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 September 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)

                                    (631) 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 1,746,326  shares of Common Stock  outstanding as of November
8, 1999.






<PAGE>



                                    Form 10-Q
                           LONG ISLAND FINANCIAL CORP.

                                      INDEX

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

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

ITEM 3.
 Quantitative and Qualitative Disclosures About Market Risk             21

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 -      FINANCIAL INFORMATION

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

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


                                                                       September 30,    December 31,
                                                                           1999              1998
                                                                       -------------    ------------
                                                                        (Unaudited)
<S>                                                                 <C>                  <C>
Assets:
Cash and due from banks..........................................   $      6,287           13,170
Interest earning deposits........................................            188              269
Federal funds sold...............................................              -            8,050
                                                                           -----           ------
              Total cash and cash equivalents....................          6,475           21,489

Securities held-to-maturity, net
 (estimated fair value of $408 and $665, respectively)...........            409              664
Securities available-for-sale....................................        132,008          145,155
Loans receivable, net............................................        108,158           94,144
Premises and equipment, net......................................          2,211            1,975
Accrued interest receivable......................................          2,201            1,614
Prepaid expenses and other assets................................          8,487            1,502
                                                                         -------          -------
              Total assets.......................................   $    259,949          266,543
                                                                         =======          =======

Liabilities and Stockholders' Equity:

Deposits:
    Demand deposits..............................................   $     34,515           36,605
    Savings deposits.............................................         26,484           12,476
    NOW and money market deposits................................         34,039           71,689
    Time certificates issued in excess of $100,000...............         23,499           18,998
    Other time deposits..........................................         78,900           78,099
                                                                         -------          -------
              Total deposits.....................................        197,437          217,867

Borrowed funds...................................................         39,370           24,000
Accrued expenses and other liabilities    .......................          3,296            2,808
                                                                         -------          -------
              Total liabilities..................................        240,103          244,675


Stockholders' equity:
    Common stock (par value $.01 per share, 10,000,000 shares
      authorized; 1,776,326 shares issued; 1,746,326 and
      1,771,306 outstanding, respectively).......................             18               18
    Surplus   ...................................................         20,185           20,126
    Accumulated surplus..........................................          2,331            1,659
    Accumulated other comprehensive (loss) income:
      Net unrealized (depreciation) appreciation in available-for-
      sale securities, net of tax................................         (2,318)              65
    Treasury stock, at cost......................................           (370)               -
                                                                        --------         --------
              Total stockholders' equity.........................         19,846           21,868
                                                                        --------         --------
              Total liabilities and stockholders' equity.........        259,949          266,543
                                                                        ========         ========

See accompanying notes to 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 Nine Months
                                                                 Ended  September 30,         Ended September 30,
                                                                   1999       1998            1999          1998
                                                                  ------     ------          ------        ------
<S>                                                          <C>              <C>            <C>          <C>
        Interest income:
              Interest earning deposits....................  $        4           5               8           16
              Federal funds sold...........................          36         212             296          436
              Securities ..................................       2,178       1,456           6,860        5,175
              Interest and fees on loans...................       2,364       2,023           6,591        5,815
                                                                 ------       -----          ------       ------
                  Total interest income....................       4,582       3,696          13,755       11,442
                                                                 ------       -----          ------       ------

         Interest expense:
              Savings deposits.............................  $      224         124             526          180
              NOW and money market deposits................         192         197             806          699
              Time certificates issued in excess of $100,000        298         226             955        1,061
              Other time deposits..........................       1,087       1,214           3,334        3,720
              Borrowed funds...............................         520         200           1,465          515
                                                                  -----       -----           -----        -----
                  Total interest expense...................       2,321       1,961           7,086        6,175
                                                                  -----       -----           -----        -----

                  Net interest income......................       2,261       1,735           6,669        5,267

         Provision for loan losses.........................         150         120             450          300
                                                                  -----       -----           -----        -----

                  Net interest income after provision
                  for loan losses .........................       2,111       1,615           6,219        4,967
                                                                  -----       -----           -----        -----

         Other operating income:
              Service charges on deposit accounts..........  $      166         109             476          283
              Net gain on sale of securities...............           -           -              88           13
              Mortgage banking operations..................         114          69             439           73
              Other .......................................         135          68             325          172
                                                                    ---         ---           -----          ---
                  Total other operating income.............         415         246           1,328          541

         Other operating expenses:
              Salaries and employee benefits...............         962         763           2,903        2,008
              Occupancy expense............................         135         128             415          330
              Premises and equipment expense...............         186         136             535          362
              Other........................................         642         491           1,810        1,375
                                                                  -----       -----           -----        -----
                  Total other operating expenses...........       1,925       1,518           5,663        4,075

