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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

                Annual Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934

For the fiscal year ended                      Commission File No. 0-22058
    December 31, 1999

                        MERCHANTS NEW YORK BANCORP, INC.
               (Exact name of registrant as specified in charter)

                 Delaware                                   13-3650812
     (State or other jurisdiction of                      (IRS employer
      incorporation or organization)                   identification No.)

    275 Madison Avenue, New York, N.Y.                        10016
  (Address of principal executive office)                   (Zip Code)

       Registrant's telephone number, including area code: (212) 973-6600

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      None

           Securities Registered Pursuant to Section 12(g) of the Act:

                                 Title of Class:
                                 ---------------

                         Common Shares, $.001 par value

      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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation  S-K is not contained  herein,  and will be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K [ ].

      As of February 1, 2000,  the  aggregate  market  value of the voting stock
held by non-affiliates was $235,255,944.

      As  of  February  1,  2000,   18,956,040   shares  of  common  stock  were
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

(1)   Specified  portions  of the  1999  Annual  Report  of  Merchants  New York
      Bancorp,  Inc. are  incorporated  by reference in Part I, Part II and Part
      IV.

(2)   Specified  portions  of the  definitive  Proxy  Statement  for the  Annual
      Meeting  of  Stockholders,  dated  March 24,  2000 of  Merchants  New York
      Bancorp, Inc. are incorporated by reference in Part III.

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<PAGE>

                        MERCHANTS NEW YORK BANCORP, INC.
                                    FORM 10-K

                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----
                                     PART I

ITEM 1.    BUSINESS                                                          1

ITEM 2.    PROPERTIES                                                       20

ITEM 3.    LEGAL PROCEEDINGS                                                20

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS              20

                                   PART II                                  21

ITEM 5.    MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS                                              21

ITEM 6.    SELECTED FINANCIAL DATA                                          21

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS                              22

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK       22

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                      22

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
           ACCOUNTING AND FINANCIAL DISCLOSURE                              22

                                   PART III                                 22

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY                  22

ITEM 11.   EXECUTIVE COMPENSATION                                           22

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT                                                       22

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                   22

                                   PART IV                                  23

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
           FORM 8-K                                                         23

                                 SIGNATURES                                 24

<PAGE>

                                     PART I

Item 1. Business

General

      Merchants New York Bancorp, Inc. (the "Company") is a bank holding company
that was organized  under the laws of the State of Delaware on February 27, 1992
for the purpose of acquiring all of the issued and outstanding  capital stock of
The Merchants  Bank of New York (the "Bank"),  a banking  corporation  organized
under the laws of the State of New York.  The sole  subsidiary of the Company is
the Bank. The principal business of the Company is the operation of the Bank.

      The Bank is a commercial  bank,  servicing  the  communities  in which its
branches are located. It is authorized to receive both demand and time deposits,
to make loans of various types,  to engage in trust services and other fiduciary
funds,  to issue  letters of credit,  to accept and pay  drafts,  to rent safety
deposit boxes, and to engage in similar activities.

      The Bank was founded in 1874 as Markel  Brothers  Private  Bankers.  A New
York City branch was  established  in 1881. In 1926, a charter was obtained from
the Banking  Department of the State of New York. The name and style of the Bank
was changed to The Merchants Bank, and at the same time the Bank became publicly
held. The Bank's name was changed to The Merchants Bank of New York in 1937.

      Cash  dividends  were  commenced  in 1932 and  since  then  have been paid
consecutively every quarter for the ensuing 67 years.

      The  Bank  operates   seven   branches,   all  in  Manhattan,   which  are
strategically  located  to serve its  middle  market  customers.  The  executive
offices of the Company are located at 275  Madison  Avenue,  New York,  New York
10016. The telephone number is (212) 973-6600.

Banking Services

      The  Bank  offers  conventional  banking  services  consisting  of  retail
banking,  commercial banking,  international banking and trust services to small
and medium size businesses and to  individuals.  The Bank's deposits are insured
by the Federal Deposit Insurance Corporation (the "FDIC").

      The Bank  provides a full range of retail  banking  services  that include
Regular and Special Checking Accounts, NOW (Negotiable Orders of Withdrawal) and
Super NOW Accounts,  Money Market Accounts,  Savings Accounts plus Keogh and IRA
Accounts and Lease Security Accounts for landlords and Attorney Escrow Accounts.
The Bank issues  VISA(R)  and  MASTERCARD(R)  credit  cards  offered  through an
intermediary  affinity  program with all credit risk assumed by the third party.
The complete process, including credit checks and eligibility,  is being handled
by the third party.  24-hour automated teller machine (ATM) cards with access to


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NYCE(R), The Exchange(R) and CIRRUS(R) systems are available for use on non-Bank
owned ATMs.  The Bank does not have any ATMs at any of its branches and does not
anticipate installing any in the near future.

      The Bank  furnishes  lending and  depository  services to small and medium
size commercial and industrial customers and to individuals.  Loan facilities to
these customers include short term loans,  revolving credit  arrangements,  term
loans,  personal  installment loans, and auto loans. Most of the Bank's business
loans are short term. Lending is limited to the New York metropolitan area which
includes the five boroughs,  Westchester,  Long Island, and Northern New Jersey.
No single borrower or group of related  borrowers is indebted to the Bank in the
aggregate  for an amount in excess of $10.9  million.  The Bank's legal  lending
limit was in excess of $17 million at December 31, 1999.

      The Bank's subsidiary,  MBNY Holdings Corp., a Delaware corporation,  is a
holding company that owns the common stock and a majority of the preferred stock
of  Merchants  Capital  Corporation,  a real estate  investment  trust that owns
approximately  90% of the real estate related  portion of the Bank's  investment
portfolio.

      The Bank's  subsidiary,  Merchants New York  Commercial  Corp., a Delaware
corporation,  specializes in asset-based  lending,  providing revolving loans to
manufacturing,  wholesale,  distribution and service companies with high working
capital needs.  The loans are based on the level of a company's  working capital
assets, primarily accounts receivable and inventory. In addition,  machinery and
equipment  loans for both  existing and new  equipment  may be provided.  In all
instances,  the  loans are  secured  by the  related  assets  which are  closely
monitored.

      The Bank's  International  Banking Department offers financial services to
its customers  through its network of correspondent  banks around the world. The
Bank  provides  Letters of Credit and  foreign  collection  services  to finance
import and export  transactions.  It also issues  Standby  Letters of Credit for
domestic use. The Bank maintains active correspondent relationships with leading
financial institutions, both domestic and world wide.

Competition

      The Bank faces significant competition for both the loans it makes and the
deposits it accepts.  The Bank's  market  area has a high  density of  financial
institutions,  many of which are branches of significantly  larger  institutions
which have greater  financial  resources than the Company,  and all of which are
competitors of the Bank to varying degrees.  The Company and its competitors are
significantly   affected  by  general   economic  and  competitive   conditions,
particularly  changes in market interest rates,  government policies and actions
of regulatory authorities.

      The Bank's  competition for loans comes  principally from other commercial
banks.  The Bank competes  successfully  for loans  primarily by emphasizing the
quality of its loan services and by charging  loan fees and interest  rates that
are generally  competitive in its market area. Its most direct  competition  for
deposits has  historically  come from commercial  banks,  savings


                                       2
<PAGE>

banks, credit unions, and savings and loan associations.  Additionally, the Bank
faces  competition  for deposits from money market funds,  stock and bond mutual
funds,  brokerage  companies  and  insurance  companies.  The Bank  competes for
deposits  by  offering a variety of customer  services  and deposit  accounts at
generally competitive interest rates.

      Management  considers the Bank's  reputation  for  financial  strength and
customer service as its major competitive  advantage in attracting  customers in
its market area.  The Bank also  believes it benefits  from its  community  bank
orientation as well as its relatively high percentage of core deposits.

Potential Impact of Changes in Government Monetary Policies and Interest Rates

      The  earnings  of the Company  and the Bank are  affected  by  legislative
changes and policies of various  governmental  authorities  such as the New York
State Banking  Department,  the Board of Governors of the Federal Reserve System
(the "FRB") and the FDIC.  The FRB controls  interest  rates,  which in turn may
affect the cost of funds and the return on earning assets. The changing economic
conditions and changes in the money markets make it impossible to predict future
changes in interest rates,  loan demand, or their effects on the Bank's business
and earnings.

