Interchange Financial Services Increases Quarterly Dividend 11%; 12th Consecutive Year of Regular Dividend Increases

On January 17, 2006, Interchange Financial Services
Corporation (NASDAQ:IFCJ), the holding company for Interchange Bank,
declared a quarterly cash dividend of $0.10 per common share payable
on February 7, 2006, to holders of record as of January 30, 2006. This
dividend represents $0.40 per share on an annualized basis, an 11.1%
increase over the prior year. Based upon the stock's $18.10 closing
price as quoted on January 17, 2006, the yield is 2.21%.
   "This is the 12th consecutive year we've increased our regular
quarterly dividend," said Anthony S. Abbate, President and CEO of
Interchange. "It once again demonstrates our ongoing commitment to
enhancing shareholder value."

   About Interchange

   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
Sorrento Pacific Financial, LLC, through the Bank's investment
department services. With $1.6 billion in assets and 30 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.

   "Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: Statements in this press release regarding
Interchange Financial's business which are not historical facts are
"forward-looking statements" that involve risks and uncertainties. For
a discussion of such risks and uncertainties, which could cause actual
results to differ from those contained in the forward-looking
statements, see "Risk Factors" in the Company's Annual Report or Form
10-K for the most recently ended fiscal year.