<PAGE>

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

                                  FORM 10-K

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

                 For the fiscal year ended September 30, 1996

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

          DELAWARE                                         11-3198508
----------------------------                     ------------------------------
(State or other jurisdiction of                  (I.R.S. Employer Identification
incorporation or organization)                   Number)

201 OLD COUNTRY ROAD, MELVILLE, NEW YORK                   11747-2724
----------------------------------------                 --------------
(Address of principal executive offices)                  (Zip Code)

                                (516) 547-2000
                                --------------
              (Registrant's telephone number, including area code)

                                    0-23526
                                    -------
                            (Commission File Number)

                                 ______________
           (Securities registered pursuant to Section 12(b) of the Act)

                           COMMON STOCK $.01 PAR VALUE
                    -----------------------------------------
           (Securities registered pursuant to Section 12(g) of the Act)

        Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, 
and will not be contained, to the best of the registrant's knowledge, in 
definitive proxy or information statements incorporated by reference in Part 
III of this Form 10-K or any amendment to this Form 10-K. (X)
                                                          ---

        Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the preceding 12 months (or for such shorter 
period that the registrant was required to file such reports), and (2) has 
been subject to such filing requirements for the past 90 days.

                              (1) YES  X   NO
                                     -----   -----

        The aggregate market value of voting stock held by non-affiliates of 
the registrant as of October 31, 1996:  Common Stock par value $.01 per 
share, $671,696,140.

        This figure is based on the closing price on the Nasdaq National 
Market for a share of the registrant's common stock on October 31, 1996, 
which was $29.19 as reported in the Wall Street Journal on November 1, 1996.  
The number of shares of the registrant's Common Stock outstanding as of 
October 31, 1996 was 24,626,961 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of 
Stockholders to be held on February 18, 1997 and the Annual Report to 
Stockholders for fiscal 1996 are incorporated herein by reference - Parts II 
and III. 

<PAGE>

                             CROSS REFERENCE INDEX

                                    PART I

                                                                            PAGE
                                                                            ----
Item 1.   Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Item 2.   Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
Item 3.   Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . .  43
Item 4.   Submission of Matters to a Vote of Security Holders . . . . . . .  44

                                    PART II

Item 5.   Market for the Registrant's Common Stock and Related Stockholder 
            Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
Item 6.   Selected Financial Data . . . . . . . . . . . . . . . . . . . . .  44
Item 7.   Management's Discussion and Analysis of Financial Condition and 
            Results of Operations . . . . . . . . . . . . . . . . . . . . .  44
Item 8.   Financial Statements and Supplementary Data . . . . . . . . . . .  44
Item 9.   Changes in and Disagreements with Accountants on Accounting and 
            Financial Disclosure. . . . . . . . . . . . . . . . . . . . . .  45

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant. . . . . . . .  45
Item 11.  Executive Compensation  . . . . . . . . . . . . . . . . . . . . .  45
Item 12.  Security Ownership of Certain Beneficial Owners and Management. .  45
Item 13.  Certain Relationships and Related Transactions. . . . . . . . . .  45

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K .  45
          Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . .  47

                                       2

<PAGE>
                                    PART 1

ITEM 1.  BUSINESS

General

Long Island Bancorp, Inc. ("Holding Company") was incorporated in the State 
of Delaware in December 1993 at the direction of the Board of Directors of 
The Long Island Savings Bank, FSB ("Bank") for the purpose of becoming a 
holding company to own all of the outstanding capital stock of the Bank upon 
its conversion from a mutual to a stock form of organization.  The 
mutual-to-stock conversion was completed on April 14, 1994.  In connection 
with the conversion the Holding Company issued 26,040,214 shares of common 
stock ("Common Stock") at a price of $11.50 per share to the Bank's 
depositors and its tax-qualified employee stock benefit plans, and an 
additional 776,250 shares to the Bank's Management Recognition and Retention 
Plans ("MRP's").  The Holding Company realized net proceeds of $264.2 million 
from the sale of its Common Stock and utilized approximately $164.0 million 
to purchase 100% of the issued and outstanding shares of the Bank's common 
stock.

The primary business of the Holding Company is the operation of its wholly 
owned subsidiary, the Bank.  In addition to directing, planning and 
coordinating the business activities of the Bank, the Holding Company invests 
its funds primarily in U.S. government and federal agency securities, 
investment grade preferred stock and federal funds. In the future, the 
Holding Company may acquire or organize other operating subsidiaries, 
including other financial institutions.

The information presented in the financial statements and in this Form 10-K 
reflect the financial condition and results of operations of the Holding 
Company and the Bank (collectively "Company"), on a consolidated basis.  At 
September 30, 1996, the Company had total assets of $5.4 billion.

The Bank's principal business has been and continues to be attracting retail 
deposits from the general public and investing those deposits, together with 
funds generated from operations, primarily in one-to-four family, owner 
occupied residential mortgage loans. In addition, from time to time depending 
on market conditions, the Bank will invest in mortgage-backed and 
asset-backed securities to supplement its lending portfolio. The Bank also 
invests, to a lesser extent, in multi-family residential mortgage loans, 
commercial loans, consumer loans and other marketable securities. Revenues 
are derived principally from interest on real estate and other loans, 
mortgage-backed and other debt securities, and dividends on investment 
securities. Primary sources of funds are deposits, borrowings under 
reverse-repurchase agreements and principal and interest payments on loans 
and mortgage-backed securities.  Additionally, the Bank issued a funding note 
("Funding note") in fiscal 1996 which was collateralized by a pool of 
adjustable rate residential mortgage loans.  See Note 14 of Notes to 
Consolidated Financial Statements.

Market Area and Competition

The Bank historically has operated as a consumer-oriented community 
institution primarily engaged in attracting deposits from the general public 
and investing such deposits and other available funds in mortgage loans 
secured by one-to-four family dwellings and mortgage-backed securities. At 
September 30, 1996 the Bank conducted its business through 36 full service 
banking offices, 6 of which are located in the New York City borough of 
Queens, 11 in Nassau County and 19 in Suffolk County, New York. It also 
operates 25 regional lending centers, 7 of which are located in Virginia; 5 
in Pennsylvania; 4 in New York; 2 in each of Georgia, New Jersey and 
Maryland; and 1 in each of Connecticut, Delaware and North Carolina.  Based 
on data published by the Federal Deposit Insurance Corporation ("FDIC") as of 
June 1995 (the latest available data) the Bank is the fourth largest 
institution in terms of deposits in Suffolk County with a 7.2% market share.  
In Queens, the Bank is ranked sixth with a 3.5% market share and in Nassau 
County, the Bank is ranked tenth with a 3.4% market share. Management 
considers the Bank's reputation and quality customer service as its major 
competitive advantages in attracting and retaining customers in its market 
areas.  In this respect, the Bank has performed extensive market research 
studies which are designed to identify the specific products and services 
required to serve each local community.  In order to better serve its 
customers, the Bank has installed automated teller machines ("ATMs") in a 
majority of its offices and is currently in the process of enhancing its 
computer technologies to facilitate, among other things, the integration of 
the Bank's efforts to deliver insurance and securities products, traditional 
deposit products and all lending products.
                                       3
<PAGE>

When ranked against all Metropolitan Statistical Areas in the nation, based 
on FDIC published data as of June 1995, the Queens, Nassau, and Suffolk 
market area served by the Bank is the fifth largest banking market in the 
United States based on combined bank deposits.  This market ranks among the 
top 5% in per capita income and has the third highest population density.  
The high population density in these areas allows the Bank to serve a large 
number of customers with an efficient network of branches.  Management 
believes that its branch offices generally are located in communities that 
can be characterized as stable, consisting of residential neighborhoods of 
predominantly one-to-four family residences.

During the last three years, unemployment and real estate values have been 
relatively stable in New York, New Jersey and Connecticut ("New York 
metropolitan area") which has had a corresponding impact on the Bank's asset 
quality.  In order to mitigate the Bank's potential exposure to a 
concentration of credit risk in the New York metropolitan area, the Bank 
expanded its lending operations into Delaware, Georgia, Maryland, 
Pennsylvania and Virginia in fiscal 1995.  In fiscal 1996, the Bank expanded 
into North Carolina as well.  The following table sets forth the geographic 
distribution of the Company's real estate loan portfolio, excluding home 
equity loans, at September 30:

            State                    1996             1995             1994
-------------------------------  ------------     ------------     ------------
                                                  (IN THOUSANDS)
Connecticut ...................  $    135,704     $     51,679     $     26,425
Georgia........................       120,070           77,820              ---
Maryland.......................       226,599           65,643               30
New Jersey.....................       167,406           93,165           69,402
New York.......................     1,370,521        1,349,780        1,415,869
Pennsylvania...................        65,184           19,968            1,131
Virginia.......................       180,732           80,477                7
Other states...................       693,984          200,381            8,035
                                 ------------     ------------     ------------
  Total real estate loans......  $  2,960,200     $  1,938,913     $  1,520,899
                                 ------------     ------------     ------------
                                 ------------     ------------     ------------

The New York metropolitan area has a large number of financial institutions, 
many of which are significantly larger and have greater financial resources 
than the Bank, and all of which are competitors of the Bank to varying 
degrees. The Bank's competition for loans comes principally from savings and 
loan associations, savings banks, commercial banks, mortgage banking 
companies and insurance companies. The Bank's most direct competition for 
deposits has historically come from savings and loan associations, savings 
banks and commercial banks. In addition, the Bank faces increasing 
competition for deposits from non-bank institutions such as brokerage firms 
and insurance companies that offer short-term money market funds, corporate 
and government securities funds, mutual funds and annuities.

Lending Activities

LOAN PORTFOLIO COMPOSITION.  Gross loans receivable, including loans held for 
sale, comprised 58.36% of total assets at September 30, 1996. The Company's 
real estate loan portfolio consists primarily of conventional first mortgage 
loans secured by owner occupied one-to-four family residences and 
co-operative apartment loans and, to a lesser extent, multi-family 
residences, second mortgage loans, commercial real estate and construction 
and land loans. At September 30, 1996, the Company had total real estate 
loans outstanding on one-to-four family properties of $2.9 billion, or 91.57% 
of the Company's total gross loans receivable, including $114.6 million, or 
3.66%, of co-operative apartment loans, $18.6 million, or 0.59%, of home 
equity loans and $5.2 million, or 0.17%, of second mortgages. At that date, 
multi-family residential mortgage loans totalled $34.9 million, or 1.12% of 
total gross loans receivable. The remainder of the Company's real estate 
loans, which totalled $77.3 million, or 2.46% of total gross loans receivable 
at September 30, 1996, included $69.6 million of commercial real estate 
loans, or 2.22% of total gross loans receivable, and $7.7 million of 
construction loans and land loans, or 0.24% of total gross loans receivable. 
These amounts include $57.9 million of real estate loans held for sale in the 
secondary market.  Commercial and other loans, which consisted principally of 
secured and unsecured lines of credit and other consumer loans, totalled 
$151.7 million, or 4.85% of total gross loans receivable at September 30, 
1996.  These amounts include $0.1 million of student loans held for sale in 
the secondary market.

                                       4

<PAGE>

The following table sets forth at September 30, 1996, the amount of all loans
due after September 30, 1997 and whether such loans have fixed or adjustable
rates.
                                               DUE AFTER SEPTEMBER 30, 1997
                                           -------------------------------------
                                            ADJUSTABLE     FIXED
                                               RATE         RATE         TOTAL
                                           -----------  -----------  -----------
                                                      (IN THOUSANDS)
Real estate loans:
  One-to-four family (1).................  $ 2,357,070  $   236,713  $ 2,593,783
  Co-operative apartments (1)............       86,191       28,369      114,560
  Home equity............................        7,274          ---        7,274
  Multi-family...........................       21,686       12,549       34,235
  Commercial real estate.................       51,215       15,233       66,448
  Second mortgages.......................        4,978          164        5,142
  Construction loans.....................          ---          ---          ---
  Land loans.............................        2,049          314        2,363
                                           -----------  -----------  -----------
    Total real estate loans..............    2,530,463      293,342    2,823,805
Commercial and other loans (2):
  Commercial loans.......................        4,208        2,588        6,796
  Property improvement...................          ---           11           11
  Loans on deposit accounts..............          ---        1,851        1,851
  Lines of credit........................          ---          ---          ---
  Other consumer loans (3)...............       11,487       78,896       90,383
                                           -----------  -----------  -----------
    Total commercial and other loans.....       15,695       83,346       99,041
                                           -----------  -----------  -----------
Total gross loans........................  $ 2,546,158  $   376,688  $ 2,922,846
                                           -----------  -----------  -----------
                                           -----------  -----------  -----------

(1)   Excludes  $57.9 million of loans held for sale.
(2)   Excludes lines of credit that are payable on demand and are therefore
      considered to be due within one year.
(3)   Excludes student loans.

                                       5

<PAGE>

   The following table sets forth the composition of the Company's loan 
portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                             AT SEPTEMBER 30,
                                  --------------------------------------------------------------------------------------------------
                                          1996               1995                1994                1993                1992
                                  -----------------   -----------------   -----------------   -----------------   ------------------
                                             PERCENT             PERCENT             PERCENT             PERCENT             PERCENT
                                               OF                  OF                  OF                  OF                  OF
                                    AMOUNT    TOTAL     AMOUNT    TOTAL     AMOUNT    TOTAL     AMOUNT    TOTAL     AMOUNT    TOTAL
                                  ---------- ------   ---------- ------   ---------- ------   ---------- ------   ---------- ------
                                                                          (DOLLARS IN THOUSANDS)
<S>                               <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>
Real estate loans (1):
  One-to-four family..............$2,728,199  87.15%  $1,687,952  80.94%  $1,236,778  73.35%  $1,453,790  74.26%  $1,920,781  67.31%
  Home equity.....................    18,564   0.59       18,115   0.87       21,225   1.26       27,381   1.40      364,988  12.79
  Co-operative apartment..........   114,609   3.66      128,423   6.16      144,814   8.59      157,659   8.05      179,262   6.28
  Multi-family....................    34,883   1.12       35,708   1.71       46,053   2.73       53,846   2.75       63,194   2.21
  Commercial real estate..........    69,625   2.22       72,393   3.47       76,295   4.52       80,047   4.09       94,952   3.33
  Second mortgages................     5,154   0.17        6,563   0.31        7,894   0.47       10,565   0.54       13,971   0.49
  Construction....................     4,509   0.14        3,070   0.15        2,392   0.14        8,153   0.42       10,302   0.36
  Land............................     3,221   0.10        4,804   0.23        6,673   0.40        9,535   0.49        9,477   0.33
                                  ---------- ------   ---------- ------   ---------- ------   ---------- ------   ---------- ------

Total real estate loans........... 2,978,764  95.15    1,957,028  93.84    1,542,124  91.46    1,800,976  92.00    2,656,927  93.10
Commercial and other loans:
  Commercial loans................     8,206   0.26        9,330   0.45       12,456   0.74       17,013   0.87       36,079   1.27
  Property improvement............     9,028   0.29       11,131   0.53       13,335   0.79       17,104   0.87       21,953   0.77
  Student (2).....................     7,084   0.23        3,324   0.16       15,429   0.92       12,533   0.64       24,611   0.86
  Loans on deposit accounts.......     2,475   0.08        2,649   0.13        2,924   0.17        3,393   0.17        8,031   0.28
  Lines of credit.................    55,292   1.77       59,746   2.86       63,102   3.74       67,258   3.44       67,560   2.37
  Other consumer loans............    69,575   2.22       42,284   2.03       36,808   2.18       39,376   2.01       38,550   1.35
                                  ---------- ------   ---------- ------   ---------- ------   ---------- ------   ---------- ------

Total commercial and other loans..   151,660   4.85      128,464   6.16      144,054   8.54      156,677   8.00      196,784   6.90
                                  ---------- ------   ---------- ------   ---------- ------   ---------- ------   ---------- ------
Total loans receivable, gross..... 3,130,424 100.00%   2,085,492 100.00%   1,686,178 100.00%   1,957,653 100.00%   2,853,711 100.00%
                                             ------              ------              ------              ------              ------
                                             ------              ------              ------              ------              ------
  Purchase accounting discounts,
    net...........................    (2,727)             (4,151)             (5,994)             (8,167)            (21,794)
  Unearned premiums, discounts
    and deferred loan fees, net...     5,021              (2,870)             (5,667)             (6,687)             (5,613)
                                  ----------         ----------          ----------          ----------          ----------
Loans receivable, net............. 3,132,718           2,078,471           1,674,517           1,942,799           2,826,304
  Allowance for possible loan
    losses .......................   (33,912)            (34,358)            (35,713)            (33,951)            (32,157)
  Allowance for market valuation
    for loans held for sale in the
    secondary market..............       ---                 ---                 (28)                ---                 ---
                                  ----------         ----------          ----------          ----------          ----------
Total loans receivable, net.......$3,098,806          $2,044,113          $1,638,776          $1,908,848          $2,794,147
                                  ----------         ----------          ----------          ----------          ----------
                                  ----------         ----------          ----------          ----------          ----------
</TABLE>

(1) These amounts include $57.9 million, $49.3 million, $8.0 million, $38.4
    million and $37.9 million of loans held for sale in the secondary market at
    September 30, 1996, 1995, 1994, 1993 and 1992, respectively.  At September
    30, 1993, this amount includes $110.0 million of non-performing real estate
    loans included in the bulk sale of certain loans and real estate owned 
    ("Bulk Sale") of which $102.6 million were one-to-four family loans, $3.8 
    million were commercial real estate loans, $3.5 million were co-operative 
    apartment loans and $0.1 million were land loans.
(2) Includes $0.1 million and  $30,000 of loans held for sale in the secondary
    market at September 30, 1996 and 1995 respectively.

                                       6
<PAGE>

The following table shows the contractual maturity of the Company's loan
portfolio at September 30, 1996.  The table does not include prepayments or
scheduled principal amortization.

<TABLE>
<CAPTION>
                                                                          AT SEPTEMBER 30, 1996
                                       ---------------------------------------------------------------------------------------------
                                                                            REAL ESTATE LOANS
                                       ---------------------------------------------------------------------------------------------
                                          ONE TO                    COOP                             COMMERCIAL
                                           FOUR         HOME        APT.      SECOND       MULTI-       REAL                  LAND
                                        FAMILY (1)     EQUITY     LOANS (1)  MORTGAGES     FAMILY      ESTATE  CONSTRUCTION   LOANS
                                       -----------    --------    ---------    -------    --------    -------- ------------  -------
                                                                              (IN THOUSANDS)
<S>                                    <C>            <C>         <C>          <C>        <C>         <C>         <C>        <C>
Amounts due:
  Within one year...................   $    76,604    $ 11,290    $     ---    $    12    $    648    $  3,177    $ 4,509    $   858
  After one year:
    One to three years..............        48,926       1,172          117        193       1,753      11,389        ---      2,049
    Three to five years.............         7,121       1,551          776        140       4,746      13,623        ---        314
    Five to 10 years................       109,040       4,551        2,701      2,924      13,906      24,315        ---        ---
    Ten to 20 years.................       388,756         ---       61,915      1,747       9,391      14,896        ---        ---
    Over 20 years...................     2,039,940         ---       49,051        138       4,439       2,225        ---        ---
                                       -----------    --------    ---------    -------    --------    -------- ------------  -------
      Total due after one year......     2,593,783       7,274      114,560      5,142      34,235      66,448        ---      2,363
                                       -----------    --------    ---------    -------    --------    -------- ------------  -------
      Total amounts due.............   $ 2,670,387    $ 18,564    $ 114,560    $ 5,154    $ 34,883    $ 69,625    $ 4,509    $ 3,221
                                       -----------    --------    ---------    -------    --------    -------- ------------  -------
                                       -----------    --------    ---------    -------    --------    -------- ------------  -------
  Purchase accounting
    discounts, net..................
  Unearned discounts, premiums
    and deferred loan fees, net.....
  Allowance for  possible loan
    losses..........................
  Loans receivable, net.............

