<PAGE>

                                                                   EXHIBIT 99.0
                   [Company Logo and Address]






                                                 January 6, 1997



Dear Stockholder:

         You are cordially invited to attend the third annual meeting of
stockholders of Long Island Bancorp, Inc. (the "Company") which will be held on
February 18, 1997, at 9:30 a.m., at the Huntington Hilton, 598 Broadhollow Road,
Melville, New York (the "Annual Meeting").  The attached Notice of Annual
Meeting and Proxy Statement describe the business to be transacted at the Annual
Meeting.

         The major business to be transacted at the Annual Meeting will be the
election of directors and the ratification of KPMG Peat Marwick LLP as our
auditors.  Officers of the Company as well as representatives of KPMG Peat
Marwick LLP will be present at the Annual Meeting to respond to any questions
that our stockholders may have regarding the business to be transacted.

         The Board of Directors of the Company has determined that the matters
to be considered at the Annual Meeting are in the best interests of the Company
and its stockholders.  For the reasons set forth in the Proxy Statement, the
Board unanimously recommends a vote "FOR" each matter to be considered.

         It is important that your shares be represented at the Annual Meeting
whether or not you are present.  Please be sure to sign, date and mail the
enclosed Proxy Card in the postage-paid envelope provided, even if you plan to
attend in person.

         If you attend the Annual Meeting, you may vote in person even if you
have already mailed in your Proxy.

         On behalf of the Board of Directors and all the employees of the
Company and The Long Island Savings Bank, FSB, I thank you for your continued
support.

                             Sincerely,


                             /s/ John J. Conefry, Jr.

                             John J. Conefry, Jr.
                             Chairman of the Board, President and
                             Chief Executive Officer

<PAGE>

                              [Company Logo and Address]




                       NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                           TO BE HELD ON FEBRUARY 18, 1997

         NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Long
Island Bancorp, Inc. (the "Company") will be held on February 18, 1997, at 9:30
a.m., at the Huntington Hilton, 598 Broadhollow Road, Melville, New York (the
"Annual Meeting").

         A Proxy Statement and Proxy Card for the Annual Meeting are enclosed.

         The Annual Meeting is for the purpose of considering and voting upon
the following matters:

         1.   The election of five directors of the Company for terms of three
              years each;

         2.   The ratification of the appointment of KPMG Peat Marwick LLP as
              the Company's independent auditors for the fiscal year ending
              September 30, 1997; and

         3.   Such other business as may properly come before the Annual
              Meeting or any adjournment thereof.

Note:  The Board of Directors of the Company is not aware of any other business
to come before the Annual Meeting.

         Any action may be taken on any one of the foregoing proposals at the
Annual Meeting on the date specified above or on any date or dates to which, by
original or later adjournment, the Annual Meeting may be adjourned.
Stockholders of record at the close of business on December 23, 1996, are the
stockholders entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof.  A complete list of stockholders entitled to vote at the
Annual Meeting will be open for examination by any stockholder for any purpose
germane to the Annual Meeting during ordinary business hours at the Company's
principal office located at 201 Old Country Road, Melville, New York for a
period of ten days prior to the Annual Meeting and will also be available at the
Annual Meeting.

<PAGE>

         You are requested to fill in, sign and date the enclosed proxy which
is solicited by the Board of Directors and to return it promptly by mail in the
enclosed envelope.  The proxy will not be used if you attend and vote in person
at the Annual Meeting.

                             By Order of the Board of Directors,


                             /s/ Roger Teurfs

                             Roger Teurfs
                             Secretary


Melville, New York
January 6, 1997

________________________________________________________________________________
IMPORTANT:  THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM.  A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.  NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
________________________________________________________________________________


<PAGE>

________________________________________________________________________________

                              LONG ISLAND BANCORP, INC.
                                 201 Old Country Road
                              Melville, New York  11747
                                    (516) 547-2000

                                   PROXY STATEMENT
                            ANNUAL MEETING OF STOCKHOLDERS
                                  February 18, 1997
________________________________________________________________________________


________________________________________________________________________________
                                       GENERAL
________________________________________________________________________________


         This Proxy Statement is furnished to stockholders of Long Island
Bancorp, Inc. (the "Company") in connection with the solicitation by the Board
of Directors of the Company (the "Board of Directors") of proxies to be used at
the Annual Meeting of Stockholders to be held on February 18, 1997, at 9:30
a.m., at the Huntington Hilton, 598 Broadhollow Road,  Melville, New York (the
"Annual Meeting"), and at any adjournment thereof.  Only holders of record of
the Company's issued and outstanding common stock, par value $0.01 per share
(the "Common Stock"), as of the close of business on December 23, 1996 (the
"Record Date") are entitled to vote at the Annual Meeting and any adjournments
thereof.  The accompanying Notice of Annual Meeting and form of proxy, the 1996
Annual Report to Stockholders, including the consolidated financial statements
for the fiscal year ended September 30, 1996, and this Proxy Statement are being
first mailed on or about January 6, 1997 to all stockholders entitled to vote at
the Annual Meeting.

________________________________________________________________________________
                          VOTING AND REVOCABILITY OF PROXIES
________________________________________________________________________________

         A majority of the holders of the Common Stock must be represented,
either in person or by proxy, to constitute a quorum for the conduct of
business.  In order to insure a quorum, stockholders are requested to vote by
completing the enclosed Proxy Card and returning it signed and dated in the
enclosed postage-paid envelope.  Stockholders are urged to indicate their vote
in the spaces provided on the Proxy Card.  PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN.  WHERE
NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR THE SPECIFIC PROPOSALS
PRESENTED IN THIS PROXY STATEMENT.  Proxies marked as abstentions will not be
counted as votes cast.  In addition, shares held in street name which have been
designated by brokers on Proxy Cards as not voted will not be counted as votes
cast.  Proxies marked as abstentions or as broker non-votes, however, will be
treated as shares present for purposes of determining whether a quorum is
present.  In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.

<PAGE>

         The election of directors shall be by a plurality of votes cast by the
holders present in person or by proxy of shares entitled to vote thereon.  The
holders of Common Stock may not vote their shares cumulatively for election of
directors.

         As to the ratification of KPMG Peat Marwick LLP as independent
auditors of the Company and all other matters that may properly come before the
Annual Meeting, by checking the appropriate box, a shareholder may: (i) vote
"FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on
such item.  Under the Company's Restated Bylaws (the "Bylaws"), unless otherwise
required by law, the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation") or the Bylaws, all matters submitted to
stockholders at any meeting, other than the election of directors, shall be
decided by the affirmative vote of a majority of the shares present in person or
represented by proxy at such meeting and entitled to vote on such matters.


         The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting.  Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment with respect to the election
of any person as a director where the nominee is unable to serve or for good
cause will not serve, matters incident to the conduct of the Annual Meeting, and
such other business, if any, that may properly come before the Annual Meeting or
any adjournments thereof.

         A proxy may be revoked at any time prior to its exercise by the filing
of a written notice of revocation with the Secretary of the Company, by
delivering a duly executed proxy bearing a later date to the Secretary of the
Company at the address listed above, or by attending the Annual Meeting and
voting in person.

         The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. In addition to the solicitation of proxies by mail,
D.F. King & Co., Inc., a proxy soliciting firm, will assist the Company in
soliciting proxies for the Annual Meeting and will be paid a fee of $6,000, plus
reimbursement for out-of-pocket expenses.  Proxies also may be solicited
personally or by telephone or telegraph by directors, officers and regular
employees of the Company and The Long Island Savings Bank, FSB (the "Bank"),
without additional compensation therefor.  The Company will also request
persons, firms and corporations holding shares in their names, or in the name of
their nominees, which are beneficially owned by others, to send proxy materials
to and obtain proxies from such beneficial owners, and will reimburse such
holders for reasonable expenses incurred in connection therewith.


________________________________________________________________________________
                   VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
________________________________________________________________________________

GENERAL

         Stockholders of record as of the close of business on the Record Date
are entitled to one vote for each share of Common Stock then held except as
described below.  As of the Record Date, there were 24,558,346 shares of Common
Stock outstanding.

         As provided in the Certificate of Incorporation, record holders of
Common Stock who, directly or indirectly, beneficially own in excess of 10% of
the outstanding shares of Common Stock (the "Limit") are not entitled to any
vote in respect of the shares held in excess of the Limit.  A person or entity
is deemed to beneficially own shares owned by an affiliate of, as well as
persons acting in concert with, such person or entity.  The Certificate of
Incorporation authorizes the Board of Directors (i) to make all determinations
necessary to implement and apply the Limit, including determining whether
persons or entities are acting in concert, and (ii) to

                                         -2-

<PAGE>

demand that any person who is reasonably believed to beneficially own Common
Stock in excess of the Limit supply information to the Company to enable the
Board of Directors to implement and apply the Limit.

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

         Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act").  Based upon
such reports, the following table sets forth, as of December 1, 1996, certain
information as to the Common Stock beneficially owned by persons owning in
excess of 5% of the outstanding shares of Common Stock.  Management knows of no
person, except as listed below, who owned more than 5% of the Company's
outstanding shares of Common Stock as of December 1, 1996.


Name and Address of          Amount and Nature of
  Beneficial Owner            Beneficial Ownership     Percent of Class
  ----------------            --------------------     ----------------

The LISB Employee Stock        2,056,795 shares(1)         8.30 %
Ownership Trust
114 W. 47th Street
New York, New York 10036

Wellington Management Company   1,366,140 shares(2)        5.51 %
75 State Street
Boston, Massachusetts 02109

____________________

(1) The Employee Stock Ownership Plan ("ESOP") is administered by a committee
    consisting of three employees of the Bank who were appointed by the Board
    of Directors of the Bank.  The ESOP's assets are held in trust (the "ESOP
    Trust"), for which United States Trust Company of New York serves as
    trustee (the "ESOP Trustee").  The terms of the ESOP provide that, subject
    to the ESOP Trustee's fiduciary responsibilities under the Employee
    Retirement Income Security Act of 1974, as amended, the ESOP Trustee will
    vote, tender or exchange shares of Common Stock held in the ESOP Trust in
    accordance with the following rules.  The ESOP Trustee will vote, tender or
    exchange shares of Common Stock allocated to participants' accounts in
    accordance with instructions received from the participants.  The ESOP
    Trustee will vote allocated shares as to which no instructions are received
    and any shares in the "suspense account" or that otherwise have not been
    allocated to participants' accounts in the same proportion as allocated
    shares with respect to which the ESOP Trustee receives instructions are
    voted.  The ESOP Trustee will tender or exchange any shares in the suspense
    account or that otherwise have not been allocated to participants' accounts
    in the same proportion as allocated shares with respect to which the ESOP
    Trustee receives instructions are tendered or exchanged.  With respect to
    allocated shares as to which no instructions are received, the ESOP Trustee
    will be deemed to have received instructions not to tender or exchange such
    shares.

(2) According to its filing on Schedule 13G with the Securities and Exchange
    Commission dated August 15, 1996, Wellington Management Company acquired
    such interest through its subsidiary Wellington Trust Company, N.A. and
    claims sole voting power over 428,320 shares of Common Stock, shared voting
    power with respect to 195,150 shares of Common Stock and shared dispositive
    power as to 1,366,140 shares of Common Stock.  Shares of Common Stock
    beneficially owned by Wellington Management Company are owned by a variety
    of investment advisory clients of Wellington Management Company.  No such
    client is known to have an interest in more than 5% of the Common Stock.