      The Bank's  profitability,  like that of most financial  institutions,  is
dependent  to a  large  extent  upon  its  net  interest  income,  which  is the
difference between its interest on  interest-earning  assets,  such as loans and
securities,  and its interest expense on interest-bearing  liabilities,  such as
deposits.  When the amount of interest-earning assets differs from the amount of
interest-bearing  liabilities expected to mature or reprice in a given period, a
significant  change in market rates of interest will affect net interest income.
The Bank manages its interest  rate risk  primarily by  structuring  its balance
sheet to emphasize holding adjustable rate loans in its portfolio, maintaining a
large portion of its  investments in  mortgage-backed  securities  which produce
monthly  cash  flow  for  reinvestment,  and  maintaining  a large  base of core
deposits.

Supervision and Regulation

      Bank holding  companies  and banks are  extensively  regulated  under both
federal and state law.  These laws and  regulations  are  intended  primarily to
protect  depositors  and not  stockholders.  To the  extent  that the  following
information  describes statutory and regulatory  provisions,  it is qualified in
its entirety by reference to the particular statutory and regulatory provisions.
Any change in the applicable law or regulation may have a material effect on the
business and prospects of the Company and the Bank.

      The Company is a registered bank holding company subject to the regulation
and  examination by the Federal Reserve Board under the Bank Holding Company Act
of 1956,  as amended (the  "Act").  The Company is required to file with the FRB
quarterly and annual reports and any additional information that may be required
under the Act. The Act also  requires  every bank holding  company to obtain the
prior approval of the FRB before (i) acquiring all or  substantially  all of the
assets of, or direct or  indirect  ownership  or control of, more than 5% of


                                       3
<PAGE>

the outstanding voting stock of any bank which is not already majority owned, or
(ii)  acquiring,  or  merging or  consolidating  with,  any other  bank  holding
company. The FRB will not approve any acquisition, merger, or consolidation that
would have a substantially  anti-competitive effect, unless the anti-competitive
impact of the proposed  transaction  is clearly  outweighed by a greater  public
interest in meeting the convenience and needs of the community to be served. The
FRB also considers capital adequacy and other financial and managerial resources
and future prospects of the companies and the banks concerned, together with the
convenience   and  needs  of  the  community  to  be  served,   when   reviewing
acquisitions, mergers or consolidations.

      In November 1999, the  Gramm-Leach-Bliley Act became law. This legislation
repealed many  limitations  applicable  to banks,  including  those  relating to
transactions in investment  securities and to interstate  branch banking.  It is
too early to predict the effect,  if any, that this new legislation will have on
the Company and the Bank.

      The Riegle-Neal Act of 1994 permits an adequately  capitalized and managed
bank holding company, with FRB approval, to acquire control of banks outside its
principal state of operation,  without regard to whether such  acquisitions  are
permissible  under  state law  (except  that  states may  restrict  out-of-state
acquisitions  of newly  formed banks by  prescribing  a minimum time that a bank
must have been in existence  before it can be acquired by an out-of-state  bank;
this cannot be greater  than five  years.) No bank  holding  company may make an
acquisition  outside its principal  state of operation  which would result in it
controlling  more  than 10% of the  total  amount  of  deposits  of all  insured
depository  institutions  in the  United  States,  or 30% or more  of the  total
deposits of insured  depository  institutions in any state (unless such limit is
waived,  or  a  more  restrictive  or  permissive  limit  is  established,  by a
particular state).

      Riegle-Neal  also allows  banks to branch  across  state  lines  either by
merging  with banks in other  states or by  establishing  new  branches in other
states.  The provision  relating to  establishing  new branches in another state
requires a state's specific approval.  The banking laws of New York provide that
a New  York  bank  chartered  less  than  five  years  which is  acquired  by an
out-of-state  bank holding company  generally may not be merged with other banks
owned by that bank holding  company,  but that an  out-of-state  bank may branch
into the state by merging  with,  or by  acquiring  one or more  branches of, an
existing New York bank. The banking laws of New York do not provide the specific
approval  for  out-of-state  banks to establish  new  branches in New York.  The
Company is unable to predict the ultimate impact of interstate  banking on it or
its competition.

      Additionally,  Riegle-Neal  prohibits a bank holding company, with certain
limited exceptions, from (i) acquiring or retaining direct or indirect ownership
or control of more than 5% of the outstanding  voting stock of any company which
is not a bank or bank holding company,  or (ii) engaging  directly or indirectly
in activities  other than those of banking,  managing or controlling  banks,  or
performing  services for its  subsidiaries.  Exceptions  may be allowed in cases
where the non-banking business is determined by the FRB to be so closely related
to banking or managing or controlling  banks as to be properly incident thereto.
In  making  such  determinations,  the FRB is  required  to weigh  the  expected
benefits to the public, such as


                                       4
<PAGE>

greater convenience,  increased competition or gains in efficiency,  against the
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices.

      The FRB  has  adopted  risk-based  capital  guidelines  for  bank  holding
companies.  The risk-based  capital  guidelines are designed to make  regulatory
capital  requirements  more sensitive to differences in risk profile among banks
and bank holding  companies,  to account for  off-balance  sheet exposure and to
minimize disincentives for holding liquid assets. Under these guidelines, assets
and  off-balance  sheet items are  assigned to broad risk  categories  each with
appropriate  weights.  The  resulting  capital  ratios  represent  capital  as a
percentage of total risk-weighted assets and off-balance sheet items. Failure to
meet the capital guidelines could subject a banking  institution to a variety of
enforcement remedies available to federal regulatory authorities.

      Bank holding companies  currently are required to maintain a minimum ratio
of total capital to risk-weighted  assets (including  certain  off-balance sheet
activities,  such as standby  letters of credit) of 8%. 50% or more of the total
capital is required to be "Tier 1 capital,"  consisting  of  shareholder  equity
plus retained  earnings,  less certain goodwill items and intangible assets. The
remainder ("Tier 2 capital") may consist of (a) an allowance for loan losses not
to exceed 1.25% of risk-weighted risk assets, (b) excess of qualifying perpetual
preferred  stock,  (c) hybrid  capital  instruments,  (d)  perpetual  debt,  (e)
mandatory   convertible   debt  securities,   and  (f)  subordinated   debt  and
intermediate-term  preferred  stock  limited  for this  purpose to 50% of Tier 1
capital.  Total capital is the sum of Tier 1 and Tier 2 capital less  reciprocal
holdings of other banking  organizations'  capital  instruments,  investments in
unconsolidated  subsidiaries  and any other  deductions as determined by the FRB
(determined  on a case by case  basis  or as a matter  of  policy  after  formal
rule-making).

      Bank holding company assets are given  risk-weights of 0% (no risk),  20%,
50% and 100%.  In addition,  certain  off-balance  sheet items are given similar
credit conversion  factors to convert them to asset equivalent  amounts to which
an appropriate  risk-weight will apply. These percentages represent the fraction
of an asset's  value that must be considered  when  computing the ratio of total
capital to risk  weighted  assets.  An asset with a zero risk weight need not be
considered in computing the ratio. If an asset has a 20% risk weight, 20% of its
value must be taken into account in computing the ratio. Half the value of a 50%
risk weighted asset,  and the full value of a 100% risk weighted asset,  must be
taken into account for this purpose.

      Risk  weighting  is fixed  according  to the  degree  of risk  each  asset
represents.  Most loans  receive a risk  weight of 100%,  except for  performing
first mortgage loans fully secured by certain residential property,  which carry
a 50% risk rating. Most investment  securities  (including,  primarily,  general
obligation  claims on  states  or other  political  subdivisions  of the  United
States)  will be assigned to the 20%  category,  except for  municipal  or state
revenue bonds, which have a 50% risk-weight,  and direct obligations of the U.S.
Treasury  or  obligations  backed  by the  full  faith  and  credit  of the U.S.
Government,  which have a 0% risk-weight. In converting off-balance-sheet items,
direct credit  substitutes  including general  guarantees and standby letters of


                                       5
<PAGE>

credit backing financial obligations,  are given a 100% conversion factor with a
50% risk-weight.  Transaction related  contingencies such as bid bonds,  standby
letters of credit backing non-financial  obligations and commitments  (including
commercial  credit lines) with an initial  maturity of more than one year have a
50% conversion factor.  Short-term commercial letters of credit are converted at
20% and certain short-term or unconditionally  cancelable  commitments have a 0%
factor.

