<PAGE> 1


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

(Mark One)

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

For the quarterly period ended June 30, 1998

                                       or

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

For the transition period from                to
                               --------------    -----------------

Commission File Number: 0-18126
                        -------

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

       Delaware                                          06-1391814
       --------                                          ----------
(State or other jurisdiction of             (I.R.S. Employer identification No.)
incorporation or organization)

               42-25 Queens Boulevard, Long Island City, NY 11104
               --------------------------------------------------
               (Address of principal executive offices)(Zip Code)

                                 (718) 729-5002
                                 --------------
              (Registrant's telephone number, including area code)

                                 Not Applicable
  ----------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed last report)

      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.        (1) X  Yes     No
                                                    ---     ---   
                                                 (2) X  Yes     No
                                                    ---     ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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

      There were 1,706,660 shares of the Registrant's  common stock  outstanding
as of August 12, 1998.
      ---------------

<PAGE> 2



                             FINANCIAL BANCORP, INC.
                                    Form 10-Q
                                      Index

Part I - Financial Information                                             Page
------------------------------                                             ----

Item 1.    Financial Statements

           Consolidated Statements of Financial Condition
           as of June 30, 1998 (Unaudited) and September 30, 1997           3

           Consolidated Statements of Income for the
           Three and Nine Months ended June 30, 1998 and 1997 
           (Unaudited)                                                      4

           Consolidated Statement of Changes in
           Stockholders' Equity for the Nine Months
           ended June 30, 1998 (Unaudited)                                  5

           Consolidated Statements of Cash Flows for the
           Nine Months ended June 30, 1998 (Unaudited)                      6-7

           Notes to Consolidated Financial Statements                       8-11

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations                   12-17

Part II- Other Information
---------------------------

Item 1.    Legal Proceedings                                               18

Item 2.    Changes in Securities and Use of Proceeds
             Not applicable.                                               18

Item 3.    Defaults Upon Senior Securities
             Not applicable.                                               18

Item 4.    Submission of Matters to a Vote of Security Holders             18
             Not applicable.   

Item 5.    Other Information                                               19

Item 6.    Reports on Form 8-K                                             19

           Exhibits                                                        19
           Exhibit 11:  Computation of per share earnings                  20  

           Signature Page                                                  21



<PAGE> 3


           Exhibits
           Exhibit 11:  Computation of per share earnings
           Exhibit 27:  Financial Data Schedule


Statements  contained  in this Form  10-Q  which  are not  historical  facts are
forward-looking  statements, as that term is defined in the  Private  Litigation
Reform Act of 1995.  Such  forward-looking  statements  are  subject to risk and
uncertainties  which could cause actual results to differ  materially from those
projected.  Such risks and  uncertainties  include potential changes in interest
rates, competitive factors in the financial services industry,  general economic
conditions,  the effect of new legislation and other risks detailed in documents
filed by the Company with the  Securities and Exchange  Commission  from time to
time.



<PAGE> 4
<TABLE>
<CAPTION>

                                        
                                        FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                        
                                        
                                                                                            June 30,                September 30,
                                                                                              1998                      1997
                                                                                       ------------------      ------------------
                                                                                                        (Unaudited)
Assets                                  
------
<S>                                                                                         <C>                     <C>       
Cash and amounts due from depository institutions                                             $3,033,891              $2,738,392
Federal funds sold and securities purchased under agreements to resell                        29,375,000              10,650,000
                                                                                       ------------------      ------------------
Total cash and cash equivalents                                                               32,408,891              13,388,392
                                        
Investment securities available for sale                                                       5,903,500                 730,750
Investment securities held to maturity, net; estimated fair value of $44,306,000 and                                    
$69,223,000 at June 30, 1998 and September 30, 1997, respectively                             44,235,008              69,410,103
Mortgage-backed securities available for sale                                                 23,045,597               9,357,048
Mortgage-backed securities held to maturity, net; estimated fair value of $31,182,000                                   
and $39,129,000 at June 30, 1998 and September 30, 1997, respectively                         30,850,973              38,521,050
Loans receivable, net                                                                        191,821,678             153,291,828
Real estate owned, net                                                                           731,116                 471,417
Investments in real estate, net                                                                3,599,285               3,543,453
Premises and equipment, net                                                                    2,287,494               2,431,570
Federal Home Loan Bank of New York stock, at cost                                              2,110,400               1,845,000
Accrued interest receivable, net                                                               1,941,407               2,248,578
Other assets                                                                                   2,063,227               1,716,727
                                                                                       ------------------      ------------------
Total assets                                                                                $340,998,576            $296,955,916
                                                                                       ==================      ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits                                                                                    $229,026,898            $213,394,282
Advance payments by borrowers for taxes and insurance                                          1,396,426               1,267,896
Advances from Federal Home Loan Bank of New York                                               6,000,000               8,000,000
Securities sold under agreements to repurchase                                                42,000,000              25,000,000
Treasury tax and loan account and other short term borrowings                                 30,000,000              20,000,000
Other liabilities                                                                              3,844,815               2,437,504
                                                                                       ------------------      ------------------
Total liabilities                                                                            312,268,139             270,099,682
                                                                                       ------------------      ------------------
Stockholders' equity
Preferred stock, $0.01 par value, 2,500,000 shares authorized; none issued      
Common stock, $0.01 par value, 6,000,000 shares authorized; 2,185,000 shares issued,
1,706,666  shares outstanding at June 30, 1998 and 1,709,700 outstanding
at September 30, 1997, respectively                                                               21,850                  21,850
Additional paid-in capital                                                                    20,415,375              20,239,758
Retained earnings - substantially restricted                                                  15,765,587              14,111,882
Common stock acquried by Employee Stock Ownership Plan (ESOP)                                   (890,174)             (1,011,566)
Common stock acquired by Recognition & Retention Plan (RRP)                                     (281,888)               (317,955)
Unrealized gain on securities available for sale, net of income taxes                             82,175                  91,604
Treasury stock, at cost; 478,334 shares  at June 30, 1998 and  475,300 shares 
at September 30, 1997, respectively                                                           (6,382,488)             (6,279,339)
                                                                                       ------------------      ------------------
Total stockholders' equity                                                                    28,730,437              26,856,234
                                                                                       ------------------        ----------------
Total liabilities and stockholders' equity                                                  $340,998,576            $296,955,916
                                                                                       ==================        ================
                                        
See accompanying notes to consolidated financial statements
</TABLE>
                                        
<PAGE> 5
<TABLE>
<CAPTION>

                             FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF INCOME
                                           (UNAUDITED)   

