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

                                   FORM 10-K

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

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

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

        FOR THE TRANSITION PERIOD FROM                TO

                       COMMISSION FILE NUMBER: 001-13094

                               DIME BANCORP, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                                <C>
                     DELAWARE                                          11-3197414
 (STATE OR OTHER JURISDICTION OF INCORPORATION OR         (I.R.S. EMPLOYER IDENTIFICATION NO.)
                  ORGANIZATION)
       589 FIFTH AVENUE, NEW YORK, NEW YORK                              10017
     (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                          (ZIP CODE)
</TABLE>

                                 (212) 326-6170
               REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
                                                                 NAME OF EACH EXCHANGE
               TITLE OF EACH CLASS                                ON WHICH REGISTERED
               -------------------                               ---------------------
<S>                                                <C>
          COMMON STOCK, $0.01 PAR VALUE                         NEW YORK STOCK EXCHANGE
              STOCK PURCHASE RIGHTS                             NEW YORK STOCK EXCHANGE
</TABLE>

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of 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.  []

     The aggregate market value of the shares of registrant's common stock held
by non-affiliates (assuming, solely for purposes of this Form, that all
directors are affiliates) was $1,322,517,641 as of February 29, 2000 (based on
the closing New York Stock Exchange price on such date).

     The number of shares of common stock of the registrant outstanding as of
February 29, 2000 was 111,240,660 shares.

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                               DIME BANCORP, INC.

                        1999 ANNUAL REPORT ON FORM 10-K

                               TABLE OF CONTENTS

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                                                                         PAGE
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<S>      <C>                                                             <C>
PART I
Item 1.     Business....................................................      1
Item 2.     Properties..................................................     13
Item 3.     Legal Proceedings...........................................     13
Item 4.     Submission of Matters to a Vote of Security Holders.........     17

PART II
Item 5.     Market for Registrant's Common Equity and Related
            Stockholder Matters.........................................     17
Item 6.     Selected Financial Data.....................................     18
Item 7.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations...................................     19
Item 7A.    Quantitative and Qualitative Disclosures About Market
            Risk........................................................     46
Item 8.     Financial Statements and Supplementary Data.................     47
Item 9.     Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure....................................     47

PART III
Item 10.    Directors and Executive Officers of the Registrant..........     47

Item 11.    Executive Compensation......................................     50

Item 12.    Security Ownership of Certain Beneficial Owners and
            Management..................................................     68
Item 13.    Certain Relationships and Related Transactions..............     69


PART IV
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form
            8-K.........................................................     70

SIGNATURES..............................................................     75
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                                     PART I

     Certain statements contained in this Annual Report on Form 10-K are
forward-looking and may be identified by the use of words such as "believe,"
"expect," "anticipate," "should," "planned," "estimated," and "potential." These
forward-looking statements are based on the current expectations of the Company
(as defined below). A variety of factors could cause the Company's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in such forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development and
results of the Company's business include interest rate movements, competition
from both financial and non-financial institutions, changes in applicable laws
and regulations, the timing and occurrence (or non-occurrence) of transactions
and events that may be subject to circumstances beyond the Company's control and
general economic conditions.

ITEM 1.  BUSINESS

GENERAL

     Dime Bancorp, Inc. (the "Holding Company" or "Dime Bancorp," and, together
with its direct and indirect subsidiaries, the "Company" or "Dime"), is a
unitary savings and loan holding company incorporated in the State of Delaware
and headquartered in New York, New York. The Holding Company's principal
subsidiary is The Dime Savings Bank of New York, FSB, a federally-chartered
savings bank ("Dime FSB"). The principal subsidiary of Dime FSB is North
American Mortgage Company ("NAMC"), a mortgage banking company that was acquired
in October 1997 (the "NAMC Acquisition"). At December 31, 1999, the Company
operated 127 branches located throughout the greater New York City metropolitan
area and conducted its mortgage banking activities nationwide through locations
in 41 states. At December 31, 1999, the Company had assets of $23.9 billion,
deposits of $14.3 billion and stockholders' equity of $1.5 billion.

     During 1999, the Company, in transactions accounted for under the purchase
method, acquired: (i) KeyBank National Association's ("KeyBank") Long Island
banking franchise, which included 28 branches (the "KeyBank Branch
Acquisition"); (ii) Citibank N.A.'s ("Citibank") indirect automobile finance
business (the "Citibank Auto Business Acquisition"); (iii) Lakeview Financial
Corp. ("Lakeview"), the then holding company for Lakeview Savings Bank, which
operated 11 branches in northern New Jersey (the "Lakeview Acquisition"); and
(iv) certain assets and the leases on all of the 15 residential real estate loan
production offices of T&N Mortgage, Inc., which was headquartered in Monroe,
Louisiana. For further information regarding these acquisitions, see Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 2 of Notes to Consolidated Financial Statements in Item 8,
"Financial Statements and Supplementary Data."

     On September 15, 1999, the Holding Company entered into a definitive
agreement and plan of merger (as subsequently amended, the "Merger Agreement")
with Hudson United Bancorp ("Hudson"), a New Jersey corporation headquartered in
Mahwah, New Jersey, which provides for the merger of Hudson with and into the
Holding Company (the "Merger"). For a discussion of recent developments
regarding the Merger and recent actions taken by North Fork Bancorporation, Inc.
("North Fork") related thereto, see Item 3, "Legal Proceedings" and Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Recent Developments."

     For internal management purposes, the Company has four business segments:
Retail Banking; Commercial Banking; Mortgage Banking; and Investment Portfolio.
Further information regarding these business segments is set forth below and in
Note 24 of Notes to Consolidated Financial Statements in Item 8, "Financial
Statements and Supplementary Data."

RETAIL BANKING

  General

     The Company's Retail Banking segment, which focuses on individuals,
includes deposit accounts and related services, securities brokerage services,
insurance products, consumer lending activities and mainte-

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nance of a portfolio of residential real estate loans receivable. Products and
services offered by this business segment, most of which are available 24 hours
a day and seven days a week, are delivered through a multi-channel distribution
network, including on-line banking.

  Deposits

     The Company's total deposits amounted to $14.3 billion at December 31,
1999, of which $13.0 billion were associated with retail customers. (The
remaining balance of total deposits consisted of escrow deposits relating to
serviced mortgage loans and commercial banking-related customer deposits.) At
that date, the Company operated 41 branches in New York City, 50 branches on
Long Island, a total of 8 branches in New York's Westchester and Rockland
Counties and 28 branches in New Jersey. In addition to its branch system, the
Company's deposit gathering network at the end of 1999 included its telephone
banking center and 248 automated teller machines owned by the Company.

     The Company attracts deposits by offering a broad selection of deposit
instruments and programs for retail and private banking customers. These include
demand accounts, savings accounts, money market accounts, time deposit accounts,
individual retirement and Keogh accounts and automatic payroll and Social
Security deposit programs. The Company's deposit levels are subject to
fluctuations resulting from numerous factors outside the Company's control,
including general economic conditions, market interest rates and competition
both from other depository institutions and alternative investments. Depositor
behavior is affected by a variety of factors, including risk-related returns on
other available investments, the rates paid by the Company compared to other
institutions and the Company's ability to satisfy customer needs. These factors
may affect the Company's willingness or ability to compete for deposits and,
therefore, the level of its deposits.

     Dime FSB is a member of the Bank Insurance Fund ("BIF") of the Federal
Deposit Insurance Corporation ("FDIC"), with approximately 66% of its deposits
insured by the BIF and the remainder insured by the Savings Association
Insurance Fund ("SAIF") of the FDIC, in each case up to applicable limits.

