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

                                    FORM 10-Q

  (Mark One)     Quarterly Report Pursuant to Section 13 or 15(d) of
      X                the Securities Exchange Act of 1934
                  For the quarterly period ended June 30, 1999
                                       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 No.: 0-29826

                           LONG ISLAND FINANCIAL CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               Delaware                             11-3453684
       -------------------------              -------------------
  (State or other jurisdiction of        (I.R.S. Employer Identification No.)
   incorporation or organization)

                  One Suffolk Square, Islandia, New York 11722
               ---------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (516) 348-0888
               ---------------------------------------------------
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements  for the past 90 days;  Yes ( x ) No ( )

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

The registrant had 1,776,326  shares of Common Stock  outstanding as of July 30,
1999.




<PAGE>

                                   Form 10-Q
                           LONG ISLAND FINANCIAL CORP.

                                      INDEX

                                                                          Page
PART I - CONSOLIDATED FINANCIAL INFORMATION                              Number
-------------------------------------------                              ------
ITEM 1.   Consolidated Financial Statements - Unaudited
     Consolidated Balance Sheets at June 30, 1999
       and December 31, 1998                                               2
     Consolidated Statements of Earnings for the Three Months Ended
       and Six Months Ended June 30, 1999 and 1998                         3
     Consolidated Statement of Changes in Stockholders' Equity
       for the Six Months Ended June 30, 1999                              4
     Consolidated Statements of Cash Flows for the Six Months
       Ended June 30, 1999 and 1998                                       5-6
     Notes to Unaudited Consolidated Financial Statements                 7-9

ITEM 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                             10-21

ITEM 3.  Quantitative and Qualitative Disclosure About Market Risk       21-22

PART II  - OTHER INFORMATION

ITEM 1.   Legal Proceedings                                                23
ITEM 2.   Changes in Securities and Use of Proceeds                        23
ITEM 3.   Defaults Upon Senior Securities                                  23
ITEM 4.   Submission of Matters to a Vote of Security Holders              23
ITEM 5.   Other Information                                                23
ITEM 6.   Exhibits and Reports on Form 8-K                                 23

          Signatures                                                       24

================================================================================
Statements  contained  in this Form  10-Q  which  are not  historical  facts are
forward- looking  statements,  as that term is defined in the Private Securities
Litigation  Reform Act of 1995. Such  forward-looking  statements are subject to
risks and  uncertainties  which could cause actual results to differ  materially
from those projected.  Such risks and uncertainties include potential changes in
interest rates, competitive factors in the financial services industry,  general
economic conditions, the effect of new legislation, potential adverse effects of
Year 2000, and other risks  detailed in documents  filed by the Company with the
Securities and Exchange Commission from time to time.
================================================================================



                                                         1

<PAGE>


PART I - CONSOLIDATED FINANCIAL INFORMATION

Item 1.       Consolidated Financial Statements - Unaudited
-------       ---------------------------------------------
<TABLE>
<CAPTION>

                                        LONG ISLAND FINANCIAL CORP.
                                        Consolidated Balance Sheets
                                                (Unaudited)
                                     (In thousands, except share data)

                                                             June 30,       December 31,
                                                               1999             1998
                                                           -----------     -------------
                                                           (Unaudited)
<S>                                                         <C>            <C>
Assets:
Cash and due from banks ................................    $   5,173         13,170
Interest earning deposits ..............................          123            269
Federal funds sold .....................................           --          8,050
                                                              -------        -------
              Total cash and cash equivalents ..........        5,296         21,489

Securities held-to-maturity, net
 (estimated fair value of $489 and $665, respectively) .          489            664
Securities available-for-sale ..........................      135,697        145,155
Loans receivable, net ..................................      105,155         94,144
Premises and equipment, net ............................        2,198          1,975
Accrued interest receivable ............................        1,827          1,614
Prepaid expenses and other assets ......................        8,263          1,502
                                                              -------        -------
              Total assets..............................    $ 258,925        266,543
                                                              =======        =======
Liabilities and Stockholders' Equity:

Deposits:
    Demand deposits.....................................    $  32,851         36,605
    Savings deposits....................................       25,199         12,476
    NOW and money market deposits ......................       38,758         71,689
    Time certificates issued in excess of $100,000 .....       21,955         18,998
    Other time deposits ................................       77,677         78,099
                                                              -------        -------
              Total deposits............................      196,440        217,867

Borrowed funds..........................................       39,000         24,000
Accrued expenses and other liabilities .................        3,022          2,808
                                                              -------        -------
              Total liabilities ........................      238,462        244,675
                                                              =======        =======
Stockholders' equity:
    Common stock (par value $.01 per share, authorized
      10,000,000 shares, issued and outstanding
      1,776,326 and 1,771,306 shares, respectively) ....           18             18
    Surplus ............................................       20,185         20,126
    Accumulated surplus ................................        2,091          1,659
    Accumulated other comprehensive (loss) income:
      Net (depreciation) unrealized appreciation in
          available-for-sale securities, net of tax ....       (1,831)            65
                                                              -------        -------
              Total stockholders' equity ...............       20,463         21,868
                                                              -------        -------
              Total liabilities and stockholders' equity    $ 258,925        266,543
                                                              =======        =======

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

                                                         2

<PAGE>

<TABLE>
<CAPTION>

                                            LONG ISLAND FINANCIAL CORP.
                                        Consolidated Statements of Earnings
                                                    (Unaudited)
                                         (In thousands, except share data)

                                                                 For the Three Months          For the Six Months
                                                                      Ended June 30,              Ended June 30,
                                                                   1999        1998            1999          1998
                                                                 ---------------------         -------------------
<S>                                                          <C>             <C>             <C>             <C>
         Interest income:
             Interest earning deposits.....................  $        2           7               4             11
             Federal funds sold............................         122         125             260            224
             Securities....................................       2,334       1,809           4,682          3,719
             Interest and fees on loans....................       2,164       1,970           4,227          3,792
                                                                  -----       -----           -----          -----
                 Total interest income.....................       4,622       3,911           9,173          7,746
                                                                  -----       -----           -----          -----
         Interest expense:
             Savings deposits..............................  $      171          34             302             56
             NOW and money market deposits.................         289         274             614            502
             Time certificates issued in excess of $100,000         315         381             657            835
             Other time deposits...........................       1,113       1,259           2,247          2,506
             Borrowed funds................................         503         200             945            315
                                                                  -----       -----           -----          -----
                 Total interest expense....................       2,391       2,148           4,765          4,214
                                                                  -----       -----           -----          -----
                 Net interest income.......................       2,231       1,763           4,408          3,532

         Provision for loan losses.........................         150          90             300            180
                                                                  -----       -----           -----          -----
                 Net interest income after provision
                 for loan losses...........................       2,081       1,673           4,108          3,352
                                                                  -----       -----           -----          -----
         Other operating income:
             Service charges on deposit accounts...........  $      167          97             310            174
             Net gain on sale of debt and equity securities          88          13              88             13
             Mortgage banking operations...................         182           4             325              4
             Other.........................................         159          69             190            104
                                                                  -----       -----           -----          -----
                 Total other operating income..............         596         183             913            295

         Other operating expenses:
             Salaries and employee benefits................       1,002         672           1,941          1,245
             Occupancy expense.............................         145         111             280            194
             Premises and equipment expense................         175          94             349            170
             Other.........................................         594         493           1,168            948
                                                                  -----       -----           -----          -----
                 Total other operating expenses............       1,916       1,370           3,738          2,557