                                                                      THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                  -------------------------     ----------------------------
                                                                           June 30,                        June 30,
                                                                  -------------------------     ----------------------------
                                                                      1998          1997            1998            1997
                                                                  -----------   -----------     -------------  -------------
<S>                                                               <C>            <C>             <C>             <C>       
INTEREST INCOME:
   Loans                                                          $3,604,576     $3,088,028      $10,046,244     $8,953,736
   Mortgage-backed securities                                        909,996        938,701        2,955,855      2,864,489
   Investments and other interest-earning assets                     732,059      1,024,865        2,536,747      2,917,439
   Federal funds sold and securities purchased
        under agreements to resell                                   320,992         18,217          741,873         55,395
                                                                  -----------   -----------     -------------  -------------
               Total interest income                               5,567,623      5,069,811       16,280,719     14,791,059
                                                                  -----------   -----------     -------------  -------------
Interest expense:
   Deposits                                                        2,254,763      2,034,239        6,707,177      5,979,707
   Borrowings                                                        707,107        492,858        2,026,929      1,335,193
                                                                  -----------   -----------     -------------  -------------
               Total interest expense                              2,961,870      2,527,097        8,734,106      7,314,900

Net interest income                                                2,605,753      2,542,714        7,546,613      7,476,159
Provision for loan losses                                            118,412        111,000          313,182        306,600
                                                                  -----------   -----------     -------------  -------------
Net interest income after provision for loan losses                2,487,341      2,431,714        7,233,431      7,169,559
                                                                  -----------   -----------     -------------  -------------
Non-interest income (loss):
   Fees and service charges                                          238,413        145,392          592,866        412,747
   Gain on sale of securities available for sale                      36,750          3,034          131,212         29,387
   Gain on sale of loans                                               2,760              0            2,760              0
   Gain from real estate operations                                   24,077         15,400           41,276         13,428
   Miscellaneous                                                      12,124         11,898           54,490         31,288
                                                                  -----------   -----------     -------------  -------------
               Total non-interest income                             314,124        175,724          822,604        486,850
                                                                  -----------   -----------     -------------  -------------
Non-interest expenses:
   Salaries and employee benefits                                    845,189        734,612        2,194,380      2,480,075
   Net occupancy expense of premises                                 129,589        126,445          372,420        397,173
   Equipment                                                         175,372        159,002          522,146        470,347
   Advertising                                                        16,016          7,952           76,732         24,004
   (Income) loss from real estate owned                               (9,987)           (79)          21,859          8,234
   Federal insurance premium                                          31,725         30,425           93,014        142,653
   Miscellaneous                                                     377,517        387,066          993,524        967,075
                                                                  -----------   -----------     -------------  -------------
               Total non-interest expenses                         1,565,421      1,445,423        4,274,075      4,489,561
                                                                  -----------   -----------     -------------  -------------
Income before income taxes                                         1,236,044      1,162,015        3,781,960      3,166,848
Income taxes                                                         457,023        500,637        1,565,564      1,332,505
                                                                  -----------   -----------     -------------  -------------
Net income                                                          $779,021       $661,378       $2,216,396     $1,834,343
                                                                  ===========   ===========     =============  =============
   Basic earnings per share                                            $0.48          $0.41            $1.37          $1.12
                                                                  ===========   ===========     =============  =============
   Diluted earnings per share                                          $0.46          $0.40            $1.31          $1.10
                                                                  ===========   ===========     =============  =============


See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE> 6
<TABLE>
<CAPTION>

                                                           Financial Bancorp. Inc.
                                                              And Subsidiaries
                                         Consolidated Statements of Changes in Stockholders' Equity
                                                                 (Unaudited)


                                                 Retained       Common     Common      Unrealized Gain
                                   Additional    Earnings -     Stock      Stock        on Securities
                          Common    Paid-in    Substantially    Acquired   Acquired  Available For Sale,   Treasury
                           Stock    Capital      Restricted     By ESOP     By RRP   Net of Income Taxes     Stock         Total
                        ---------- ----------  -------------- ----------- ---------- -------------------- ----------   -------------
<S>                       <C>      <C>          <C>           <C>          <C>             <C>            <C>           <C>        
Balance at September 
  30, 1997                $21,850  $20,239,758  $14,111,882   ($1,011,566) ($317,955)      $91,604        ($6,279,339)  $26,856,234

Net Income for the 
  nine months ended
  June 30, 1998               -         -         2,216,396         -          -              -                 -         2,216,396

Purchase of 5,000 shares 
  of treasury stock           -         -             -             -          -              -              (129,375)     (129,375)

Amortization relating to 
  allocation of ESOP 
  stock and earned portion
   of RRP stock               -        183,285        -           121,392     36,067          -                 -           340,744

Adjustment to valuation 
  allowance on securities 
  available for sale          -          -            -             -          -            (9,429)             -            (9,429)

Stock issued upon exercise 
  of options                  -         (7,668)       -             -          -              -                26,226        18,558

Cash dividends paid on 
  common stock                -          -         (562,691)        -          -              -                  -         (562,691)
                         --------  -----------  ------------   ----------- ---------- ---------------     ------------  ------------
Balance at June 30, 1998  $21,850  $20,415,375  $15,765,587     ($890,174)  $281,888)      $82,175        ($6,382,488)  $28,730,437
                         ========  ===========  ===========    =========== ========== ===============     ============  ============

See accompanying notes to consolidated financial statements.
</TABLE>



<PAGE> 7
<TABLE>
<CAPTION>
                                       Financial Bancorp, Inc.
                                          And Subsidiaries
                               Consolidated Statements of Cash Flows
                                            (Unaudited)