<CAPTION>
                                             AT SEPTEMBER 30, 1996
                                     ------------------------------------
                                               REAL ESTATE LOANS
                                     ------------------------------------
                                                                 TOTAL
                                     COMMERCIAL    OTHER         LOANS
                                       LOANS     LOANS (2)     RECEIVABLE
                                     ----------  ---------    -----------
                                               (IN THOUSANDS)
<S>                                 <C>         <C>          <C>
Amounts due:
  Within one year...................   $1,410    $  44,125    $   142,633 
  After one year:
    One to three years..............    4,908       23,789         94,296 
    Three to five years.............      636       24,090         52,997 
    Five to 10 years................      ---       25,600        183,037 
    Ten to 20 years.................      ---        3,478        480,183 
    Over 20 years...................    1,252       15,288      2,112,333 
                                     ----------  ---------    -----------
      Total due after one year......    6,796       92,245      2,922,846 
                                     ----------  ---------    -----------
      Total amounts due.............   $8,206    $ 136,370      3,065,479 
                                     ----------  ---------
                                     ----------  ---------
  Purchase accounting
    discounts, net..................                               (2,727)
  Unearned discounts, premiums
    and deferred loan fees, net.....                                5,021 
  Allowance for  possible loan
    losses..........................                              (33,912)
                                                              -----------
  Loans receivable, net.............                          $ 3,033,861 
                                                              -----------
                                                              -----------
</TABLE>

 (1)   Excludes $57.9  million of real estate loans held for sale.
 (2)   Excludes $7.1 million of student loans held for investment and sale.
                                       7
<PAGE>

The following table sets forth the Company's loan originations and loan
purchases, sales and principal repayments for the periods indicated:

<TABLE>
<CAPTION>
                                                               FOR THE YEAR ENDED SEPTEMBER 30,
                                                        -------------------------------------------
                                                             1996            1995           1994
                                                        ------------    ------------    ------------
                                                                        (IN THOUSANDS)
<S>                                                     <C>             <C>             <C>
Real estate loans, net at beginning of period:          $  1,957,028    $  1,542,124    $  1,800,976
Real estate loans originated and purchased:
  One-to-four family (1)..............................     1,395,388         640,164         400,712
  Co-operative apartment..............................         3,072           3,143          17,697
  Multi-family........................................        10,106             358             368
  Commercial real estate..............................         9,915           9,528           7,670
  Construction........................................         7,218           2,692           2,605
  Land................................................           ---           1,000             232
  Purchases (3).......................................       949,437         397,776           5,795
                                                        ------------    ------------    ------------
    Total real estate loans originated and purchased..     2,375,136       1,054,661         435,079
Transfers to real estate owned .......................       (10,001)        (10,312)        (12,699)
Write-offs............................................        (3,869)         (4,608)         (5,852)
Principal repayments..................................      (331,680)       (202,509)       (256,391)
Sales of loans........................................      (649,064)       (278,649)       (418,989)
Securitized loans.....................................      (358,786)       (143,679)            ---
                                                        ------------    ------------    ------------

At end of period (2)..................................  $  2,978,764    $  1,957,028    $  1,542,124
                                                        ------------    ------------    ------------
                                                        ------------    ------------    ------------

Commercial and other loans, net:
At beginning of period................................  $    128,464    $    144,054    $    156,677
Commercial and other loans originated.................        89,827          63,540          62,821
Write-offs............................................        (4,330)         (5,015)         (5,859)
Principal repayments..................................       (59,416)        (53,596)        (64,887)
Commercial and other loans sold ......................        (2,885)        (20,519)         (4,698)
                                                        ------------    ------------    ------------

At end of period......................................  $    151,660    $    128,464    $    144,054
                                                        ------------    ------------    ------------
                                                        ------------    ------------    ------------
</TABLE>

(1) Includes home equity loan advances for the fiscal years ended September 30,
    1996, 1995, and 1994 in the amounts of $6.6 million, $2.2 million and $2.6
    million, respectively.
(2) Includes $57.9 million, $49.3 million, and $8.0 million of loans held for
    sale in the secondary market at September 30, 1996, 1995 and 1994, 
    respectively.

(3) Composed predominantly of one-to-four family loans.

ONE-TO-FOUR FAMILY MORTGAGE LENDING.  The Bank offers both fixed rate and 
adjustable rate mortgage ("ARM") loans primarily secured by one-to-four 
family, owner occupied residences.  Prior to 1995, the majority of such loans 
were secured by property located in Queens, Nassau and Suffolk counties.  
During fiscal 1995, the Bank acquired the lending operations of Entrust 
Financial Corporation ("Entrust") and Developer's Mortgage Corporation 
("Developer's"). These acquisitions enabled the Bank to expand its retail 
production offices into the states of Pennsylvania, Delaware, Maryland, 
Virginia and Georgia, while continuing to originate loans through its New 
York, New Jersey and Connecticut offices.  During fiscal 1996, the Bank 
continued to expand its operations outside New York through the acquisition 
of two mortgage origination offices located in Pennsylvania and North 
Carolina from Fleet Mortgage Corporation and the entire loan production 
operations of First Home Mortgage of Virginia, Inc. ("First Home").  The 
First Home acquisition added five mortgage origination offices in Virginia.  
Loan originations are generally obtained from existing or past customers, 
members of local communities, mortgage bankers, mortgage brokers, real estate 
agents and attorney referrals.  The Bank also operates a national 
correspondent lending program to purchase, from mortgage bankers, loans 
secured by owner occupied one-to-four family residences for geographic 
diversity.  The program is designed to expand the Bank's mortgage portfolio 
and reduce the risks associated with geographic concentrations.  The Bank 
also accepts loan application information through its telemarketing 
operations. Generally, the Bank's underwriting guidelines conform to Federal 
National Mortgage Association ("FNMA") and Federal Home Loan Mortgage 
Corporation ("FHLMC") guidelines.

                                       8

<PAGE>

The Bank generally originates one-to-four family residential mortgage loans 
in amounts up to 80% of the lower of the appraised value or selling price of 
the property securing the loan.  One-to-four family mortgage loans are also 
originated with loan-to-value ratios of up to 100% of the appraised value of 
the mortgaged property; however, private mortgage insurance is required 
whenever loan-to-value ratios exceed 80% of the appraised value of the 
property securing the loan.  The majority of the loans originated conform to 
FNMA and FHLMC loan limits for one-to-four family residences, however, loans 
may be originated for amounts up to $1.5 million.

During the 1986 to 1989 period, the Bank originated a significant number of 
one-to-four family mortgage loans without verification of the borrower's 
financial condition or employer verification of the borrower's level of 
income if the borrower's financial condition and stated income was considered 
reasonable for the employment position held ("low documentation loans").  The 
Bank has experienced higher delinquency and default rates on such loans, as 
compared to fully underwritten one-to-four family loans, and in recognition 
thereof, discontinued the origination of low documentation loans in 1990.  
From time to time, on a selective basis, the Bank originates loans that 
involve limited verification of the borrower's level of income or financial 
condition ("limited documentation loans").  All such limited documentation 
loans are intended to conform to secondary market investor guidelines.

The Bank offers fixed rate one-to-four family residential, condominium and 
co-operative unit loans up to the FNMA and FHLMC limits.  In addition, fixed 
rate loans in principal amounts above the FNMA and FHLMC limits are offered 
in amounts conforming to the limits permitted by various investors to whom 
the loans are intended to be sold.  Interest rates charged on fixed rate 
loans are competitively priced based on market conditions and the Bank's cost 
of funds. The terms of these loans are a maximum of 30 years.  Origination 
fees are generally charged; however, the Bank offers loans with higher or 
lower fees depending on the interest rates to be charged.

The Bank originates most fixed rate loans for immediate sale to FNMA, FHLMC 
or other investors.  There is approximately a one month delay between funding 
and the sale of the loans.  The total real estate loans held for sale 
aggregated $57.9 million at September 30, 1996.  The Bank arranges for the 
sale of such loans at the time the loan application is received through best 
effort and mandatory delivery commitments and, on a regular basis, determines 
whether it is best to retain or sell the servicing rights.  For the year 
ended September 30, 1996, the Bank sold real estate loans totaling $649.1 
million, 80.1% of which were sold on a servicing released basis in order to 
take advantage of market prices for loan servicing.

The Bank offers a variety of ARM loans with maximum loan terms of up to 40 
years, except for co-operative apartment loans which have a maximum loan term 
of 30 years.  These loans adjust periodically and are indexed to a specific 
Treasury Bill rate, plus a margin.  These loans typically carry an initial 
interest rate below the fully-indexed rate for the loan.  The Bank qualifies 
borrowers at the second year rate with a minimum qualification interest rate 
equal to the then applicable FNMA standard on one year ARM loans.  All other 
ARM loans are underwritten at the initial start rate.  The initial discounted 
rate is determined by the Bank in accordance with market and competitive 
factors. Generally, the ARM loans adjust by a maximum of 2% for each rate 
adjustment period with a lifetime cap of 5% - 6% over the initial rate.  
Accordingly, if interest rates and the resulting cost of funds increase in a 
rapidly increasing interest rate environment, it is possible for the interest 
rate increase to exceed the cap levels on these loans and negatively impact 
net interest income. Origination fees and points of up to 3% may be charged 
for one-to-four family ARM loans.  ARM loans generally pose a risk that as 
interest rates rise, the amount of a borrower's monthly loan payment also 
rises, thereby increasing the potential for delinquencies and loan losses.  
However, this potential risk is lessened by the Bank's policy of originating 
ARM loans with annual and lifetime interest rate caps that limits the 
increase of a borrower's monthly payment.

The Bank has correspondent loan agreements with select mortgage bankers who 
originate loans throughout the United States.  The Bank purchased 2,812 loans 
amounting to $776.3 million of residential one-to-four family conforming and 
jumbo loans through its correspondent mortgage originators in the fiscal year 
ended September 30, 1996.  Such loans are underwritten to the Bank's 
standards. These loans are primarily from outside the Bank's core franchise 
area.  The strategy of utilizing correspondent mortgage originators is to 
develop and maintain multiple distribution channels, to increase geographic 
diversity and to improve the stability of interest income.

SECOND MORTGAGE LOANS.  As of September 30, 1996, the balance of such loans 
is predominantly one-to-four family loans, and was $5.2 million, or 0.17% of 
total gross loans. This category has been steadily decreasing since September 
30, 1992, when balances of such loans were $14.0 million or 0.49% of total 
loans.

HOME EQUITY LOANS.  Home equity lines of credit are included in the Bank's 
portfolio of one-to-four family loans.  These loans are offered as prime rate 
indexed loans on which interest only is due for an initial term of ten years 
and thereafter 

                                       9

<PAGE>

principal and interest payments sufficient to liquidate the loan are required 
for the remaining term, not to exceed 15 years.  These loans are made on 
one-to-four family residential and condominium units, generally 
owner-occupied and subject to a 75% combined loan-to-value ratio including 
prior liens or up to 90% of private mortgage insurance is obtained. They are 
granted in amounts from $50,000 to $300,000 with an aggregate maximum of 
$1,000,000.  The underwriting standards for home equity loans are generally 
the same as those for one-to-four family mortgages.  In fiscal 1993, the 
Company sold $303.9 million of home equity loans.  The remaining balance of 
home equity loans at September 30, 1996 was $18.6 million, or 0.59% of total 
gross loans.

MULTI-FAMILY LENDING.  The Bank originates multi-family loans with 
contractual terms of up to 25 years with interim rate adjustments.  These 
loans are generally secured by apartment or co-operative buildings and 
mixed-use (business and residential) properties, located in the Bank's 
primary market area and are originated in amounts of up to 75% of the 
appraised value of the property.  In making such loans, the Bank bases its 
underwriting decision primarily on type and location of the property, the net 
income generated by the real estate to support the debt service, the 
financial resources of the borrower, the borrower's experience in owning or 
managing similar property, the marketability of the property and the credit 
history of the borrowing entity.  The Bank generally requires a debt service 
coverage ratio of at least 1.15x and may require personal guarantees from 
borrowers depending upon the loan-to-value ratio for the loan and the type of 
project.  As of September 30, 1996, $34.9 million, or 1.12% of the Company's 
total gross loan portfolio, consisted of multi-family residential loans.  At 
September 30, 1996, the Company's largest multi-family loan had an 
outstanding balance of $ 2.5 million and was secured by a 100 unit apartment 
complex.

COMMERCIAL REAL ESTATE LENDING.  The Bank originates commercial real estate 
loans secured by properties such as retail stores, office buildings and 
industrial buildings located in the Bank's primary market area.  The Bank's 
commercial real estate loans are generally made in amounts up to 75% of the 
appraised value of the property.  The Bank's underwriting standards and 
procedures are similar to those applicable to its multi-family loans, whereby 
the Bank considers the net operating income of the property and the 
borrower's expertise, credit history and profitability.  The Bank generally 
requires that the properties securing commercial real estate loans have debt 
service coverage ratios of not less than 1.15x and may require personal 
guarantees from the borrowers or the principals of the borrowing entity.  At 
September 30, 1996, the Company's commercial real estate loan portfolio 
totalled $69.6 million, or 2.22% of the Company's total gross loan portfolio. 
 At September 30, 1996, the Company's largest commercial real estate loan 
relationship had an aggregate outstanding balance of $14.8 million, including 
$2.9 million of unsecured commercial debt, and was secured primarily by 
various commercial real estate properties which are occupied by retail 
establishments.

CONSTRUCTION AND LAND LENDING.  The Bank's construction loans primarily have 
been made to finance the construction  of one-to-four family residential 
properties and, to a lesser extent multi-family and commercial properties. 
Construction and land development loans may be made in amounts up to 75% of 
the value as completed.  The Bank generally requires personal guarantees of 
the borrowers and an indication that the borrower has sufficient equity in 
the project.  Construction loans generally are made with adjustable rates 
with varying terms.  Loan proceeds are disbursed in increments as 
construction progresses and as inspections warrant.  As of September 30, 
1996, the Company had $7.7 million, or 0.24% of its total gross loan 
portfolio invested in construction and land loans.  At September 30, 1996, 
the Company's largest construction and/or land loans relationship had an 
aggregate outstanding balance of $2.6 million and was secured by the 
underlying land and subsequent improvements.

COMMERCIAL AND OTHER LOANS.  The Bank offers a wide variety of other secured 
and unsecured loans.  As of September 30, 1996 commercial and other loans 
totalled $151.7 million or 4.85% of the Company's total gross loan portfolio. 
 The Bank has de-emphasized its commercial loan portfolio since 1990, which 
has resulted in a reduction in the balance of these loans to $8.2 million at 
September 30, 1996 from $36.1 million at September 30, 1992.  The largest 
component of other loans is the Bank's line of credit products, including 
unsecured fixed rate and prime rate based revolving credit lines, which  are 
granted up to a maximum amount of $25,000, a fixed rate overdraft checking 
line product, and a junior home equity line of credit product for amounts 
from $10,000 to $50,000.  The terms for this product are similar to the home 
equity product, except that these loans are subject to an 80% combined 
loan-to-value ratio.  The Bank's tax advantage installment loan product 
carries a fixed rate, is available for amounts from $5,000 to $100,000 and is 
payable in terms of three to fifteen years.  Those loans that exceed $25,000 
are subject to an 80% combined loan-to-value ratio.  At September 30, 1996, 
balances of these credit line products totalled $55.3 million, or 1.77% of 
total loans.  Property improvement loans are made up to a maximum loan amount 
of $10,000 on an unsecured basis.  The Bank also purchases and originates new 
and used automobile loans, personal loans, passbook savings loans and 
government-guaranteed student loans.  In addition, the Bank finances new and 
used automobile leases on an outsourced basis.  The underwriting standards 
employed by the Bank for other loans include a determination of the 
applicants' payment history on other debts and an assessment of the 

                                      10

<PAGE>

borrower's ability to meet payments on all of the borrower's obligations.  In 
addition to the credit worthiness of the applicant, the underwriting process 
also includes a comparison of the value of the security, if any, to the 
proposed loan amount.  The Bank offers a Visa and Mastercard credit card 
program on an agent bank basis to generate fee income.  The associated credit 
card receivables are assets of the credit card issuing bank.  The level of 
delinquencies in the Bank's other loan portfolio has generally been within 
industry standards; however, there can be no assurance that delinquencies 
will not increase in the future.

LOAN APPROVAL PROCEDURES AND AUTHORITY.  All one-to-four family ARM loans 
under $650,000 may be approved by designated mortgage department personnel.  
In certain cases where loan amounts exceed predetermined levels and/or 
loan-to-value ratios, loans must be approved by two or more authorized 
individuals. Loans over $650,000 require approval by the Loan Committee of 
the Board of Directors ("Loan Committee").  When loan approval is required 
before the next regularly scheduled Loan Committee meeting ("interim Loan 
Committee approval"), approval must be obtained from four predetermined 
designated individuals.  Loans reported to the Loan Committee will consist of 
any loan approved as a result of the interim Loan Committee approval process 
plus loans randomly selected by the internal audit department meeting 
particular criteria.  All one-to-four family fixed rate mortgage loans may be 
approved by a designated underwriter up to the loan maximum as set forth by 
the investor guidelines.  All fixed rate loans are originated with the intent 
to sell.  However, if a loan is not sold within six months from the date the 
loan is closed, the loan must be reported to the Loan Committee.

All ARM loans and fixed rate mortgage loans greater than $350,000 made to 
Directors, principal shareholders and related interests must be approved by 
the Board of Directors.  All loans made to Senior Vice Presidents and above 
must be reported to the Board of Directors.

Upon receipt of a completed loan application from a prospective borrower, a 
credit report is ordered and certain other information is verified by the 
Bank's loan underwriters and, if necessary, additional financial information 
is obtained.  An appraisal of the real estate intended to secure the proposed 
loan, if applicable, is required which currently is performed by either staff 
appraisers of the Bank or by independent appraisers designated and approved 
by the Bank.  The Board of Directors annually approves the independent 
appraisers used by the Bank and approves the Bank's appraisal policy.  It is 
the Bank's policy to require borrowers to obtain title insurance and hazard 
insurance on all real estate first mortgage loans prior to closing.  
Borrowers generally are required to advance funds on a monthly basis together 
with each payment of principal and interest to a mortgage escrow account from 
which the Bank makes disbursements for items such as real estate taxes and in 
some cases hazard insurance premiums.

The above lending procedures also apply to commercial real estate and 
multi-family loans with the exception of certain approval levels.  Loans 
under $100,000 may be approved by an approved officer and loans between 
$100,000 and $300,000 must be approved by two approved officers.  Loans over 
$300,000 must be reported to the Loan Committee and loans over $350,000 must 
be approved by the Loan Committee.

LOAN CONCENTRATIONS.  As a result of the Financial Institutions Reform, 
Recovery and Enforcement Act of 1989 ("FIRREA"), the Bank may not extend 
credit to a single borrower or related group of borrowers in an amount 
greater than 15% of the Bank's unimpaired capital and surplus.  An additional 
amount of credit may be extended, equal to 10% of unimpaired capital and 
surplus, if the loan is secured by readily marketable collateral, which does 
not include real estate.

At September 30, 1996, there were no borrowers who had loans, which when 
aggregated in accordance with the applicable regulatory requirements, 
involved aggregate extensions of credit from the Bank exceeding its FIRREA 
loans-to-one borrower limit of $67.6 million.

LOAN SERVICING.  As part of its efforts to increase non-interest revenues, the
Company has placed additional emphasis on increasing its loan servicing
portfolio.  At September 30, 1996 and 1995 loans aggregating $3.7 billion and
$2.6 billion, respectively, were being serviced for others.  Management intends
to continue to emphasize loan servicing to generate revenues and believes that
the growth of the servicing portfolio will increase the level of loan servicing
fee income in future years.  In this respect, during 1996 and 1995, the Bank
purchased mortgage servicing rights in the amount of $15.2 million and $10.1
million, respectively.
                                      11
<PAGE>

NON-PERFORMING ASSETS

Loans are considered non-performing if they are in foreclosure and/or are 90 
or more days delinquent (excluding those restructured loans that have been 
returned to performing status after developing a satisfactory payment 
history, generally six months). Loans, other than education loans, accrue 
interest until considered doubtful of collection by management, but in no 
case beyond 90 days delinquent. Consumer loans (other than education loans) 
are generally written off upon becoming 120 days delinquent in the case of 
installment loans and 180 days in the case of revolving credit lines. 
Delinquent interest on education loans continues to accrue, however, since 
these loans are backed by a government agency guarantee and all interest and 
principal is ultimately expected to be received. Once management reaches a 
decision to place a loan on non-accrual status, all delinquent previously 
accrued interest on such loan is reversed against previously recorded income.

The Bank begins collection procedures with respect to mortgage loans by 
sending a late notice when the loan is 15 days past due, and by the 17th day 
of delinquency the matter is referred to the collection department for 
follow-up. During the next 60 days, a series of collection letters are sent 
and staff collectors attempt to make phone contact with the borrower. Formal 
written demand for the arrears is then made. The Bank usually authorizes 
commencement of a foreclosure action between 90 and 120 days after the 
default if the loan is not brought current or has not entered into a mutually 
satisfactory reinstatement arrangement with the borrower. The same collection 
procedures are used for delinquent home equity loans.

The Bank's consumer loan collection procedures call for sending late notices 
by the 15th day and then again on the 20th day of delinquency. The loan is 
referred to the collection department by the 20th day if not brought current. 
Legal action on installment loans is usually commenced if payments are not 
received after the loan has been delinquent for 120 days.  Delinquent 
revolving credit accounts involves similar procedures, except that legal 
action is usually commenced after 180 days.

The level of non-performing residential property loans is also affected by 
the Bank's loan restructuring activities. Where borrowers have encountered 
hardship, but are able to demonstrate to the Bank's satisfaction an ability 
and willingness to resume regular monthly payments, the Bank seeks to provide 
them with an opportunity to restructure their loans. Where successful, these 
restructurings avoid the cost of completing the foreclosure process, as well 
as any losses on acquisition of the properties and the costs of maintaining 
and disposing of real estate owned.

The Bank returns restructured residential loans that have complied with the 
terms of their restructure agreement for a satisfactory period (generally six 
months) to performing status. At September 30, 1996, restructured residential 
loans included in performing and non-performing loans were $11.8 million and 
$11.4 million, respectively.

During December 1993 in an effort to accelerate resolution of certain of its 
problem assets, the Company entered into a contract for the bulk sale of 
certain loans and real estate owned ("Bulk Sale").  The sale of the loans was 
completed by December 31, 1993 and the sale of owned real estate was 
completed in the second quarter of fiscal 1994.  At September 30, 1993 the 
book value of the loans anticipated to be sold was approximately $142.0 
million, of which approximately $110.0 million were then non-performing and 
approximately $32.0 million were then performing. At that date, the net book 
value of the real estate owned anticipated to be sold was approximately $14.0 
million.

The following table sets forth information regarding the components of 
non-performing assets at September 30  for the years indicated. Restructured 
loans that have not yet demonstrated a sufficient payment history to warrant 
a return to performing status are included with non-performing loans.

