<PAGE>
 
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

         [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended September 30, 1998

                                      OR

         [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

         For the transition period from                     to

         Commission file number 0-28886

                             ROSLYN BANCORP, INC.
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

             Delaware                                   11-3333218
  -------------------------------         ------------------------------------
  (State or Other Jurisdiction of         (I.R.S. Employer Identification No.)
   Incorporation or Organization)

               1400 Old Northern Boulevard, Roslyn, New York 11576
             ------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (516) 621-6000
             ------------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 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 [_]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

The Registrant had 41,399,959 shares of Common Stock outstanding as of 
November 11, 1998.
<PAGE>
 
                                    FORM 10-Q
                       ROSLYN BANCORP, INC. AND SUBSIDIARY
                                      INDEX

                                                                         Page
                                                                        Number
                                                                        ------
PART I - FINANCIAL INFORMATION
------------------------------

ITEM 1.  Financial Statements - Unaudited:

         Consolidated Statements of Financial Condition at
            September 30, 1998 and December 31, 1997                      1

         Consolidated Statements of Income for the three and nine 
            months ended September 30, 1998 and 1997                      2

         Consolidated Statement of Changes in Stockholders' Equity
            for the nine months ended September 30, 1998                  3

         Consolidated Statements of Cash Flows
            for the nine months ended September 30, 1998 and 1997         4

         Notes to Unaudited Consolidated Financial Statements             5

ITEM 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                          13

ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk       26


PART II - OTHER INFORMATION
---------------------------

ITEM 1.  Legal Proceedings                                               29

ITEM 2.  Changes in Securities and Use of Proceeds                       29

ITEM 3.  Defaults Upon Senior Securities                                 29

ITEM 4.  Submission of Matters to a Vote of Security Holders             29

ITEM 5.  Other Information                                               29

ITEM 6.  Exhibits and Reports on Form 8-K                                29

         Signature Page                                                  31


================================================================================
Statements contained in this Form 10-Q which are not historical facts are
forward-looking statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected. Such risks and uncertainties include potential changes in
interest rates, competitive factors in the financial services industry, general
economic conditions, the effect of new legislation and other risks detailed in
documents filed by Roslyn Bancorp, Inc. with the Securities and Exchange
Commission from time to time.
================================================================================
<PAGE>
 
                       ROSLYN BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                   (Unaudited)
                      (In thousands, except share amounts)
<TABLE>
<CAPTION>

                                                                                    September       December
                                                                                    30, 1998        31, 1997
                                                                                   -----------     -----------
                                     ASSETS
                                     ------
<S>                                                                                <C>             <C>        
Cash and cash equivalents:
  Cash and cash items                                                              $     2,536     $     2,516
  Due from banks                                                                        35,710          19,850
                                                                                   -----------     -----------
                                                                                        38,246          22,366
Debt and equity securities, net:
  Held-to-maturity (estimated fair value of $1,795 and $2,026, respectively)             1,735           1,930
  Available-for-sale                                                                   658,015         494,193
Mortgage-backed and mortgage related securities, net:
  Held-to-maturity (estimated fair value of $93,180 and $200,445, respectively)         92,547         200,193
  Available-for-sale                                                                 1,573,786       1,856,633
                                                                                   -----------     -----------
                                                                                     2,326,083       2,552,949
Loans held-for-sale, net                                                                88,692          15,283
Loans receivable held for investment, net:
  Real estate loans, net                                                             1,210,183         973,634
  Consumer and student                                                                   8,769           4,686
                                                                                   -----------     -----------
                                                                                     1,218,952         978,320
  Less allowance for possible loan losses                                              (24,779)        (24,029)
                                                                                   -----------     -----------
                                                                                     1,194,173         954,291
Banking house and equipment, net                                                        18,126          17,033
Accrued interest receivable                                                             23,704          21,237
Mortgage servicing rights, net                                                          11,107           9,155
Excess of cost over fair value of net assets acquired                                    2,567           2,906
Real estate owned, net                                                                     412             157
Deferred tax asset, net                                                                  2,858              --
Other assets                                                                            13,198           5,702
                                                                                   -----------     -----------
     Total assets                                                                  $ 3,719,166     $ 3,601,079
                                                                                   ===========     ===========
<CAPTION> 
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
<S>                                                                                <C>             <C> 
Liabilities:
  Deposits:
     Savings accounts                                                              $   471,994     $   468,928
     Certificates of deposit                                                         1,353,764       1,303,272
     Money market accounts                                                              87,591          49,344
     Demand deposit accounts                                                           132,428         120,701
                                                                                   -----------     ----------- 
       Total deposits                                                                2,045,777       1,942,245
                                                                                   -----------     -----------
  Official checks outstanding                                                            7,691           1,199
  Borrowed funds:
     Reverse-repurchase agreements                                                     993,918         965,119
     Other borrowings                                                                       --           1,332
  Accrued dividends and interest on deposits                                            12,345          10,375
  Mortgagors' escrow and security deposits                                              35,323          20,222
  Accrued taxes payable                                                                 11,331           9,478
  Deferred tax liability, net                                                               --           1,742
  Accrued expenses and other liabilities                                                20,921          21,032
                                                                                   -----------     -----------
     Total liabilities                                                               3,127,306       2,972,744
                                                                                   -----------     -----------
Stockholders' equity:
  Preferred stock, $0.01 par value, 10,000,000 shares authorized; none issued               --              --
  Common stock, $0.01 par value, 100,000,000 shares authorized; 43,642,459
    shares issued; 41,399,959 and 43,642,459 shares outstanding, respectively              436             436
  Additional paid-in capital                                                           424,359         423,411
  Retained earnings - substantially restricted                                         289,587         261,120
  Accumulated other comprehensive income:
     Net unrealized gain on securities available-for-sale, net of tax                   18,788          32,891
  Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")              (50,667)        (52,012)
  Unearned common stock held by Stock-Based Incentive Plan ("SBIP")                    (32,472)        (37,511)
  Treasury stock, at cost (2,242,500 shares at September 30, 1998)                     (58,171)             --
                                                                                   -----------     -----------
     Total stockholders' equity                                                        591,860         628,335
                                                                                   ===========     ===========
     Total liabilities and stockholders' equity                                    $ 3,719,166     $ 3,601,079
                                                                                   ===========     ===========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       1
<PAGE>
 
                       ROSLYN BANCORP, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                                    For the                   For the
                                                               three months ended         nine months ended
                                                                  September 30,             September 30,
                                                             ----------------------     ----------------------
                                                                1998         1997          1998        1997
                                                             ---------    ---------     ---------    ---------
<S>                                                          <C>          <C>           <C>          <C>      
Interest income:
    Federal funds sold and short-term deposits               $     276    $     395     $   1,199    $   3,704
    Debt and equity securities                                   9,728        8,616        25,907       25,028
    Mortgage-backed and mortgage related securities             29,710       33,680        96,721       91,426
    Real estate loans                                           25,521       16,532        69,987       42,175
    Consumer and student loans                                     201          110           516          252
                                                             ---------    ---------     ---------    ---------
       Total interest income                                    65,436       59,333       194,330      162,585
                                                             ---------    ---------     ---------    ---------
Interest expense:
    Deposits                                                    24,522       22,792        72,825       65,547
    Borrowed funds                                              16,645       11,544        46,112       23,072
                                                             ---------    ---------     ---------    ---------
       Total interest expense                                   41,167       34,336       118,937       88,619
                                                             ---------    ---------     ---------    ---------
Net interest income before provision for possible loan          
    losses                                                      24,269       24,997        75,393       73,966
Provision for possible loan losses                                 150          150           750          450
                                                             ---------    ---------     ---------    ---------
Net interest income after provision for possible loan           
    losses                                                      24,119       24,847        74,643       73,516
                                                             ---------    ---------     ---------    ---------
Non-interest income:
    Fees and service charges                                       871          539         2,196        1,826
    Mortgage banking operations                                  2,988          868         5,739        2,500
    Net gains on securities                                      2,192          923         5,944        1,266
    Real estate operations, net                                    216          (17)          767          (54)
    Other non-interest income                                       24           36           529          637
                                                             ---------    ---------     ---------    ---------
       Total non-interest income                                 6,291        2,349        15,175        6,175
                                                             ---------    ---------     ---------    ---------
Non-interest expense:
    General and administrative expenses:
       Compensation and employee benefits                        8,260        6,720        22,173       18,703
       Occupancy and equipment                                   1,216          975         3,315        2,798
       Deposit insurance premiums                                   61           56            78          269
       Advertising and promotion                                   609          585         2,066        1,784
       Other non-interest expenses                                 915        2,093         4,872        7,622
                                                             ---------    ---------     ---------    ---------
          Total general and administrative expenses             11,061       10,429        32,504       31,176
    Amortization of excess of cost over fair value of net
      assets acquired                                              118          117           353          352
    Charitable contribution to The Roslyn Savings
      Foundation                                                    --           --            --       12,711
                                                             ---------    ---------     ---------    ---------
       Total non-interest expense                               11,179       10,546        32,857       44,239
                                                             ---------    ---------     ---------    ---------
Income before income taxes                                      19,231       16,650        56,961       35,452
Provision for income taxes                                       5,897        5,616        17,997       11,487
                                                             ---------    ---------     ---------    ---------
Net income                                                   $  13,334    $  11,034     $  38,964    $  23,965
                                                             =========    =========     =========    =========
Basic earnings per share                                     $    0.35    $    0.28     $    1.01    $    0.60
                                                             =========    =========     =========    =========
Diluted earnings per share                                   $    0.35    $    0.28     $    1.01    $    0.60
                                                             =========    =========     =========    =========
Dividends per common share                                   $   0.100    $   0.060     $   0.265    $   0.110
                                                             =========    =========     =========    =========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                                       2
<PAGE>
 
                       ROSLYN BANCORP, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (Unaudited)
                      (In thousands, except share amounts)
<TABLE>
<CAPTION>

                                                                                                   Unallocated    Unearned
                                                                          Retained    Accumulated     Common       Common
                                                            Additional    Earnings-      Other        Stock         Stock     
                                                Common       Paid-in-   Substantially Comprehensive  Held by       Held by    
                                                Stock        Capital      Restricted     Income        ESOP         SBIP      
                                              ---------     ---------     ---------    ---------    ---------     ---------   
<S>                                           <C>           <C>           <C>          <C>          <C>           <C>         
Balance at December 31, 1997                  $     436     $ 423,411     $ 261,120    $  32,891    $ (52,012)    $ (37,511)  

Comprehensive income (1):
   Net income                                                                38,964                                           
   Other comprehensive income, net of tax:
      Net unrealized loss on certain
       securities, net of reclassification
       adjustment                                                                        (14,103)                             
                                                                                                                              
Comprehensive income                                                                                                          
                                                                                                                              
Allocation from shares purchased with
   loan to ESOP                                                   570                                   1,345                 
Amortization of SBIP stock awards                                 378          (270)                                  5,039   
Cash dividends declared on common  stock                                    (10,227)                                          
Common stock acquired
    (2,242,500 shares)                                                                                                        
                                              ---------     ---------     ---------    ---------    ---------     ---------
Balance at September 30, 1998                 $     436     $ 424,359       289,587    $  18,788    $ (50,667)    $ (32,472)  
                                              =========     =========     =========    =========    =========     =========   
<CAPTION>

                                                Treasury                     
                                                 Stock,                      
                                                at cost        Total        
                                               ---------     ---------      
<S>                                            <C>           <C>            
Balance at December 31, 1997                   $      --     $ 628,335      
                                                                            
Comprehensive income (1):                                                   
   Net income                                                   38,964      
   Other comprehensive income, net of tax:                                   
      Net unrealized loss on certain                                        
       securities, net of reclassification                                  
       adjustment                                              (14,103)     
                                                             ---------      
Comprehensive income                                            24,861      
                                                             ---------      
Allocation from shares purchased with                                       
   loan to ESOP                                                  1,915      
Amortization of SBIP stock awards                                5,147      
Cash dividends declared on common stock                        (10,227)     
Common stock acquired                                                       
    (2,242,500 shares)                           (58,171)      (58,171)     
                                               ---------     ---------
Balance at September 30, 1998                  $ (58,171)    $ 591,860      
                                               =========     =========      
                                             
</TABLE>

(1) The following table shows the comprehensive income for the nine months ended
    September 30, 1997:

       Comprehensive income:
            Net income                                          $      23,965
            Other comprehensive income, net of tax:
                Net unrealized gain on certain securities, 
                  net of reclassification adjustment                   12,145
                                                                    ------------
       Comprehensive income                                     $      36,110
                                                                    ============



     See accompanying notes to unaudited consolidated financial statements.


