Business Wire
June 24, 2005 08:50 AM US Eastern Timezone

Interchange Financial Services Corporation and Franklin Bank Announce Merger
Agreement

SADDLE BROOK, N.J.--(BUSINESS WIRE)--June 24, 2005--Interchange Financial
Services Corporation (NASDAQ:IFCJ) and Franklin Bank announced today that they
have entered into a definitive agreement in which Interchange Financial Services
Corporation ("Interchange") will acquire Franklin Bank ("Franklin") in a
transaction valued at $24.8 million based on Interchange's closing stock price
as of June 23, 2005. The acquisition of Franklin will be accomplished through a
merger of Franklin with and into Interchange Bank, a wholly-owned subsidiary of
Interchange. Interchange's acquisition of Franklin represents Interchange's
first expansion into counties contiguous with Bergen County, Interchange's
primary market area, and is intended to further enhance Interchange's presence
in northern New Jersey.

"Franklin allows us to spring-board into Essex County and provides us with a
loyal customer and employee base," stated Anthony Abbate, president and CEO of
Interchange. "Just as important, four directors have agreed to serve on the
Essex County Advisory Board which we will establish to assist in growing our
franchise in the adjacent markets."

"This acquisition fits neatly into our strategic plan and we believe it will
allow us, with the assistance of the Essex County Advisory Board, to replicate
our Bergen County success," Abbate added, "Franklin Bank began operations in
2000 and was profitable by 2003 due to its sound banking fundamentals and
dedication to providing exceptional customer service."

"Interchange is an outstanding business partner for Franklin Bank," explained
Salvatore Cocco Jr., Chairman of the Board of Franklin Bank. "It was important
for us not only to provide competitive value for our shareholders, but also to
affiliate with a community bank that believes in the same standards of service
excellence that we have delivered. This transaction will provide our customers
with greater flexibility and more banking locations to service their business."
President & CEO Tom Lupo added, "We believe our combination with Interchange
will only enhance future prospects for our current and future customers and the
communities we serve."

Under the terms of the agreement, the total consideration to be received by
Franklin shareholders in the merger is fixed at 1,323,575 shares of the common
stock of Interchange. Based on the price of $17.80 for Interchange common stock
prior to today's announcement, the transaction represents total consideration of
approximately $24.8 million, including approximately $1.2 million for the cash
payment for option holders. The definitive agreement provides each Franklin
shareholder will receive 1.2264 Interchange shares for each Franklin share,
subject to adjustments, equating to approximately $21.83 for each share of
Franklin common stock held at closing, based upon the closing price of June 23,
2005. The total consideration value at closing may increase or decrease
depending upon the average per share price of Interchange common stock for a
ten-day period prior to closing.

Interchange expects to realize cost savings equal to approximately 35% of
Franklin's annual non-interest expenses in the first full year of combined
operations. The transaction is expected to be accretive to Interchange's
earnings in the first year of combined operations. The transaction has been
approved by the Board of Directors of both companies and is expected to be
completed before the end of the year. The consummation of the acquisition is
conditioned upon, among other things, the receipt of all necessary regulatory
approvals and the approval of



Franklin's  shareholders.  Each of the  directors of  Franklin,  who hold in the
aggregate  approximately  37.6% of the  fully-diluted  outstanding  shares,  has
agreed to vote in favor of the acquisition.

About Interchange Bank

Headquartered in Saddle Brook, NJ, Interchange Bank is one of Bergen County's
largest independent commercial banks and a wholly owned subsidiary of
Interchange Financial Services Corporation (NASDAQ:IFCJ). A thought leader in
the industry, the Bank was among the first to implement a broad range of
innovative services, including 24-hour, 7-day-a-week online banking and bill
paying services, online stock trading, and the ability to apply for a loan
online with an instant credit decision. Mutual funds and annuities are offered
by ICBA Financial Services, through the Bank's investment department. With $1.5
billion in assets and 29 branches, the Bank focuses its efforts on the local
communities from which it derives deposits and generates loans. Through
Interchange Bank's subsidiary, Interchange Capital Company, L.L.C., cost
effective equipment leasing solutions are available to small-and-middle market
companies. For additional information, please visit the company's Web site at
www.interchangebank.com.

About Franklin Bank

Franklin is a New Jersey state bank which conducts traditional commercial
banking business, accepting deposits from the general public, including
individuals, businesses, non-profit organizations and governmental units.
Franklin originates commercial loans, consumer loans and both residential and
commercial real estate loans. As of March 31, 2005, Franklin Bank had total
assets of approximately $81.0 million. Franklin is headquartered in Nutley,
Essex County, New Jersey.