                 Income before provision for income taxes..         761         486           1,283          1,090

         Provision for income taxes........................         262         190             452            432
                                                                  -----       -----           -----          -----
                 Net income................................  $      499         296             831            658
                 Basic and diluted earnings per share......  $     0.28        0.17            0.47           0.37

         Weighted average shares outstanding...............   1,776,326    1,764,571      1,776,160      1,762,513
                                                              =========    =========      =========      =========

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


                                                         3

<PAGE>

<TABLE>
<CAPTION>

                                              LONG ISLAND FINANCIAL CORP.
                               Consolidated Statement of Changes in Stockholders' Equity
                                         For the Six Months Ended June 30, 1999
                                                      (Unaudited)
                                           (In thousands, except share data)


                                                                                            Accumulated
                                                                                               other
                                              Common                     Accumulated        comprehensive
                                              stock        Surplus         surplus          (loss)  income    Total
                                          ------------  ------------   --------------     ----------------    ------
<S>                                       <C>   <C>        <C>               <C>                 <C>          <C>
Balance at December 31, 1998............  $     18         20,126            1,659               65           21,868

Dividend reinvestment and stock
 purchase plan, issued 5,020 shares.....         -             59                -                -               59

Dividends declared on common
 stock ($.16 per common share)..........         -              -             (284)               -             (284)

Corporate reorganization costs..........         -              -             (115)               -             (115)

Comprehensive income: (1)
   Net income for the period............         -              -              831                -              831
    Other comprehensive income,
     net of tax:
     Unrealized depreciation in available-
       for-sale securities, net of
       reclassification adjustment (2)..         -              -               -            (1,896)          (1,896)
                                            ------         ------           ------           -------          -------
   Total comprehensive income (loss)                                                                          (1,065)

Balance at June 30, 1999................  $     18         20,185            2,091           (1,831)          20,463
                                            ======         ======           ======           =======          ======
<FN>
(1)    The Company's comprehensive income for the six months ended June 30, 1998, was $544,000.
(2)    Disclosure of reclassification amount:
                                                                                    June 30, 1999
       Comprehensive income items, net of tax                                       -------------
       Unrealized loss in available-for-sale securities,
         arising during the period..........................................        $  (1,844)
       Less: Reclassification adjustment for gains included in income.......               52
                                                                                       -------
       Net unrealized depreciation..........................................        $  (1,896)
                                                                                       =======
</FN>


See accompanying notes to unaudited consolidated financial statements.

</TABLE>







                                                           4

<PAGE>

<TABLE>
<CAPTION>

                                              LONG ISLAND FINANCIAL CORP.
                                          Consolidated Statements of Cash Flows
                                                      (Unaudited)
                                                     (In thousands)


                                                                               For the Six Months
                                                                                 Ended June 30,
                                                                             1999            1998
                                                                           ------------------------
<S>                                                                       <C>  <C>            <C>
Cash flows from operating activities:
       Net income....................................................     $    831            658
       Adjustments to reconcile net income to net cash (used in)
             provided by operating activities:
             Provision for possible loan losses......................          300            180
             Depreciation and amortization...........................          282            169
             Amortization of premiums, net
                 of discount accretion...............................         (122)            (2)
             Gain on sales of securities.............................          (88)           (13)
             Proceeds and gains from sales of loans held-for-
                 sale, net of originations...........................          451           (129)
             Net deferred loan origination fees......................           74             60
             Deferred income taxes...................................          (71)            59
             Changes in asset and liability accounts:
                 Accrued interest receivable.........................         (213)           140
                 Accrued expenses and other liabilities..............          260            (58)
                 Prepaid expenses and other assets...................       (5,499)          (164)
             Net cash (used in) provided by                                 -------         ------
                 operating activities................................       (3,795)           900
                                                                            -------         ------
       Cash flows from investing activities:
             Purchases of securities available-for-sale..............     (226,838)      (198,126)
             Proceeds from sales of securities available-for-sale....       12,777          4,773
             Proceeds from maturities of securities..................      211,195        181,350
             Principal repayments on securities......................        9,576         11,099
             Loan originations and principal
                 repayments on loans, net............................      (11,836)       (11,139)
             Purchase of premises and equipment......................         (505)          (610)
                                                                           --------       --------
                 Net cash used in investing activities...............       (5,631)       (12,653)
                                                                           --------       --------
       Cash flows from financing activities:
             Net decrease in demand deposit
                 accounts,  NOW accounts, money
                 market and savings accounts.........................      (23,962)       (28,530)
             Net decrease in certificates of deposit.................        2,535         (2,962)
             Payments for cash dividends.............................         (284)          (282)
             Increase in borrowings..................................       15,000         19,000
             Proceeds from shares issued under the
                 dividend reinvestment plan..........................           59            116
             Corporate reorganization costs..........................         (115)             -
                                                                           --------       --------
             Net cash used in financing activities...................       (6,767)       (12,658)
                                                                           --------       --------

             Net decrease in cash and cash equivalents...............      (16,193)       (24,411)

       Cash and cash equivalents at beginning of period..............       21,489         29,764
                                                                           --------       --------
       Cash and cash equivalents at end of period....................    $   5,296          5,353
                                                                           ========       ========
</TABLE>

(Continued)


                                                           5

<PAGE>
<TABLE>
<CAPTION>

                                              LONG ISLAND FINANCIAL CORP.
                                         Consolidated Statements of Cash Flows
                                                      (Unaudited)
                                                     (In thousands)



                                                                   For the Six Months
                                                                     Ended June 30,
                                                                    1999        1998
                                                                 ---------------------
        <S>                                                   <C>   <C>         <C>
        Supplemental disclosure of cash flow information
        ------------------------------------------------
        Cash paid during the period for:
              Interest                                        $     5,074       4,344
                                                                    =====       =====
              Income taxes                                    $         -         345
                                                                    =====       =====

</TABLE>


        See accompanying notes to unaudited consolidated financial statements.




































                                                           6

<PAGE>


                           LONG ISLAND FINANCIAL CORP.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION

The  accompanying   unaudited  consolidated  financial  statements  include  the
accounts of Long Island  Financial Corp.  (the  "Company") and its  wholly-owned
subsidiary,  Long Island Commercial Bank (the "Bank").  Significant intercompany
accounts and transactions have been eliminated in consolidation.

The unaudited  consolidated  financial  statements  included  herein reflect all
normal recurring adjustments which are, in the opinion of management,  necessary
for a fair  presentation of the results for the interim periods  presented.  The
results of operations for the six months ended June 30, 1999 are not necessarily
indicative  of the results of  operations  that may be  expected  for the entire
fiscal year.  Certain  information  and note  disclosures  normally  included in
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted  pursuant to the rules and regulations
of the Securities and Exchange Commission.  Certain  reclassifications have been
made to prior year amounts to conform to the current year presentation.

These unaudited  consolidated financial statements should be read in conjunction
with the audited consolidated  financial statements and notes thereto,  included
in the Company's 1998 Annual Report on Form 10-K.