  Securities Brokerage Services

     Securities brokerage services are provided by the Company through Dime
Securities, Inc., a wholly-owned subsidiary that is a registered broker-dealer.
The services provided by Dime Securities, Inc. primarily consist of the
execution of securities transactions, on an agency basis, solely upon the order
and for the accounts of its customers. In addition, Dime Securities, Inc.
provides standardized and individualized investment and financial planning
advice to individuals and business entities. Products sold by Dime Securities,
Inc., which are not BIF- or SAIF-insured, include: mutual funds; government,
corporate and municipal bonds; equity securities and equity options; annuities;
and unit investment trusts.

  Insurance Activities

     The Company's insurance agency subsidiaries include The Dime Agency, Inc.,
Dime NJ Agency, Inc. and North American Mortgage Insurance Services. These
subsidiaries currently sell certain tax-deferred annuities and products issued
by various insurance companies, including individual and group life, disability
and accidental death insurance, as well as hazard, mortgage and automobile
insurance.

  Consumer Lending

     The Company's consumer loans receivable portfolio at December 31, 1999
totaled $2.5 billion and was comprised largely of home equity loans and lines of
credit and automobile loans. This loan portfolio also included manufactured home
loans, loans secured by deposits, boat loans, unsecured and secured personal
loans, property improvement loans, government-guaranteed student loans and
unsecured revolving lines-of-credit and overdraft checking loans. The Company
generates consumer loans through its retail branch system, its NAMC loan
production network, direct mail and general marketing initiatives.

     Home equity loans, which represented approximately 60% of the Company's
total consumer loan portfolio at December 31, 1999, are underwritten following
guidelines similar to those for conventional

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<PAGE>   5

residential real estate loans (see "Mortgage Banking -- Residential Real Estate
Loan Production"). The loan-to-value ratio on any home equity loan originated by
the Company during 1999, together with any prior lien, generally did not exceed
90% at the time of origination. Loans made pursuant to home equity lines of
credit have adjustable interest rates that, after an introductory period, are
based generally on a fixed margin over the prime lending rate.

     Automobile loans represented approximately 36% of the total consumer loan
portfolio at the end of 1999, up from less than 1% one-year earlier. This
increase reflects the impact of the Citibank Auto Business Acquisition.

  Residential Real Estate Loans Receivable Portfolio

     At December 31, 1999, the Company maintained a residential real estate
loans receivable portfolio of $8.2 billion, consisting of one-to-four family
first mortgage loans and cooperative apartment loans. During 1999, the Company
continued to manage the level of this loan portfolio consistent with its
strategy to reduce the percentage of such loans to total loans receivable.

COMMERCIAL BANKING

  General

     The Company's Commercial Banking segment provides both lending and deposit
products and services to business customers. This segment includes commercial
real estate lending and business banking activities.

  Commercial Real Estate Lending

     At December 31, 1999, the Company's commercial real estate loans receivable
amounted to $3.5 billion, of which approximately $2.2 billion were secured by
properties located in the State of New York. The Company maintains commercial
real estate loan production offices in the greater New York City metropolitan
area, as well as in Florida, Massachusetts, Pennsylvania and Virginia.

     The Company's underwriting policies with respect to commercial real estate
loans are based primarily on the loan-to-value ratio of the property and an
assessment as to the adequacy of the underlying project's cash flow and its
coverage of operating expenses and debt service payments. The Company's
underwriting policies generally require an appraisal of the underlying property,
an engineer's report and a "Phase I" environmental assessment. Loan-to-value
ratios at the time of origination are usually not more than 75%.

  Business Banking

     The Company's business banking activities consist of providing loans
(including lease financing and asset-based lending), deposit products and cash
management and other services to small- and medium-sized businesses. The Company
originates business loans principally to finance seasonal working capital needs,
expansion, renovation and equipment purchases. In general, the ability of the
borrower to generate sufficient cash flows from operations to liquidate the debt
is a critical component of the credit decision. At December 31, 1999, the
Company's business loans receivable amounted to $1.0 billion.

MORTGAGE BANKING

  General

     The Company's Mortgage Banking segment activities, which are conducted
principally through NAMC, include the production of residential real estate
loans either for the Company's portfolio or for sale into the secondary market
and servicing loans for the Company and others.

  Residential Real Estate Loan Production

     The Company produces fixed-rate and adjustable-rate residential real estate
loans through a multi-channel, multi-regional network. During 1999, the
Company's residential real estate loan production

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<PAGE>   6

amounted to $22.4 billion, of which approximately 39% was originated through
mortgage brokers, approximately 37% was originated directly by the Company and
approximately 24% was purchased through correspondent lenders.

     The Company's residential real estate loan production includes loans: (i)
that meet the standard underwriting policies and purchase limits established by
Federal National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC") guidelines ("conforming conventional loans"); (ii) in
amounts in excess of the FNMA and FHLMC purchase limits ("jumbo loans"); (iii)
insured or guaranteed under Federal Housing Administration ("FHA") or Veterans
Administration ("VA") programs; (iv) that conform to programs established by
various state and local authorities; and (v) exclusively for sale to specified
secondary market investors that conform to the requirements of such investors,
which may be more or less stringent than those for conforming conventional
loans.

     Underwriting policies and guidelines for residential real estate loans
produced for the Company's portfolio are generally in conformance with those of
FNMA and FHLMC. Such policies and guidelines include requiring an appraisal of
the value of the collateral for the purpose of determining the loan-to-value
ratio (i.e., the ratio that the principal amount of the loan bears to the value
of the collateral securing the loan at the time of origination) and the
collateral's adequacy as security. The collateral's value is the lower of the
purchase price or the appraised value, except for refinance loans, where the
appraised value is used. With respect to residential first mortgage loans having
a loan-to-value ratio in excess of 80% at the date of origination, the Company
generally requires private mortgage insurance underwritten by FNMA- and
FHLMC-approved insurers in accordance with FNMA and FHLMC coverage levels.

     When the Company makes residential real estate loans to borrowers whose
creditworthiness does not meet standard FNMA and FHLMC underwriting guidelines
("subprime loans"), it sells the loans, as well as the right to service them,
into the secondary market, without recourse to the Company, and receives a fee
for their origination.

     The Company administers a formal process for approving and monitoring, and
conducts annual reviews of, its mortgage brokers and correspondents. Mortgage
broker performance is assessed primarily by monitoring loan credit quality.
Correspondent-purchased loans are contractually required to be underwritten by
the correspondent lenders in accordance with the Company's guidelines and,
unless a correspondent lender has been delegated underwriting authority, all
loans are re-underwritten by the Company prior to purchase. Correspondent
lenders with delegated underwriting status are generally subject to more
stringent financial and operational requirements than those without such status
and have undergone a comprehensive on-site review conducted by the Company.
Mortgage brokers and correspondent lenders demonstrating unacceptable
performance or insufficient loan activity are removed from the Company's
programs.

  Secondary Market Activities

     During 1999, the Company continued its strategy of selling into the
secondary market substantially all of its fixed-rate residential real estate
loan production. Further, during 1999, the Company opportunistically sold
adjustable-rate residential real estate loans into the secondary market. In
total, $22.5 billion of residential real estate loans held for sale were sold by
the Company into the secondary market during 1999.