                                       3
<PAGE>
 
                       ROSLYN BANCORP, INC. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                            For the Nine Months Ended
x                                                                                                  September 30,
                                                                                           ---------------------------
                                                                                              1998            1997
                                                                                           -----------     -----------
<S>                                                                                        <C>             <C>        
Cash flows from operating activities:
Net income                                                                                 $    38,964     $    23,965
Adjustments to reconcile net income to net cash provided by operating activities:
     Charitable contribution of Roslyn Bancorp, Inc. common stock to The Roslyn                    
       Savings Foundation                                                                           --          12,711 
     Provision for (recovery of) possible loan losses                                              750             450
     Provision for possible losses on real estate owned                                           (700)             --
     Originated mortgage servicing rights, net of amortization                                  (1,952)           (214)
     Amortization of excess of cost over fair value of net assets acquired                         353             352
     Depreciation                                                                                1,260           1,145
     Accretion of discounts, net of amortization of premiums                                   (10,099)         (3,229)
     Amortization of premium on callable preferred stock                                           564             594
     ESOP expense                                                                                1,726           1,631
     SBIP expense                                                                                5,012           1,963
     Loan originations and purchases, net of proceeds from sales of loans held for sale        (67,937)           (802)
     Gains on sales of loans                                                                    (2,279)         (1,788)
     Net gains on securities                                                                    (5,944)         (1,266)
     Net gains on sales of real estate owned                                                      (186)           (155)
     Decrease (increase) in deferred income taxes                                                5,538          (5,824)
     Changes in assets and liabilities:
         Increase in accrued interest receivable                                                (2,467)         (3,413)
         (Increase) decrease in other assets                                                    (7,496)          3,558
         Increase in official checks outstanding                                                 6,492              --
         Increase in accrued dividends and interest on deposits                                  1,970           5,340
         Increase in accrued taxes payable                                                       1,853           3,704
         (Decrease) increase in accrued expense and other liabilities                              439          (2,557)
         Net (decrease) increase in unearned income                                             (4,028)          6,057
         Other, net                                                                                229              --
                                                                                           -----------     -----------
              Net cash (used in) provided by operating activities                              (37,938)         42,222
                                                                                           -----------     -----------
Cash flows from investing activities:
Proceeds from repayments of mortgage-backed and mortgage related securities                    
     held-to-maturity                                                                          107,892          53,787 
Proceeds from sales and repayments of debt, equity, mortgage-backed and mortgage
     related securities available-for-sale                                                   1,504,376         515,307
Purchases of debt, equity, mortgage-backed and mortgage related securities                  
     available-for-sale                                                                     (1,394,167)     (1,097,315)
Loan originations and purchases, net of principal repayments                                  (313,553)       (397,227)
Proceeds from sales of loans held for investment                                                73,154              --
Purchases of banking house and equipment, net                                                   (2,353)           (848)
Proceeds from sales of real estate owned                                                           767           1,181
                                                                                           -----------     -----------
              Net cash used in investing activities                                            (23,884)       (925,115)
                                                                                           -----------     -----------
Cash flows from financing activities:
Increase (decrease) in demand deposit, money market, and savings accounts                       53,040        (238,612)
Increase in certificates of deposit                                                             50,492         159,067
Increase in borrowed funds                                                                      27,467         916,790
Increase in mortgagors' escrow and security deposits                                            15,101           6,170
Net proceeds of common stock issuance                                                               --         410,650
Loan to ESOP for open market purchase of common stock                                               --         (53,805)
Open market purchase of common stock for SBIP                                                       --         (41,374)
Cash dividends paid on common stock                                                            (10,227)         (4,423)
Cost to repurchase common stock                                                                (58,171)             --
Decrease in non-depository stock subscriptions                                                      --      (1,356,911)
                                                                                           -----------     -----------
              Net cash provided by (used in) financing activities                               77,702        (202,448)
                                                                                           -----------     -----------
Net increase (decrease) in cash and cash equivalents                                            15,880      (1,085,341)
Cash and cash equivalents at beginning of period                                                22,366       1,126,310
                                                                                           -----------     -----------
Cash and cash equivalents at end of period                                                 $    38,246     $    40,969
                                                                                           ===========     ===========
Supplemental disclosures of cash flow information: 
Cash paid during the period for:
     Interest on deposits and borrowed funds                                               $   116,967     $    83,279
                                                                                           ===========     ===========
     Income taxes                                                                          $    10,560     $    13,080
                                                                                           ===========     ===========
Non-cash investing activities:
     Additions to real estate owned, net                                                   $       137     $        12
                                                                                           ===========     ===========

</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                                       4
<PAGE>
 
                       ROSLYN BANCORP, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the
accounts of Roslyn Bancorp, Inc. (the "Company") and its direct wholly-owned
subsidiary The Roslyn Savings Bank and subsidiaries (the "Bank").

The unaudited consolidated financial statements included herein reflect all
normal recurring adjustments which, in the opinion of management, are necessary
to present a fair statement of the results for the interim periods presented.
The results of operations for the three and nine months ended September 30, 1998
are not necessarily indicative of the results of operations that may be expected
for the entire year. Certain information and note disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC").

The unaudited consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in
the Company's 1997 Annual Report on Form 10-K/A No.1.

2.   EARNINGS PER SHARE

The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share," effective December 15, 1997. This statement
establishes standards for computing and presenting earnings per share ("EPS")
for entities with publicly held common stock or potential common stock. The
statement simplifies the computations of EPS that were previously found in
Accounting Principles Board Opinion No. 15, "Earnings Per Share," and replaces
primary EPS with basic EPS and fully diluted EPS with diluted EPS. Basic EPS is
computed by dividing income available to common stockholders 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 entity.
This statement requires a reconciliation of the numerator and denominator of the
two EPS calculations and the restatement of all prior period EPS data presented
after adoption.

3.   CONVERSION TO STOCK FORM OF OWNERSHIP

On May 29, 1996, the then Board of Trustees of the Bank adopted a Plan of
Conversion, which was subsequently amended on July 30, 1996 and September 30,
1996, to convert the Bank from a New York State chartered mutual savings bank to
a New York State chartered capital stock savings bank with the concurrent
formation of the Company as the holding company of the Bank (the "Conversion").

On January 10, 1997, the Company issued 42,371,359 shares of its common stock,
at a price of $10.00 per share, in an initial public offering. The Company
received gross proceeds from the Conversion of $423.7 million, before the
reduction from gross proceeds of $13.1 million for Conversion related expenses.
On the date of the Conversion, $145.3 million of deposits and $278.4 million of
non-depository stock subscriptions funds were transferred to stockholders'
equity, and $1.08 billion of non-depository stock subscriptions funds were
subsequently returned to subscribers.


                                       5
<PAGE>
 
Concurrent with the close of the stock offering, an additional 1,271,100 shares
of authorized but unissued shares of the Company's common stock were contributed
by the Company to The Roslyn Savings Foundation (the "Foundation"), a private
foundation dedicated to charitable purposes within the Bank's local community.
The Company recognized a one-time expense of $12.7 million, the full amount of
the contribution made to the Foundation, in the first quarter of 1997. The
contribution to the Foundation will be fully tax deductible, subject to an
annual limitation based upon the Company's annual taxable income.

4.   PROPOSED ACQUISITION OF T R FINANCIAL CORP.

On May 26, 1998, the Company and T R Financial Corp. (the holding company of
Roosevelt Savings Bank) announced a definitive agreement to merge the holding
companies in an exchange of stock transaction. Under the terms of the agreement,
the merger will be structured as a tax-free stock-for-stock transaction that is
intended to be accounted for as a pooling-of-interests. T R Financial Corp.
shareholders will receive 2.05 shares of the Company's common stock for each
share of T R Financial Corp. common stock held. The exchange ratio may be
increased by the Company in the event that T R Financial Corp. exercises its
rights under the merger agreement to terminate the merger agreement due to the
price of the Company's common stock declining below certain levels established
by formulas set forth in the merger agreement. In addition, in connection with
the merger, each party acquired an option to purchase 19.9% of the other
company's then issued and outstanding common stock. The options may only be
exercised upon the occurrence of certain events (none of which have occurred).
The merger will create a financial institution with $7.7 billion in assets and
more than $4.1 billion in deposits. The combined institution will retain the
Roslyn Bancorp, Inc. name. During the quarter ended September 30, 1998, both
companies filed preliminary proxy materials with the SEC in connection with each
company's shareholders' meeting to consider the proposed merger of the two
holding companies. Additionally, applications were filed with the bank
regulatory agencies with respect to the proposed merger. The transaction is
subject to both regulatory and shareholder approvals and is expected to close in
December 1998.

5.   EMPLOYEE STOCK OWNERSHIP PLAN

In connection with the Conversion, the Bank established an Employee Stock
Ownership Plan (the "ESOP"). The ESOP is a tax qualified retirement plan
designed to invest primarily in the Company's common stock. All full-time
employees of the Bank who have completed one year of service with the Bank will
be able to participate in the ESOP. Subsequent to the Conversion, the ESOP
purchased, through a $53.8 million loan from the Company and an initial $1.0
million contribution from the Bank, approximately 8% of the outstanding shares
of the Company's common stock, or 3,491,397 shares, on the open market. The loan
to the ESOP will be primarily repaid with contributions from the Bank to the
ESOP over a period not to exceed 30 years. The Company recognizes compensation
expense attributable to its ESOP, other than the initial $1.0 million
contribution which was charged to compensation expense in 1996, ratably over the
year based upon the estimated number of ESOP shares to be allocated each
December 31st. The amount of compensation expense recorded is equal to the
estimate of shares to be allocated by the ESOP multiplied by the average fair
market value of the underlying shares during the period. For the nine months
ended September 30, 1998 and 1997, compensation expense attributable to the ESOP
was approximately $1.7 million and $1.6 million, respectively.

6.   STOCK-BASED INCENTIVE PLAN

The Roslyn Bancorp, Inc. 1997 Stock-Based Incentive Plan ("Incentive Plan" or
"SBIP") authorizes the granting of options to purchase common stock,
option-related awards and awards of common stock (collectively, "Awards").
Subject to certain adjustments to prevent dilution of Awards to participants,
the maximum number of shares reserved for Awards denominated in the Company's
common stock under 


                                       6
<PAGE>
 
the Incentive Plan is 6,108,444 shares. The maximum number of shares reserved
for purchase pursuant to the exercise of options and option-related Awards which
may be granted under the Incentive Plan is 4,364,246 shares, and will primarily
vest over a five year period and which must be exercised no more than ten years
from the date of grant. The maximum number of shares reserved for the award of
shares of common stock is 1,744,198 shares, and will primarily vest over a five
year period. All officers, other employees and outside directors of the Company
and its affiliates, including the Bank and its subsidiaries, are eligible to
receive Awards under the Incentive Plan. The Incentive Plan will be administered
by a committee of non-employee directors of the Company (the "Committee").
Authorized but unissued shares, or shares previously issued and reacquired by
the Company, may be used to satisfy the Awards under the Incentive Plan. Each
option and award may become 100% exercisable/vested upon the occurrence of a
change in control of the Company, or upon death, disability or retirement of the
optionee.