2.       REORGANIZATION

At a special  meeting on  December  8, 1998,  the  stockholders  of Long  Island
Commercial  Bank approved a Plan of Acquisition  dated as of September 15, 1998,
which subsequently  became effective January 28, 1999, and as a result of which:
(i) the Bank became a wholly-owned  subsidiary of Long Island Financial Corp., a
Delaware  corporation;  and (ii) all of the  outstanding  shares  of the  Bank's
common stock were  converted,  subject to dissenter's  rights,  on a one-for-one
basis,  into  outstanding  shares of the common  stock of Long Island  Financial
Corp.  No  stockholder   asserted   dissenter's   rights.  This  transaction  is
hereinafter referred to as the "Reorganization."

The  Reorganization  created a bank holding  company  structure  which  provides
greater operating flexibility by allowing the Company to conduct a broader range
of business  activities  and permits  the Board of  Directors  of the Company to
determine  whether  to  conduct  such  activities  in the  Bank  or in  separate
subsidiaries of the Company.  Finally,  the reorganization will permit expansion
into a broader range of financial  services and other business  activities  that
are not currently permitted to the Bank as a New York state-chartered commercial
bank. Such  activities  include,  among others,  operating  non-bank  depository
institutions  or  engaging  in  financial  and  investment   advisory  services,
securities brokerage and management consulting  activities.  Costs to effect the
Reorganization amounting to $115,000 were charged against accumulated surplus.




                                                           7

<PAGE>


3.       RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  "Accounting  for Derivative
Instruments and Hedging  Activities".  SFAS No. 133  establishes  accounting and
reporting standards for derivative  instruments and for hedging  activities.  It
requires  that  an  entity   recognize  all  derivatives  as  either  assets  or
liabilities   in  the  statement  of  financial   condition  and  measure  those
instruments  at fair value.  The  accounting  for changes in the fair value of a
derivative  (that is,  gains and  losses)  depends  on the  intended  use of the
derivative and the resulting  designation.  SFAS No. 133 is effective for fiscal
years beginning  after June 15, 2000, and does not require  restatement of prior
periods.  Management of the Company believes the  implementation of SFAS No. 133
will not have a material impact on the Company's  financial condition or results
of operations.

4.       SECURITIES

The following table sets forth certain information  regarding amortized cost and
estimated fair values of the securities  held-to-maturity and available-for-sale
as of the dates indicated:
<TABLE>
<CAPTION>

                                                                     June 30, 1999          December 31, 1998
                                                                              Estimated                   Estimated
                                                               Amortized        fair        Amortized       fair
                                                                 cost           value         cost          value
                                                              -----------     ---------     ---------     ---------
                                                                                       (In thousands)

      <S>                                                  <C>  <C>           <C>           <C>             <C>
      Held-to-maturity, net:
      Mortgage-backed securities:
         CMO..........................................     $        489           489           664             665
                                                                =======       =======       =======         =======
      Available-for-sale:
      U.S. Government and Agency Obligations..........     $     83,558        81,155        78,994          78,980
      Mortgage-backed securities:
         GNMA.........................................           43,584        42,816        39,864          39,771
         FHLMC........................................            1,516         1,551         2,453           2,487
         FNMA.........................................            4,221         4,244         6,060           6,097
      Municipal obligations...........................            1,165         1,147        12,855          13,002
      Other debt securities...........................               167           165           199             199
                                                                -------       -------       -------         -------
      Total debt securities...........................          134,211       131,078       140,425         140,536

      Equity securities - FHLB stock..................             4,619         4,619         4,619           4,619
                                                                -------       -------       -------         -------
        Total securities available-for-sale...........     $    138,830       135,697       145,044         145,155
                                                                =======       =======       =======         =======
</TABLE>


                                                           8
<PAGE>

5.       LOANS RECEIVABLE, NET

Loans receivable, net consist of the following as of the dates indicated:
<TABLE>
<CAPTION>

                                                               June 30, 1999               December 31, 1998
                                                              ---------------             -------------------
                                                                         (Dollars in thousands)

         <S>                                           <C>  <C>        <C>              <C>            <C>
         Commercial and industrial loans               $    32,461     30.3  %         $   30,853      32.1  %
         Commercial real estate loans                       67,800     63.4                53,990      56.2
         Automobile loans                                    4,403      4.1                 8,262       8.6
         Consumer loans                                      1,300      1.2                 1,396       1.5
         Residential real estate loans held-for-sale         1,035      1.0                 1,486       1.6
                                                           -------    -----                ------     -----
                                                           106,999    100.0  %             95,987     100.0  %
         Less:
           Unearned income                             $       143                            362
           Deferred fees, net                                  484                            410
           Allowance for loan losses                         1,217                          1,071
                                                           -------                         ------
                                                           105,155                         94,144
                                                           =======                         ======
</TABLE>


6.       RECENT DEVELOPMENTS

On May 26,  1999,  the Board of  Directors  of the Company  declared a quarterly
dividend of eight cents ($0.08) per common share.  The dividend was paid on July
1, 1999, to shareholders' of record as of June 24, 1999.

On April 15,  1999,  the  Company  announced  the  commencement  of a program to
repurchase up to 10% of it's  outstanding  common stock.  No time limit has been
placed on the duration of the stock  repurchase  program.  Subject to applicable
securities laws, such purchases will be made at times and in amounts the Company
deems appropriate and may be discontinued at any time.  Repurchased  shares will
be held as treasury stock available for general corporate  purposes.  As of June
30, 1999, no shares had been repurchased by the Company.

















                                                           9
<PAGE>

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

General

Long Island Commercial Bank, the subsidiary of Long Island Financial Corp., is a
New York  state-chartered  commercial bank, founded in 1989, which is engaged in
commercial  banking in Islandia,  New York and the  surrounding  communities  in
Suffolk and Nassau  counties.  The Bank offers a broad range of  commercial  and
consumer banking services, including loans to and deposit accounts for small and
medium-sized   businesses,   professionals,   high  net  worth  individuals  and
consumers. The Bank is an independent local bank, emphasizing personal attention
and  responsiveness to the needs of its customers.  The Bank's senior management
has  substantial  banking  experience,  and senior  management  and the Board of
Directors  of the  Bank  have  extensive  commercial  and  personal  ties to the
communities in Nassau and Suffolk Counties, New York.

Financial Condition

The Company's total assets were $258.9 million as of June 30, 1999,  compared to
$266.5 million at December 31, 1998. The decline in cash and cash equivalents of
$16.2 million,  or 75.4%, was  attributable to the timing of seasonal  municipal
deposits  which were not on  deposit at June 30,  1999.  Loans  receivable,  net
increased $11.0 million, or 11.7%, to $105.2 million at June 30, 1999, despite a
$3.9 million  reduction in the automobile  loan  portfolio  during the six month
period  ended June 30,  1999.  The  decrease  in  securities  available-for-sale
reflects the sale of certain municipal  obligations  during the six month period
ended  June 30,  1999,  combined  with  principal  repayments  on the  Company's
mortgage- backed securities portfolio. Prepaid expenses and other assets grew by
$6.8 million primarily as a result of the purchase of bank owned life insurance,
covering the directors and executive  officers of the Bank. The purchase of this
insurance provides benefits to both the Bank and the covered employees.