                                         -3-
<PAGE>

STOCK OWNERSHIP OF MANAGEMENT

         The table below presents the shares of Common Stock and the percentage
of Common Stock beneficially owned as of September 30, 1996 by (i) the Company's
directors, (ii) the executive officers named in the "Summary Compensation Table"
below (see "Executive Compensation") and (iii) the Company's directors and
executive officers, as a group.
<TABLE>
<CAPTION>
                                                      Shares of Common Stock     Percent
                             Position(s)                Beneficially Owned       of Class
Name                         with the Company         (1)   (2)   (3)   (4)         (5)
----                         ----------------       ----------------------       --------
<S>                           <C>                          <C>                    <C>
John J. Conefry, Jr.         Chairman of the Board,
                             President and CEO                265,685             1.08%

William E. Viklund (6)       Retired President and
                             Director                          22,390              .09%

Lawrence W. Peters           Director                          25,909              .11%

Bruce M. Barnet (7)          Executive Vice President,
                             Director                          35,012              .14%

Clarence M. Buxton           Director                          75,948              .31%

Edwin M. Canuso              Director                          66,466              .27%

Richard F. Chapdelaine       Director                          77,966              .32%

Brian J. Conway              Director                          76,167              .31%

Robert J. Conway (8)         Director                          64,511              .26%

Frederick DeMatteis          Director                          91,071              .37%

George R. Irvin (9)          Director                          73,240              .30%

Herbert J. McCooey           Director                          58,484              .24%

Robert S. Swanson, Jr.       Director                          63,230              .26%

James B. Tormey,M.D.(10)     Director                          48,932              .20%

Leo J. Waters                Director                          38,294              .16%

Donald D. Wenk (11)          Director                         102,600              .42%

Troy J. Baydala              Director Emeritus                 40,319              .16%

Joseph P. Bryant             Executive Vice President          42,515              .17%

W. Douglas Singer            Executive Vice President          63,005              .26%

Mark Fuster                  Executive Vice President          62,258              .25%

Robert T. Volk               Executive Vice President          56,852              .23%

All directors and
executive officers as a
group (21 persons)                                          1,450,854             5.89%


</TABLE>
                                         -4-

<PAGE>


(1)  Unless otherwise indicated, each person effectively exercises sole voting
     and dispositive power as to the shares reported.

(2)  Includes options granted under the Long Island Bancorp, Inc. 1994 Stock
     Incentive Plan (the "Stock Incentive Plan") or the Long Island Bancorp,
     Inc. 1994 Non-Employee Directors Stock Option Program (the "Director Stock
     Option Program") which are currently exercisable.  Excludes remaining
     options granted in 1994 which are exercisable in two equal installments
     beginning on March 29, 1998, options granted in 1995 which are exercisable
     in three equal installments beginning on March 29, 1998, and options
     granted in 1996 which are exercisable in four equal installments beginning
     on March 29, 1998.

(3)  Includes shares awarded under The Long Island Savings Bank Management
     Recognition and Retention Plan for Executive Officers (the "Executive
     Officer MRP") and The Long Island Savings Bank Management Recognition and
     Retention Plan for Non-Employee Directors (the "Director MRP" and,
     together with the Executive Officer MRP, the "MRPs").  Under the MRPs,
     awards are granted in the form of shares of Common Stock held by the MRPs.
     Directors and executive officers earn shares of Common Stock covered by
     the award at a rate of 20% per year commencing one year from the date of
     the award.  Shares awarded in 1996 primarily vest 50% on March 29, 1997
     and 50% on March 29, 1998.

(4)  Includes 1,726, 0, 1,105, 1,498, 1,498, and 1,438 shares allocated under
     the ESOP to the accounts of Messrs. Conefry, Viklund, Bryant, Singer,
     Fuster, and Volk, respectively.

(5)  The total number of shares of Common Stock outstanding on September 30,
     1996 was 24,644,157.  For purposes of this table, 581,460 shares of Common
     Stock subject to stock options granted, in the aggregate, to all directors
     and executive officers are not considered outstanding as such options are
     not exercisable prior to March 29, 1998.

(6)  Mr. Viklund resigned his Board and management positions with the Company
     and Bank, effective September 6, 1996.

(7)  Mr. Barnet was elected Executive Vice President, Director of Real Estate
     and Development for both the      Company and the Bank on October 3, 1996

(8)  Of the 64,511 shares of Common Stock beneficially owned, Mr. Robert J.
     Conway has sole voting and investment power with respect to 56,511 shares
     of Common Stock and has shared voting and investment power with respect to
     8,000 shares of Common Stock.

(9)  Of the 73,240 shares of Common Stock beneficially owned, Mr. Irvin has
     sole voting and investment power with respect to 10,749 shares of Common
     Stock and has shared voting and investment power with respect to 62,491
     shares of Common Stock.

(10) Of the 48,932 shares of Common Stock beneficially owned, Dr. Tormey has
     sole voting and investment power with respect to 46,932 shares of Common
     Stock and has shared voting and investment power with respect to 2,000
     shares of Common Stock.

(11) Of the 102,600 shares of Common Stock beneficially owned, Mr. Wenk has
     sole voting and investment power with respect to 95,600 shares of Common
     Stock and has shared voting and investment power with respect to 7,000
     shares of Common Stock.

                                         -5-
<PAGE>
________________________________________________________________________________
                                    PROPOSAL NO. 1
                                ELECTION OF DIRECTORS
________________________________________________________________________________


         The Board of Directors of the Company consists of fifteen directors
divided into three classes, Class I, Class II and Class III directors, and one
director emeritus.  Upon election by the stockholders, the directors of each
class serve for a term of three years, with the directors of one class elected
each year.  The Class I directors, consisting of Messrs. Conefry, Chapdelaine,
Irvin and Tormey, were elected to terms of office expiring at the 1998 annual
meeting of stockholders. The Class II directors, consisting of Messrs.
DeMatteis, McCooey, Swanson, Canuso, Barnet and Peters were granted terms of
office expiring at the 1999 annual meeting of stockholders of the Company. The
Class III directors, consisting of Messrs. Buxton, Conway (Brian J.), Conway
(Robert J.), Waters and Wenk, were granted terms of office expiring at the 1997
annual meeting of stockholders.  In all cases, directors serve until their
respective successors are duly elected and qualified.

         The directors whose terms expire at the Annual Meeting are Messrs.
Buxton, Conway (Brian J.), Conway (Robert J.), Waters and Wenk.  Each of these
directors (each a "Board Nominee") has been nominated by the Board to stand for
reelection, and, if elected, to serve for a term expiring at the annual meeting
of stockholders to be held in 2000.  Each Board Nominee has consented to being
named in this Proxy Statement and to serve if elected.

         UNLESS OTHERWISE INSTRUCTED, IT IS THE INTENTION OF THE PROXY HOLDERS
TO VOTE THE PROXIES RECEIVED BY THEM IN RESPONSE TO THIS SOLICITATION FOR THE
ELECTION OF THE BOARD NOMINEES AS DIRECTORS.  IF ANY BOARD NOMINEE SHOULD REFUSE
OR BE UNABLE TO SERVE, THE PROXIES WILL BE VOTED FOR SUCH PERSON AS SHALL BE
DESIGNATED BY THE BOARD TO REPLACE ANY SUCH NOMINEE.  THE BOARD PRESENTLY HAS NO
KNOWLEDGE THAT ANY OF THE BOARD NOMINEES WILL REFUSE OR BE UNABLE TO SERVE.

     THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE BOARD  NOMINEES.

BOARD NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth certain information regarding the Board
Nominees and the other members of the Board of Directors of the Company.


                                  POSITION(S) HELD WITH    DIRECTOR    TERM
NAME                    AGE(1)    THE COMPANY              SINCE(2)    EXPIRES
----                    ------    ---------------------    ---------   -------

John J. Conefry, Jr.       52     Chairman of the Board,
                                  President and CEO        01/15/80      1998

Lawrence W. Peters         66     Director                 04/25/89      1999

Bruce M. Barnet(3)         44     Executive Vice President,
                                  Director                 06/24/86      1999

Clarence M. Buxton         69     Director                 01/15/74      1997

Edwin M. Canuso            71     Director                 05/19/70      1999

Richard F. Chapdelaine(4)  71     Director                 11/22/88      1998

Brian J. Conway(5)         38     Director                 03/28/89      1997

Robert J. Conway(5)        61     Director                 08/17/83      1997

                                         -6-
<PAGE>


                                  POSITION(S) HELD WITH    DIRECTOR    TERM
NAME                    AGE(1)    THE COMPANY              SINCE(2)    EXPIRES
----                    ------    ---------------------    ---------   -------

Frederick DeMatteis        73     Director                 04/20/65      1999
George R. Irvin(3)         69     Director                 09/21/76      1998
Herbert J. McCooey         70     Director                 07/21/64      1999
Robert S. Swanson, Jr.     71     Director                 08/20/68      1999
Dr. James B. Tormey        67     Director                 01/19/82      1998
Leo J. Waters              61     Director                 03/27/90      1997
Donald D. Wenk             66     Director                 01/15/74      1997
Troy J. Baydala            78     Director Emeritus        08/15/72        -

____________________

(1) As of November 1, 1996.

(2) All directors commenced service as directors of the Company on December 20,
    1993, the date of the Company's incorporation.  The dates set forth above
    are the dates the individuals commenced service as directors of the Bank.

(3) Bruce M. Barnet is the son-in-law of George R. Irvin.

(4) Mr. Chapdelaine served on the Board of Directors of the Bank from August
    1968 to March 1986, at which time he left the Board.  He was reappointed to
    the Board of Directors of the Bank in November 1988.

(5) Brian J. Conway is the nephew of Robert J. Conway.

         The following table sets forth certain information regarding the
executive officers who are not directors of the Company.


                                  POSITION(S) HELD WITH
NAME                    AGE(1)    THE COMPANY
----                    ------    ---------------------

William  E. Viklund        56     Former President

Joseph P. Bryant           49     Executive Vice President

W. Douglas Singer          46     Executive Vice President

Mark Fuster                49     Executive Vice President/Treasurer

Robert T. Volk             44     Executive Vice President

____________________

(1) As of November 1, 1996.

         Mr. Fuster has served as an executive officer of the Company since
December 21, 1993, the first meeting of the Board of Directors of the Company.
Messrs. Bryant, Singer and Volk have served as executive officers of the Company
since July 26, 1994, March 29, 1994 and July 26, 1994, respectively.  All
executive officers of the Company are elected annually and serve at the will of
the Board of Directors, until their respective successors have been elected and
qualified.
                                         -7-

<PAGE>

BIOGRAPHICAL INFORMATION

         Set forth below is certain information with respect to the directors,
Board Nominees and executive officers of the Company.  Unless otherwise
indicated, the principal occupation listed for each person below has been his
principal occupation for the past five years.

DIRECTORS AND BOARD NOMINEES

    JOHN J. CONEFRY, JR. has served as the Chairman of the Board of Directors
and Chief Executive Officer of the Company since December 21, 1993, the first
meeting of the Board of Directors of the Company, and as Chairman of the Board
of Directors of the Bank since January 25, 1994.  He joined the Bank as an
employee on September 6, 1993 as Vice Chairman.  On November 23, 1993, he was
elected Chief Executive Officer of the Bank.  Mr. Conefry has been a Director of
the Bank since January 15, 1980. On September 7, 1996 he assumed the Presidency
of the Company and of the Bank.  Mr. Conefry previously was employed by Merrill
Lynch, Pierce, Fenner & Smith, Inc., where he had been a Senior Vice President
since 1981.  Prior to that, he had been a partner in the public accounting firm
of Deloitte, Haskins & Sells.  Mr. Conefry also serves on a number of boards of
not-for-profit organizations.

    WILLIAM E. VIKLUND was a director and President of the Company from its
formation in 1993 to September 6, 1996.  Mr. Viklund resigned his management and
board positions with the Company and Bank on September 6, 1996.

    LAWRENCE W. PETERS has been a director of the Company since its formation
in 1993.  He joined the Bank on April 13, 1989 as a Senior Executive Vice
President and Chief Lending Officer.  Mr. Peters retired from his management
position on May 23, 1995.  Prior to joining the Bank, Mr. Peters was employed by
Dime Savings Bank of New York as Vice Chairman and Director, and was in charge
of all lending functions.

