<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q
                                        
              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1999           0-28886
                                                -----------------------  
                                                Commission File Number

                             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)

                                      None
        ---------------------------------------------------------
       Securities registered pursuant to Section 12(b) of the Act

                          Common Stock, $.01 par value
               ----------------------------------------------------
           Securities registered pursuant to Section 12(g) of the Act

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 76,928,744 shares of Common Stock outstanding as of May 13,
1999.
<PAGE>
 
                                   FORM 10-Q
                              ROSLYN BANCORP, INC.
                                     INDEX
<TABLE> 
<CAPTION>
<S>      <C>                                                          <C>  
                                                                       Page
                                                                      Number
                                                                      ------
PART I - FINANCIAL INFORMATION
------------------------------

ITEM 1.  Financial Statements - Unaudited:

         Consolidated Statements of Financial Condition at
         March 31, 1999 and December 31, 1998                            1
         
         Consolidated Statements of Income for the three months ended
         March 31, 1999 and 1998                                         2
         
         Consolidated Statement of Changes in Stockholders' Equity
         for the three months ended March 31, 1999                       3
         
         Consolidated Statements of Cash Flows
         for the three months ended March 31, 1999 and 1998              4
         
         Notes to Unaudited Consolidated Financial Statements            5
         
ITEM 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                            14
         
ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk      27
 
 
PART II - OTHER INFORMATION
------------------------------
 
ITEM 1.   Legal Proceedings                                              28
          
ITEM 2.   Changes in Securities                                          28
          
ITEM 3.   Defaults Upon Senior Securities                                28
          
ITEM 4.   Submission of Matters to a Vote of Security Holders            28
          
ITEM 5.   Other Information                                              28
          
ITEM 6.   Exhibits and Reports on Form 8-K                               28
          
          Signature Page                                                 30
</TABLE> 
     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 risk 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 the Company with
     the Securities and Exchange Commission from time to time.
<PAGE>
 
                              ROSLYN BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                  (Unaudited)
                      (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                          March 31, 1999       December 31, 1998
                                                                                          --------------       -----------------
                                                ASSETS                                                         
                                                ------                                                         
<S>                                                                                       <C>                     <C>
Cash and cash equivalents:                                                                                     
 Cash and cash items                                                                      $       6,016             $      8,403
 Due from banks                                                                                  51,547                   47,706
 Money market investments                                                                        35,500                   38,079
                                                                                          -------------             ------------ 
                                                                                                 93,063                   94,188
Debt and equity securities, net:                                                                                    
 Held-to-maturity (estimated fair value of $0 and $27,148, respectively)                              -                   26,965
 Available-for-sale                                                                             698,617                  795,362
Mortgage-backed and mortgage related securities, net:                                                               
 Held-to-maturity (estimated fair value of $0 and $1,268,461, respectively)                           -                1,250,266
 Available-for-sale                                                                           3,084,468                1,795,833
                                                                                          -------------             ------------ 
                                                                                              3,783,085                3,868,426
Federal Home Loan Bank of New York stock, at cost                                                26,379                   40,029
Loans held-for-sale, net                                                                         75,027                   81,725
Loans receivable held for investment, net:                                                                          
 Real estate loans, net                                                                       3,452,553                3,527,944
 Consumer                                                                                       101,453                   96,005
                                                                                          -------------             ------------ 
                                                                                              3,554,006                3,623,949
 Less allowance for possible loan losses                                                        (40,272)                 (40,207)
                                                                                          -------------             ------------ 
                                                                                              3,513,734                3,583,742
Banking house and equipment, net                                                                 30,698                   32,170
Accrued interest receivable                                                                      44,017                   47,103
Mortgage servicing rights, net                                                                   15,530                   13,779
Excess of cost over fair value of net assets acquired                                             2,331                    2,449
Real estate owned, net                                                                              873                    1,176
Deferred tax asset, net                                                                          10,240                    5,308
Other assets                                                                                     33,289                   29,624
                                                                                          -------------             ------------ 
  Total assets                                                                            $   7,628,266             $  7,799,719
                                                                                          =============             ============
                                                                                                                    
                                      LIABILITIES AND STOCKHOLDERS' EQUITY                                          
                                      ------------------------------------                                          
Liabilities:                                                                                                        
 Deposits:                                                                                                          
  Savings accounts                                                                        $     958,423             $    971,138
  Certificates of deposit                                                                     2,839,160                2,835,578
  Money market accounts                                                                         143,509                  120,930
  Demand deposit accounts                                                                       285,373                  291,336
                                                                                          -------------             ------------ 
   Total deposits                                                                             4,226,465                4,218,982
 Official checks outstanding                                                                     40,202                   22,472
 Borrowed funds:                                                                                                    
  Reverse-repurchase agreements                                                               2,000,382                2,094,319
  Other borrowings                                                                              372,578                  433,528
 Accrued dividends and interest on deposits                                                      23,223                   28,808
 Mortgagors' escrow and security deposits                                                        77,663                   72,044
 Accrued taxes payable                                                                            9,033                   34,012
 Accrued expenses and other liabilities                                                          80,776                   42,188
                                                                                          -------------             ------------ 
  Total liabilities                                                                           6,830,322                6,946,353
                                                                                          -------------             ------------ 
                                                                                                                    
Commitments and contingencies                                                                         -                        -
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; 79,236,244 and 89,196,513
  shares issued and; 76,928,744 and 76,459,921 shares outstanding at March 31, 1999 and                             
  December 31, 1998, respectively                                                                   792                      892
 Additional paid-in-capital                                                                     481,332                  529,012
 Retained earnings-substantially restricted                                                     444,959                  512,184
 Accumulated other comprehensive income:                                                                            
  Net unrealized gain on securities available-for-sale, net of tax                                9,482                   13,745
 Unallocated common stock held by Employee Stock Ownership Plan (ESOP)                          (49,770)                 (53,831)
 Unearned common stock held by Stock-Based Incentive Plan (SBIP)                                (29,459)                 (30,818)
    Common stock held by Supplemental Executive Retirement Plan and Trust (SERP), at cost             -                   (2,158)
 Treasury stock, at cost (2,307,500 shares and 12,736,592 shares at March 31, 1999 and                              
 December 31, 1998 , respectively)                                                              (59,392)                (115,660)
                                                                                          -------------             ------------ 
  Total stockholders' equity                                                                    797,944                  853,366
                                                                                          -------------             ------------ 
  Total liabilities and stockholders' equity                                              $   7,628,266             $  7,799,719
                                                                                          =============             ============
</TABLE>
     See accompanying notes to unaudited consolidated financial statements.