Total deposits decreased $21.4 million, or 9.8%, from $217.9 million at December
31, 1998 to $196.4 million at June 30, 1999,  primarily reflecting a decrease in
NOW and money market deposits.  The decrease in NOW and money market deposits of
$32.9  million,  or 45.9%,  from $71.7  million at  December  31,  1998 to $38.8
million at June 30, 1999, is  attributable  to the timing of seasonal  municipal
deposits,  which were not on  deposit at June 30,  1999.  The  decrease  of $3.8
million,  or 10.3%,  in demand  deposits was also  attributable  to the seasonal
reduction in municipal  deposits.  The effects of those  declines were offset in
part by a $3.0 million increase in time deposits in excess of $100,000.  Savings
deposits increased by $12.7 million,  or 102.0%,  from December 31, 1998 to June
30,  1999,  as a result of new  products  offering  competitive  rates to higher
balance accounts while reducing the overall cost of funds.

Borrowed  funds  increased by $15.0  million,  or 62.5%,  from $24.0  million at
December 31, 1998 to $39.0  million at June 30, 1999,  as the Company  continued
its leveraging  strategy in the first six months of 1999.  Stockholders'  equity
amounted  to $20.5  million  at June 30,  1999,  compared  to $21.9  million  at
December  31,  1998.   Excluding  the  unrealized  loss  related  to  securities
available-for-sale,  stockholders'  equity  grew at a rate  of 2.3%  for the six
months ended June 30, 1999.


                                                           10
<PAGE>

Analysis of Net Interest Income

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

The  following  table sets forth certain  information  relating to the Company's
consolidated average balance sheets and its consolidated  statements of earnings
for the six months ended June 30, 1999, and 1998, and reflects the average yield
on interest-earning assets and average cost of interest-bearing  liabilities for
the periods  indicated.  Such yields and costs are derived by dividing income or
expense,  annualized,  by the  average  balance  of  interest-earning  assets or
interest-bearing  liabilities,  respectively.  Average balances are derived from
average daily balances.  Average balances and yields include  non-accrual loans,
as they are not material.







































                                                           11
<PAGE>

<TABLE>
<CAPTION>

                                                                         Three Months Ended June 30,
                                                              1999                                     1998
                                                              ----       Average                       ----        Average
                                                Average                  Yield /          Average                  Yield /
                                                Balance     Interest      Cost            Balance    Interest       Cost
                                               --------     --------    --------          -------    --------      -------
                                                                              (Dollars in thousands)

<S>                                          <C>   <C>       <C>   <C>       <C>          <C><C>      <C>  <C>
Interest earning assets:
       Federal funds sold and
         interest-earning deposits.........  $      10,417   $       124     4.76 %       $    9,687   $     132      5.45 %
       Securities held-to-maturity and
         available-for-sale, net (5).......        150,069         2,307     6.15 %          105,705       1,719      6.50 %
       Municipal obligations (4)...........          2,578            40     6.21 %            8,176         135      6.60 %
       Loans receivable, net (1)...........        100,818         2,164     8.59 %           86,277       1,970      9.13 %
                                                  --------         -----                     -------       -----
         Total interest-earning assets.....        263,882         4,635     7.03 %          209,845       3,956      7.54 %
Non-interest-earning assets................         21,628         -----                      10,990       -----
                                                  --------                                   -------
Total assets...............................  $     285,510                                $  220,835
                                                  ========                                   =======

Interest-bearing liabilities:
       Savings deposits....................  $      21,737   $       171     3.15 %       $    4,614   $      34      2.95 %
       NOW and money market deposits.......         60,395           289     1.91 %           42,292         274      2.59 %
       Certificates of deposit.............        104,567         1,428     5.46 %          111,091       1,640      5.91 %
                                                   -------         -----                     -------       -----
         Total interest-bearing deposits...        186,699         1,888     4.05 %          157,997       1,948      4.93 %
       Borrowed funds......................         41,195           503     4.88 %           14,456         200      5.53 %
                                                   -------         -----                     -------       -----
         Total interest-bearing liabilities        227,894         2,391     4.20 %          172,453       2,148      4.98 %
Other non-interest bearing liabilities.....         36,507         -----                      26,722       -----
                                                   -------                                   -------
Total liabilities..........................        264,401                                   199,175
Stockholders' Equity.......................         21,109                                    21,660
Total liabilities and stockholders'                -------                                   -------
       equity..............................  $     285,510                                $  220,835
                                                   =======                                   =======
Net interest income/
     interest rate spread (2) (4)..........                  $     2,244     2.83 %                    $   1,808      2.56 %
                                                                   =====     ====                          =====      ====
Net interest margin (3)....................                                  3.40 %                                   3.45 %
                                                                             ====                                     ====
Ratio of interest-earning assets to
       interest-bearing liabilities........                                  1.16                                     1.22
                                                                             ====                                     ====

<FN>
(1)    Amount is net of residential real estate loans held-for-sale, deferred loan fees and allowance for loan losses and includes
       non-performing loans.
(2)    Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-
       bearing liabilities.
(3)    Net interest margin represents net interest income divided by average interest-earning assets.
(4)    Interest income and yields are presented on a fully-taxable equivalent basis using the Federal statutory income tax rate
       of 34%.
(5)    Securities held-to-maturity and available-for-sale, net exclude municipal obligations.
</FN>
</TABLE>







                                                             12
<PAGE>

<TABLE>
<CAPTION>
                                                                         Six Months Ended June 30,
                                                              1999                                     1998
                                                             ------     Average                       ------      Average
                                                Average                  Yield /          Average                  Yield /
                                                Balance     Interest      Cost            Balance    Interest       Cost
                                               ---------    --------   ---------          -------    --------    ---------

<S>                                          <C>   <C>       <C>   <C>       <C>          <C>          <C>            <C>
Interest earning assets:
       Federal funds sold and
         interest-earning deposits.........  $      11,274   $       264     4.68 %       $    8,624   $     235      5.45 %
       Securities held-to-maturity and
         available-for-sale, net (5).......        147,695         4,516     6.12            110,099       3,627      6.59
       Municipal obligations (4)...........          7,688           240     6.24              4,179         138      6.60
       Loans receivable, net (1)...........         98,861         4,227     8.55             83,074       3,792      9.13
                                                   -------         -----                     -------       -----
         Total interest-earning assets.....        265,518         9,247     6.97            205,976       7,792      7.57
Non-interest-earning assets................         19,354         -----                      10,925       -----
                                                   -------                                   -------
Total assets...............................  $     284,872                                $  216,901
                                                   =======                                   =======

Interest-bearing liabilities:
       Savings deposits....................  $      19,278   $       302     3.13         $    4,053   $      56      2.76
       NOW and money market deposits.......         64,234           614     1.91             41,112         502      2.44
       Certificates of deposit.............        105,522         2,904     5.50            112,956       3,341      5.92
                                                   -------         -----                     -------       -----
         Total interest-bearing deposits...        189,034         3,820     4.04            158,121       3,899      4.93
       Borrowed funds......................         38,840           945     4.87             11,432         315      5.51
                                                   -------         -----                     -------       -----
         Total interest-bearing liabilities        227,874         4,765     4.18 %          169,553       4,214      4.97
Other non-interest bearing liabilities.....         35,569         -----                      25,773       -----
                                                   -------                                   -------
Total liabilities..........................        263,443                                   195,326
Stockholders' Equity.......................         21,429                                    21,575
Total liabilities and stockholders'                -------                                   -------
       equity..............................  $     284,872                                $  216,901
                                                   =======                                   =======
Net interest income/
     interest rate spread (2) (4)..........                  $     4,482     2.79 %                    $   3,578      2.60 %
                                                                   =====     ====                          =====      ====
Net interest margin (3)....................                                  3.38 %                                   3.47 %
                                                                             ====                                     ====
Ratio of interest-earning assets to
       interest-bearing liabilities........                                  1.17                                     1.21
                                                                             ====                                     ====