      The Company's  management believes that the risk-weighting of assets under
these  guidelines  does not and will not have a material impact on the Company's
operations or on the operations of the Bank.

      In addition to the risk-based  capital  guidelines,  the FRB has adopted a
minimum Tier 1 capital  leverage ratio,  under which a bank holding company must
maintain a minimum ratio of Tier 1 capital to average total consolidated  assets
of at least  3% in the  case of a bank  holding  company  that  has the  highest
regulatory  examination  rating and is not contemplating  significant  growth or
expansion.  The leverage  capital ratio assists in the assessment of the capital
adequacy  of bank  holding  companies.  Its  principal  objective  is to place a
constraint on the maximum  degree to which a banking  organization  can leverage
its  equity  capital  base,  even if it  invests  primarily  in assets  with low
risk-weights.

      At  December  31,  1999,  the  capital  ratios of the Company and the Bank
exceeded the FRB's minimum regulatory capital guidelines as follows:

<TABLE>
<CAPTION>
                                              Merchants New York Bancorp, Inc.

                                                                            Risked-Based Capital
                             Leverage Capital(1)                   Tier 1                         Total(2)
                         ----------------------------   ------------------------------------------------------------
                            Amount         Ratio             Amount         Ratio              Amount       Ratio
                         ----------------------------   ----------------------------    ----------------------------
                                                   (Dollars in Thousands)

          <S>              <C>              <C>             <C>             <C>               <C>           <C>
          Actual           $103,937         7.54%           $103,937        14.88%            $112,670      16.13%

          Minimum
          requirement        41,354         3.00              27,940         4.00               55,881       8.00

                           ======================           ======================            ====================
          Excess           $ 62,583         4.54%           $ 75,997        10.88%            $ 56,789       8.13%
                           ======================           ======================            ====================
</TABLE>


<TABLE>
<CAPTION>
                                               The Merchants Bank of New York

                                                                             Risk-Based Capital
                             Leverage Capital(1)                   Tier 1                         Total(2)
                         ----------------------------   ------------------------------------------------------------
                            Amount        Ratio             Amount        Ratio             Amount        Ratio
                         ----------------------------   ----------------------------    ----------------------------
                                                   (Dollars in Thousands)

          <S>              <C>              <C>             <C>             <C>               <C>           <C>
          Actual           $104,653         7.58%           $104,653        14.96%            $113,396      16.21%

          Minimum
          requirement        55,226         4.00              27,982         4.00               55,963       8.00

                           ======================           ======================            ====================
          Excess           $ 49,427         3.58%           $ 76,671        10.96%            $ 57,433       8.21%
                           ======================           ======================            ====================
</TABLE>


                                       6
<PAGE>

(1)   The leverage  capital  requirement is generally  between 3.0% and 5.0% for
      all but the most highly-rated companies.

(2)   The  Company's  Tier  1  capital  includes  stockholders'  equity,  net of
      intangible assets, and gross of unrealized  securities valuation accounts.
      Total  risk-based (Tier 2) capital includes Tier 1 capital plus the amount
      of loan loss  allowance  or 1.25% of  risk-weighted  assets,  whichever is
      less.

      The capital adequacy  guidelines also provide explicitly for consideration
of interest rate risk in the overall  evaluation of a bank's capital adequacy in
order to ensure that banking institutions  effectively measure and monitor their
interest  rate  risk,  and that they  maintain  adequate  capital  for the risk.
Banking  institutions  deemed by the Federal  bank  regulatory  agencies to have
excessive interest rate risk may be required to maintain additional capital.

      The Bank is a state-chartered bank subject to supervision,  regulation and
examination by the New York State Banking  Department and by the FRB.  Deposits,
reserves,  investments,  loans, consumer law compliance, issuance of securities,
payment  of  dividends,  establishing  and  closing  of  branches,  mergers  and
consolidations,   changes  in  control,  electronic  funds  transfer,  community
reinvestment,  management  practices and other aspects of operations are subject
to regulation by the appropriate Federal and state regulatory agencies. The Bank
is  also  subject  to  various  regulatory  requirements  of the  FRB  including
disclosure requirements in connection with personal and mortgage loans, interest
on  deposits  and  reserve  requirements.  In  addition,  the Bank is subject to
numerous federal,  state and local laws and regulations which set forth specific
restrictions  and  procedural  requirements  with  respect to the  extension  of
credit,  credit practices,  the disclosure of credit terms and discrimination in
credit transactions.

      Federal  regulatory  agencies have broad powers to take prompt  corrective
action to resolve problems at banking institutions, including (in certain cases)
the  appointment  of a  conservator  or receiver.  The extent of these powers is
generally influenced by the level of capital at the institution. Management does
not  anticipate  that the Bank will become  subject to these  prompt  corrective
action provisions.

      Only  a  well  capitalized  depository  institution  may  accept  brokered
deposits  without  prior  regulatory  approval.   Under  FDIC  regulations,   an
institution  is  generally  considered  "well  capitalized"  if it  has a  total
risk-based  capital ratio of at least 10%, a Tier 1 risk-based  capital ratio of
at least 6%, and a Tier 1 capital  (leverage)  ratio of at least 5%. The Company
and  the  Bank  meet  the  guidelines  to be  considered  a  "well  capitalized"
institution.   Federal  law  generally   requires   full-scope   on-site  annual
examinations of all insured depository  institutions by the appropriate  Federal
bank regulatory  agency  although the examination may occur at longer  intervals
for small well-capitalized or state-chartered banks.

      Subsidiary  banks  of a  bank  holding  company  are  subject  to  certain
restrictions  imposed by the Act on any  extension of credit to the bank holding
company  or any of its  subsidiaries,  or  investments  in the  stock  or  other
securities of the bank holding company or its subsidiaries, and in the taking of
such stock or securities as collateral for loans to any borrower. A bank holding
company and its  subsidiaries  are prohibited from engaging in certain  "tie-in"
arrangements  in  connection  with the  extension  of credit or provision of any
property or services.


                                       7
<PAGE>

      Various  restrictions  limit the extent to which the Bank can supply funds
to the  Company.  The FRB limits the  amount of  dividends  the Bank can pay the
Company.  Without prior approval, the maximum dividend payable to the Company in
a single fiscal year is limited to the Bank's net profits for that year plus its
retained  earnings  for the  preceding  two  calendar  years,  less any required
transfer to surplus.  Further  restrictions  prevent the Company from  borrowing
from a Bank  subsidiary  unless  the loans are  secured  in  specified  amounts.
Without the prior approval of the FRB,  secured loans,  other  transactions  and
investments between the Company and any Bank subsidiary are generally limited in
amount to 10% of the Bank's capital and surplus.  Federal law also requires that
transactions  between a Bank subsidiary and the Company,  including extension of
credit,  sales of  securities  or  assets  and the  provision  of  services,  be
conducted on terms at least as favorable  to the Bank  subsidiary  as those that
apply or that would apply to comparable transactions with unaffiliated parties.

      As a consequence  of the extensive  regulation of the  commercial  banking
business  in the United  States,  the  business  of the Company and the Bank are
particularly  susceptible  to  changes  in  federal  and state  legislation  and
regulations which may increase the cost of doing business.

Lending Activities and Credit Risk Management

      The  Bank's   commercial   and  industrial   loan   portfolio   represents
approximately  96% of total loans.  Loans in this category are typically made to
small and medium sized  businesses.  Such loans typically range between $100,000
and $3 million,  although larger loans are made on occasion, as the Bank's legal
lending limit is in excess of $17 million.  Loan proceeds are generally used for
working capital and are seasonal in nature.  In addition,  the Bank supports the
financing of the importation of merchandise through letters of credit and direct
loans.  The primary source of repayment is from the borrowers'  conversion cycle
of inventory and accounts receivable as well as profits and cash flows.