                  Income before provision for income taxes.         601         343           1,884        1,433

         Provision for income taxes........................         220         108             672          540
                                                                    ---         ---             ---          ---

                  Net income...............................  $      381         235            1,212         893
                                                                    ===         ===            =====         ===
                  Basic and diluted earnings per share.....  $     0.22        0.13             0.68        0.51
                                                                   ====        ====             ====        ====

         Weighted average shares outstanding...............   1,758,364    1,768,166       1,770,163    1,764,418
                                                              =========    =========       =========    =========

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

                                                          3

<PAGE>
<TABLE>
<CAPTION>


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


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

Comprehensive income (loss): (1)
   Net income for the period............             -            -         1,212                 -              -        1,212
     Other comprehensive income,
       net of tax:
     Unrealized depreciation in available-
       for-sale securities, net of
       reclassification adjustment (2)..             -            -             -            (2,383)             -       (2,383)
                                                  ----         ----          ----            -------           ----      -------
   Total comprehensive income (loss)....                                                                                 (1,171)

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

Dividends declared on common
 stock ($.24 per common share)..........             -            -          (425)                -              -         (425)

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

Treasury stock, at cost (30,000 shares).             -            -             -                 -           (370)        (370)
                                                  ----         ----          ----              ----           -----        -----

Balance at September 30, 1999...........    $       18       20,185         2,331            (2,318)          (370)      19,846
                                                    ==       ======         =====            =======          =====      ======

<FN>
(1)      The Company's comprehensive income for the Nine Months Ended September 30, 1998, was $1,103,000.
(2)      Disclosure of reclassification amount:
                                                                                               September 30, 1999
         Comprehensive income (loss) items, net of tax                                         ------------------
         Unrealized loss in available-for-sale securities,
           arising during the period                                                          $        (2,331)
         Less: Reclassification adjustment for gains included in income                                    52
                                                                                                       -------

         Net unrealized depreciation                                                          $        (2,383)
                                                                                                       =======
</FN>

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




                                                                4

<PAGE>

<TABLE>
<CAPTION>

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

                                                                               For the Nine Months
                                                                               Ended September 30,
                                                                               1999          1998
                                                                              ------        ------
<S>                                                                    <C> <C>           <C>
Cash flows from operating activities:
       Net income ...................................................  $      1,212           893
       Adjustments to reconcile net income to net cash (used in)
             provided by operating activities:
                 Provision for possible loan losses..................           450           300
                 Depreciation and amortization.......................           427           279
                 Amortization of premiums, net
                     of discount accretion...........................           (65)           70
                 Gain on sales of securities.........................           (88)          (13)
                 Proceeds and gains from sales of loans held-for-
                     sale, net of originations.......................         1,297          (955)
                 Net deferred loan origination fees..................           102            82
                 Deferred income taxes...............................             -            89
                 Changes in asset and liability accounts:
                     Accrued interest receivable.....................          (587)          463
                     Accrued expenses and other liabilities..........           534           (79)
                     Prepaid expenses and other assets...............        (5,337)         (321)
                                                                             -------         -----
                 Net cash (used in) provided by
                     operating activities............................        (2,055)          808
                                                                             -------          ---

       Cash flows from investing activities:
             Purchases of securities available-for-sale..............      (226,838)     (204,587)
             Proceeds from sales of securities available-for-sale....        12,777         4,773
             Proceeds from maturities of securities..................       211,695       192,350
             Principal repayments on securities......................        11,844        17,237
             Loan originations and principal
                 repayments on loans, net............................       (15,863)       (8,183)
             Purchase of premises and equipment......................          (663)       (1,059)
                                                                           ---------     ---------
                 Net cash used in investing activities...............        (7,048)          531
                                                                           ---------     ---------

       Cash flows from financing activities:
             Net decrease in demand deposit
                 accounts,  NOW accounts, money
                 market and savings accounts.........................       (25,732)      (6,289)
             Net increase (decrease) in certificates of deposit......         5,302       (4,413)
             Payments for cash dividends.............................          (425)        (423)
             Increase in borrowings..................................        15,370       14,000
             Proceeds from shares issued under the
                 dividend reinvestment plan..........................            59          170
             Treasury stock purchased................................          (370)           -
                 Corporate reorganization costs......................          (115)           -
                                                                             -------     -------
                 Net cash (used in) provided by financing activities.        (5,911)       3,045
                                                                             -------     -------

             Net (decrease) increase in cash and cash equivalents....       (15,014)       4,384

       Cash and cash equivalents at beginning of period..............        21,489       29,764
                                                                            -------      -------
       Cash and cash equivalents at end of period....................  $      6,475       34,148
                                                                            =======      =======
</TABLE>
(Continued)