The Bank contributed $41.4 million, during the third quarter of 1997, to the
Incentive Plan to enable the Incentive Plan to purchase the 1,744,198 shares of
the Company's common stock to be awarded. This contribution represents deferred
compensation which is initially recorded as a reduction to stockholders' equity
and ratably charged to compensation expense over the vesting period of the
awards. The Committee established September 2, 1997 as the Incentive Plan's
effective grant date and 1,512,507 shares, reserved as noted above, were awarded
to outside directors, officers and employees of the Bank. During the nine months
ended September 30, 1998, the Company granted stock awards of 91,409 shares,
with prices ranging from $21.69 to $27.75 per share, and 22,859 shares were
forfeited. During the nine months ended September 30, 1998, plan participants
vested in 328,377 shares. The total outstanding unvested stock awards amounted
to 1,252,210 shares at September 30, 1998. Upon the achievement of certain
defined performance targets, 99,255 of the aforementioned shares will vest. For
the nine months ended September 30, 1998 and 1997, compensation expense
attributable to the Incentive Plan was approximately $5.0 million and $2.0
million, respectively.

Options granted under this plan are either non-statutory stock options or
incentive stock options. Each option entitles the holder to purchase one share
of the Company's common stock at an exercise price equal to the fair market
value on the date of grant. There was no compensation expense attributable to
the options as the Company used the intrinsic value based method of accounting
as the exercise price equaled the stock price at the grant date. During the nine
months ended September 30, 1998, the Company granted stock options of 461,000
shares, with exercise prices ranging from $21.06 to $27.88 per share, and
148,691 options were forfeited. Additionally, during the nine months ended
September 30, 1998, plan participants vested in 794,326 options. The total
number of outstanding stock options was 4,191,815 at September 30, 1998 with a
weighted average exercise price of $22.48.

7.   RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
130, "Reporting Comprehensive Income," which established standards for the
reporting and displaying of comprehensive income and its components in a full
set of comparative general purpose financial statements. The Company adopted the
provisions of SFAS No. 130 during the quarter ended March 31, 1998 to give
effect to this pronouncement. Under existing accounting standards, other
comprehensive income is separately classified into foreign currency items,
minimum pension liability adjustments and unrealized gains and losses on
available-for-sale securities. Only the last of these items, however, is
currently applicable to the Company. Comprehensive income is reported by the
Company in the Consolidated Statements of Changes in Stockholders' Equity.

The FASB also issued in June 1997, SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which established standards for the way
public business enterprises, including the Company, are to report information
about operating segments in annual reporting and selected 


                                       7
<PAGE>
 
information about operating segments in interim reporting. This statement also
established standards for related disclosures about products, services,
geographic areas and major customers. SFAS No. 131 is effective for annual
reporting periods beginning after December 15, 1997 and requires interim periods
to be presented in the second year of application. SFAS No. 131 is limited to
additional disclosures and, accordingly, the adoption of this statement will not
have an impact on the Company's financial condition or results of operations.

In February 1998, the FASB issued SFAS No. 132, "Employer's Disclosures about
Pensions and Other Postretirement Benefits," an amendment of SFAS No. 87,
"Employer's Accounting for Pensions," SFAS No. 88, "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits," and SFAS No. 106, "Employer's Accounting for
Postretirement Benefits Other Than Pensions". This statement revises employer's
disclosures about pension and other postretirement benefit plans. It does not
change the measurement or recognition of  those plans. It standardizes the
disclosure requirements for pensions and other postretirement benefits to the
extent practicable, requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis, and eliminates certain disclosures that are no longer as useful as
they were when SFAS Nos. 87, 88 and 106 were issued. The statement suggests
combined formats for presentation of pension and other postretirement benefit
disclosures. The statement also permits reduced disclosures for nonpublic
entities.

SFAS No. 132 is effective for fiscal years beginning after December 15, 1997.
Earlier application is encouraged. Restatement of disclosures for earlier
periods provided for comparative purposes is required unless the information is
not readily available, in which case the notes to the financial statements
should include all available information and a description of the information
not available. SFAS No. 132 is limited to additional disclosures and,
accordingly, the adoption of this statement will not have an impact on the
Company's financial condition or results of operations.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
value. The accounting for changes in the fair value of a derivative depends on
the intended use of the derivative and its specific designation as follows:

a.   For a derivative designated as hedging the exposure to changes in the fair
     value of a recognized asset or liability or a firm commitment (referred to
     as a fair value hedge), the gain or loss is recognized in earnings in the
     period of change together with the offsetting loss or gain on the hedged
     item attributable to the risk being hedged.

b.   For a derivative designated as hedging the exposure to variable cash flows
     of a forecasted transaction (referred to as a cash flow hedge), the
     effective portion of the derivative's gain or loss is initially reported as
     a component of other comprehensive income and subsequently reclassified
     into earnings when the forecasted transaction affects earnings.

c.   For a derivative designated as hedging the foreign currency exposure of a
     net investment in a foreign operation, the gain or loss is reported in
     other comprehensive income as part of the cumulative translation
     adjustment. The accounting for a fair value hedge described above applies
     to a derivative designated as a hedge of the foreign currency exposure of
     an unrecognized firm commitment or an available-for-sale security.

d.   For a derivative not designated as a hedging instrument, the gain or loss
     is recognized in earnings in the period of change.


                                       8
<PAGE>
 
This Statement amends SFAS No. 52, "Foreign Currency Translation," to permit
special accounting for a hedge of a foreign currency forecasted transaction with
a derivative. It supersedes SFAS No. 80, "Accounting for Futures Contracts,"
SFAS No. 105, "Disclosure of Information about Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit
Risk," and SFAS No. 119, "Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments." It amends SFAS No. 107, "Disclosures about
Fair Value of Financial Instruments," to include in SFAS No. 107 the disclosure
provisions about concentrations of credit risk from SFAS No. 105.

SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Initial application of this statement should be as of the
beginning of an entity's fiscal quarter; on that date, hedging relationships
must be designated anew and documented pursuant to the provisions of this
statement. The Company has not yet determined the impact of SFAS No. 133 on its
financial statements.

8.   RECENT DEVELOPMENTS

In October 1998, the Board of Directors of the Bank implemented a Retirement 
Enhancement Program for employees who met a certain set of criteria as of 
September 30, 1998. Forty-three employees qualify for the voluntary program. The
Program enhances an eligible employee's retirement package primarily through a 
modification to the Bank's Defined Benefit Retirement Plan by increasing an 
eligible employee's age and service for purposes of determining his or her 
retirement benefit and guaranteeing retiree medical insurance for a period of 
ten years. Until the number of employees opting for the Retirement Enhancement 
Program has been determined, the financial impact cannot be reasonably 
estimated.

On October 20, 1998, the Company announced it had received all the necessary
regulatory approvals to open a full service branch facility in Smithtown, New
York. Additionally, on August 18, 1998, the Company also announced it had
received all the necessary regulatory approvals to open a full service branch
facility in Oceanside, New York. The branches are expected to open during the
fourth quarter of 1998. On June 17, 1998, the Company announced it had received
all the necessary regulatory approvals to open a full service branch facility in
Bayshore, New York. The Company expects to open this branch in the first quarter
of 1999.

On August 25, 1998, the Company announced that its Board of Directors declared a
quarterly dividend of ten cents ($0.10) per common share. The dividend was paid
on September 14, 1998 to shareholders of record as of September 1, 1998.

On April 28, 1998, the Company announced that the Superintendent of Banks of the
State of New York granted the Company permission to purchase approximately 2.2
million additional shares, or 5% of outstanding shares, in addition to the 2.2
million shares the Company was previously authorized to repurchase pursuant to
the initial stock repurchase plan announced on January 13, 1998. The Company
therefore had the ability to repurchase a total of 4.4 million shares through
January 12, 1999. As of May 26, 1998, the Company had repurchased 2,242,500
shares under the stock repurchase program, however, in connection with the
proposed acquisition of T R Financial Corp., the Company has suspended its stock
repurchase program effective on May 26, 1998.

During April 1998, the Company announced the Roslyn Bancorp, Inc. Dividend
Reinvestment and Stock Purchase Plan (the "Plan"). The Plan is administered by
Registrar and Transfer Company (the "Plan Administrator"). The Plan provides
stockholders that hold at least 25 shares in registered stock on the books of
the Company with the ability to reinvest cash dividends paid on shares of common
stock of the Company in additional shares. The Company will pay all brokerage
commissions relating to the reinvestment of dividends and the purchase of shares
with additional cash contributions. Administrative costs of the Plan relating to
the investment of dividends will also be paid by the Company.


                                       9
<PAGE>
 
9.   DEBT AND EQUITY AND MORTGAGE-BACKED AND MORTGAGE RELATED SECURITIES

The following table sets forth certain information regarding amortized cost and
estimated fair values of debt and equity and mortgage-backed and mortgage
related securities of the Company at September 30, 1998 and December 31, 1997,
respectively.

<TABLE>
<CAPTION>

                                                                 September 30, 1998          December 31, 1997
                                                              ------------------------    ------------------------
                                                                            Estimated                    Estimated
                                                               Amortized       Fair       Amortized        Fair
                                                                 Cost          Value         Cost          Value
                                                              ----------    ----------    ----------    ----------
                                                                                 (In thousands)
<S>                                                           <C>           <C>           <C>           <C>       
Available-for-sale:
     Debt securities:
        United States Government - direct and
          guaranteed                                          $    45,362   $     48,445  $     75,499   $    77,975
        United States Government agencies                         121,499        122,414       125,097       125,481
        Other                                                          --             --         5,365         5,385
                                                               ----------     ----------    ----------    ----------
           Total debt securities                                  166,861        170,859       205,961       208,841
                                                               ----------     ----------    ----------    ----------
     Equity securities:                                                  
        Preferred and common stock                                300,728        313,198       243,864       274,253
        Other                                                     173,772        173,958         9,720        11,099
                                                               ----------     ----------    ----------    ----------
           Total equity securities                                474,500        487,156       253,584       285,352
                                                               ----------     ----------    ----------    ----------
     Mortgage-backed and mortgage related securities, net:
        FNMA pass-through securities                                2,010          2,018            --            --
        GNMA pass-through securities                               10,611         11,858        14,291        15,711
        FHLMC pass-through securities                              82,373         83,280       250,206       253,153
        GNMA adjustable rate mortgage pass-
          through securities                                      369,293        374,905       442,037       449,260
        Whole loan private collateralized
          mortgage obligations                                    717,638        724,104       640,467       645,316
        Agency collateralized mortgage
           obligations                                            375,336        377,621       486,860       493,193
                                                               ----------     ----------    ----------    ----------
           Total mortgage-backed and mortgage
             related securities, net                            1,557,261      1,573,786     1,833,861     1,856,633
                                                               ----------     ----------    ----------    ----------
           Total securities available-for-sale                $ 2,198,622   $  2,231,801  $  2,293,406   $ 2,350,826
                                                               ==========     ==========    ==========    ==========
Held-to-maturity, net:
     Debt securities:
        State, county and municipal                           $     1,735   $      1,795  $      1,930   $     2,026
     Mortgaged-backed and mortgage related
       securities:
        Whole loan private collateralized mortgage
          obligations                                              92,547         93,180       200,193       200,445
                                                               ----------     ----------    ----------    ----------
           Total securities held-to-maturity, net             $    94,282   $     94,975  $    202,123   $   202,471
                                                               ==========     ==========    ==========    ==========
</TABLE>