    BRUCE M. BARNET has been a director of the Company since its formation in
1993.  He became a director of the Bank on June 24, 1986.  As the President of
Sunset Developers, Inc., a real estate brokerage firm,  he was active in the
development, sale and management of residential and commercial real estate in
the New York area since 1985.  On October 3, 1996, Mr. Barnet was appointed
Executive Vice President, Director of Real Estate and Development, of the
Company and the Bank.

    CLARENCE M. BUXTON has been a director of the Company since its formation
in 1993.  He became a director of the Bank on January 15, 1974.  Mr. Buxton is a
partner in Buxton, Davidson Associates, an employee benefit and estate planning
firm.

    EDWIN M. CANUSO has been a director of the Company since its formation in
1993.  He  became a director of the Bank on May 19, 1970.  He served the Bank
for 16 years as the Senior Executive Vice President in charge of real estate
management, development, construction and joint ventures.  Mr. Canuso retired
from the Bank on January 1, 1993.  He currently serves in a consulting capacity
to the Bank.

    RICHARD F. CHAPDELAINE has been a director of the Company since its
formation in 1993.  He became a director of the Bank on August 20, 1968.  He is
the Chairman of the Board of Chapdelaine Corporate Securities & Co. and
Chapdelaine & Co., Inc., both firms dealing in financial services.  He serves on
the Boards of St. Francis Hospital, Niagara University Emeritus, and Golden Bear
International.

    BRIAN J. CONWAY has been a director of the Company since its formation in
1993.  He became a director of the Bank on March 28, 1989.  He is a Managing
Director of TA Associates, Inc., a private equity investment firm.


                                         -8-
<PAGE>

    ROBERT J. CONWAY has been a director of the Company since its formation in
1993.  He became a director of the Bank on August 17, 1983.  Mr. Conway was
employed by AMF for 29 years.  His last position with AMF was Corporate Vice
President and Group Executive of the Worldwide Bowling Products Group.  He has
worked as a professional equities trader and currently is a private real estate
investor.

    FREDERICK DEMATTEIS has been a director of the Company since its formation
in 1993.  He became a director of the Bank on April 20, 1965.  Mr. DeMatteis is
the Chairman of the Board and CEO of Leon D. DeMatteis Corporation, a real
estate development and construction firm.  He is the Chairman of the Board for
St. Vincents Services and the Chairman of the Board of DM Airport Developers,
Inc. He serves on the Boards of St. Francis Hospital, Building Future Council,
Chairman of RY Management Co., Inc., and the Signet Hotel Corporation.

    GEORGE R. IRVIN has been a director of the Company since its formation in
1993.  He became a director of the Bank on September 21, 1976.  As President of
Realty Syndicates Co., Mr. Irvin is an active developer of residential and
commercial real estate on Long Island.

    HERBERT J. MCCOOEY has been a director of the Company since its formation
in 1993.  He became a director of the Bank on July 21, 1964.  Mr. McCooey is
retired. Prior to his retirement he served as Executive Vice President of Robb,
Peck, McCooey & Co., Inc., a specialist firm on the New York Stock Exchange.  He
was also a Senior Floor Governor of the New York Stock Exchange.

    ROBERT S. SWANSON, JR. has been a director of the Company since its
formation in 1993.  He became a director of the Bank on August 20, 1968.  Mr.
Swanson served as Chairman of the Board of S.B. Thomas Inc., a specialty baking
company.  He retired in 1976.

    JAMES B. TORMEY, M.D. has been a director of the Company since its
formation in 1993.  He became a director of the Bank on January 19, 1982.  Since
January 1, 1995 he has been retired from the active practice of medicine.  Dr.
Tormey has served as a member of the Medical Ethics Committee of the Catholic
Diocese of Rockville Centre.  He is a limited partner in the Rockville Centre
Medical Realty Association.

    LEO J. WATERS has been a director of the Company since its formation in
1993.  He became a director of the Bank on March 27, 1990.  He is the President
of a private investment consulting firm.

    DONALD D. WENK has been a director of the Company since its formation in
1993.  He became a director of the Bank  on January 15, 1974.  From June 23,
1992 until January 25, 1994, Mr. Wenk served as Chairman of the Board of
Directors of the Bank.  From January 25, 1994 until January 23, 1996,  Mr. Wenk
served as Chairman of the Executive Committee of the Board of Directors of the
Bank.  He is the Chairman of the Board of American Casting & Manufacturing
Corporation, and he also serves on the Board of St. Francis Hospital.

    TROY J. BAYDALA has been a director emeritus of the Company since soon
after its formation in 1993.  He became a director of the Bank on August 15,
1972 and retired from the Board of the Bank on December 8, 1992 upon reaching
the mandatory retirement age of 75.  Mr. Baydala retired in 1983 from his
position as Executive Vice President and Secretary of the Bank.  He previously
served as a Senior Vice President of Franklin National Bank, where he worked for
23 years.  Mr. Baydala was the President of the New York chapter of the American
Institute of Real Estate Appraisers (MAI).

                                         -9-

<PAGE>

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS


    JOSEPH P. BRYANT has been an Executive Vice President of the Company since
July 26, 1994.  He is Executive Vice President and Chief Mortgage Officer of the
Bank.  Mr. Bryant joined the Bank on November 1, 1993.  He formerly served as
President of Prudential Real Estate Financial Services Inc., a real estate
financing institution.

    W. DOUGLAS SINGER has been an Executive Vice President of the Company since
March 29, 1994. He is Executive Vice President and Treasurer of the Bank.  He
joined the Bank in 1988 from Goldman Sachs & Co. where he was a Vice President
in its Mortgage Backed Securities Department.

    MARK FUSTER has been the Treasurer of the Company since December 21, 1993
and Executive Vice President and Treasurer of the Company since January 23,
1996.  He is Executive Vice President and Chief Financial Officer of the Bank.
Mr. Fuster joined the Bank in 1981.  Prior to joining the Bank Mr. Fuster served
as Vice President and Controller for the real estate and mortgage loan
department at another financial institution.  Mr. Fuster had previously served
as a supervisor at the accounting firm of Peat Marwick Mitchell & Co.

    ROBERT T. VOLK has been an Executive Vice President of the Company since
July 26, 1994.  He is Executive Vice President and Director of Consumer Banking
at the Bank.  Mr. Volk joined the Bank in 1989.  He formerly served as Vice
President, Community Banking Group Administration at National Westminster Bank
USA.

________________________________________________________________________________
                  COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
                            OF THE COMPANY AND OF THE BANK
________________________________________________________________________________

         The Board of Directors meets on a monthly basis and may have
additional special meetings upon the request of the Chairman of the Board or a
majority of the Board of Directors.  During the fiscal year ended September 30,
1996, the Board of Directors met twelve times. All directors attended at least
75% of the aggregate number of meetings of the Board of Directors and committee
meetings, for those committees on which such director served,  during this
period.  The Board of Directors has established the following committees among
others:

         The Compensation Committee consists of Chairman Chapdelaine and
Messrs. DeMatteis and Swanson.  The function of the Compensation Committee is to
review the performance and compensation of the officers of the Company, make
recommendations to the Board of Directors with respect thereto and administer
the Executive Officer MRP, including the granting of restricted shares of Common
Stock pursuant thereto, and the Stock Incentive Plan, including the granting of
options pursuant thereto.  This committee meets on an as-needed basis and met
seven times during fiscal 1996.

         The Audit Committee consists of Chairman Waters and Messrs. Conway
(Brian J.), McCooey, Swanson,  Tormey and Peters.  The purpose of this Committee
is to review the progress of all internal audits, all independent audits and all
periodic reports of such audits submitted to the Audit Committee and to
supervise and coordinate with persons conducting such audits.  This committee
generally meets, at a minimum, on a quarterly basis and met 12 times during
fiscal 1996.

         In addition to the Committees described above, the Board of Directors
has established an Executive Committee and a Planning and Development Committee.

         The Board of Directors of the Bank (the "Bank Board") and the Board of
Directors are identically constituted.  During fiscal 1996, the Bank Board met
twelve times.  No director attended

                                         -10-
<PAGE>

fewer than 75% of the aggregate of Bank Board and committee meetings, for those
committees on which such director served during the time he served, held during
this period.

         The Bank Board also maintains executive, compensation and audit
committees, the membership of which is the same as the comparable committees of
the Board of Directors.  The Committees of the Bank Board serve substantially
the same functions at the Bank level as those of the Company.  The Compensation
and Audit Committees of the Bank Board met seven times and twelve times,
respectively, during such period.

         In addition to the Committees described above, the Bank Board has
established the Loan, Investment and Community Reinvestment Act ("CRA")
Committees.

         There are no arrangements or understandings between the Company or any
person(s) pursuant to which any person is or was selected as a director or
nominee.  There is no family relationship between any director, any Board
Nominee, any executive officer or any significant employee of the Company,
except that Brian J. Conway is the nephew of Robert J. Conway and Bruce M.
Barnet is the son-in-law of George R. Irvin.

         No director, Board Nominee, officer, or affiliate of the Company, or
any owner of record or beneficially of more than five percent (5%) of the Common
Stock or any associate of such parties is, or has been involved in any legal
proceedings as a party adverse to the Company or its subsidiaries or has a
material interest adverse to the Company or its subsidiaries. During the past
five years no director, Board Nominee, executive officer, promoter or control
person is or has been involved in any proceeding of a nature requiring
disclosure herein which is material to an evaluation of the ability or integrity
of such director, Board Nominee or executive officer or to the stockholders'
voting or investment decision.

________________________________________________________________________________
                      TRANSACTIONS WITH CERTAIN RELATED PERSONS
________________________________________________________________________________

         Savings associations such as the Bank are subject to the restrictions
contained in Section 22(h) of the Federal Reserve Act (as implemented by
provisions of the Financial Institutions Reform, Recovery and Enforcement Act of
1989 ("FIRREA") and the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA")) and the Federal Reserve Board's Regulation O thereunder on
loans to executive officers, directors and principal stockholders.  Under
Section 22(h), loans to a director, executive officer and to a greater than
10.0% stockholder of a savings association and certain affiliated interests of
such persons may not exceed, together with all other outstanding loans to such
person and affiliated interests, the institution's loans-to-one-borrower limit
(generally equal to 15.0% of the institution's unimpaired capital and surplus).
Section 22(h) also generally prohibits the making of loans above amounts
prescribed by the appropriate federal banking agency to directors, executive
officers and greater than 10.0% stockholders of a savings association and their
respective affiliates, unless such loan is approved in advance by a majority of
the board of directors of the institution with any "interested" director not
participating in the voting.  Regulation O prescribes the loan amount (which
includes all other outstanding loans to such person) as to which such prior
board of director approval is required as being the greater of $25,000 or 5.0%
of the association's unimpaired capital and unimpaired surplus (up to $500,000).
Further, Section 22(h) requires that loans to directors, executive officers and
principal stockholders be made on terms substantially the same as, and following
credit-underwriting procedures that are not less stringent than, those offered
in comparable transactions to other persons and that do not involve more than
normal risk of repayment or present other unfavorable features, except that
extensions of credit to directors, executive officers, and principal
shareholders are permitted as long as the extension of credit is made pursuant
to a pension or benefit program that is widely available to employees and does
not give preference to directors, executive officers, and principal
shareholders.  Section 22(h) also generally prohibits a depository institution
from paying the overdrafts of any of its executive officers or directors, unless
the payment of funds is made in accordance with a written, pre-

                                         -11-
<PAGE>

authorized interest-bearing extension of credit plan that specifies a method of
payment or a written, pre-authorized transfer of funds from another account of
the account holder at the institution.

         Savings associations also are subject to the requirements and
restrictions of Section 22(g) of the Federal Reserve Act (as implemented by
FDICIA) and Regulation O on loans to executive officers.  Under Section 22 (g),
the Bank is prohibited from extending credit, unless secured by a perfected
security interest in qualifying United States or United States agency
obligations or a deposit account in the lending bank, to its executive officers,
except to finance the purchase, construction, maintenance or improvement of the
executive's residence or the education of the executive's children or if for any
other purpose the aggregate loans do not exceed at any one time the higher of
$25,000 or 2.5% of the institution's unimpaired capital and unimpaired surplus
but in no event more than $100,000.  Under OTS regulations in effect prior to
the FIRREA and FDICIA amendments, similar restrictions applied; however, a
savings association could make loans such as residential mortgage loans and
consumer loans to officers and directors (and other employees) at favorable
interest rates and loan fees if certain procedures were followed.