                                                                                    Nine Months Ended
                                                                           -----------------------------------
                                                                                         June 30,
                                                                           -----------------------------------
                                                                                 1998                1997
                                                                           -------------         -------------
<S>                                                                          <C>                   <C>       
Cash flow from operating activities:
  Net income                                                                 $2,216,396            $1,834,343
  Adjustments to reconcile net income to net cash
    provided by operating activities
  Loss (Gain) on sale of real estate owned                                      (18,603)               (9,262)
 (Gain) on sale of securities available for sale                               (131,212)              (29,387)
  Net amortization of premiums and accretion
    of discounts on investment securities                                      (169,648)             (150,205)
  Net amortization of premiums and accretion
    of discounts on mortgage-backed securities                                   62,936                27,303
  Accretion of deferred loan fees and discounts                                (103,984)              (89,911)
  Depreciation and amortization                                                 207,885               226,841
  Provision for loan losses                                                     313,182               306,600
  Cost of ESOP and RRP                                                          340,744               298,152
  Writedown of investment in real estate                                              0                14,673
  Deferred income taxes                                                        (113,534)              (76,881)
  Decrease (increase) in accrued interest receivable, net                       307,171               (52,866)
  Decrease (increase) in refundable income taxes                                 66,388              (240,000)
  (Increase) in other assets                                                   (291,935)             (143,348)
  Increase (decrease) in other liabilities                                    1,407,311              (798,278)
                                                                           -------------         -------------
   Net cash provided by operating activities                                  4,093,097             1,117,774
                                                                           -------------         -------------
Cash flows from investing activities:
  Purchases of investment securities available for sale                      (5,850,375)           (4,938,672)
  Purchases of investment securities  held to maturity                      (42,884,375)          (20,091,000)
  Proceeds from sales of investment securities available for sale               736,750             7,890,781
  Proceeds from maturities and calls of investment securities held to        
    maturity                                                                 68,227,500            16,000,000
  Purchases of mortgage-backed securities available for sale                (21,719,234)           (5,046,497)
  Proceeds from sale of mortgage-backed securities available for sale         3,797,846                     0
  Purchase of mortgage-backed securities held to maturity                      (376,553)                    0
  Proceeds from principal repayments on
   mortgage-backed securities                                                12,273,390             7,216,705
  Purchases of mortgage loans                                               (24,301,571)           (6,668,211)
  Loan originations, net of repayments                                      (15,205,227)           (6,498,927)
  Additions to premises and equipment                                           (54,641)             (199,774)
  Proceeds from sale of and insurance recoveries
   on real estate owned                                                         526,654               276,499
  Purchase of Federal Home Loan Bank of N.Y. stock                             (265,400)             (159,200)
  Net (increase) decrease in investments in real estate                         (65,000)              (31,895)
                                                                           -------------         -------------
   Net cash (used in) provided by investing activities                      (25,160,236)          (12,250,191)
                                                                           -------------         -------------

See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE> 8
<TABLE>
<CAPTION>

                                       Financial Bancorp, Inc.
                                          And Subsidiaries
                          Consolidated Statements of Cash Flows (Continued)
                                            (Unaudited)

                                                                                    Nine Months Ended
                                                                           -----------------------------------
                                                                                         June 30,
                                                                           -----------------------------------
                                                                                 1998                1997
                                                                           -------------         -------------

<S>                                                                         <C>                   <C>       
Cash flows from financing activities:
  Net increase in deposits                                                  $15,632,616            $6,494,035
  Repayments of FHLB of NY advances                                          (2,000,000)           (1,200,000)
  Proceeds from reverse repurchae agreements                                 22,000,000            15,000,000
  Repayments of reverse repurchase agreements                                (5,000,000)          (14,046,000)
  Net (decrease) increase in treasury tax
     account borrowings                                                      10,000,000             9,545,675
  Increase in advance payments by
     borrowers for taxes and insurance                                          128,530                73,818
  Dividends paid                                                               (562,691)             (450,063)
  Reissuance of treasury stock                                                   18,558                81,270
  Purchase of treasury stock                                                   (129,375)           (1,158,463)
                                                                           -------------         -------------
       Net cash provided by financing activities                             40,087,638            14,340,272
                                                                           -------------         -------------
               
Net increase in cash and cash equivalents                                    19,020,499             3,207,855
Cash and cash equivalents - beginning                                        13,388,392             5,102,223
                                                                           -------------         -------------
Cash and cash equivalents - ending                                          $32,408,891            $8,310,078
                                                                           =============         =============
                
Supplemental schedule of noncash investing and
  financing activities:
  Loans transferred to real estate owned                                       $767,750              $137,006
                                                                           =============         =============
  Loans to facilitate sale of real estate owned                                      $0               $96,000
                                                                           =============         ============= 

Unrealized (gain) loss on securities available for sale                        ($16,848)             ($85,855)
Deferred income taxes                                                             7,419                37,776
                                                                           -------------         -------------
                                                                                ($9,429)             ($48,079)
                                                                           =============         ============= 
                
Supplemental disclosures of cash flow information:
  Cash paid (net of refunds received) during the year for:
    Federal, state and city income taxes                                     $1,612,710            $1,649,384
                                                                           =============         =============
  Interest paid on deposits and borrowed funds                               $5,672,000            $7,255,336
                                                                           =============         =============

See accompanying notes to consolidated financial statements.
</TABLE>



<PAGE> 9


                    FINANCIAL BANCORP, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


BASIS OF PRESENTATION
The  accompanying   unaudited  consolidated  financial  statements  include  the
accounts of Financial  Bancorp,  Inc. (the  "registrant" or the "Company"),  its
wholly  owned  subsidiaries,  842  Manhattan  Avenue  Corp,  which  manages real
property,  and Financial Federal Savings Bank (the Bank), a federally  chartered
stock association and the Bank's wholly owned  subsidiaries,  Finfed Development
Corp.,  which  participates  in a joint venture for the  development of land and
sale of lots,  Finfed  Funding  Ltd.,  which  serves  as a conduit  for  funding
investments in Finfed  Development Corp., and F.S. Agency Inc., which is engaged
in the sale of annuities. All significant intercompany accounts and transactions
have been eliminated in consolidation.

Certain information and footnote  disclosures  required under generally accepted
accounting  principles  have  been  condensed  or  omitted  from  the  following
consolidated  financial  statements pursuant to the rules and regulations of the
Securities and Exchange  Commission.  The Company  believes that the disclosures
presented  are  adequate  to  assure  that  the  information  presented  is  not
misleading  in  any  material  respect.  It  is  suggested  that  the  following
consolidated  financial  statements  be read in  conjunction  with the  year-end
consolidated financial statements and notes thereto included in the registrant's
Annual Report on Form 10-K for the year ended September 30, 1997.

The results of operations  for the three and nine months ended June 30, 1998 are
not  necessarily  indicative  of the results that may be expected for the entire
fiscal year.

Certain  amounts  for the three and nine  months  ended June 30,  1997 have been
reclassified to conform with the current period's presentation.

RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997,  the  Financial  Accounting  Standards  Board (the "FASB")  issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive  Income". SFAS No. 130 requires that all items that are components
of "comprehensive income" be reported in a financial Statement that is displayed
with the same prominence as other financial statements.  Comprehensive income is
defined as the "change in equity [net assets] of a business  enterprise during a
period  from  transactions  and other  events and  circumstances  from  nonowner
sources.  It  includes  all  changes  in  equity  during a period  except  those
resulting from  investments by owners and  distributions  to owners".  Companies
will be required to (a) classify  items of other  comprehensive  income by their
nature in the financial  statements and (b) display the  accumulated  balance of
other  comprehensive  income  separately  from retained  earnings and additional
paid-in capital in the equity section of a statement of financial position. SFAS
No. 130 is effective  for fiscal  years  beginning  after  December 15, 1997 and
requires  reclassification  of prior periods  presented.  As the requirements of
SFAS No. 130 are disclosure-related, its


<PAGE> 10



implementation  will have no  impact on the  Company's  financial  condition  or
results of operations.

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  About Segments of an
Enterprise and Related  Information." SFAS No. 131 requires disclosures for each
segment that are similar to those  required  under  current  standards  with the
addition  of  quarterly  disclosure  requirements  and a finer  partitioning  of
geographic  data by  country,  as  opposed  to  broader  geographic  regions  as
permitted  under  current  standards.  SFAS No. 131 is effective for fiscal year
beginning  after December 15, 1997 with earlier  application  permitted.  As the
requirements of SFAS No. 131 are  disclosure-related,  its  implementation  will
have no impact on the Company's financial condition or results of operations.

In April  1998,  the FASB issued FASB No.  132,  "Employers'  Disclosures  About
Pensions and Other Post  Retirement  Benefits."  SFAS No. 132  standardizes  the
disclosure  requirements for these plans and it requires additional  information
about  changes in the benefit  obligations  and fair value of plan  assets.  The
statement is effective for fiscal years  beginning  after  December 15, 1997 and
information for previous periods presented for comparative  purposes is required
to be restated.  As the statement  does not change  measurement  or  recognition
standards for these plans and is only  disclosure  related,  its  implementation
will  have  no  impact  on the  Company's  financial  condition  or  results  of
operations.

The forgoing  does not  constitute a  comprehensive  summary of all  anticipated
material changes or developments affecting the manner in which the Company keeps
its books and records and performs its  financial  accounting  responsibilities.
It's intended only as a summary of some of the recent pronouncements made by the
FASB which are of particular interest to financial institutions.

EARNINGS PER SHARE (EPS)
Basic EPS is computed by dividing net income by the weighted  average  number of
common  shares  outstanding  for the period.  Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted  into common stock.  EPS data for the three and nine
months ended June 30, 1997 has been restated as the result of the implementation
of SFAS No. 128, "Earnings Per Share."

<PAGE> 11
<TABLE>
<CAPTION>


INVESTMENT SECURITIES
The following  table sets forth certain  information  regarding the carrying and
estimated fair value of the Company's investment securities at June 30, 1998 and
September 30, 1997, respectively.


                                                        June 30, 1998              September 30, 1997
                                                     --------------------      -------------------------

                                                                Estimated                    Estimated
                                                     Carrying     Fair          Carrying        Fair
                                                      Value       Value           Value         Value
                                                     -------    ---------       ---------    -----------
                                                                      (in thousands)

<S>                                                  <C>        <C>              <C>          <C>
Investments Securities:
Available for sale
   FNMA preferred stock                                   $0         $0             $701         $731
   Corporate debt securities                           5,853      5,904                0            0
   Add:  Unrealized gain                                  51          0               30            0
                                                      ------     ------             -----       -----
     Total investment securities available for sale   $5,904     $5,904             $731         $731
                                                      ======     ======             =====       =====

Held maturity
   U.S. Government and agency obligations            $43,735    $43,806          $69,410      $69,223
   Corporate debt securities                             500        500                0            0
                                                     -------    -------          -------      ------- 
      Total investment securities held to maturity   $44,235    $44,306          $69,410      $69,223

</TABLE>

<TABLE>
<CAPTION>

MORTGAGE-BACKED SECURITIES
The following  table sets forth certain  information  regarding the carrying and
estimated fair value of the Company's mortgage-backed security portfolio at June
30, 1998 and September 30, 1997, respectively.

                                                        June 30, 1998              September 30, 1997
                                                     --------------------      -------------------------

                                                                Estimated                    Estimated
                                                     Carrying     Fair          Carrying        Fair
                                                      Value       Value           Value         Value
                                                     -------    ---------       ---------    -----------
                                                                      (in thousands)
<S>                                                   <C>         <C>             <C>         <C>   
Mortgage-backed securities:
Available for sale
   FHLMC certificates                                 $12,149     $12,176          $4,422      $4,510
   FNMA certificates                                   10,801      10,870           4,801       4,847
   Add:  Unrealized gain                                   96           0             134           0
   Total mortgage-backed securities available for     -------     -------          ------      ------
     sale                                             $23,046     $23,046          $9,357      $9,357
                                                      =======     =======          ======      ======

Held to maturity
   GNMA certificates                                  $18,804     $19,018         $23,335     $23,752
   FHLMC certificates                                   8,420       8,539          11,299      11,480
   FNMA certificates                                    1,875       1,873           1,988       1,998
   Other pass-through certificates                      1,752       1,752           1,899       1,899
                                                      -------     -------         -------     ------- 
   Total mortgage-backed securities held to maturity  $30,851     $31,182         $38,521     $39,129

</TABLE>



<PAGE> 12
<TABLE>
<CAPTION>


LOANS RECEIVABLE, NET
The following  table sets forth the  composition of the Company's loan portfolio
at June 30, 1998 and September 30, 1997, respectively.


                                         June 30,        September 30,
                                           1998              1997
                                       -------------     --------------
                                                 (in thousands)
<S>                                      <C>                <C>     
Real estate mortgages:
     One- to four-family                 $156,629           $126,440
     Equity and second mortgages            2,537              2,637
     Multi-family                          15,714             11,779
     Commercial                            17,478             13,217
                                        ---------          ---------
                                          192,358            154,073
                                        ---------          ---------

Construction                                  925                574
                                        ---------          ---------

Consumer:
     Loans on deposit accounts                327                176
     Home improvement                           2                  4
     Guaranteed student loans                 230                214
     Personal                                  19                 23
                                        ---------          ---------
                                              578                417

Commercial, including lines of credit          75                 77
                                        ---------          ---------

     Total loans                          193,936            155,141
                                        ---------          ---------

Less:Loans in process                        446                201
     Allowance for loan losses             1,681              1,405
     Deferred loan fees and discounts        (13)               243
                                        ---------          ---------
                                           2,114              1,849
                                        ---------          ---------
     Total loans receivable, net        $191,822           $153,292
                                        =========          =========
</TABLE>


<PAGE> 13
<TABLE>
<CAPTION>


ADVANCES FROM FEDERAL HOME LOAN BANK OF NEW YORK ("FHLB")
As a member  of the FHLB,  the Bank has an  available  overnight  line of credit
subject to the terms and conditions of the lender's overnight advance program in
the amount of $29,657,700  at June 30, 1998. The following  table sets forth the
composition  of the Bank's FHLB  advances as of June 30, 1998 and  September 30,
1997, respectively.