                                       1
<PAGE>
 
                              ROSLYN BANCORP, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)
                    (In thousands, except per share amounts)
                                        
<TABLE>
<CAPTION>
                                                                                                          For the
                                                                                                    Three Months Ended
                                                                                                         March 31,
                                                                                                ----------------------------
                                                                                                     1999            1998
                                                                                                ----------        ----------
<S>                                                                                            <C>               <C>
Interest income:
 Federal funds sold and short-term deposits                                                     $      694        $      675
 Debt and equity securities                                                                         11,796            12,756
 Mortgage-backed and mortgage related securities                                                    49,635            60,185
 Real estate loans                                                                                  65,491            59,596
 Consumer and student loans                                                                          2,065             1,345
                                                                                                ----------        ----------
  Total interest income                                                                            129,681           134,557
                                                                                                ----------        ----------
Interest expense:
 Deposits                                                                                           44,552            47,762
 Borrowed funds                                                                                     33,539            33,954
                                                                                                ----------        ----------
  Total interest expense                                                                            78,091            81,716
                                                                                                ----------        ----------
Net interest income before provision for possible loan losses                                       51,590            52,841
Provision for possible loan losses                                                                       -               550
                                                                                                ----------        ----------
Net interest income after provision for possible loan losses                                        51,590            52,291
                                                                                                ----------        ----------
Non-interest income:
 Fees and service charges                                                                            1,350             1,751
 Mortgage banking operations                                                                         3,217             1,835
 Net gains on securities                                                                             2,185             4,269
 Real estate operations, net                                                                           290               244
 Other non-interest income                                                                             118               305
                                                                                                ----------        ----------
  Total non-interest income                                                                          7,160             8,404
                                                                                                ----------        ----------
Non-interest expense:
 General and administrative expenses:
  Compensation and employee benefits                                                                11,854            15,430
  Occupancy and equipment                                                                            2,201             2,253
  Deposit insurance premiums                                                                           155                84
  Advertising and promotion                                                                            630             1,350
  Other non-interest expenses                                                                        4,011             5,189
                                                                                                ----------        ----------
   Total general and administrative expenses                                                        18,851            24,306
 Amortization of excess of cost over fair value of net
   assets acquired                                                                                     118               117
   Merger related costs                                                                             87,987                 -
   Restructuring charge                                                                              5,903                 -
                                                                                                ----------        ----------
      Total non-interest expense                                                                   112,859            24,423
                                                                                                ----------        ----------
(Loss)/income before provision for income tax and extraordinary item                               (54,109)           36,272
Provision for income tax                                                                             1,657            13,213
                                                                                                ----------        ----------
(Loss)/income before extraordinary item                                                            (55,766)           23,059
Extraordinary item, net of tax - Prepayment penalty on debt extinguishment                          (2,916)                -
                                                                                                ----------        ----------
Net (loss)/income                                                                               $  (58,682)       $   23,059
                                                                                                ==========        ==========
Basic and diluted (loss)/earnings per share:
     (Loss)/income before extraordinary item                                                    $    (0.78)       $     0.31
     Extraordinary item, net of tax                                                                  (0.04)                -
                                                                                                ----------        ----------
     Net (loss)/income per share                                                                $    (0.82)       $     0.31
                                                                                                ==========        ==========
</TABLE>
     See accompanying notes to unaudited consolidated financial statements.

                                       2
<PAGE>
 
                              ROSLYN BANCORP, INC.
           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, 1998              $     892     $  529,012     $  512,184     $ 13,745     $  (53,831)    $  (30,818)

Comprehensive loss:
   Net loss                                                               (58,682)
  Other comprehensive income, net of
    tax  :
   Unrealized loss on certain
    securities,
     net of reclassification                                                            (5,755)
      adjustment (1)
Comprehensive loss

Adjustments to stockholders' equity to
    effect the merger with T R
    Financial Corp.                            (100)       (47,768)                      1,492          3,613             52
Allocation of ESOP stock                                        84                                        448
Amortization of SBIP stock awards                                4           (164)                                     1,307
Cash dividends declared on
    common  stock                                                          (8,379)
                                          ---------     ----------     ----------     --------     ----------     ----------
Balance at March 31, 1999                 $     792     $  481,332     $  444,959     $  9,482     $  (49,770)    $  (29,459)
                                          =========     ==========     ==========     ========     ==========     ==========
<CAPTION>

                                            Common           Treasury
                                         Stock Held by        Stock
                                         SERP, at cost       at cost         Total
                                         -------------     ------------    -----------
                                         <S>             <C>              <C>
Balance at December 31, 1998              $    (2,158)     $  (115,660)    $  853,366

Comprehensive loss:
   Net loss                                                                   (58,682)
  Other comprehensive income, net of
    tax:
   Unrealized loss on certain
    securities,
     net of reclassification                                               
      adjustment (1)                                                           (5,755) 
                                                                           ----------
Comprehensive loss (2)                                                        (64,437)
                                                                           ----------

Adjustments to stockholders' equity to
    effect the merger with T R
    Financial Corp.                             2,158           56,268         15,715
Allocation of ESOP stock                                                          517
Amortization of SBIP stock awards                                               1,147
Cash dividends declared on
    common  stock                                                              (8,379) 
                                                                           
Balance at March 31, 1999                 $         -      $   (59,392)    $  797,944
                                          ===========      ===========     ==========
</TABLE>


(1)  Disclosure of reclassification adjustment, net of tax, for the three months
     ended March 31, 1999:
<TABLE>
<CAPTION>
<S>                                                                        <C>
Net unrealized depreciation arising during the period                       $ (4,523)
Less:  Reclassification adjustment for net gains included in net loss          1,232
                                                                            --------
Net unrealized loss on certain securities                                   $ (5,755)
                                                                            ========

(2)  Disclosure of Comprehensive Income at March 31, 1998:

     Comprehensive Income:

       Net income                                                           $ 23,059  
       Other comprehensive income, net of tax:
         Unrealized loss on certain securities, net of reclassification
          adjustment                                                            (369)
                                                                            --------
       Comprehensive income                                                 $ 22,690
                                                                            ========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>