         Although the Company does not, the Bank may from time to time make
loans to the directors and executive officers of the Company or the Bank or
members of their families, as well as to members of the public.  In keeping with
earlier applicable OTS regulations, the loans were made by the Bank in the past
in the ordinary course of business and on substantially the same terms and
conditions, except for reduced interest rates and loan fees, as those of
comparable transactions prevailing at the time, and did not involve more than
the normal risk of repayment or present other unfavorable features. The Bank's
policy during fiscal 1996 complied in all respects with Sections 22(g) and 22(h)
of the Federal Reserve Act and Regulation O and provided, among other things,
that all loans made by the Bank to its directors and executive officers which,
when aggregated with all other extensions of credit to that director or
executive officer, exceeded $350,000 were required to be approved by the Bank
Board, be made in the ordinary course of business, on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and not involve more than the
normal risk of collectability or present other unfavorable features.

         Mr. Barnet is the sole shareholder and President of Sunset Developers,
Inc. which until October 3, 1996 served as a real estate advisor and rendered
real estate services to the Bank and to subsidiaries of the Bank, pursuant to an
advisory agreement dated April 1, 1996 (1996 Advisory Agreement), covering 11
separate Bank owned properties.  The 1996 Advisory Agreement consolidated four
separate Advisory Agreements previously existing between the Bank and Sunset
Developers.  In connection with the 1996 Advisory Agreement, Sunset Developers
was entitled to an hourly fee for services rendered for each property covered
under the 1996 Advisory Agreement and result-based additional compensation for
10 of the properties covered under the 1996 Advisory Agreement.  Sunset
Developers, Inc. received a total of $304,939 in fees from the Bank during the
fiscal year ended September 30, 1996.  In connection with Mr. Barnet's joining
the Bank and Company on October 3, 1996 as Executive Vice President, Director of
Real Estate and Development, the 1996 Advisory Agreement was terminated pursuant
to a Termination Agreement dated October 3, 1996.  Pursuant to the terms of the
Termination Agreement, all amounts due and owing to Sunset Developers were paid
by the Bank, and Sunset Developers released the Bank from any claims for
additional compensation and payment.  The Company believes that the terms and
conditions of its relationship with Sunset Developers, Inc. were as favorable as
those that could be obtained from arms length negotiations with unassociated
third parties.

         Mr. Buxton is an agent for certain large insurance companies.  In such
capacity, he has acted as the agent for certain life and health insurance
policies provided by the Bank to its executive officers and other employees.
During fiscal 1996, the Bank paid $701,000 in premiums to these insurance
companies in connection with such policies and Mr. Buxton received compensation
from such insurance companies in connection therewith.

                                         -12-
<PAGE>

________________________________________________________________________________
                             BENEFICIAL OWNERSHIP REPORT
________________________________________________________________________________

         Section 16(a) of the Exchange Act and regulations promulgated
thereunder require the Company's directors and executive officers, and persons
who own more than 10% of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission (the "SEC") and the NASDAQ
reports of ownership and changes in ownership of common stock and other equity
securities of the Company.  Officers, directors and greater than 10%
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.

         Based solely on review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during the fiscal year ended September 30, 1996 all
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.

________________________________________________________________________________
                               DIRECTOR'S COMPENSATION
________________________________________________________________________________

         DIRECTOR FEES.  Non-employee members of the Board of Directors receive
an annual retainer of $6,000 and non-employee members of the Bank Board receive
an annual retainer of $18,000.  In addition, each such member receives a fee of
$1,000 per meeting for attendance at Board meetings and a fee of $500 per
meeting for attendance at Committee meetings.  For Board meetings of the Company
and the Bank held on the same day, only one fee is paid to cover both meetings.
For Committee meetings of the same Committee of the Company and the Bank held on
the same day, only one fee is paid for both meetings. Mr. Waters, Chairman of
the Audit Committee, and Mr. Chapdelaine, Chairman of the Compensation
Committee, each receive one Committee retainer fee of $12,000 per annum for
serving as Chairman of his Committee of the Company and the Bank, in addition to
any other compensation that they receive as members of the Board of Directors or
the Bank Board.  Committee Chairmen who receive such a retainer receive no
additional compensation (e.g., Committee meeting fees) for serving in that
capacity regardless of the number of meetings held.  Directors who are employees
of the Bank receive no fees or retainers.  In addition, Mr. Canuso, Mr. Wenk,
Dr. Tormey and Mr. Baydala provide consulting services to the Bank.  For these
services, Mr. Canuso receives a consulting fee of $30,000 per annum, Mr. Wenk
receives a consulting fee of $1,000 per month, and Dr. Tormey receives a
consulting fee of $1,000 per month.   Mr. Baydala receives a consulting fee of
$500 per Loan Committee meeting attended and $500 per day that he performs loan
inspections and appraisals; such fees are expected to approximate between
$26,000 and $29,000 per annum.

         The Bank maintains a deferred fee plan for directors whereby directors
may elect to defer any or all fees earned for their services as a director.  Mr.
Robert J. Conway is the only director whose fees are currently being deferred
pursuant to this plan.

         OPTION PROGRAM FOR NON-EMPLOYEE DIRECTORS.  The Company maintains a
non-employee director stock option program.  The program automatically grants to
directors of the Company who are not employees of or consultants to the Bank or
the Company non-statutory options to acquire a fixed number of shares of Common
Stock.  Under the program, each outside director received, in connection with
the  consummation of the Bank's conversion from mutual to stock form, the
concurrent issuance of the Bank's capital stock to the Company and the sale of
the Company's Common Stock to the public (the "Conversion"), an option to
acquire a number of shares of the Common Stock equal to (a) 41,400 shares, plus
(b) 1,035 shares for each full and partial year of service by any such outside
director on the Bank Board (a "Conversion Grant").  Each new outside director
will receive an option to acquire 2,588 shares of the Common Stock, as of the
date of appointment or election to the Board of Directors (an "Initial Grant").
On each anniversary of any Conversion Grant and Initial Grant each continuing
outside director shall automatically receive an option to acquire 518 shares of
the Common Stock.  These additional options will be granted subject to the
availability of options within the program. Outside

                                         -13-

<PAGE>

directors have to date received fixed option awards, depending upon length of
service on the Bank Board, covering an aggregate 705,881 shares of Common Stock,
including an aggregate of 5,698 shares of Common Stock covering the 1996
automatic grant of options.   70,369 shares currently remain available for
future fixed option awards, as described above, to new outside directors and
current outside directors who continue to serve on the Board of Directors.  The
exercise price per share of each option equals the fair market value of the
underlying shares of Common Stock on the date of grant of such option.  All
options granted under the program become exercisable as to one-fifth of the
underlying shares on each of the first five anniversaries of the date of grant.
All option grants expire upon the earlier of ten years following the date of
grant, or, in the event of an involuntary termination, as defined in the
program, one year following the date the optionee ceases to be a director of the
Company.  In the event of an involuntary termination, or upon the occurrence of
a change in control, as defined in the program, all options granted to an
outside director become 100% exercisable.  In the event of a voluntary
termination, as defined in the program, the outstanding options will
automatically expire on the date of any such termination.

         MANAGEMENT RECOGNITION AND RETENTION PLAN FOR NON-EMPLOYEE DIRECTORS.
The Bank maintains a management recognition and retention plan for directors of
the Bank and the Company who are not employees of or consultants to the Bank or
the Company.  The plan provides for the automatic fixed grant of 17,913 shares
of restricted Common Stock to those individuals (a) who were directors of the
Company and the Bank on the date of the Conversion and (b) who are subsequently
elected or appointed as a director of both the Company and the Bank.  To date,
outside directors as a group have received, in the aggregate, awards of 197,043
shares of restricted Common Stock under the plan.  35,832 shares of restricted
Common Stock remain available for future grants under the plan.  All grants of
shares of restricted Common Stock vest at a rate of one-fifth on each of the
first five anniversaries of the date of grant.  In the event of a termination of
board membership, other than a termination due to retirement after age 75,
death, or disability (as defined in the plan), all unvested shares of restricted
Common Stock will be forfeited by the former director.  In the event of any such
retirement, death, or disability, or any change in control, as defined in the
plan, of the Company or the Bank, all shares of restricted Common Stock become
fully vested as of the date of any such termination or change in control.

         HEALTH CARE COVERAGE.  The Bank has made available a plan of health
care coverage to directors who are not employees of the Bank or the Company and
who wish to participate in the plan.  Such directors may choose to receive
health care coverage under one of two plans.  The first plan provides medical
coverage within the Bank's Flexible Benefits Program, under which each director
may choose from one of three plan options, each of which has a different level
of reimbursement and a different monthly premium.  The second plan is a health
maintenance organization.

         RETIREMENT BENEFIT PLAN.  The Bank has adopted a non-qualified
Retirement Benefit Plan for directors who are not employees of the Bank or the
Company ("Eligible Directors").  Upon retirement from the Board of Directors at
age 65 or older, with a minimum of 15 years of service, the retirement benefits
provide continuation of the annual retainers received by Eligible Directors from
the Bank and the Company and Board meeting fees at the then current rate for a
period of ten years following retirement.  In the event that an Eligible
Director retires from the Board of Directors with a minimum of five but less
than 15 years of service, such Eligible Director shall receive pro-rated
retirement benefits based on the years of service.  Mr. Baydala is currently
receiving annual benefits of $36,000 under the Retirement Benefit Plan.


                                         -14-
<PAGE>

________________________________________________________________________________
                                EXECUTIVE COMPENSATION
________________________________________________________________________________

         THE REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION AND
THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR THE EXCHANGE ACT, EXCEPT AS TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE,
AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

          The Compensation Committees of the Bank and the Company (together,
the "Committee") are identically constituted and, at the direction of the Board
of Directors, have jointly prepared the following report for inclusion in this
Proxy Statement.  The Committee is comprised of Messrs. Chapdelaine, DeMatteis
and Swanson, three non-employee directors who are "disinterested persons" within
the meaning of Rule 16b-3 of the Exchange Act.  The Committee has the
responsibility for all compensation matters concerning the Company's and the
Bank's executive officers.

         COMPENSATION PHILOSOPHY.  The executive compensation program links
management pay with the Company's annual and long-term performance.  The program
is intended to attract and retain highly-qualified senior managers by providing
compensation opportunities that are consistent with the Company's performance.
The program provides for base salaries that reflect such factors as level of
responsibility, individual performance, internal fairness, and external
competitiveness, annual incentive bonus awards that are payable in cash for the
achievement of strategic acquisitions and/or divestitures, loan production,
improvement in asset quality, increased fee income, introduction of innovative
products and services, and the achievement of other significant annual financial
and operational objectives.  The program also provides long-term incentive
opportunities in the form of stock options and restricted shares that strengthen
the mutuality of interest between management and the Company's stockholders and
encourage management continuity.  From time to time, the Committee utilizes the
services of a recognized, external consulting firm to assess marketplace
compensation values and practices, and to assess the reasonableness of the
overall compensation program.

         The Company strives to provide motivational compensation opportunities
that effectively and appropriately reward management for the achievement of
critical performance objectives.  The Committee supports a pay-for-performance
policy that determines executive compensation amounts based on both corporate
and individual performance.  Salaries and annual bonuses for senior corporate
executives are therefore based on the overall performance of the Company and on
their personal contributions to that performance.  In addition, the program
provides stock incentive opportunities designed to align the interests of
executives and other key employees with other stockholders through the ownership
of Common Stock.