      The Bank's mortgage loan portfolio  represents  approximately  4% of gross
loans and is  secured  by  mortgages  on real  property  located in the New York
metropolitan area. Mortgage loans are made on an accommodation basis to current,
well  established  customers or are on occasion  made to a business for property
which it is occupying.  In the latter  instance,  full credit  evaluation of the
borrowers'  financial  status is done and the Bank  does not rely  solely on the
collateral.

      The Bank's lending is subject to its written underwriting standards and to
loan origination  procedures  prescribed by management.  Detailed information is
obtained to assist in  determining  the  borrower's  ability to repay  including
credit reports,  financial  statements and confirmations.  The Bank's commercial
and  industrial  loans are  underwritten  based on the cash  flow and  financial
condition of the borrowing business and applicable  collateral when appropriate.
Such  loans  may be  secured  in whole or in part by  collateral  such as liquid
assets, accounts receivable, inventory, equipment or real property. The majority
of the loans are personally guaranteed by the principals of the business and may
be further collateralized by the assets of those principals.  The interest rates
on commercial and industrial loans are primarily variable rates that change with
market conditions and are priced in relation to the "prime rate."


                                       8
<PAGE>

      Intrinsic to the lending  process is the  possibility of loss. In times of
economic  slowdown,  the  risk  inherent  in the  Bank's  portfolio  of loans is
increased.  While management endeavors to minimize this risk, it recognizes that
loan  losses  will  occur and that the  amount of these  losses  will  fluctuate
depending  on the  risk  characteristics  of the  loan  portfolio  which in turn
depends on current and expected economic conditions, the financial conditions of
borrowers and the credit management process.

      As of December 31, 1999, the Bank's loans of $437 million, net of unearned
discounts,  represented  31% of total  assets.  The Bank  has no  foreign  loans
outstanding.  The following  table sets forth the composition of the Bank's loan
portfolio  net of unearned  discounts at the end of each of the most recent five
fiscal years:

<TABLE>
<CAPTION>
                                           1999           1998             1997             1996              1995
                                         --------       --------         --------         --------          --------
                                                                       (In Thousands)
<S>                                      <C>             <C>             <C>              <C>               <C>
Commercial and industrial........        $417,509        $339,982        $312,967         $283,341          $256,620
Real estate - mortgage...........          17,499          19,307          15,723           10,941            11,276
Installment loans................           2,146           2,520           3,212            2,855             3,067
                                         --------        --------        --------         --------          --------
Gross loans......................         437,154         361,809         331,902          297,137           270,963
  Less:  unearned discounts......             (57)            (46)            (94)             (56)              (59)
                                         ========        ========        ========         ========          ========
Total (net of unearned
  discounts).....................        $437,097        $361,763        $331,808         $297,081          $270,904
                                         ========        ========        ========         ========          ========
</TABLE>

      Approximately  38%  of  the  current  loan  portfolio  is  outstanding  to
companies in the diamond,  jewelry,  furs and apparel industries.  This includes
loans  to  various   types  of  companies   such  as   wholesalers,   retailers,
manufacturers and casters. The Bank's portfolio is sensitive to downturns in the
economy,  since these items are purchased with disposable income. As of December
31, 1999,  there are no categories of loans  exceeding 10% of total loans except
as shown in the  above  table.  Substantially  all of the  Bank's  loans  are to
borrowers in the New York metropolitan area.

      The following  table sets forth the  maturities  of selected  loans in the
Bank's gross loan portfolio at December 31, 1999:

<TABLE>
<CAPTION>
                                             Due One               Due One            Due After
                                          Year or Less          to Five Years         Five Years            Total
                                       -----------------     -----------------     ---------------     ---------------
                                                                       (In Thousands)
<S>                                             <C>                    <C>                  <C>               <C>
Commercial and industrial........               $376,662               $37,227              $3,563            $417,452
Real estate - mortgage...........                  3,495                10,331               3,673              17,499
                                                --------               -------              ------            --------
Total............................               $380,157               $47,558              $7,236            $434,951
                                                ========               =======              ======            ========

Loans included in the above
which are due after one year,
which have:
Fixed interest rates.............                                      $ 4,853              $2,373             $ 7,226
Adjustable interest rates........                                       42,705               4,863              47,568
                                                                       -------              ------             -------
Total............................                                      $47,558              $7,236             $54,794
                                                                       =======              ======             =======
</TABLE>


                                       9
<PAGE>

Asset and Liability Management

      The Bank's net interest income is an important  component of its operating
results.  The  stability  of net  interest  income  in  changing  interest  rate
environments  depends on the Bank's ability to manage  effectively  the interest
rate  sensitivity and maturity of its assets and  liabilities.  The Bank's Asset
and Liability  Management  Committee  develops and  implements  risk  management
strategies,  and uses various risk  measurement  tools to evaluate the impact of
changes  in  interest  rates on the  Bank's  asset/liability  structure  and net
interest income.

      The Bank's  asset/liability  management  goal is to maintain an acceptable
level of interest rate risk to produce  relatively stable net interest income in
changing interest rate environments.  Management's plan has been (i) to maximize
the amount of loans  having  interest  rates  that move with prime rate  changes
(approximately 97% of the loan portfolio is in this category) and (ii) to invest
a major portion of the investment portfolio in mortgage-backed  securities which
have an average  life of four years or less and a constant  cash flow  return of
principal which can be reinvested on a monthly basis (during 1999 this cash flow
averaged  approximately  $18 million  per month).  In  addition,  a  substantial
portion   of   the   investment   portfolio   has   been   classified   in   the
available-for-sale  category to allow for sales to be made, when appropriate, to
take advantage of interest rate arbitrage to improve future interest returns. As
economic conditions change, management will modify the plan as necessary.

      One  measure of the  Bank's  interest  rate  sensitivity  is its  interest
sensitivity  gap,  or  the  difference  between   interest-earning   assets  and
interest-bearing  liabilities  scheduled to mature or reprice within a specified
time frame.  Shorter gaps are a measure of exposure to changes in interest rates
for  shorter  intervals  and  longer  gaps  measure  sensitivity  over a  longer
interval.  At  December  31,  1999,  the Bank  had a  negative  one-year  gap of
approximately  (19%)  of total  interest-earning  assets;  that is,  it had more
interest-bearing  liabilities than interest-earning assets maturing or repricing
within one year.  A negative  gap may enhance  earnings in periods of  declining
interest  rates in that,  during such  periods,  the  interest  expense  paid on
liabilities  may decrease  more  rapidly  than the  decrease in interest  income
earned on assets.  Conversely,  in an increasing  interest rate  environment,  a
negative  gap  may  result  in an  increase  in the  interest  expense  paid  on
liabilities  that is more rapid than the increase in interest  income  earned on
assets.   While  a  negative  gap  indicates  the  amount  of   interest-earning
liabilities  which  will  mature  before  interest-bearing  assets,  it does not
indicate the extent to which they reprice.  Therefore,  at times, a negative gap
may not increase earnings in a declining interest rate environment.


                                       10
<PAGE>



      The following table  summarizes the Bank's interest rate sensitive  assets
and liabilities at December 31, 1999 according to the time periods in which they
are expected to reprice, and the resulting gap for each time period:

<TABLE>
<CAPTION>
                                           Less than        Three to         One to
                                             Three           Twelve           Five              Over
                                             Months          Months           Years           Five Years          Total
                                          -----------      -----------      -----------      ------------     ------------
                                                                  (Dollars in Thousands)
<S>                                        <C>              <C>              <C>               <C>             <C>
Interest-earning assets:
Federal funds sold....................     $ 50,000         $     --         $     --          $     --        $   50,000
U.S. government and
    agency obligations................       35,961          107,884          396,747           161,495           702,087
Obligations of states and political
    subdivisions......................          125            6,258           12,586            68,251            87,220
Other securities......................       39,885               --              275            31,236            71,396
Commercial and industrial loans:
    Fixed rate........................       29,937            3,958            3,388             1,379            38,662
    Adjustable rate...................      378,790               --               --                --           378,790
Real estate loans:
    Fixed rate........................           --               --            1,755             2,373             4,128
    Adjustable rate...................       13,371               --               --                --            13,371
Installment loans.....................          342              728            1,076                --             2,146
Other.................................        6,881               --               --                --             6,881
                                           --------         --------         --------          --------        ----------
    Total interest-earning assets.....     $555,292         $118,828         $415,827          $264,734        $1,354,681
                                           --------         --------         --------          --------        ----------