                              ROSLYN BANCORP, INC.
                     Consolidated Statements of Cash Flows
                                  (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                     For the Three Months Ended
                                                                                                              March 31,
                                                                                                  -------------------------------
                                                                                                       1999              1998
                                                                                                  ---------------   -------------
<S>                                                                                               <C>               <C>
Cash flows from operating activities:
Net (loss) income                                                                                   $  (58,682)       $  23,059
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
  Provision for possible loan losses                                                                         -              550
  Recovery of possible other real estate owned losses                                                     (329)            (150)
  Originated mortgage servicing rights, net of amortization and valuation adjustment                    (1,751)            (388)
  Amortization of excess of cost over fair value of net assets acquired                                    118              117
  Depreciation and amortization                                                                            797              926
  Amortization of premiums in excess of (less than) accretion of discounts                                  20           (2,527)
  ESOP and SBIP expense                                                                                  1,497            4,052
  Proceeds from sales of loans held-for-sale, net of originations and purchases                         10,701              643
  Gains on sales of loans                                                                               (3,981)            (413)
  Net gains on securities                                                                               (2,185)          (4,269)
  Net gains on sales of real estate owned                                                                   (9)            (205)
  Merger related costs and restructuring charges                                                        65,727                -
  Income taxes deferred and tax benefits attributable to stock plans                                    (2,013)             224
  Changes in assets and liabilities:
     Decrease in accrued interest receivable                                                             3,086              154
     Decrease (increase) in other assets                                                                 2,908             (594)
     Increase (decrease) in official checks outstanding                                                 17,730          (12,239)
     (Decrease) increase in accrued dividends and interest                                              (5,585)             216
     Decrease in accrued taxes payable                                                                 (24,979)          (6,246)
     (Decrease) increase in accrued expenses and other liabilities                                     (27,139)          38,351
     Net increase (decrease) in unearned income                                                            849             (324)
     Increase in other, net                                                                                168              114
                                                                                                    ----------        ---------  
       Net cash (used in) provided by operating activities                                             (23,052)          41,051
                                                                                                    ----------        ---------  
Cash flows from investing activities:
  Proceeds from calls and repayments of debt and mortgage-backed and mortgage related securities
       held-to-maturity and redemption of FHLB Capital Stock                                             13,650          128,642
  Proceeds from sales and repayments of debt, equity, mortgage-backed and mortgage-related
       securities available-for-sale                                                                    872,482          779,025
  Purchases of securities held-to-maturity and FHLB Capital Stock                                            -         (144,249)
  Purchases of debt, equity, mortgage-backed and mortgage related securities available-for-sale       (792,144)        (809,380)
  Loan originations and purchases less than (in excess of) principal repayments                         69,137         (192,688)
  Proceeds from sales of loans held for investment                                                           -            8,942
  Disposition (purchases) of banking house and equipment, net                                              675           (1,152)
  Proceeds from sales of other real estate owned                                                           641              439
                                                                                                    ----------        ---------  
       Net cash provided by (used in) investing activities                                             164,441         (230,421)
                                                                                                    ----------        ---------  
Cash flows from financing activities:
  Increase in demand deposit, money market and savings accounts                                          3,901            3,049
  Increase (decrease) in certificates of deposit                                                         3,582           (7,447)
  (Decrease) increase in borrowed funds                                                               (154,887)         235,641
  Increase in mortgagors' escrow and security deposits                                                   5,619           20,003
  Net proceeds from exercise of stock options                                                                -              538
  Cash dividends paid on common stock                                                                   (8,379)          (5,989)
  Cost to repurchase common stock                                                                            -          (23,190)
  Proceeds from reissuance of treasury stock                                                             7,650                -
                                                                                                    ----------        ---------  
       Net cash (used in) provided by financing activities                                            (142,514)         222,605
                                                                                                    ----------        ---------  
  Net (decrease) increase in cash and cash equivalents                                                  (1,125)          33,235
  Cash and cash equivalents at beginning of period                                                      94,188           40,673
                                                                                                    ----------        ---------  
  Cash and cash equivalents at end of period                                                        $   93,063        $  73,908
                                                                                                    ==========        =========  
Supplemental disclosures of cash flow information:
Cash paid during the period for:
  Interest on deposits and borrowed funds                                                           $   88,724        $  62,402
                                                                                                    ==========        =========  
  Income taxes                                                                                      $   26,428        $   4,535
                                                                                                    ==========        =========  
Non-cash investing activities:
  Additions to real estate owned, net                                                               $        -        $     676
                                                                                                    ==========        =========  
  Transfer of securities from held-to-maturity to available-for-sale, at amortized cost             $1,269,280        $       -
                                                                                                    ==========        =========  
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       4
u
<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").

After the close of business on February 16, 1999, T R Financial Corp. merged
with and into the Company and T R Financial Corp.'s subsidiary, Roosevelt
Savings Bank, merged with and into the Bank. All subsidiaries of Roosevelt
Savings Bank became subsidiaries of the Bank (the "Merger"). The acquisition was
accounted for as a pooling-of-interests, and accordingly, all historical
financial information for the Company has been restated to include T R Financial
Corp.'s historical information for the earliest period presented. Previously
reported balances of T R Financial Corp. have been reclassified to conform to
the Company's presentation and restated to give effect to the Merger. When
necessary, certain reclassifications have been made to prior period amounts to
conform to the current periods presentation.

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 months ended March 31, 1999 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 1998 Annual Report on Form 10-K.

                                       5
<PAGE>
 
2.  ACQUISITION OF T R FINANCIAL CORP.

On February 16, 1999, a merger between T R Financial Corp., a Delaware company,
and the Company was completed with the Company as the surviving corporation (the
"Merger").  The transaction was treated as a tax-free reorganization and
accounted for using the pooling-of-interests method of accounting.  As part of
this Merger, on February 16, 1999, T R Financial Corp.'s wholly-owned
subsidiary, Roosevelt Savings Bank, a New York State chartered stock savings
bank, was merged into the Bank.

Pursuant to the merger agreement, each share of T R Financial Corp. common stock
was converted into the Company's common stock at a fixed exchange ratio of 2.05.
As a result, 17,347,768 shares of T R Financial Corp. common stock were
exchanged for 35,528,785 shares of the Company's common stock and a total of
1,746,880 T R Financial stock options were converted into options to purchase a
maximum of 3,581,103 shares of the Company's common stock at exercise prices
ranging from $2.20 to $17.32 depending on the exercise price of the underlying 
T R Financial stock option.  Additionally under the agreement, five former
officers and five former directors of T R Financial Corp. have joined the Boards
of Directors of the Company and the Bank.

3.  EMPLOYEE STOCK OWNERSHIP PLAN

For the three months ended March 31, 1999 and 1998, compensation expense
attributable to the ESOP was approximately $461,000 and $2.4 million,
respectively. The March 31, 1998 ESOP expense includes $1.9 million of
compensation expense attributable to T R Financial Corp.'s ESOP. Concurrent

                                       6
<PAGE>
 
with the Merger and pursuant to the terms of the T R Financial Corp. ESOP, the 
T R Financial Corp. ESOP loan of approximately $4.5 million was satisfied on
March 30, 1999, through the sale of approximately 244,000 shares of Roslyn
common stock. The remaining shares held by the ESOP trustee were released for
allocation to the former T R Financial Corp. employees. Included in the merger
related charge incurred during the quarter ended March 31, 1999 was $24.6
million relating to the allocation of the shares to the former employees of T R
Financial Corp. This transaction represents a non-cash charge to equity, as the
shares were acquired by the former T R Financial Corp. at its initial public
offering.

4.  STOCK-BASED INCENTIVE PLAN

During the three months ended March 31, 1999, the Company granted stock awards
of 34,000 shares, with prices ranging from $17.81 to $20.69 per share, and
16,091 shares were forfeited. During the three months ended March 31, 1999, plan
participants vested in 16,284 shares. The total outstanding unvested stock
awards amounted to 1,252,491 shares at March 31, 1999. Upon the achievement of
certain defined performance targets, 85,057 of the aforementioned shares will
vest. For the three months ended March 31, 1999 and 1998, compensation expense
attributable to the Incentive Plan was approximately $1.0 million and $1.6
million, respectively.

During the three months ended March 31, 1999, the Company granted stock options
of 40,000 shares, with exercise prices ranging from $17.81 to $18.00 per share,
and 44,927 options were forfeited. The total number of outstanding stock options
was 7,761,562, including 1,746,880 of T R Financial Corp.'s stock options that
were converted into options to purchase a maximum of 3,581,103 shares of the
Company's common stock at exercise prices ranging $2.20 to $17.32. The weighted
average price of total outstanding stock options, at March 31, 1999 was $14.35.
The converted T R Financial Corp. stock options were fully vested upon the
consumation of the

                                       7
<PAGE>
 
Merger. During the three months ended March 31, 1999, plan participants vested
in 3,658,403 stock options, including the vested T R Financial Corp. stock
options.

5.   RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("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.

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.

6.  RECENT DEVELOPMENTS

On February 10, 1999, the Company announced that its Board of Directors declared
a quarterly dividend of eleven and one half cents' ($0.115) per common share.
The dividend was paid on March 12, 1999 to shareholders of record as of March 2,
1999.

