estate and multi-family loans are secured by office buildings, apartment buildings, mixed-use properties and other commercial properties. The Company generally originates adjustable-rate commercial real estate loans and multi-family loans with a maximum amortization term of 25 years. The maximum loan-to-value ratio for the Company’s commercial real estate loans is 75% and 80% for multi-family loans.

In April 2005, the Company began to offer loans directly to builders and developers on income properties and residential for-sale housing units. Construction loans will be originated through the Company’s commercial lenders or by mortgage brokers who make the initial contact with the potential borrower and forward the Company a completed loan application that it will review to determine whether the applicant satisfies its underwriting criteria.

The Company originates residential mortgage loans directly and through its mortgage subsidiary. The Company originates both adjustable-rate and fixed-rate loans and its ability to originate and purchase fixed or adjustable-rate loans depends on customer demand for such loans, which is affected by, among other factors, the current and expected future levels of market interest rates.

The Company also purchases mortgage loans from other banks, mortgage bankers and mortgage brokers. The Company also purchases pools of mortgage loans in the secondary market on a “bulk purchase” basis from several well-established financial institutions.

Net interest income increased by $13.1 million, or 21.4%, to $74.4 million for the nine-month period ended March 31, 2005 from $61.3 million for the nine-month period ended March 31, 2004.

Interest and dividend income increased by $13.2 million, or 8.4%, to $170.9 million for the nine-month period ended March 31, 2005 from $157.7 million for the nine-month period ended March 31, 2004.

Interest expense increased $91.0 thousand or 0.09%, to $96.5 million for the nine-month period ended March 31, 2005 from $96.4 million for the nine-month period ended March 31, 2004.

Operating expenses increased by $48.0 million, or 119%, to $88.3 million for the nine-month period ended March 31, 2005 from $40.3 million for the period ended March 31, 2004.