                                      12

<PAGE>

<TABLE>
<CAPTION>
                                                                      AT SEPTEMBER 30,
                                               --------------------------------------------------------------
                                                 1996         1995        1994        1993            1992
                                               ---------   ---------   ---------   ----------      ----------
                                                                   (DOLLARS IN THOUSANDS)
<S>                                            <C>         <C>        <C>          <C>             <C>
Non-performing loans (1):
Residential:
  One-to-four family ......................... $  39,573   $  39,661   $  33,359   $  107,441      $  152,498
  Co-operative apartments ....................       602       1,572       1,811        4,208           5,083
  Home equity ................................     3,489       4,915       6,577       13,857          12,455
  Second mortgage ............................       190         226         471        1,002           1,446
  Multi-family ...............................       896       1,512       1,123          430             758
                                               ---------   ---------   ---------   ----------      ----------
    Total residential ........................    44,750      47,886      43,341      126,938         172,240
Non-residential:
  Commercial real estate .....................     4,336       4,093       4,459        8,301           6,783
  Construction ...............................       453         453         861        5,092           7,008
  Land .......................................       675         836       1,847        2,659           2,937
                                               ---------   ---------   ---------   ----------      ----------
Total real estate loans (2)...................    50,214      53,268      50,508      142,990         188,968
Other loans ..................................     2,952       2,408       3,528        2,326           6,090
                                               ---------   ---------   ---------   ----------      ----------
Total non-performing loans ...................    53,166      55,676      54,036      145,316         195,058
  Real estate owned, net .....................     8,155       8,893       7,187       25,812          35,255
                                               ---------   ---------   ---------   ----------      ----------
Total non-performing assets .................. $  61,321   $  64,569   $  61,223   $  171,128 (3)  $  230,313
                                               ---------   ---------   ---------   ----------      ----------
                                               ---------   ---------   ---------   ----------      ----------
Total non-performing loans to gross loans.....      1.70%       2.67%       3.20%        7.42%(3)        6.84%
Total non-performing assets to total assets...      1.14        1.32        1.36         4.29 (3)        4.09

</TABLE>

(1) All non-performing loans are in non-accrual status. There are no loans 
    90 days or more past due and still accruing interest (other than 
    education loans which are guaranteed).
    
(2) Includes $11.4 million, $14.8 million, $15.8 million, $25.0 million and 
    $18.9 million of restructured real estate loans that have not yet 
    complied with the terms of their restructure agreement for a 
    satisfactory period (generally six months) as of September 30, 1996, 
    1995, 1994, 1993 and 1992, respectively.
    
(3) After giving effect to the consummation of the Bulk Sale, the total 
    non-performing assets would have been $77.1 million and the Company's 
    ratio of non-performing loans to total gross loans would have been 3.26% 
    at September 30, 1993. The ratio of non-performing assets to total 
    assets would have been 1.93% at September 30, 1993.

   Non-performing assets continue to have an adverse effect on the Company.  
The principal amount of non-performing real estate loans, excluding 
restructured loans, aggregated approximately $38.8 million, $38.5 million and 
$34.7 million at September 30, 1996, 1995 and 1994, respectively.  Interest 
income that would have been recorded if the loans had been performing in 
accordance with their original terms aggregated $2.9 million, $2.7 million 
and $3.7 million for the fiscal years ended September 30, 1996, 1995 and 
1994, respectively.  No interest income was recorded for these loans during 
the  fiscal years ended September 30, 1996, 1995 and 1994.  The principal 
amount of non-performing commercial loans excluding restructured loans 
aggregated approximately $0.8 million, $0.8 million and $1.5 million for the 
fiscal years ended September 30, 1996, 1995 and 1994, respectively.

   The principal amount of restructured real estate loans that have not 
complied with the terms of their restructure agreement for a satisfactory 
period (generally six months) aggregated approximately $11.4 million, $14.8 
million and $15.8 million at September 30, 1996, 1995 and 1994, respectively. 
 Interest income that would have been recorded if the loans had been 
performing in accordance with their original terms aggregated $0.3 million, 
$0.3 million and $0.4 million for the fiscal years ended September 30, 1996, 
1995 and 1994, respectively. Interest income recorded for these loans 
amounted to $0.1 million, $0.1 million and $0.2 million, for fiscal years 
1996, 1995 and 1994. Restructured loans that have complied with the terms of 
their restructure agreement for a satisfactory period (generally six months) 
and returned to performing status aggregated $11.8 million, $12.1 million and 
$12.8 million as of September 30, 1996, 1995, 1994, respectively.

   The principal amount of restructured commercial loans aggregated $0.5 
million, $0.9 million and $1.8 million at September 30, 1996, 1995 and 1994, 
respectively.  Interest income that would have been recorded if the loans had 
been performing in accordance with their original terms aggregated $43,000, 
$49,000 and $125,000 for fiscal years ended September 30, 1996, 1995 and 
1994, respectively.  Interest income recorded for these loans amounted to 
$29,000, $40,000 and $100,000 for the fiscal years ended September 30, 1996, 
1995 and 1994, respectively.

                                      13

<PAGE>

   Although there are indications that the New York metropolitan real estate 
market has stabilized, there can be no assurance that economic conditions 
will not decline and therefore lead to an increase in the level of 
non-performing assets. Any such developments could further adversely affect 
the Company's operations by requiring additional provisions for possible loan 
losses, as well as through decreased interest income and increased 
non-interest expenses resulting from the allocation of resources to the 
management of non-performing assets and from increased real estate owned 
expenses.

NON-PERFORMING RESIDENTIAL PROPERTY LOANS

   At September 30, 1996, non-performing residential property loans were 
$44.8 million (including $8.1 million in loans that have been restructured 
and which may be returned to performing status if they develop a satisfactory 
payment history). The September 30, 1996 level of non-performing residential 
property loans represents a decrease of $3.1 million from September 30, 1995 
and an increase of $1.4 million from the level at September 30, 1994.  These 
levels reflect the movement of non-performing loans through the foreclosure 
process, the decrease in the amount of loans that became non-performing and, 
to a lesser extent, non-performing loans that were satisfied or reinstated 
and the effect of returning restructured loans that have demonstrated a 
satisfactory payment history to performing status.

   The volume of loans delinquent less than 90 days that are not in 
non-performing status may, to some degree, be a leading indicator of future 
levels of non-performing loans.  Residential property loan delinquencies (net 
of those already in non-performing status) were as follows:

                                                     AT SEPTEMBER 30,
                                            ---------------------------------
                                                1996       1995       1994
                                            ----------- ---------- ----------
                                                      (IN THOUSANDS)
60-89 Days . . . . . . . . . . . . . . . . .  $ 10,030   $ 10,415   $ 10,210
30-59 Days . . . . . . . . . . . . . . . . .    73,225     51,558     59,465

NON-PERFORMING COMMERCIAL REAL ESTATE LOANS

   At September 30, 1996 the level of non-performing commercial real estate 
loans was $4.3 million, an increase of $0.2 million from the September 30, 
1995 level of $4.1 million.  This stable level in non-performing commercial 
real estate was primarily due to management's strategy to originate 
commercial real estate loans on a selective basis.  The Company's commercial 
real estate loan portfolio, like the residential property loan portfolio, 
reflects indications of a stabilizing real estate market in the New York 
metropolitan area, however, it is possible that the Company may experience 
some future increases in the level of non-performing commercial real estate 
loans.  The largest non-performing commercial real estate loan had an 
outstanding principal balance of $1.8 million at September 30, 1996 and was 
secured by a retail shopping center.

   The Bank seeks to work with delinquent commercial real estate borrowers in 
an attempt, when feasible, to restructure loans to provide for a resumption 
of regular monthly payments.  These arrangements, which are individually 
negotiated based on the borrower's ability to maintain such payments 
generally provide for interest rates that are lower than those initially 
contracted for, and in some instances include a reduction in the principal 
amount of the loan, which reduction must be written off by the Bank.  In each 
instance the Bank evaluates the costs associated with a particular 
restructuring arrangement and may enter into such an agreement if it believes 
it is economically beneficial to the Bank.

                                      14

<PAGE>

REAL ESTATE OWNED

   At September 30, 1996 and 1995, the balance of real estate owned was $8.2 
million and $8.9 million, respectively.  The Bank generally obtains 
appraisals on properties acquired as real estate owned at the time it obtains 
possession of the property and charges-off any declines in value at such 
time. The Bank generally reassesses the value of real estate owned every six 
months and charges off any amounts carried in excess of the reassessed value. 
The following table summarizes the real estate owned portfolio at September 
30:

                                                     1996           1995
                                                   --------       --------
                                                       (IN THOUSANDS)
One-to-four family...........................      $  5,835       $  5,068
Condo/co-op..................................         1,990          2,464
Multi-family.................................           ---            673
Commercial...................................           330            347
Land.........................................           ---            341
                                                   --------       --------
                                                   $  8,155       $  8,893
                                                   --------       --------
                                                   --------       --------

   At September 30, 1996, the largest single real estate owned property was a 
one-to-four family unit with a book value of $0.3 million.

CLASSIFIED ASSETS

     Federal regulations and the Bank's Classification of Assets Policy 
provide for the classification of loans and other assets considered to be 
lesser quality as "substandard," "doubtful" or "loss" assets. An asset is 
considered substandard if it is inadequately protected by the current net 
worth and paying capacity of the obligor or of the collateral pledged, if 
any. Substandard assets include those characterized by the "distinct 
possibility" that the Bank will sustain "some loss" if the deficiencies are 
not corrected. Assets classified as doubtful have all of the weaknesses 
inherent in those classified substandard with the added characteristic that 
the weaknesses present make "collection or liquidation in full," on the basis 
of currently existing facts, conditions, and values, "highly questionable and 
improbable." Assets classified as loss are those considered "uncollectible" 
and of such little value that their continuance as assets without the 
establishment of a specific loss reserve is not warranted. Assets which do 
not currently expose the Bank to sufficient risk to warrant classification in 
one of the aforementioned categories but possess weaknesses are required to 
be designated "special mention" by management. An internal loan review 
function, which was created to review and rate the quality of loans and other 
assets, reports to the Loan Committee on a quarterly basis.

   The following table sets forth the Bank's classified assets (other than 
"loss" classifications) and assets designated as special mention. Assets 
classified "loss" were charged-off.

                                                       AT SEPTEMBER 30, 1996
                                                   -----------------------------
                                                       (DOLLARS IN THOUSANDS)
                                                   -----------------------------
                                                                PERCENT OF TOTAL
                                                                ----------------
                                                     AMOUNT          ASSETS
                                                   ----------   ----------------
Classified assets:
  Substandard, including real estate owned . . .   $  74,900

   Doubtful. . . . . . . . . . . . . . . . . . .       2,240
                                                   ---------
     Total classified. . . . . . . . . . . . . .      77,140         1.44%

Special mention. . . . . . . . . . . . . . . . .      15,672
                                                   ---------
Total. . . . . . . . . . . . . . . . . . . . . .   $  92,812         1.73%
                                                   ---------
                                                   ---------

                                      15

<PAGE>

LOANS SOLD WITH RECOURSE

     Some residential property loans sold by the Company have been sold with 
recourse. The majority of these loans were sold to FNMA and FHLMC. At 
September 30, 1996, loans sold with recourse aggregated $289.5 million, but 
the maximum exposure under the Company's recourse obligations was $130.1 
million. Included in loans sold with recourse at September 30, 1996 were 
loans delinquent 90 or more days with an aggregate outstanding balance of 
$10.3 million.  Although the Company does not believe that its recourse 
obligations subject it to risk of material loss in the future, the Company 
has established recourse reserves which at September 30, 1996 aggregated 
approximately $0.6 million.

     Recourse as discussed herein means that the Company is obligated to 
remit to the investor the amount of contractual principal and interest due 
(less a servicing fee), regardless of whether these payments are actually 
received from the borrower. On completion of foreclosure, the entire balance 
of the loan must be remitted to the investor, regardless of whether the sale 
of the real estate owned property yields that amount. For loans sold to FNMA, 
it has been the Bank's practice to repurchase from FNMA any loans sold with 
recourse that become more than 90 days delinquent. By repurchasing these 
delinquent loans prior to foreclosure, the Bank derives the benefit of 
substantial savings between the interest rate that must be paid monthly to 
FNMA even if not received and the Bank's own interest cost to fund the 
purchase of these loans; additionally, repurchases permit the Bank to provide 
eligible borrowers with more flexible workout options. During fiscal 1996, 
the Bank repurchased from FNMA residential property loans sold with recourse 
totaling $1.7 million.

ALLOWANCE FOR POSSIBLE LOAN LOSSES

     The Company maintains a valuation allowance for possible loan losses. 
The allowance for possible loan losses is established and maintained through 
a provision for possible loan losses at a level deemed appropriate by 
management to provide adequately for known and inherent risks in the 
portfolio. The determination of the amount of the allowance for possible loan 
losses includes estimates that are susceptible to significant changes due to 
changes in appraised values of collateral and general economic conditions. In 
connection with the determination of the allowance, management obtains 
independent appraisals for significant properties. While management uses 
available information to recognize losses on loans, future additions to the 
allowance may be necessary.  The Bank's Classification of Assets Committee 
oversees the valuation allowance process.

     In addition, various regulatory agencies, as an integral part of their 
examination process, periodically review the Bank's allowance for possible 
loan losses. Such agencies may require the Bank to recognize additions to the 
allowance.

   Management's evaluation of the risk inherent in its loan portfolio and the 
general economy includes a review of all loans on which full collectibility 
may not be reasonably assured considering, among other matters, the estimated 
fair value of the underlying collateral, economic conditions, historical loan 
loss experience and other factors that warrant recognition in providing for 
an adequate loan loss allowance.  Other factors considered by management 
include the size and risk exposure of each segment of the loan portfolio, 
present indicators such as delinquency rates and the borrowers' current 
financial condition and the potential for losses in future periods.  In 
evaluating the adequacy of the allowance for possible loan losses management 
recognizes the risk associated with each type of loan and the current 
outstanding balance. The primary risk element considered by management with 
respect to each consumer and one-to-four family mortgage loan is any current 
delinquency on the loan.  The primary risk elements considered with respect 
to commercial real estate and multi-family loans are the financial condition 
of the borrower, the sufficiency of collateral (including changes in the 
appraised values of collateral) and the record of payment.  A subjective 
review of all substantial non-performing loans, other problem loans and 
overall delinquency is made prior to the end of each calendar quarter to 
determine the adequacy of the allowance for possible loan losses.  
Additionally, current year charge-offs, charge-off trends, new loan 
production and current balance by particular loan categories are factored 
into the determination of allowance levels.

     When real estate loans are foreclosed the loan balance is compared to 
the fair value of the property. If the net carrying value of the loan at the 
time of foreclosure exceeds the fair value of the property, the difference is 
charged to the allowance for possible loan losses and the fair value of the 
property becomes the book value of the real estate owned. The real estate 
owned is subsequently carried at the lower of book value or fair value with 
any further adjustment reflected as a charge against earnings.

                                      16

<PAGE>

   The following table sets forth the Company's allowance for possible loan 
losses at or for the years ended September 30,:

<TABLE>
<CAPTION>
                                                 1996      1995      1994      1993      1992
                                               --------  --------  --------  --------  --------
                                                             (DOLLARS IN THOUSANDS)
<S>                                            <C>       <C>       <C>       <C>       <C>
Balance at beginning of period..............   $ 34,358  $ 35,713  $ 33,951  $ 32,157  $ 26,857
Provision for possible loan losses..........      6,200     6,470    11,955    47,288    19,347
Charge-offs:
  Real estate loans.........................      3,869     4,608     5,852    39,508(1)  9,891
  Commercial loans..........................        562       917     1,551     1,054       974
  Other loans...............................      3,768     4,098     4,308     6,236     4,958
                                               --------  --------  --------  --------  --------
    Total charge-offs.......................      8,199     9,623    11,711    46,798    15,823
Recoveries:
  Real estate loans.........................        691     1,006       482       685     1,644
  Commercial loans..........................        319       141       577        67       195
  Other loans...............................        543       651       459       552       437
                                               --------  --------  --------  --------  --------
    Total recoveries........................      1,553     1,798     1,518     1,304     2,276
                                               --------  --------  --------  --------  --------
Net charge-offs.............................      6,646     7,825    10,193    45,494    13,547
Transfers out...............................        ---       ---       ---       ---      (500)
                                               --------  --------  --------  --------  --------
Balance at end of period....................   $ 33,912  $ 34,358  $ 35,713  $ 33,951 $  32,157
                                               --------  --------  --------  --------  --------
                                               --------  --------  --------  --------  --------

Ratio of net loan charge-offs during the
  period to average loans, net out-
  standing during the period................       0.27%     0.42%     0.59%     1.79%     0.48%
Ratio of allowance for possible loan
  losses to gross loans receivable at
  the end of the period.....................       1.08      1.65      2.12      1.73(2)   1.13
Ratio of allowance for possible loan
  losses to non-performing loans at
  at the end of the period..................      63.79     61.71     66.09     23.36(3)  16.49

</TABLE>
__________

(1) Includes $32.0 million in charge-offs related to the Bulk Sale.

(2) Giving effect to the consummation of the Bulk Sale, the ratio of 
    allowance for possible loan losses to gross loans receivable at 
    September 30, 1993 would have been 1.84%.

(3) Giving effect to the consummation of the Bulk Sale, the ratio of 
    allowance for possible loan losses to non-performing loans at September 
    30, 1993 would have been 56.29%.

   The provision for possible loan losses declined to $6.2 million for the 
year ended September 30, 1996 from $6.5 million for the year ended September 
30, 1995.  This reduction reflects the stable level of non-performing loans 
and the third consecutive year of lower charge-offs.

                                      17

<PAGE>

   The following table sets forth the Company's allocation of its allowance 
for possible loan losses to the total amount of loans in each of the 
categories listed.

<TABLE>
<CAPTION>
                                                                     AT SEPTEMBER 30,
                         ----------------------------------------------------------------------------------------------------
                                1996                 1995                1994                  1993                 1992
                         ------------------   -------------------   ------------------   ------------------   ------------------
                                   LOANS IN             LOANS IN             LOANS IN             LOANS IN             LOANS IN
                                   CATEGORY             CATEGORY             CATEGORY             CATEGORY             CATEGORY
                                   TO TOTAL             TO TOTAL             TO TOTAL             TO TOTAL             TO TOTAL
                          AMOUNT   LOANS (1)   AMOUNT   LOANS (1)   AMOUNT   LOANS (1)   AMOUNT   LOANS (1)   AMOUNT   LOANS (1)
                         -------  ----------  -------  ----------  -------  ----------  -------  ----------  -------  ----------
                                                                  (DOLLARS IN THOUSANDS)
<S>                      <C>       <C>        <C>       <C>        <C>       <C>        <C>        <C>       <C>       <C>
Real estate loans ...... $20,226    95.16%    $20,554    93.84%    $22,881    91.46%    $24,951     92.00%   $25,414    93.10%
Commercial loans .......   3,631     0.26       3,874     0.45       4,250     0.74       3,874      0.87      2,601     1.27
Other loans ............  10,055     4.58       9,930     5.71       8,582     7.80       5,126      7.13      4,142     5.63
                         -------  ----------  -------  ----------  -------  ----------  -------  ----------  -------  ----------
  Total allowance
  for possible loan
  losses ............... $33,912   100.00%    $34,358   100.00%    $35,713   100.00%    $33,951    100.00%   $32,157   100.00%
                         -------  ----------  -------  ----------  -------  ----------  -------  ----------  -------  ----------
                         -------  ----------  -------  ----------  -------  ----------  -------  ----------  -------  ----------
</TABLE>

(1) Gross loans used to calculate percentage.

INVESTMENT ACTIVITIES

   INVESTMENT POLICIES.  The investment policy of the Company, which is 
established by senior management and approved by the Board of Directors, is 
based upon its asset/liability management goals and emphasizes high credit 
quality and diversified investments while seeking to optimize net interest 
income within acceptable limits of liquidity and safety and soundness.  The 
Company's investment activities are overseen by the Investment Committee of 
the Board of Directors, which meets quarterly.

   The Company's investment goal has been to invest available funds in 
short-term, highly liquid instruments that are adjustable rate or that 
generally do not exceed an average life of five years, or that meet specific 
requirements of the Company's asset/liability goals.  The policy is designed 
to provide and maintain liquidity to meet day-to-day, cyclical and long-term 
changes in the Company's asset/liability structure, and at September 30, 
1996, 91.43% of the individual holdings in the Company's mortgage-backed 
security and debt and equity security portfolios mature or reprice in fewer 
than five years.

   The Company's investment policy permits it to invest in, among other 
instruments, U.S. government obligations, securities of  various 
government-sponsored agencies, including mortgage-backed securities 
issued/guaranteed by FNMA, FHLMC and Government National Mortgage Association 
("GNMA"), certificates of deposit of insured banks and savings associations, 
bankers acceptances, federal funds, asset-backed securities, private issuer 
investment grade mortgage-backed securities, investment grade preferred 
stock, investment grade corporate debt securities and commercial paper.

   The Company's investment policy permits purchases of privately issued 
securities only if they are rated in one of the three highest categories by a 
nationally recognized rating agency and does not permit purchases of 
securities of below investment grade quality. In addition, the Company's 
investment policy prohibits investment in certain types of mortgage 
derivative securities that management considers high risk. The Company 
generally purchases only short-term classes of collateralized mortgage 
obligations ("CMOs") and real estate mortgage investment conduits ("REMICs"). 
At September 30, 1996, the Company held no securities issued by any one 
entity with a total carrying value in excess of 10% of the Company's net 
worth at that date, except for obligations of the U.S. government and 
government-sponsored agencies and certain mortgage-backed securities which 
are fully collateralized by mortgages held by single purpose entities.

   Thrift Bulletin Number 52 ("TB-52"), the Office of Thrift Supervision 
("OTS") Policy Statement on securities portfolio policies and unsuitable 
investment practices requires that institutions classify mortgage derivative 
products acquired, including certain tranches of REMICs and CMOs, as 
"high-risk mortgage securities" if such products exhibit greater price 
volatility than a benchmark fixed-rate 30-year mortgage-backed pass-through 
security. Institutions may only hold high-risk mortgage securities to reduce 
interest-rate risk in accordance with safe and sound practices and must also 
follow certain prudential safeguards in the purchase and retention of such 
securities.