                                         June 30,        September 30,
                                           1998              1997
                                       -------------     --------------
                                                 (in thousands)
<S>                                           <C>                <C>     
FHLB advances:
     Fixed rate:
          5.597% due December 1997                $0             $2,000
          5.670% due December 1998             6,000              6,000
                                       -------------     -------------- 
               Total fixed rate                6,000              8,000
                                       -------------     --------------
     Overnight line of credit                      0                  0
                                       -------------     --------------
Total FHLB advances                           $6,000             $8,000
                                       =============     ==============

</TABLE>


<TABLE>
<CAPTION>

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities   sold  under   agreements  to   repurchase   consist  of  borrowings
collateralized  by investment  securities.  The  following  table sets forth the
composition of the Company's borrowings  collateralized by securities sold under
agreements   to  repurchase  as  of  June  30,  1998  and  September  30,  1997,
respectively.


                                                           June 30,        September 30,
                                                             1998              1997
                                                        -------------     --------------
                                                                (in thousands)
<S>                                                       <C>                 <C>     
Securities sold under agreements to repurchase:
     5.291% due December 2001, callable December 1997          $0              $5,000
     5.813% due May 2002, callable May 1998                10,000              10,000
     5.620% due August 2002, callable August 1999          10,000              10,000
     5.963% due November 2004, callable October 2002        5,000                   0
     5.930% due December 2004, callable December 2002       7,000                   0
     5.050% due June 2008, callable June 1999              10,000                   0
                                                        ---------           ---------

Total securities sold under agreements to repurchase      $42,000             $25,000
                                                        =========           =========
</TABLE>


<PAGE> 14


Item 2.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

GENERAL

The Company is the holding company for the Bank,  which converted to a federally
chartered  stock  savings  association  on August  17,  1994 and to a  federally
chartered stock savings bank on October 20, 1994. The Bank is  headquartered  in
Long Island City,  New York and operates  five full  service  branches,  four in
Queens  and  one  in  Brooklyn.  Deposits  of the  Bank  are  insured  up to the
applicable limits of the Federal Deposit  Insurance  Corporation  ("FDIC").  The
Bank is subject to  regulation by the Office of Thrift  Supervision  ("OTS") and
the FDIC.  The  Company is listed on The Nasdaq  Stock  Market  under the symbol
"FIBC".

The Company's  results of operations  are generally  dependent on the Bank.  The
Bank's sources of earnings  primarily  consist of net interest income,  which is
the  difference  between the income  earned on interest  earning  assets and the
expenses paid on interest  bearing  liabilities.  The results of operations  are
also affected,  to a lesser extent, by non-interest  income, which includes loan
servicing  fees and  charges,  and  other  miscellaneous  income.  In  addition,
operations are impacted by non-interest  expenses such as employee  salaries and
benefits,  office  occupancy,  data  processing  and federal  deposit  insurance
premiums.

The  Bank  is  primarily  engaged  in  the  origination  of  one-to-four  family
residential  mortgage  loans,  multi-family  and commercial real estate mortgage
loans,   and  to  a  lesser  extent   residential   construction   loans.  As  a
community-oriented  institution,  the Bank is  generally  engaged in  attracting
retail deposits from the areas surrounding its branch offices. In addition,  the
Bank may borrow funds from the FHLB or through  reverse  repurchase  agreements.
These funds are then generally concentrated in lending activities throughout the
New York City metropolitan area.

FINANCIAL CONDITION

As  of  June  30,  1998,  the  Company's   total  assets  were  $341.0  million,
representing  a $44.0  million,  or 14.8%,  increase  from $297.0  million at of
September 30, 1997.  Loans receivable  increased by $38.5 million,  or 25.1%, to
$191.8  million at June 30, 1998,  from $153.3  million at  September  30, 1997.
Mortgage-backed  securities,  inclusive of available for sale, increased by $6.0
million,  or 12.5%,  to $53.9  million at June 30,  1998 from  $47.9  million at
September  30, 1997.  Investment  securities,  inclusive of available  for sale,
decreased by $20.0  million or 28.5% from $70.1 million at September 30, 1997 to
$50.1 million at June 30, 1998 predominantly due to calls and maturities.  Asset
growth was funded by a $15.6  million,  or 7.3%,  increase in deposits to $229.0
million  at  June  30,  1998,   from  $213.4  million  at  September  30,  1997.
Furthermore,  securities sold under agreements to repurchase  increased by $17.0
million,  or 68.0%,  to $42.0  million at June 30, 1998,  from $25.0  million at
September 30, 1997,  while advances from the FHLB decreased by $2.0 million,  or
25.0%,  to $6.0  million,  at June 30,  1998,  as  compared  to $8.0  million at
September 30, 1997.  The treasury tax and loan account  borrowings  increased by
$10.0 million,  or 50.0%,  to $30.0 million at June 30, 1998, from $20.0 million
at September 30, 1997. In the aggregate, borrowings


<PAGE> 15


as of June 30, 1998 totalled  $78.0  million,  an increase of $25.0 million from
the $53.0 million  outstanding  at September 30, 1997.  The increase in deposits
and borrowings  enabled the Bank to fund new loan  originations  and to purchase
adjustable rate mortgages and mortgage-backed securities.

Total stockholders' equity was $28.7 million at June 30, 1998, reflecting a $1.9
million,  or 7.0%,  increase  from $26.8  million at  September  30,  1997.  The
increase in stockholders' equity was the result of earnings, partially offset by
the payment of the Company's  quarterly  cash  dividend.  At June 30, 1998,  the
Company  had,   exclusive  of  shares   repurchased,   1,706,666  common  shares
outstanding.  During the nine months ended June 30, 1998, the Company's tangible
and stated book value per share of common  stock  increased  by $1.14 and $1.12,
respectively,  to $16.77 and $16.83,  from $15.63 and $15.71,  respectively,  at
September 30, 1997.