                                       10
<PAGE>
 
10.  LOANS RECEIVABLE, NET

Loans receivable, net at September 30, 1998 and December 31, 1997 consist of the
following:


                                           September 30,          December 31, 
                                               1998                   1997
                                         -----------------      ----------------
                                                         (In thousands)
Real estate loans:                        
     One- to four-family                  $    849,704             $    633,957
     Multi-family                               49,084                   44,006
     Commercial real estate                    283,636                  248,607
     Construction and development               79,256                   52,269
     Home equity and second mortgage            40,602                   16,974
Consumer                                         8,769                    4,686
Student                                            896                    1,296
                                           -----------              -----------
             Gross loans                     1,311,947                1,001,795
Less:                                                    
     Unamortized discounts, net                  4,366                    5,974
     Deferred loan fees                           (665)                   1,522
     Deferred mortgage interest                    601                      696
     Allowance for possible loan losses         24,779                   24,029
                                           -----------              -----------
             Total loans, net                1,282,865                  969,574
Less:                                                    
     Loans held-for-sale, net                            
         One- to four-family, net               87,796                   13,987
         Student                                   896                    1,296
                                           -----------              -----------
             Loans receivable held for                   
               investment, net            $  1,194,173             $    954,291
                                           ===========              ===========

                                       11
<PAGE>
 
11.  ASSET QUALITY

The following table sets forth information regarding non-accrual loans, at the
dates indicated and real estate owned ("REO"). It is the Bank's general policy
to discontinue accruing interest on all loans which are 90 days or more past
due, or when in the opinion of management, such suspension is warranted. When a
loan is placed on non-accrual status, the Bank ceases the accrual of interest
owed and previously accrued interest is charged against interest income. Loans
are generally returned to accrual status when principal and interest payments
are current, there is reasonable assurance that the loan will be fully
collectible and a consistent record of performance has been demonstrated.

<TABLE>
<CAPTION>
                                                                               At                               At
                                                                          September 30,                    December 31,
                                                                              1998                             1997
                                                                        ---------------               -----------------   
                                                                                          (In thousands)
<S>                                                                    <C>                            <C>   
Non-performing loans:                                                
     One- to four-family                                               $         4,101                $         3,676  %
     Commercial real estate                                                      1,403                          2,723
     Home equity                                                                    62                             62
     Consumer loans                                                                 25                             19
                                                                                ------                         ------
         Total non-performing loans                                              5,591                          6,480
Real estate owned, net(1)                                                          412                            157
                                                                                ======                         ======
         Total non-performing assets                                   $         6,003               $          6,637
                                                                                ======                         ======
                                                                     
Allowance for possible loan losses as a percent of loans(2)                       2.03  %                        2.46  %   
                                                                                                                           
Allowance for possible loan losses as a percent of total                                                                   
  non-performing loans                                                          443.19  %                      370.82  %   
                                                                                                                           
Non-performing loans as a percent of loans(2)                                     0.46  %                        0.66  %   
                                                                                                                           
Non-performing assets as a percent of total assets                                0.15  %                        0.18  %   
</TABLE>

(1)  REO balances are shown net of related loss allowances.

(2)  Loans include loans receivable held for investment, net, excluding the
     allowance for possible loan losses.


Loans in arrears three months or more were as follows at:

<TABLE> 
<CAPTION> 
                                                                               Amount                    % of loans
                                                                               ------                     ----------      
                                                                                      (dollars in thousands)
            <S>                                                               <C>                             <C> 
            September 30, 1998                                                $  3,958                        0.30%
                                                                              ========                        =====
            December 31, 1997                                                 $  4,519                        0.46%
                                                                              ========                        =====
            December 31, 1996                                                 $  6,467                        1.26%
                                                                              ========                        =====
</TABLE> 

The principal balance of restructured loans that have not complied with the
terms of their restructuring agreement for a satisfactory period of time
(normally six months) was $2.9 million and $280,000 at September 30, 1998 and
December 31, 1997, respectively. Interest income that would have been recorded
if the loans had been performing in accordance with their original terms
aggregated approximately $172,000 and $30,000 during the nine months ended
September 30, 1998 and year ended December 31, 1997, respectively.

                                       12
<PAGE>
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Roslyn Bancorp, Inc. is a savings and loan holding company regulated by the
Office of Thrift Supervision. The primary operating subsidiary of Roslyn
Bancorp, Inc. is The Roslyn Savings Bank and its subsidiaries (the "Bank"), a
New York State chartered stock savings bank. While the following discussion of
financial condition and results of operations includes the collective results of
Roslyn Bancorp, Inc. and the Bank (collectively the "Company"), this discussion
reflects principally the Bank's activities as the Company currently does not
engage in any significant business activities other than the management of the
Bank and the investment of net proceeds from the Bank's mutual-to-stock
conversion which occurred on January 10, 1997.

Financial Condition

Total assets at September 30, 1998 were $3.72 billion, an increase of $118.1
million, or 3.3%, from $3.60 billion at December 31, 1997, primarily due to
increases in both the mortgage loan and debt and equity securities
available-for-sale portfolios. Loans, net of unearned income, increased $314.0
million, or 31.6%, to $1.31 billion at September 30, 1998 compared to $993.6
million at December 31, 1997. The increase in loans, net of unearned income, was
primarily due to a substantial increase in loan originations during the first
nine months of 1998. Loan originations increased 142.4%, to $893.0 million, for
nine months ended September 30, 1998, as compared to $368.4 million during the
nine months ended September 30, 1997. Debt and equity securities
available-for-sale increased $163.8 million, or 33.1%, from $494.2 million at
December 31, 1997, to $658.0 million at September 30, 1998. These increases were
partially offset by a $390.5 million decrease in mortgage-backed and mortgage
related securities from $2.06 billion at December 31, 1997 to $1.67 billion at
September 30, 1998. These overall increases were primarily funded through
deposit growth, cash flows and the Company's leveraging strategy.

Total liabilities at September 30, 1998 were $3.13 billion, an increase of
$154.6 million, or 5.2%, from $2.97 billion at December 31, 1997. The overall
increase in total liabilities was principally due to a $103.5 million increase
in total deposits from $1.94 billion at December 31, 1997 to $2.05 billion at
September 30, 1998. The increase in total deposits was primarily the result of
the continued growth in certificates of deposits, money market, demand deposits
and savings accounts. Borrowings increased $27.4 million to $993.9 million at
September 30, 1998 as compared to $966.5 million for the prior year-end.

Total stockholders' equity decreased $36.4 million to $591.9 million at
September 30, 1998 from $628.3 million at December 31, 1997. The decrease was
primarily due to the repurchase of 2,242,500 shares of the Company's common
stock, at an average per share price of $25.94, dividends paid of $11.2 million
for the nine months ended September 30, 1998, and a $14.1 million decrease in
net unrealized gain on securities available-for-sale, net of tax. These
decreases were partially offset by the nine months earnings of $39.0 million and
the amortization of unallocated and unearned shares of common stock held by the
Company's stock-related benefit plans.

Analysis of Net Interest Income

Net interest income represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income depends
upon the volume of interest-earning assets and interest-bearing liabilities and
the interest rates earned or paid on them.

The following table sets forth certain information regarding the Company's
average statements of financial condition and its statements of income for the
three and nine months ended September 30, 1998 and 1997, and reflects the
average yield on interest-earning assets and average cost of interest-bearing
liabilities for the periods indicated. Such yields and costs are derived by
dividing income or expense, annualized, by the average balance of

                                       13
<PAGE>
 
interest-earning assets or interest-bearing liabilities, respectively. Average
balances are derived from average daily balances. Average balances and yields
include non-accrual loans.

<TABLE>
<CAPTION>

                                                                     Three Months Ended September 30,
                                           -------------------------------------------------------------------------------------
                                                            1998                                          1997
                                           ----------------------------------------       --------------------------------------
                                                                          Average                                      Average
                                            Average                       Yield/           Average                      Yield/
                                            Balance        Interest        Cost            Balance       Interest        Cost
                                           -----------    -----------    ----------       -----------    ---------    ----------
                                                                          (Dollars in thousands)
Assets:
<S>                                        <C>             <C>               <C>       <C>             <C>                <C>  
Interest-earning assets:
   Federal funds sold and repurchase
      agreements                           $     19,446    $        276        5.68%   $      26,317     $       395      6.00%
   Debt and equity securities                   647,636           9,728        6.01          532,830           8,616      6.47
   Mortgage-backed and mortgage                                                       
     related securities                       1,795,017          29,710        6.62        1,867,823          33,680      7.21
   Real estate loans, net                     1,283,029          25,521        7.96          770,837          16,532      8.58
   Consumer and student loans                     8,367             201        9.61            4,577             110      9.61
                                             ----------      ----------                   ----------      ----------
          Total interest-earning assets       3,753,495          65,436        6.97        3,202,384          59,333      7.41
                                                             ----------                                   ----------
Non-interest-earning assets                      89,425                                       69,778                 
                                             ----------                                   ----------                               
Total assets                               $  3,842,920                                $   3,272,162                 
                                             ==========                                   ==========
                                                                                      
Liabilities and Stockholders' Equity:                                                 
                                                                                      
Interest-bearing liabilities:                                                         
   Deposits:                                                                          
      Money market accounts                $     74,575    $        673        3.61%   $     50,688      $       338      2.67%
      Savings accounts                          501,587           3,600        2.87         425,988            3,300      3.10
      NOW and Super NOW accounts                 87,125             686        3.15          82,994              782      3.77
      Certificates of deposit                 1,363,743          19,563        5.74       1,251,903           18,372      5.87
                                             ----------      ----------                  ----------       ----------
          Total deposits                      2,027,030          24,522        4.84       1,811,573           22,792      5.03
   Borrowed funds                             1,121,515          16,645        5.94         765,811           11,544      6.03
                                             ----------      ----------                  ----------       ----------
          Total interest-bearing 
            liabilities                       3,148,545          41,167        5.23       2,577,384           34,336      5.33   
                                                             ----------                                   ----------
Non-interest-bearing liabilities                105,852                                      73,374                 
                                             ----------                                  ----------
Total liabilities                             3,254,397                                   2,650,758                 
Stockholders' equity                            588,523                                     621,404                 
                                             ----------                                  ----------
Total liabilities and stockholders'                                                   
  equity                                   $  3,842,920                                $  3,272,162                 
                                             ==========                                  ==========
                                                                                      
Net interest income/net interest rate                      
  spread                                                   $     24,269        1.74%                     $    24,997      2.08% 
                                                             ==========  ==========                       ========== =========      
  Net interest margin                                                          2.59%                                      3.12%
                                                                         ==========                                  =========
                                                                                      
Ratio of interest-earning assets to                                                   
  interest-bearing liabilities                                               119.21%                                    124.25%
                                                                         ==========                                  =========
                                                                                      