                                       8
<PAGE>
 
On June 17, 1998, the Company announced that it had received all of the
necessary regulatory approvals to open a full service branch facility in
Bayshore, New York.  The Company expects to open this branch in the second
quarter of 1999.

                                       9
<PAGE>
 
     7.   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 March 31, 1999 and December
     31, 1998, respectively.

<TABLE>
<CAPTION>
                                                                     March 31, 1999              December 31, 1998
                                                            -----------------------------  ---------------------------------
                                                                              Estimated                       Estimated
                                                              Amortized         Fair         Amortized           Fair
                                                                Cost            Value          Cost              Value
                                                            -------------   -------------  --------------   ----------------
<S>                                                         <C>              <C>          <C>              <C>
                                                                                    (In thousands)
Available-for-sale:
 Debt securities:
  United States Government-direct and
     Guaranteed                                              $   125,185       $   127,944    $    187,250     $    191,669
  United States Government agencies                              140,284           140,606         154,353          154,986
  State, county and municipal                                      5,481             5,635               -                -
  Industrial, financial corporation and other                      1,121             1,150           3,003            3,123
                                                             -----------        ----------     -----------     ------------
   Total debt securities                                         272,071           275,335         344,606          349,778
                                                             -----------        ----------     -----------     ------------
 Equity securities:
  Preferred and common stock                                     247,728           256,507         268,860          284,679
  Trust preferreds                                               153,909           150,702         147,131          144,727
  Other                                                           14,893            16,073          14,883           16,178
                                                             -----------        ----------     -----------     ------------ 
   Total equity securities                                       416,530           423,282         430,874          445,584
                                                             -----------        ----------     -----------     ------------
 Mortgage-backed and mortgage related securities, net:
  FNMA pass-through securities                                    36,227            35,947           3,135            3,142
  GNMA pass-through securities                                 1,076,161         1,087,889         202,288          204,325
  FHLMC pass-through securities                                   11,584            12,121           3,431            3,451
  GNMA adjustable rate mortgage                                                                          
    pass-through securities                                      314,088           319,333         352,245          356,650
  Whole loan private collateralized mortgage obligations         670,734           672,330         674,727          675,659
  Agency collateralized mortgage obligations                     966,885           956,848         553,917          552,606
                                                             -----------       -----------    ------------     ------------
   Total mortgage-backed and mortgage
     related securities, net                                   3,075,679         3,084,468       1,789,743        1,795,833
                                                             -----------       -----------    ------------     ------------
   Total securities available-for-sale                       $ 3,764,280       $ 3,783,085    $  2,565,223     $  2,591,195
                                                             ===========       ===========    ============     ============
Held-to-maturity, net:
 Debt securities:
  Public utility                                             $         -       $         -    $        800     $        796
  State, county and municipal                                          -                 -           5,551            5,809
  Industrial, financial corporation and other                          -                 -          20,614           20,543
                                                             -----------       -----------    ------------     ------------
   Total debt securities                                               -                 -          26,965           27,148
                                                             -----------       -----------    ------------     ------------ 
 Mortgaged-backed and mortgage related
   securities, net:
  FNMA pass-through securities                                         -                 -          67,500           68,082
  GNMA pass-through securities                                         -                 -       1,045,918        1,060,676
  FHLMC pass-through securities                                        -                 -          65,864           68,245
  Whole loan private collateralized mortgage                                                             
    obligations                                                        -                 -          68,071           68,416
  Agency collateralized mortgage obligations                           -                 -           2,913            3,042
                                                             -----------       -----------    ------------     ------------  
   Total mortgage-backed and mortgage
    related securities, net                                            -                 -       1,250,266        1,268,461
                                                             -----------       -----------    ------------     ------------
   Total securities held-to-maturity                         $         -       $         -    $  1,277,231     $  1,295,609
                                                             ===========       ===========    ============     ============
</TABLE>

                                       10
<PAGE>
 
     8. LOANS RECEIVABLE, NET
     Loans receivable, net at March 31, 1999 and December 31, 1998 consist of
     the following:

<TABLE>
<CAPTION>
                                                                          March 31,               December 31,
                                                                            1999                     1998
                                                                       ------------             -------------
                                                                                 (In thousands)
<S>                                                                  <C>                       <C>
Loans held-for-sale, net:
  One- to four- family loans, net                                       $   73,908              $    79,991
  Student loans                                                              1,119                    1,734
                                                                        ----------              -----------
    Loans held-for-sale, net                                            $   75,027              $    81,725
                                                                        ==========              ===========


Loans receivable held for investment, net:
 Real estate loans, net:
  One- to four- family                                                  $2,649,453               $2,730,004
  Multi-family                                                              90,038                   84,575
  Home equity and second mortgage                                          122,076                  114,915
  Commercial real estate                                                   482,625                  484,260
  Construction and development                                              95,290                  101,545
                                                                        ----------               ----------
    Total real estate loans                                              3,439,482                3,515,299

  Less:
     Net unamortized discount and deferred income                           (4,190)                  (4,601)
     Net deferred loan origination costs                                    17,261                   17,246
                                                                        ----------               ----------
      Total real estate loans, net                                       3,452,553                3,527,944

 Other loans, net:
   Consumer                                                                 16,518                   16,219
   Automobile leases, net                                                   84,935                   79,786
 Less allowance for possible loan losses                                   (40,272)                 (40,207)
                                                                        ----------               ----------
    Loans receivable held for investment, net                           $3,513,734               $3,583,742
                                                                        ==========               ==========
</TABLE>

                                       11
<PAGE>
 
9.  ASSET QUALITY

The following table sets forth information regarding non-accrual loans, at the
dates indicated and real estate owned.  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 March 31, 1999                   At December 31, 1998
                                                                ----------------------             -------------------------
                                                                                       (In thousands)
Non-performing loans:
<S>                                                             <C>                               <C>
  One- to four- family                                                        $15,287                                $15,662
  Commercial real estate                                                        2,498                                  2,775
  Home equity                                                                      61                                    120
  Consumer loans                                                                   25                                     96
  Automobile leases                                                                62                                      -
                                                                              -------                                -------
     Total non-accrual loans                                                   17,933                                 18,653
Loans contractually past due 90 days or more, other than                                                              
  Non-accruing                                                                  1,363                                  3,421
                                                                              -------                                -------
     Total non-performing loans (1)                                            19,296                                 22,074
Real estate owned, net (2)                                                        873                                  1,176
                                                                              -------                                -------
     Total non-performing assets                                              $20,169                                $23,250
                                                                              =======                                =======

Allowance for possible loan losses as a percent of loans (3)                     1.13%                                  1.11%

Allowance for possible loan losses as a percent of total
  non-performing loans                                                         208.71%                                182.15%

Non-performing loans as a percent of loans (3)                                   0.54%                                  0.61%

Non-performing assets as a percent of total assets                               0.26%                                  0.30%
</TABLE>

(1)  Revised to conform T R Financial Corp.'s non-performing policy to Roslyn's.
(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.