                                                           5

<PAGE>



(Continued)

<TABLE>
<CAPTION>
                                              LONG ISLAND FINANCIAL CORP.
                                         Consolidated Statements of Cash Flows
                                                      (Unaudited)
                                                    (In thousands)



                                                                        For the Nine Months
                                                                        Ended September 30,
                                                                         1999         1998
                                                                        ------       ------
        <S>                                                     <C>     <C>          <C>
        Supplemental disclosure of cash flow information

        Cash paid during the period for:
              Interest ..................................       $       7,392        6,277
                                                                        =====        =====

              Income taxes ..............................       $           -          642
                                                                        =====        =====



       See accompanying notes to consolidated financial statements.

</TABLE>
































                                                           6

<PAGE>



                           LONG ISLAND FINANCIAL CORP.
                   NOTES TO 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 accompanying  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 nine month period ended
September 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 ("FASB") issued SFAS No.
133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities."  This
statement  requires  companies  to record  derivatives  on the balance  sheet as
assets or liabilities, measured at fair value. The accounting for changes in the
fair value of a derivative depends on the intended use of the derivative and its
specific designation.

In June  1999,  the  FASB  issued  SFAS  No.  137,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities-Deferral  of the  Effective  Date  of FASB
Statement No. 133-an amendment of FASB Statement No. 133." This statement delays
the effective date for one year of SFAS No. 133, to fiscal years beginning after
June 15, 2000.  SFAS No.'s 133 and 137 apply to quarterly  and annual  financial
statements. The Company does not believe that there will be a material impact on
its financial  condition or results of operations  upon the adoption of SFAS No.
133.

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>

                                                                  September 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 ...........................................   $        409           408           664             665
                                                                    ===           ===           ===             ===

      Available-for-sale:
      U.S. Government and Agency Obligations............   $     83,032        80,135        78,994          78,980
      Mortgage-backed securities:
         GNMA  .........................................         41,770        40,706        39,864          39,771
         FHLMC .........................................          1,432         1,460         2,453           2,487
         FNMA  .........................................          3,847         3,843         6,060           6,097
      Municipal obligations ............................          1,166         1,138        12,855          13,002
      Other debt securities ............................            108           107           199             199
                                                                -------       -------       -------         -------
      Total debt securities ............................        131,355       127,389       140,425         140,536

      Equity securities - FHLB stock ...................          4,619         4,619         4,619           4,619
                                                                -------       -------       -------         -------
        Total securities available-for-sale ............   $    135,974       132,008       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>

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

         <S>                                           <C>  <C>       <C>             <C>  <C>        <C>
         Commercial and industrial loans.............  $    33,092     30.0  %         $   30,853      32.1  %
         Commercial real estate loans................       72,958     66.3                53,990      56.2
         Automobile loans............................        2,525      2.3                 8,262       8.6
         Consumer loans..............................        1,334      1.2                 1,396       1.5
         Residential real estate loans held-for-sale.          189       .2                 1,486       1.6
                                                           -------    -----                ------     -----
                                                           110,098    100.0  %             95,987     100.0  %
         Less:
           Unearned income...........................           79                            362
           Deferred fees, net........................          512                            410
           Allowance for loan losses.................        1,349                          1,071
                                                           -------                         ------
                                                       $   108,158                     $   94,144
                                                           =======                         ======
</TABLE>



6.       RECENT DEVELOPMENTS

On August  24,1999 the Board of  Directors  of the Company  declared a quarterly
dividend  of eight cents  ($0.08) per common  share.  The  dividend  was paid on
October 1, 1999, to shareholders' of record as of September 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. As of September 30, 1999,
30,000  shares  have been  repurchased  by the Company at an  aggregate  cost of
$370,000.

7.       PENDING LEGISLATION

Legislation  on which  the  Congress  has  completed  it's  work and  which  the
President is expected to sign  eliminates many Federal and State law barriers to
affiliations   among  banks  and  other  financial   services   providers.   The
legislation,   which  takes  effect  120  days  after  the  date  of  enactment,
establishes a statutory  framework pursuant to which full affiliations can occur
between banks and securities  firms,  insurance  companies,  and other financial
companies.  The  legislation  provides some degree of flexibility in structuring
these  new  affiliations,  although  certain  activities  may only be  conducted
through a holding company structure. The legislation,  preserves the role of the
Board of Governors of the Federal Reserve System as the umbrella  supervisor for
holding companies,  but incorporates a system of functional  regulation pursuant
to which the various  Federal and state financial  supervisors  will continue to
regulate  the  activities   traditionally   within  their   jurisdictions.   The
legislation  specifies that banks may not  participate  in the new  affiliations
unless the banks are  well-capitalized and well-managed or if any bank affiliate
had  received  a less than  "satisfactory"  Community  Reinvestment  Act of 1977
rating as of its most recent examination.