         Effective January 1, 1994, Internal Revenue Code (the "Code") Section
162(m) places a limitation of $1 million per officer on the deductibility of
certain elements of compensation paid to the Named Executive Officers (as
defined below) of the Company and the Bank.  As stated above, the Committee
designs its compensation arrangements to achieve various objectives.  Because of
the importance placed by the Committee on establishing appropriate compensation
arrangements that will achieve these objectives, the Committee has not taken
into account the impact of Section 162(m) of the Code and does not believe that
the tax law should dictate compensation policies or have a significant effect in
determining compensation policies and practices for the Company's executive
officers.  The Committee will study whether it is possible or desirable to cause
compensation arrangements in the future to be exempt from the limitation imposed
under Section 162(m) of the Code.  To the extent that the Committee's
compensation objectives can be achieved in a manner that maximizes the
deductibility of compensation paid by the Company, it will seek to do so.

                                         -15-

<PAGE>

         The following is a discussion of each of the elements of the Company's
executive compensation program, including a description of the decisions and
actions taken by the Committee with respect to fiscal 1996 compensation for the
Chief Executive Officer (the "CEO") and all executive officers as a group.

         MANAGEMENT COMPENSATION PROGRAM.  Compensation paid to the Company's
executive officers in the fiscal year ended September 30, 1996 (as reflected in
the tables that follow with respect to the Named Executive Officers) consisted
of the following elements: base salary, annual incentive bonus, restricted
shares under the Executive Officer MRP and stock options under the Stock
Incentive Plan.  Total annual cash compensation for each executive officer
varies each year based on the Company's achievement of its annual objectives and
the individual's performance.

         With respect to determining the base salary of executive officers, the
Committee takes into consideration a variety of factors, including the
executive's level of responsibility and individual performance, the salaries of
similar positions in the Company, comparable companies in our industry and the
financial and operational performance of the Company in relation to its
competition in the industry.  The Company participates in and reviews various
industry salary surveys.  In addition, the Committee may, from time to time,
utilize the services of independent consultants to assess comparable external
salaries.

         The Company's annual incentive bonus to its executive officers
(including the Named Executive Officers) is based on the achievement of
objective, financial, and operational performance targets and the discretion of
the Committee.  These targets may include net operating income, completion of
certain strategic business transactions, attainment of certain critical
financial ratios, and other performance objectives as may be determined
annually.  In determining individual incentive bonus awards, accountability of
executive officers and individual contributions towards the attainment of these
objectives are considered.  In determining specific awards for the fiscal year
ended September 30, 1995, which were paid during fiscal 1996, the Committee
placed considerable emphasis on the integration of strategic acquisitions,  loan
production, financial performance as reflected by net income, and the
introduction of innovative relationship banking products in determining annual
incentive bonus for the Company's executive officers.  The calculation of the
Company's financial performance with respect to the determination of these
incentive bonus awards is made as soon as is practicable after the completion of
the Company's fiscal year.

         One long-term retention element of the management compensation program
is in the form of restricted share grants.  These restricted shares are granted
and administered by the Committee under the Executive Officer MRP.  The
Committee and the Board of Directors believe that providing executive officers
with stock ownership opportunities significantly aligns the interests of the
executives with stockholders and encourages the executives' long-term retention.
Restricted share grants under the Executive Officer MRP also recognize the past
contributions of these employees and provide an additional incentive for
shareholder value creation.  On March 29, 1994 (the "Grant Date") immediately
prior to the public offering of the Common Stock, the Committee granted to
certain officers and key employees (including the Named Executive Officers),
restricted shares that will vest (with respect to the lapse of restrictions) at
the rate of 20% per year from the Grant Date.  On April 19, 1995, the Committee
granted certain officers and key employees (including the Named Executive
Officers), restricted shares that will vest (with respect to the lapse of
restrictions) at the rate of 20% per year from March 29, 1996.  On March 26,
1996, the Committee granted certain officers and key employees (including the
Named Executive Officers) restricted shares that will vest (with respect to the
lapse of restriction) at the rate 50% on March 29, 1997 and 50% on March 29,
1998.

                                         -16-

<PAGE>

         The other long-term incentive element of the Company's management
compensation program is in the form of stock option grants.  These stock options
are granted and administered by the Committee under the Company's Stock
Incentive Plan (the "Plan").  The Plan is intended to create an opportunity for
executive officers and other key employees of the Company to acquire a
proprietary interest in the Company and thereby enhance their efforts in the
service of the Company and its stockholders.

         On the Grant Date, the Committee granted to certain executive officers
(including the Named Executive Officers) and certain other key employees of the
Company, stock options with an exercise price of $11.50 per share that was the
initial offering price (and then current fair market value) of the Common Stock.
Of the stock options granted to each executive officer and key employee, 20%
become exercisable on each succeeding anniversary of the Grant Date.  In 1995
stock options with an exercise price of $17.81 per share (the current fair
market value at grant date) were granted to an executive officer and certain key
employees.  These options became exercisable in 20% annual  installments
beginning on March 29, 1996.  The Committee believes that by rationing the
exercisability of these stock options over a five-year period, the executive
retention impact of the Plan will be strengthened and management's motivation to
enhance the value of the Common Stock will be positively influenced.

         CHIEF EXECUTIVE OFFICER COMPENSATION.  Mr. John J. Conefry, Jr.,
Chairman, President and Chief Executive Officer of the Company, joined the Bank
on September 6, 1993 as Vice Chairman of the Bank Board.  On November 23, 1993,
he was elected Chief Executive Officer of the Bank and on January 25, 1994 he
was elected Chairman of the Bank Board. On September 7, 1996, he was elected to
the additional position of President.  Mr. Conefry has served as the Chairman of
the Board of Directors and Chief Executive Officer of the Company since December
21, 1993.  In consideration of Mr. Conefry's assumption of these
responsibilities the Company entered into an employment agreement with Mr.
Conefry that provided for a base salary of $600,000 per year through December
31, 1995 and $700,000 per year beginning January 1, 1996.  This amount was
determined based on an assessment of the degree of accountability of the
Chairman and Chief Executive Officer position during this critical period in the
Bank's and the Company's history, as well as an assessment of competitive
marketplace compensation for positions of comparable responsibility among
similar financial institutions.  This employment agreement provides that the
base salary amount may be reviewed annually and adjusted at the sole discretion
of the Board of Directors.  Similar agreements were entered into with other
executive officers of the Company in order to maintain a stable and competent
management group through and after the Conversion.

         Mr. Conefry was awarded a bonus of $350,000 in December 1995 for the
year ended September 30, 1995 in recognition of his accountability for adding
shareholder equity value and for his contributions to the Company's meeting its
targeted performance objectives for the year, the leadership demonstrated in the
successful integration of two mortgage banking operations, and the introduction
of products and services designed to fulfill the corporate objective of becoming
the BANK OF A LIFETIME.  With respect to the long-term retention and incentive
elements of Mr. Conefry's compensation, grants of restricted shares (as
identified in the tables below) were made during fiscal 1996 and were based on
the practices of comparable companies in our industry as well as in recognition
of Mr. Conefry's leadership and his level of responsibility and seniority.




SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS


Richard F. Chapdelaine,      Frederick DeMatteis      Robert S. Swanson, Jr.
    Chairman

                                         -17-

<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         One of the responsibilities of the Compensation Committee is to
determine the level of compensation for executive officers of the Company.  The
Compensation Committee for 1996 consisted of directors Chapdelaine, DeMatteis
and Swanson, none of whom are officers or employees of or consultants to the
Company, the Bank or any of their subsidiaries.

         Although the Company does not, the Bank may, from time to time, make
loans to the Company's and the Bank's directors, executive officers, or members
of their families, subject to certain regulatory restrictions applicable
thereto.  All loans outstanding to members of the Compensation Committees of the
Company or the Bank or to members of the Boards of Directors of the Company or
the Bank were made in the ordinary course of business of the Bank, were made on
substantially the same terms, including interest rate and collateral, as those
prevailing at the times the loans were made for comparable transactions with
other persons (except for reduced interest rates and loan fees for certain loans
made prior to August 9, 1989 under the applicable OTS regulations), and do not
involve more than the normal risk of collectability or present other unfavorable
features.

<PAGE>
 
STOCK PERFORMANCE GRAPH

         The following graph shows a comparison of cumulative total stockholder
return on the Common Stock since April 14, 1994 (the date of the consummation of
the Conversion) with the cumulative total returns of both a broad equity market
index and a published industry index.  The broad equity market index chosen was
the Nasdaq National Composite Index and the published industry index chosen was
the NASDAQ Bank Composite Index.  The Common Stock began trading on April 14,
1994.  As a result, the graph may not be indicative of possible future
performance of the Common Stock.


                    COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
                  THE COMMON STOCK, NASDAQ NATIONAL COMPOSITE INDEX
                         AND NASDAQ BANK COMPOSITE INDEX (1)

                                         [GRAPH]
<TABLE>
<S>                 <C>        <C>       <C>       <C>       <C>       <C>       <C>       <C>        <C>      <C>       <C>
                      4/14/94   6/30/94   9/30/94  12/31/94   3/31/95   6/30/95   9/30/95  12/31/95   3/31/96   6/30/96   9/30/96
LISB Common Stock      100.00    132.58    133.63    123.11    147.31    159.93    206.23    222.01    236.74    257.26    243.06
NASDAQ Bank Composite
Index                  100.00    111.26    113.40    102.40    113.06    124.86    142.30    148.29    154.63    157.82    168.85
NASDAQ National        
Composite Index        100.00     97.18    105.49    104.07    113.32    129.65    144.96    146.26    152.98    164.76    171.26

</TABLE>

____________________

(1) Assumes $100 invested on April 14, 1994 and all dividends reinvested
    through the end of the Company's fiscal year ended September 30, 1996.  The
    price of the Common Stock issued at the Conversion was $11.50 per share.
    The performance graph above is based upon closing prices on the trading day
    specified. The Common Stock closed on April 14, 1994, its first day of
    trading activity, at $11.875 per share.

                                             -19-
<PAGE>

SUMMARY COMPENSATION TABLE

    The following table sets forth the compensation paid by the Company or
any of its subsidiaries for services during the  three fiscal years ended
September 30, 1996 to the Chief Executive Officer and the four highest paid
executive officers of the Company or its subsidiaries who each received total
salary and bonus in excess of $100,000 (the "Named Executive Officers").  In
addition, one executive officer of the Company who retired during the year is
included in the table.

<TABLE>
                                   ANNUAL COMPENSATION                         LONG TERM COMPENSATION
                                  ---------------------                        ----------------------
                                                                   RESTRICTED  SECURITIES
NAME AND                FISCAL    SALARY    BONUS     OTHER ANNUAL   STOCK     UNDERLYING     LTIP      ALL OTHER
PRINCIPAL POSITIONS     YEAR       ($)       ($)      COMPENSATION   AWARDS     OPTIONS       PAYOUTS   COMPENSATION
-------------------     ----       ---       ---         ($)(1)      ($)(2)     (#)(3)        ($)(4)      ($)(5)
<S>                       <C>    <C>       <C>         <C>          <C>         <C>           <C>        <C>
                                                         ------      ------     ------        ------      ------
John  J.Conefry, Jr.(6)  1996   673,076   350,000         0         112,169        0             0          56,420(7)
  Chairman, President,
  Chief Executive
  Officer and Director   1995   600,000   250,000         0         712,500        0             0          98,728

                         1994   496,154         0         0         446,350  274,275             0         133,404

William E. Viklund(8)    1996   496,153   150,000         0               0        0             0       2,007,115(9)
  Former President,
  Chief Operating
  Officer and Director   1995   500,000   100,000         0         356,250        0             0          40,146

                         1994   500,000   140,000         0         232,875  134,550             0          25,565


Joseph P. Bryant         1996   248,076   125,000         0          28,356        0             0          31,680(10)
  Executive Vice
  President
                         1995   225,000    50,000         0         151,406   31,050             0          67,891

                         1994   203,365         0         0           9,706   31,050             0         103,066


W. Douglas Singer        1996   180,000    70,000         0          29,334        0             0          20,141(11)
  Executive Vice
  President and
  Treasurer              1995   160,000    50,000         0         151,406        0             0          15,938

                         1994   160,000    60,000         0          80,857   62,100             0           8,779

Mark Fuster
  Executive Vice         1996   180,000    60,000         0          30,731        0             0          19,955(12)
  President and          
  Chief Financial
  Officer
                         1995   160,000    65,000         0         151,406        0             0          15,598

                         1994   160,000    80,000         0          80,857   62,100             0           9,458


Robert T. Volk           1996   160,000    80,000         0          29,334        0             0          18,746(13)
Executive Vice President 

                         1995   155,962    50,000         0         151,406        0             0          18,334

                         1994   145,000    60,000         0          80,857   62,100             0           9,477
</TABLE>

                                                                    -20-

<PAGE>
 


(1) For fiscal 1996, there were no (a) perquisites with an aggregate value over
    the lesser of $50,000 or 10% of the individual's total salary and bonus for
    the year; (b) payments of above-market preferential earnings on deferred
    compensation; (c) payments of earnings with respect to long-term incentive
    plans prior to settlement or maturation; or (d)  preferential discounts on
    stock.