Interest-bearing liabilities:
  NOW accounts........................     $ 51,215         $     --         $     --          $     --        $   51,215
  Savings accounts....................       28,866               --               --                --            28,866
  Money market accounts...............      191,972               --               --                --           191,972
  Time deposits.......................      265,474           91,374           17,696                81           374,625
Securities sold under repurchase
    agreements........................      135,000           40,000           10,000                --           185,000
FHLB Term Advances                           65,000           40,000               --                --           105,000
Other short term borrowings...........       20,048               --               --                --            20,048
                                           --------         --------         --------          --------        ----------
    Total interest-bearing liabilities.    $757,575         $171,374         $ 27,696          $     81        $  956,726
                                           --------         --------         --------          --------        ----------
Net interest sensitivity gap..........     (202,283)         (52,546)         388,131           264,653           397,955
Cumulative gap position...............     (202,283)        (254,829)         133,302           397,955
Cumulative gap/total
    interest-earning assets...........      (14.93%)         (18.81%)           9.84%            29.38%
                                           ========         ========         ========          ========
</TABLE>


      Mortgage  backed  securities  have  been  adjusted  for  weighted  average
maturity  dates and  prepayments.  All  securities are disclosed at book values.
Prepayments  and scheduled  payments have been  estimated for the loan portfolio
based on the Bank's historical experience. Non-accrual loans are included in the
table at their original contractual maturities.  Savings account and NOW account
repricings  are  based  on  the  Bank's  historical   repricing  experience  and
management's  belief that these accounts are not highly  sensitive to changes in
interest rates.


                                       11
<PAGE>

Asset Quality

      Management  continually  reviews  delinquent  loans to  adequately  assess
problem situations and to quickly and efficiently remedy these problems whenever
possible.  When a loan  becomes past due (when it is past due 90 days) and doubt
exists as to the ultimate  collection  of principal or interest,  the accrual of
interest  is  discontinued.  Any  accrued  but unpaid  interest on such loans is
charged against current  earnings.  Non-accrual  loans at December 31, 1999 were
$428,000 or 0.10% of total loans, while at December 31, 1998 and 1997, they were
$146,000 and $159,000,  respectively. Loans which are current as of December 31,
1999 but for which there are serious  doubts as to the ability of the  borrowers
to comply with the present loan repayment terms are not material in amount.

      The  following   table  sets  forth  the  aggregate   amount  of  domestic
non-accrual,  past  due and  restructured  loans  at the end of each of the most
recent five fiscal years:

<TABLE>
<CAPTION>

                                                                          December 31,
                                                ----------------------------------------------------------------
                                                  1999          1998          1997          1996          1995
                                                  ----          ----          ----          ----          ----
                                                                     (Dollars in Thousands)
<S>                                               <C>            <C>           <C>         <C>            <C>
Non-accrual loans.......................          $428           146           159         1,109          2,169
Past due 90 days or more
  (other than above)....................           496           351           204           687            281
                                                  ----          ----          ----         -----          -----
Total...................................          $924           497           363         1,796          2,450
                                                  ----          ----          ----         -----          -----
Restructured*...........................           292            --            --            --             --
Interest income that would
  have been earned on
  non-accrual and reduced
  rate loans outstanding................            57             3           126           288            201
Interest income included in
  net income for the above
  loans.................................            --            --            81            39             --
Non-accrual, past due and
  restructured loans as a
  percentage of total gross
  loans.................................            .21%         .14           .11           .60            .90
</TABLE>

  * Included in Non-accrual loans

      The provision for loan losses is a charge against  income which  increases
the allowance for loan losses.  The adequacy of the allowance for loan losses is
evaluated   periodically  and  is  determined  based  on  management's  judgment
concerning  the amount of risk and potential for loss inherent in the portfolio.
This  judgment  is  based  upon a  number  of  factors  including  a  review  of
non-performing  and other  classified  loans,  the value of collateral  for such
loans, historical loan loss experience,  changes in the nature and volume of the
loan  portfolio,   and  current  and  prospective  economic  conditions.   While
management uses the best information available in establishing the allowance for
loan losses,  future  adjustments  may be necessary based on changes in economic
conditions and in the credit risk inherent in the loan portfolio. As


                                       12
<PAGE>

of December 31, 1999,  there were no potential  problem loans of which they were
aware that in management's opinion would materially impact financial results.

      The Bank's allowance for loan losses at December 31, 1999 was $9.1 million
or 2.08% of total  loans  compared  to $7.97  million or 2.2% of total  loans at
December 31, 1998. At December 31, 1997 the allowance was $6.17 million or 1.86%
of total loans. Of the allowance for loan losses,  non-accrual loans represented
4.7%, 1.8% and 2.6% at December 31, 1999, 1998 and 1997, respectively.

      As in all banks,  in addition  to  non-accrual  loans,  the Bank has other
sub-standard  loans  which  reflect a higher  degree of risk  because of general
economic  conditions or specific  deterioration  because of circumstances  for a
particular  borrower.  These  loans  are  reflected  in  the  criticized  and/or
classified  categories by the Bank's loan review process.  In  establishing  the
allowance  for loan  losses,  the  Bank  must  consider  these  categories,  and
additions to the allowance are made with this in mind.

      As a general rule, non-accrual loans (those on which interest is no longer
being  accrued)  are charged off at December 31 of each year.  On average,  $0.8
million  of such loans have been  charged  off for each of the past five  years.
Some sub-standard loans outside the non-accrual category are also charged off on
these  occasions,  resulting in the Bank's total  charge-offs  for the past five
years having  averaged  $1.9 million per year.  In the same period,  the average
annual provision for additions to the loan loss allowance was $1.9 million.

      The  following  table sets forth certain  information  with respect to the
Bank's loan loss experience for each of the most recent five fiscal years:

<TABLE>
<CAPTION>

                                                                      December 31,
                                           -----------------------------------------------------------------
                                                                 (Dollars in Thousands)
                                             1999           1998          1997          1996           1995
                                             ----           ----          ----          ----           ----
<S>                                        <C>             <C>           <C>            <C>           <C>
Allowance  for loan  losses  balance at
beginning of year...................       $7,965          6,167         5,617          6,484         6,188
Provision for loan losses...........        1,915          1,425         1,700          2,580         2,080
Charge offs:
   Commercial and industrial........       (1,223)          (208)       (1,460)        (4,345)       (2,315)
   Installment......................           (1)           (24)           (9)           (60)          (33)
                                           ------         ------        ------         ------        ------
Total charge offs...................       (1,224)          (232)       (1,469)        (4,405)       (2,348)
Recoveries:
   Commercial and industrial........          446            589           314            952           563
   Installment......................            6             16             5              6             1
                                           ------         ------        ------         ------        ------
Total recoveries....................          452            605           319            958           564
Net charge offs.....................         (772)           373        (1,150)        (3,447)       (1,784)
                                           ------         ------        ------         ------        ------
Balance at end of year..............       $9,108          7,965         6,167          5,617         6,484
                                           ======         ======        ======         ======        ======
Ratio  of net  charge  offs to  average
loans  outstanding,   net  of  unearned
discounts...........................          .19%          (.11)           .35           1.23           .65
</TABLE>


                                       13
<PAGE>

      The following  table sets forth an approximate  breakdown of the allowance
for loan  losses by major  categories  of loans for each of the most recent five
fiscal years:(1)

<TABLE>
<CAPTION>

                                                                   December 31,
                                                                   ------------

                                   1999              1998             1997             1996             1995
                              ---------------    -------------    --------------    ------------    --------------
                                       % of             % of             % of             % of             % of
                                       Loans            Loans            Loans            Loans            Loans
                                       in Ea.           in Ea.           in Ea.           in Ea.           in Ea.
                                       Categ.           Categ.           Categ.           Categ.           Categ.
                              Loan     to      Loan     to       Loan    to       Loan    to       Loan    to
                              Loss     Total   Loss     Total    Loss    Total    Loss    Total    Loss    Total
                              Allow    Loans   Allow    Loans    Allow   Loans    Allow   Loans    Allow   Loans
                              -----    -----   -----    -----    -----   -----    -----   -----    -----   -----
                                                              (Dollars in Thousands)
<S>                           <C>      <C>     <C>      <C>      <C>     <C>      <C>     <C>      <C>     <C>
Commercial & industrial..     $  214   95.52      73    93.96       80   94.34      555   95.36    1,085   94.71
Real estate..............         --    4.00      --     5.34       --    4.70       --    3.68       --    4.16
Installment..............         25     .48      20     0.70       22      96       24      96       23    1.13
Unallocated..............      8,869      --   7,872       --    6,065      --    5,038      --    5,376      --
                              ------           -----             -----            -----            -----
Total....................     $9,108           7,965             6,167            5,617            6,484
                              ======           =====             =====            =====            =====
</TABLE>

Securities and Investment Policy Objectives

      The  Bank   invests   in  U.S.   Government   obligations,   U.S.   Agency
mortgage-backed securities and high quality state and municipal securities, high
grade  bonds and money  market  instruments.  The  Bank's  investment  portfolio
represents  a  significant  share of its  assets  and  exerts an  important  and
stabilizing influence upon the Bank's earnings.