                                                           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 $259.9  million as of  September  30,  1999,
compared to $266.5  million at December 31,  1998.  The decline in cash and cash
equivalents  of $15.0  million,  or 69.9%,  was  attributable  to the  timing of
seasonal  municipal  deposits  which were not on deposit at September  30, 1999.
Loans  receivable,  net increased $14.0 million,  or 14.9%, to $108.2 million at
September  30, 1999,  despite a $5.7 million  reduction in the  automobile  loan
portfolio during the nine month period ended September 30, 1999. The decrease in
securities available-for-sale reflects the sale of certain municipal obligations
during the nine month period ended  September 30, 1999,  combined with principal
repayments  on  the  Company's  mortgage-backed  securities  portfolio.  Prepaid
expenses  and other  assets grew by $7.0  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 directors and employees.

Total deposits decreased $20.5 million, or 9.4%, from $217.9 million at December
31,  1998 to $197.4  million at  September  30,  1999,  primarily  reflecting  a
decrease in NOW and money market deposits.  The decrease in NOW and money market
deposits of $37.7 million,  or 52.5%, from $71.7 million at December 31, 1998 to
$34.0 million at September 30, 1999, is  attributable  to the timing of seasonal
municipal deposits,  which were not on deposit at September 30, 1999, as was the
decrease of $2.1  million,  or 5.7%,  in demand  deposits.  The effects of those
declines were offset in part by a $14.0 million, or 112.3%,  increase in savings
deposits and a $4.5 million increase in time deposits in excess of $100,000 from
December 31, 1998, to September 30, 1999. The increase in savings  deposits is a
result of new products offering competitive rates to higher balance accounts.

Borrowed  funds  increased by $15.4  million,  or 64.0%,  from $24.0  million at
December  31,  1998 to $39.4  million at  September  30,  1999,  as the  Company
continued  its  leveraging  strategy  in the first  nine  months of 1999.  Total
stockholders'  equity  decreased  $2.1 million to $19.8 million at September 30,
1999 from $21.9 million at December 31, 1998.  The decrease was primarily due to
a  $2.4  million   decrease  in  net  unrealized   appreciation   on  securities
available-for-sale,  dividends  declared of $425,000  for the nine months  ended
September 30, 1999,  and stock  repurchases  of $370,000,  offset in part by net
income of $1.2 million.


                                                          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 nine months ended September 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 September 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>         <C>
Interest earning assets:
    Federal funds sold and
      interest-earning deposits.......    $       3,150   $      40       5.08 %    $     15,993   $     217       5.43 %
    Securities held-to-maturity and
      available-for-sale, net (5).....          133,342       2,166       6.50            82,567       1,347       6.53
    Municipal obligations (4).........            1,166          17       5.83             9,875         163       6.60
    Loans receivable, net (1).........          104,675       2,364       9.03            89,963       2,023       8.99
                                                -------       -----                      -------       -----
      Total interest-earning assets...          242,333       4,587       7.57           198,398       3,750       7.56
                                                              -----                                    -----
Non-interest-earning assets..............        18,888                                    8,566
                                                -------                                  -------
Total assets............................. $     261,221                             $    206,964
                                                =======                                  =======


Interest-bearing liabilities:
    Savings deposits..................... $      25,960   $     224       3.45      $     12,724   $     124       3.90
    NOW and money market deposits........        36,235         192       2.12            30,572         197       2.58
    Certificates of deposit..............       101,027       1,385       5.48            98,498       1,440       5.85
                                                -------       -----                      -------       -----
      Total interest-bearing deposits....       163,222       1,801       4.41           141,794       1,761       4.97
    Borrowed funds.......................        41,662         520       4.99            14,169         200       5.65
                                                -------       -----                      -------       -----
      Total interest-bearing liabilities.       204,884       2,321       4.53           155,963       1,961       5.03
                                                              -----                                    -----
Other non-interest bearing liabilities...        36,602                                   29,142
                                                -------                                  -------
Total liabilities........................       241,486                                  185,105
Stockholders' Equity.....................        19,735                                   21,859
                                                -------                                  -------
Total liabilities and stockholders'
       equity............................ $     261,221                             $    206,964
                                                =======                                  =======

Net interest income/
     interest rate spread (2) (4)........                 $  2,266        3.04 %                   $   1,789       2.53 %
                                                             =====        ====                         =====       ====

Net interest margin (3)..................                                 3.74 %                                   3.61 %
                                                                          ====                                     ====