Non-performing  loans totaled $2.9 million,  or 1.49% of total loans at June 30,
1998,  as compared to $2.8  million,  or 1.83% of total loans at  September  30,
1997. At June 30, 1998, non-performing assets totalled $7.0 million, or 2.06% of
total assets, as compared to $6.7 million, or 2.25% of total assets at September
30, 1997.  Excluding the Company's $3.4 million Joint Venture  Investment in AFT
Associates,  non-performing  assets to total assets would decrease to 1.06%. The
Company's  allowance  for loan losses  totalled  $1.7  million at June 30, 1998,
which represents a ratio of allowance for loan losses to  non-performing  assets
and to total loans of 23.88% and 0.87%, respectively,  as compared to 21.07% and
0.91%, respectively, at September 30, 1997.

ANALYSIS OF OPERATIONS

COMPARISON OF THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1998 AND 1997

Net income  for the three  months  ended June 30,  1998  totalled  $779,021,  or
diluted  earnings  per share of $0.46 per share,  as  compared  to net income of
$661,378,  or diluted earnings per share of $0.40 per share for the three months
ended June 30, 1997. The $117,643 or 17.8% increase was primarily attributable a
$55,627 or a 2.3%  increase in net  interest  income after  provisions  for loan
losses, a $138,400, or a 78.8% increase in non-interest income, and a $43,614 or
an 8.7% decrease in income taxes,  offset part by a $119,998 or 8.3% increase in
non-interest expenses. For the nine month period ended June 30, 1998, net income
increased  $382,053,  or 20.8%, to $2,216,396,  or diluted earnings per share of
$01.37,  from  $1,834,343,  or diluted earnings per share of $1.10, for the same
period in 1997.

The return on average  assets  equalled  0.99% and 0.96% for the quarter and the
nine months  ended June 30, 1998,  respectively,  as compared to 0.97% and 0.91%
for the quarter ended and the nine months ended June 30, 1997, respectively. The
Company's  return on average equity equalled 10.98% and 10.64%,  for the quarter
and nine months  ended June 30,  1998,  respectively,  compared  with 10.08% and
9.40%, for the quarter and the nine months ended June 30, 1997, respectively.

Net interest income  increased  $63,039,  or 2.5%, to $2,605,753 for the quarter
ended June 30, 1998,  from  $2,542,714  for the quarter ended June 30, 1997. For
the nine month  period  ended  June 30,  1998,  net  interest  income  increased
$70,454, or 0.9%, to $7,546,613, from $7,576,159 for the same


<PAGE> 16


period in 1997.  The  increase in net  interest  income for the quarter and nine
months ended June 30, 1998, was primarily due to the continued leveraging of the
balance sheet, utilizing low cost borrowings and deposit growth to fund mortgage
loan originations with higher yields.

As a result,  for the  quarter  ended June 30,  1998,  average  interest-earning
assets  were  $299.3  million,  which  represents  a $37.8  million,  or a 14.4%
increase,  from $261.5  million,  for the same period in 1997.  The  increase in
average  interest-earning  assets  was  offset  by a $32.0  million,  or a 13.7%
increase  in average  interest-bearing  liabilities  to $266.0  million  for the
quarter ended June 30, 1998, from $234.0 million for the same quarter last year.
For the  nine  months  ended  June 30,  1998,  average  interest-earning  assets
increased by $35.1 million, or 13.7%, to $291.2 million, from $256.1 million for
the same period last year. The increase in average  interest-earning  assets was
offset by a $29.3  million,  or a 12.8%,  increase  in average  interest-bearing
liabilities  to $259.0  million  for the nine  months  ended June 30,  1998,  as
compared to $229.7  million for the same nine month period in 1997.  The average
yield on interest-earning  assets was 7.44% for the quarter ended June 30, 1998,
as compared to 7.75% for the quarter  ended June 30, 1997,  and the average cost
of  interest-bearing  liabilities was 4.47% for the quarter ended June 30, 1998,
as  compared to 4.33% for the quarter  ended June 30,  1997.  For the nine month
period ended June 30, 1998,  the average  yield on  interest-earning  assets was
7.45%, as compared to 7.70% for the same period in 1997, and the average cost of
interest-bearing liabilities was 4.51%, as compared to 4.26% for the same period
in 1997.

The Company's net interest margin decreased by 42 basis points to 3.48%, for the
quarter ended June 30, 1998, as compared to 3.90% for the quarter ended June 30,
1997.  For the nine month period ended June 30,  1998,  the net interest  margin
decreased by 43 basis points to 3.46%,  as compared to 3.89% for the same period
in 1997. The net interest  spread  decreased 45 basis points and 49 basis points
to 2.97% and 2.95%,  for the quarter and the nine  months  ended June 30,  1998,
respectively,  as  compared  with 3.42% and 3.44% for the same  periods in 1997,
respectively. The decline in the net interest margin and net interest spread for
the  quarter  and nine  months  ended  June 30,  1998  reflects  the  effects of
leveraging of the balance sheet.

The  Company's  provision  for loan  losses for the  quarter  ended and the nine
months  ended June 30,  1998  increased  by $7,412 and $6,582,  to $118,412  and
$313,182  respectively.  The  provisions for loan losses  reflects  management's
on-going effort to maintain adequate allowances.

Non-interest income, for the quarter ended June 30, 1998, increased $138,400, or
78.8%, to $314,424, as compared to $175,724 for the quarter ended June 30, 1997.
For the nine month  period ended June 30, 1998,  non-interest  income  increased
$335,754,  or 69.0%,  to $822,604  from $486,850 for the nine month period ended
June 30, 1997.  The  $138,400  increase in  non-interest  income for the quarter
ended June 30, 1998, is primarily attributable to the $93,021 increase in income
realized from  additional  service fee income from  increased  amounts of demand
deposit  accounts and automated teller machines (ATM's) related service fees. In
addition,  the increase in  non-interest  income was  attributable  to a $33,716
increase in the gain on sale of investment securities to $36,750 for the quarter
ended June 30, 1998, as compared to $3,034 for the same period in 1997.  For the
nine months ended June 30, 1998, non-interest income increased primarily



<PAGE> 17


due to the reasons  stated above,  in addition to a decrease in  provisions  for
losses on  investments  in real estate,  in which a subsidiary of the Bank has a
one-third interest.

Non-interest  expenses  increased by $119,998,  or 8.3%, to  $1,565,421  for the
quarter ended June 30, 1998, from $1,445,423 for the same period in 1997. During
the nine month period ended June 30, 1998,  non-interest  expenses  decreased by
$215,486,  or 4.8%, to  $4,274,075,  from  $4,489,561  for the nine month period
ended June 30, 1997.