<FN>
(1)    Amount is net of residential real estate loans held-for-sale, deferred loan fees and allowance for loan losses and includes
       non-performing loans.
(2)    Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-
       bearing liabilities.
(3)    Net interest margin represents net interest income divided by average interest-earning assets.
(4)    Interest income and yields are presented on a fully-taxable equivalent basis using the Federal statutory income tax rate
       of 34%.
(5)    Securities held-to-maturity and available-for-sale, net exclude municipal obligations.
</FN>
</TABLE>








                                                             13
<PAGE>

Comparison of Operating Results for the Three Months Ended
June 30, 1999 and 1998

General

Net income increased by $203,000, or 68.6%, from $296,000 for the 1998 period to
$499,000 for the three months ended June 30, 1999. The increase was attributable
primarily to increases in other operating income of $413,000, or 225.7%, and net
interest  income of  $468,000,  or 26.5%,  offset in part by  increases in other
operating expenses of $546,000,  or 39.9%. The Bank's effective tax rate for the
three  months  ended June 30,  1999,  was 34.4%  compared  to 39.1% for the 1998
period.

Interest Income

Interest income, on a fully-taxable  equivalent basis,  increased  $679,000,  or
17.2 %, from $4.0  million for the three  months  ended June 30,  1998,  to $4.6
million for the three months ended June 30, 1999. The increase was  attributable
to an increase in the average balance of total interest-earning  assets of $54.0
million, or 25.8%, from $209.8 million for the three months ended June 30, 1998,
to $263.9 million for the three months ended June 30, 1999. The average  balance
of securities  held-to-maturity  and  available-  for-sale,  net,  (exclusive of
municipal obligations) increased $44.4 million, or 42.0%, with a decrease in the
average  yield from 6.50% for the three months ended June 30, 1998, to 6.15% for
the comparable  period in 1999. Due to the formation and related tax benefits of
an operating  subsidiary of the Bank in the second quarter 1999, the benefits of
holding  municipal  obligations  diminished.  As a result, in April of 1999, the
Bank sold  approximately  $11.8 million of municipal  obligations.  The proceeds
from the sale were  reinvested in higher  earning  assets,  primarily bank owned
life insurance and other available-for-sale  securities.  The average balance of
loans receivable,  net increased $14.5 million,  or 16.9% from $86.3 million for
the three months ended June 30, 1998, to $100.8 million for the 1999 period. The
average yield on loans receivable, net, decreased 54 basis points from 9.13% for
the three  months  ended June 30, 1998,  to 8.59% for the  comparable  period in
1999. The decrease  reflects the growth in the Company's  commercial real estate
portfolio  at  lower  market  interest  rates  and  as  a  result  of  increased
competitive pricing in 1999.

Interest Expense

Interest expense increased  $243,000,  or 11.3%, from $2.1 million for the three
months ended June 30, 1998,  to $2.4 million for the three months ended June 30,
1999,  resulting primarily from a $55.4 million or 32.1% increase in the average
balance  of total  interest-bearing  liabilities  for the  period,  from  $172.5
million for the  comparable  period to $227.9 million for the three months ended
June 30,  1999.  The growth  reflected  an increase  in the  average  balance of
interest-bearing  deposits of $28.7 million, or 18.2%,  coupled with an increase
in the  average  balance of  borrowed  funds of $26.7  million,  or 185.0%.  The
average rate paid on interest-bearing deposits decreased 88 basis points for the
three month period ended June 30, 1999,  to 4.05% when  compared  with the 4.93%
rate paid for the 1998 period.  The  decrease  reflects the growth in lower cost
deposits as a result of increased sales efforts in late 1998 and early 1999. The
average balance of savings deposits  increased by $17.1 million,  or 371.1%, and
the average  balance of NOW and money  market  deposits  has  increased by $18.1
million,  or 42.8% from period to period. The increases reflect the introduction
of new deposit products and services, as well as an increased emphasis on sales

                                                            14
<PAGE>

throughout  the  Company.  The average  balance of  certificates  of deposit has
decreased by $6.5 million as the Company continues to focus on reducing its cost
of funds.  The average cost of borrowed funds decreased 65 basis points to 4.88%
for the three months ended June 30, 1999,  from 5.53% for the comparable  period
in 1998, due to lower market interest rates.

Net Interest Income

Net interest income on a fully-taxable  equivalent  basis increased by $436,000,
or 24.1%,  from $1.8 million for the three  months ended June 30, 1998,  to $2.2
million for the three  months  ended June 30,  1999.  The average  cost of total
interest-bearing  liabilities for the period  decreased 78 basis points to 4.20%
in 1999,  from  4.98% in 1998.  The  average  yield on  interest-earning  assets
decreased 51 basis points to 7.03% in 1999, from 7.54% in 1998. The net interest
rate spread increased by 27 basis points from 2.56% in 1998, to 2.83% in 1999.

Provision for Loan Losses

The Company's  provision for loan losses was $150,000 for the three months ended
June 30, 1999,  compared to $90,000 for the same period in 1998.  This  increase
generally reflects the growth within the loan portfolio,  the average balance of
which  increased by $14.5  million,  or 16.8%,  to $100.8  million for the three
months ended June 30, 1999.

Other Operating Income

Other operating income increased $413,000,  or 225.7%, to $596,000 for the three
months ended June 30, 1999, compared to $183,000 for the three months ended June
30, 1998. The increase was primarily  attributable to the  establishment  of the
Company's residential mortgage department in May 1998, and fee income associated
with the  origination and sale of residential  mortgages.  Such fees amounted to
approximately  $182,000 for the three  months ended June 30, 1999.  In addition,
service charges on deposits accounts increased by $70,000, or 72.2%,  reflecting
the  growth in the  Company's  depositor  base and an  overall  increase  in the
Company's  fee  schedule.  In April  1999,  the  Company  sold $12.8  million in
securities  with a net gain on sale of securities  in the amount of $88,000,  an
increase of $75,000 over the prior year period.

Other Operating Expense

Other operating expenses increased $546,000, or 39.9%, from $1.4 million for the
three  months  ended June 30,  1998,  to $1.9 million for the three months ended
June 30, 1999.  Salaries and employee benefits increased by $330,000,  or 49.1%,
to $1.0 million for the three months ended June 30, 1999, reflecting increase in
staff  in  connection  with  the  Company's  branch  expansion,   opening  of  a
residential   mortgage   department  ,  continued   internal  growth,   and  the
strengthening of the Company's  middle-management to support the planned growth.
The number of full-time  equivalent employees increased from 59 at June 30, 1998
to 73, or 23.7% at June 30, 1999.  Occupancy  expense for the three months ended
June 30,  1999,  was  $145,000,  compared to $111,000  for the 1998  period,  an
increase of $34,000,  or 30.6%,  reflecting the branch expansion and main office
expansion to support operations growth. The branch expansion also contributed to
growth in other categories of other operating expenses.


                                                          15
<PAGE>

Income Taxes

Total income tax expense  increased  $72,000,  or 37.9%,  from  $190,000 for the
three months  ended June 30,  1998,  to $262,000 for the three months ended June
30, 1999. The effective tax rate  decreased  from 39.1% for the 1998 period,  to
34.4%  for the  1999  period,  and is  attributable  to the  combination  of the
municipal  obligations portfolio and the related tax benefits of a subsidiary of
the Bank.