Ratio of interest-earning assets to
     interest-bearing liabilities........                                 1.18                                     1.27
                                                                          ====                                     ====


<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>

                                                                     Nine Months Ended September 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>
Interest earning assets:
    Federal funds sold and
      interest-earning deposits.......... $       8,536   $     304       4.75 %    $     11,107   $     452       5.43 %
    Securities held-to-maturity and
      available-for-sale, net (5)........       142,858       6,682       6.24           100,821       4,974       6.58
    Municipal obligations (4)............         5,490         251       6.10             6,099         302       6.60
    Loans receivable, net (1)............       100,821       6,591       8.72            85,395       5,815       9.08
                                                -------       -----                      -------       -----
      Total interest-earning assets......       257,705      13,828       7.15           203,422      11,543       7.57
                                                             ------                                   ------
Non-interest-earning assets..............        19,192                                   10,130
                                                -------                                  -------
Total assets............................. $     276,897                             $    213,552
                                                =======                                  =======


Interest-bearing liabilities:
    Savings deposits..................... $      21,530   $     526       3.26      $      6,975   $     180       3.44
    NOW and money market deposits........        54,799         806       1.96            37,560         699       2.48
    Certificates of deposit..............       104,007       4,289       5.50           108,084       4,781       5.90
                                                -------       -----                      -------       -----
      Total interest-bearing deposits....       180,336       5,621       4.16           152,619       5,660       4.94
    Borrowed funds.......................        39,791       1,465       4.91            12,355         515       5.56
                                                -------       -----                      -------       -----
      Total interest-bearing liabilities.       220,127       7,086       4.29           164,974       6,175       4.99
                                                              -----                                    -----
Other non-interest bearing liabilities...        35,912                                   26,908
                                                -------                                  -------
Total liabilities........................       256,039                                  191,882
Stockholders' Equity.....................        20,858                                   21,670
                                                -------                                  -------
Total liabilities and stockholders'
       equity............................ $     276,897                             $    213,552
                                                =======                                  =======

Net interest income/
   interest rate spread (2) (4)..........                 $   6,742       2.86 %                   $   5,368       2.58 %
                                                              =====       ====                         =====       ====

Net interest margin (3)..................                                 3.49 %                                   3.52 %
                                                                          ====                                     ====

Ratio of interest-earning assets to
       interest-bearing liabilities......                                 1.17                                     1.23
                                                                          ====                                     ====


<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
September 30, 1999 and 1998

General

The Company  reported net income of $381,000,  or basic and diluted earnings per
share of $.22 for the quarter ended September 30, 1999, compared to $235,000, or
basic and  diluted  earnings  per share of $.13 for the  comparable  prior  year
period.  The increase in net income was  attributable  primarily to increases in
net  interest  income of  $526,000,  or 30.3%,  and  other  operating  income of
$169,000,  or 68.7%,  which were offset in part by increases in other  operating
expenses of $407,000, or 26.8%.

Interest Income

Interest income, on a fully-taxable  equivalent basis,  increased  $837,000,  or
22.3 %, from $3.8 million for the three months ended September 30, 1998, to $4.6
million  for the three  months  ended  September  30,  1999.  The  increase  was
attributable  to an increase in the  average  balance of total  interest-earning
assets of $43.9  million,  or 22.1%,  from $198.4  million for the three  months
ended September 30, 1998, to $242.3 million for the three months ended September
30,   1999.   The   average   balance   of   securities   held-to-maturity   and
available-for-sale,  net, (exclusive of municipal  obligations)  increased $50.8
million,  or 61.5%,  with a decrease in the average yield to 6.50% for the three
months ended September 30, 1999,  from 6.53% for the comparable  period in 1998.
The decline in the average balance of municipal  obligations to $1.2 million for
the three months ending September 30, 1999, from $9.9 million for the comparable
prior year period was the result of the sale of  approximately  $11.8 million in
municipal  obligations  during the second quarter of 1999. 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  $14.7  million,  or 16.4% from $90.0 million for the
three months ended  September 30, 1998,  to $104.7  million for the 1999 period.
The average yield on loans  receivable,  net,  increased 4 basis points to 9.03%
for the three months ended  September  30, 1999,  from 8.99% for the  comparable
period  in 1998.  The  increase  in yield is a result  of  non-accrual  interest
received  totaling  $67,000,  or approximately  25 basis points.  Excluding that
interest,  the  yield on loans  receivable,  net,  for the  three  months  ended
September 30, 1999 would have been 8.78%, a decrease of 21 basis points from the
comparable 1998 period.  That decrease  reflects the lower market interest rates
resulting  from  increasingly  competitive  pricing in 1999 in  commercial  real
estate lending.