      The Bank's investment policy is designed to promote three objectives.  The
primary objective is to provide liquidity necessary to meet day to day, cyclical
and long term  changes in the mix of the  Bank's  assets  and  liabilities.  The
second  objective  is to  provide a stable  flow of  dependable  earnings  while
maintaining  liquidity through absorbing funds when loan demand decreases due to
seasonal trends and to supply funds when loan demand increases toward its annual
peak. The third objective is to provide a balance of quality and diversification
to the Bank's assets.  There is minimal  exposure to trading  losses,  since the
Bank invests but does not trade.  Only high grade short term instruments and top
rated  bonds  with an  average  life of four  years  or less are  acquired  with
staggered maturities for liquidity.

      Current money and security  market  conditions are evaluated by the Bank's
Investment  Committee on a monthly  basis.  The  Investment  Committee  includes
Messrs. Witty, Hertz,  Lawrence,  Cardew and Gould. The Committee's strategy and
investment  program  for each month,  developed  in  accordance  with the Bank's
investment  policy,  is presented  for approval at the  previous  month's  Board
meeting.

-----------
(1) The  allocation of loan loss  allowance is calculated on the basis of 50% of
the non-accruing  commercial and industrial loans and a 5 year average of losses
on  installment  loans.  Such  allocation is not  necessarily  indicative of the
amounts in which future charge-offs may be taken or of future loss trends.


                                       14
<PAGE>

      As of December 31, 1999, no single  issuer's  securities  accounted for as
much as 10% of stockholders'  equity, except for securities issued by the United
States and its political subdivisions and agencies.

      The following  table sets forth for the most recent three fiscal years the
book values and estimated market values of the Company's investment securities:

<TABLE>
<CAPTION>

                                                                                      December 31
                                                               ------------------------------------------------------
                                                                  1999                    1998                 1997
                                                                  ----                    ----                 ----
Available for sale securities:                                                       (in Thousands)
<S>                                                             <C>                     <C>                  <C>
U.S. government and agency
   obligations.........................................         $436,834                $484,293             $496,300

Obligations of states and political
   subdivisions........................................           27,729                  28,435               22,838

Other securities.......................................          198,152                 132,846                8,194
                                                                --------                --------             --------

Total - available for sale (book value)................         $662,715                $645,574             $527,332
                                                                ========                ========             ========

Estimated market value.................................         $649,932                $660,026             $541,634
                                                                ========                ========             ========

Held to maturity securities:

U.S. government and agency
   obligations.........................................         $114,636                $109,502             $159,690

Obligations of states and political
   subdivisions........................................           59,491                  59,813               55,154
Other securities.......................................           23,861                  28,848                  327
                                                                --------                --------             --------
Total - held to maturity (book value)..................         $197,988                $198,163             $215,171
                                                                ========                ========             ========

Estimated market value.................................         $195,169                $203,429             $219,902
                                                                ========                ========             ========
</TABLE>


                                       15
<PAGE>

      The following tables set forth the investment values,  range of maturities
and average yields for each category at December 31, 1999.

<TABLE>
<CAPTION>

                                                      Securities Available for Sale (Market Value)
                                                      --------------------------------------------

                                                      One to        Five to          Over           Total         Average
                                   One Year            Five           Ten            Ten            Market        Yield to
                                    or Less            Years         Years          Years           Value         Maturity
                                  ------------     ------------    ----------     ----------    ------------    ------------
                                                                 (Dollars in Thousands)
<S>                                <C>                <C>            <C>            <C>            <C>             <C>
U.S. Government
Obligations(1)(2)............      $122,630           $ 66,504       $    --        $   943        $190,077        8.14%
U. S. agency obligations.....       121,187            227,679        15,496          1,730         366,092        7.43%
Obligation of state and
political subdivisions(2)....         1,160              3,528         6,549         15,479          26,716        5.46%
Other securities.............        39,887                 --            --         27,160          67,047        6.50%
                                   --------           --------       -------        -------        --------        -----
Total available for sale.....      $284,864           $297,711       $22,045        $45,312        $649,932        7.46%
                                   ========           ========       =======        =======        ========        =====
Average yield to maturity....         7.83%               7.32          6.15           6.32
</TABLE>

<TABLE>
<CAPTION>

                                                        Securities Held to Maturity (Book Value)
                                                        ----------------------------------------

                                                    One to           Five to        Over           Total          Average
                                   One Year          Five              Ten           Ten            Book          Yield to
                                   or Less           Years            Years         Years          Value          Maturity
                                 -------------    -----------     -----------     ---------     -----------     -----------
                                                                 (Dollars in Thousands)
<S>                                 <C>             <C>              <C>           <C>            <C>              <C>
U.S. Government
Obligations (1)(2)...........       $ 26,219        $ 29,702         $    --       $    --        $ 55,921         8.64%
U.S. agency obligations......         32,762          25,953              --            --          58,715         7.96%
Obligations  of New York
state (2)....................          5,240           9,144          19,621        25,486          59,491         5.38%
Other securities.............             --          23,786              75            --          23,861         7.20%
                                    --------        --------         -------       -------        --------         -----
Total held to maturity.......       $ 64,221        $ 88,585         $19,696       $25,486        $197,988         7.28%
                                    ========        ========         =======       =======        ========         =====
Average yield to maturity....          8.21%            6.91            5.09          4.95

Total investments............       $349,085        $386,296         $41,741       $70,798        $847,920         7.42%
                                    ========        ========         =======       =======        ========         =====
</TABLE>

-----------
(1)   Consisting  mainly  of  Government  guaranteed  GNMA  investments  with an
      average life of four years.

(2)   Above  yield  is  not  computed  on  tax-equivalent   basis.  The  average
      tax-equivalent  yield to maturity on  obligations  of states and political
      subdivisions  are as follows:  securities  available  for sale - 8.27% and
      securities held to maturity - 8.15%. The total tax equivalent yield on the
      entire investment securities portfolio is 7.70%.

Deposits

      Deposits  are the  Bank's  principal  source of funds.  The Bank  attracts
deposits from the general  public and small  businesses by offering a variety of
deposit  accounts at  competitive  rates.  The Bank's deposit  accounts  include
savings  accounts,  personal  and  commercial  checking  accounts,  money market
accounts, NOW accounts, and certificates of deposit ("time deposits").  The Bank
also  offers tax  deferred  retirement  savings  accounts  (IRAs),  savings  and
certificates  of deposit  accounts of $100,000 or more  ("jumbo  certificates").
Management  believes  that a


                                       16
<PAGE>

significant portion of maturing deposits will be retained by the Bank. There are
no material amounts of foreign deposits in domestic offices.

      At December 31, 1999, the Bank had $280.8  million in jumbo  certificates,
compared to $310 million at December 31, 1998 and $301.2 million at December 31,
1997. At December 31, 1999, the dollar amount of jumbo certificates by remaining
maturity dates and the weighted average interest rates were as follows:

<TABLE>
<CAPTION>

        Remaining Maturity                                     Amount              Weighted
        ------------------                                 (in Thousands)        Average Rate
                                                           --------------        ------------
        <S>                                                   <C>                    <C>
        3 months or less.............................         $228,355               4.81%
        More than 3 through 6 months.................           33,415               5.14
        More than 6 months through 12 months.........           13,676               5.41
        More than 12 months..........................            5,360               5.98
                                                              --------              -----
            Total....................................         $280,806               5.33%
                                                              ========              =====
</TABLE>

      Deposit inflows and outflows are generally dependent on market conditions,
interest rates, the general  economic  environment in the Bank's market area and
other  competitive  factors.  The  variety of  accounts  offered by the Bank has
enabled it to be more  competitive  in obtaining  funds and to respond with more
flexibility to changes in the interest rate environment.  Management's policy is
to review  deposit  interest  rates at least weekly and to adjust  appropriately
based on the need for  funds,  competition  and the  effect on the net  interest
margin.