Comparison of Operating Results for the Six Months Ended June 30, 1999 and 1998

General

Net income for the six months  ended June 30, 1999,  increased  by $173,000,  or
26.3%,  to $831,000  from  $658,000 for the  corresponding  period in 1998.  The
increase was  attributable to an increase in other operating income of $618,000,
or 209.5%,  and net  interest  income of $876,000,  or 24.8%,  offset in part by
increases in other  operating  expenses of $1.2  million,  or 46.2%.  The Bank's
effective tax rate for the six months ended June 30, 1999, was 35.2% compared to
39.6% for the 1998 period.

Interest Income

Interest income, on a fully-taxable equivalent basis, increased $1.5 million, or
18.7%, from $7.8 million for the six months ended June 30, 1998, to $9.3 million
for the six months ended June 30, 1999.  This  increase was  attributable  to an
increase  in the  average  balance  of total  interest-earning  assets  of $59.5
million,  or 28.9%,  from $206.0 million for the six months ended June 30, 1998,
to $265.5 million for the six months ended June 30, 1999. The average balance of
securities   held-to-maturity   and  available-for-  sale,  net,  (exclusive  of
municipal  obligations)  increased  $37.6 million,  or 34.1%,  in the six months
ended June 30, 1999, from the six months ended June 30, 1998, with a decrease in
the average  yield from 6.59% for the six months ended June 30,  1998,  to 6.12%
for the 1999  period.  Due to the  formation  and  related  tax  benefits  of an
operating  subsidiary of the Bank in the second  quarter  1999,  the benefits of
holding  municipal  obligations  diminished.  As a result, in April of 1999, the
Bank sold  approximately  $11.8 million of municipal  obligations.  The proceeds
from the sale were  reinvested in higher  earning  assets,  primarily bank owned
life insurance and other available-for-sale  securities.  The average balance of
loans receivable,  net increased $15.8 million,  or 19.0% from $83.1 million for
the six months  ended June 30,  1998,  compared  to $98.9  million  for the same
period in 1999.  The average yield on loans  receivable,  net decreased 58 basis
points  from 9.13% for the six  months  ended  June 30,  1998,  to 8.55% for the
comparable  period in 1999. This decrease  reflects the Company's  growth in the
commercial  real estate  portfolio at lower market interest rates as a result of
increased competitive pricing in 1999.



                                                          16
<PAGE>

Interest Expense

Interest expense  increased  $551,000,  or 13.1%,  from $4.2 million for the six
months  ended June 30,  1998,  to $4.8 million for the six months ended June 30,
1999.  This was  attributable  to an increase  in the  average  balance of total
interest-bearing  liabilities  for the  period of $58.3  million,  or 34.4%,  to
$227.9  million for the six months ended June 30, 1999,  from $169.6 million for
the  comparable  1998  period.  The growth  reflected an increase in the average
balance of interest-bearing deposits of $30.9 million, or 19.6%, coupled with an
increase in the average  balance of borrowed funds of $27.4 million,  or 239.7%.
The average rate paid on interest-bearing deposits decreased 89 basis points for
the six month period ended June 30,  1999,  to 4.04% when  compared to the 4.93%
rate paid for the 1998 period.  The  decrease  reflects the growth in lower cost
deposits  as a result of  increased  sales  efforts in late 1998 and early 1999,
from the six months  ended June 30,  1998,  to the current  period.  The average
balance of savings  deposits  increased  by $15.2  million,  or 375.6%,  and the
average balance of NOW and money market deposits increased by $23.1 million,  or
56.2%.  The  increases  reflect the  introduction  of new deposit  products  and
services,  as well as an increased emphasis on sales throughout the Company.  In
addition,  the average  balance of  certificates  of deposit  decreased  by $7.4
million as the  Company  continues  to focus on reducing  the cost of funds.  In
addition,  the average cost of borrowed  funds also decreased 64 basis points to
4.87% for the six months  ended  June 30,  1999,  from 5.51% for the  comparable
period in 1998, due to increased  borrowings  throughout 1998 and 1999, at lower
market rates.

Net Interest Income

Net interest income on a fully-taxable  equivalent  basis increased by $904,000,
or 25.3%,  from $3.6  million for the six months  ended June 30,  1998,  to $4.5
million  for the six  months  ended June 30,  1999.  The  average  cost of total
interest-bearing  liabilities for the period  decreased 79 basis points to 4.18%
in 1999,  from  4.97% in 1998.  The  average  yield on  interest-earning  assets
decreased 60 basis points to 6.97% in 1999, from 7.57% in 1998. The net interest
rate spread increased by 19 basis points from 2.60% in 1998, to 2.79% in 1999.

Provision for Loan Losses

The  Company's  provision  for loan losses was $300,000 for the six months ended
June 30, 1999, compared to $180,000 for the 1998 period. This increase generally
reflects  the growth  within the loan  portfolio,  the average  balance of which
increased by $15.8 million,  or 19.0%, to $98.9 million for the six months ended
June 30, 1999.  Management of the Company assesses the adequacy of the allowance
for loan  losses  based  on  evaluating  known  and  inherent  risks in the loan
portfolio and upon management's  continuing  analysis of the factors  underlying
the quality of the loan  portfolio.  While  management  believes that,  based on
information  currently  available,  the  Company's  allowance for loan losses is
sufficient  to cover  losses  inherent in its loan  portfolio  at this time,  no
assurances  can be given that the  Company's  level of allowance for loan losses
will be sufficient  to cover future loan losses  incurred by the Company or that
future  adjustments  to the  allowance  for loan losses will not be necessary if
economic and other conditions differ  substantially  from the economic and other
conditions  used by  management  to determine the current level of the allowance
for loan losses.  Management  may in the future  increase its level of allowance
for loan losses as a percentage of total loans and non- performing  loans in the
event it increases the level of commercial real estate, commercial, construction
or consumer  lending as a percentage of its total loan  portfolio.  In addition,
various regulatory  agencies,  as an integral part of their examination process,
periodically review the Company's allowance for loan losses.
                                                          17
<PAGE>


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


                                                                  June 30, 1999            December 31, 1998
                                                                 ---------------------------------------------
                                                                               (In thousands)

<S>                                                           <C>        <C>    <C>           <C>       <C>
Non-accrual loans:
         Commercial and industrial loans..................    $           273                 366
         Automobile loans.................................                 35                  37
         Consumer loans...................................                 80                 108
                                                                          ---                 ---
              Total non-accrual loans.....................                388                 511

         Loans contractually past due 90 days or
         more, other than non-accruing  (2)...............                  -                   -
                                                                          ---                 ---
              Total non-performing loans..................     $          388                 511
                                                                          ===                 ===

Allowance for possible loan losses as a percentage
         of loans  (1)....................................                1.16 %             1.12 %
Allowance for possible loan losses as a percentage
         of total non-performing loans....................               13.66 %           209.59 %
Non-performing loans as a percentage of loans  (1)........                 .37 %              .54 %


<FN>
(1)    Loans include loans receivable, net excluding the allowance for possible loan losses.
(2)    Excludes $378,000 of loans, at December 31, 1998, which have matured, however, are current with respect to scheduled
       periodic principal and/or interest payments.  The Company is in the process of renewing these obligations and/or awaiting
       anticipated repayment.
</FN>
</TABLE>


Other Operating Income

Other operating income increased  $618,000,  or 209.5%,  to $913,000 for the six
months ended June 30,  1999,  compared to $295,000 for the six months ended June
30, 1998. The increase was primarily  attributable to the  establishment  of the
Company's   residential  mortgage  department  in  May,  1998,  and  fee  income
associated  with the origination  and sale of residential  mortgages.  Such fees
amounted to  approximately  $325,000 for the six months ended June 30, 1999.  In
addition,  service charges on deposit accounts increased by $136,000,  or 78.2%,
reflecting the growth in the Company's depositor base and an overall increase in
the Company's fee schedule.