Interest Expense

Interest  expense  increased  $360,000,  or 18.4%, to $2.3 million for the three
months ended  September  30, 1999,  from $2.0 million for the three months ended
September 30, 1998,  resulting  primarily from a $48.9 million or 31.4% increase
in the average balance of total  interest-bearing  liabilities to $204.9 million
for the three  months ended  September  30,  1999,  from $156.0  million for the
comparable prior year period.  The increased expense results from an increase in
the average  balance of  interest-bearing  deposits of $21.4 million,  or 15.1%,
coupled  with an  increase in the  average  balance of  borrowed  funds of $27.5
million, or 194.0%. The average rate paid on interest-bearing deposits decreased
56 basis points for the three month period ended  September  30, 1999,  to 4.41%
when  compared  with the 4.97% rate paid for the 1998  period.  The  decrease in
average rate reflects the increased growth in lower cost

                                                          14

<PAGE>



deposits as a result of increased sales efforts in late 1998 and early 1999. The
average balance of savings deposits  increased by $13.2 million,  or 104.0%, and
the average balance of NOW and money market deposits  increased by $5.7 million,
or 18.5% from period to period.  The average  balance of certificates of deposit
increased  only $2.6  million as the Company  continues to focus on reducing its
cost of funds.  The average cost of borrowed funds  decreased 66 basis points to
4.99%  for the  three  months  ended  September  30,  1999,  from  5.65% 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 $477,000,
or 26.7%,  to $2.3 million for the three months ended  September 30, 1999,  from
$1.8 million for the three months ended  September 30, 1998. The average cost of
total  interest-bearing  liabilities for the period decreased 50 basis points to
4.53% in 1999, from 5.03% in 1998. The average yield on interest-earning  assets
for the period increased 1 basis point to 7.57% in 1999, from 7.56% in 1998. The
net interest  rate spread  increased  by 51 basis points from 2.53% in 1998,  to
3.04% in 1999.

Provision for Loan Losses

The Company's  provision for loan losses was $150,000 for the three months ended
September  30, 1999,  compared to $120,000 for the 1998 period.  This  increased
provision was made  primarily to reflect the growth  within the loan  portfolio,
the average  balance of which increased by $14.7 million,  or 16.4%,  from $90.0
million  in the 1998  period,  to  $104.7  million  for the three  months  ended
September 30, 1999.

Other Operating Income

Other operating income increased  $169,000,  or 68.7%, to $415,000 for the three
months ended September 30, 1999, compared to $246,000 for the three months ended
September  30,  1998.  The  increase was  attributable,  in part,  to fee income
associated  with the origination  and sale of residential  mortgages.  Such fees
amounted to $114,000  for the three  months ended  September  30, 1999.  Service
charges on deposits  accounts  increased by $57,000,  or 52.3%,  reflecting  the
growth in the Company's  depositor base and an overall increase in the Company's
fee schedule.  Other operating  income increased as a result of dividends earned
on bank owned life insurance.

Other Operating Expense

Other operating expenses increased  $407,000,  or 26.8%, to $1.9 million for the
three months ended  September  30, 1999,  from $1.5 million for the three months
ended September 30, 1998.  Salaries and employee benefits increased by $199,000,
or 26.1%,  to $1.0  million  for the three  months  ended  September  30,  1999,
reflecting  internal  growth,  and the  strengthening  of the Company's  middle-
management to support the planned growth.  The increase from period to period in
occupancy expense, premises and equipment expense, and other expense reflect the
branch  expansion,  the delivery and support of electronic  banking services and
main office expansion to support operations growth.




                                                          15

<PAGE>





Income Taxes

Provision for income tax expenses increased  $112,000,  or 103.7%, from $108,000
recorded for the quarter  ended  September 30, 1998, to $220,000 for the quarter
ended September 30, 1999. The increase is primarily attributable to the increase
in income before income taxes.


Comparison  of Operating  Results for the Nine Months Ended
September  30, 1999 and 1998

General

The Company  reported net income of $1.2 million,  or basic and diluted earnings
per share of $.68 for the nine months  ended  September  30,  1999,  compared to
$893,000,  or basic and diluted  earnings  per share of $.51 for the  comparable
prior year period.  The increase was  attributable  to increases in net interest
income of $1.4 million,  or 26.6%,  and other operating  income of $787,000,  or
145.5%, offset in part by increases in other operating expenses of $1.6 million,
or 39.0%.