      Fixed rate,  fixed term  certificates  of deposit  accounts  ("CD's")  are
generally a significant  source of funds for the Bank At December 31, 1999, CD's
amounted to $374.6 million or 57.9% of total interest-bearing deposits, compared
to $416.9  million or 63.9% at December 31, 1998 and $419.1  million or 65.9% at
December 31, 1997.  CD's  offered by the Bank have  maturities  of seven days or
more, impose a minimum balance requirement of $2,000, and pay simple interest.

      At December 31, 1999,  savings deposit accounts  amounted to $28.9 million
or 4.5% of the Bank's total interest-bearing deposits, compared to $26.2 million
or 4% of the Bank's  total  interest-bearing  deposits at December  31, 1998 and
$24.7  million or 4% of the Bank's total  interest-bearing  deposits at December
31, 1997.  Savings  deposits  consist of passbook savings accounts and statement
savings accounts. The minimum initial deposit required is $100. Savings accounts
offered by the Bank pay interest  compounded and credited on a quarterly  basis,
to accounts with a minimum balance of $5 at the end of the quarter.

      The Bank offers NOW accounts with unlimited check writing privileges.  The
minimum initial deposit  required is $2,500.  There is a service charge incurred
if the daily  average  balance  for the month falls  below  $2,500.  Interest is
compounded monthly. Interest is credited at the end of the month, at the current
rate determined by the Bank. NOW accounts amounted to $51.2 million,  or 7.9% of
the Bank's total  interest-bearing  deposits at December  31, 1999,  compared to
$46.4  million,  or 7.1%,  at December 31, 1998 and $47.3  million,  or 7.4%, at
December 31, 1997.


                                       17
<PAGE>

      The Bank also offers a money market  account with  limited  check  writing
privileges.  Such accounts have a minimum balance requirement of $2,000 and earn
interest at the Bank's  money  market  rate if the  account  maintains a minimum
average  balance of $2,000 for the month.  There is a service charge incurred if
the daily  average  balance  falls below  $2,000.  Interest on all money  market
accounts is  compounded  monthly and credited  monthly.  Money  market  accounts
amounted  to  $192.0  million,  or 29.7% of the  Bank's  total  interest-bearing
deposits,  at December 31, 1999, compared to $162.8 million, or 25%, at December
31, 1998 and $145.3 million, or 22.8%, at December 31, 1997.

      The following table sets forth the average deposits and average rates paid
for each of the most  recent  three  fiscal  years  for the  classifications  of
deposits listed:

<TABLE>
<CAPTION>

                                                                 Years Ended December 31,
                                                                 ------------------------

                                         1999         Rate(%)        1998        Rate(%)         1997        Rate(%)
                                         ----         -------        ----        -------         ----        -------
                                                                  (Dollars in Thousands)
<S>                                    <C>             <C>        <C>             <C>         <C>            <C>
Deposits:
     Demand....................        $277,710          --       $255,239          --        $227,744         --
     NOW.......................          48,896        1.93         44,609        2.24          41,904       2.27
     Savings...................          27,757        2.98         25,476        2.98          24,277       2.98
     Money market..............         173,011        3.49        145,660        3.38         141,671       3.37
     Other time ...............         385,873        4.76        416,286        5.27         416,221       5.45
                                       --------                   --------                    --------       ----
Total..........................        $913,247                   $887,270                    $851,817
                                       ========                   ========                    ========
</TABLE>

      Management  believes the variety of deposit  accounts  offered by the Bank
allows it to compete  for funds  effectively.  However,  these  sources of funds
generally are interest rate sensitive and therefore can be more costly in a high
interest rate environment.  Although the Bank will continue to carefully monitor
deposit flows, the ability of the Bank to control deposit flows will continue to
be  significantly  affected by the general market rate  environment and economic
conditions.

      Additional  sources of funds are interest and principal  payments on loans
and securities, and positive cash flows generated from operations.  Interest and
principal  payments  on loans are a  relatively  stable  source of funds,  while
deposit  inflows and outflows are  significantly  influenced  by general  market
interest rates,  economic conditions and competitive  factors. In the event that
the Bank is not able to generate  sufficient  funds from these  sources,  it has
available  $122  million of overnight  federal  funds lines of credit from other
financial  institutions  as well as the  ability  to  obtain  substantial  funds
through repurchase agreements against its investment portfolio.  The bulk of the
real estate related portion of the Bank's investment portfolio is held by a real
estate  investment  trust,  Merchants Capital  Corporation  ("MCC"),  which is a
subsidiary of the Bank's  Delaware  holding  company  subsidiary,  MBNY Holdings
Corp,  formed in 1998. MCC and the Bank are parties to an agreement  under which
the portion of the  investment  portfolio  held by MCC is  available  to support
repurchase  agreements  entered  into by the  Bank.  The Bank is a member of the
Federal Home Loan Bank of New York where it has  availability of $210 million of
funds,  of which $50 million may be used in overnight  funds.  Furthermore,  the
Bank has access to the discount window of the Federal  Reserve Bank.  There were
no  borrowings


                                       18
<PAGE>

from the Federal  Reserve Bank's  discount  window under these  arrangements  in
1999, 1998 or 1997.

Short Term Borrowings

      The following  table  represents the Bank's material short term borrowings
for the fiscal years ending December 31:

<TABLE>
<CAPTION>

                                                                          1999             1998             1997
                                                                          ----             ----             ----
                                                                                  (Dollars in Thousands)
<S>                                                                     <C>            <C>                <C>
Balance at year end...........................................          $310,048       $209,031           $191,772
Weighted average interest rate on balances at end of year.....             5.87%          5.34%              5.82%
Maximum amount of borrowing at any month end..................          $310,048       $259,841           $248,436
Approximate average amounts outstanding during period.........          $246,115       $211,269           $182,285
Approximate weighted average interest rate during period......             5.33%          5.65%              5.80%
</TABLE>

Year 2000 ("Y2K") Compliance

      The date rollover was a non-event  for the Company's  systems and software
applications,  including  those  maintained  by the Company's  third-party  data
processor.  The Company's applications  successfully achieved the date rollover.
Ongoing  assessment and evaluation will continue to the end of the first quarter
of this year. Total cost of the Y2K readiness  project remained at approximately
$400,000.

Employees

      At  December  31,  1999,  the  Company  and the  Bank  had 243  employees,
consisting of 80 officers and 163 supervisory and clerical  employees.  The Bank
considers its relations with its employees to be good.


                                       19
<PAGE>

                        SELECTED STATISTICAL INFORMATION

      In addition to the statistical  information that is presented in this Form
10-K, the following  information is included in the Company's 1999 Annual Report
to  Shareholders  (the  "Annual  Report") and is hereby  incorporated  herein by
reference:

<TABLE>
<CAPTION>

Description of Statistical Information                  Annual Report Caption                       Page
--------------------------------------                  ---------------------                       ----

<S>                                                <C>                                              <C>
Average Balance Sheets                             Average Assets, Liabilities and
                                                   Stockholders' Equity                              39

Analysis of Net Interest Earnings                  Analysis of Net Interest Earnings                 10

Volume and Rate Variance                           Change in Interest Income and Expense
                                                                                                     11

Return on Equity and Assets                        Selected Financial Data                            8
</TABLE>

Item 2. Properties

      The Bank owns the nine story office  building at 434  Broadway,  New York,
New York where one of its branch  offices is located.  The Bank occupies five of
the nine floors, the mezzanine and basement; four floors are presently rented to
others. In addition, the Bank owns the commercial condominium located at 62 West
47th Street,  New York, New York, which houses the Bank's midtown branch office,
consisting of a main floor, mezzanine, and basement.