     Conforming conventional loans produced by the Company for sale into the
secondary market are typically pooled and exchanged for securities backed by
such loans (mortgage-backed securities ("MBS")), which are generally sold to
investment banking firms. The Company may also sell conforming conventional
loans, as whole loans, directly to FNMA or FHLMC or to private investors. Jumbo
loans produced for sale in the secondary market are sold to private investors.
FHA-insured and VA-guaranteed loans produced for sale in the secondary market
are pooled to form Government National Mortgage Association ("GNMA") MBS, issued
by the Company, which are sold to investment banking firms.

     In June 1999, NAMC entered into a strategic alliance with FNMA under which
NAMC delivers all of its fixed-rate agency-eligible conforming conventional
residential real estate loan originations to FNMA.

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NAMC utilizes FNMA's automated loan underwriting system as its primary agency
loan underwriting system.

  Loan Servicing

     At December 31, 1999, the Company's residential real estate loans serviced
for others portfolio (excluding loans being subserviced by the Company)
consisted of approximately 350,000 loans with principal balances totaling $37.0
billion. In return for servicing these loans, the Company earns fees based upon
the outstanding principal balances of the loans. Minimum servicing fees for
substantially all loans serviced under MBS programs are established by the
sponsoring entities. At year-end 1999, the Company was subservicing, for a fee,
approximately 12,000 residential real estate loans with principal balances of
$1.3 billion in connection with sales of loan servicing rights. In addition, at
that date, the Mortgage Banking segment was servicing approximately 87,000
residential real estate loans owned by the Company with principal balances of
approximately $9.7 billion.

     Loan servicing consists of collecting principal and interest payments from
borrowers, remitting aggregate principal and interest payments to investors,
making loan-related advances when required, accounting for principal and
interest, collecting funds for payment of loan-related expense such as taxes and
insurance, inspecting the collateral as required, contacting delinquent
borrowers, conducting foreclosures and property dispositions in the event of
unremedied defaults and generally administering loans.

INVESTMENT PORTFOLIO

     The Company, pursuant to established policies and guidelines, invests in
certain debt and equity securities and money market investments. These
investments are made in conjunction with the Company's overall liquidity,
interest rate risk and credit risk management processes. In addition, as a
member of the Federal Home Loan Bank of New York ("FHLBNY"), Dime FSB is
required to maintain a specified investment in the capital stock of the FHLBNY
(see "Regulation and Supervision -- Federal Home Loan Bank System").

EMPLOYEES

     The Company had 6,928 full-time equivalent employees at December 31, 1999.
Employees of the Company are not represented by any collective bargaining group.
The Company considers its employee relations to be satisfactory.

COMPETITION

     The Company experiences substantial competition both in attracting and
retaining deposits and in making loans. Its most direct competition for deposits
historically has come from other thrift institutions and commercial banks doing
business in the greater New York City metropolitan area. The Company also
competes for funds with money market mutual funds, corporate and governmental
debt securities and other investment alternatives. The Company's competition for
loans comes principally from other thrift institutions, commercial banks,
mortgage banking companies, consumer finance companies, insurance companies and
other institutional investors and lenders. A number of institutions with which
the Company competes for deposits and loans have significantly greater assets
and capital than the Company.

REGULATION AND SUPERVISION

  General

     Dime FSB is a federal savings bank and a member of the FHLBNY and is
subject to the regulations, examinations and reporting requirements of the
Office of Thrift Supervision (the "OTS"), as the primary regulator of federal
savings associations, and of the FDIC, as insurer of Dime FSB's deposits.
Additionally, Dime FSB is subject to certain limited regulation by the Board of
Governors of the Federal Reserve System

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(the "Federal Reserve Board"). As a savings and loan holding company, the
Holding Company is also subject to the regulations, examinations and reporting
requirements of the OTS.

     The description of statutory provisions and regulations applicable to
savings associations and savings and loan holding companies set forth below does
not purport to be a complete description of the statutes and regulations
described or of all such statutes and regulations and their effects on Dime FSB
and the Holding Company. The regulatory framework has been established primarily
for the protection of depositors and the financial system generally and is not
intended for the protection of stockholders or other creditors.

  Deposit Insurance

     The FDIC administers two separate deposit insurance funds: the BIF, of
which Dime FSB is a member, and the SAIF. As of December 31, 1999, approximately
66% of Dime FSB's deposits were BIF-insured and approximately 34% of its
deposits were SAIF-insured. Pursuant to the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), the FDIC established a
risk-based assessment system for insured depository institutions that takes into
account the risks attributable to different categories and concentrations of
assets and liabilities. Under this system, both BIF-insured and SAIF-insured
depository institutions are placed into one of nine confidential assessment risk
categories using a two-step process based first on capital ratios and then on
other factors. Currently, both BIF-insured and SAIF-insured deposit assessment
rates range between $0.00 and $0.27 for each $100 of insured deposits.

     Under the Deposit Insurance Funds Act of 1996 (the "Funds Act"),
assessments are imposed on insured depository institutions with respect to both
BIF- and SAIF-assessable deposits in order to pay for a portion of the debt
service of certain bonds issued by the Federal Financing Corporation (the "FICO
Bonds"). Pursuant to the Funds Act, between January 1, 1997 and December 31,
1999, BIF-assessable deposits were assessed at a rate equal to 20% of the rate
applied to SAIF-assessable deposits for purposes of the FICO Bonds debt service
assessment. Effective January 1, 2000, there is no difference between the
assessment rates on BIF- and SAIF-assessable deposits. The FICO assessment rate
is adjusted quarterly to reflect changes in the assessment bases of the BIF and
SAIF. The average annual assessment rate during 1999 was $0.01185 for each $100
of BIF-assessable deposits and $0.05925 for each $100 of SAIF-assessable
deposits.

  Capital Requirements

     Under federal statute and OTS regulations, savings associations are
required to comply with three separate capital adequacy standards. These
institutions are required to have core capital equal to 3% of adjusted total
assets, tangible capital equal to at least 1.5% of adjusted total assets and
total risk-based capital equal to at least 8% of total risk-weighted assets. The
OTS is also authorized to establish individual minimum capital requirements for
a savings association consistent with these capital standards. The OTS has not
established any such individual minimum capital requirements for Dime FSB. There
are potentially severe consequences for failing to meet these regulatory capital
requirements.

     Core capital includes common stockholders' equity (including common stock,
common stock surplus and retained earnings, but excluding any unrealized gains
or losses, net of related taxes, on certain securities available for sale),
non-cumulative perpetual preferred stock and any related surplus and minority
interests in the equity accounts of fully consolidated subsidiaries. Intangible
assets, other than servicing assets valued in accordance with applicable
regulations and purchased credit card relationships ("PCCRS"), generally must be
deducted from core capital. Servicing assets and PCCRS may represent in the
aggregate up to 100% of core capital, although the aggregate amount of
non-mortgage servicing assets and PCCRS may not exceed 25% of core capital.
Servicing assets and PCCRS that are includable in capital are each subject to a
limitation equal to the lesser of 90% of fair value or 100% of the remaining
unamortized book value. In addition, certain deferred tax assets and investments
in and loans to non-includable subsidiaries must be deducted from core capital.

     Tangible capital means core capital less any intangible assets (except for
mortgage servicing assets includable in core capital) and investments in
subsidiaries that are not "includable subsidiaries" (except as permitted by
regulation).