<TABLE>
<CAPTION>

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

                                                     Amount           % of loans
                                                     ------           ----------
                                                        (Dollars in thousands)
<S>                                                  <C>                <C>
March 31, 1999                                       $15,917            0.45%
                                                     =======            ====
December 31, 1998                                    $20,649            0.57%
                                                     =======            ====
December 31, 1997                                    $18,264            0.60%
                                                     =======            =====

</TABLE>

                                       12
<PAGE>
 
There were no restructured loans that had not complied with the terms of their
restructuring agreement for a satisfactory period of time (normally six months)
at March 31, 1999 and $909,000 of restructured loans that had not complied with
the terms of their restructuring agreement at December 31, 1998.  Interest
income that would have been recorded if the loans had been performing in
accordance with their original terms aggregated approximately $76,000 during the
year ended December 31, 1998.

                                       13
<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 March 31, 1999 were $7.63 billion, a decrease of $171.5 million,
or 2.2%, from $7.80 billion at December 31, 1998, primarily due to decreases in
both the mortgage loan and debt and equity securities available-for-sale
portfolios.  Loans, net of unearned income, decreased $76.6 million, or 2.1%, to
$3.63 billion at March 31, 1999 compared to $3.71 billion at December 31, 1998.
The decrease in loans, net of unearned income, is primarily due to management's
strategy of selling the bulk of its residential originations into the secondary
market in an effort to better manage its interest rate risk.  Debt and equity
securities available-for-sale and held-to-maturity decreased $123.7 million, or
15.0%, from $822.3 million at December 31, 1998, to $698.6 million at March 31,
1999 primarily due to management's strategy of selling certain U.S. Government
Bonds and common stock held by the former T R Financial Corp. and replacing them
with higher yielding agency mortgage-backed securities.  Mortgage-backed and
mortgage related securities increased $38.4 million, or 1.3% from $3.05 billion
at December 31, 1998 to $3.08 billion at March 31, 1999.  These overall
increases were primarily funded through deposit growth, cash flows and the
Company's leveraging strategy.

Total liabilities at March 31, 1999 were $6.83 billion, a decrease of $116.0
million, or 1.7%, from $6.95 billion at December 31, 1998. The overall decrease
in total liabilities was principally due to a $154.9 million decrease in
borrowed funds from $2.53 billion at December 31, 1998 to $2.37 billion at March
31, 1999.  Partially offsetting the decrease in borrowed funds was an increase
in total deposits which is the result of the continued growth in certificates of
deposits and money market accounts. Total deposits increased $7.5 million to
$4.23 billion at March 31, 1999 as compared to $4.22 billion for the prior year-
end.

Total stockholders' equity decreased $55.4 million to $797.9 million at March
31, 1999 from $853.4 million at December 31, 1998.  The decrease was primarily
due to dividends paid of $8.4 million for the three months ended March 31, 1999,
a $4.3 million decrease in net unrealized gain on securities available-for-sale,
net of tax, and the three months net loss of $58.7 million.  Partially
offsetting the decreases were 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 months ended March 31, 1999 and 1998, 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 interest-

                                       14
<PAGE>
 
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 March 31,
                                                 ----------------------------------------------------------------------------------
                                                                       1999                                  1998
                                                 -------------------------------------------    -----------------------------------
                                                                                  Average                                 Average
                                                   Average                        Yield/        Average                    Yield/
                                                   Balance           Interest     Cost          Balance        Interest     Cost
                                                 ------------     -----------    ----------     ----------    --------   --------
<S>                                              <C>            <C>              <C>         <C>           <C>          <C>
                                                                                 (Dollars in thousands)
Assets:
Interest-earning assets:
   Federal funds sold and short-term deposits    $      60,441    $       694        4.59%    $     49,915    $     675     5.41%
   Debt and equity securities                          736,045         11,796        6.41          852,527       12,756     5.99
   Mortgage-backed and mortgage
     related securities                              3,070,912         49,635        6.47        3,341,737       60,185     7.20
   Real estate loans, net                            3,519,843         65,491        7.44        3,004,213       59,596     7.93
   Consumer and student loans                          114,215          2,065        7.23           72,565        1,345     7.41
                                                 -------------    -----------                 ------------    ---------    
          Total interest-earning assets              7,501,456        129,681        6.91        7,320,957      134,557     7.35
                                                                  -----------                                 ---------   
Non-interest-earning assets                            197,845                                     200,062
                                                 -------------                                ------------

Total assets                                     $   7,699,301                                $  7,521,019
                                                 =============                                ============

Liabilities and Stockholders' Equity:

Interest-bearing liabilities:
   Money market accounts                         $     129,617          1,161        3.58     $     63,551          371     2.34
   Savings accounts                                  1,032,541          5,412        2.10        1,109,673        7,837     2.82
   NOW and Super NOW accounts                          148,809          1,530        4.11          163,111        1,262     3.09
   Certificates of deposit                           2,904,745         36,449        5.02        2,746,575       38,292     5.58
                                                 -------------    -----------                 -------------   ---------    
          Total deposits                             4,215,712         44,552        4.23        4,082,910       47,762     4.68
   Borrowed funds                                    2,444,207         33,539        5.49        2,346,308       33,954     5.79
                                                 -------------                                -------------   ---------    
          Total interest-bearing liabilities         6,659,919         78,091        4.69        6,429,218       81,716     5.08
                                                                  -----------                                 ---------    
Non-interest-bearing liabilities                       189,399                                     227,500   
                                                 -------------                                -------------   
Total liabilities                                    6,849,318                                   6,656,718   
Stockholders' equity                                   849,983                                     864,301   
                                                 -------------                                -------------   
                                                                                                              
Total liabilities and stockholders' equity       $   7,699,301                                $  7,521,019   
                                                 =============                                =============   
                                                                                                              
Net interest income/net interest rate spread                      $    51,590        2.22%                    $  52,841     2.27%
                                                                  ===========        ====                     =========     ====


Net interest margin                                                                  2.75%                                  2.89%
                                                                                     =====                                  ====

Ratio of interest-earning assets to
  interest-bearing liabilities                                                     112.64%                                113.87%
                                                                                   ======                                 ======
</TABLE>

                                       15
<PAGE>
 
Comparison of Operating Results for the Three Months Ended March 31, 1999 and 
1998

General

The Company reported a net loss of $58.7 million, or basic and diluted loss per
share of $0.82 for the quarter ended March 31, 1999, as compared to net income
of $23.1 million, or basic and diluted earnings per share of $0.31, for the
comparable prior year period.

The quarters include the operating results of T R Financial Corp., which was
acquired by the Company on February 16, 1999 and accounted for as a pooling-of-
interests transaction.

The quarter ended March 31, 1999, includes $78.5 million, net of tax of merger
related costs associated with the acquisition and $3.4 million, net of tax of
restructuring charges relating to the January 1999 early retirement program.
Additionally, an extraordinary item of $2.9 million, net of tax, was incurred
during the quarter ended March 31, 1999 related to prepayment penalties incurred
in recasting the borrowed fund position. The Company, in order to take advantage
of favorable market conditions while increasing spreads and reducing its
exposure to interest rate risk, restructured its securities and borrowed fund
position.