Forward Looking Statements

This document contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include, but
are not limited to, (i) statements about the benefits of the acquisition of
Franklin by Interchange, including future financial and operating results, cost
savings, enhanced revenues, and accretion to reported earnings that may be
realized from the merger; (ii) statements with respect to Interchange's and
Franklin's plans, objectives, expectations and intentions and other statements
that are not historical facts; and (iii) other statements identified by words
such as "believes," "expects," "anticipates," "estimates," "intends," "plans,"
"targets," "projects" and similar expressions. These statements are based upon
the current beliefs and expectations of Interchange's and Franklin's management
and are subject to significant risks and uncertainties. Actual results may
differ from those set forth in the forward-looking statements.

The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in the
forward-looking statements: (1) the risk that the businesses of Interchange and
Franklin will not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; (2) expected revenue
synergies and cost savings from the merger may not be fully realized or realized
within the expected time frame; (3) revenues following the merger may be lower
than expected; (4) deposit attrition, operating costs, customer loss and
business disruption following the merger, including, without limitation,
difficulties in maintaining relationships with employees, may be greater than
expected; (5) the ability to obtain governmental approvals of the merger on the
proposed terms and schedule; (6) the failure of Franklin's stockholders to
approve the transaction; (7) competitive pressures among depository and other
financial institutions may increase significantly and have an effect on pricing,
spending, third-party relationships and revenues; (8) the strength of the United
States economy in general and the strength of the local economies in which the
combined company will conduct operations may be different than



expected  resulting in, among other things, a deterioration in credit quality or
a reduced  demand for credit,  including  the  resultant  effect on the combined
company's loan portfolio and allowance for loan losses;  (9) changes in the U.S.
and foreign legal and regulatory  framework;  and (10) adverse conditions in the
stock  market,  the public  debt  market and other  capital  markets  (including
changes in interest rate  conditions)  and the impact of such  conditions on the
combined company's capital markets and asset management  activities.  Additional
factors that could cause  Interchange's  results to differ materially from those
described in the forward-looking  statements can be found in Interchange's (such
as Annual  Reports on Form  10-K,  Quarterly  Reports  on Form 10-Q and  Current
Reports on Form 8-K) filed  with the  Securities  and  Exchange  Commission  and
available  at the  SEC's  Internet  site  (http://www.sec.gov).  All  subsequent
written and oral forward-looking  statements concerning the proposed transaction
or other matters attributable to Interchange or Franklin or any person acting on
their  behalf  are  expressly  qualified  in their  entirety  by the  cautionary
statements  above.  Interchange  and Franklin do not undertake any obligation to
update any  forward-looking  statement to reflect  circumstances  or events that
occur after the date the forward-looking statements are made.

The proposed transaction will be submitted to Franklin's stockholders for their
consideration, and Interchange will file with the SEC a registration statement
on form S-4, which will include a proxy statement of Franklin and a prospectus
of Interchange, as well as other relevant documents concerning the proposed
transaction. Stockholders are urged to read the registration statement and the
proxy statement/prospectus regarding the proposed transaction when it becomes
available and any other relevant documents filed with the SEC, as well as any
amendments or supplements to those documents, because they will contain
important information. You will be able to obtain a free copy of the proxy
statement/prospectus, as well as other filings containing information about
Interchange and Franklin, at the SEC's Internet site (http://www.sec.gov).
Copies of the proxy statement/prospectus and the SEC filings that will be
incorporated by reference in the proxy statement/prospectus can also be
obtained, without charge, by directing a request to Franklin Bank, Corporate
Secretary, 277 Franklin Avenue, Nutley, New Jersey 07110 (973-667-9595).

Interchange and Franklin, and their respective directors and executive officers,
may be deemed to be participants in the solicitation of proxies from the
stockholders of Franklin in connection with the merger. Information about the
directors and executive officers of Interchange and their ownership of
Interchange common stock is set forth in the proxy statement, dated March 30,
2005, for Interchange's 2005 annual meeting of stockholders, as filed with the
SEC on a Schedule 14A. Additional information regarding the interests of those
participants may be obtained by reading the proxy statement/prospectus regarding
the proposed transaction when it becomes available.


Keating & Co.
Vicki Banner, 973-666-1100
vbanner@keating.com