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     For purposes of the risk-based capital requirement, total risk-based
capital means core capital plus supplementary capital, so long as the amount of
supplementary capital that is used to satisfy the requirement does not exceed
the amount of core capital. Supplementary capital includes, among other things,
subordinated debt issued pursuant to OTS regulations, general valuation loan and
lease loss allowances up to a maximum of 1.25% of risk-weighted assets and up to
45% of unrealized gains on certain securities available for sale. Risk-weighted
assets are determined by multiplying certain categories of the savings
association's assets, including off-balance sheet equivalents, by an assigned
risk weight of 0% to 100% based on the credit risk associated with those assets
as specified in OTS regulations. The OTS adopted a rule, effective January 1,
1994, incorporating an interest-rate risk component into its existing risk-based
capital requirement. In March 1995, the OTS extended a waiver of the interest
rate risk capital deduction until it issued a Thrift Bulletin establishing an
appeals process and notified thrift institutions of the effective date. Although
the OTS issued the Thrift Bulletin on August 21, 1995, it also announced that
the automatic interest rate risk capital deduction would not be implemented
until the OTS issued a notice otherwise.

     Pursuant to FDICIA, the OTS adopted prompt corrective action ("PCA")
regulations that established five capital categories for savings associations
("well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized") and require
certain mandatory actions and authorize other discretionary actions to be taken
by the OTS with respect to institutions in the three undercapitalized
categories, with the nature and extent of such actions dependent primarily on
the category in which the institution is placed. The OTS has specified by
regulation the relevant capital level for each category. Under OTS regulations,
an institution is considered well capitalized if its ratio of total risk-based
capital to risk-weighted assets is 10% or more, its ratio of core capital to
risk-weighted assets is 6% or more, its ratio of core capital to adjusted total
assets is 5% or greater, and it is not subject to any order or directive by the
OTS to meet a specific capital level.

     In addition, an institution's primary federal bank regulatory agency is
authorized to downgrade the institution's capital category to the next lower
category upon a determination that the institution is in an unsafe or unsound
condition or is engaged in an unsafe or unsound practice. An unsafe or unsound
practice can include receipt by the institution of a less than satisfactory
rating on its most recent examination with respect to its asset quality,
management, earnings or liquidity.

     For information concerning Dime FSB's regulatory capital status, see Note
15 of Notes to Consolidated Financial Statements in Item 8, "Financial
Statements and Supplementary Data."

     The Federal Deposit Insurance Act (the "FDI Act") generally prohibits a
depository institution from making any capital distribution (including payment
of a dividend) or paying any management fee to its holding company if the
depository institution would be "undercapitalized." "Undercapitalized"
depository institutions are subject to limitations on, among other things, asset
growth, acquisitions, branching, new business lines, acceptance of brokered
deposits and borrowings from the Federal Reserve System and are required to
submit a capital restoration plan. The federal bank regulatory agencies may not
accept a capital plan without determining, among other things, that the plan is
based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. In addition, for a capital restoration plan to
be acceptable, the depository institution's holding company, if any, must
guarantee that the institution will comply with such capital restoration plan.
If the depository institution fails to submit an acceptable plan, it is treated
as if it is "significantly undercapitalized." "Significantly undercapitalized"
depository institutions may be subject to a number of requirements and
restrictions, including orders to sell sufficient voting stock to become
"adequately capitalized," requirements to reduce total assets and cessation of
receipt of deposits from correspondent banks. "Critically undercapitalized"
institutions are subject to the appointment of a receiver or conservator.

  Depositor Preference

     The FDI Act provides that, in the event of the "liquidation or other
resolution" of an insured depository institution, the claims of depositors of
such institution (including claims by the FDIC as subrogee of insured
depositors) and certain claims for administrative expenses of the FDIC, as a
receiver, would be afforded a

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priority over other general unsecured claims against such an institution. If an
insured depository institution fails, insured and uninsured depositors, along
with the FDIC, will be placed ahead of unsecured, non-deposit creditors,
including a holding company for the institution (such as the Holding Company),
in order of priority of payment.

  Loans-to-One-Borrower Limitations and Loans to Insiders

     Savings associations are subject to loans-to-one-borrower limitations under
federal law and OTS regulations. At December 31, 1999, Dime FSB's
loans-to-one-borrower limitation was approximately $216 million.

     Savings associations are also subject to Sections 22(g) and 22(h) of the
Federal Reserve Act. These provisions, among other things, limit a savings
institution's extension of credit to the principal stockholders, directors and
executive officers of the savings institution and its affiliates and to the
related interests of these persons.

  Liquid Assets

     OTS regulations require a savings institution to maintain, for each
calendar quarter, an average daily balance of liquid assets (as defined) equal
to at least 4% of either (i) its liquidity base (the institution's net
withdrawable accounts plus short-term borrowings) at the end of the preceding
calendar quarter or (ii) the average daily balance of its liquidity base during
the preceding calendar quarter. Monetary penalties may be imposed for failure to
meet liquidity ratio requirements.

  Restrictions on Capital Distributions

     OTS regulations limit the ability of savings associations to make capital
distributions. Capital distributions include: (i) cash dividends; (ii) payments
to repurchase, redeem, retire or otherwise acquire an institution's shares or
debt instruments included in total capital and any extension of credit to
finance an affiliate's acquisition of the savings association's shares or
interests; (iii) payments to stockholders of another institution in a cash-out
merger, or payments of cash or other property to the savings association's
owners or affiliates made in connection with a corporate restructuring; (iv)
other distributions charged against capital if the savings association would not
be "well capitalized" following the distribution; and (v) any other transaction
that the OTS determines to entail a payout of capital.

     Under current OTS regulations, which became effective April 1, 1999, a
savings association is required to file an application prior to making a capital
distribution if: (i) it is not eligible for expedited treatment under the OTS
application processing rules; (ii) the total amount of all capital
distributions, including the proposed capital distribution, for the applicable
calendar year would exceed an amount equal to the savings association's net
income for that year to date plus the savings association's retained net income
for the preceding two years; (iii) the savings association would not be at least
adequately capitalized under the PCA regulations of the OTS following the
distribution; or (iv) the capital distribution would violate a prohibition
contained in any statute, regulation or agreement with the OTS (or with the
FDIC) or a condition imposed in an OTS-approved application or notice.

     A savings association that is not required to file an application must file
a notice with the OTS at least 30 days prior to a capital distribution if: (i)
it would not be well capitalized under the PCA regulations of the OTS following
the distribution; (ii) the proposed capital distribution would reduce the amount
of or retire any part of the savings association's common or preferred stock or
retire any part of debt instruments such as notes or debentures included in
capital, other than regular payments required under a debt instrument approved
by the OTS; or (iii) it is a subsidiary of a savings and loan holding company.

     The OTS may disapprove a notice or deny an application if the proposed
capital distribution would: (i) make the association undercapitalized,
significantly undercapitalized, or critically undercapitalized under the PCA
regulations of the OTS; (ii) raise safety or soundness concerns; or (iii)
violate a prohibition

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<PAGE>   11

contained in any statute, regulation or agreement with the OTS (or with the
FDIC), or a condition imposed in an OTS-approved application or notice.

     The Holding Company's ability to pay dividends on its common stock ("Common
Stock") is limited by restrictions imposed by Delaware law. In general,
dividends may be paid out of the Holding Company's surplus, as defined by
Delaware law, or in the absence of such surplus, out of its net profits for the
current and/or immediately preceding fiscal year.