</TABLE>

                                       14
<PAGE>
 
<TABLE>
<CAPTION>


                                                                           Nine Months Ended September 30,
                                               ------------------------------------------------------------------------------------
                                                                 1998                                        1997
                                               -----------------------------------------    ---------------------------------------
                                                                               Average                                    Average
                                                 Average                        Yield/       Average                       Yield/
                                                 Balance        Interest         Cost        Balance       Interest         Cost
                                               ------------    -----------    ----------    ----------    -----------    ----------
                                                                                (Dollars in thousands)
Assets:
<S>                                         <C>             <C>                <C>      <C>            <C>                    <C>  

Interest-earning assets:
      Federal funds sold and repurchase
        agreements                          $       29,168  $     1,199        5.48%    $      89,566  $      3,704           5.51%
      Debt and equity securities                   590,449       25,907        5.85           506,627        25,028           6.59
      Mortgage-backed and mortgage
        related securities                       1,888,771       96,721        6.83         1,702,189        91,426           7.16
      Real estate loans, net                     1,140,194       69,987        8.18           650,183        42,175           8.65
      Consumer and student loans                     7,341          516        9.37             3,761           252           8.93
                                                ------------   ---------                    -----------   ----------
          Total interest-earning assets          3,655,923      194,330        7.09         2,952,326       162,585           7.34
                                                               ---------                                  ----------
Non-interest-earning assets                         77,425                                     87,622
                                               ------------                                -----------

Total assets                                $    3,733,348                              $   3,039,948
                                               ============                                ===========

Liabilities and Stockholders' Equity:

Interest-bearing liabilities:
   Deposits:
      Money market accounts                 $       58,595  $     1,352        3.08%    $      54,675  $      1,101           2.68%
      Savings accounts                             502,765       11,394        3.02           436,529         9,988           3.05
      NOW and Super NOW accounts                    87,156        2,195        3.36            76,843         2,037           3.53
      Certificates of deposit                    1,348,190       57,884        5.72         1,188,061        51,080           5.73
                                               ------------    ---------                   -----------    ----------
          Total deposits                         1,996,706       72,825        4.86         1,756,108        64,206           4.87
   Borrowed funds                                1,037,799       46,112        5.92           527,428        23,072           5.83
   Non-depository stock subscriptions                    -            -           -            70,537         1,341           2.53
                                               ------------    ---------                   -----------    ----------
          Total interest-bearing liabilities     3,034,505      118,937        5.23         2,354,073        88,619           5.02
                                                               ---------                                  ----------
Non-interest-bearing liabilities                    96,433                                     80,429
                                               ------------                                -----------
Total liabilities                                3,130,938                                  2,434,502
Stockholders' equity                               602,410                                    605,446
                                               ------------                                -----------

Total liabilities and stockholders' equity  $    3,733,348                              $   3,039,948
                                               ============                                ===========

Net interest income/net interest rate                       
  spread                                                    $    75,393        1.86%                   $    73,966           2.32%  
                                                               =========     ========                     ==========    ========== 
                                                                           

Net interest margin                                                            2.75%                                          3.34%
                                                                            ========                                    ===========

Ratio of interest-earning assets to
  interest-bearing liabilities                                               120.48%                                        125.41%
                                                                            ========                                    =========== 

</TABLE>

                                       15
<PAGE>
 
Comparison of Operating Results for the Three Months Ended September 30, 1998
and 1997

General

The Company reported net income of $13.3 million, or basic and diluted earnings
per share of $0.35, for the quarter ended September 30, 1998, as compared to net
income of $11.0 million, or basic and diluted earnings per share of $0.28, for
the comparable prior year period.

Interest Income

Interest income for the quarter ended September 30, 1998 increased to $65.4
million, or 10.3%, from $59.3 million as compared to the quarter ended September
30, 1997. The increase was primarily the result of a $551.1 million, or 17.2%,
increase in average interest-earning assets to $3.75 billion for the quarter
ended September 30, 1998, as compared to $3.20 billion in the comparable quarter
of 1997, offset partially by a corresponding decrease in the average yield from
7.41% to 6.97%. The increase in average interest-earning assets was principally
attributable to growth of $512.2 million in average real estate loans, net and
$114.8 million in average debt and equity securities, offset by a $72.8 million
decrease in average mortgage-backed and mortgage-related securities. This growth
was primarily funded by increased deposits, borrowings and cash flows.

Interest income on real estate loans increased $9.0 million, or 54.4%, to $25.5
million for the three months ended September 30, 1998, from $16.5 million for
the same period in 1997. The increase was a result of the growth in the average
balance of loans outstanding primarily due to increased originations of one- to
four-family, commercial real estate and construction and development loans. The
increase was partially offset by a 62 basis point decrease in the average yield
on real estate loans from 8.58% for the three months ended September 30, 1997 to
7.96% for the same period in 1998, principally due to an increased concentration
of lower yielding one- to four-family real estate loans within the loan
portfolio mix.

Interest income on mortgage-backed and mortgage-related securities decreased
$4.0 million, or 11.8%, to $29.7 million for the three months ended September
30, 1998, from $33.7 million for the same period in 1997. The decrease was
partially the result of the reduction in the average balance of mortgage-backed
and mortgage related securities due to management's strategy of decreasing its
investment in loan-based securities. The decrease was also due to a 59 basis
point decline in the average yield on mortgage-backed and mortgage related
securities from 7.21% for the three months ended September 30, 1997 to 6.62% for
the same period in 1998. Interest income on debt and equity securities increased
$1.1 million, or 12.9%, to $9.7 million for the three months ended September
30, 1998, from $8.6 million for the same period in 1997. The increase was the
result of growth in the average balance of debt and equity securities, offset by
a 46 basis point decline in the average yield on debt and equity securities from
6.47% for the three months ended September 30, 1997 to 6.01% for the same period
in 1998.

Interest Expense

Interest expense for the three months ended September 30, 1998, was $41.2
million, compared to $34.3 million for the three months ended September 30,
1997, an increase of $6.9 million, or 19.9%. The increase in interest expense is
related to a $571.2 million, or 22.2%, increase in the average balance of
interest-bearing liabilities from $2.58 billion for the quarter ended September
30, 1997 to $3.15 billion for the quarter ended September 30, 1998. This
increase reflects a $215.5 million increase in the average balance of
interest-bearing deposits and a $355.7 million increase in the average balance
of borrowed funds for the quarter ended September 30, 1998, as compared to the
prior year quarter.

The increase in total deposits was primarily due to an increase in the average
balance of savings accounts and certificates of deposit by offering competitive
rates and through the acquisition of $150.0 million of brokered deposits of
which $50.0 million were acquired during the quarter ended September 30, 1997
and $100.0 million during the third 

                                       16
<PAGE>
 
and fourth quarters of 1996. As of September 30, 1998, $139.7 million of
brokered deposits remained outstanding. The higher deposit balances, partially
offset by the lower average cost, resulted in an increase of $1.7 million in
interest expense on deposits for the quarter ended September 30, 1998 as
compared to the same quarter in 1997.

The average balance of borrowed funds increased $355.7 million from $765.8
million for the three months ended September 30, 1997 to $1.12 billion for the
three months ended September 30, 1998. This increase, coupled with a 9 basis
point decrease in the average cost, resulted in a $5.1 million increase in
interest expense on borrowed funds, from $11.5 million for the quarter ended
September 30, 1997 to $16.6 million for the quarter ended September 30, 1998.
The increase in borrowings, principally reverse-repurchase agreements, are part
of the Company's wholesale leverage strategy to improve its return on invested
capital.

The proceeds from the increased deposits and borrowings were reinvested in real
estate loans and investment securities.

Net Interest Income

Net interest income before provision for possible loan losses was $24.3 million
for the three months ended September 30, 1998 as compared to $25.0 million for
the three months ended September 30, 1997, a decrease of $728,000, or 2.9%. The
net interest margin and spread for the quarter ended September 30, 1998,
decreased to 2.59% and 1.74%, respectively, from 3.12% and 2.08%, respectively,
for the prior year quarter due to the increase in the average balances of
borrowed funds and deposits, combined with the decrease in the rates earned on
real estate loans and mortgage-backed and related securities. The proceeds from
the increased borrowings and deposits were used to fund loan originations and
invest in debt and equity securities.

Provision for Possible Loan Losses

The provision for possible loan losses totaled $150,000 for the three months
ended September 30, 1998 as compared to $150,000 for the three months ended
September 30, 1997. The provision for possible loan losses for the three months
ended September 30, 1998 reflects management's qualitative and quantitative
assessment of the loan portfolio, net charge-offs and collection of delinquent
loans. At September 30, 1998 and December 31, 1997, the allowance for possible
loan losses amounted to $24.8 million and $24.0 million, respectively, and the
ratio of such allowance to total non-performing loans was 443.19% at September
30, 1998 as compared to 370.82% at December 31, 1997.

The Company's formalized process for assessing the adequacy of the allowance for
loan losses, and the resultant need, if any, for periodic provisions to the
allowance charged to income, entails both individual loan analyses and loan pool
analyses. The individual loan analyses are periodically performed on
individually significant loans or when otherwise deemed necessary, and primarily
encompasses multi-family, commercial real estate and construction and
development loans. The result of these individual analyses is the allocation of
the overall allowance to specific allowances for individual loans, both loans
considered impaired and non-impaired.

The loan pool analyses are performed on the balance of the portfolio, primarily
the one- to four-family residential and consumer loans. The pools consist of
aggregations of homogeneous loans having similar credit risk characteristics.
Examples of pools defined by the Company for this purpose are
Company-originated, fixed-rate residential loans; Company-originated,
adjustable-rate residential loans; purchased, fixed-rate residential loans;
outside-serviced residential loans; residential second mortgage loans;
participations in conventional first mortgages; residential construction loans;
commercial construction loans, etc. For each such defined pool, there is a set
of sub-pools based upon delinquency status: current, 30-59 days, 60-89 days,
90-119 days and 120+ days (the latter three sub-pools are considered to be
"classified" by the Company). For each sub-pool, the Company has developed a
range of allowance necessary to adequately provide for probable losses inherent
in that pool of loans. These ranges are based upon a number of factors including
the risk characteristics of the pool, actual loss and migration experience,
expected loss and migration experience considering current economic conditions,
industry norms, and the relative seasoning of the pool.

                                       17
<PAGE>
 
The ranges of allowance developed by the Company are applied to the outstanding
principal balance of the loans in each sub-pool; as a result, further specific
and general allocations of the overall allowance are made (the allocations for
the classified sub-pools are considered specific and the allocations for the
non-classified sub-pools are considered general).

The Company's overall allowance also contains an unallocated amount which is
supplemental to the results of the aforementioned process and takes into
consideration known and expected trends that are likely to affect the
creditworthiness of the loan portfolio as a whole such as, national and local
economic conditions, unemployment conditions in the local lending area and the
timeliness of court foreclosures proceedings in the Company's local and other
lending areas.

At September 30, 1998 and December 31, 1997, the loan portfolio continued to
show significant growth in all sectors, and the mix has continued to change. At
those dates, one- to four-family residential first mortgage loans were $849.7
million and $634.0 million, respectively, or 64.8% and 63.3%, respectively, of
the gross loan portfolio. The relatively riskier multi-family, commercial real
estate, construction and development, and home equity and second mortgage loans
aggregated $452.5 million and $361.9 million, respectively, at those dates, or
34.5% and 36.1%, respectively, of the gross loan portfolio. Non-performing loans
at those dates were $5.6 million and $6.5 million, respectively, of which $1.4
million and $2.7 million, respectively, were commercial real estate loans. The
allowance for possible loan losses as a percent of loans was 2.03% and 2.46%,
respectively, at those dates.