                                      18

<PAGE>

   The Company's investment policy also permits it to invest in certain 
derivative financial instruments.  These instruments consist of interest rate 
caps, floors and collars and are generally used to hedge against interest 
rate exposure.  See--"Borrowings".

   MORTGAGE-BACKED SECURITIES.  The Company invests in mortgage-backed 
securities and uses such investments to complement its mortgage lending 
activities and supplement such activities at times of low mortgage loan 
demand.  At September 30, 1996, the net carrying value of mortgage-backed 
securities totalled approximately $1.7 billion, or 32.44% of total assets, 
which equaled their estimated fair value as substantially all mortgage-backed 
securities are classified as available-for-sale.  Mortgage-backed securities 
in the Company's held-to-maturity portfolio are carried at amortized cost. 
The mortgage-backed securities portfolio includes REMICs and CMOs, with a net 
carrying value at September 30, 1996 of $88.8 million.  A CMO is a special 
type of pass-through debt in which the stream of principal and interest 
payments on the underlying mortgages or mortgage-backed securities is used to 
create classes with different maturities and, in some cases, amortization 
schedules as well as a residual interest, with each such class possessing 
different risk characteristics.

   At September 30, 1996, $1.7 billion, or 93.95% of the amortized cost of 
the Company's mortgage-backed securities portfolio was directly insured or 
guaranteed by FNMA or FHLMC. FNMA and FHLMC provide the certificate holder a 
guarantee of timely payments of scheduled principal and interest, whether or 
not they have been collected.  Those securities not insured or guaranteed by 
FNMA or FHLMC are either privately insured or have senior subordinated 
structures, and are rated AAA by one of the nationally recognized bond rating 
agencies.  The Company's mortgage-backed securities portfolio had a weighted 
average yield of 6.83% at September 30, 1996.  At September 30, 1996, $1.3 
billion or 75.96%, of total mortgage-backed securities had adjustable rates 
and $0.4 million, or 24.04%, of total mortgage-backed securities had fixed 
rates, based on amortized cost.

   Mortgage-backed securities generally yield less than the loans that 
underlie such securities because of the cost of payment guarantees or credit 
enhancements that reduce credit risk.  In addition, mortgage-backed 
securities are more liquid than individual mortgage loans and may be used 
more easily to collateralize obligations of the Bank. In general, 
mortgage-backed securities issued or guaranteed by FNMA and FHLMC and certain 
AAA-rated mortgage-backed pass-through securities are weighted at no more 
than 20% for risk-based capital purposes, compared to the risk weight 
assigned to non-securitized whole loans of 50%.

   While mortgage-backed securities carry a reduced credit risk as compared 
to whole loans, such securities remain subject to the risk that a fluctuating 
interest rate environment, along with other factors such as the geographic 
distribution of the underlying mortgage loans, may alter the prepayment rate 
of such mortgage loans and so affect both the prepayment speed, and value of 
such securities. In contrast to mortgage-backed securities in which cash flow 
is received (and, hence, prepayment risk is shared) pro rata by all 
securities holders, the cash flows from the mortgages or mortgage-backed 
securities underlying REMICs or CMOs are segmented and paid in accordance 
with a predetermined priority to investors holding various tranches of such 
securities or obligations. A particular tranch of a REMIC or CMO may 
therefore carry prepayment risk that differs from that of both the underlying 
collateral and other tranches.

   ASSET-BACKED SECURITIES.  The Company invests in asset-backed securities.  
At September 30, 1996 the Company's total asset-backed securities portfolio 
of $40.4 million, or 0.75% of total assets, was classified as 
available-for-sale. These securities are rated AAA by one of the nationally 
recognized bond rating agencies, carry a fixed rate, and are primarily 
secured by automobile loans.

   PREFERRED AND COMMON STOCK.  The Company invests in preferred and common 
stock.  At September 30, 1996, all preferred and common stock was classified 
as available-for-sale and totalled $40.0 million, or 0.75% of total assets.  
These securities are investment grade and carry an A1P1 commercial paper 
rating as determined by one of the nationally recognized bond rating agencies.

                                      19

<PAGE>

SECURITIES PORTFOLIO

   The table below sets forth certain information regarding the amortized 
cost and market value of the Company's debt and equity securities portfolio 
at the dates indicated.  Securities held-to-maturity are recorded at 
amortized cost. Securities available-for-sale are recorded at estimated fair 
value.  Securities balances are categorized based upon the Company's adoption 
of Statement of Financial Accounting Standards No. 115 ("SFAS 115"), 
"Accounting for Certain Investments in Debt and Equity Securities" effective 
September 30, 1993. Effective November 1995, the Financial Accounting 
Standards Board issued a Special Report on SFAS 115 providing a one-time 
reassessment that allowed entities to, concurrent with the initial adoption 
of the implementation guidance but no later than December 31, 1995, reassess 
the appropriateness of the classifications of all securities held at that 
time.  The 1996 balances reflect the reassessment of the Company's portfolio 
which resulted in debt securities in the amount of $78.6 million previously 
classified as held-to-maturity to be classified as available-for-sale.

<TABLE>
<CAPTION>
                                                                                     AT SEPTEMBER 30,
                                                         ------------------------------------------------------------------------
                                                                  1996                     1995                     1994
                                                         ----------------------   ----------------------   ----------------------
                                                         AMORTIZED   ESTIMATED    AMORTIZED   ESTIMATED    AMORTIZED   ESTIMATED
                                                           COST      FAIR VALUE     COST      FAIR VALUE     COST      FAIR VALUE
                                                         ---------   ----------   ---------   ----------   ---------   ----------
                                                                                      (IN THOUSANDS)
<S>                                                      <C>         <C>          <C>         <C>          <C>         <C>
SECURITIES HELD-TO-MATURITY:
Debt securities:
  U.S. government and agency obligations...............  $     --     $     --   $   2,593     $  2,593    $    448     $    434
  U.S. government and agency obligations pledged as
   collateral..........................................        --           --       7,393        7,398       9,578        9,351
  Asset-backed securities..............................        --           --      45,853       45,880      75,627       75,265
                                                         ---------   ----------   ---------   ----------   ---------   ----------
Total debt securities held-to-maturity.................  $     --     $     --    $ 55,839     $ 55,871    $ 85,653     $ 85,050
                                                         ---------   ----------   ---------   ----------   ---------   ----------
                                                         ---------   ----------   ---------   ----------   ---------   ----------
SECURITIES AVAILABLE-FOR-SALE:
Debt securities:
  U.S. government and agency obligations...............  $ 13,385     $ 13,382    $ 63,852     $ 63,665    $148,524     $147,324
  U.S. government and agency obligations pledged as
   collateral..........................................    88,021       86,105       --          --           --          --
  Asset-backed securities..............................    40,561       40,369     129,391      128,989     203,587      200,117
                                                         ---------   ----------   ---------   ----------   ---------   ----------
    Total debt securities..............................   141,967      139,856     193,243      192,654     352,111      347,441
Equity securities:
  Preferred and common stock...........................    40,038       40,038      40,038       40,038          89           89
  Investment in mutual funds...........................       779          756         729          716         681          657
                                                         ---------   ----------   ---------   ----------   ---------   ----------
    Total equity securities............................    40,817       40,794      40,767       40,754         770          746
                                                         ---------   ----------   ---------   ----------   ---------   ----------
Total debt and equity securities available-for-sale....  $182,784     $180,650    $234,010     $233,408    $352,881     $348,187
                                                         ---------   ----------   ---------   ----------   ---------   ----------
                                                         ---------   ----------   ---------   ----------   ---------   ----------
FHLB - New York stock..................................  $ 40,754     $ 40,754    $ 35,132     $ 35,132    $ 30,760     $ 30,760
                                                         ---------   ----------   ---------   ----------   ---------   ----------
                                                         ---------   ----------   ---------   ----------   ---------   ----------
Federal funds sold.....................................  $ 33,480     $ 33,480    $ 10,100     $ 10,100    $125,650     $125,650
                                                         ---------   ----------   ---------   ----------   ---------   ----------
                                                         ---------   ----------   ---------   ----------   ---------   ----------
</TABLE>


                                      20
<PAGE>

    The table below sets forth certain information regarding the amortized cost
and market values of the Company's mortgage-backed securities portfolio at the
dates indicated.  Mortgage-backed securities held-to-maturity are recorded at
amortized cost.  Mortgage-backed securities available-for-sale are recorded at
estimated fair value.  Securities balances are categorized based upon the
Company's adoption of SFAS 115 effective September 30, 1993.  The 1996 balances
reflect the reassessment of the Company's portfolio in accordance with the
Special Report on SFAS 115 which resulted in mortgage-backed securities in the
amount of $1.2 billion previously classified as held-to-maturity to be
classified as available-for-sale.

<TABLE>
<CAPTION>
                                                                                     AT SEPTEMBER 30,
                                                          ----------------------------------------------------------------------
                                                                   1996                    1995                    1994
                                                          ----------------------  ----------------------  ----------------------
                                                          AMORTIZED   ESTIMATED   AMORTIZED   ESTIMATED   AMORTIZED   ESTIMATED
                                                             COST     FAIR VALUE     COST     FAIR VALUE     COST     FAIR VALUE
                                                          ----------  ----------  ----------  ----------  ----------  ----------
                                                                                      (IN THOUSANDS)
<S>                                                       <C>         <C>         <C>         <C>         <C>         <C>
MORTGAGE-BACKED SECURITIES HELD-TO-MATURITY:
  FNMA pass-through certificates........................  $   --      $   --      $  353,324  $  356,706  $  386,475  $  382,193
  FHLMC pass-through certificates.......................      --          --         362,646     362,237     452,874     437,416
  Real estate mortgage investment conduit...............      17,017      15,041      17,693      17,693      18,366      18,366
  Other pass-through certificates.......................       6,079       6,079      62,082      61,929       6,079       6,079
  GNMA, FHLMC and FNMA securities pledged as
   collateral...........................................      --          --         540,354     540,449     385,037     368,425
                                                          ----------  ----------  ----------  ----------  ----------  ----------
  Gross mortgage-backed securities......................      23,096      21,120   1,336,099   1,339,014   1,248,831   1,212,479
  Unamortized premiums (unearned discounts), net........      --          --           1,804      --          (6,339)     --
                                                          ----------  ----------  ----------  ----------  ----------  ----------
  Mortgage-backed securities held-to-maturity, net......  $   23,096  $   21,120  $1,337,903  $1,339,014  $1,242,492  $1,212,479
                                                          ----------  ----------  ----------  ----------  ----------  ----------
                                                          ----------  ----------  ----------  ----------  ----------  ----------
MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE:
  FNMA pass-through certificates........................  $  483,480  $  485,696  $  274,501  $  279,776    $117,311   $ 115,973
  GNMA pass-through certificates........................       3,582       3,632      --          --          --          --
  FHLMC pass-through certificates.......................     367,480     369,337     497,438     506,371     685,279     685,757
  Other pass-through certificates.......................      78,101      77,884       9,892       9,620      10,038       9,089
  GNMA, FNMA and FHLMC securities pledged as
   collateral...........................................     767,263     780,557     140,072     143,080       7,249       7,482
                                                          ----------  ----------  ----------  ----------  ----------  ----------
  Gross mortgage-backed securities......................   1,699,906   1,717,106     921,903     938,847     819,877     818,301
  Unamortized premiums (unearned discounts), net........       3,270      --           4,120      --            (900)     --
                                                          ----------  ----------  ----------  ----------  ----------  ----------
  Mortgage-backed securities available-for-sale, net....  $1,703,176  $1,717,106  $  926,023  $  938,847  $  818,977  $  818,301
                                                          ----------  ----------  ----------  ----------  ----------  ----------
                                                          ----------  ----------  ----------  ----------  ----------  ----------
</TABLE>

                                       21

<PAGE>


     The table below sets forth certain information regarding the carrying 
value, weighted average yields and maturities of the Company's 
mortgage-backed and debt and equity securities as of September 30, 1996.  
Pursuant to the reassessment permitted by the Special Report on SFAS 115, all 
the Company's debt and equity securities are classified as 
available-for-sale.  Mortgage-backed securities held-to-maturity are recorded 
at amortized cost.  Securities available-for-sale are recorded at estimated 
fair value.

<TABLE>
<CAPTION>

                                         ONE YEAR OR LESS      ONE TO FIVE YEARS      FIVE TO TEN YEARS      MORE THAN TEN YEARS
                                       --------------------   --------------------   --------------------   --------------------
                                                   WEIGHTED               WEIGHTED               WEIGHTED               WEIGHTED
                                       AMORTIZED   AVERAGE    AMORTIZED   AVERAGE    AMORTIZED   AVERAGE    AMORTIZED   AVERAGE
                                         COST       YIELD       COST       YIELD       COST       YIELD        COST      YIELD
                                       ---------   --------   ---------   --------   ---------   --------   ----------  --------
                                                                        (DOLLARS IN THOUSANDS)
<S>                                    <C>         <C>        <C>         <C>        <C>         <C>        <C>         <C>
DEBT AND EQUITY SECURITIES
  AVAILABLE-FOR-SALE:
U.S. government securities and
  obligations........................   $26,584     5.60%     $  --          --%      $74,822     6.10%     $   --         --%
Asset-backed securities..............     --        --          35,543     5.03         --        --             5,018   4.90
                                       ---------     ---      ---------     ---      ---------     ---      ----------    ---
Total debt and equity securities
  available-for-sale.................   $26,584     5.60%     $ 35,543     5.03%      $74,822     6.10%     $    5,018   4.90%
                                       ---------     ---      ---------     ---      ---------     ---      ----------    ---
                                       ---------     ---      ---------     ---      ---------     ---      ----------    ---
MORTGAGE-BACKED SECURITIES HELD-TO-
  MATURITY...........................   $ --          --%     $ 17,017     8.36%      $ --          --%     $    6,079   9.93%
                                       ---------     ---      ---------     ---      ---------     ---      ----------    ---
                                       ---------     ---      ---------     ---      ---------     ---      ----------    ---
MORTGAGE-BACKED SECURITIES
  AVAILABLE-FOR-SALE.................   $39,315     7.12%     $302,215     5.19%      $ 8,282     5.95%     $1,353,364   7.14%
                                       ---------     ---      ---------     ---      ---------     ---      ----------    ---
                                       ---------     ---      ---------     ---      ---------     ---      ----------    ---
FHLB-New York stock..................

Preferred and common stock...........

Mutual funds.........................

<CAPTION>
                                                   TOTAL SECURITIES
                                       -------------------------------------------
                                       WEIGHTED               ESTIMATED   WEIGHTED
                                       AVERAGE    AMORTIZED      FAIR     AVERAGE
                                       LIFE (1)      COST       VALUE      YIELD
                                       --------   ----------  ----------  --------
<S>                                    <C>        <C>         <C>         <C>
DEBT AND EQUITY SECURITIES
  AVAILABLE-FOR-SALE:
U.S. government securities and
  obligations........................   56.99     $  101,406  $   99,487   5.97%
Asset-backed securities..............   42.96         40,561      40,369   5.02
                                       --------   ----------  ----------    ---
Total debt and equity securities
  available-for-sale.................   52.98     $  141,967  $  139,856   5.70%
                                       --------   ----------  ----------    ---
                                       --------   ----------  ----------    ---
MORTGAGE-BACKED SECURITIES HELD-TO-
  MATURITY...........................   99.54     $   23,096  $   21,120   8.77%
                                       --------   ----------  ----------    ---
                                       --------   ----------  ----------    ---
MORTGAGE-BACKED SECURITIES
  AVAILABLE-FOR-SALE.................  294.11     $1,703,176  $1,717,106   6.79%
                                       --------   ----------  ----------    ---
                                       --------   ----------  ----------    ---
FHLB-New York stock..................             $   40,754  $   40,754     --%
                                                  ----------  ----------    ---
                                                  ----------  ----------    ---
Preferred and common stock...........             $   40,038  $   40,038   4.29%
                                                  ----------  ----------    ---
                                                  ----------  ----------    ---
Mutual funds.........................             $      779  $      756   7.07%
                                                  ----------  ----------    ---
                                                  ----------  ----------    ---
</TABLE>
__________
(1)  This calculation is in months.


                                       22


<PAGE>

SOURCES OF FUNDS

     GENERAL.  Deposits, repayments and maturities on loans and 
mortgage-backed securities, redemptions of debt and equity securities and, to 
a lesser extent, borrowings under reverse repurchase agreements and funding 
notes are the primary source of the Company's funds for use in lending, 
investing and for other general purposes.

     DEPOSITS.  The Bank offers a variety of deposit accounts having a range 
of interest rates and terms.  The Bank's deposits consist of passbook 
savings, demand and NOW, money market, statement savings and certificate 
accounts.  The flow of deposits is influenced significantly by general 
economic conditions, changes in money market rates, prevailing interest rates 
and competition.  The Bank's deposits are obtained primarily from the areas 
in which its branch offices are located.  The Bank relies on customer service 
and long-standing relationships with customers to attract and retain these 
deposits.  Certificate accounts in excess of $100,000 are not actively 
solicited by the Bank.  In fiscal 1996, the Bank entered into an agreement 
whereby it authorized a broker to sell its certificates of deposit.  No sales 
have taken place as of September 30, 1996 under this agreement.  Since 1990, 
when market rates decreased, the Bank has not attempted to retain certificate 
accounts by keeping its rates above those offered by competitors.  Despite 
this strategy, certificate accounts increased to 53.92% of total deposits at 
September 30, 1996 from 51.51% of total deposits at September 30, 1995.  
Management believes that this increase is attributable to the rise in 
interest rates that occurred during fiscal 1996 and 1995 and the return of 
funds to certificate accounts that had been temporarily invested in short 
term liquid accounts.  Management monitors the Bank's certificate accounts 
and, based on historical experience, believes it will retain a large portion 
of the funds held in such accounts upon maturity.

   The following table sets forth the distribution of the Bank's deposit 
accounts at the dates indicated and the weighted average nominal interest 
rates on each category of deposits presented. Management believes that the 
use of year end balances instead of average balances does not result in any 
material difference in the information presented.

<TABLE>
<CAPTION>
                                                                     AT SEPTEMBER 30,
                            ---------------------------------------------------------------------------------------------------
                                         1996                              1995                              1994
                            -------------------------------   -------------------------------   -------------------------------
                                                   WEIGHTED                          WEIGHTED                          WEIGHTED
                                        PERCENT    AVERAGE                PERCENT    AVERAGE                PERCENT    AVERAGE
                                        OF TOTAL   NOMINAL                OF TOTAL   NOMINAL                OF TOTAL   NOMINAL
                              AMOUNT    DEPOSITS     RATE       AMOUNT    DEPOSITS     RATE       AMOUNT    DEPOSITS     RATE
                            ----------  --------   --------   ----------  --------   --------   ----------  --------   --------
                                                                  (DOLLARS IN THOUSANDS)
<S>                         <C>         <C>        <C>        <C>         <C>        <C>        <C>         <C>        <C>
Passbook accounts.........  $  669,241   18.42%     2.76%     $  730,060   20.43%     2.76%     $  934,912   26.20%     2.75%
Demand and NOW accounts...     227,747    6.27      1.30         223,232    6.25      1.29         207,967    5.83      2.90
                            ----------  --------              ----------  --------              ----------  --------
    Total.................     896,988   24.69                   953,292   26.68                 1,142,879   32.03
Money market accounts.....     130,442    3.59      2.75         154,938    4.34      2.75         207,952    5.83      2.75
Statement savings
  accounts................     646,789   17.80      3.24         624,707   17.48      3.24         826,970   23.18      2.94
Certificate accounts:
  Jumbo within 1 year.....     110,565    3.04      5.41          86,698    2.43      5.62          36,463    1.02      3.75
  Other within 1 year.....   1,250,270   34.42      5.41       1,075,725   30.10      5.53         698,880   19.59      3.84
  One to three years......     314,327    8.65      5.68         423,644   11.86      6.13         469,421   13.16      5.44
  Three or more years.....     283,629    7.81      6.42         254,525    7.12      6.50         185,250    5.19      5.64
                            ----------  --------              ----------  --------              ----------  --------
  Total...................   1,958,791   53.92                 1,840,592   51.51                 1,390,014   38.96
                            ----------  --------              ----------  --------              ----------  --------
Total deposits............  $3,633,010  100.00%               $3,573,529  100.00%               $3,567,815  100.00%
                            ----------  --------              ----------  --------              ----------  --------
                            ----------  --------              ----------  --------              ----------  --------
</TABLE>

                                       23
<PAGE>


   The following table presents, by various rate categories, the amount of
certificate accounts outstanding at September 30, 1996, 1995 and 1994 and the
periods to maturity of the certificate accounts outstanding at September 30,
1996:

<TABLE>
<CAPTION>
                                                                                  PERIOD TO MATURITY FROM SEPTEMBER 30, 1996
                                                                                 ---------------------------------------------
                                                      AT SEPTEMBER 30,                        ONE TO
                                             ----------------------------------    WITHIN     THREE
                                                1996        1995        1994      ONE YEAR    YEARS    THEREAFTER     TOTAL
                                             ----------  ----------  ----------  ----------  --------  ----------   ----------
                                                                              (IN THOUSANDS)
<S>                                          <C>         <C>         <C>         <C>         <C>       <C>          <C>
Certificate accounts:
3.99% or less..............................  $       36  $   11,029  $  495,426  $       36  $  --      $ --        $       36
4.00% - 4.99%..............................     292,511     149,768     361,917     286,664     5,775         72       292,511
5.00% - 5.99%..............................   1,160,668     897,341     354,261     835,312   245,574     79,782     1,160,668
6.00% - 6.99%..............................     393,757     650,183     139,042     222,677    61,140    109,940       393,757
7.00% - 7.99%..............................     111,739     131,214      37,344      16,144     1,762     93,833       111,739
8.00% or greater...........................          80       1,057       2,024           2        76          2            80
                                             ----------  ----------  ----------  ----------  --------  ----------   ----------
                                             $1,958,791  $1,840,592  $1,390,014  $1,360,835  $314,327   $283,629    $1,958,791
                                             ----------  ----------  ----------  ----------  --------  ----------   ----------
                                             ----------  ----------  ----------  ----------  --------  ----------   ----------
</TABLE>

The following table presents the deposit activity of the Bank for the periods
indicated.