                                                          18
<PAGE>

Other Operating Expense

Other operating expenses increased $1.2 million, or 46.2%, in the current period
from $2.6 million for the six months ended June 30, 1998.  Salaries and employee
benefits  increased  by $696,000,  or 55.9%,  to $1.9 million for the six months
ended June 30, 1999, reflecting a 23.7% increase in staff in connection with the
Company's  branch  expansion,  opening  of a  residential  mortgage  department,
continued   internal   growth,   and   the   strengthening   of  the   Company's
middle-management  to support the planned growth.  Occupancy expense for the six
months  ended June 30,  1999,  was  $280,000,  compared to $194,000 for the 1998
period,  an increase of $86,000,  or 44.3%,  reflecting the branch expansion and
main office expansion to support operations growth.

Income Taxes

Total income tax expense increased  $20,000,  or 4.6%, from $432,000 for the six
months ended June 30, 1998,  to $452,000 for the six months ended June 30, 1999.
The effective tax rate  decreased  from 39.6% for the 1998 period,  to 35.2% for
the  1999  period,  and is  attributable  to the  combination  of the  municipal
obligations portfolio and the related tax benefits of a subsidiary of the Bank.

Liquidity

Liquidity management for the Company requires that funds be available to pay all
deposit  withdrawal and maturing  financial  obligations and meet credit funding
requirements  promptly and fully in accordance with their terms. For most banks,
including the Bank, maturing assets provided only a limited portion of the funds
required to pay maturing  liabilities  over a very short time frame. The balance
of the funds  required  is  provided  by liquid  assets and the  acquisition  of
additional  liabilities,  making  liability  management  integral  to  liquidity
management in the short term.

The primary  investing  activities of the Company are the purchase of securities
available-for-sale  and the origination of loans.  During each of the six months
ended June 30, 1999,  and 1998, the Company's  purchases of securities  were all
classified  available-for-sale  and totaled $226.8  million and $198.1  million,
respectively.  Loan originations,  net of principal repayments on loans, totaled
$11.8  million and $11.1  million,  for the six months ended June 30, 1999,  and
1998,  respectively.  Those  activities were funded  primarily by borrowings and
principal repayments and maturities on securities.

The Company maintains levels of liquidity that it considers adequate to meet its
current  needs.  The  Company's  principal  sources  of  cash  include  incoming
deposits, the repayment of loans and conversion of investment  securities.  When
cash  requirements  increase  faster  than  cash is  generated,  either  through
increased loan demand or withdrawal of deposited  funds, the Company can arrange
for the sale of loans and liquidate available-for-sale securities and access its
lines of credit,  totaling $3.5 million with unaffiliated financial institutions
which enable it to borrow federal funds on an unsecured basis. In addition,  the
Company has  available  lines of credit  with the Federal  Home Loan Bank of New
York (FHLB)  equal to 8.3% of the  Company's  assets,  which enable it to borrow
funds on a secured  basis.  The Company  could also engage in other  borrowings,
including reverse repurchase agreements.



                                                          19
<PAGE>

At June 30, 1999, the Company's  borrowings  consisted of  convertible  advances
from the FHLB. The  convertible  feature of these advances allows the FHLB, at a
specified  call date and quarterly  thereafter,  to convert these  advances into
replacement  funding  for the  same or  lesser  principal  amount,  based on any
advance then  offered by the FHLB,  at then current  market  rates.  If the FHLB
elects to convert these advances, the Bank may repay any portion of the advances
without   penalty.   These   convertible   advances   are   secured  by  various
mortgage-backed  and callable agency securities.  At June 30, 1999,  convertible
advances outstanding were as follows:

                        Interest               Call              Contractual
          Amount          Rate                 Date               Maturity
       -----------      --------            ----------           -----------
       $14,000,000        5.49%             02/19/2003           02/19/2008
       $10,000,000        4.24%             10/08/2000           10/08/2008
       $15,000,000        4.59%             01/21/2002           01/21/2009

Management  of the Company has set minimum  liquidity  level of 10% as a target.
The  Company's  average  liquid  assets (cash and due from banks,  federal funds
sold, interest earning deposits with other financial institutions and investment
securities  available-for-sale,  less  securities  pledged as  collateral)  as a
percentage of average assets of the Company during the six months ended June 30,
1999, was 24.7%.  The Company's  strategic plan is to build its core business by
generating and maintaining  banking  relationships  with small and  medium-sized
privately owned  businesses,  professional  firms and high net worth individuals
within its market area.

Capital Resources

The Bank is subject to the risk based  capital  guidelines  administered  by the
banking  regulatory  agencies.  The  guidelines  currently  require all banks to
maintain  a minimum  ratio of total risk  based  capital to total risk  weighted
assets of 8%, including a minimum ratio of Tier 1 capital to total risk weighted
assets of 4% and a Tier 1 capital to average  adjusted  assets of 4%. Failure to
meet minimum capital  requirements can initiate certain mandatory,  and possibly
additional discretionary actions by regulators,  that, if undertaken, could have
a direct material effect on the Bank's financial statements.  As of December 31,
1998,  the  most  recent   notification  from  the  federal  banking  regulators
categorized  the Bank as well  capitalized  under the  regulatory  framework for
prompt corrective action.

In  accordance  with the  requirements  of FDIC and the New York  State  Banking
Department, the Bank must meet certain measures of capital adequacy with respect
to leverage and risk-based capital. As of June 30, 1999, the Bank exceeded those
requirements  with a leverage  capital ratio,  and risk-based  capital ratio and
total-risk based capital ratio of 7.81%, 16.32% and 17.21%, respectively.

Year 2000

The Company has initiated a program,  consistent with  guidelines  issued by the
Federal  Financial  Institutions  Examination  Council  (FFIEC),  to prepare the
Company's  computer  systems and software  applications  for the year 2000.  The
Company uses purchased software for all of its internal  transaction  processing
applications;  therefore,  no significant  internal  programming is necessary to
prepare these systems to handle  transactions  in the year 2000. The majority of
the Company's  efforts in preparation for year 2000 processing relate to testing
purchased and outsourced processing systems, as well as updating databases.

                                                     20
<PAGE>



The Company's primary application,  which handles processing of loans, deposits,
and general ledger,  has been certified as year 2000 compliant by the vendor. As
of  December  31,  1998,  the  Company has  completed  extensive  testing of all
critical internal  applications and the test results have not indicated any year
2000  related  issues.  As part of our  ongoing  efforts to assess and  minimize
potential  risks  associated  with the year 2000,  management  has  completed an
evaluation  of its  customer  base  and is  continuing  its  efforts  with  such
customers  to  discuss  the status of their year 2000  readiness.  Through  this
evaluation  process,  the Company is aware of no issues that would significantly
affects the Company's  ability to conduct business as usual during and after the
century date change.