Interest Income

Interest income, on a fully-taxable equivalent basis, increased $2.3 million, or
19.8%, to $13.8 million for the nine months ended September 30, 1999, from $11.5
million  for the nine  months  ended  September  30,  1998.  This  increase  was
attributable  to an increase in the  average  balance of total  interest-earning
assets of $54.3 million, or 26.7%, from $203.4 million for the nine months ended
September  30, 1998, to $257.7  million for the nine months ended  September 30,
1999. The average balance of securities held-to-maturity and available-for-sale,
net, (exclusive of municipal  obligations) increased $42.0 million, or 41.7%, in
the nine months ended  September 30, 1999,  from the nine months ended September
30,  1998,  with a decrease in the average  yield from 6.58% for the nine months
ended  September 30, 1998, to 6.24% for the 1999 period.  The average balance of
loans receivable,  net, increased $15.4 million, or 18.1% from $85.4 million for
the nine months ended September 30, 1998, to $100.8 million for the 1999 period.
The average yield on loans receivable,  net,  decreased 36 basis points to 8.72%
for the three months ended  September  30, 1999,  from 9.08% for the  comparable
period in 1998.  This decrease  reflects lower market  interest rates  resulting
from increasingly competitive pricing in 1999 in commercial real estate lending.

Interest Expense

Interest expense  increased  $911,000,  or 14.8%, from $6.2 million for the nine
months  ended  September  30,  1998,  to $7.1  million for the nine months ended
September 30, 1999. This was  attributable to an increase in the average balance
of total interest-bearing liabilities for the period of $55.2 million, or 33.4%,
to $220.1  million for the nine months ended  September  30,  1999,  from $165.0
million for the comparable 1998 period.  The growth reflected an increase in the
average balance of interest-bearing deposits of $27.7 million, or 18.2%, coupled
with an increase in the average  balance of borrowed funds of $27.4 million,  or
222.1%. The average rate paid on interest-bearing deposits decreased 78 basis

                                                          16

<PAGE>



points  for the nine  month  period  ended  September  30,  1999,  to 4.16% when
compared  to the 4.94% rate paid for the 1998  period.  The  decrease in average
rate  continues  to reflect  the growth in lower  cost  deposits  as a result of
increased  sales  efforts in 1999.  The  average  balance  of  savings  deposits
increased by $14.6 million,  or 208.7%, and the average balance of NOW and money
market  deposits  increased by $17.2 million,  or 49.9%.  The average balance of
certificates  of deposit  decreased  by $4.1  million for the nine months  ended
September  30, 1999 as the Company  continued to focus on replacing  higher cost
funds  with  lower  cost core  deposits.  The  average  cost of  borrowed  funds
decreased 65 basis points to 4.91% for the nine months ended September 30, 1999,
from 5.56% for the  comparable  period in 1998,  due to increased  borrowings in
1998 and 1999 at lower market rates.

Net Interest Income

Net  interest  income on a  fully-taxable  equivalent  basis  increased  by $1.3
million,  or 25.6%,  from $5.4 million for the nine months ended  September  30,
1998, to $6.7 million for the nine months ended  September 30, 1999. The average
cost of total  interest-bearing  liabilities  for the period  decreased 70 basis
points  to  4.29%  in  1999,   from  4.99%  in  1998.   The  average   yield  on
interest-earning  assets  decreased 42 basis points to 7.15% in 1999, from 7.57%
in 1998. The net interest rate spread increased by 28 basis points from 2.58% in
1998, to 2.86% in 1999.

Provision for Loan Losses

The  Company's  provision for loan losses was $450,000 for the nine months ended
September  30, 1999,  compared to $300,000 for the 1998 period.  This  increased
provision was made to reflect the growth within the loan portfolio,  the average
balance of which increased by $15.4 million, or 18.1%, to $100.8 million for the
nine months ended  September 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.

The following table sets forth information regarding non-accrual loans and 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 but not
collected  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.



                                                          17

<PAGE>
<TABLE>
<CAPTION>



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

<S>                                                           <C>      <C>                       <C>
Non-accrual loans:
         Commercial and industrial loans..................    $          45                        366
         Automobile loans.................................               16                         37
         Consumer loans...................................               71                        108
                                                                       ----                       ----
              Total non-accrual loans.....................              132                        511

         Loans contractually past due 90 days or
         more, other than non-accruing  (2)...............                -                          -
                                                                       ----                       ----

              Total non-performing loans..................    $         132                        511
                                                                       ----                       ----


Allowance for loan losses as a percentage
         of loans  (1)....................................             1.23 %                     1.12 %
Allowance for loan losses as a percentage
         of total non-performing loans....................         1,021.97 %                   209.59 %
Non-performing loans as a percentage of loans  (1)........              .12 %                      .54 %


<FN>
(1)  Loans  include  loans  receivable,  net  excluding  the  allowance for loan
     losses.
(2)  Excludes  $55,638 and $378,000 of loans, at September 30, 1999 and December
     31,  1998,  respectively,  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  $787,000,  or 145.5%,  to $1.3 million for the
nine months ended  September 30, 1999,  compared to $541,000 for the nine months
ended September 30, 1998. The increase was attributable,  in part, to fee income
associated  with the origination  and sale of residential  mortgages.  Such fees
increased  by $366,000  for the nine months ended  September  30, 1999.  Service
charges on deposit  accounts  increased by $193,000,  or 68.2%,  reflecting  the
growth in the Company's  depositor base and an overall increase in the Company's
fee schedule. Other operating income increased $153,000 primarily as a result of
dividends earned on bank owned life insurance and certain loan prepayment fees.