  Transactions with Affiliates

     Under federal law and regulation, transactions between a savings
association and its "affiliates," which term includes its holding company and
other companies controlled by its holding company, are subject to quantitative
and qualitative restrictions. Savings associations are restricted in their
ability to engage in certain types of transactions with their affiliates. These
"covered transactions" include: (i) purchasing or investing in securities issued
by an affiliate; (ii) lending or extending credit to, or guaranteeing credit of,
an affiliate; (iii) purchasing assets from an affiliate; and (iv) accepting
securities issued by an affiliate as collateral for a loan or extension of
credit. Covered transactions are permitted between a savings association and a
single affiliate up to 10% of the capital stock and surplus of the association,
and between a savings association and all of its affiliates up to 20% of the
capital stock and surplus of the institution. The purchase of low-quality assets
by a savings association from an affiliate is not permitted. 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. Notwithstanding the foregoing,
a savings association is not permitted to make a loan or extension of credit to
any affiliate unless the affiliate is engaged only in activities that the
Federal Reserve Board has determined to be permissible for bank holding
companies. Savings associations also are prohibited from purchasing or investing
in securities issued by an affiliate, other than shares of a subsidiary. Covered
transactions between a savings association and an affiliate, and certain other
transactions with or benefiting an affiliate, must be on terms and conditions at
least as favorable to the institution as those prevailing at the time for
comparable transactions with non-affiliated companies. This arms-length
requirement applies to all covered transactions, as well as to: (i) the sale of
securities or other assets to an affiliate; (ii) the payment of money or the
furnishing of services to an affiliate; (iii) any transaction in which an
affiliate acts as agent or broker or receives a fee for its services to the
savings association or to any other person; or (iv) any transaction or series of
transactions with a third party if any affiliate has a financial interest in the
third party or is a participant in the transaction or series of transactions.

  Community Reinvestment Act ("CRA")

     Under the CRA and the implementing OTS regulations, a savings association
has a continuing and affirmative obligation to help meet the credit needs of its
local communities, including low- and moderate-income neighborhoods, consistent
with the safe and sound operation of the institution.

     As part of its CRA activities, Dime FSB originates loans for affordable
housing (which are generally loans to low- or moderate-income borrowers). In
order to generate these loans, Dime FSB's specifically designated staff uses a
variety of outreach initiatives, including participation in seminars and housing
fairs, such as those targeted to first-time home buyers, loan application
materials in a variety of foreign languages and cooperative ventures with
not-for-profit groups. Dime FSB's CRA lending activities also include loans in
low- or moderate-income neighborhoods, community development financing for new
construction and rehabilitation of affordable multifamily housing and targeted
commercial projects. Typically, these project loans are made in partnership with
government subsidy programs.

     The OTS assigns a CRA rating based upon a Lending Test, Investment Test and
Service Test keyed to, respectively, the number of loans, the number of
investments and the level of availability of retail banking services in a
savings association's assessment area. The Lending Test is the primary component
of the assigned composite rating. An "outstanding" rating on the Lending Test
automatically results in at least a "satisfactory" rating on the composite, but
an institution cannot receive a "satisfactory" or better rating on the

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<PAGE>   12

composite if it does not receive at least a "low satisfactory" rating on the
Lending Test. Alternatively, a savings association may elect to be assessed by
complying with a strategic plan approved by the OTS.

     Following each of the five most recent CRA examinations of Dime FSB by the
OTS, the most recent of which covered the period August 1997 through September
1999, Dime FSB received an "outstanding" CRA rating, which is the highest rating
that an institution may receive.

  Savings Association Investment Powers

     Federal savings associations are subject to comprehensive regulation
governing their investments and activities. Among other things, a federal
savings association may invest up to 3% of its assets in service corporations,
an unlimited percentage of its assets in operating subsidiaries (which may only
engage in activities permissible for the association itself) and, under certain
conditions, in finance subsidiaries. Other than investments in service
corporations, operating subsidiaries, finance subsidiaries, stock of government-
sponsored agencies such as FHLMC and FNMA and certain "pass-through investments"
in entities engaging only in activities that a federal savings association may
conduct directly, federal savings associations generally are not permitted to
make equity investments. A service corporation in which a federal savings
association may invest is permitted to engage in activities reasonably related
to the activities of a federal savings association as the OTS may approve on a
case-by-case basis and certain activities pre-approved by the OTS.

     Under federal law, a savings association may not acquire or retain,
directly or through a subsidiary, any corporate debt securities that, when
acquired, were not rated in one of the four highest rating categories by at
least one nationally recognized rating agency, unless such activity is done
through a separately capitalized affiliate (other than a subsidiary or an
insured depository institution).

     Federal law and regulations empower Dime FSB to exercise any authority to
make investments or engage in activities that Dime FSB was authorized to
exercise or engage in under New York law in effect at the time it converted to a
federal mutual charter, whether or not Dime FSB had utilized such authority as a
state-chartered mutual savings bank. These so-called "grandfathered" powers are
in addition to the powers Dime FSB possesses as a federal savings bank. Among
these grandfathered powers is the authority to make "leeway" investments. Under
this authority, Dime FSB, subject to certain limitations, may make equity and
other investments that do not qualify under any other provision of the
grandfathered powers, so long as no one such investment exceeds 1% of Dime FSB's
assets and the total of all such investments does not exceed 5% of its assets.
However, certain specific types of investments are prohibited under this
provision, including the acquisition of common stock in a commercial bank or
life insurance company.

     The exercise of these grandfathered powers, or any other activity, is
subject to the authority of the FDIC to issue regulations or orders it deems
necessary to prevent actions or practices that pose a serious threat to the BIF
or the SAIF. The FDIC has authority, upon making such determination, to prohibit
a savings association from engaging in that activity.

  Acquisition of Control of Savings Associations

     The Home Owners Loan Act ("HOLA") prohibits a savings and loan holding
company, directly or indirectly, from: (i) acquiring control of a savings
association or another savings and loan holding company, without prior OTS
approval; (ii) generally acquiring more than 5% of the voting shares of a
savings and loan holding company or a savings association that is not a
controlled subsidiary; or (iii) acquiring control of an "uninsured institution,"
as defined in the HOLA. No director or officer of a savings and loan holding
company or individual owning, controlling or holding power to vote more than 25%
of the holding company's voting shares may: (i) hold, solicit or exercise
proxies in respect of any voting rights in a mutual savings association; or (ii)
except with the prior approval of the OTS, acquire control of any savings
association that is not a subsidiary of such holding company.

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<PAGE>   13

  Federal Home Loan Bank ("FHLB") System

     Dime FSB is a member of the FHLB system, which consists of 12 regional
FHLBs. The FHLB system provides a central credit facility primarily for member
institutions. Members are required to hold shares of the capital stock of the
regional FHLB in which they are a member in an amount at least equal to the
greater of: (i) 1% of its aggregate outstanding principal amount of its
residential mortgage loans, home purchase contracts and similar obligations at
the beginning of each calendar year; (ii) 0.3% of its total assets; or (iii) 5%
of its FHLB advances or borrowings.

  Federal Reserve System

     Dime FSB is subject to various regulations promulgated by the Federal
Reserve Board, including, but not limited to, Regulation B (Equal Credit
Opportunity Act), Regulation D (Federal Reserve Act), Regulation E (Electronic
Fund Transfers Act), Regulation Z (Truth in Lending Act), Regulation CC
(Expedited Funds Availability Act) and Regulation DD (Truth in Savings Act).

     FHLB system members are authorized to borrow from the Federal Reserve
"discount window," but Federal Reserve Board regulations require institutions to
exhaust all FHLB sources before borrowing from a Federal Reserve Bank.

  Federal Securities Laws

     The Holding Company is subject to the periodic reporting, proxy
solicitation, tender offer, insider trading and other requirements and
restrictions under the Securities Exchange Act of 1934.