Interest Income

Interest income for the quarter ended March 31, 1999 decreased $4.9 million, or
3.6%, to $129.7 million, from $134.6 million as compared to the quarter ended
March 31, 1998. The decrease was primarily the result of a decrease in the
average yield on total interest-earning assets from 7.35% for the quarter ended
March 31, 1998 to 6.91% for the 1999 comparable quarter. Offsetting the decline
in the yield was a $180.5 million, or 2.5%, increase in average interest-earning
assets to $7.50 billion for the quarter ended March 31, 1999 as compared to
$7.32 billion in the comparable quarter of 1998. The increase in average
interest-earning assets was principally attributable to growth of $515.6 million
in average real estate loans, net and $41.7 million in average consumer and
student loans, offset by a $270.8 million decrease in average mortgage-backed
and mortgage related securities and $116.5 million decrease in average debt and
equity securities. This growth was primarily funded by increased deposits,
borrowings and cash flows.

Interest income on real estate loans increased $5.9 million, or 9.9%, to $65.5
million for the three months ended March 31, 1999, from $59.6 million for the
same period in 1998. The increase was a result of the growth in the average
balance of loans outstanding primarily due to increased loan originations. The
increase was partially offset by a 49 basis point decrease in the average yield
on real estate loans from 7.93% for the three months ended March 31, 1998 to
7.44% for the same period in 1999, principally due to an increased concentration
of lower yielding one- to four- family real estate loans within the loan
portfolio mix.

Interest income on consumer and student loans increased $720,000, or 53.5%, to
$2.1 million for the three months ended March 31, 1999, from $1.3 million for
the same period in 1998. The increase was a result of the growth in the average
balance of consumer loans outstanding. The increase was partially offset by an
18 basis point decrease in the average yield on consumer and student loans from
7.41% for the three months ended March 31, 1998 to 7.23% for the same period in
1999, principally due to the increased concentration of lower yielding home
equity loans within the consumer loan portfolio mix.

Interest income on mortgage-backed and mortgage related securities decreased
$10.6 million, or 17.5%, to $49.6 million for the three months ended, March 31,
1999, from $60.2 million for the same period in 1998. 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 73 basis
point decline in the average yield on mortgage-backed and mortgage related
securities from 7.20% for the three months ended March 31, 1998 to 6.47% for the
same period in 1999. Interest income on debt and equity

                                       16
<PAGE>
 
securities decreased $1.0 million, or 7.5%, to $11.8 million for the three
months ended March 31, 1999 from $12.8 million for the same period in 1998. The
decrease was the result of a decline in the average balance of debt and equity
securities, offset by a 42 basis point increase in the average yield on debt and
equity securities from 5.99% for the three months ended March 31, 1998 to 6.41%
for the same period in 1999.

Interest Expense

Interest expense for the three months ended March 31, 1999, was $78.1 million,
compared to $81.7 million for the three months ended March 31, 1998, a decrease
of $3.6 million, or 4.4%. The decrease in interest expense is related to a 39
basis point decline in the average cost of interest-bearing liabilities offset
by a $230.7 million, or 3.6%, increase in the average balance of interest-
bearing liabilities from $6.43 billion for the quarter ended March 31, 1998 to
$6.66 billion for the quarter ended March 31, 1999. This increase reflects a
$132.8 million increase in the average balance of interest-bearing deposits and
a $97.9 million increase in the average balance of borrowed funds for the
quarter ended March 31, 1999, as compared to the prior year quarter.

The increase in total deposits was primarily due to an increase in the average
balance of money markets and certificates of deposit by offering competitive
rates. The lower average cost, partially offset by higher deposit balances,
resulted in a decrease of $3.2 million in interest expense on deposits for the
quarter ended March 31, 1999 as compared to the same quarter in 1998.

The average balance of borrowed funds increased $97.9 million from $2.35 billion
for the three months ended March 31, 1998 to $2.44 billion for the three months
ended March 31, 1999. This increase, coupled with a 30 basis point decrease in
the average cost, resulted in a $415,000 decrease in interest expense on
borrowed funds, from $34.0 million for the quarter ended March 31, 1998 to $33.5
million for the quarter ended March 31, 1999. 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 $51.6 million
for the three months ended March 31, 1999 as compared to $52.8 million for the
three months ended March 31, 1998, a decrease of $1.3 million, or 2.4%. The net
interest margin and spread for the quarter ended March 31, 1999, decreased to
2.75% and 2.22%, respectively, from 2.89% and 2.27%, 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.

Provision for Possible Loan Losses

The Company had no provision for possible loan losses for the three months ended
March 31, 1999 as compared to $550,000 for the three months ended March 31,
1998. The lack of a provision for possible loan losses for the three months
ended March 31, 1999 reflects management's qualitative and quantitative
assessment of the loan portfolio, net charge-offs and collection of delinquent
loans. At March 31, 1999 and December 31, 1998, the allowance for possible loan
losses amounted to $40.3 million and $40.2 million, respectively, and the ratio
of such allowance to total non-performing loans was 208.71% and 182.15%,
respectively.

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

                                       17
<PAGE>
 
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 two 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. 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 March 31, 1999 and December 31, 1998, 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 $2.72 billion
and $2.81 billion, respectively, or 75.0% and 75.8%, respectively, of loans net
of unearned income. The relatively riskier multi-family, commercial real estate,
construction and development, and home equity and second mortgage loans
aggregated $790.0 million and $785.3 million, respectively, at those dates, or
21.8% and 21.2%, respectively, of loans net of unearned income. Consumer,
student and automobile leases amounted to $102.6 million or 2.8% of gross loans
and $97.7 million or 2.6% of loans net of unearned income at March 31, 1999 and
December 31, 1998, respectively. Non-performing loans at those dates were $19.3
million and $22.1 million, respectively, of which $2.5 million and $2.8 million,
respectively, were commercial real estate loans. The allowance for possible loan
losses as a percent of loans was 1.13% and 1.11%, respectively, at those dates.

The quantitative information cited in the above paragraph indicates a continuing
trend over the last several years: (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 the last several years
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.

                                       18
<PAGE>
 
Non-Interest Income

Non-interest income decreased $1.2 million, or 14.8%, to $7.2 million for the
quarter ended March 31, 1999 as compared to $8.4 million for the same period in
the prior year. The decrease was a result of a $2.1 million decrease in net
gains on sales of securities and a $401,000 decrease in fees and service
charges. The decrease in net gains on sales of securities was due to
management's investment strategy of periodically recognizing profits from its
available-for-sale securities portfolio during favorable market conditions.
Offsetting these decreases is a $1.4 million increase in mortgage banking
operations income. 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 $112.9 million for the quarter ended March 31, 1999
as compared to $24.4 million for the quarter ended March 31, 1998. The increase
in non-interest expense was primarily attributable to merger related costs
associated with the acquisition of T R Financial Corp. totaling $88.0 million
and the restructuring charge in connection with the early retirement program for
employees totaling $5.9 million. The aforementioned merger related costs
associated with the acquisition comprised of $16.9 million of transaction costs,
$39.9 million of severance and other compensation costs, $24.6 million of ESOP
amortization costs and $6.5 million of costs associated with combining
operations. General and administrative expenses decreased $5.5 million, or
22.4%, to $18.9 million for the quarter ended March 31, 1999 from $24.3 million
for the 1998 corresponding quarter. The decrease primarily reflects cost savings
achieved in connection with the acquisition of T R Financial Corp., principally
relating to reductions in compensation and certain employee benefit plan
expenses and the elimination of other redundant charges. After giving effect to
the reduction in expenses relating to the merger, compensation and employee
benefits increased slightly due to the costs associated with additional
commission and other compensation costs associated with the increased volume of
loan originations, and to a lesser extent, due to an increase in office and
occupancy expense relating to the mid-fourth quarter 1998, opening of two
branches.