(2) In fiscal 1994, 1995, and 1996 restricted stock awards were granted under
    the Bank's Executive Officer MRP.  The 1996 awards were 4,015, 0, 1,015,
    1,050, 1,100, and 1,050 shares of Common Stock to Messrs. Conefry, Viklund,
    Bryant, Singer, Fuster, and Volk respectively. The dollar value of such
    1996 awards set forth in the above table is based upon $27.94 per share,
    which was the fair value of the Common Stock on the date of the award of
    such grants.  The dollar value of all unvested awards based upon the
    closing price of the Common Stock of $28.88 per share as reported on the
    NASDAQ system on September 30, 1996 is $115,933, $0, $29,308, $30,319,
    $31,762, and $30,319, respectively.  The 1996 awards will vest for Messrs.
    Conefry, Bryant, Singer, Fuster and Volk on March 29, 1997, in the amounts
    of 2,015, 515, 550, 600 and 550 shares respectively.  The balance of the
    1996 awards will vest on March 29, 1998.

(3) Reflects options granted under the Company's 1994 Stock Incentive Plan.
    For a discussion of the terms of the grant and the vesting of options, see
    "Option Grants in Last Fiscal Year" and the corresponding tables.

(4) For fiscal 1994, 1995 and 1996 the Bank had no long-term incentive plans.
    Consequently, there were no payouts or awards under any long-term incentive
    plan.


(5) Amounts include contributions to the 401(k) Savings Plan and ESOP, and the
    imputed income on the value of split dollar life insurance and premiums
    paid for group term life insurance policy and one whole life insurance
    policy.  The whole life insurance policy is owned by the individual.  The
    split dollar life insurance policies are also owned by the individuals but
    any cash surrender value proceeds received on termination of a policy will
    be first used to refund the premiums paid by the Company with respect to
    such policy.

(6) John J. Conefry, Jr. joined the Bank on September 6, 1993 as Vice Chairman.
    On November 23, 1993 he was elected Chief Executive Officer of the Bank.
    On January 25, 1994, he was elected Chairman of the Bank Board.  On
    September 7, 1996, Mr. Conefry was elected to the Presidency of the Company
    and the Bank. As of January 25, 1994, Mr. Conefry's annual salary was
    increased to $600,000.  As of January 1, 1996 his annual salary was
    increased to $700,000.

(7) Includes (i) imputed income on the value of split dollar life insurance in
    the amount of $4,099, (ii) premium for group term life insurance in the
    amount of $4,807, (iii) personal use of a company-provided automobile in
    the amount of $9,250, (iv) 401(k) Savings Plan contribution in the amount
    of $2,443, (v) ESOP contributions in the amount of $9,750, and (vi)
    dividends on unvested restricted stock awards of $26,071.

(8) Mr. William E. Viklund resigned his management and Board positions with
    both the Company and the Bank on September 6, 1996.

(9) Includes (i) severance payments in the amount of $1,920,000, (ii) premiums
    for group term life insurance, income on the value of the split dollar life
    insurance, and whole life insurance, in the amounts of $4,293, $842 and
    $1,753 respectively, (iii) personal use of a company provided automobile in
    the amount of $13,629, (iv) ESOP contributions in the amount of $9,750, (v)
    dividends on unvested restricted stock awards of $13,300, and  (vi)
    distribution of the split dollar cash surrender value of $43,548.


                                         -21-
<PAGE>
 
(10) Includes (i) premiums for group term life insurance and split dollar life
     insurance in the amounts of $1,061 and $1,189, respectively, (ii) personal
     use of company-provided automobile in the amount of $5,795, (iii) a moving
     expense allowance in the amount of $10,386, (iv) ESOP contributions in the
     amount of $9,750 and (v) dividends on unvested restricted stock awards of
     $3,499.

(11) Includes (i) premiums for group term life insurance and split dollar life
     insurance in the amounts of $827  and $919, respectively, (ii) 401(k)
     Savings Plan contribution in the amount of $3,407, (iii) ESOP
     contributions in the amount of $9,750, and (iv) dividends on unvested
     restricted stock awards of $5,238.

(12) Includes (i) premiums for group term life insurance and split dollar life
     insurance in the amounts of $696  and $904, respectively, (ii) 401(k)
     Savings Plan contribution in the amount of $3,357, (iii) ESOP contributions
     in the amount of $9,750, and (iv) dividends on unvested restricted stock
     awards of $5,248.

(13) Includes (1) premiums for group term life insurance and split dollar life
     insurance in the amounts of $432  and $770, respectively, (ii) 401(k)
     Savings Plan contributions in the amount of $2,556, (iii) ESOP
     contributions in the amount of $9,750, and (iv) dividends on unvested
     restricted stock awards of $5,238.

OPTION GRANTS IN LAST FISCAL YEAR

         No options were granted under the Company's 1994 Stock Incentive Plan
to the Named Executive Officers in fiscal 1996.

         The following table sets forth information with respect to (i) the
number of shares of Common Stock underlying unexercised stock options held by
the Named Executive Officers and (ii) the value of such unexercised in-the-money
options, both as of September 30, 1996.

<TABLE>
<CAPTION>
__________________________________________________________________________________________________
                             AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                    AND FISCAL YEAR-END OPTION VALUES
__________________________________________________________________________________________________

                                               NUMBER OF SECURITIES
                        SHARES      VALUE           UNDERLYING               VALUE OF UNEXERCISED
                        ACQUIRED   REALIZED      UNEXERCISED OPTIONS         IN-THE MONEY OPTIONS
NAME                  ON EXERCISE    ($)          AT FISCAL YEAR-END          AT FISCAL YEAR-END
                          (#)                           (#)                         ($) (1)
                                             EXERCISABLE/UNEXERCISABLE    EXERCISABLE/UNEXERCISABLE

<S>                     <C>           <C>        <C>                      <C>
John J. Conefry, Jr....  -           -             109,710/164,565        $1,906,211/$2,859,317
William E. Viklund...  49,885        $855,499       17,390/7,000          $302,151/$121,625
Joseph P. Bryant.                                   12,630/43,470         $180,261/$598,550
W. Douglas Singer....    -           -              24,840/37,260         $431,595/$647,392
Mark Fuster............  -           -              24,840/37,260         $431,595/$647,392
Robert T. Volk........                              24,840/37,260         $431,595/$647,392
</TABLE>
____________________

(1) Based upon the difference between $28.875, the closing price of the Common
    Stock as reported on the NASDAQ system on September 30, 1996, and the
    $11.50 exercise price of the options granted in 1994 and in the case of Mr.
    Bryant, the $17.81 exercise price of options granted in 1995.

                                             -22-
<PAGE>

 
EMPLOYMENT AND OTHER AGREEMENTS

         The Bank has entered into employment agreements with Messrs. Conefry,
Viklund, Bryant, Singer, Fuster, and Volk (the "Bank Agreements").  Messrs.
Conefry, Viklund, Bryant, Singer, Fuster and Volk have also entered into
employment agreements with the Company (the "Company Agreements").  To ensure
that no duplicate payments or benefits are received by Messrs. Conefry, Viklund,
Bryant, Singer, Fuster and Volk, any amounts paid or benefits provided by the
Company under the Company Agreements to such officers will reduce commensurately
any obligation of the Bank to pay such amounts under the Bank Agreements, and
vice versa.  The term of employment under Mr. Viklund's employment agreement
with the Bank and Company terminated on September 6, 1996 pursuant to a
separation agreement between Mr. Viklund and the Bank and Mr. Viklund and the
Company dated September 6, 1996.

         The Bank Agreements and the Company Agreements establish the
respective duties and compensation of these officers and were intended to ensure
that the Bank and the Company would be able to maintain stable and competent
management. The Company Agreements provide for a three-year term of employment
for each officer as do their employment agreements with the Bank. Upon the
satisfactory completion of an annual performance review, the Bank Board, in its
sole discretion, may approve, as of each anniversary of the date of each of the
Bank Agreements, a one year extension of the officer's term of employment
thereunder.  The term of employment under the Company Agreements will be
automatically extended on each anniversary of the date thereof for an additional
one year period unless, six months prior to any such anniversary, the relevant
officer or the Company elects not to extend (or further extend) the term of
employment thereunder.  The annual base salary amounts for Messrs. Conefry,
Bryant, Singer, Fuster and Volk under their employment agreements are $700,000,
$250,000, $180,000, $180,000 and $160,000 respectively.  Mr. Barnet was
appointed Executive Vice President, Director of Real Estate and Development on
October 3, 1996 at an annual salary of $225,000.  At that time Mr. Barnet
entered into employment agreements with the Bank and the Company.  The
employment agreements are identical in terms to those of the other Executive
Officers.  The Bank Agreements and the Company Agreements also provide that the
base salary of the officers will be reviewed annually for increase in the sole
discretion of the Board of Directors or the Bank Board, as the case may be.  In
addition to such base salary, the Bank Agreements and the Company Agreements
also provide for, among other things, annual bonus payments (in the sole
discretion of the Board of Directors or the Bank Board, as the case may be),
disability pay, entitlement to participate in incentive, retirement, savings and
welfare benefit plans, business expense reimbursement, vacation and other
benefits.

         The Bank Agreements and the Company Agreements provide for termination
by the Bank or the Company, as the case may be, with or without "cause" (as
defined in the relevant employment agreements) at any time.  In the event that
the Bank or the Company chooses to terminate the officer's employment without
cause or if the officer resigns from the Bank or the Company for "good reason"
(as defined in the relevant employment agreements), including, without
limitation, (i) failure of the Bank Board or the Board of Directors, as the case
may be, to appoint or reappoint the officer to his stated offices, (ii) a
material change in  any officer's functions, duties or responsibilities causing
their position with the Bank or the Company to become one of lesser
responsibility, importance, or scope, (iii) any reduction in base salary or a
material reduction in other benefits, or (iv) a "change in control" (as defined
in the relevant employment agreements) of the Bank or the Company, the officer
will be entitled to a lump sum severance payment equal to three times such
officer's highest annual base salary and bonus payment.  The Bank or the
Company, as the case may be, will also be required to continue the officer's
life, health, accident, dental and disability coverage for up to three years.
The officer would also be entitled to base salary through the date of
termination, any annual bonus previously awarded but not yet paid, reimbursement
for business expenses incurred prior to termination but not yet paid, payment
for unused vacation days, any other compensation or benefits under the Bank's or
the Company's benefit plans to which the officer is otherwise entitled (the
"Standard Entitlements"), and certain indemnification rights (to the extent
permitted by the Office of Thrift Supervision).  In the event of death, the
officer's beneficiary will be entitled to continuation of two-thirds of the
officer's base salary for three months or the same payable in one lump sum at
the Bank's or the Company's discretion, as the case may be, a prorated annual
bonus for the year of death, and the Standard Entitlements.  In the event of
termination upon retirement, the agreements require continuation of life and
health

                                         -23-

<PAGE>

insurance coverage for one year that is substantially identical to the coverage
maintained for such individual prior to retirement and the Standard
Entitlements.  In the event of a termination for cause, the officer will only be
entitled to the Standard Entitlements and to certain indemnification rights (in
both cases, where applicable, only to the extent permitted by the Office of
Thrift Supervision).  In the event of a "voluntary termination" (as defined in
the relevant employment agreements), the officer will only be entitled to such
payments or benefits as he would be if terminated for cause.  In the event an
officer is disabled he may be suspended and shall be entitled to receive
two-thirds of base salary for the period of time specified in the Bank
Agreements or the Company Agreements.  In addition, a disabled officer shall be
entitled to continued coverage under life, health and other welfare benefit
plans while such officer is disabled.