  Recent Legislation

     On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley Act of 1999 (the "GLB Act"). The GLB Act significantly
reforms various aspects of the financial services industry.

     The GLB Act contains provisions that permit affiliations among commercial
banks, insurance companies, securities firms and other financial service
providers by revising and expanding the Bank Holding Company Act of 1956 (the
"BHC Act") to permit a holding company to engage in a full range of financial
activities as a "financial holding company." "Financial activities" is broadly
defined to include not only banking, insurance and securities activities, but
also merchant banking and additional activities that the Federal Reserve Board,
in consultation with the Secretary of the Treasury, determines to be financial
in nature, incidental to such financial activities or complementary activities
that do not pose a substantial risk to the safety and soundness of depository
institutions or the financial system generally.

     The GLB Act provides that no company may acquire control of an insured
savings association after May 4, 1999, unless that company engages, and
continues to engage, only in the financial activities permissible for either a
multiple savings and loan holding company or a financial holding company.
However, any company that was a unitary savings and loan holding company on May
4, 1999 (or becomes a unitary savings and loan holding company pursuant to an
application pending on that date) may continue to operate under present law as
long as the company continues to control only one savings institution, excluding
supervisory acquisitions, and each controlled institution meets the qualified
thrift lender test. The GLB Act further requires that a grandfathered unitary
savings and loan holding company must continue to control at least one savings
association, or a successor institution, that it controlled on May 4, 1999. The
Holding Company is a grandfathered unitary savings and loan holding company.

     The GLB Act also permits national banks to engage in expanded activities
through the formation of financial subsidiaries, which may engage in any
activity authorized for national banks directly or any financial activity
permitted under the new sections of the BHC Act or permitted by regulation,
except for insurance underwriting, real estate investment or development, or
merchant banking.

     The GLB Act also contains a number of other provisions that will affect the
operations of all financial institutions, such as provisions relating to the
financial privacy of consumers and provisions authorizing federal

                                       11
<PAGE>   14

banking regulators to adopt rules that will limit the ability of banks and other
financial entities to disclose non-public information about consumers to
non-affiliated entities. These limitations are expected to require more
disclosure to consumers and, in some circumstances, to require consent by the
consumer before information is allowed to be provided to a third party.

     The GLB Act also makes significant changes to the FHLB system, including
broadening the purposes for which FHLB advances may be used, eliminating the
requirement that federal savings associations be FHLB members and changing the
method of calculating the Resolution Funding Corporation (the "RFC") obligations
payable by the FHLBs. Previously, the aggregate amount of the annual RFC
obligation paid by all FHLBs was $300 million. The GLB Act imposes an annual
obligation equal to 20% of the net earnings of the FHLBs.

     The Company is currently unable to predict the effect, if any, that the GLB
Act will have on its financial condition and results of operations.

  Legislative and Regulatory Proposals

     The operations of a savings association and a savings and loan holding
company are affected by the economic, fiscal and monetary policies of the United
States and its agencies and regulatory authorities, particularly the Federal
Reserve Board. The fiscal and economic policies of various governmental entities
and the monetary policies of the Federal Reserve Board have a direct effect on
the Company's business operations and the availability, growth and distribution
of the Company's investments and deposits.

     In addition, proposals to change the laws and regulations governing the
operations and taxation of savings associations and other financial institutions
and companies that control such institutions are frequently raised in Congress
and before the OTS and other bank regulatory authorities. The likelihood of any
major changes in the future and the effect such changes might have on the
Company are impossible to determine.

TAXATION

     The Holding Company files consolidated federal income tax returns with its
eligible 80%-or-greater-owned subsidiaries on a calendar year basis. The maximum
corporate federal income tax rate applicable to the Holding Company and its
subsidiaries currently is 35%, subject to the 20% alternative minimum tax
applicable to corporations, as discussed below.

     The 20% alternative minimum tax applies generally to taxable income, with
certain adjustments, plus items of tax preference ("AMTI") and is imposed to the
extent that the alternative minimum tax exceeds the regular income tax for the
taxable year. The amount of AMTI that can be offset by net operating loss
("NOL") carryforwards is limited to 90% of AMTI. Therefore, for taxable years in
which available NOL carryforwards completely offset taxable income, the Holding
Company (and its subsidiaries) would be subject to an effective minimum federal
tax rate of 2% of AMTI (as determined before offset by NOL carryforwards). Any
alternative minimum tax paid by the Company would be available as a carryforward
tax credit, which, subject to certain limitations, could be used to reduce its
otherwise determined regular federal tax liability.

     For federal income tax purposes, the deduction available to Dime FSB for
bad debts is equal to its actual loss experience. The use of reserves for bad
debts is no longer available. Generally, federal bad debt reserve balances in
existence on December 31, 1987 will be subject to recapture upon distribution of
such reserves to shareholders. For New York State and New York City tax
purposes, thrift institutions continue to use the reserve method of tax
accounting for bad debts and determine a deduction for bad debts in a manner
similar to prior law, including an alternative deduction equal to 32% of the
thrift's taxable income as specially determined for this law.

     New York State and New York City each imposes an annual franchise tax on
banking corporations, based on net income allocable to New York State or New
York City, respectively, at a rate of 9%. If, however, the application of an
alternative minimum tax (based on taxable assets allocated to New York,
"alternative" net income, or a flat minimum fee) results in a greater tax, an
alternative minimum tax will be imposed. In

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<PAGE>   15

addition, New York State imposes a tax surcharge equal to 17% of the New York
State franchise tax allocable to business activities carried on in the
Metropolitan Commuter Transportation District. NOLs cannot be carried back or
forward for New York State or New York City tax purposes. These taxes apply to
the Holding Company, Dime FSB and certain of Dime FSB's subsidiaries. Certain
subsidiaries of a banking corporation may be subject to a general business
corporation tax in lieu of the tax on banking corporations. The rules regarding
the determination of income allocated to New York and alternative minimum taxes
differ for these subsidiaries.

     The Holding Company and certain of its subsidiaries are also subject to
state and local taxation in states other than New York. Most states provide a
statutory apportionment methodology that determines the allocable income subject
to tax in those states. In certain cases, the income and activities of the
affiliated group are used to determine the tax liability of the entity doing
business in that state. Further, the ability to utilize NOL carryovers varies by
state. New Jersey imposes a Savings Institution Tax based on net income
attributed to New Jersey on the basis of separate accounting at a rate of 3% and
NOLs cannot be carried back or forward. In addition, the Holding Company is
subject to an annual franchise tax imposed by Delaware, its state of
incorporation. This franchise tax is the higher of an amount determined by
reference to authorized shares or assumed capital (asset size), but cannot
exceed $150,000.

     For additional information regarding income taxes of the Company, see Note
20 of Notes to Consolidated Financial Statements in Item 8, "Financial
Statements and Supplementary Data."

ITEM 2.  PROPERTIES

     The Company leases its principal executive offices in New York City and its
administrative headquarters located in Uniondale, New York. The Company also
leases the executive offices for its mortgage banking operations in Tampa,
Florida and owns both its residential real estate loan production headquarters
located in Santa Rosa, California and its residential real estate and consumer
loan servicing operations center in Albion, New York.

     At December 31, 1999, Dime FSB operated 127 full-service branches in the
greater New York City metropolitan area, of which 57 were owned and 70 were
leased. At that date, the Company leased approximately 260 residential real
estate loan production facilities in 41 states.