<TABLE>
<CAPTION>
                                              FOR THE YEAR ENDED SEPTEMBER 30,
                                             ----------------------------------
                                                1996        1995        1994
                                             ----------  ----------  ----------
                                                       (IN THOUSANDS)
<S>                                                                                            <C>       <C>          <C>
Opening 
balance...................................................................................... $3,573,529 $3,567,815 $3,617,600
Net withdrawals..............................................................................    (96,367)  (133,966)  (170,119)
Interest credited............................................................................    155,848    139,680    120,334
                                                                                              ---------- ---------- ----------
Ending balance............................................................................... $3,633,010 $3,573,529 $3,567,815
                                                                                               ---------  ---------  ---------
                                                                                               ---------  ---------  ---------
</TABLE>

The following table presents time deposits at September 30, 1996 over $100,000:

<TABLE>
<CAPTION>
MATURITY PERIOD
---------------                                                                                                    AMOUNT
                                                                                                                ---------------
                                                                                                                 (IN THOUSANDS)
<S>                                                                                                             <C>
Three months or less..........................................................................................      $  37,996
Over three through six months.................................................................................         38,384
Over six through 12 months....................................................................................         34,184
Over 12 months................................................................................................         50,090
                                                                                                                     --------
    Total.....................................................................................................      $ 160,654
                                                                                                                     --------
                                                                                                                     --------
</TABLE>

BORROWINGS

   Although deposits are the Bank's primary source of funds, the Bank often uses
borrowings as an alternative and sometimes a less costly source of funds.  The
Bank's primary source of borrowing is sales of securities under agreements to
repurchase ("reverse-repurchase agreements"), generally from 30 days up to 36
months, with nationally recognized investment banking firms.  Reverse-repurchase
agreements are accounted for as borrowings by the Bank and are secured by
designated securities.  The proceeds of these transactions are used to meet cash
flow or asset/liability needs of the Bank as well as to take advantage of
investment opportunities that may exist in the market which enable the Bank to
earn a positive interest rate spread.  At September 30, 1996, the Bank had
reverse-repurchase agreements outstanding of $0.8 billion.  Additionally, the
Company's investment policy enables the Company to enter into certain interest
rate contracts to hedge interest rates on certain assets and liabilities.  The
Bank had entered into interest rate cap agreements involving a notional amount
of $90.0 million and $140.0 million as of September 30, 1996 and 1995,
respectively, which serve to hedge against the interest rate risk of borrowed
funds.

In addition, on June 27, 1996, the Bank issued a Funding note in the amount of
$181.4 million which is collateralized by a pool of adjustable rate residential
mortgage loans.  Payments of principal and interest on the Funding note are paid
monthly based on the scheduled payments due on the underlying loans.  The
interest on the Funding note changes monthly and bears



                                       24

<PAGE>
interest at a rate of 50 basis points over the one month London Interbank 
Offered Rate ("LIBOR").  See Note 14 of Notes to Consolidated Financial 
Statements.

   The following table sets forth certain information regarding borrowed funds
for the dates indicated:

<TABLE>
<CAPTION>
                                                      AT OR FOR THE YEAR ENDED
                                                           SEPTEMBER 30,
                                                    ----------------------------
                                                      1996      1995      1994
                                                    --------  --------  --------
                                                       (DOLLARS IN THOUSANDS
<S>                                                 <C>       <C>       <C>
FHLB-NY note payable:
  Average balance outstanding.....................  $  2,461  $    875  $      8
  Maximum amount outstanding at any month-end
   during the year................................     --       30,000     3,000
  Balance outstanding at end of year..............     --       10,000     --
  Weighted average interest rate during the
   year...........................................      5.73%     6.32%     5.13%
  Weighted average interest rate at end of year...     --         6.63     --
Reverse-repurchase agreements and short-term loans
  payable:
  Average balance outstanding.....................  $675,104  $510,111  $228,360
  Maximum amount outstanding at any month-end
   during the year................................   805,942   743,952   325,022
  Balance outstanding at end of year..............   800,000   623,675   325,022
  Weighted average interest rate during the
   year...........................................      5.69%     5.53%     4.30%
  Weighted average interest rate at end of year...      5.52      5.69      4.66
Funding note:
  Average balance outstanding.....................  $ 46,883     --        --
  Maximum amount outstanding at any month-end
   during the year................................   181,370     --        --
  Balance outstanding at end of year..............   178,023     --        --
  Weighted average interest rate during the
   year...........................................      6.11%    --        --
  Weighted average interest rate at end of year...      6.00     --        --
Total borrowings:
  Average balance outstanding.....................  $724,448  $510,986  $228,368
  Maximum amount outstanding at any month-end
   during the year................................   981,119   743,952   325,022
  Balance outstanding at end of year..............   978,023   633,675   325,022
  Weighted average interest rate during the
   year...........................................      5.71%     5.53%     4.30%
  Weighted average interest rate at end of year...      5.61      5.70      4.66
</TABLE>

PURCHASE ACCOUNTING

   In 1983, with the assistance of the Federal Savings and Loan Insurance
Corporation ("FSLIC") as set forth in an assistance agreement ("Assistance
Agreement"), the Bank acquired, as a wholly-owned subsidiary, The Long Island
Savings Bank of Centereach FSB ("Centereach").  The Bank and Centereach reported
to the Federal Home Loan Bank Board of New York ("FHLB-NY"), forerunner of the
OTS, as two separate entities.  In 1986, with FSLIC assistance, the Bank
acquired Flushing Federal Savings and Loan Association ("Flushing Federal") by
merger.

   The FSLIC-assisted supervisory acquisitions of Centereach and Flushing 
Federal were accounted for using the purchase method of accounting and 
resulted in goodwill of $656.8 million. The goodwill constituted an 
intangible asset on Centereach's and the Bank's balance sheets, and was 
included in determining regulatory capital.  As a result of FIRREA, however, 
each bank was required to deduct "non-qualifying" goodwill from all measures 
of regulatory capital and phase out "qualifying supervisory goodwill" from 
core (and therefore also from risk-based) capital by December 31, 1994.

   To bring Centereach into capital compliance and avoid possible regulatory
sanctions against Centereach on September 3, 1993, with the OTS's approval,
Centereach and the Bank sold $836.3 million in deposits from ten branch
locations and reduced their asset size by a similar amount.  Concurrent with the
sale of these deposits, the Bank was merged into Centereach ("Merger") and
Centereach's name was changed to The Long Island Savings Bank, FSB.  The
Company, in connection with the Merger, reviewed its accounting policies and
practices and decided to revise its past practices relating
                                       25

<PAGE>

to the amortization of goodwill.  The $625.4 million in goodwill on 
Centereach's books, as a result of "pushdown" accounting related to the 
Centereach acquisition, was originally to be amortized over 40 years in 
accordance with Accounting Principles Board Opinion No. 17 ("APB 17"), 
"Intangible Assets." In fiscal 1993 the Company decided to amortize all of 
this goodwill at a constant rate over the average lives of acquired long-term 
interest-earning assets (after adjustment for estimated prepayments of assets 
subject to prepayment), in accordance with Statement of Financial Accounting 
Standards No. 72 ("SFAS 72"), "Accounting for Certain Acquisitions of Banking 
or Thrift Institutions."  The principal effect of the retroactive adoption of 
SFAS 72 was to reallocate the amortization of the goodwill so that a greater 
proportion of such goodwill was amortized in earlier years. This resulted in 
the additional amortization of $323.5 million of goodwill against fiscal 1993 
earnings as a cumulative effect of a change in accounting principle effective 
October 1, 1992. In addition, the balance of the Centereach unamortized 
goodwill, $59.2 million, was written off in September 1993 as a charge to 
current earnings.

   The unamortized balance of goodwill recorded in connection with the 1986
acquisition of Flushing Federal of $11.6 million was also written off in
September 1993 as a charge to current earnings.

   The November 1994 acquisitions of Entrust and Developer's and the August 1996
acquisition of First Home were accounted for using the purchase method of
accounting and resulted in goodwill to be charged to earnings on a straight line
basis over 15 years.  As of September 30, 1996 the unamortized balance of
goodwill related to these acquisitions was $5.3 million.

   The following table sets forth the net effect on income of purchase 
accounting adjustments for the fiscal years ended September 30:

<TABLE>
                                                                RECOGNITION OF
                                                                    DISCOUNT
                         AMORTIZATION    PURCHASE ACCOUNTING    (PREMIUM) DUE      NET EFFECT
FISCAL YEAR               OF GOODWILL      DISCOUNTS, NET       TO ASSET SALES      ON INCOME
-----------              ------------    -------------------    ---------------    ----------
                                                 (IN THOUSANDS)
<S>                      <C>             <C>                    <C>                <C>
1994 . . . . . . . . .      $  --            $  1,822                $    --         $ 1,822
1995 . . . . . . . . .       (211)(1)           1,492                     56           1,337
1996 . . . . . . . . .       (284)(2)           1,081                 (1,308)           (511)
</TABLE>
______________
(1) Represents amortization stemming from the acquisitions of the
    operations of Entrust and Developer's  and is included in Other general &
    administrative expense in the Consolidated Statements of Operations.
(2) Represents amortization stemming from the acquisitions of
    operations of Entrust, Developer's and First Home since its acquisition and
    is included in Other general and administrative expense in the Consolidated
    Statements of Operations.

    The following table sets forth the scheduled amortization of remaining
purchase accounting discounts (premiums) for the fiscal years ending September
30:
                                                                   PURCHASE
                                                                   ACCOUNTING
FOR THE FISCAL                                                     DISCOUNTS/
YEAR ENDING                                                        (PREMIUMS)
--------------                                                   --------------
                                                                 (IN THOUSANDS)
1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $   652
1998. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         224
1999-2003 . . . . . . . . . . . . . . . . . . . . . . . . . . .         173
2004-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . .        (299)
2009-2013 . . . . . . . . . . . . . . . . . . . . . . . . . . .      (1,065)
2014 and thereafter . . . . . . . . . . . . . . . . . . . . . .        (855)
                                                                 --------------
                                                                    $(1,170)
                                                                 --------------
                                                                 --------------
OTHER FEE BASED PRODUCTS

   In 1990, the Bank organized the Long Island Savings Agency ("LISA"), as a
wholly-owned service corporation to offer non-traditional, fee-based products to
its customers.  LISA was formed to engage in the business of selling single
premium
                                       26

<PAGE>

deferred annuity products and was expanded in 1993 to offer a broader range 
of financial products and services including an expanded line of annuities 
and other investment products by marketing a line of mutual funds with a 
variety of investment objectives.  The insurance products and mutual funds 
sold are products of unrelated insurance and securities firms from which LISA 
earns commissions. During the fiscal years ended September 30, 1996, 1995 and 
1994, LISA generated gross fee income of $1.6 million, $0.8 million and $1.2 
million, respectively.

SUBSIDIARY ACTIVITIES

   The Bank currently owns 17 subsidiaries, each of which is wholly-owned.  
These subsidiaries have been primarily created to (a) take title to 
foreclosed properties, (b) take title to land held for investment, (c) 
develop or own investment properties, (d) act as holding companies, (e) sell 
insurance and securities products and (f) facilitate borrowings.

   (a)  Foreclosed Property Subsidiaries.  Longrich Investors, Inc., Oldfield 
Realty, Inc., Syosset N.J. Realty, Inc. and Syosset Connecticut Realty, Inc. 
were all formed for the sole purpose of holding title to foreclosed property. 
Two subsidiaries take title to properties located in New York and one each in 
New Jersey and Connecticut. Such properties are included in Real estate owned 
in the Consolidated Statements of Financial Condition.

   (b)  Subsidiaries Holding Land for Investment.  Christa Realty, Inc., Kyle 
Development, Inc. and 63 Ocean Realty Corp. were primarily formed to take 
title to undeveloped land held for investment purposes.  Such properties are 
included in Investment in real estate in the Consolidated Statements of 
Financial Condition.

   (c) Real Estate Development/Rental Subsidiaries.  Longpond Investors Inc. 
and Longco Investors Inc. were created primarily to serve as joint venture 
partners where the joint venture built and now operates rental real estate.  
Suffco Development Corp. was formed for the same purpose except that the 
projects are sold upon completion.  Suffco Development Corp. also serves as 
document custodian to facilitate operations with FNMA.  3366 Park Avenue 
Corp. owns an office building that contains branch facilities and operates 
the property.

   (d) Holding Company Subsidiaries.  Mortgage Headquarters Inc. was formed 
primarily for the purpose of serving as a holding company for lower tier 
subsidiary operations.  In addition, Mortgage Headquarters Inc. serves as a 
joint venture partner where the joint venture originates mortgage loans.

   (e) Insurance Products and Mutual Funds Subsidiary.  LISA was formed to 
market insurance products and mutual funds.  The insurance products and 
mutual funds sold are products of unrelated insurance and securities firms 
from which LISA earns commissions.  See -- Other Fee Based Products.

   (f) Financing Subsidiary.  201 Old Country Road Inc. was formed to serve 
as a special purpose subsidiary which currently holds mortgage loans that 
serve as collateral for the Funding note previously described. See 
--Borrowings.

   (g) Other Subsidiaries.  Great Neck Towers Corp.,  Syosset Document Corp. 
and First Home Mortgage of Virginia, Inc. are inactive subsidiaries.  First 
Home Mortgage of Virginia, Inc. was acquired by the Company in August 1996.  
All former operations and net assets purchased in the acquisition were 
transferred to the Bank.

SAVINGS BANK LIFE INSURANCE

As an issuing bank, the Bank offers Savings Bank Life Insurance ("SBLI") to 
its customers up to the legal maximum of $50,000 per insured individual and, 
as a trustee bank, offers an additional $500,000 in group coverage per 
insured under SBLI's Financial Institution Group Life Insurance policy.  
During April 1996, approximately 8,800 life insurance policies were 
transferred from East River Savings Bank at no cost to the Company.  As of 
September 30, 1996, the SBLI Department had approximately 17,200 policies in 
effect.  The SBLI Department's activities are segregated from the Bank and, 
while they do not materially affect the Bank's earnings, management believes 
that offering SBLI is beneficial to the Bank's relationship with its 
depositors and the  general public.  The SBLI Department pays its own 
expenses and reimburses the Bank for expenses incurred on its behalf.


                                       27

<PAGE>

PERSONNEL

As of September 30, 1996, the Bank had 1,355 full-time employees and 123 part-
time employees. The employees are not represented by a collective bargaining
unit, and the Bank considers its relationship with its employees to be good.

                                  TAXATION
FEDERAL TAXATION

GENERAL.  The Holding Company and the Bank report their income on a consolidated
basis, using a calendar year and the accrual method of accounting and are
currently subject to federal income taxation in the same manner as other
corporations.  Prior to January 1, 1996, the Bank was entitled to establish a
reserve for bad debts under Section 593 ("IRC 593") of the Internal Revenue Code
of 1986, as amended ("Code").  IRC 593 was repealed in August 1996 as part of
the Small Business Job Protection Act of 1996.  The following discussion of tax
matters is intended only as a summary and does not purport to be a comprehensive
description of the tax rules applicable to the Bank or the Holding Company. The
Bank is currently under exam by both the Internal Revenue Service and New York
State Department of Taxation and Finance, however, no material tax deficiencies
are anticipated.

BAD DEBT DEDUCTION.  The Bank is required to use the specific charge-off method
for calculating its bad debt deduction effective the first tax year after
December 31, 1995.  The specific charge-off method under the Code Section 166(a)
permits a taxpayer to deduct any debt (or portion thereof) that becomes wholly
(or partially) worthless during the tax year.

As part of the repeal of IRC 593, the Bank is required to recapture (that is,
include in taxable income) its post-1987 additions to its bad debt reserves
whether the additions were computed using a percentage based on the Bank's
actual loss experience ("experience method"), or a percentage equal to 8% of the
Bank's taxable income, computed with certain modifications, without regard to
the Bank's actual loss experience, and reduced by the amount of any addition
permitted to the reserve for non-qualifying loans ("percentage of taxable income
method").  The recapture is to be determined under Code Section 481(a) and will
be added into taxable income ratably over a six year period beginning with the
first tax year after 1995.  The amount to be recaptured is approximately $2.7
million and will not have a material impact on the Company.  The Bank may
postpone the recapture of the post-1987 excess reserves for up to two years if
the Bank meets certain residential loan requirements.  The residential loan
requirements provide for deferral during 1996 and 1997 if the principal amount
of residential loans originated by the Bank during each year is not less than
its base amount.  The base amount is defined as the average of the principal
amounts of residential loans originated by the Bank during the six most recent
tax years beginning before January 1, 1996.  Residential loans are defined as
loans secured by residential real property, church property and certain mobile
homes, but only to the extent that the loan is made to the owner of the property
to acquire, construct or improve the property.  By this definition, mortgage
refinancing and home equity loans are not considered residential loans, except
to the extent that the loan proceeds are used to acquire or improve qualified
residential property.

DISTRIBUTIONS.  To the extent that (i) the Bank's reserve for losses on
qualifying real property loans exceeds the amount that would have been allowed
under the experience method and (ii) the Bank makes "non-dividend distributions"
to stockholders that are considered to result in distributions from the excess
tax bad debt reserve or the supplemental reserve for losses on loans ("Excess
Distributions"), then an amount based on the amount distributed will be included
in the Bank's taxable income. Non-dividend distributions include distributions
in excess of the Bank's current and accumulated earnings and profits,
distributions in redemption of stock and distributions in partial or complete
liquidation. However, dividends paid out of the Bank's current or accumulated
earnings and profits, as calculated for federal income tax purposes, will not be
considered to result in a distribution from the Bank's bad debt reserves.

The amount of additional taxable income created from an Excess Distribution is
an amount that when reduced by the tax attributable to the income is equal to
the amount of the distribution. Thus, if certain portions of the Bank's
accumulated bad debt reserve are used for any purpose other than to absorb
qualified bad debt losses, such as for the payment of dividends or other
distributions with respect to the Bank's capital stock (including distributions
upon redemption or liquidation), approximately one and one-half times the amount
so used would be includible in gross income for federal income tax purposes,
assuming a 35% corporate income tax rate (exclusive of state taxes). See "--
Regulation" for limits on the payment of dividends by the Bank. The Bank does
not intend to pay dividends that would result in a recapture of any portion of
its bad debt reserves.
                                     28

<PAGE>

The recapture of the pre-1988 reserves also applies if the taxpayer fails to
qualify as a bank as defined by Code Section 581.  A bank is defined as a bank
or trust company incorporated and doing business under the laws of the United
States (including laws relating to the District of Columbia) or any State, a
substantial part of the business of which consists of receiving deposits and
making loans and discounts, or of exercising fiduciary powers similar to those
permitted to national banks under authority of the Comptroller of the Currency,
and which is subject by law to supervision and examinations by State,
Territorial or Federal Authority having supervision over banking institutions.
The Bank intends to continue to qualify as a bank under Code Section 581.

The pre-1988 reserves and supplemental reserves will be treated as tax
attributes to which Code Section 381 applies.  In the case of mergers,
acquisitions, spin-offs and other reorganizations of a thrift, the surviving
institution will inherit the pre-1988 reserves and the accumulated earnings and
profits of the former thrift.  As stated above, the pre-1988 reserves will be
restored into income in the case of any distribution in redemption of the stock
of the surviving institution or any partial or complete liquidation following a
merger.

CORPORATE ALTERNATIVE MINIMUM TAX.  For taxable years beginning after December
31, 1986, the Code imposes a tax on alternative minimum taxable income ("AMTI")
at a rate of 20%.  Only 90% of the AMTI can be offset by net operating loss
carryovers. For taxable years beginning after December 31, 1989, the adjustment
to AMTI based on book income will be an amount equal to 75% of the amount by
which a corporation's adjusted current earnings exceeds its AMTI (determined
without regard to this adjustment and prior to reduction for net operating
losses). In addition, for taxable years beginning after December 31, 1986, and
before January 1, 1996, an environmental tax of 0.12% of the excess of AMTI
(with certain modifications) over $2.0 million is imposed on corporations,
including the Company, whether or not an Alternative Minimum Tax ("AMT") is
paid. The Company does not expect to be subject to the AMT. The Company was
subject to an environmental tax liability for the tax year ended December 31,
1995, which was not material.

DIVIDENDS RECEIVED DEDUCTION AND OTHER MATTERS.  The Holding Company may exclude
from its income 100% of dividends received from the Bank as a member of the same
affiliated group of corporations. The corporate dividends received deduction is
generally 70% in the case of dividends received from unaffiliated corporations
with which the Holding Company will not file a consolidated tax return.  The
deduction is increased to 80% if the Holding Company owns more than 20% of the
stock of a corporation distributing a dividend.

STATE AND LOCAL TAXATION

NEW YORK STATE TAXATION.  The Company is subject to New York State franchise
taxes on net income (federal taxable income with adjustments) or one of several
alternative bases, whichever results in the highest tax.  The Company will file
a combined tax return in the same manner as other corporations with some
exceptions, including the Bank's reserve for bad debts as discussed below.
Generally, the Holding Company would not be required to pay New York State tax
on dividends and interest received from the Bank or on gains realized on the
sale of Bank stock.