The quantitative information cited in the above paragraph indicates a continuing
trend over this time horizon of (1) a dramatic increase in absolute dollars, and
significant increase in relative dollars, in the relatively less risky one- to
four-family residential first mortgage loans, (2) a steady increase in absolute
dollars, and significant decrease in relative dollars, in the relatively riskier
loans (as previously defined), and (3) a decrease in absolute dollars in non-
performing loans. The application of the Company's formalized process for
assessing the adequacy of the allowance for possible loan losses to the loan
portfolio undergoing the changes cited during this time horizon has resulted in
a relatively flat absolute dollar level of the allowance for possible loan
losses and a steady decrease in the ratio of the allowance for possible loan
losses to total loans. Management continues to believe the Company's reported
allowance for possible loan losses is both appropriate in the circumstances and
adequate to provide for estimated probable losses inherent in the loan
portfolio.

Non-Interest Income

Non-interest income increased $4.0 million, or 167.8%, to $6.3 million for the
quarter ended September 30, 1998 as compared to $2.3 million for the same period
in the prior year. The increase was a result of a $1.3 million increase in net
gains on sales of securities, a $2.1 million increase in mortgage banking
operations income and a $332,000 increase in fees and service charges. The
increase in net gains on securities was due to management's investment strategy
of periodically recognizing profits from its available-for-sale securities
portfolio during favorable market conditions. The increase in mortgage banking
operations income, which includes gains from the sale of loans, was primarily
due to an increased level of loan production and favorable market conditions in
the secondary market.

Non-Interest Expense

Non-interest expense totaled $11.2 million for the quarter ended September 30,
1998 as compared to $10.5 million for the quarter ended September 30, 1997, an
increase of $633,000, or 6.0%. The increase in non-interest expense was
primarily attributable to an increase in compensation and employee benefits of
$1.5 million, which principally relates to the costs associated with additional
commission and other compensation costs associated with the increased volume of
loan originations, and to a lesser extent, an increase in office and occupancy
expense.

                                       18
<PAGE>
 
Income Taxes

Total income tax expense increased $281,000, from $5.6 million recorded during
the quarter ended September 30, 1997 to $5.9 million during the quarter ended
September 30, 1998. The increase is primarily attributable to the increase in
income before income taxes.

Comparison of Operating Results for the Nine Months Ended September 30, 1998 and
1997

General

The Company reported net income of $39.0 million for the nine month period ended
September 30, 1998, or basic and diluted earnings per share of $1.01, as
compared to net income of $24.0 million, or basic and diluted earnings per share
of $0.60, for the corresponding period in 1997. Net income for the nine months
ended September 30, 1997 included a $7.4 million, after tax, non-recurring
expense relating to the funding of The Roslyn Savings Foundation (the
"Foundation").

Interest Income

Interest income amounted to $194.3 million for the nine months ended September
30, 1998, representing an increase of $31.7 million, or 19.5%, from the same
period in 1997. The increase was attributable to the growth in average
interest-earning assets to $3.66 billion for the nine months ended September 30,
1998, from $2.95 billion for the nine months ended September 30, 1997. The
growth in average interest-earning assets was primarily attributable to growth
of $490.0 million in average real estate loans, net, $186.6 million in average
mortgage-backed and mortgage related securities and $83.8 million in average
debt and equity securities, offset by a $60.4 million decrease in average
federal funds sold and repurchase agreements. This growth was primarily funded
by increased deposits, borrowings and cash flows.

Interest income on real estate loans increased $27.8 million, or 65.9%, to $70.0
million for the nine months ended September 30, 1998, from $42.2 million for the
same period in 1997. The increase was a result of the growth in the average
balance of loans outstanding primarily due to increased originations of one- to
four-family, construction and development, home equity and second mortgages and
commercial real estate loans. The increase in interest income for the nine
months ended September 30, 1998, as compared to the same period in 1997, was
partially offset by a 47 basis point decrease in the average yield on real
estate loans, net from 8.65% for the nine months ended September 30, 1997 to
8.18% for the same period in 1998. The decline in the real estate loan yield was
principally due to an increased concentration of one- to four-family real estate
loans within the loan portfolio mix in 1998.

Interest income on mortgage-backed and mortgage related securities increased
$5.3 million, or 5.8%, to $96.7 million for the nine months ended September 30,
1998, from $91.4 million for the same period in 1997. The increase was a result
of a $186.6 million growth in the average balance of mortgage-backed and
mortgage-related securities from $1.70 billion for the nine months ended
September 30, 1997 to $1.89 billion for the nine months ended September 30,
1998, due to management's strategy of increasing its investment in loan based
securities during early 1998. Partially offsetting this increase was a 33 basis
point decline in the average yield on mortgage-backed and mortgage-related
securities from 7.16% for the nine months ended September 30, 1997 to 6.83% for
the same period in 1998.

Interest income on debt and equity securities increased $879,000, or 3.5%, to 
$25.9 million for the nine months ended September 30, 1998, from $25.0 million 
for the same period in 1997. The increase was the result of growth in the 
average balance of debt and equity securities, offset by a 74 basis point 
decline in the average yield on debt and equity securities from 6.59% for the 
nine months ended September 30, 1997 to 5.85% for the same period in 1998.

Interest income on federal funds sold and repurchase agreements decreased $2.5
million, or 67.6%, to $1.2 million for the nine months ended September 30, 1998,
from $3.7 million for the same period in 1997. The decrease is due to the
short-term liquidity position maintained by the Company in early January 1997
relating to the then pending offering of the Company's common stock and the
anticipated return of approximately $1.08 billion in non-depository stock
subscription funds.

                                       19
<PAGE>
 
Interest Expense

Interest expense for the nine months ended September 30, 1998, was $118.9
million, compared to $88.6 million for the nine months ended September 30, 1997,
an increase of $30.3 million, or 34.2%. The increase in interest expense is
related to a $680.4 million, or 28.9%, increase in the average balance of
interest-bearing liabilities from $2.35 billion in 1997 to $3.03 billion in
1998. This increase reflects a $240.6 million increase in the average balance of
interest-bearing deposits and a $510.4 million increase in the average balance
of borrowed funds for the nine months ended September 30, 1998, as compared to
the comparable period in 1997, offset by a $70.5 million decrease in average
non-depository stock subscriptions.

The increase in total deposits is primarily due to an increase in the average
balance of savings and certificates of deposit accounts, which was a result of
the Bank's offering of more competitive rates, and through the acquisition of
$150.0 million of brokered deposits of which $50.0 million were acquired during
the quarter ended September 30, 1997 and $100.0 million during the third and
fourth quarters of 1996. As of September 30, 1998, $139.7 million of brokered
deposits remained outstanding. The effect of the higher average deposit
balances, coupled with a 1 basis point decrease in the average cost, resulted in
an increase of $8.6 million in interest expense on deposits to $72.8 million for
the nine months ended September 30, 1998 as compared to $64.2 million for the
same period in 1997.

The average balance of borrowed funds increased $510.4 million, from $527.4
million for the nine months ended September 30, 1997 to $1.04 billion for the
nine months ended September 30, 1998. This increase, in addition to a 9 basis
point increase in the average cost, resulted in an $23.0 million increase in
interest expense on borrowed funds, from $23.1 million for the nine months ended
September 30, 1997 to $46.1 million for the nine months ended September 30,
1998. The increase in borrowings, principally reverse-repurchase agreements, are
part of the Company's wholesale leveraging strategy.

The average balance of non-depository stock subscriptions decreased from $70.5
million for the nine months ended September 30, 1997 to zero for the
corresponding 1998 period. This decrease relates to the one-time expense
incurred in the 1997 period relating to interest paid on stock subscription
escrow funds received in connection with the offering of the Company's common
stock.

The proceeds from the increase in deposits and borrowings were reinvested in
real estate loans, investment securities, and, to a lesser extent, used to fund
the treasury stock repurchase program.

Net Interest Income

Net interest income before provision for possible loan losses was $75.4 million
for the nine months ended September 30, 1998 as compared to $74.0 million for
the nine months ended September 30, 1997, an increase of $1.4 million, or 1.9%.
The net interest margin and spread for the nine months ended September 30, 1998,
decreased to 2.75% and 1.86%, respectively, from 3.34% to 2.32%, respectively,
for the prior year comparable period due principally to the increase in the
average balances of borrowed funds and deposits and a decrease in the yield on
interest-earning assets. The proceeds from the borrowed funds and deposits were
used to fund loan originations, invest in mortgage-backed and mortgage-related
securities, and, to a lesser extent, used to fund share purchases for the
treasury stock repurchase program.

Provision for Possible Loan Losses

The provision for possible loan losses totaled $750,000 for the nine months
ended September 30, 1998 as compared to $450,000 for the nine months ended
September 30, 1997. The provision for possible loan losses for the nine months
ended September 30, 1998 reflects management's qualitative and quantitative
assessment of the loan portfolio, net charge-offs and collection of delinquent
loans.


                                      20
<PAGE>
 
Non-Interest Income

Non-interest income increased $9.0 million, or 145.7%, to $15.2 million for the
nine months ended September 30, 1998 as compared to $6.2 million for the same
period in the prior year. The increase was a result of a $4.7 million increase
in net gains on sales of securities, a $3.2 million increase in mortgage banking
operations income and a $370,000 increase in fees and service charges. The
increase in net gains on securities was due to management's investment strategy
of periodically recognizing profits from its available-for-sale securities
portfolio during favorable market conditions. The increase in mortgage banking
operations income was primarily due to an increased level of loan production and
favorable market conditions in the secondary market.

Non-Interest Expense

Non-interest expense totaled $32.9 million for the nine months ended September
30, 1998 as compared to $44.2 million for the nine months ended September 30,
1997, a decrease of $11.3 million, or 25.7%. The decrease was primarily the
result of the one-time $12.7 million charge associated with funding the
Foundation included in the 1997 period. Excluding the effect of funding the
Foundation, non-interest expense increased $1.4 million, or 4.2%, to $32.9
million for the nine months ended September 30, 1998 as compared to $31.5
million for the same period in 1997. Excluding the effect of funding the
Foundation, the increase in non-interest expense was primarily attributable to
an increase in compensation and employee benefits of $3.5 million, including the
Company's SBIP and increased commission and other compensation costs associated
with the increased volume of loan originations. Offsetting these increases was a
decrease of $2.8 million in other non-interest expenses principally relating to
a reduction in professional fees.

Income Taxes

Total income tax expense increased $6.5 million, from $11.5 million recorded
during the nine months ended September 30, 1997 to $18.0 million during the nine
months ended September 30, 1998. The increase was primarily attributable to both
the increase in income before income taxes and the one-time charitable donation
made by the Company to the Foundation in the first quarter of 1997. The
Company's contribution of common stock to the Foundation was tax deductible,
subject to a limitation based on 10% of the Company's annual taxable income. The
Company, however, was able to carry forward any unused portion of the deduction
for five years following the year in which the contribution was made. Based on
the Company's estimate of annual taxable income during the carry forward period
(the five years following the time of contribution), the Company recognized a
tax benefit of $5.3 million on the $12.7 million charitable donation during the
first quarter of 1997.

Proposed Acquisition of T R Financial Corp.