      In  addition  to the above two  offices,  the Bank  maintains  five branch
offices at 93 Canal  Street,  1040 Sixth  Avenue,  295 Fifth  Avenue,  145 Fifth
Avenue,  and its corporate  headquarters  at 275 Madison  Avenue,  New York, New
York, where the Bank's main branch office is located.

Item 3. Legal Proceedings

      Various actions and proceedings are presently pending to which the Company
or the Bank is a party. In the opinion of management, the aggregate liabilities,
if any,  arising from such  actions are not expected to have a material  adverse
effect on the financial position of the Company or the Bank.

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

      During the fourth  quarter of 1999,  there were no matters  submitted to a
vote of the Company's stockholders.


                                       20
<PAGE>

                                     Part II

Item 5. Market for the Company's Common Equity and Related Stockholder Matters

      The market  for the  Company's  common  equity is not an  exchange  but is
established  by  the  National  Association  of  Securities  Dealers'  Automated
Quotation  System. At December 31, 1999 the total number of holders of record of
the Company's common equity was 1,627.  The information  appearing on page 16 of
the  Annual  Report  under  the  caption   "Price  Range  of  Common  Stock"  is
incorporated herein by reference.

      Cash  dividends  have  been  declared  in each  quarter  of 1999  and 1998
aggregating  annually $8.7 million and $7.8 million,  respectively,  or $.45 per
share in 1999 and $.40 per share in 1998,  after  adjusting for the  two-for-one
stock split which occurred during 1999.

      As a depository  institution  whose  deposits are insured by the FDIC, the
Bank may not pay  dividends  or  distribute  any of its capital  assets while it
remains in default on any  assessment due the FDIC. The Bank currently is not in
default under any of its  obligations  to the FDIC. The Company and the Bank, in
declaring  and paying  dividends,  are also limited  insofar as minimum  capital
requirements of regulatory  authorities must be maintained.  The Company and the
Bank comply with such capital requirements.

      Under the Federal  Reserve  Act,  the  approval of the FRB is required for
dividends  declared  by a state  member  bank  which in any year  exceed the net
profits of such bank for that year,  as  defined,  combined  with  retained  net
profits for the two preceding years. Additionally,  under Federal law, a bank is
prohibited from paying dividends in amounts greater than undivided  profits then
on hand, as defined, after deducting bad debts.

      During 1986, the  stockholders  approved the Employee Stock Option Plan of
the Bank (the  "Option  Plan").  Due to the  Bank's  becoming  the  wholly-owned
subsidiary of the Company on July 1, 1993, the Company  adopted a  substantially
identical  stock  option  plan as  successor  to the  Option  Plan and all stock
options have become  options to purchase the Company's  Common Stock rather than
shares of the Bank's  stock.  During 1999,  no options  were  granted  under the
Option  Plan.  During 1999,  outstanding  options to purchase a total of 123,054
shares of Common Stock were exercised. All shares delivered upon these exercises
were reissued from the Company's  treasury.  The weighted average exercise price
of such  options  was $5.17 per share.  Such  transactions  were exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant to
Section 4(2) thereof.

Item 6. Selected Financial Data

      The information appearing on page 37 (Note 17) and page 8 respectively, of
the Annual Report under the captions  "Selected  Quarterly  Financial  Data" and
"Selected Financial Data" is incorporated herein by reference.


                                       21
<PAGE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

      The information appearing on pages 9 through 16 of the Annual Report under
the caption  "Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations" is incorporated herein by reference.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The  information  appearing on pages 13 and 15 of the Annual  Report under
the caption "Market Risk Management" is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

      The  Company's  financial   statements,   related  notes  and  Independent
Auditors'  Report which  appear on pages 17 through 38 of the Annual  Report are
incorporated herein by reference.

Item  9.  Changes  in and  Disagreements  with  accountants  on  Accounting  and
Financial Disclosure

         None.

                                    Part III

Item 10. Directors and Executive Officers of the Company

      The  information  appearing  on pages 5 through 7 of the  Company's  Proxy
Statement  prepared in connection  with the 1999 Annual Meeting of  Stockholders
(the  "Proxy   Statement")   under  the  caption   "Election  of  Directors"  is
incorporated herein by reference.

      All executive  officers are designated  annually by the Board of Directors
and serve at the pleasure of the Board.

Item 11. Executive Compensation

      The information  appearing on pages 10 and 11 of the Proxy Statement under
the caption "Executive Compensation" is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

      The  information  appearing on pages 8 and 9 of the Proxy  Statement under
the caption "Security  Ownership of Certain Beneficial Owners and Management" is
incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

      The  information  appearing  on page 13 of the Proxy  Statement  under the
caption   "Compensation   and  Option  Committee  Report  on  Executive  Officer
Compensation"  and on page 16 thereof under the caption  "Certain  Relationships
and Related Transactions" is incorporated herein by reference.


                                       22
<PAGE>

                                     Part IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)1.  Financial  Statements.  The financial  statements,  related notes and the
Report of Independent Auditors, KPMG LLP, dated January 24, 2000 appear on pages
17 through 38 of the Annual Report and are incorporated herein by reference.

(a)2. Financial Statements Schedules.

(a)3. Exhibits (numbered in accordance with Item 601 of Regulation S-K):

          Item                   Description
          ----                   -----------

          (11)                   Computation of Earnings Per Share

          (13)                   1999 Annual Report to Shareholders

          (27)                   Financial Data Schedule

(b) Reports on Form 8-K. One, dated September 17, 1999,  containing  information
responsive to Item 5 of Form 8-K.


                                       23
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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.


                                         MERCHANTS NEW YORK BANCORP, INC.
                                                    (Registrant)


                                    By:   /s/ Spencer B. Witty
                                          -----------------------------------
                                          Spencer B. Witty
                                          Chairman of the Board

                                          Dated February 29, 2000


                                    By:   /s/ James G. Lawrence
                                          -----------------------------------
                                          James G. Lawrence
                                          President, Chief Executive Officer and
                                          Director (Principal Executive Officer)

                                          Dated February 29, 2000


                                    By:   /s/ William J. Cardew
                                          -----------------------------------
                                          William J. Cardew
                                          Vice Chairman of the Board,
                                          Chief Operating Officer and Director
                                          (Principal Financial Officer)

                                          Dated February 29, 2000


                                    By:   /s/ M. Nasette Aranda
                                          -----------------------------------
                                          M. Nasette Aranda
                                          Vice President and Comptroller
                                          (Principal Accounting Officer)

                                          Dated February 29, 2000


                                       24
<PAGE>

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

           Signature                                           Title                               Date
           ---------                                           -----                               ----

<S>                                               <C>                                        <C>
   /s/ Charles J. Baum                            Director                                   February 29, 2000
------------------------------
Charles J. Baum

   /s/ William J. Cardew                          Vice Chairman of the Board, Chief          February 29, 2000
------------------------------                    Operating Officer and Director
William J. Cardew

   /s/ Eric W. Gould                              Executive Vice President, Treasurer        February 29, 2000
------------------------------                    and Director
Eric W. Gould

   /s/ Rudolf H. Hertz                            Vice Chairman of the Board and Director    February 29, 2000
------------------------------
Rudolf H. Hertz

   /s/ James G. Lawrence                          President, Chief Executive Officer and     February 29, 2000
------------------------------                    Director
James G. Lawrence

   /s/ Robinson Markel                            Director                                   February 29, 2000
------------------------------
Robinson Markel

   /s/ Paul Meyrowitz                             Director                                   February 29, 2000
------------------------------
Paul Meyrowitz

   /s/ Alan Mirken                                Director                                   February 29, 2000
------------------------------
Alan Mirken

   /s/ Mitchell J. Nelson                         Director                                   February 29, 2000
------------------------------
Mitchell J. Nelson

   /s/ Leonard Schlussel                          Director                                   February 29, 2000
------------------------------
Leonard Schlussel

   /s/ Charles I. Silberman                       Vice Chairman of the Board and Director    February 29, 2000
------------------------------
Charles I. Silberman

   /s/ Marcia Toledano                            Director                                   February 29, 2000
------------------------------
Marcia Toledano

   /s/ Spencer B. Witty                           Chairman of the Board and Director         February 29, 2000
------------------------------
Spencer B. Witty
</TABLE>


                                       25