     For further information regarding the Company's properties and lease
obligations, see Notes 6 and 23 of Notes to Consolidated Financial Statements in
Item 8, "Financial Statements and Supplementary Data."

ITEM 3.  LEGAL PROCEEDINGS

     On January 13, 1995, Anchor Savings Bank FSB ("Anchor FSB") filed suit in
the United States Court of Federal Claims against the United States for breach
of contract and taking of property without compensation in contravention of the
Fifth Amendment to the United States Constitution. Anchor FSB's lawsuit was
assumed by Dime FSB upon consummation of the merger of Anchor Bancorp, Inc.
("Anchor Bancorp"), the holding company for Anchor FSB, and Anchor FSB with and
into the Holding Company and Dime FSB, respectively, on January 13, 1995 (the
"Anchor Merger"). The action arose because the passage of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") and the
regulations adopted by the OTS pursuant to FIRREA deprived Anchor FSB of the
ability to include supervisory goodwill and certain other assets for purposes of
computing its regulatory capital as the Federal Savings and Loan Insurance
Corporation ("FSLIC") had agreed. The direct effect was to cause Anchor FSB to
go from an institution that substantially exceeded its regulatory capital
requirements to one that was critically undercapitalized upon the effectiveness
of the FIRREA-mandated capital requirements.

     From 1982 to 1985, Anchor FSB had acquired eight FSLIC-insured institutions
that were in danger of failing and causing a loss to the FSLIC. Four
institutions were acquired with some financial assistance from the FSLIC and
four were unassisted "supervisory" cases. In acquiring the institutions, Anchor
FSB assumed liabilities determined to exceed the assets it acquired by over $650
million at the dates of the respective acquisitions. The difference between the
fair values of the assets acquired and the liabilities assumed in the

                                       13
<PAGE>   16

transactions were recorded on Anchor FSB's books as goodwill. At the time of
these acquisitions, the FSLIC had agreed that this supervisory goodwill was to
be amortized over periods of up to 40 years. Without that agreement, Anchor FSB
would not have made the acquisitions. When FIRREA was enacted, Anchor FSB still
had over $500 million of regulatory capital as a result of its supervisory
acquisitions, which included regulatory capital from supervisory goodwill and
other capital enhancements used by the FSLIC in connection with the transactions
affected by FIRREA. At the same time, the supervisory goodwill had in excess of
20 years remaining to be amortized under the agreements with the FSLIC. In
addition, until the formation of Anchor Bancorp in 1991, the FIRREA-mandated
capital requirements impacted $157 million associated with preferred stock
issued to the FSLIC as a result of one of the acquisitions. FIRREA further
required the remaining supervisory goodwill to be eliminated by December 31,
1994 for regulatory capital purposes. The elimination of the supervisory
goodwill resulted in severe limitations on Anchor FSB's activities and required
the disposition of valuable assets under liquidation-like circumstances, as a
result of which Anchor FSB was severely damaged. The complaint asks that the
Government make Anchor FSB whole for the effects of the loss, which are
estimated to exceed substantially the amount of its capital impacted by FIRREA.

     There are approximately 120 cases involving similar issues still pending in
the United States Court of Federal Claims, which has entered summary judgment
for the plaintiffs in a small number of the cases as to liability, but not
damages. The first three of those cases, referred to as the Winstar cases, were
appealed to the United States Supreme Court, which, on July 1, 1996, affirmed
the decision that the Government was liable for breach of contract in those
cases.

     All of the Winstar-related cases, including Dime FSB's lawsuit were
assigned to the Chief Judge of the Court of Federal Claims who issued an Omnibus
Case Management Order ("OCMO") that controls the proceedings in all these cases.
The OCMO imposes procedures and schedules different from most cases in the Court
of Federal Claims. Under the OCMO, Dime FSB, in early 1997, moved for partial
summary judgment as to the existence of a contract and the inconsistency of the
Government's actions with that contract in each of the related transactions. The
Government has disputed the existence of a contract in each case, cross-moved
for summary judgment and submitted a filing acknowledging that it is not aware
of any affirmative defenses. Initial briefing on the Dime FSB motions was
completed on August 1, 1997. In August 1997, the Court held a hearing on summary
judgment motions in four other cases. As part of that hearing, the Court heard
argument on eleven issues that the plaintiffs contend are common to many of the
pending cases, including Dime FSB's case. The Court issued its order on December
22, 1997, ruling in favor of the plaintiffs on all eleven "common" issues. The
Court's order directed the Government to submit a "show cause" filing by
February 20, 1998 asserting why judgment for the plaintiff should not be entered
on each of the common issues with respect to each pending summary judgment
motion. The Government then submitted a filing in response to the "show cause"
order, but asserted that it might need further discovery as to certain issues.
At a status conference on March 11, 1998, the Court directed each of the
plaintiffs to submit a proposed form of order for entry of judgment as to
liability on the Winstar contract issues and an accompanying brief by March 31,
1998 and directed the Government to respond by April 30, 1998 with a filing
asserting any basis for not entering the order proposed by the plaintiff. On
March 31, 1998, Dime FSB, as directed by the Court, submitted a proposed order
imposing liability on the Government as to each of Dime FSB's claims. On April
30, 1998, the Government served its opposition to the entry of the order. Final
submissions were made on May 15, 1998 by Dime FSB and May 22, 1998 by the
Government. In September 1999, the Government filed supplemental papers in
support of its pending summary judgment motion. Dime FSB responded to such
filings in early November 1999, at which time it again requested entry of
summary judgment on liability in its favor. No date has been set for argument on
Dime FSB's request to enter judgment. It is not possible to predict whether the
Court will grant any of Dime FSB's motions for partial summary judgment or, if
so, when it will schedule a trial on damages and any remaining liability issues.
As evidenced by their discussion, this case and all similar cases have been
subject to significant delays.

     Commencing in April 1998, the oldest 30 of the pending cases (after
excluding certain specific cases) that elected to proceed were allowed to
commence full discovery as to liability and damages in their cases. The second
30 cases commenced discovery in 1999. This pattern will continue for all
remaining cases. Cases will not be assigned to trial judges until after the fact
discovery is completed. Dime FSB is among the first 30

                                       14
<PAGE>   17

plaintiffs and commenced full case-specific discovery on April 1, 1998.
Case-specific fact discovery in Dime FSB's case ended on July 31, 1999, and
expert discovery will continue until the spring of 2000. On October 29, 1999,
Dime FSB filed its experts reports relating to its damage claims with the
Government. The Government's expert reports were filed on March 16, 2000.

     There have been four court decisions determining damages in the
Winstar-related cases. A decision in the first of these cases was handed down on
April 9, 1999, and it ordered the Government to pay $909 million in restitution
and non-overlapping reliance damages to the plaintiff, Glendale Federal Bank,
FSB ("Glendale Federal"). A second decision was issued on April 16, 1999 in the
California Federal Bank ("California Federal") case, and the Government was
ordered to pay damages of $33 million on a cost of replacement capital theory. A
third decision was handed down in the La Salle Talman case on September 29,
1999. The Government, in that case, was ordered to pay approximately $5 million
under the reliance theory. In the Landmark Land Company, Inc. decision, the
Government, on March 5, 2000, was ordered to pay approximately $39 million in
restitution damages to the plaintiff and the FDIC. The four courts did not enter
judgment for lost profits (otherwise known as expectancy damages). The
determinations of damages by the Court of Federal Claims in the Glendale
Federal, California Federal and La Salle Talman cases have been appealed. It is
impossible, therefore, to predict the measure of damages that will be upheld in
cases in which liability is found.