         If an officer's term of employment under the Bank Agreements or the
Company Agreements is not extended and such officer's employment with the Bank
and the Company has not previously been terminated thereunder (x) with or
without cause, (y) voluntarily or for good reason by the officer, or (z) due to
death, disability or retirement, the officer shall be entitled to receive, upon
termination of employment (other than for cause) and in lieu of any other
severance payments, base salary continuation for the period commencing on the
date of termination and ending six months thereafter.  The present value of this
base salary continuation may be paid to any relevant officer in one lump sum.
Notwithstanding the above, if (a) there occurs a change in control during the
officer's term of employment under the Bank Agreements or Company Agreements,
(b) such officer's term of employment under the Bank Agreements or the Company
Agreements is not extended through  the second anniversary of any such change in
control, and (c) the employment of any such officer is subsequently terminated
(other than for cause), such officer, in lieu of the special severance and
welfare benefit continuation described in the first sentence of this paragraph,
shall be entitled to receive the severance and benefits to which he would have
been entitled had his employment been terminated without cause.

         If any amounts payable in connection with any change in control are
determined to be "excess parachute payments" under Section 280G of the Code
resulting in the imposition of the 20% excise tax on such payments under Section
4999 of the Code, each officer will receive from the Company an additional
amount such that the effect of the imposition of that excise tax is effectively
eliminated.

         To provide additional employment incentive to certain executives, the
Bank, in accordance with the terms of the Deferred Pension Plan (the "Deferred
Plan"), will provide a specified benefit, payable in 40 equal quarterly
installments to each participant upon reaching age 65.  Generally, a participant
becomes vested in his benefit under the Deferred Plan at the rate of 10% on each
anniversary of the participant's participation in the Deferred Plan.  Mr. Fuster
will not be subject to the Deferred Plan's non-competition forfeiture provisions
unless he voluntarily terminates his employment with the Bank.  The Deferred
Plan is a non-qualified plan and was adopted effective January 1, 1987.  The
benefit payable under the Deferred Plan to Mr. Fuster is $250,000.  Under the
terms of the separation agreement dated September 6, 1996, Mr. Viklund shall
receive a Deferred Pension Plan benefit for ten years equal to $97,236 per
annum, payable in 40 equal quarterly installments commencing October 1, 1999.
Messrs. Conefry, Bryant, Singer and Volk are not participants in the Deferred
Plan.

         The Federal Deposit Insurance Corporation ("FDIC") has adopted
regulations that limit the payment by banking institutions experiencing
financial difficulties of "golden parachutes" and certain other benefits.  The
golden parachute regulations prohibit any insured depository institution
(including its holding company, subsidiaries or affiliates) which is insolvent,
for which a conservator or receiver has been appointed, as to which a
determination that such insured depository institution is troubled has been
made, which has been assigned a composite OTS MACRO rating of 4 or 5, or as to
which a proceeding to terminate deposit insurance has been instituted, from
making any payments that are contingent on or payable on or after termination of
employment, unless such payment falls within certain specific exceptions,
including payments under tax-qualified pension or retirement plans, bona fide
deferred compensation plans, non-discriminatory severance pay plans and payments
on account of death or disability.  With certain exceptions, the regulations
also generally prohibit all insured depository institutions, their subsidiaries
and affiliated holding companies, regardless of their financial health, from
making certain indemnification payments for civil money penalties or other
enforcement action.  If the Bank's or the Company's financial position at the
time of a change in control (or other termination other than

                                         -24-

<PAGE>

for cause) is such that it is subject to the regulations, termination payments
under the Bank Agreements and the Company Agreements may be limited.

         Under the Bank Agreements and the Company Agreements, the Bank and the
Company have agreed to indemnify the officers and hold them harmless, to the
fullest extent permitted by law and the OTS, against all expense, liability and
loss reasonably incurred by such officers as a consequence of being involved in
a legal action by reason of the fact that the officer was an executive or
director of the Bank or the Company.  Such indemnification shall continue after
the officer shall cease to be an executive or director of the Bank or the
Company.

OTHER BENEFITS

         RETIREMENT PLAN.  The Bank has maintained a non-contributory,
tax-qualified defined benefit pension plan (the "Retirement Plan") for eligible
employees since 1940.  All employees at least age 21 who have been employed for
a twelve-month period and are salaried employees, and are not paid on a
commission basis, are eligible to participate in the Retirement Plan.  The
Retirement Plan provides for a benefit for each participant, including the
executive officers named in the executive compensation table above, equal to the
sum of (i) a participant's benefit accrued under the Retirement Plan as of
December 31, 1995 (as described below), plus (ii) 1.5% of the participant's
5-year average annual compensation (i.e., average compensation during the
highest 60 consecutive months of the participant's final 120 months of
employment) multiplied by the participant's years (and any fraction thereof) of
full-time employment after December 31, 1995, reduced by 1% of the participant's
primary social security benefit multiplied by the participant's years (and any
fraction thereof) of full-time employment after December 31, 1995.  A
participant's benefit accrued under the Retirement Plan as of December 31, 1995
is equal to 2% of the participant's 3-year average annual compensation (i.e.,
average compensation during the highest 36 consecutive months of the
participant's final 120 months of employment) multiplied by the participant's
years (and any fraction thereof) of full-time employment before January 1, 1996,
reduced by 1% of the participant's primary social security benefit multiplied by
the participant's years (and any fraction thereof) of full-time employment from
January 1, 1986 to December 31, 1995. In no event can a participant receive
credit for more than 30 years of service.  Compensation, as defined in the
Retirement Plan, excludes overtime payments, bonuses, other special payments or
awards, such as awards under the Executive Officer MRP and the 1994 Stock
Incentive Plan, and deferred compensation arrangements.  A participant is fully
vested in his or her benefit under the Retirement Plan after five years of
service.  For the 1994, 1995 and 1996 plan years, the Bank was not required to
make a contribution to the Retirement Plan.

                                         -25-
<PAGE> 
         The following table illustrates annual pension benefits at age 65
under the current Retirement Plan provisions available at various levels of
compensation and years of service:

                                  PENSION PLAN TABLE
                                   YEARS OF SERVICE

REMUNERATION(1), (2)   15       20           25          30            35
--------------------   --       --           --          --            --

$125,000          $  28,125 $  37,500    $ 46,875     $ 56,250    $  65,625
 150,000             33,750    45,000      56,250       67,500       78,750
 175,000             39,375    52,500      65,625       78,750       91,875
 200,000             45,000    60,000      75,000       90,000      105,000
 225,000             50,625    67,500      84,375      101,250      118,125
 250,000             56,250    75,000      93,750      112,500      120,000(3)
 300,000             67,500    90,000     112,500      120,000(3)   120,000(3)
 400,000             90,000   120,000(3)  120,000(3)   120,000(3)   120,000(3)
 450,000            101,250   120,000(3)  120,000(3)   120,000(3)   120,000(3)
 500,000            112,500   120,000(3)  120,000(3)   120,000(3)   120,000(3)




(1) The annual retirement benefits shown in the table do not reflect a
    deduction for Social Security benefits, and there are no other offsets to
    benefits.  The amounts shown in the table do not include additional
    benefits payable to Messrs. Viklund and Fuster under the Deferred Pension
    Plan.  See discussion on Deferred Pension Plan under "Employment and other
    Agreements".

(2) For the plan year beginning in 1996, the average final compensation for
    computing benefits under the Retirement Plan cannot exceed $150,000 (as
    adjusted for subsequent years pursuant to Code provisions).

(3) For 1996, applicable law limits the annual benefit payable under the
    Retirement Plan to $120,000.  For subsequent years, this limit is indexed
    for inflation.

         The following table sets forth the years of credited service under the
Retirement Plan as of September 30, 1996, as to the date of their retirement,
for each of the individuals named in the Executive Compensation Table.

                                                     Period of Credited Service
                                                      --------------------------
                                                           Years     Months
                                                            -----     ------
 John J. Conefry, Jr....................................      3         0
 William E. Viklund(1)..................................     20        11
 Joseph P. Bryant.......................................      2        11
 W. Douglas Singer......................................      8         8
 Mark Fuster............................................     15         8
 Robert T. Volk.........................................      7         1

 1) Actual at his retirement on September 6, 1996.

                                         -26-

<PAGE>


         EMPLOYEE STOCK OWNERSHIP PLAN.  The Bank maintains an Employee Stock
Ownership Plan which became effective upon the Conversion, for the benefit of
eligible employees of the Bank and its affiliates that are participating
employers in the ESOP.  On May 18, 1995, the Bank received a determination from
the Internal Revenue Service that the ESOP qualifies under Sections 401(a) and
4975(e)(7) of the Code and that the trust established to implement the ESOP  is
tax-exempt under Section 501(a) of the Code.

         Generally, each salaried employee, who has completed one year of
service with a participating employer, is eligible to participate in the ESOP.
An employee automatically becomes a participant in the ESOP after becoming an
eligible employee.  Each of the Named Executive Officers is a participant in the
ESOP.

         Using proceeds of a loan from the Company (the "ESOP Loan") and a
minimal cash contribution from the Bank, the ESOP Trust purchased 7.72% of the
Common Stock issued in the Conversion.  The loan principal amount totaled
$19,800,000 at September 30, 1996 and is payable by the ESOP Trust in quarterly
installments of principal plus interest at a rate of 6.15% per annum.

         The shares of Common Stock purchased by the ESOP Trust were placed in
a "suspense account" where the shares are held subject to the encumbrance of the
ESOP Loan.  As the ESOP Loan is repaid, generally with periodic contributions to
the ESOP Trust by the participating employers and cash dividends, if any, paid
on the shares of Common Stock purchased by the ESOP Trust with the ESOP Loan
proceeds, shares of Common Stock will be released from the suspense account and
allocated to participants' accounts at least annually.  For each calendar year,
a participating employer will contribute to the ESOP, on behalf of each
participant who either is employed by a participating employer as of the end of
that year or who was employed during that year but who retired, became disabled
or died prior to the last day of that year, an amount equal to 6.5% of the
participant's compensation (defined as in the Retirement Plan) for that year
subject to certain limitations, including a limitation for the plan year
beginning in 1994 of $150,000 (as adjusted for subsequent years pursuant to Code
provisions) on the amount of a participant's compensation that may be taken into
account in determining contributions under the ESOP.  To date, approximately
243,000 shares have been allocated to participants' ESOP accounts.

         A participant's account balance in the ESOP generally will become
vested and nonforfeitable at a rate of 20% as of each anniversary of the
participant's commencement of service.  A participant's ESOP account generally
will be distributable in full in shares of Common Stock or cash, at the
participant's election, after termination of service.

                                         -27-
<PAGE>

________________________________________________________________________________
                                      PROPOSAL 2
                       RATIFICATION OF APPOINTMENT OF AUDITORS
________________________________________________________________________________


         The Board of Directors has appointed KPMG Peat Marwick LLP to perform
the audit of the Company's financial statements for the year ending September
30, 1997, subject to ratification by the Company's stockholders at the Annual
Meeting.  KPMG Peat Marwick LLP served as the independent auditors of the
Company for the year ended September 30, 1996.  Representatives from KPMG Peat
Marwick LLP will be present at the Annual Meeting and will be given the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions from stockholders.