For the quarter ended June 30, 1998, salaries and employee benefits increased by
$110,577,  or 15.1%,  to $845,189 from $734,612 for the same period in 1997. For
the nine months ended June 30, 1998, salaries and employee benefits decreased by
$285,695,  or 11.5%,  to $2,194,380,  from  $2,480,075 for the nine months ended
June 30, 1997.  The  increase in salaries and employee  benefits for the quarter
ended  June 30,  1998 is  primarily  attributable  to  higher  compensation  and
employee  benefits as a result of the continued  increase in the Company's stock
paid,  whick is used to calculate  the expense  related to the Company  Employee
Stock Owners Plan (ESOP). In addition, compensation expense was also affected by
normal  accruals  for annual  incentive  awards.  The  decrease in salaries  and
employee  benefits  for the nine month  period  ended June 30, 1998 is primarily
attributable  to a  non-recurring  charge of $268,000  for the  retirement  of a
senior officer during the March 1997 quarter.

For the quarter ended June 30, 1998,  occupancy  expense  increased by $3,144 to
$129,589 from $126,445 for the same period last year.  For the nine months ended
June 30, 1998, occupancy expense decreased by $24,753, to $372,420 from $397,173
for the same period in 1997.  Equipment  expense for the quarter and nine months
ended June 30, 1998, increased by $16,370 and $51,799, to $175,372 and $522,146,
respectively,  from $159,002 and $470,347, respectively  for the same periods in
1997.  The increase in  equipment  expense for the quarter and nine months ended
June 30,  1998,  represents  costs  associated  with the Bank's data  processing
servicer.  Advertising  expense,  for the quarter and nine months ended June 30,
1998, increased by $8,064 and $52,728, to $16,016 and $76,732, respectively. The
increase in advertising  expense is primarily  attributable to costs  associated
with an  increase  in loan and  deposit  marketing  efforts,  in addition to the
Bank's  50th  anniversary  and  related  gift  campaigns.  The  Company has been
successful in  controlling  operating  expenses,  as evidenced by the efficiency
ratio of 54.71% and 51.64%, for the quarter and nine months ended June 30, 1998,
respectively, as compared to 53.54% and 53.20% for the same periods in 1997.

For the quarter ended June 30, 1998,  income tax expense decreased by $43,614 to
$457,023  as compared to  $500,637  for the same  quarter in 1997.  For the nine
month period ended June 30,  1998,  income tax expense  increased by $233,059 to
$1,565,564 as compared to $1,332,505 for the same period in 1997, as a result of
the increase in income before taxes.


LIQUIDITY AND CAPITAL RESOURCES

The Bank is required to maintain an average  daily  balance of specified  liquid
assets (as defined in the  regulations)  equal to a monthly  average of not less
than the specified  percentage  of its net  withdrawable  deposit  accounts plus
short-term borrowings. This liquidity requirement was 5% for fiscal 1997, but is
subject to change from time to time by the OTS to any amount within the range


<PAGE> 18


of 4% to 10% depending upon economic  conditions and the savings flows of member
institutions. In 1997, OTS regulations also required each savings institution to
maintain an average daily balance of short-term  liquid assets of at least 1% of
the total of its net withdrawable deposit accounts and borrowings payable in one
year or less.  Monetary  penalties  may be  imposed  for  failure  to meet these
liquidity  requirements.  The OTS has recently lowered the liquidity requirement
from 5% to 4% and  eliminated  the 1% short term liquid asset  requirement.  The
Bank's  liquidity  ratio  for  June 30,  1998 was  28.29%,  which  exceeded  the
applicable  requirements.  The Bank has never been subject to monetary penalties
for failure to meet its liquidity requirements.

The primary  investment  activities of the Bank are the  origination of mortgage
loans and the purchase of investment securities and mortgage-backed  securities.
The Company's primary sources of funds are the Bank's deposit accounts, proceeds
from  principal  and interest  payments on loans and  investments,  advances and
overnight  borrowings from the FHLB, as well as reverse  repurchase  agreements.
While maturities and scheduled amortization of loans, mortgage-backed securities
and  investment  securities  are  predictable  sources of funds,  deposit flows,
mortgage  prepayments and callable investment  securities are greatly influenced
by market interest rates, general economic conditions and competition within the
financial industry.

At June 30,  1998,  the Bank  had  outstanding  loan  commitments  to  originate
mortgage  loans of  $15.8  million.  Management  anticipates  that it will  have
sufficient  funds  available and  borrowing  capability to meet its current loan
originations and loan purchase commitments.  Certificates of deposit,  which are
scheduled  to mature in  one-year  or less from  June 30,  1998  totalled  $76.0
million,  of which  $16.5  million  represent  "Silver  Certificate  of Deposit"
accounts,  which allow one withdrawal of principal per quarter  without an early
withdrawal penalty for direct deposit customers 62 years of age or older.

Although the OTS capital regulations require savings institutions to meet a 1.5%
tangible  capital ratio and a 4.0% leverage  (core)  capital  ratio,  the prompt
corrective  action standards also establish,  in effect, a minimum 2.0% tangible
capital standard and a 4.0% leverage (core) capital ratio (3.0% for institutions
receiving the highest rating on the CAMEL financial  institution rating system).
The Bank's tangible capital and core capital totalled $21.8 million,  or 6.5% at
June 30, 1998, in excess of the regulatory  requirements.  The Bank's risk-based
capital ratio as of June 30, 1998, was $23.0 million,  or 16.7%,  also in excess
of the regulatory capital requirement of 8.0%.

YEAR 2000 COMPLIANCE

As the year 2000 approaches, a critical business issue has emerged regarding how
existing  application  software  programs and operating  systems can accommodate
this date value. In brief,  many existing  application  software products in the
marketplace  were designed to only  accommodate a two digit date position  which
represents  the year (e.g.,  '95 is stored on the system and represents the year
1995).  The Company,  through a series of phases,  has identified the process of
implementing  a program  designed to ensure that all software used in connection
with the  Company's  business  will manage and  manipulate  data  involving  the
transition from 1999 to 2000 without  functional or data abnormality and without
inaccurate results related to such data. To the extent the Company's systems are
not fully year 2000 compliant,  there can be no assurance that potential systems
interruptions to update software would not have a material adverse effect on the


<PAGE> 19


Company's business. The Company has completed both the Organizational  Awareness
Phase and  Assessment  Phase.  The  Company has  drafted a  compliance  plan and
established  a steering  committee.  In the  Assessment  Phase,  the Company has
performed a complete  inventory  of internal  business  hardware and software as
well as an inventory of environmental  systems and critical vendor applications.
Critical  applications and a risk assessment in the event of non-compliance have
been defined and the Company has  identified  resources  needed to implement the
Year 2000  Plan.  The  Company is now in the  Renovation  Phase  which  involves
implementing  required  system  hardware  and software  upgrades  and  obtaining
various  vendor  certifications.  As such,  the Company  anticipates  that costs
associated to complete its Year 2000 Plan will not exceed $400,000.  The Company
anticipates that substantially all of the costs will consists of newly purchased
hardware  and will not  materially  affect the  Company's  operating  results or
financial condition.