New York State passed legislation in August 1996 that incorporated the
provisions of IRC 593 into New York Sate tax law.  The impact of this
legislation enabled the Bank to defer the recapture of the New York State tax
bad debt reserves that would have occurred as a result  of the federal repeal of
IRC 593.  The legislation also enabled the Bank to continue to utilize the
reserve method for computing its bad debt deduction.  The following discussion
of the reserve for bad debts is intended only as a summary and does not purport
to be a comprehensive description of the New York State tax rules applicable to
the Bank or the Holding Company.

BAD DEBT DEDUCTION.  Savings institutions such as the Bank which meet certain
definition tests primarily relating to their assets and the nature of their
business ("qualifying thrifts") are permitted to establish a reserve for bad
debts and to make annual additions thereto, which additions may, within
specified formula limits, be deducted in arriving at their taxable income.  The
Bank will be a qualifying thrift only if, among other requirements, at least 60%
of its assets are assets described in Section 1453(h)(1) of the New York State
Tax Law.  These assets generally include cash, obligations of the United States
or an agency or instrumentality thereof, certain obligations of a state or
political subdivision thereof, residential real estate loans and related loans,
loans secured by savings accounts, student loans and property used by the Bank
in the conduct of its business.  If the Bank failed to meet the 60% test in any
taxable year or otherwise failed to be a qualifying thrift, the Bank would be
considered a "large bank" (based on its current assets) and as such it would not
be permitted to deduct additions to a bad debt reserve.  In addition, the Bank
would be required to recapture all or a portion of its bad debt reserves, which
may be spread over a period of years.  The Bank presently satisfies the 60%
test.  Although

                                     29

<PAGE>

there can be no assurance that the Bank will satisfy the 60% test in the 
future, management believes that this level of qualifying assets can be 
maintained by the Bank.  The Bank's deduction for additions to its bad debt 
reserve with respect to qualifying loans may be computed using the experience 
method or a percentage equal to 32% of the Bank's taxable income, computed 
with certain modifications, without regard to the Bank's actual loss 
experience, and reduced by the amount of any addition permitted to the 
reserve for non-qualifying loans ("NYS percentage of taxable income method"). 
Use of the NYS percentage of taxable income method of calculating the 
addition to the bad debt reserve may have the effect of reducing the marginal 
rate of tax on the Bank's income derived from qualifying loans to a rate as 
low as 7.6%, exclusive of any alternative tax, as compared to the generally 
applicable maximum corporate New York State income tax rate of 11.21%.  The 
Bank's deduction with respect to non-qualifying loans must be computed under 
the experience method which is based on the qualifying thrift's actual loss 
experience.  Under the experience method, the amount of a reasonable 
addition, in general, equals the amount necessary to increase the balance of 
the bad debt reserve at the close of the taxable year to the greater of (i) 
the amount that bears the same ratio to loans outstanding at the close of the 
taxable year as the total net bad debts sustained during the current and five 
preceding taxable years bears to the sum of the loans outstanding at the 
close of those six years, or (ii) the balance of the bad debt reserve at the 
close of the base year (assuming that the loans outstanding have not declined 
since then).  The "base year" for these purposes is the last taxable year 
beginning before the NYS percentage of income bad debt deduction was taken.  
Any deduction for the addition to the reserve for non-qualifying loans 
reduces the taxable addition to the reserve for qualifying real property 
loans calculated under the NYS percentage of taxable income method.  Each 
year the Bank reviews the most favorable way to calculate the deduction 
attributable to an addition to the bad debt reserve.

The amount of the addition to the reserve for losses on qualifying real property
loans under the NYS percentage of taxable income method cannot exceed the amount
necessary to increase the balance of the reserve for losses on qualifying real
property loans at the close of the taxable year to 6% of the balance of the
qualifying real property loans outstanding at the end of the taxable year. Also,
if the qualifying thrift uses the NYS percentage of taxable income method, then
the qualifying thrift's aggregate addition to its reserve for losses on
qualifying real property loans cannot, when added to the addition to the reserve
for losses on non-qualifying loans, exceed the amount by which (i) 12% of the
amount that the total deposits or withdrawable accounts of depositors of the
qualifying thrift at the close of the taxable year exceeded (ii) the sum of the
qualifying thrift's surplus, undivided profits and reserves at the beginning of
such year.  The Bank's balance of its reserve for losses on qualifying real
property loans, for New York State tax purposes, was approximately $98 million
at December 31, 1995.

NEW YORK CITY AND OTHER STATES.  The Company is required to file tax returns in
New York City and ten other states and jurisdictions where it maintains mortgage
lending offices.  Unlike New York State, New York City has not enacted
legislation which would prevent the recapture of federal bad debt reserves from
being subject to New York City tax.  If New York City does not pass such
legislation, the resulting New York City tax expense would not be material.  The
New York City tax rate is 9.0% of the net income allocable to New York City.
The Company's tax rates in the other ten states in which it conducts business
vary from 6.0% to 11.25% on allocable net income for the specific jurisdiction.
In addition, the Holding Company is required to file an annual report with and
pay an annual franchise tax to the State of Delaware.

                              REGULATION

GENERAL

Set forth below is a brief description of certain laws and regulations which
relate to the regulation of the Bank. The description is not complete and is
qualified in its entirety by reference to applicable laws and regulations.

The Bank is a federally chartered savings bank, the deposits of which are
insured by the Savings Association Insurance Fund ("SAIF"), which is
administered by the FDIC. See "--Insurance of Accounts." Accordingly, the Bank
is subject to broad regulation and oversight by its primary regulators, the OTS
and the FDIC.  The Bank is subject to certain limited regulation by the Board of
Governors of the Federal Reserve System ("FRB").  The Company, as a savings and
loan holding company, is required to file certain reports and otherwise comply
with the rules and regulations of the OTS.  The Company is also required to
comply with the rules and regulations of the Securities and Exchange Commission
("SEC") under the federal securities laws.  As a federal savings bank, the Bank
is subject to extensive regulation and supervision by the OTS.  The OTS
periodically examines the Bank for compliance with various regulatory
requirements.  The FDIC also has the authority to conduct special examinations
of the Bank.  The Bank must file periodic reports with the OTS describing its

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<PAGE>

activities and financial condition.  Certain regulatory requirements applicable
to the Bank are discussed below or elsewhere herein.

FEDERAL REGULATION OF SAVINGS ASSOCIATIONS

The activities of savings institutions are governed by the Home Owner's Loan
Act, as amended ("HOLA") and, in certain respects, the Federal Deposit Insurance
Act ("FDIA").  The HOLA and the FDIA were amended by FIRREA and the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA").  FDICIA, among
other things, requires that federal banking regulators intervene promptly when a
depository institution experiences financial difficulties.  FDICIA also requires
the establishment of a risk-based deposit insurance assessment system and the
imposition of numerous additional safety and soundness operational standards and
restrictions.  FIRREA and FDICIA contain provisions affecting numerous aspects
of the operations and regulations of federally-insured savings and loan
associations and empower the OTS and the FDIC, among other agencies, to
promulgate regulations implementing their provisions.

The investment and lending authority of the Bank is restricted by federal laws
and regulations.  Savings associations are restricted as to the amount that may
be invested in nonresidential real property loans and may not invest in non-
investment grade debt securities, nor may they generally make equity
investments, other than investments in service corporation subsidiaries.
Transactions between the Bank and its affiliates are limited to certain
percentages of the Bank's capital and certain other restrictions.  The OTS may
impose additional restrictions on transactions with affiliates if necessary to
protect the safety and soundness of savings associations and has adopted
regulations against insider abuse.

LOANS-TO-ONE BORROWER LIMITS.  Savings associations, such as the Bank, generally
are subject to the same loans-to-one borrower limits that apply to national
banks.  With certain exceptions, loans and extensions of credit outstanding at
one time to one borrower (including certain related entities of the borrower)
may not exceed 15% of the unimpaired capital and surplus of the savings
association, plus an additional 10% of unimpaired capital and surplus for loans
fully secured by certain readily marketable collateral.  At September 30, 1996,
the maximum amount the Bank could lend to one borrower was approximately $67.6
million, and at that date the Bank had no lending relationships which exceeded
such loans-to-one borrower limitation. See "Business--Lending Activities-Loan
Concentrations."

INSURANCE OF ACCOUNTS.  FIRREA established two separate deposit insurance funds
that are not to be commingled.  The two funds are the Bank Insurance Fund
("BIF") to insure banks and the SAIF to insure savings associations.  The
deposits of the Bank are insured up to $100,000 per depositor (as defined by law
and regulation) by the SAIF, which is administered by the FDIC and backed by the
full faith and credit of the United States government.  The FDIC is authorized
to conduct examinations of, and to require reporting by, insured institutions,
such as the Bank. It may prohibit any insured institution from engaging in any
activity the FDIC determines by regulation or order to pose a serious threat to
the insurance fund. The FDIC also has the authority to initiate enforcement
actions where the OTS has failed or declined to take such action after receiving
a request to do so from the FDIC.

FDICIA eliminated limitations on increases in federal deposit insurance premiums
and authorized the FDIC to increase the assessment rates to the extent necessary
to protect the SAIF and the BIF.  FDICIA also directs the FDIC to implement a
risk-based deposit insurance assessment system. Pursuant to this requirement,
the FDIC adopted a risk-based assessment system, effective January 1, 1994,
under which all insured depository institutions are placed into one of nine
categories and assessed insurance premiums, ranging from 0.23% to 0.31% of
deposits, based upon their level of capital and supervisory evaluation.  Under
the system, institutions classified as well capitalized (i.e., those with a core
capital ratio of at least 5%, a ratio of Tier 1 or core capital to risk-weighted
assets ("Tier 1 risk-based capital") of at least 6% and a total risk-based
capital ratio of at least 10% and considered financially sound with no material
weaknesses) would pay the lowest premium while institutions that are less than
adequately capitalized (i.e., those with core and Tier 1 risk-based capital
ratios of less than 4% or a risk-based capital ratio of less than 8% and
considered of substantial supervisory concern) would pay a higher premium. Risk
classification of all insured institutions is determined by the FDIC
periodically. As of the date of this Report, the FDIC has informed the Bank that
its annual assessment for deposit insurance is 0.23%, the lowest category for
the period from July 1, 1996 to December 31, 1996.

The FDIC may terminate the deposit insurance of any insured depository
institution, including the Bank, if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, order or any condition imposed by a written
agreement with the FDIC. It also may suspend deposit insurance temporarily
during the hearing process for the permanent

                                     31

<PAGE>

termination of insurance, if the institution has no tangible capital. If 
insurance of accounts is terminated, the accounts at the institution at the 
time of the termination, less subsequent withdrawals, shall continue to be 
insured for a period of six months to two years, as determined by the FDIC. 
Management is aware of no existing circumstances pursuant to which the FDIC 
would seek to impose sanctions on the Bank or which could result in 
termination of the Bank's deposit insurance.

On September 30, 1996, as part of an omnibus appropriations bill,  the Deposit
Insurance Funds Act of 1996 ("Act") was enacted.  The Act should significantly
reduce and eventually end the premium disparity that has existed between banks
insured by the BIF and thrifts insured by the SAIF.  The Act requires i) SAIF
institutions to pay a one-time special assessment, ii) BIF institutions to
include in their deposit insurance premiums beginning January 1, 1997 a portion
of the interest due on the Finance Corporation ("FICO") bonds, and iii) BIF
institutions to pay their full pro rata share of the FICO payments starting the
earlier of January 1, 2000 or the date at which no savings institution continues
to exist.  Beginning January 1, 1997, the FDIC has estimated that thrifts will
pay a rate of 6.4 cents per $100 of deposits (a 16.6% reduction from the current
assessment of 23 cents) and banks will pay 1.3 cents per $100 deposits to fund
FICO bond interest payments until the earlier of January 1, 2000 or the date at
which the last savings association continues to exist.  At that time the
payments will be shared on a pro-rata basis.  Pursuant to these provisions of
the Act, the Bank paid a special SAIF premium assessment totaling $18.7 million
on November 27, 1996.  The Bank also anticipates that, commencing on January 1,
1997 and through December 31, 1999, its annual SAIF assessment will drop to $2.4
million and in the year 2000 will drop to approximately $0.5 million.  The Bank
paid $8.4 million in SAIF assessments in fiscal 1996.

The Act also includes a provision that requires the U.S. Treasury Department to
conduct a study of all issues relevant to the development of a common charter
for all insured depository institutions and the elimination of separate charters
between thrifts and commercial banks.  The Secretary of the Treasury is to
submit a report to Congress on the Treasury's findings and conclusions in
connection with the study on or before March 31, 1997.  Another provision in the
Act states that the BIF and SAIF funds will merge on January 1, 1999 if no
insured depository institution is a savings association on that date.

In light of these latter two provisions of the Act, it is possible that the
Bank, on or before January 1, 1999, will be required to convert to a bank
charter and the Holding Company would be required to convert to a bank holding
company.  In such an event, the Bank will be regulated by the Office of the
Comptroller of the Currency and the Holding Company would be regulated by the
FRB.  It is also possible that Congress could modify the thrift, unitary holding
company, and/or bank charters, and/or create one or more new unified charters.
Management currently does not believe that any such regulatory change to the
charters of the Bank or the Company would have a material, adverse effect on the
Bank or the Company, although there can be no assurance that this would not be
the case.

LIQUIDITY REQUIREMENTS.  All savings associations are required to maintain an
average daily balance of liquid assets (cash, certain time deposits, bankers'
acceptances, specified United States Government, state and federal agency
obligations, shares of certain mutual funds and certain corporate debt
securities and commercial paper) equal to a certain percentage of the sum of its
average daily balance of net withdrawable deposit accounts and borrowings
payable in one year or less.  The liquidity requirement, which is currently 5%,
may be changed from time to time by the OTS (between 4.0% and 10.0%) depending
upon economic conditions and savings flows of all savings associations.  Short-
term liquid assets currently must constitute at least 1.0% of a savings
association's average daily balance of net withdrawable deposit accounts and
current borrowings. Monetary penalties may be imposed upon savings associations
for violations of liquidity requirements.  The Bank's liquidity and short-term
liquidity ratios for September 30, 1996 were 9.34% and 2.41%, respectively,
which exceeds the applicable requirements.

ACCOUNTING REQUIREMENTS.  FIRREA requires the OTS to establish accounting
standards to be applicable to all savings associations except to the extent
otherwise specified in the capital standards.  Such standards must incorporate
generally accepted accounting principals ("GAAP") to the same degree as is
prescribed by the Federal banking agencies for banks or may be more stringent
than such requirements.

QUALIFIED THRIFT LENDER TEST.  All savings associations, including the Bank, are
required to meet a qualified thrift lender ("QTL") test to avoid certain
restrictions on their operations.  Under FDICIA, a savings association has been
required to have at least 65.0% of its portfolio assets (which consist of total
assets less intangibles, properties used to conduct the savings association's
business and liquid assets not exceeding 20.0% of total assets) in "qualified
thrift investments" (primarily residential mortgage loans and related
investments, including certain mortgage-backed and mortgage-related securities)
on a monthly average basis in nine of every 12 months.  A savings association
that fails the QTL test must either convert to a bank charter or operate under
certain restrictions.  If the savings association does not convert to a bank
charter,

                                     32

<PAGE>

it generally will be prohibited from: (i) making an investment or engaging in 
any new activity not permissible for a national bank, (ii) paying dividends 
not permissible under national bank regulations, (iii) obtaining advances 
from any Federal Home Loan Bank ("FHLB"), and (iv) establishing any new 
branch office in a location not permissible for a national bank in the 
association's home state.  One year following the association's failure to 
meet the QTL test, any holding company parent of the association must 
register and be subject to supervision as a bank holding company.  In 
addition, beginning three years after the association fails the QTL test, the 
association would be prohibited from refinancing any investment or engaging 
in any activity not permissible for a national bank and would have to repay 
any outstanding advances from an FHLB as promptly as possible.  On September 
30, 1996, as part of the omnibus appropriations bill, Congress enacted the 
Economic Growth and Paperwork Reduction Act of 1996 ("Regulatory Paperwork 
Reduction Act"), modifying and expanding investment authority under the QTL 
test.  Prior to the enactment of the Regulatory Paperwork Reduction Act, 
commercial, corporate, business, or agricultural loans were limited in the 
aggregate to 10% of a thrift's assets and education loans were limited to 5% 
of a thrift's assets.  Further, in order to qualify for favorable tax 
treatment, federal savings associations also had to meet a different asset 
test under the Code (the "domestic building and loan association test").  The 
amendments permit federal thrifts to invest in, sell, or otherwise deal in 
education and credit card loans without limitation and raise from 10 to 20 
percent of total assets the aggregate amount of commercial, corporate, 
business, or agricultural loans or investments that may be made by a thrift, 
subject to a requirement that amounts in excess of 10% of total assets be 
used only for small business loans.  In addition, the legislation defines 
"qualified thrift investment" to include, without limit, education, small 
business, and credit card loans; and removes the 10% limit on personal, 
family, or household loans for purposes of the QTL test.  The legislation 
also provides that a thrift meets the QTL test if it qualifies as a domestic 
building and loan association under the Code.  As of September 30, 1996, the 
Bank maintained 99.08% of its "portfolio assets" (which, as defined in the 
OTS regulations, exclude liquidity items and office properties) in qualified 
thrift investments and met the QTL test. At September 30, 1996, 89.79% of the 
Bank's total assets were invested in qualified thrift investments.

TRANSACTIONS WITH RELATED PARTIES.  Transactions between savings institutions
and any "affiliate" are governed by Sections 23A and 23B of the Federal Reserve
Act ("FRA").  An affiliate of a savings institution is any company or entity
which controls, is controlled by or is under common control with the savings
institution, including any holding company parent of the association and its
non-savings institution subsidiaries.  Generally, Sections 23A and 23B (i) limit
the extent to which the savings institution or its subsidiaries may engage in
"covered transactions" with any one affiliate to an amount equal to 10.0% of
such institution's capital stock and surplus, and contain an aggregate limit on
all such transactions with all affiliates to an amount equal to 20.0% of such
capital stock and surplus, and (ii) require that all such transactions be on
terms substantially the same, or at least as favorable, to the institution or
subsidiary as those provided to a non-affiliate. Each loan or extension of
credit to an affiliate by a savings association must be secured by collateral
with a market value ranging from 100% to 130% (depending on the type of
collateral) of the amount of credit extended.  The term "covered transaction"
includes the making of loans, purchase of assets, issuance of a guarantee and
other similar types of transactions.  In addition to the restrictions imposed by
Sections 23A and 23B, no savings institution may (i) loan or otherwise extend
credit to an affiliate, except for any affiliate which engages only in
activities which are permissible for bank holding companies under Section 4(c)
of the Bank Holding Company Act, or (ii) purchase or invest in any stocks,
bonds, debentures, notes or similar obligations of any affiliates, except for
affiliates which are subsidiaries of the savings institution.

In addition, loans to directors, executive officers and to greater than 10.0%
stockholders of a savings institution or the company that controls the savings
institution, and certain affiliated interests of such insiders, are governed by
Sections 22(g) and 22(h) of the FRA, and Regulation O promulgated thereunder.
Such loans, together with all other outstanding loans to such person and
affiliated interests, may not exceed the institution's loans-to-one borrower
limit (generally equal to 15.0% of the institution's unimpaired capital and
surplus, plus an additional 10% for loans fully secured by readily marketable
collateral).  Loans to directors, executive officers and principal stockholders
must also be made on terms substantially the same as offered in comparable
transactions to other persons, except for extensions of credit made pursuant to
a benefit or compensation program that is widely available to all employees of
the institution and does not give preference to insiders over other employees,
with prior board approval required for certain loans.  In addition, the
aggregate amount of extensions of credit by a savings institution to all
insiders cannot exceed the institution's unimpaired capital and surplus.
Furthermore, Section 22(g) places additional restrictions on loans to executive
officers.

RESTRICTIONS ON CAPITAL DISTRIBUTIONS.  The OTS imposes limitations on all
capital distributions by savings associations, which include cash dividends,
stock redemptions or repurchases, cash-out mergers, interest payments on certain
convertible debt and other distributions charged to the capital account of a
savings association.  Generally, the applicable regulation permits specified
levels of capital distributions by associations meeting at least their minimum
capital requirements, so long

                                     33
<PAGE>

as such associations provide the OTS with at least 30 days advance notice and 
receive no objection to the distribution from the OTS.

The regulation establishes three tiers of savings associations, based primarily
on an association's capital level.  Generally, Tier 1 associations, which are
savings associations that before and after the proposed distribution meet or
exceed their fully phased-in capital requirements and have not been informed by
the OTS that they are in need of more than normal supervision, may make capital
distributions during any calendar year equal to the higher of (i) 100.0% of net
income for the calendar year-to-date plus 50.0% of its "surplus capital ratio"
at the beginning of the calendar year or (ii) 75.0% of net income over the most
recent four quarter period.  The "surplus capital ratio" is defined to mean the
percentage by which the association's ratio of total capital to assets exceeds
the ratio of its fully phased-in capital requirement to assets, and "fully
phased-in capital requirement" is defined to mean an association's capital
requirement under the statutory and regulatory standards applicable on December
31, 1994, as modified to reflect any applicable individual minimum capital
requirements imposed upon an association. Any additional capital distributions
would require prior regulatory approval.  In the event the Bank's capital fell
below its fully-phased in requirement or the OTS notified it that it was in need
of more than normal supervision, the Bank's ability to make capital
distributions would be restricted. In addition, the OTS could prohibit a
proposed capital distribution by any association, which would otherwise be
permitted by the regulation, if the OTS determines that such distribution would
constitute an unsafe or unsound practice.  Furthermore, under FDICIA, the Bank
would be prohibited from making any capital distributions if, after the
distribution, the Bank would have: (i) a total risk-based capital ratio of less
than 8.0%, (ii) a Tier 1 risk-based capital ratio of less than 4.0% or (iii) a
leverage ratio of less than 4.0% (3.0% in the event that the Bank is assigned a
MACRO Rating of 1, the highest OTS examination rating for savings institutions).
As of September 30, 1996, the Bank qualified as a Tier 1 institution for
purposes of this regulation.