Despite having completed  reasonable  testing and  certification of its internal
computer  systems,  as of June 30, 1999,  the Company had developed its business
resumption plan  considering the potential impact of disruptions in all critical
and non-critical applications from within and from third-party business partners
and infrastructure  providers.  Testing of the business resumption plan has been
completed to verify the proper processing of transactions on the backup system.

Monitoring and managing the year 2000 projects results in additional  direct and
indirect  costs to the  Company.  Direct  costs  include  potential  charges  by
third-party  software  vendors for product  enhancements  and costs  involved in
testing  software  products  for  the  year  2000  compliance.   Indirect  costs
principally  consist of the time  devoted by existing  employees  in  monitoring
software vendor progress, testing enhanced software products and the development
of the business  resumption  plan.  The Company does not believe that such costs
will have a material  effect on results of operations.  Both direct and indirect
costs of addressing the year 2000 issue will be charged to earnings as incurred.


Item 3.     Quantitative and Qualitative Disclosures About Market Risk
-------     ----------------------------------------------------------

The principal objective of the Company's interest rate management is to evaluate
the interest rate risk inherent in certain balance sheet accounts, determine the
level of risk  appropriate  given the  Company's  business  strategy,  operating
environment,  capital and liquidity requirements and performance objectives, and
manage the risk  consistent  with the Board of  Directors  approved  guidelines.
Through such  management,  the Company seeks to reduce the  vulnerability  of it
operations to changes in interest  rates.  The Board has directed the Investment
Committee to review the  Company's  interest  rate risk  position on a quarterly
basis.

Funds  management  is the  process by which the Company  seeks to  maximize  the
profit  potential  which is derived from the spread  between the rates earned on
interest-earning  assets  and the  rates  paid on  interest-bearing  liabilities
through  the  management  of  various  balance  sheet  components.  It  involves
virtually every aspect of the Company's management and decision-making  process.
Accordingly,  the Company's  results of operations  and financial  condition are
largely  dependent on the movements in the market interest rates and its ability
to manage its assets and liabilities in response to such movements.
                                                          21
<PAGE>

At June 30, 1999,  78.3% of the Company's  gross loans had  adjustable  interest
rates and its loan portfolio had an average  weighted  maturity of 7.2 years. At
such date, $26.0 million,  or 19.1%, of the Company's  securities had adjustable
interest rates, and its securities  portfolio had a weighted average maturity of
6.2 years.  At June 30, 1999, the Company had $56.9 million of  certificates  of
deposit with  maturities  of one year or less and $22.0 million of deposits over
$100,000,  which tend to be less  stable  sources of funding as compared to core
deposits and represented  38.9% of the Company's  interest-bearing  liabilities.
Due to the  Company's  level  of  shorter  term  certificates  of  deposit,  the
Company's  cost of  funds  may  increase  at a  greater  rate in a  rising  rate
environment than if it had a greater amount of core deposits which, in turn, may
adversely  affect net interest income and net income.  Accordingly,  in a rising
interest rate environment, the Company's interest-bearing liabilities may adjust
upwardly  more rapidly than the yield on its  adjustable-rate  loans,  adversely
affecting the Company's  net interest rate spread,  net interest  income and net
income.

The Company's  interest rate sensitivity is monitored by management  through the
use of a quarterly  interest  rate risk analysis  model which  evaluates (i) the
potential  change in the net interest  income over the  succeeding  four quarter
period and (ii) the  potential  change in the fair market value of equity of the
Company  ("Net  Economic   Value  of  Equity"),   which  would  result  from  an
instantaneous  and sustained  interest rate change of zero and plus or minus 200
basis point increments.

At June 30,  1999,  the effect of  instantaneous  and  sustained  interest  rate
changes on the  Company's net interest  income and Net Economic  Value of Equity
are as follows:
<TABLE>
<CAPTION>

                Change in
              Interest Rates               Potential Change in                Potential Change in
              in Basis Points              Net Interest Income           Net Economic Value of Equity
             ----------------            ------------------------        -----------------------------
                                         $ Change      % Change           $ Change        % Change
             -----------------------------------------------------------------------------------------
                                                  (Dollars in thousands)
                 <S>                    <C>              <C>            <C>               <C>

                   200                  $    583           5.75 %       $  (9,041)       (41.30) %
                   100                       257           2.54            (3,143)       (14.36)
                 Static                        -              -                 -             -
                  (100)                     (667)         (6.58)            6,891         31.48
                  (200)                   (1,862)        (18.37)           10,910        49.83


</TABLE>














                                                          22
<PAGE>

                  PART II - OTHER INFORMATION


Item 1.           Legal Proceedings
-------           ------------------
                  Not applicable.

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

Item 3.           Defaults Upon Senior Securities
-------           -------------------------------
                  Not applicable.

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

The Company's Annual Meeting of Stockholders was held on April 21, 1999, and the
following individuals were elected as Directors for a term of 3 years each:
<TABLE>
<CAPTION>

                                        Votes           Votes                        Broker
                                         For          Withheld      Abstentions     Non-Votes
                                      ---------       --------      -----------     ---------
<S>                                   <C>              <C>               <C>            <C>
     Harvey Auerbach                  1,363,148        119,250           -              -
     Perry B. Duryea, Jr.             1,363,398        119,000           -              -
     Frank J. Esposito                1,363,348        119,050           -              -
     Roy M. Kern, Sr.                 1,363,598        118,800           -              -
     Douglas C. Manditch              1,363,598        118,800           -              -
</TABLE>

The terms of the following Directors continued after the Annual Meeting:

John L. Ciarelli,  Donald Del Duca, Waldemar  Fernandez,  Gordon Lenz, Walter J.
Mack, Werner Neuburger,  Thomas Roberts III, Alfred Romito, Sally Ann Slacke and
John C. Tsunis.

Item 5.           Other Information
-------           -----------------
                  Not applicable.

Item 6.           Exhibits and Reports on Form 8-K
-------           --------------------------------
         (a)      Exhibits
                  11.0   Statement Re: Computation of Per Share Earnings
                  27.0   Financial Data Schedule


                                                          23
<PAGE>

                                   SIGNATURES


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



                           LONG ISLAND FINANCIAL CORP.
                                  (Registrant)



Date:    August 13, 1999              By:    /s/ Douglas C. Manditch
                                          -------------------------------------
                                          Douglas C. Manditch
                                          President and Chief Executive Officer


Date:    August 13, 1999            By:      /s/ Thomas Buonaiuto
                                          -------------------------------------
                                          Thomas Buonaiuto
                                          Vice President and Treasurer





                                                          24
<PAGE>



Exhibit 11.0      Computation Of Per Share Earnings

Long Island Financial Corp.
Statement Re: Computation of Per Share Earnings
(In thousands, except for share amounts)

<TABLE>
<CAPTION>
                                                        Three Months Ended                  Six Months Ended
                                                  June 30, 1999     June 30, 1998     June 30, 1999    June 30, 1998
                                                  -------------     -------------     -------------    -------------
<S>                                            <C>                 <C>               <C>                  <C>
Net income...................................  $      499                 296              831                  658

Weighted average shares outstanding..........   1,776,326           1,764,571        1,776,160            1,762,513

Basic and diluted earnings per share.........  $     0.28                0.17             0.47                 0.37
                                                     ====                ====             ====                 ====

</TABLE>