<PAGE> 20


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Bank does not purchase derivative  financial  instruments or other financial
instruments  for  trading  purposes.  Further,  the Bank is not  subject  to any
foreign currency exchange rate risk,  commodity price risk or equity price risk.
The Bank is,  however,  subject to  interest  rate risk to the  extent  that its
interest-bearing  liabilities reprice or mature more or less frequently than its
interest-earning  assets.  The Bank's interest rate risk  management  policy has
been  structured  to monitor and maintain  the Bank's  interest  sensitivity  to
within the Board's prescribed  limits while  attempting to maximize net interest
income.  In  connection  with  its  interest  rate  risk  management   strategy,
management has emphasized the origination of shorter-term fixed-rate one-to-four
family and mixed-use mortgage loans and the purchase of adjustable-rate mortgage
loans, or mortgage-backed  securities,  along with limiting investment purchases
to securities  with a final maturity or which reprice within five years or less.
However,  there can be no  assurances  that the Bank  will be able to  originate
adjustable  rate  loans or  acquire  mortgage-backed  securities  with terms and
characteristics which conform with the Bank's underwriting standards, investment
criteria or interest  rate risk  policies.  This strategy is necessary to reduce
the Bank's  exposure to interest rate risk. On the  liability  side,  management
closely monitors the pricing of its deposit  products,  and has made a conscious
effort to extend  deposit  maturities,  and secure  fixed-rate  borrowings  when
market conditions are favorable.

The actual duration of mortgage loans,  mortgage-backed  securities and callable
investment  securities  can be  significantly  impacted  by changes in  mortgage
prepayment and market interest rates. Mortgage prepayment rates will vary due to
a number of  factors,  including  the  regional  economy  in the area  where the
underlying mortgages were originated,  seasonal factors,  demographic  variables
and  the  assumability  of  the  underlying  mortgages.   However,  the  largest
determinants  of  prepayment  rates are  prevailing  interest  rates and related
mortgage   refinancing   opportunities.   Management   monitors   interest  rate
sensitivity  so that  adjustments  in the asset and  liability  mix, when deemed
appropriate, can be made on a timely basis.

At June 30,  1998,  $125.6  million,  or 38.3%,  of the Bank's  interest-earning
assets were in adjustable-rate loans and mortgage-backed  securities or floating
rate investments.  The Bank's loan portfolio  totalled $193.9 million,  of which
$79.4 million, or 40.9%, were adjustable-rate loans and $114.5 million, or 59.1%
were  fixed-rate  loans.  At  June  30,  1998,  the  mortgage-backed  securities
held-to-maturity  portfolio  totalled $30.9  million,  of which $17.1 million or
55.5% of the mortgage-backed portfolio were adjustable rate securities and $13.7
million or 44.5% were  fixed-rate  securities.  The  mortgage-backed  securities
portfolio classified as available-for-sale totalled $23.0 million, of which 100%
were adjustable-rate securities. During the nine months ended June 30, 1998, the
Bank purchased  approximately  $21.4 million of adjustable-rate  mortgage-backed
securities and $24.1 million of adjustable-rate mortgage loans.


<PAGE> 21



                             FINANCIAL BANCORP, INC.


Part II.    OTHER INFORMATION

Item 1.     Legal Proceedings
                The Company is not presently  engaged in any legal 
                proceeding of a material nature.

Item 2.     Changes in Securities and Use of Proceeds
                Not applicable.

Item 3.     Defaults Upon Senior Securities
                Not applicable.

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

               Not applicable.
 
Item 5.     Other information

            On July  20,  1998,  Financial  Bancorp,  Inc.  and  Dime  Community
            Bancshares,  Inc.  the holding  company for the Dime Savings Bank of
            Williamsburgh,  entered into a definitive merger agreement  pursuant
            to  which  Dime  Community  will acquire  Financial  Bancorp,  Inc.,
            subject to regulatory and shareholder approval.

            On  September  4,  1997,  the  Company  announced  that its Board of
            Directors  authorized its sixth repurchase  program.  The Company is
            authorized  to  purchase  up to 170,970  or 10% of its common  stock
            outstanding,  from time to time, through  open-market  transactions,
            subject  to the  availability  of stock,  during a two year  period.
            Since September 4, 1997, the Company  repurchased 5,000 shares at an
            average price of $25.875.

            On July 29, 1998, the Holding Company declared its regular quarterly
            cash  dividend for the quarter  ended June 30,  1998,  of $0.125 per
            share,  payable  on August  12,  1998 to  stockholders  of record on
            August 26, 1998.

Item 6.     (A) Exhibits

            Exhibit 3.1  Certificate of Incorporation of Financial 
                         Bancorp, Inc. *
            Exhibit 3.2  Bylaws of Financial Bancorp, Inc. *
            Exhibit 11   Earnings Per Share
            Exhibit 27   Financial Data Schedule


            (B) Reports on Form 8-K

            On July  20,  1998,  Financial  Bancorp,  Inc.  and  Dime  Community
            Bancshares,  Inc.  the holding  company for the Dime Savings Bank of
            Williamsburgh,  entered into a definitive merger agreement  pursuant
            to which  Dime  Community  will  acquire  Financial  Bancorp,  Inc.,
            subject to regulatory and shareholder approval. Subsequently on July
            23, 1998,  Financial Bancorp,  Inc. filed a Form 8-K, which reported
            the  terms of the  merger.  The  Merger  Agreement  was  filed as an
            exhibit thereto.



<PAGE> 22



                                   SIGNATURES


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



                                    Financial Bancorp, Inc.
                                    (Registrant)





Date: August 14, 1998                     By: /s/ Frank S. Lataweic
                                              ----------------------
                                              Frank S. Latawiec
                                              President and Chief
                                              Executive Officer



Date:  August 14, 1998                    By: /s/ P. James O'Gorman
                                              ----------------------
                                              P. James O'Gorman
                                              Senior Vice President and
                                              Chief Financial Officer