Tier 2 institutions are those in compliance with their current, but not their
fully phased-in, capital requirements.  Tier 2 institutions may make
distributions of up to 75% of their net income for the most recent four-quarter
period.  Tier 1 and Tier 2 institutions may seek OTS approval to pay dividends
beyond these amounts.

Tier 3 institutions have capital levels below their current required minimum
levels and may not make any capital distributions without the prior written
approval of the OTS.

In order to make distributions under these safe harbors, Tier 1 and Tier 2
associations must submit 30 days written notice to the OTS prior to making the
distribution.  The OTS may object to the distribution during that 30-day period
based on safety and soundness concerns.  In addition, a Tier 1 association
deemed to be in need of more than normal supervision by the OTS may be treated
as a Tier 2 or Tier 3 association as a result of such a determination.

FEDERAL HOME LOAN BANK ("FHLB") SYSTEM.  The Bank is a member of the Federal
Home Loan Bank Board of New York ("FHLB-NY"), which is one of 12 regional FHLB
governed and regulated by the Federal Housing Finance Board. Each FHLB serves as
a source of liquidity for its members within its assigned region.  It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB System.  It makes loans to members (i.e., advances) in accordance with
policies and procedures established by its Board of Directors.  At September 30,
1996, the Bank had no outstanding advances from the FHLB-NY.

As a member, the Bank is required to purchase and maintain stock in the FHLB-NY
in an amount equal to the greater of 1.0% of its aggregate unpaid residential
mortgage loans, home purchase contracts or similar obligations at the beginning
of each year or 5.0% of total advances.  At September 30, 1996, the Bank had
$40.8 million in FHLB stock, which was in compliance with this requirement.  For
the fiscal year ended September 30, 1996, dividends received from the FHLB-NY by
the Bank totalled $2.5 million.

ASSESSMENTS.  Savings institutions are required by OTS regulations to pay
assessments to the OTS to fund the operations of the OTS.  The general
assessment, paid on a semi-annual basis, is computed based upon the savings
institution's total assets, including consolidated subsidiaries, as reported in
the institution's latest quarterly thrift financial report.  The assessments
paid by the Bank in fiscal 1996 totalled $0.7 million.

BRANCHING.  OTS rules permit federally chartered savings associations to branch
nationwide to the extent allowed by federal statute.  The OTS authority preempts
any state law purporting to regulate branching by federal savings associations.
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<PAGE>

COMMUNITY REINVESTMENT.  Under the Community Reinvestment Act ("CRA"), as
implemented by OTS regulations, a savings institution has a continuing and
affirmative obligation, consistent with its safe and sound operation, to help
meet the credit needs of its entire community, including low and moderate income
neighborhoods.  The CRA does not establish specific lending requirements or
programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the CRA.  The CRA
requires the OTS, in connection with its examination of a savings institution,
to assess the institution's record of meeting the credit needs of its community
and to take such record into account in its evaluation of certain applications
by such institution.  An unsatisfactory rating may be used as a basis for denial
of an application for the OTS.  The CRA also requires all institutions to make
public disclosure of their CRA ratings.  Federal banking agencies, including the
OTS, have recently revised their CRA regulations and their methodology for
determining an institution's compliance with the CRA.  The Bank received a CRA
Rating of Outstanding in its most recent CRA examination, which was conducted
prior to the effective date of the amended OTS regulations.

BROKERED DEPOSITS.  The FDIC has promulgated regulations implementing the FDICIA
limitations on brokered deposits.  Under the regulations, well-capitalized
institutions are not subject to brokered deposit limitations, while adequately
capitalized institutions are able to accept, renew or roll over brokered
deposits only (i) with a waiver from the FDIC and (ii) subject to the limitation
that they do not pay an effective yield on any such deposit which exceeds by
more than (a) 75 basis points the effective yield paid on deposits of comparable
size and maturity in such institution's normal market area for deposits accepted
in its normal market area or (b) 120 basis points for retail deposits and 130
basis points for wholesale deposits accepted outside the institution's normal
market area, respectively, from the current yield on comparable maturity U.S.
Treasury obligations.  Undercapitalized institutions are not permitted to accept
brokered deposits and may not solicit deposits by offering an effective yield
that exceeds by more than 75 basis points the prevailing effective yields on
insured deposits of comparable maturity in the institution's normal market area
or in the market area in which such deposits are being solicited.  Pursuant to
the regulation, the Bank, as a well-capitalized institution, may accept brokered
deposits. The Bank, however, had no brokered deposits outstanding as of
September 30, 1996.

REGULATORY CAPITAL REQUIREMENTS

GENERAL.  Federally insured savings associations, such as the Bank, are required
to maintain minimum levels of regulatory capital. Pursuant to FIRREA, the OTS
established capital standards applicable to all Federal savings associations.
These standards generally must be no less stringent than the capital
requirements applicable to national banks.  The OTS also is authorized to impose
capital requirements in excess of these standards on individual associations on
a case-by-case basis.

Any savings association that fails any of the capital requirements is subject to
possible enforcement actions by the OTS or the FDIC.  Such actions could include
a capital directive, a cease and desist order, civil monetary penalties, the
establishment of restrictions on an association's operations and the appointment
of a conservator or receiver.  The OTS' capital regulation provides that such
actions, through enforcement proceedings or otherwise, may require one or more
of a variety of corrective actions. See "--Prompt Corrective Regulatory Action."

The capital regulations create three capital requirements: a tangible capital
requirement, a leverage or core capital requirement and a risk-based capital
requirement.  At September 30, 1996, the Bank was in compliance with all three
capital requirements.  These three capital standards are described below.

TANGIBLE CAPITAL REQUIREMENT.  Under current OTS regulations, each savings
association must maintain tangible capital equal to at least 1.50% of its
adjusted total assets (as defined by regulation).  Tangible capital generally
includes common stockholders' equity and retained income, and certain
noncumulative perpetual preferred stock and related earnings plus mortgage
servicing rights up to 50% of the amount of tangible capital as described.  At
September 30, 1996, the Bank had recorded mortgage servicing rights of $29.7
million.

In calculating adjusted total assets, adjustments are made to total assets to
give effect to the exclusion of certain assets from capital and to appropriately
account for the investments in and assets of both includible and non-includible
subsidiaries.

CORE CAPITAL REQUIREMENT.  Each savings association must maintain core capital
equal to at least 3.0% of its adjusted total assets.  Core capital includes
common stockholders' equity (including retained income), non-cumulative
perpetual preferred stock and related surplus, minority interest in the equity
accounts of fully consolidated subsidiaries and a percentage of qualifying
intangible assets.  The Bank's core capital was $416.8 million at September 30,
1996.

                                     35

<PAGE>

RISK-BASED REQUIREMENT.  The risk-based capital standard adopted by the OTS
requires savings associations to maintain a minimum ratio of total capital to
risk-weighted assets of 8.0%.  Total capital consists of core capital, defined
above, and supplementary capital.  Supplementary capital consists of certain
capital instruments that do not qualify as core capital, and general valuation
loan and lease loss allowances up to a maximum of 1.25% of risk-weighted assets.
Supplementary capital may be used to satisfy the risk-based requirement only in
an amount equal to the amount of core capital.  In determining the risk-based
capital ratios, total assets, including certain off-balance sheet items, are
multiplied by a risk weight assigned by OTS to certain categories of assets.
The risk weights assigned by the OTS for significant categories of assets are
(i) 0.0% for cash and securities issued by the Federal government or
unconditionally backed by the full faith and credit of the Federal government;
(ii) 20.0% for securities (other than equity securities) issued by Federal
government sponsored agencies and mortgage-backed securities issued by, or fully
guaranteed as to principal and interest by, FNMA or FHLMC, except for those
classes with residual characteristics or stripped mortgage-related securities;
(iii) 50.0% for prudently underwritten permanent one-to-four family first lien
mortgage loans not more than 90 days delinquent and having a loan-to-value ratio
of not more than 80.0% at origination unless insured to such ratio by private
mortgage insurance by an insurer approved by FNMA or FHLMC and certain
qualifying multi-family mortgage loans and (iv) 100.0% for all other loans and
investments, including consumer loans, commercial loans, and one-to-four family
residential real estate loans more than 90 days delinquent, and all repossessed
assets or assets more than 90 days past due.

On August 31, 1993, the OTS issued a final rule incorporating an interest rate
risk ("IRR") component into its risk-based capital rules, but deferred full
implementation of the IRR component until an appeals process for affected
institutions had been adopted.  Under the rule, an institution with a greater
than "normal" level of IRR will be subject to a deduction of its IRR component
from total capital for purposes of calculating the risk-based capital
requirement.  As a result, such an institution may be required to maintain
additional capital in order to comply with the risk-based capital requirement.
An institution with a greater than "normal" IRR is defined as an institution
that would suffer a loss of net portfolio value exceeding 2.0% of the estimated
market value of its assets in the event of a 200 basis point increase or
decrease (with certain minor exceptions) in interest rates. The IRR component
will be calculated, on a quarterly basis, as one-half of the difference between
an institution's measured IRR and 2.0%, multiplied by the market value of its
assets. The rule also authorizes the director of the OTS, or his designee, to
waive or defer an institution's IRR component on a case-by-case basis.  On
August 23, 1995, the OTS issued procedures that will allow eligible thrifts (i)
to request an adjustment to their IRR component, as calculated by OTS, or (ii)
calculate their IRR exposure using their own computer models.  At the same time,
the OTS deferred until further notice application of its IRR rule requiring
thrifts with above normal IRR exposure to adjust their  regulatory capital
requirements.  The OTS continues to monitor the IRR of individual institutions
and retains the right to impose minimum capital on individual institutions.
Based on the Bank's IRR profile and the level of interest rates at September 30,
1996, as well as the Bank's level of risk-based capital at September 30, 1996,
management believes that the Bank does not have a greater than normal level of
IRR as measured under the OTS rule and will not be required to increase its
capital as a result of the rule.

FEDERAL RESERVE SYSTEM.  The FRB requires all depository institutions to
maintain reserves against their transaction accounts (primarily NOW and Super
NOW checking accounts) and non-personal time deposits.  At September 30, 1996,
the Bank was in compliance with these requirements.

The balances maintained to meet the reserve requirements imposed by the FRB may
be used to satisfy liquidity requirements imposed by the OTS.  Because required
reserves must be maintained in the form of vault cash or a non-interest-bearing
account at a FRB, the effect of this reserve requirement is to reduce an
association's earning assets.  The amount of funds necessary to satisfy this
requirement has not had a material effect on the Bank's operations.

The Bank is also subject to certain regulations regarding savings account
disclosure contained in FDICIA and funds availability disclosure promulgated by
the FRB to implement the requirements of the Truth in Savings Act and the
Expedited Funds Availability Act, as amended, respectively.

FINANCIAL REPORTING.  Depository institutions whose accounts are insured by the
FDIC ("insured institutions") are required to submit independently audited
annual reports to the FDIC and the appropriate agency (and state supervisor when
applicable).  These publicly available reports must include (i) annual financial
statements prepared in accordance with GAAP and such other disclosure
requirements as required by the FDIC or the appropriate agency and (ii) a
report, signed by the chief executive officer and the chief financial officer or
chief accounting officer of the institution which contains

                                     36

<PAGE>

statements about the adequacy of internal controls and compliance with 
designated laws and regulations, and an attestation by independent auditors 
related to the former.

Insured institutions are required to monitor the above activities through an
independent audit committee which, in the case of institutions with assets over
$500 million, has access to independent legal counsel.

SAFETY AND SOUNDNESS GUIDELINES.

Under FDICIA, as amended by the Riegle Community Development and Regulatory
Improvement Act of 1994 ("CDRI Act"), each federal banking agency is required to
establish safety and soundness standards for institutions under its authority.
On July 10, 1995, the federal banking agencies, including the OTS, jointly
released Interagency Guidelines Establishing Standards For Safety and Soundness
and published a final rule establishing deadlines for submission and review of
safety and soundness compliance plans.  The final rule and the guidelines took
effect  August 9, 1995.  The guidelines, among other things, require savings
associations to maintain internal controls, information systems and internal
audit systems that are appropriate to the size, nature and scope of the
association's business.  The guidelines also establish certain standards for
loan documentation, credit underwriting, interest rate exposure, and asset
growth.  Savings associations are required to maintain safeguards to prevent the
payment of compensation, fees and benefits that are excessive or that could lead
to material financial loss.  The OTS may determine that a savings association is
not in compliance with the safety and soundness guidelines and, upon doing so,
may require the association to submit an acceptable plan to achieve compliance
with the guidelines.  A savings association must submit an acceptable compliance
plan to the OTS within 30 days of receipt or request for such a plan.  Failure
to submit or implement a compliance plan may subject the association to
regulatory actions.  Management believes that the Bank currently meets the
standards adopted in the interagency guidelines and does not believe that
implementation of the regulatory standards will materially affect the Bank's
operations.

Additionally, under FDICIA, as amended by the CDRI Act, federal banking agencies
are required to establish standards relating to asset quality and earnings that
the agencies determine to be appropriate.  On August 27, 1996, the federal
banking agencies, including the OTS, adopted guidelines relating to asset
quality and earnings.  Under the proposed guidelines, a savings association
would be required to maintain systems, consistent with its size and the nature
and scope of its operations, to identify problem assets and prevent
deterioration in those assets as well as to evaluate and monitor earnings and
insure that earnings are sufficient to maintain adequate capital and reserves.
Management believes that the asset quality and earnings guidelines, as adopted
by the banking agencies, would not have a material effect on the Bank's
operations.

PROMPT CORRECTIVE REGULATORY ACTION.  Under Section 38 of the FDIA, as added by
FDICIA, each appropriate agency and the FDIC is required to take prompt
corrective action to resolve the problems of insured depository institutions
that do not meet minimum capital ratios.  Such action must be accomplished at
the least possible long-term cost to the appropriate deposit insurance fund.

The federal banking agencies, including the OTS, have adopted substantially
similar regulations to implement Section 38 of the FDIA.  Under these
regulations, an institution shall be deemed to be (i) "well capitalized" if it
has total risk-based capital of 10.0% or more, has a Tier 1 risk-based capital
ratio of 6.0% or more, has a Tier 1 leverage capital ratio of 5.0% or more and
is not subject to any order or final capital directive to meet and maintain a
specific capital level for any capital measure, (ii) "adequately capitalized" if
it has a total risk-based capital ratio of 8.0% or more, a Tier 1 risk-based
capital ratio of 4.0% or more and a Tier 1 leverage capital ratio of 4.0% or
more (3.0% under certain circumstances) and does not meet the definition of
"well capitalized," (iii) "undercapitalized" if it has a total risk-based
capital ratio that is less than 8.0%, a Tier 1 risk-based capital ratio that is
less than 4.0% or a Tier 1 leverage capital ratio that is less than 4.0% (3.0%
under certain circumstances), (iv) "significantly undercapitalized" if it has a
total risk-based capital ratio that is less than 6.0%, a Tier 1 risk-based
capital ratio that is less than 3.0% or a Tier 1 leverage capital ratio that is
less than 3.0%, and (v) "critically undercapitalized" if it has a ratio of
tangible equity to total assets that is equal to or less than 2.0%. Section 38
of the FDIA and the regulations promulgated thereunder also specify
circumstances under which a federal banking agency may reclassify a well
capitalized institution as adequately capitalized and may require an adequately
capitalized institution or an undercapitalized institution to comply with
supervisory actions as if it were in the next lower category (except that the
FDIC may not reclassify a significantly undercapitalized institution as
critically undercapitalized). At September 30, 1996, the Bank met the criteria
to be considered a "well capitalized" institution.

                                     37

<PAGE>

HOLDING COMPANY REGULATION

The Company is a unitary savings and loan holding company within the meaning of
the HOLA.  As such, the Holding Company is required to register with the OTS and
is subject to OTS regulations, examinations, supervision and reporting
requirements.  In addition, the OTS has enforcement authority over the Company
and its non-savings institution subsidiaries.  Among other things, this
authority permits the OTS to restrict or prohibit activities that are determined
to be a serious risk to the subsidiary savings institution.  The Bank must
notify the OTS 30 days before declaring any dividend to the Company.

The HOLA prohibits a savings and loan holding company, directly or indirectly,
or through one or more subsidiaries, from acquiring another savings institution
or holding company thereof, without prior written approval of the OTS; acquiring
or retaining, with certain exceptions, more than 5% of a non-subsidiary savings
institution, a non-subsidiary holding company, or a non-subsidiary company
engaged in activities other than those permitted by the HOLA; or acquiring or
retaining control of a depository institution that is not federally insured.  In
evaluating applications by holding companies to acquire savings institutions,
the OTS must consider the financial and managerial resources and future
prospects of the company and institution involved, the effect of the acquisition
on the risk to the insurance funds, the convenience and needs of the community
and competitive factors.

As a unitary savings and loan holding company, the Company generally will not be
restricted under existing laws as to the types of business activities in which
it may engage, provided that the Bank continues to meet the QTL test. See "--
Federal Regulation of Savings Association-Qualified Thrift Lender Test" for a
discussion of the QTL requirements.  Upon any non-supervisory acquisition by the
Company of another savings and loan association or savings bank that meets the
QTL test and is deemed to be a savings institution by the OTS, the Company would
become a multiple savings and loan holding company (if the acquired institution
is held as a separate subsidiary) and would be subject to extensive limitations
on the types of business activities in which it could engage.  The HOLA
generally limits the activities of a multiple savings and loan holding company
and its non-insured institution subsidiaries primarily to activities permissible
for bank holding companies under Section 4(c)(8) of the Bank Holding Company
Act.

The OTS is prohibited from approving any acquisition that would result in a
multiple savings and loan holding company controlling savings institutions in
more than one state, subject to two exceptions: (i) the approval of interstate
supervisory acquisitions by savings and loan holding companies, and (ii) the
acquisition of a savings institution in another state if the laws of the state
of the target savings institution specifically permit such acquisitions.  Under
New York law, reciprocal interstate acquisitions are authorized for savings and
loan holding companies and savings institutions. Certain states do not authorize
interstate acquisitions under any circumstances; however, federal law
authorizing acquisitions in supervisory cases preempts such state law.

Federal law generally provides that no "person," acting directly or indirectly
or through or in concert with one or more other persons, may acquire "control,"
as that term is defined in OTS regulations, of a federally-insured savings
institution without giving at least 60 days written notice to the OTS and
providing the OTS an opportunity to disapprove the proposed acquisition.  Such
acquisitions of control may be disapproved if it is determined, among other
things, that (i) the acquisition would substantially lessen competition; (ii)
the financial condition of the acquiring person might jeopardize the financial
stability of the savings institution or prejudice the interests of its
depositors; or (iii) the competency, experience or integrity of the acquiring
person or the proposed management personnel indicates that it would not be in
the interest of the depositors or the public to permit the acquisition of
control by such person.

In addition, federal regulations governing conversions of mutual savings
institutions to the stock form of organization prohibit the direct or indirect
acquisition without prior OTS approval of more than 10% of any equity security
of a savings institution within three years of the savings institution's
conversion to stock form.  This limitation applies to acquisitions of the stock
of the Company. Such acquisition may be disapproved if it is found, among other
things, that the proposed acquisition (i) would frustrate the purposes of the
provisions of the regulations regarding conversions, (ii) would be manipulative
or deceptive, (iii) would subvert the fairness of the conversion, (iv) would be
likely to result in injury to the savings institution, (v) would not be
consistent with economical home financing, (vi) would otherwise violate law or
regulation, or (vii) would not contribute to the prudent deployment of the
savings institution's conversion proceeds.
                                     38

<PAGE>

FEDERAL SECURITIES LAWS

The Holding Company's common stock is registered with the SEC under Section 
12(g) of the Securities Exchange Act of 1934, as amended ("Exchange Act").  
The Holding Company is subject to the information, proxy, solicitation, 
insider trading restrictions and other requirements under the Exchange Act.

ITEM 2. PROPERTIES

   As of October 31, 1996, the Bank conducted its business through its office 
in Melville, N.Y., 36 full service branch offices, and 25 regional lending 
centers (one of which is located within a full service branch location).  Six 
of the Bank's offices are located in Queens County of New York City, 11 are 
located in Nassau County-Long Island, and 19 are located in Suffolk 
County-Long Island. Seven of the Bank's regional lending centers are located 
in Virginia; 5 in Pennsylvania; 4 in New York; 2 each in Georgia, New Jersey 
and Maryland; and 1 each in Connecticut, Delaware and North Carolina.  The 
Bank believes that the current facilities are adequate to meet the present 
and immediately foreseeable needs of the Bank.