Other Operating Expense

Other operating  expenses  increased $1.6 million,  or 39.0%, to $5.7 million in
the nine months ended  September 30, 1999,  from $4.1 million in the nine months
ended September 30, 1998.  Salaries and employee benefits increased by $895,000,
or  44.6%,  to $2.9  million  for the nine  months  ended  September  30,  1999,
reflecting  branch  expansion,  internal  growth,  and the  strengthening of the
Company's   middle-management  to  support  the  planned  growth.  Increases  in
occupancy expense,

                                                          18

<PAGE>



premises  and  equipment  expense,  and other  expense for the nine months ended
September 30, 1999 are a result of branch expansion and the delivery and support
of electronic banking services.

Income Taxes

Provision for income taxes increased  $132,000,  or 24.4%, from $540,000 for the
nine months  ended  September  30,  1998,  to $672,000 for the nine months ended
September  30,  1999.  The  increase is  attributable  to the increase in income
before income taxes.

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 nine months
ended  September 30, 1999, and 1998, the Company's  purchases of securities were
all classified available-for-sale and totaled $226.8 million and $204.6 million,
respectively.  Loan originations,  net of principal repayments on loans, totaled
$15.9  million and $8.2 million,  for the nine months ended  September 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,  liquidate  available-for-sale  securities and access its
lines of credit,  totaling $4.5 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  forms of
borrowings, including reverse repurchase agreements.

At September 30, 1999, the Company's primary 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  September  30,  1999,
convertible advances outstanding were as follows:




                                                          19

<PAGE>





                     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 average of the  Company's  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 nine months ended
September 30, 1999, was 21.2%.

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 September 30, 1999, the Bank exceeded
those  requirements with a leverage capital ratio, and risk-based  capital ratio
and total-risk based capital ratio of 8.66%, 16.02% and 16.97%, respectively.


Year 2000

The Company has been preparing for Year 2000 since 1998 and is pleased to report
that as of September 30, 1999, all  significant  systems are Year 2000 certified
and testing has been completed.  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.

Management  initiated a Year 2000 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.

                                                          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 had  completed  extensive  testing of all
critical  internal  applications and the test results had 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 to discuss the
status of their year 2000  readiness  with new and existing  customers.  Through
this  evaluation  process,  the Company has not become  aware of any issues that
would  significantly  affect 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 September  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 guidelines  approved by the Board of Directors.
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.

At  September  30,  1999,  79.9% of the  Company's  gross  loans had  adjustable
interest  rates and its loan portfolio had an average  weighted  maturity of 7.4
years.  At such date,  $12.2 million,  or 9.2%, of the Company's  securities had
adjustable  interest rates, and its securities  portfolio had a weighted average
maturity of 6.5 years.  At September 30, 1999,  the Company had $54.7 million of
certificates of deposit

                                                          21

<PAGE>



with maturities of one year or less and $23.5 million of deposits over $100,000,
which tend to be less stable sources of funding as compared to core deposits and
represented  38.7% 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 September 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                     $   381          3.81 %            $  (4,432)          (20.13) %
                   100                         205          2.05                   (855)           (3.88)
                 Static                          -             -                      -                -
                  (100)                       (348)        (3.48)                 5,115            23.23
                  (200)                     (1,582)       (15.84)                 7,514            34.13
</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
-------           ---------------------------------------------------
                  Not applicable.

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:    November 12, 1999        By:   /s/ Douglas C. Manditch
                                      ------------------------------------------
                                      Douglas C. Manditch
                                      President and Chief Executive Officer


Date:    November 12, 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                            Nine Months Ended
                                           September 30, 1999    September 30, 1998     September 30, 1999    September 30, 1998
                                           ------------------    ------------------     ------------------    ------------------

<S>                                       <C>                     <C>                    <C>                    <C>
Net income.............................   $         381                 235                  1,212                    893


Weighted average shares outstanding....       1,758,364           1,768,166              1,770,163              1,764,418

Basic and diluted earnings per share...             .22                 .13                    .68                    .51
                                                    ===                 ===                    ===                    ---


</TABLE>