On May 26, 1998, the Company and T R Financial Corp. (the holding company of
Roosevelt Savings Bank) announced a definitive agreement to merge the holding
companies in an exchange of stock transaction. Under the terms of the agreement,
the merger will be structured as a tax-free stock-for-stock transaction that is
intended to be accounted for as a pooling-of-interests. T R Financial Corp.
shareholders will receive 2.05 shares of the Company's common stock for each
share of T R Financial Corp. common stock held. The exchange ratio may be
increased by the Company in the event that T R Financial Corp. exercises its
rights under the merger agreement to terminate the merger agreement due to the
price of the Company's common stock declining below certain levels established
by formulas set forth in the merger agreement. In addition, in connection with
the merger, each party acquired an option to purchase 19.9% of the other
company's then issued and outstanding common stock. The options may only be
exercised upon the occurrence of certain events (none of which have occurred).
The merger will create a financial institution with $7.7 billion in assets and
more than $4.1 billion in deposits. The combined institution will retain the
Roslyn Bancorp, Inc. name. During the quarter ended September 30, 1998, both
companies filed preliminary proxy materials with the Securities and Exchange
Commission (the "SEC") in connection with each company's shareholders meeting 
to consider the 


                                      21
<PAGE>
 
proposed merger of the two holding companies. Additionally, applications with
respect to the proposed merger were also filed with bank regulatory agencies.
The transaction is subject to both regulatory and shareholder approvals and is
expected to close in December 1998.

Liquidity and Capital Resources

The Company's primary sources of funds are deposits, proceeds from the principal
and interest payments on loans, mortgage-backed and mortgage related and debt
securities, dividends received on equity securities, and to a lesser extent,
proceeds from the sale of residential mortgage loans in the secondary market.
While maturities and scheduled amortization of loans and securities are
predictable sources of funds, deposit outflows, mortgage prepayments and
mortgage loan sales are greatly influenced by general interest rates, economic
conditions and competition.

The primary investing activities of the Company are the origination of both one-
to four-family and commercial real estate loans and the purchase of
mortgage-backed and mortgage related and debt and equity securities. During the
nine months ended September 30, 1998 and 1997, the Bank originated loans in the
amount of $893.0 million and $368.4 million, respectively. Purchases of
mortgage-backed and mortgage related and debt and equity securities totaled
$1.39 billion and $1.10 billion during the nine months ended September 30, 1998
and 1997, respectively. These activities were funded primarily by principal
repayments on loans and mortgage-backed and mortgage related securities, deposit
growth and by increases in borrowed funds during the nine months ended September
30, 1998. Loan sales provided additional liquidity to the Company, totaling
$399.4 million and $144.2 million for the nine months ended September 30, 1998
and 1997, respectively.

The Company closely monitors its liquidity position on a daily basis. Excess
short-term liquidity is invested in overnight federal funds sold. In the event
that the Bank should require funds beyond its ability to generate them
internally, additional sources of funds are available through the use of
reverse-repurchase agreements. At September 30, 1998, the Company had $993.9
million in reverse-repurchase agreements outstanding, and at December 31, 1997
there were $965.1 million in reverse-repurchase agreements outstanding. The
aforementioned is primarily attributable to management's decision to utilize
borrowings, primarily in the form of reverse-repurchase agreements, to fund a
significant portion of its asset growth.

At September 30, 1998 the Company had outstanding loan commitments to advance
approximately $310.3 million for mortgage loans, primarily all of which were
fixed-rate commercial and residential real estate loans. Management anticipates
that it will have sufficient funds available to meet these loan commitments.
Certificates of deposit that are scheduled to mature in one year or less from
September 30, 1998 totaled $1.06 billion. Based upon prior experience, and the
Company's current pricing strategy, management believes that a significant
portion of such deposits will remain with the Company.

The Company's most liquid assets are cash and cash equivalents, short-term
securities, securities available-for-sale and securities held-to-maturity due
within one year. The levels of these assets are dependent on the Company's
operating, financing, lending, and investment activities during any given
period.

Regulatory Capital Position

The Bank is subject to minimum regulatory requirements imposed by the Federal
Deposit Insurance Corporation (the "FDIC") which vary according to the
institution's capital level and the composition of its assets. An insured
institution is required to maintain core capital of not less than 3% of total
assets plus an additional 100 to 200 basis points ("leverage capital ratio"). An
insured institution must also maintain a ratio of total capital to risk-based
assets of 8%. Although the minimum leverage capital ratio is 3%, the Federal
Deposit Insurance Corporation Improvement Act (the "FDICIA") stipulates that an
institution with less than 4% leverage capital ratio is deemed to be an
"undercapitalized" institution and results in the imposition of regulatory
restrictions. The Bank's capital ratios qualify it to be deemed "well
capitalized" under FDICIA.


                                      22
<PAGE>
 
In accordance with the requirements of the FDIC and the New York State Banking
Department, the Bank must meet certain measures of capital adequacy with respect
to leverage and risk-based capital. As of September 30, 1998 the Bank exceeded
those requirements. The Bank's leverage capital ratio, Tier-1 risk-based capital
ratio and total-risk based capital ratio were 10.96%, 22.02% and 23.28%,
respectively.

Year 2000 Compliance

The "Year 2000" Problem, as it is generally referred to, concerns the inability
of certain computer hardware and software systems and associated applications to
correctly recognize and process dates beyond December 31, 1999. Many computer
programs were developed using only six digits to define the date field in their
programs. Computer programs used by the Company, its suppliers or outside
service providers that have date-sensitive software may recognize "00" as the
year 1900, rather than the year 2000. Due to the nature of financial
information, calculations that rely on the integrity of the date field for the
correct processing of information could be significantly misstated, if
corrective action is not timely taken.

State of Readiness

The Company has implemented a detailed Year 2000 Plan, according to the
guidelines of the Federal Financial Institutions Examination Council, to
evaluate the Year 2000 compliance of its computer systems and the equipment
which supports the operation of the Company. 

In 1998, the Company initiated formal communications with all of its service
providers, vendors, major fund providers, major borrowers and companies with
which it has material investments, to determine the extent to which it may be
vulnerable to the inability of those parties to remediate their own Year 2000
issues. The Company's vendor relationships cover wide range of services which 
may or may not be subject to a contractual agreement. Where a contractual 
relationship exists between the company and a provider of services, and the 
company is exposed due to a failure on the part of the vendor to provide the 
service, whether due to Year 2000 or some other issue, the vendor would
necessarily be subject to a breach of contract suit. In order to minimize the
risk of material loss or disruption of the Company's business due to an issue
involving date sensitive processing, the Company has not only required of all of
these vendors their written assurances that they are proactively addressing Year
2000 issues within their operations, but the company is also requesting and
taking advantage of opportunities to test and verify these claims.

Like many financial institutions, the Company relies upon computers for the
daily conduct of its business and for data processing. The Company utilizes a
combination of in-house and service bureau applications, with the bulk of
customer account processing being handled by a leading national vendor of data
processing services for financial institutions. The Company has received written
assurances that this service provider has completed its internal remediation of
programs, and has substantially completed its remediation of issues related to
interdependencies with other parties. The vendor has provided the Company with a
Year 2000 compliant version of its system. The Company will participate in
testing of both direct and indirect services commencing in November, 1998, and
continuing through the first quarter of 1999.

The Company does not anticipate that there will be any significant or material
condition which will impact this service provider's ability to deliver accurate
data processing services before, during and after the transition to the new
millennium, therefore no formal contingency plans exist at this time. However,
results of system tests conducted by the Company and by other users of this
service provider will be carefully monitored to ensure that all issues have been
identified and successfully remediated.

Another national provider of data processing operations services the Company's
residential mortgage loans. This vendor has also provided written assurances
that it is meeting its objectives to be Year 2000 compliant by December 31,
1998. Should the vendor fail to demonstrate its ability to provide Year 2000
compliant service by March 31, 1999, the Company may invoke a contingency plan
to move its servicing portfolio to an alternative, compliant vendor.

In addition to its outsourced systems, the Company relies on in-house, computer
based financial accounting and mortgage origination systems. The Company is in
the process of installing new software for both of 


                                      23
<PAGE>
 
these applications. The new systems have been certified by their respective
vendors to be Year 2000 compliant. Language to that effect was included in the
service contracts executed with the system vendors. Both of these revisions were
planned around the business needs of the Company, not the ability or inability
of the installed software to accommodate Year 2000 processing. Nevertheless,
these mission critical system replacements are Year 2000 compliant, and
therefore address that issue.

The balance of the Company's internal processing is supported by PC based
systems, using industry standard software to run non-mission critical
applications. Any software program or application which was not supported by the
vendor, or which required an update to achieve Year 2000 capability, has been
identified for replacement or upgrade. Equipment which contains embedded chips
or microprocessors has also been tested and scheduled for upgrade or replacement
where necessary. All such system enhancements are expected to be completed by
first quarter of 1999. The cost to remediate these systems is immaterial, and is
being expensed in the period in which it occurs. The majority of the related
expenses are anticipated to be incurred and charged to the Company's 1998
operating results.

The Company believes it has developed an effective plan to address the Year 2000
problem and that, based on the available information, its Year 2000 transition
will not have a material effect on its business, operations or financial
results. However, the Company has no control over the progress of third parties
in addressing their own Year 2000 issues. If the necessary changes are not
effected or are not completed in a timely manner, or if unanticipated problems
arise, there may be a material impact on the Company's financial condition and
results of operations.

Cost to Address the Company's Year 2000 Issues

The Company's costs to achieve Year 2000 compliance are not expected to have 
material financial impact on the Company.  The Company anticipates that its 1998
expenses related to Year 2000 issues will be approximately $120,000 and 1999 
expenses will be approximately $50,000.  The Company intends to fund such costs 
from its current operations.  However, as stated above, there can be no 
assurance that all such costs have been identified, or that there may not be 
some unforeseen cost which may have a material adverse effect on the Company's 
financial condition and results of operations.

Risks of Year 2000 Issues

To date, the Company has not identified any system which presents a material 
risk of failing to by Year 2000 compliant in a timely manner, or for which a 
suitable alternative cannot be implemented.  However, as the Company progresses 
with its Year 2000 transition, systems or equipment may be identified which 
present a material risk of business interruption.  Such disruption may include 
the inability to process customer account transactions, including deposits, 
withdrawals, loan payments and disbursements; the inability to reconcile and 
record daily activity; the inability to process loan applications or to track 
delinquencies; the inability to generate checks or to clear funds.  In addition,
if any of the Company's major borrowers should fail to achieve Year 2000 
compliance, and should they experience a disruption of their own businesses, 
their ability to meet their obligations to the Company may be seriously 
impaired.  To mitigate credit risk in the case of large borrowers, the Company 
currently includes a clause relating to the borrower's Year 2000 awareness and 
preparedness in its loan commitment documents.  In addition, 100% of all 
borrowers whose loans exceed $500,000 have been contacted to survey their Year 
2000 readiness in order to anticipate any potential exposure.  The dollar value 
of loans for which borrowers were surveyed equates to 70% of the permanent and 
construction loan portfolio in total.  The Company has not contacted its largest
dollar deposit customers to determine their readiness for Year 2000.

To the extent that the risks posed by the Year 2000 problem are pervasive in
data processing and telecommunication services worldwide, or to the extent that
disruption of a power utility prevents the 


                                      24

<PAGE>
 
Company from gaining access to its systems, the Company cannot predict with
certainty that it will remain materially unaffected by issues related to the
Year 2000 problem, which are beyond the Company's control.

Contingency Plans

The Company is in the process of developing two types of contingency plans.
Remediation plans will identify components of mission critical applications
which are judged, at some point prior to December 31, 1999, to be at risk of
failure to achieve complete renovation, validation and implementation. Business
Interruption Plans will ensure that the Company has sufficiently planned for
unanticipated system failures at critical production dates before, on and after
January 1, 2000.

Remediation Planning: The Company expects to complete its Year 2000 transition
--------------------
and to have thoroughly tested its systems prior to any date of potential
disruption. However, the Company is developing Year 2000 remediation plans for
mission critical systems which are not already identified as compliant. If the
results of testing of the Company's systems are not satisfactory, contingency
plans will be invoked within sufficient time to assure successful implementation
of a compliant alternative.