Income Taxes

Total income tax expense decreased $11.6 million, from $13.2 million recorded
during the quarter ended March 31, 1998 to $1.7 million during the quarter ended
March 31, 1999. The decrease is primarily attributable to the decrease in income
before income taxes and the tax effect of the merger related costs and other
restructuring charges.

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. Purchases of
mortgage-backed and mortgage related and debt and equity securities totaled
$792.1 million and $953.6 million during the three months ended March 31, 1999
and 1998, 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 three months ended March
31, 1999.

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 March 31,

                                       19
<PAGE>
 
1999, the Company had $2.00 billion in reverse-repurchase agreements
outstanding, and at December 31, 1998 there were $2.09 billion 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.

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.

Management of Interest Rate Risk

The principal objectives of the Company's interest rate risk management are to
evaluate the interest rate risk inherent in certain balance sheet accounts,
determine the level of risk appropriate given the Company's business strategy,
operating environment, capital and liquidity requirements and performance
objectives, and manage the risk consistent with the Board of Directors' approved
guidelines.  Through such management, the Company seeks to reduce the
vulnerability of its operations to changes in interest rates.  The Company's
Board of Directors reviews the Company's interest rate risk position on a
monthly basis.  The Company's Board of Directors has established an
Asset/Liability Committee comprised of the Company's senior management under the
direction of the Board of Directors.  Senior management is responsible for
reviewing with the Board of Directors its activities and strategies, the effect
of those strategies on the Company's net interest margin, the market value of
the portfolio of investments and loans and the effect that changes in interest
rates will have on the Company's portfolio and exposure limits.

Currently, the Company has utilized the following strategies to manage interest
rate risk:  (1) selling substantially all mortgage loans to the secondary market
without recourse; and (2) investing in shorter-term adjustable-rate securities
which may generally bear lower yields as compared to longer-term investments,
but which better position the Company for increases in market interest rates. In
recent years, the Company has attempted to shorten the maturities of its
interest-earning assets by increasing its investment in shorter-term investments
to better match the maturities of its deposit accounts, in particular its
certificates of deposit that mature in one year or less, which, at March 31,
1999, totaled $2.26 billion, or 34.9%, of total interest-bearing liabilities.
These strategies may adversely impact net interest income due to lower initial
yields on these investments in comparison to longer-term fixed-rate investments
and whole loans.  However, management believes that reducing its exposure to
interest rate fluctuations will enhance long-term profitability.

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 March 31, 1999, the Company's one-year gap position was
negative 3.37%.  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 

                                       20
<PAGE>
 
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 March 31, 1999, 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
March 31, 1999, 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 8.00% to 40.00% 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 7.68% and 24.96% annually. Savings accounts were assumed to
decay at 21.00%, 5.00%, 5.00%, 5.00%, 5.00% and 59.00%, 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.

                                       21
<PAGE>
 
<TABLE>
<CAPTION>
                                                                           At March 31, 1999
                           ------------------------------------------------------------------------------------------------------
                                                  One              Two            Three           Four         Over
                                Up to            to Two         to Three         to Four        to Five        Five
                               One Year          Years            Years           Years          Years         Years       Total
                           ------------     ------------     -----------     -----------     ----------     ------------  ------
<S>                       <C>               <C>              <C>             <C>             <C>            <C>
                                                                      (Dollars in thousands)
Interest-earning assets   
 (1):                     
 Federal funds sold        $     35,500     $          -    $          -    $          -    $         -    $          -    $ 35,500
 Debt and equity          
   securities, net (2)          155,645           33,926          96,154          18,909              -         420,362     724,996
 Mortgage-backed and      
   mortgage related       
   securities, net (2)        1,690,712          672,910         347,116         178,581         75,099         120,050   3,084,468
 Real estate loans,       
   net (3) (4)                  937,743          521,384         388,417         321,086        464,019         875,966   3,508,615
 Consumer and student     
   loans (4)                     49,702           32,350          18,116             658            237           1,422     102,485
                           ------------     ------------    ------------    ------------    -----------    ------------   ---------
   Total interest-earning                                                                                                          
     assets                   2,869,302        1,260,570         849,803         519,234        539,355       1,417,800   7,456,064
                           ------------     ------------     -----------     -----------     ----------     ------------  ---------
                          
Interest-bearing          
 liabilities:             
   Money market accounts         28,704            7,175           7,175           7,175          7,175          86,105     143,509
   Savings accounts             201,266           47,921          47,921          47,921         47,921         565,473     958,423
   Super NOW and NOW       
     accounts                    30,589            7,648           7,648           7,648          7,648          91,773     152,954
   Certificates of deposit    2,258,943          306,098         124,172          59,053         51,958          38,936   2,839,160
   Borrowed funds               607,082          709,500         152,600         628,300         55,000         220,478   2,372,960
                            -----------     ------------     -----------     -----------     ----------     -----------   ---------
   Total interest-bearing 
      liabilities             3,126,584        1,078,342         339,516         750,097        169,702       1,002,765   6,467,006
                            -----------     ------------     -----------     -----------     ----------     -----------   ---------
                          
 Interest sensitivity     
   gap (5)                 $   (257,282)    $    182,228     $   510,287     $  (230,863)    $  369,653     $   415,035   $ 989,058
                           ============     ============     ===========     ===========     ==========     ===========   =========
                          
 Cumulative interest      
   sensitivity gap         $   (257,282)    $    (75,054)    $   435,233     $   204,370     $  574,023     $   989,058
                           ============     ============     ===========     ===========     ==========     ============
 Cumulative interest
   sensitivity gap as a
   percentage of total assets     (3.37)%          (0.98)%          5.71%           2.68%          7.52%         12.97%
 Cumulative net interest-
   earning assets as a
   percentage of cumulative
   interest-bearing liabilities    91.77%           98.22%         109.58%         103.86%        110.51%        115.29%

</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 includes
    callable preferred stock, the maturities of which have been assumed to be
    the date on which they are initially callable.
(3) For the purpose of the gap analysis, the allowance for possible loan losses
    and non-accrual loans have been excluded.
(4) Loans held-for-sale, net 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.

                                       22
<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, 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.

The Company's interest rate sensitivity is also monitored by management through
the use of a model which internally generates estimates of the change in net
portfolio value ("NPV") over a range of interest rate change scenarios. NPV is
the present value of expected cash flows from assets, liabilities, and off-
balance sheet contracts. The NPV ratio, under any interest rate scenario, is
defined as the NPV in that scenario divided by the market value of assets in the
same scenario. For purposes of the NPV table, prepayment assumptions similar to
those used in the Gap Table were used, reinvestment rates were those in effect
for similar products currently being offered and rates on core deposits were
modified to reflect recent trends. The following table sets forth the Company's
NPV as of March 31, 1999, as calculated by the Company.