         Unless marked to the contrary, the shares represented by the enclosed
proxy card, if executed and returned, will be voted FOR ratification of the
appointment of KPMG Peat Marwick LLP as the independent auditors of the Company
for the fiscal year ending September 30, 1997.  The appointment of KPMG Peat
Marwick LLP as the Company's independent auditors must be approved by a majority
of the votes present in person or represented by proxy at the Annual Meeting.

         THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING SEPTEMBER 30, 1997.

________________________________________________________________________________
                 OTHER MATTERS MAY PROPERLY COME BEFORE THE MEETING
________________________________________________________________________________


         The Board of Directors knows of no business that will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders.  If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.

         Whether or not you intend to be present at the Annual Meeting, you are
urged to return your signed and dated proxy promptly.  If you are present at the
Annual Meeting and wish to vote your shares, your proxy may be revoked by voting
at the Annual Meeting.

________________________________________________________________________________
               NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
________________________________________________________________________________

         The Restated Bylaws of the Company provide an advance notice procedure
for a stockholder to properly bring business before an annual meeting.  The
stockholder must give written advance notice to the Secretary of the Company not
less than seventy (70) days nor more than ninety (90) days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than twenty
days, or delayed by more than seventy days, from such anniversary date, notice
by the stockholder to be timely must be so delivered not earlier than the
ninetieth day prior to such annual meeting and not later than the close of
business on the later of the seventieth day prior to such annual meeting or the
tenth day following the day on which public announcement of the date of such
meeting is first made.

                                         -28-

<PAGE>

         The advance notice by shareholders must include the stockholder's name
and address, as they appear on the Company's record of stockholders, a brief
description of the proposed business, the reason for conducting such business at
the annual meeting, the class and number of shares of the Company's capital
stock that are owned beneficially and of record by such stockholder, and any
material interest of such stockholder in the proposed business.  In the case of
nominations for election to the Board of Directors, certain information
regarding the nominee must be provided.  Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement and proxy
relating to an annual meeting any stockholder proposal which does not meet all
of the requirements for inclusion established by the SEC in effect at the time
such proposal is received.

________________________________________________________________________________
                                STOCKHOLDER PROPOSALS
________________________________________________________________________________

         In order to be eligible for inclusion in the proxy materials of the
Company for the Annual Meeting of Stockholders for the fiscal year ended
September 30, 1997, any stockholder proposal to take action at such meeting must
be received at the Company's executive offices at 201 Old Country Road,
Melville, New York 11747 no later than September 2, 1997.  Any such proposals
shall be subject to the requirements of the proxy rules adopted under the
Exchange Act.

                                    MISCELLANEOUS
________________________________________________________________________________

         A copy of the Company's Annual Report on Form 10-K (without exhibits)
for the year ended September 30, 1996, as filed with the SEC, will be furnished
without charge to stockholders of record upon written request to Long Island
Bancorp, Inc., 201 Old Country Road, Melville, New York 11747, Attention:  Mary
M. Feder, Vice President, Investor Relations.

                             By Order of the Board of Directors,

                             /s/ Roger Teurfs

                             Roger Teurfs
                             Secretary


Melville, New York
January 6, 1997



         YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.


                                         -29-
<PAGE>

                                           
PROXY
                                           
             THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
                              LONG ISLAND BANCORP, INC.
                       PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
                                  February 18, 1997

     The undersigned hereby appoints Richard F. Chapdelaine, Frederick 
DeMatteis, Herbert J. McCooey, and Dr. James B. Tormey, and each of them, 
proxies for the undersigned, with full power of substitution, to vote all 
shares of Long Island Bancorp, Inc. Common Stock which the undersigned may be 
entitled to vote at the Annual Meeting of Stockholders of Long Island 
Bancorp, Inc., Melville, New York, on Tuesday, February 18, 1997, at 9:30 
A.M., or at any adjournment thereof, upon the matters set forth on the 
reverse side and described in the accompanying Proxy Statement and upon such 
other business as may properly come before the meeting or any adjournment 
thereof.

     Please mark this proxy as indicated on the reverse side to vote any 
item. If you wish to vote in accordance with the Board of Directors' 
recommendations, please sign the reverse side; no boxes need to be checked.

ADDRESS CHANGE: PLEASE MARK ADDRESS CHANGE BOX ON REVERSE SIDE

(Continued and to be signed on other side)


<PAGE>

                                                       /X/ PLEASE MARK 
                                                           YOUR VOTE
                                                           AS THIS

The Board of Directors recommends a vote FOR Items I and II.

                                           
Item I - ELECTION OF DIRECTORS                            WITHHELD
         Nominees: Clarence M. Buxton,             FOR     FOR ALL
         Brian J. Conway, Robert J. Conway,       /  /      /  /
         Leo J. Waters, and Donald D. Wenk



WITHHELD FOR: (Write that nominee's name in the space 
provided below).


-------------------------------------------------------


                                         FOR    AGAINST   ABSTAIN
Item II - Approvals of Auditors         /  /     /  /     /  /



                                        I PLAN TO ATTEND MEETING           /  /

                                             ADDRESS CHANGE
                                      Please mark this box if you have    /  /
                                    written address change information 
                                         on the reverse side.

Receipt is hereby acknowledged of the Long Island Bancorp, Inc. Notice of
Meeting and Proxy Statement.
                                           

Signature(s)                                             Date
            ---------------------------------------------     ---------------
Note: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.

<PAGE>
                                           
                                           
      VOTING INSTRUCTIONS TO UNITED STATES TRUST COMPANY OF NEW YORK AS TRUSTEE
                UNDER THE LONG ISLAND SAVINGS BANK 401(k) SAVINGS PLAN
                      AND THE LISB EMPLOYEE STOCK OWNERSHIP PLAN
                                           
     I hereby direct that at the annual meeting of stockholders of Long Island
Bancorp, Inc. on February 18, 1997, and at any adjournments thereof, the voting
rights pertaining to the shares of Long Island Bancorp, Inc. Common Stock
credited to my account under The Long Island Savings Bank 401(k) Saving Plan
and/or allocated to my account under The LISB Employee Stock Ownership Plan
shall be exercised as checked on this card, or if not checked, shall be voted in
the discretion of the Trustee.
  
  
    ADDRESS CHANGE: PLEASE MARK ADDRESS CHANGE BOX ON REVERSE SIDE
    
    (Continued and to be signed on other side)
    

                                   See Reverse Side




<PAGE>

                                                             /X/ PLEASE MARK 
                                                                 YOUR VOTES
                                                                 AS THIS

The Board of Directors recommends a vote FOR 
Items I and II.
                                           

Item I - ELECTION OF DIRECTORS                    FOR     WITHHELD
         Nominees: Clarence M. Buxton,           /  /       /  /
         Brian J. Conway, Robert J. Conway, 
         Leo J. Waters, and Donald D. Wenk



WITHHELD FOR: (Write that nominee's name in the space 
provided below).

------------------------------------------------------



                                                     FOR    AGAINST   ABSTAIN
Item II - Approvals of Auditors                      /  /     /  /     /  /



                                             ADDRESS CHANGE

                                      Please mark this box if you have    /  /
                                    written address change information 
                                         on the reverse side.

Receipt is hereby acknowledged of the Long Island Bancorp, Inc. Notice of
Meeting and Proxy Statement.


Signature                                               Date
          ----------------------------------------------    ----------
Note: Please sign as name appears hereon. 




<PAGE>


                        NOTICE TO PARTICIPANTS IN
           THE LONG ISLAND SAVINGS BANK 401(k) SAVINGS PLAN
              AND THE LISB EMPLOYEE STOCK OWNERSHIP PLAN


Dear Plan Participant:

     Enclosed with this notice is a Proxy Statement of Long Island Bancorp, 
Inc. (the "Company"), describing the Annual Meeting of Stockholders to be 
held on February 18, 1997 (the "Annual Meeting"). The Annual Meeting will be 
for the purpose of electing five directors and ratifying the appointment of 
KPMG Peat Marwick LLP as the Company's independent auditors. Directors and 
officers of the Company will be present at the Annual Meeting to respond to 
any questions that stockholders may have regarding the business to be 
transacted. The Proxy Statement has been prepared by the Board of Directors 
of the Company, in connection with the business to be transacted at the 
Annual Meeting. THE ITEMS TO BE PRESENTED AT THE ANNUAL MEETING ARE IMPORTANT 
AND ARE DESCRIBED IN THE PROXY MATERIALS BEING ENCLOSED WITH THIS NOTICE.

DIRECTIONS TO THE TRUSTEE

     Only United States Trust Company of New York, as trustee (the 
"Trustee") of The Long Island Savings Bank 401(k) Savings Plan (the "401(k)") 
and The LISB Employee Stock Ownership Plan (the "ESOP") (referred to 
collectively as "the Plans"), can vote the shares of the Company stock 
("Shares") held by the Plans. However, under the terms of the Plans, you, as 
a participant in the Plans, are entitled to instruct the Trustee how to vote 
Shares credited to your 401(k) account and/or allocated to your account under 
the ESOP. The Shares held by the ESOP that are not allocated to any 
participant's account will be voted by the Trustee in proportion to the 
voting instructions received by the Trustee from all ESOP participants.

     Enclosed with this notice is a confidential voting instruction card 
which is provided to you for the purpose of instructing the Trustee how to 
vote concerning the election of directors and the ratification of the 
appointment of KPMG Peat Marwick LLP as the Company's independent auditors. 
Your interest in this matter is very important. Please take the time to 
complete the instruction card and return it to the Trustee. You may instruct 
the Trustee to vote for, against, or to withhold consent with respect to 
these matters. If you do not provide instructions to the Trustee, your Shares 
will be voted in the discretion of the Trustee.

     The Trustee will vote all Shares held by the Plans in accordance with the 
instructions set forth on the voting instruction cards which are received by 
the Trustee on a timely basis, unless the Trustee determines such instructions
are contrary to the requirements of the Employee Retirement Income Security 
Act of 1974, as amended ("ERISA").

CONFIDENTIALITY AND INSTRUCTIONS

     How you vote will not be revealed, directly or indirectly, to any 
officer, to any other employee, or any director of the Company or to anyone 
else, except as otherwise required by law. You should, therefore, feel 
completely free to instruct the Trustee to vote in the manner you think 
best. The Trustee will monitor the mailing of all materials relating to the 
Annual Meeting to the Plans' participants.

VOTING DEADLINE

     Because of the time required to tabulate voting instructions from 
participants before the Annual Meeting, the Trustee must establish a cut-off 
date for receiving your instruction card. The cut-off date established by the 
Trustee is 5:00 P.M. Eastern Time February 11, 1997. The Trustee cannot 
insure that instruction cards received after the cut-off date will be 
tabulated. Therefore, it is important that you act promptly and return your 
instruction card on or before February 11, 1997, in the envelope provided for 
your convenience. If the Trustee does not receive timely instructions from 
you, the Trustee will vote your Shares in its discretion.

    If you are a direct stockholder of Long Island Bancorp, Inc. you will 
receive under separate cover proxy solicitation materials, including a proxy 
card. The enclosed card can only be used to direct the voting of Shares held 
by the Plans.

FURTHER INFORMATION

     If you have questions regarding the information provided to you, you may 
contact the Trustee at 1-800-535-3093 between 11:00 A.M. and 8:00 P.M. 
Eastern Time, Monday through Friday.

     Your ability to instruct the Trustee how to vote Shares held by the 
Plans is an important part of your rights as a Plan participant. Please 
consider the enclosed material carefully and then furnish your voting 
instructions promptly.

Dated January 6, 1997


                        United States Trust Company of New York, as Trustee of 
                        THE LONG ISLAND SAVINGS BANK 401(k) SAVINGS PLAN
                        AND THE LISB EMPLOYEE STOCK OWNERSHIP PLAN