Business Interruption Plan: These plans would be invoked if unanticipated Year
--------------------------
2000 problems occur in production, similar to Disaster Recovery Plans.
Essentially, they require that resources are planned for deployment to ensure
that such an interruption does not threaten the viability of the Company. The
Company will modify its current Business Resumption Plan to specifically address
the special circumstances of a disruption due to a Year 2000 related component
failure.

The discussion above contains certain forward-looking statements. Actual results
may differ materially from the Company's expectations due to the nature and
uncertainty of circumstances surrounding the Year 2000 problem. The Company may
fail to identify systems that are not Year 2000 compliant, or the Company or
other parties may fail to meet the dates and goals set above. If so, the extent
and nature of efforts to then address those contingencies, to repair or replace
the affected systems, the Company's ability to obtain qualified personnel,
consultants or other resources and the success of those efforts cannot be stated
with any degree of certainty.


                                      25
<PAGE>
 
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Quantitative and Qualitative Disclosure about Market Risk is presented at
December 31, 1997 in Exhibit 13.0 to the Company's Annual Report of Form 10-K/A
No.1, filed with the SEC. There have been no material changes in the Company's
market risk at September 30, 1998 compared to December 31, 1997. The following
is an update of the discussion provided therein:

General

The Company's largest component of market risk continues to be interest rate
risk. Virtually all of this risk continues to reside at the Bank level. The Bank
still is not subject to foreign currency exchange or commodity price risk. At
September 30, 1998, neither the Company nor the Bank owned any trading assets,
nor did they utilize hedging transactions such as interest rate swaps and caps.

Assets, Deposit Liabilities and Wholesale Funds

There has been no material change in the composition of assets, deposit
liabilities and wholesale funds from December 31, 1997 to September 30, 1998.

Gap Analysis

The matching of assets and liabilities may be analyzed by examining the extent
to which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest rate sensitivity
gap is defined as the difference between the amount of interest-earning assets
maturing or repricing within a specific time period and the amount of
interest-bearing liabilities maturing or repricing within that same time period.
At September 30, 1998, the Company's one-year gap position, the difference
between the amount of interest-earning assets maturing or repricing within one
year and interest-bearing liabilities maturing or repricing within one year, was
negative 2.97%. A gap is considered positive when the amount of interest rate
sensitive assets exceeds the amount of interest rate sensitive liabilities. A
gap is considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets. Accordingly,
during a period of rising interest rates, an institution with a negative gap
position would be in a worse position to invest in higher yielding assets which,
consequently, may result in the cost of its interest-bearing liabilities
increasing at a rate faster than its yield on interest-earning assets than if it
had a positive gap. During a period of falling interest rates, an institution
with a negative gap would tend to have its interest-bearing liabilities
repricing downward at a faster rate than its interest-earning assets as compared
to an institution with a positive gap which, consequently, may tend to
positively affect the growth of its net interest income. Given the Company's
existing liquidity position and its ability to sell securities from its
available-for-sale portfolio, management of the Company believes that its
negative gap position will have no material adverse effect on its liquidity
position. If interest rates decrease, there will be a corresponding effect on
the Company's interest rate margin and corresponding operating results.

The following table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at September 30, 1998, which are
anticipated by the Company, based upon certain assumptions, to reprice or mature
in each of the future time periods shown (the Gap Table). Except as stated
below, the amount of assets and liabilities shown which reprice or mature during
a particular period were determined in accordance with the earlier of term to
repricing or the contractual maturity of the asset or liability. The table sets
forth an approximation of the projected repricing of assets and liabilities at
September 30, 1998, on the basis of contractual maturities, anticipated
prepayments, and scheduled rate adjustments within a one year period and
subsequent annual time intervals. Prepayment assumptions ranging from 9.00% to
34.56% per year were applied to the real estate loan portfolio, dependent upon
the loan type and coupon. Mortgage-backed and mortgage related securities were
assumed to prepay at rates between 12.12% and 51.84% annually. Savings accounts
were assumed to decay at 21.37%, 5.00%, 5.00%, 


                                      26
<PAGE>
 
5.00%, 5.00% and 58.72%, and Super NOW and NOW accounts and money market
accounts were assumed to decay at 20.00%, 5.00%, 5.00%, 5.00%, 5.00% and 60.00%,
for the periods of up to one year, one to two years, two to three years, three
to four years, four to five years, and over five years, respectively. Prepayment
and deposit decay rates can have a significant impact on the Company's estimated
gap. While the Company believes such assumptions to be reasonable, there can be
no assurance that assumed prepayment rates and decay rates will approximate
actual future loan prepayment and deposit withdrawal activity.

<TABLE>
<CAPTION>

                                                                      At September 30, 1998
                            -------------------------------------------------------------------------------------------------------
                                                              Two                             Four 
                              Up to          One              to             Three             to             Over
                              One           to Two           Three          to Four           Five            Five
                              Year          Years            Years           Years           Years            Years           Total
                            --------       -------          -------        --------         -------         --------        --------

                                                                   (Dollars in thousands)
<S>                      <C>            <C>             <C>             <C>             <C>              <C>            <C>        
Interest-earning
  assets (1):
   Debt and  equity      
     securities(2)       $    167,272    $    15,110     $    66,744      $   48,968      $   10,259      $   351,397    $   659,750
   Mortgage-backed and  
    mortgage related   
     securities(2)            998,704        331,430         115,956          60,307          43,800          116,136      1,666,333
   Real estate loans,   
     net(3)(4)                385,568        112,028         253,076         121,180          58,153          362,409      1,292,414
   Consumer and         
     student loans(4)           7,854            438             418             337              23              570          9,640
                         -----------    -----------     -----------     -----------     -----------      -----------    -----------
      Total interest-
       earning assets      1,559,398        459,006         436,194         230,792         112,235          830,512      3,628,137

Interest-bearing
  liabilities:
   Money  market        
      accounts                 17,518          4,380           4,380           4,380           4,380           52,553         87,591
   Savings accounts           100,865         23,489          23,489          23,489          23,489          277,173        471,994
   Super NOW and NOW   
     accounts                  17,310          4,327           4,327           4,327           4,327           51,931         86,549
   Certificates of     
     deposit                1,056,476        141,950          67,436          58,218           9,692           19,992      1,353,764
   Borrowed funds             477,618        105,000         200,000              --         211,300               --        993,918
                         -----------    -----------     -----------     -----------     -----------      -----------    -----------
      Total interest-
       bearing
       liabilities         1,669,787        279,146         299,632          90,414         253,188          401,649      2,993,816
                         -----------    -----------     -----------     -----------     -----------      -----------    ===========
Interest sensitivity
  gap(5)                 $  (110,389)   $   179,860     $   136,562     $   140,378     $  (140,953)     $   428,863    $   634,321
                         ===========    ===========     ===========     ===========     ===========      ===========    ===========

Cumulative interest
  sensitivity gap        $  (110,389)   $    69,471     $   206,033     $   346,411     $   205,458      $   634,321
                         ===========    ===========     ===========     ===========      ===========     ===========
Cumulative interest
  sensitivity gap as 
  a percentage of
  total assets                 (2.97)%        1.87%           5.54%           9.31%            5.52%          17.06%
Cumulative interest-
  earning assets as a
  percentage of 
  cumulative interest-
  bearing liabilities          93.39%       103.56%         109.16%         114.81%          107.93%         121.19%
</TABLE>


(1)  Interest-earning assets are included in the period in which the balances
     are expected to be re-deployed and/or repriced as a result of anticipated
     prepayments, scheduled rate adjustments, and contractual maturities.

(2)  Debt and equity and mortgage-backed and mortgage-related securities are
     shown at their respective carrying values. Equity securities primarily
     includes callable preferred stock, the maturities of which have been
     assumed to be the date on which they are initially callable.

(3)  For the purposes of the gap analysis, the allowance for possible loan
     losses and non-performing loans have been excluded.

(4)  Loans held-for-sale are included in the "Up to One Year" category.

(5)  Interest sensitivity gap represents the difference between net
     interest-earning assets and interest-bearing liabilities.


                                      27
<PAGE>
 
Certain shortcomings are inherent in the method of analysis presented in the
foregoing table. For example, although certain assets and liabilities may have
similar maturities or periods to repricing, they may react in different degrees
to changes in market interest rates. Also, the interest rates on certain types
of assets and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates on other types may lag behind changes in market
rates. Additionally, certain assets, such as adjustable rate mortgage ("ARM")
loans, have features which limit adjustments to interest rates on a short-term
basis and over the life of the asset. Further, in the event of a change in
interest rates, prepayment and early withdrawal levels may deviate significantly
from those assumed in calculating the table. Finally, the ability of borrowers
to service their ARM loans may decrease in the event of an interest rate
increase. The table reflects the estimates of management as to periods to
repricing at particular points in time. Among the factors considered, management
monitors both current trends and its historical repricing experience with
respect to particular or similar products. For example, the Bank has a number of
deposit accounts, including passbook savings, Super NOW and NOW accounts and
money market accounts which, subject to certain regulatory exceptions not
relevant here, may be withdrawn at any time. The Bank, based upon its historical
experience, assumes that while all customers in these account categories could
withdraw their funds on any given day, they will not do so, even if market
interest rates were to change. As a result, different assumptions may be used at
different points in time.

Interest Rate Risk Compliance

The Company continues to monitor the impact of interest rate volatility upon net
interest income and net portfolio value in the same manner as at December 31,
1997. There have been no changes in the Board approved limits of acceptable
variance in net interest income and net portfolio value at September 30, 1998
compared to December 31, 1997 and the projected changes continue to fall within
the Board of Directors approved limits at all levels of potential interest rate
volatility.


                                      28
<PAGE>
 
PART II - OTHER INFORMATION
---------------------------

Item 1.   LEGAL PROCEEDINGS

           Not applicable

Item 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

           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
                 --------
          2.1    Agreement and Plan of Merger by and between Roslyn Bancorp,
                 Inc. and T R Financial Corp., dated as of May 25, 1998*
          2.2    Roslyn Bancorp, Inc. Stock Option Agreement dated as of May
                 25, 1998; T R Financial Corp. Stock Option Agreement, dated
                 as of May 25, 1998* 
          3.1    Certificate of Incorporation of Roslyn Bancorp, Inc.**
          3.2    Bylaws of Roslyn Bancorp, Inc.**
          11.0   Statement re: Computation of Per Share Earnings
          27.0   Financial Data Schedule***

          (b)    Reports on Form 8-K
                 -------------------  
                 None

*      Incorporated by reference from the Form 8-K filed on June 3, 1998.
**     Incorporated by reference from the Form S-1 (Registration No. 333-10471),
       as amended, filed on August 20, 1996.
***    Submitted only with filing in electronic format


                                      29
<PAGE>
 
                                  Exhibit Index
                                  -------------
                                                                          Page
                                                                          ----

11.0     Statement Re:  Computation of Per Share Earnings                  34
27.0     Financial Data Schedule (submitted only with filing 
         in electronic filing)                                              -



                                      30
<PAGE>
 
                                   SIGNATURES


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


                                  ROSLYN BANCORP, INC.
                                  (Registrant)


Date:   November 16, 1998         By: /s/ Joseph L. Mancino
     ------------------------        -------------------------------
                                          Joseph L. Mancino
                                          Chairman of the Board, President and
                                          Chief Executive Officer


Date:   November 16, 1998         By: /s/ Michael P. Puorro
     ------------------------        -------------------------------
                                          Michael P. Puorro
                                          Treasurer and Chief Financial Officer


                                      31