<TABLE>
<CAPTION>
 Change in
 Interest
   Rates                                                                                           NPV as % of Portfolio
 in Basis                                Net Portfolio Value                                          Value of Assets
  Points 
                   ---------------------------------------------------------------       -----------------------------------------
(Rate Shock)             Amount                $ Change               % Change                 NPV Ratio            % Change (1)
-------------     -----------------     ------------------      -----------------       ------------------      -----------------
                                        (Dollars in thousands)
<S>                       <C>                   <C>                        <C>                 <C>                    <C> 
200                       $ 554,946             $ (306,433)                (35.57)%             7.80%                  7.26%
100                         722,299               (139,080)                (16.15)              9.75                   3.51
Static                      861,379                      -                   0.00              11.22                   0.00
(100)                       860,991                   (388)                 (0.05)             10.99                  (2.07)
(200)                       875,361                 13,982                   1.62              11.02                  (3.45)
</TABLE>

(1)  Based on the portfolio value of the Company's assets assuming no change in
interest rates.

As in the case with the Gap Table, certain shortcomings are inherent in the
methodology used in the above interest rate risk measurements. Modeling changes
in NPV require the making of certain assumptions which may or may not reflect
the manner in which actual yields and costs respond to changes in market
interest rates. In this regard, the NPV model presented assumes that the
composition of the Company's interest sensitive assets and liabilities existing
at the beginning of a period remains constant over the period being measured and
also assumes that a particular change in interest rates is reflected uniformly
across the yield curve regardless of the duration to maturity or repricing of
specific assets and liabilities. Accordingly, although the NPV measurements and
net interest income models provide

                                       23
<PAGE>
 
an indication of the Company's interest rate risk exposure at a particular point
in time, such measurements are not intended to and do not provide a precise
forecast of the effect of changes in market interest rates on the Company's net
interest income and will differ from actual results.

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.

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 March 31, 1999 the Bank exceeded
those requirements.  The Bank's leverage capital ratio, Tier-I risk-based
capital ratio and total-risk based capital ratio were 8.38%, 19.19% and 20.41%,
respectively.

Computer Issues for the Year 2000

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. As a New York State chartered
savings institution, the Bank is subject to review by both the NYSBD and the
FDIC. The FDIC has completed three Tier II Year 2000 examinations of the Bank's
remediation progress.

Beginning in 1997, 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 a 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 suffers harm to its operations 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 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.

                                       24
<PAGE>
 
Like many financial institutions, the Company relies upon computers for the
daily conduct of its business and for data processing generally. The Company
utilizes a combination of in-house and service bureau applications, with the
bulk of customer account processing being handled by leading national vendors of
data processing services for financial institutions. The Company has received
written assurances that these service providers have completed their internal
remediation of programs, and have substantially completed the remediation of
issues related to interdependencies with other parties. The Company continues to
participate both directly and indirectly in the testing of these servicers and
other third party dependencies.

The Company does not anticipate that there will be any significant or material
condition which will impact these service providers in their ability to deliver
accurate data processing services before, during and after the transition to the
new millennium. However, results of system tests conducted by the Company and by
other users of this service providers will be carefully monitored to ensure that
all issues have been identified and successfully remediated.

In addition to its outsourced systems, the Company relies on in-house, computer
based financial accounting and mortgage origination systems. The Company has
recently installed a new general ledger and financial accounting system, and has
upgraded the mortgage origination system. 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. All 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.

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
replaced or upgraded. Equipment which contains embedded chips or microprocessors
has also been tested and replaced or scheduled for replacement in 1999.

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 expenses related to Year 2000 issues for 1998 were $60,000 and the
Company anticipates the expenses for 1999 to be approximately $525,000. 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 be Year 2000 compliant in a timely manner, or for which a
suitable alternative cannot be implemented.  However, as the Company

                                       25
<PAGE>
 
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. 

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 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. The
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 Plan:  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 Plans:  These plans would be invoked if unanticipated Year
----------------------------                                                    
2000 problems disrupt 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.

                                       26
<PAGE>
 
Current Legislation

Currently, legislation is pending that would broaden the activities in which
bank holding companies and banks may engage, and restructure the regulation of
financial service companies. The legislation would, however, restrict the
activities of unitary savings and loan holding companies, subject to a
grandfather for existing unitary savings and loan holding companies, such as the
Company. The Company is unable to predict whether legislation will be enacted or
the extent to which the legislation would impact competition or
restrict or disrupt its operations.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

          For a description of the Company's quantitative and qualitative
disclosures about market risk, see the information set forth under the caption
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations Interest Rate Sensitivity Analysis."

                                       27
<PAGE>
 
PART II - OTHER INFORMATION
---------------------------


Item 1.  Legal Proceedings

         The Company is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business.  Such
routine legal proceedings, in the aggregate, are believed by management to be
immaterial to the Company's financial condition or results of operations.

Item 2.  Changes in Securities

         Not applicable

Item 3.  Defaults Upon Senior Securities

         Not applicable

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

         Not applicable

Item 5.  Other Information

         Not applicable

Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibits
               --------
         3.1   Certificate of Incorporation of Roslyn Bancorp, Inc.(1)
         3.2   Bylaws of Roslyn Bancorp, Inc. (2)
         10.17 Employment agreement between Roslyn Savings Bank and John M.
               Tsimbinos
         11.0  Statement re:  Computation of Per Share Earnings
         27.0  Financial Data Schedule

         -------------------------- 
         (1.) Incorporated by reference into this document from Exhibits filed
         with the Registration Statement on Form S-1, and any amendments
         thereto, Registration Statement No. 333-10471, filed with the
         Securities and Exchange Commission on August 20, 1996.

         (2.) Incorporated by reference into this document from the Exhibits
         filed with the Form 10-K, and any amendments thereto, Commission File
         No. 0-28886, filed with the securities and Exchange Commission on 
         March 31, 1999.

         (b)   Reports on Form 8-K
               -------------------
 
               (i)   On January 12, 1999, Roslyn filed a Report on Form 8-K to
announce that it had entered into the First Amendment, dated as of January 23,
1999 to the Agreement and Plan of Merger, dated as of May 25, 1998 with T R
Financial Corp.

               (ii)  On February 8, 1999, Roslyn filed a Report on Form 8-K
regarding its issuance of a press release which reported earnings for the fiscal
year and quarter ended December 31, 1998.

               (iii) On February 19, 1999, Roslyn filed a Report on Form 8-K to
announce the consummation of its acquisition of T R Financial Corp., as well as
to announce the consummation of the merger of Roosevelt Savings Bank with and
into The Roslyn Savings Bank.

                                       28
<PAGE>
 
                                 Exhibit Index
                                 -------------
<TABLE> 
<CAPTION> 
                                                   
Exhibit No.               Identification of Exhibit
-----------               -------------------------
<S>         <C>                                                                          
  10.17     Employment Agreement between Roslyn Savings Bank and John M. Tsimbinos
  11.0      Statement re:  Computation of Per Share Earnings                             
  27.0      Financial Data Schedule (submitted only with filing in electronic filing)    
</TABLE> 

                                       29
<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:   May 17, 1999         By: /S/ Joseph L. Mancino
        -------------           -----------------------------------------------
                                     Joseph L. Mancino
                                     Vice Chairman of the Board, President and
                                     Chief Executive Officer



Date:   May 17, 1999         By: /S/ Michael P. Puorro
        ------------            -----------------------------------------------
                                     Michael P. Puorro
                                     Treasurer and Chief Financial Officer

                                      30