                                                              LEASE
           LOCATION                    LEASED/OWNED     TERMINATION DATE 
           --------                    ------------     ----------------
                                                               (1)
                                                               ---
Executive Office
201 Old Country Road
     Melville, NY 11747. . . . . . . . . . . O                       N/A

BRANCHES:
QUEENS COUNTY:
35-01 30th Avenue
     Astoria, NY 11103 . . . . . . . . . . . O                       N/A

22-02 31st Street
     Astoria, NY 11105 . . . . . . . . . . . L                   12/2030

30-27 Steinway Street
     Astoria, NY 11103 . . . . . . . . . . . L                      4/98

72-35 Broadway
     Jackson Heights, NY 11372 . . . . . . . O                       N/A

97-33 Queens Boulevard
     Rego Park, NY 11374 . . . . . . . . . . L                   12/2011

153-01 10th Avenue
     Whitestone, NY 11357. . . . . . . . . . L                    3/2000

NASSAU COUNTY:
1150 Franklin Avenue
     Garden City, NY 11530 . . . . . . . . . L                      2/98

3105 Hempstead Turnpike
     Levittown, NY 11756 . . . . . . . . . . O                       N/A

1900 Northern Boulevard
     Manhasset, NY 11030 . . . . . . . . . . L                   10/2001

1001 Park Boulevard
     Massapequa Park, NY 11762 . . . . . . . L                    7/2001

2090 Merrick Road
     Merrick, NY 11566 . . . . . . . . . . . O                       N/A

                                                                 (Continued)

                                      39
<PAGE>

                                                              LEASE
           LOCATION                    LEASED/OWNED     TERMINATION DATE 
           --------                    ------------     ----------------
                                                               (1)
                                                               ---
NASSAU COUNTY: (CONTINUED)
53 North Park Avenue
     Rockville Centre, NY 11570  . . . . . . L                     10/96 (2)

339 Merrick Road
    Rockville Centre, NY  11570  . . . . . . O                       N/A

3887 Merrick Road
     Seaford, NY 11783 . . . . . . . . . . . O                       N/A

50 Jackson Avenue
     Syosset, NY 11791
     (includes a regional lending center). . L                    8/2006

120  South Franklin Avenue
     Valley Stream, NY 11580 . . . . . . . . O                       N/A

3366 Park Avenue
     Wantagh, NY 11793 . . . . . . . . . . . O                       N/A

SUFFOLK COUNTY:
180 West Main Street
     Babylon, NY 11702 . . . . . . . . . . . O                       N/A

300 East Main Street
     Bay Shore, NY 11706 . . . . . . . . . . O                       N/A

269 Middle Country Road
     Coram, NY 11727 . . . . . . . . . . . . O                       N/A

180 East Main Street
     East Islip, NY 11730. . . . . . . . . . O                       N/A

696 Horseblock Road
     Farmingville, NY 11738. . . . . . . . . O                       N/A

845 Wheeler Road
     Hauppauge, NY 11788 . . . . . . . . . . O                       N/A

1229 East Jericho Tpke.
     Huntington, NY 11743. . . . . . . . . . O                       N/A

839-140 New York Avenue
     Huntington, NY 11743. . . . . . . . . . L                   12/2000

599 Middle Country Road
     Middle Island, NY 11953 . . . . . . . . O                       N/A

718 Medford Ave.
     North Patchogue, NY 11772 . . . . . . . O                       N/A

1336 Montauk Highway
     Oakdale, NY 11769 . . . . . . . . . . . O                       N/A

450 Jefferson Shopping Plaza
     Port Jefferson Station, NY 11776. . . . L                    9/2000

                                                                 (Continued)

                                      40
<PAGE>

                                                              LEASE
           LOCATION                    LEASED/OWNED     TERMINATION DATE 
           --------                    ------------     ----------------
                                                               (1)
                                                               ---
SUFFOLK COUNTY: (CONTINUED)
325 Route 25A
     Rocky Point, NY 11778 . . . . . . . . . O                       N/A

999-25 Montauk Highway
South Port Shopping Center 
     Shirley, NY 11967 . . . . . . . . . . . L                   12/2005

65 Nugent Street
     Southampton, NY 11968 . . . . . . . . . O                       N/A

1047 North Country Road
     Stony Brook, NY 11790 . . . . . . . . . O                       N/A

6348 Route 25A
     Wading River, NY 11792. . . . . . . . . O                       N/A

526 Union Boulevard
     West Islip, NY 11795. . . . . . . . . . L                     11/98

71 Sunset Avenue
     Westhampton Beach, NY 11978 . . . . . . O                       N/A

OTHER REGIONAL LENDING CENTERS:
Plaza West Office Center
     2001 West Main Street Suite 140
     Stamford, CT 06902. . . . . . . . . . . L                       M-M

103 Foulk Rd.
    Wilmington, DE 19803 . . . . . . . . . . L                     02/99

Suite 880
    2000 RiverEdge Parkway
    Atlanta, GA 30328. . . . . . . . . . . . L                      2/99

410 Commerce Drive
    Peachtree City, GA 30269 . . . . . . . . L                     10/97

10005 Old Columbia Road, Suite L260
    Columbia, MD 21046 . . . . . . . . . . . L                    5/2001

6 Montgomery Village Ave.
    Gaithersburg, MD 20879 . . . . . . . . . L                       M-M

4325 Lake Boone Trail
    Raleigh, NC 27604. . . . . . . . . . . . L                     11/98

9 Law Drive
     Fairfield, NJ 07006 . . . . . . . . . . L                      3/99

240 Half Mile Road
    Red Bank, NJ 07701 . . . . . . . . . . . L                      5/97

2 Gannett Dr.
    White Plains, NY 10604 . . . . . . . . . L                       M-M

                                                                 (Continued)

                                      41
<PAGE>
                                                              LEASE
           LOCATION                    LEASED/OWNED     TERMINATION DATE 
           --------                    ------------     ----------------
                                                               (1)
                                                               ---
OTHER REGIONAL LENDING CENTERS:
(CONTINUED)

30-50 Whitestone Expressway
     Flushing, NY 11354. . . . . . . . . . . L                      4/99

2780 Middle Country Road
     Lake Grove, NY 11755. . . . . . . . . . L                     10/98

237 West Chocolate Ave.
    Hershey, PA  17033 . . . . . . . . . . . L                      6/97

111 Gibraltar Rd.
    Horsham, PA 19044. . . . . . . . . . . . L                      2/98

54 Quakertown Rd.
    Pennsburg, PA 18073. . . . . . . . . . . L                      2/98

303 East Baltimore Pike
    PO Box 127
    Media, PA  19063 . . . . . . . . . . . . L                       M-M

1100 Berkshire Blvd.
    Reading, PA 19610. . . . . . . . . . . . L                      8/99

7231 Forest Ave.
    Richmond, VA 23226 . . . . . . . . . . . L                      2/97

5544 Greenwich Rd.
    Virginia Beach, VA 23462 . . . . . . . . L                      6/97

206 Temple Ave.
    Colonial Heights, VA 23834 . . . . . . . L                      3/97

155 Creekside Village La.
    Winchester, VA 22602 . . . . . . . . . . L                      4/98

825 Dilegence Dr.
    Newport News, VA 23606 . . . . . . . . . L                      4/98

Galten Building, Suite 220
Middle St.
    Franklin, VA 23851 . . . . . . . . . . . L                     12/98

Suite 110
    8321 Old Courthouse Road
    Vienna, VA 22182 . . . . . . . . . . . . L                      5/99

OTHER FACILITIES:

22-04 31st Street
     Astoria, NY 11105 . . . . . . . . . . . O                       N/A

29-16 Ditmars Boulevard
     Astoria, NY 11105 . . . . . . . . . . . L                      6/99

110 Bi County Blvd.
     Farmingdale, NY 11735 . . . . . . . . . L                    6/2000
_________________
1.      M-M represents a month to month lease.
2.      Effective in November 1996, the Bank is a month to month tenant.

                                      42

<PAGE>
ITEM 3.         LEGAL PROCEEDINGS.

On March 24, 1994, the Bank received notice that it had been named as a 
defendant in a class action lawsuit filed in the United States District Court 
for the Eastern District of New York against James J. Conway, Jr., former 
chairman and chief executive officer of the Bank who resigned from the Bank 
in June 1992, his former law firm, certain predecessor firms of that law 
firm, certain partners of that law firm and the Bank.  The lawsuit is 
entitled RONNIE WEIL ALSO KNOWN AS RONNIE MOORE, FOR HERSELF AND ON BEHALF OF 
ALL OTHER PERSONS WHO ATTAINED MORTGAGE LOANS FROM THE LONG ISLAND SAVINGS 
BANK, FSB DURING THE PERIOD JANUARY 1, 1983 THROUGH DECEMBER 31, 1992 AGAINST 
THE LONG ISLAND SAVINGS BANK, FSB.  The complaint alleges that the defendants 
caused mortgage loan commitments to be issued to mortgage loan borrowers, and 
submitted legal invoices to the borrowers at the closing of mortgage loans, 
which falsely represented the true legal fees charged for representing the 
Bank in connection with the mortgage loans and failed to advise that a part 
of the listed legal fee would be paid to Mr. Conway, thereby defrauding the 
borrowers.  The complaint does not specify the amount of damages sought.

On or about June 9, 1994, the Bank was served with an Amended Summons and 
Amended Complaint adding the Bank's directors as individual defendants. On 
or about July 29, 1994, the Bank and the individual director defendants 
served on plaintiffs a motion to dismiss the Amended Complaint.  On or about 
August 29, 1994, the plaintiffs served papers in response to the motion.  The 
remaining schedule on the motion has been held in abeyance pending certain 
discovery.

Management believes that the likelihood is remote that this case will have a 
material adverse impact on the Company's consolidated financial position.

On August 15, 1989 the Bank and its former wholly owned subsidiary, The Long 
Island Savings Bank of Centereach, FSB ("Centereach"), filed suit against the 
United States seeking damages and/or other appropriate relief on the grounds, 
among others, that the government had breached the terms of the 1983 
assistance agreement between the Bank and the Federal Savings and Loan 
Insurance Corporation pursuant to which the Bank acquired Centereach 
("Assistance Agreement").  The Assistance Agreement, among other things, 
provided for the inclusion of supervisory goodwill as an asset on 
Centereach's balance sheet to be included in capital and amortized over 40 
years for regulatory purposes.

The suit is pending before Chief Judge Loren Smith in the United States Court 
of Federal Claims and is entitled THE LONG ISLAND SAVINGS BANK, FSB ET AL. VS 
THE UNITED STATES.  The case had been stayed pending disposition by the 
United States Supreme Court of three related supervisory goodwill cases (the 
WINSTAR cases).  On July 1, 1996 the Supreme Court ruled in the WINSTAR cases 
the government had breached its contracts with the WINSTAR parties and was 
liable in damages for those breaches.

On September 18, 1996 Judge Smith issued an Omnibus Management Order ("Case 
Management Order") applicable to all WINSTAR-related cases.  The Case 
Management Order addresses certain timing and procedural matters with respect 
to the administration of the WINSTAR-related cases, including organization of 
the parties, initial discovery, initial determinations regarding liability, 
and the resolution of certain common issues.  The Case Management Order 
provides that the parties will attempt to agree upon a Master Litigation 
Plan, which may be in phases, to govern all further proceedings, including 
the resolution of common issues (other than common issues covered by the Case 
Management Order), dispositive motions, trials, discovery schedules, 
protocols for depositions, document production, expert witnesses, and other 
matters.

On November 1, 1996, the Bank filed a motion for summary judgment on 
liability. Pursuant to the schedule set forth in the Case Management Order, 
within sixty days of the filing of the motion, the government must file a 
response with respect to whether a contract exists and whether the government 
acted inconsistently with the contract.  Within 120 days of filing of the 
motion, the government must set forth any defenses it knows or has reason to 
know that relate to these two issues.

In its complaint, the Bank did not specify the amount of damages it was 
seeking from the United States.  There have been no decisions determining 
damages in the WINSTAR cases or any of the WINSTAR-related cases.  The Bank 
is unable to predict the outcome of its claim against the United States and 
the amount of damages that may be awarded to the Bank, if any, in the event 
that judgment is rendered in the Bank's favor.  Consequently, no assurances 
can be given as to the results of this claim or the timing of any proceedings 
in relation thereto.
                                      43
<PAGE>

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

None.
                                       
                                    PART II

ITEM 5.      MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
             MATTERS

Long Island Bancorp, Inc. common stock is traded on the Nasdaq National 
Market and quoted under the symbol "LISB".

Information regarding Long Island Bancorp, Inc. common stock and its price 
for the 1996 fiscal year appears on page 65 of the 1996 Annual Report under 
the caption "Market Price of Common Stock" and its incorporated herein by 
this reference.

As of September 30, 1996, Long Island Bancorp, Inc. had approximately 3,981 
stockholders of record, not including the number of persons or entities 
holding stock in nominee or street name through various brokers and banks.

On December 22, 1994, Long Island Bancorp, Inc. adopted a dividend policy to 
pay an annual dividend of forty cents ($0.40) per share of common stock, 
payable in equal quarterly installments, should the earnings of the  Company 
warrant.  In accordance with this policy, dividends have been paid in fiscal 
1996 to shareholders as follows:

       Declaration Date       Record Date             Payment Date
      -------------------    --------------------    ---------------------
       December 21, 1995      January 16, 1996        February 14, 1996
       March 26, 1996         April 15, 1996          May 15, 1996
       June 25, 1996          July 17, 1996           August 16, 1996
       September 24,1996      October 16, 1996        November 15, 1996

Long Island Bancorp, Inc. initiated its first, second and third stock 
repurchase programs on March 9, 1995, September 9, 1995 and  April 15, 1996, 
respectively, as authorized by the OTS.  As of September 30, 1996, Long 
Island Bancorp, Inc. repurchased 2,497,554 shares,  or 10.13% of the 
outstanding common stock, at an aggregate cost of $59.9 million under the 
three stock repurchase plans.

ITEM 6.      SELECTED FINANCIAL DATA

Information regarding selected financial data appears on page 10 of the 1996 
Annual Report and is incorporated herein by this reference.

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

Information regarding management's discussion and analysis of financial 
condition and results of operations appears on pages 15 through 30 of the 
1996 Annual Report under the caption "Management's Discussion and Analysis of 
Financial Condition and Results of Operations" and is incorporated herein by 
this reference.

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information regarding the financial statements and the Independent Auditors'
Report appears on pages 31 through 64 of the 1996 Annual Report and is
incorporated herein by this reference.

                                      44
<PAGE>

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

None.
                                       
                                   PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding the directors and executive officers of the Registrant 
appears on pages 6 through 10 of the Company's Proxy Statement for the Annual 
Meeting of Shareholders to be held February 18, 1997 under the captions 
"Board Nominees, Directors and Executive Officers," "Biographical Information 
-Directors and Board Nominees" and "- Executive Officers Who Are Not 
Directors" and is incorporated herein by this reference.

ITEM 11.     EXECUTIVE COMPENSATION

Information regarding executive compensation appears on pages 15 through 18 of
the Company's Proxy Statement for the Annual Meeting of Shareholders to be held
February 18, 1997 and is incorporated herein by this reference.

ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership of certain beneficial owners appears 
on page 3 of the Company's Proxy Statement for the Annual Meeting of 
Shareholders to be held February 18, 1997 under the caption "Stock Ownership 
of Certain Beneficial Owners" and is incorporated herein by this reference.

Information regarding security ownership of management appears on pages 4 and 
5 of the Company's Proxy Statement for the Annual Meeting of Shareholders to 
be held February 18, 1997 under the caption "Stock Ownership of Management" 
and is incorporated herein by this reference.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions appears 
on pages 11 and 12 of the Company's Proxy Statement for the Annual Meeting of 
Shareholders to be held on February 18, 1997 under the caption "Transactions 
with Certain Related Persons" and is incorporated herein by this reference.
                                       
                                    PART IV

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

(a)  1.      FINANCIAL STATEMENTS

The following financial statements are included in the Company's Annual 
Report to Shareholders for the year ended September 30, 1996 and are 
incorporated by this reference:

        -    Consolidated Statements of Condition at September 30, 1996 and 1995
        -    Consolidated Statements of Operations for each of the years in the 
             three year period ended September 30, 1996
        -    Consolidated Statements of Changes in Stockholders' Equity for 
             each of the years in the three year period ended September 30, 1996
        -    Consolidated Statements of Cash Flows for each of the years in the 
             three year period ended September 30, 1996
        -    Notes to Consolidated Financial Statements
        -    Independent Auditors' Report

The remaining information appearing in the Annual Report to Stockholders is 
not deemed to be filed as a part of this report, except as expressly provided 
herein.

                                      45
<PAGE>

    2.       FINANCIAL STATEMENT SCHEDULES

Financial Statement Schedules have been omitted because they are not 
applicable or the required information is shown in the Consolidated Financial 
Statements or Notes thereto.

(b)          REPORTS ON FORM 8-K FILED DURING THE LAST QUARTER OF FISCAL 1996

Press release dated July 23, 1996 in connection with the earnings for the 
third quarter of fiscal year 1996.

Press release dated August 1, 1996 announcing the acquisition of First Home 
Mortgage of Virginia, Inc.

Press release dated September 6, 1996 announcing the retirement of William E. 
Viklund from his position as President and Chief Operating Officer.

Press release dated September 24, 1996 announcing the Company's eighth quarterly
dividend of $0.10 per common share.

(c)          EXHIBITS REQUIRED BY SECURITIES AND EXCHANGE COMMISSION REGULATION
             S-K

        Exhibit
        Number
        -------
        3.1       Restated Certificate of Incorporation of Long Island Bancorp,
                  Inc. (1)
        3.2       Restated By-Laws of Long Island Bancorp, Inc. (1)
        10.1      Employment Agreements between Long Island Bancorp, Inc. and 
                  Certain Officers
        10.2      Employment Agreements or Other Arrangements between The Long 
                  Island Savings Bank, FSB and Certain Officers
        10.3      The Long Island  Savings Bank, FSB Management Recognition 
                  and Retention Plans for Non-Employee Directors (2)
        10.4      The Long Island Savings Bank, FSB Management Recognition and 
                  Retention Plan for Executive Officers (2)
        10.5      Long Island Bancorp, Inc. 1994 Stock Incentive Plan (2)
        10.6      Long Island Bancorp, Inc. 1994 Non-Employee Directors Stock 
                  Option Program (2)
        10.7      Form of The Long Island Savings Bank, FSB Employee Stock 
                  Ownership Plan and Trust (1)
        10.8      Long Island Bancorp Inc. Non-Employee Director Retirement 
                  Benefit Plan (3)
        10.9      ESOP Loan Documents (1)
        10.10     Amendment to The Long Island Savings Bank, FSB 401 (k) 
                  Savings Plan
        10.11     Amendments to Retirement Plan of The Long Island Savings 
                  Bank, FSB in Retirement System for Savings Institutions
        10.12     Form of The Long Island Savings Bank, FSB Deferred 
                  Compensation Planfor Fees of Directors (3)
        10.13     The Long Island Savings Bank, FSB Deferred Pension Plan (1)
        10.14     Amendments to the ESOP
        10.15     Separation agreement with President of the Bank and Holding 
                  Company
        11.0      Statement Re: Computation of Per Share Earnings
        13.0      1996 Annual Report to Shareholders
        99.0      Proxy Statement for the Annual Meeting of Stockholders to be
                  held on February 18, 1997

(1)     Incorporated by reference to Exhibits filed with the Registration
        Statement on Form S-1, Registration No. 33-73694

(2)     Incorporated by reference to Exhibits filed with the Proxy Statement 
        for the Special Meeting of Stockholders held August 3, 1994.

(3)     Incorporated by reference to Exhibits filed with Form 10-K for the
        fiscal year ended September 30, 1994.

                                      46
<PAGE>

SIGNATURES

Pursuant to the requirements of section 13 or 15(d) of The Securities 
Exchange Act of 1934, the Company has duly caused this report to be signed on 
its behalf by the undersigned, thereunto duly authorized.

Long Island Bancorp, Inc.                             Dated: December 19, 1996
-------------------------
   (Registrant)


/s/ John J. Conefry, Jr.
------------------------
John J. Conefry, Jr.
Chairman and Chief Executive Officer


                                       47
<PAGE>

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

NAME                              TITLE                  DATE
----                              -----                  ----

/s/ John J. Conefry, Jr.                                 December 19, 1996
-------------------------------   Chairman, Chief        -----------------
John J. Conefry, Jr.              Executive Officer
                                  and Director

/s/ Mark Fuster                                          December 19, 1996
-------------------------------                          -----------------
Mark Fuster                       Chief Financial 
                                  Officer         

/s/ Bruce M. Barnet                                      December 19, 1996
-------------------------------                          -----------------
Bruce M. Barnet                   Executive Vice
                                  President and 
                                  Director      

/s/ Clarence M. Buxton                                   December 19, 1996 
-------------------------------                          -----------------
Clarence M. Buxton                Director


/s/ Edwin M. Canuso                                      December 19, 1996
-------------------------------                          -----------------
Edwin M. Canuso                   Director


/s/ Richard F. Chapdelaine                               December 19, 1996
-------------------------------                          -----------------
Richard F. Chapdelaine            Director


/s/ Brian Conway                                         December 19, 1996
-------------------------------                          -----------------
Brian Conway                      Director


/s/ Robert J. Conway                                     December 19, 1996 
-------------------------------                          ----------------- 
Robert J. Conway                  Director


/s/ Frederick DeMatteis                                  December 19, 1996 
-------------------------------                          ----------------- 
Frederick DeMatteis               Director


/s/ George R. Irvin                                      December 19, 1996 
-------------------------------                          ----------------- 
George R. Irwin                   Director


/s/ Herbert J. McCooey                                   December 19, 1996 
-------------------------------                          ----------------- 
Herbert J. McCooey                Director


/s/ Lawrence W. Peters                                   December 19, 1996 
-------------------------------                          ----------------- 
Lawrence W. Peters                Director


                                      48
<PAGE>

NAME                              TITLE                  DATE
----                              -----                  ----

/s/ Robert S. Swanson, Jr.                               December 19, 1996 
-------------------------------                          ----------------- 
Robert S. Swanson, Jr.            Director


/s/ James B. Tormey                                      December 19, 1996 
-------------------------------                          ----------------- 
James B. Tormey                   Director


/s/ Leo J. Waters                                        December 19, 1996 
-------------------------------                          ----------------- 
Leo J. Waters                     Director


/s/ Donald D. Wenk                                       December 19, 1996 
-------------------------------                          ----------------- 
Donald D. Wenk                    Director


                                      49