     During the summer of 1998, there were settlements in a total of four of the
Winstar-related cases in which the Government agreed to make payments to the
plaintiffs. In addition, there also was a settlement in a pending, small case in
September 1999. Dime FSB believes that the circumstances of the five settled
cases were materially different from Dime FSB's case, and Dime FSB does not
believe that these settlements will affect the final outcome of its case. The
Company is unaware of any other pending settlements in this litigation.

     The Company continues to believe that its claim is meritorious, that it is
one of the more significant cases before the Court, and that it is entitled to
damages, which, as noted, are estimated to exceed substantially its regulatory
capital impacted by FIRREA. The Company also believes that it is entitled to
damages under each of the primary damage theories considered by the courts in
the Glendale Federal, California Federal and La Salle Talman cases so far
decided.

     On March 5, 2000, North Fork announced its intention to make a hostile bid
to acquire all of the outstanding Common Stock and to terminate the Merger. In
connection with that hostile bid, Fleet Boston Corporation ("Fleet Boston")
announced that it had agreed, among other things, to invest an aggregate of $250
million in exchange for preferred stock of North Fork and rights to purchase
North Fork's common stock.

     On March 6, 2000, North Fork filed a lawsuit in the Delaware Court of
Chancery against the Holding Company, members of the Holding Company's Board of
Directors (the "Board") and Hudson, challenging a number of the provisions in
the Merger Agreement and alleging, among other things, breaches of fiduciary
duties by the Board. The complaint seeks, among other things, an order
invalidating certain provisions of the Merger Agreement, including: (i) the
Holding Company's agreement not to engage in any discussions with, or provide
confidential information to, any person making an offer to merge with or acquire
the Holding Company, until the completion of the Merger; (ii) the Board's
agreement to recommend that the Holding Company's stockholders ("Dime
Stockholders") adopt the Merger Agreement; and (iii) the Holding Company's
agreement not to terminate the Merger Agreement prior to June 30, 2000 if Dime
Stockholders fail to adopt its terms.

     On March 9, 2000, North Fork amended its complaint to include allegations
of breach of fiduciary duties by the Board for compelling a premature
stockholder vote on the Merger Agreement and of false and misleading statements
in the Holding Company's proxy statement/prospectus supplement dated March 7,
2000. After the Holding Company postponed its special stockholders meeting on
the Merger Agreement from March 15, 2000 to March 24, 2000, North Fork withdrew
its additional motion for a temporary restraining order to enjoin the March 15th
meeting, but reserved its right to proceed in the future.

                                       15
<PAGE>   18

     On March 17, 2000, North Fork moved for an expedited hearing and partial
summary judgment with respect to its challenges to the provisions of the Merger
Agreement. The Holding Company intends to vigorously oppose these motions.

     The Holding Company is the subject of at least 14 putative class action
lawsuits filed on or after March 6, 2000 by Dime Stockholders: Brecher v. Toal,
et. al., Miller v. Toal, et. al., Weiss v. Toal, et. al., Susser v. Toal, et.
al., Lifshitz v. Toal, et. al., Pill v. Toal, et. al., Milite v. Toal, et. al.,
Steiner v. Toal, et. al., Shiry v. Toal, et. al., Lewis v. Toal, et. al., and
Coleman v. Toal, et. al., each filed in the Delaware Court of Chancery on March
6, 2000; Great Neck Capital Appreciation Partnership v. Dime Bancorp, Inc.,
filed in the Delaware Court of Chancery on March 7, 2000; Silverberg v. Dime
Bancorp, Inc., filed in the Supreme Court of the State of New York, County of
Queens on March 9, 2000; and Graifman v. Koons, et. al., filed in the Supreme
Court of the State of New York, County of New York, on March 15, 2000. Each of
these purported class action lawsuits alleges, among other things, breaches of
fiduciary duties by the Board and challenges the stock option granted by the
Holding Company to Hudson in connection with the Merger Agreement, purported
benefits to the Holding Company's directors and officers that will result from
the Merger, and the rejection by the Board of North Fork's exchange offer
regarding the Common Stock (the "Exchange Offer"), as further described in Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Recent Developments."

     On March 10, 2000, the Dime Stockholder plaintiffs in some of the putative
class action lawsuits filed a motion for partial summary judgment seeking a
determination invalidating the same provisions of the Merger Agreement that were
the subject of North Fork's complaint. The Holding Company intends to vigorously
oppose these motions.

     On March 10, 2000, the Holding Company filed suit in the Supreme Court of
the State of New York, County of New York, against North Fork and Fleet Boston.
The complaint alleges violations of New York's antitrust laws, including a
conspiracy between North Fork and Fleet Boston to: (i) diminish competition in a
variety of banking markets; (ii) diminish competition for the purchase of banks
and thrifts in some markets; and (iii) eliminate a stronger competitor (i.e.,
the combined institution resulting from the Merger). In addition, the complaint
alleges that Fleet Boston's divestiture of branches from the Fleet Financial-
BankBoston Corporation merger to Sovereign Bancorp, Inc. ("Sovereign") is part
of the conspiracy, as Sovereign is not capable of competing effectively in
markets with Fleet Boston and Fleet Boston may use monopoly profits gained in
those markets to fund the Exchange Offer. The suit asks the court to: (i) enjoin
North Fork and Fleet Boston from acting in concert to acquire the Holding
Company or otherwise interfere with the Merger; (ii) enjoin the proposed branch
divestiture from Fleet Boston to Sovereign and require divestiture to a banking
organization with a reasonable opportunity to improve competition in the markets
served; and (iii) declare violations of the New York antitrust laws.

     On March 13, 2000, North Fork filed a motion in the Delaware Court of
Chancery to enjoin prosecution of the action filed by the Holding Company in New
York County, alleging that such action must be brought as counterclaims in North
Fork's lawsuit in the Delaware Court of Chancery. On March 17, 2000, the Holding
Company filed a response opposing this motion. On March 20, 2000, the Delaware
Court of Chancery refused to enjoin the Holding Company from prosecuting its
antitrust claims in the New York courts. The Holding Company intends to proceed
vigorously with this prosecution.

     On March 21, 2000, the Holding Company filed suit in the United States
District Court for the Eastern District of New York against North Fork and
members of North Fork's board of directors seeking preliminary and permanent
injunctive relief in connection with alleged misrepresentations contained in
North Fork's proxy statement, dated March 13, 2000, soliciting proxies against
the Merger, in violation of the Securities Exchange Act of 1934.

     The Holding Company believes that its various claims against North Fork and
Fleet Boston are meritorious and that the various claims made against the
Holding Company and the Board are without merit. However, it is not possible to
predict the outcome of these claims at this time. For a discussion of the Merger
and recent developments related thereto, see Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Recent
Developments."

                                       16
<PAGE>   19

     Certain claims, suits, complaints and investigations involving the Company,
arising in the ordinary course of business, have been filed or are pending. The
Company is of the opinion, after discussion with legal counsel representing the
Company in these proceedings, that the aggregate liability or loss, if any,
arising from the ultimate disposition of these matters would not have a material
adverse effect on the Company's consolidated financial position or results of
operations.

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

     No matter was submitted to the Holding Company's stockholders during the
quarter ended December 31, 1999.

                                    PART II

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

     The Common Stock is traded on the New York Stock Exchange ("NYSE") under
the symbol "DME." On February 29, 2000, there were approximately 19,277 holders
of record of the Common Stock.

     The following table sets forth, for the quarters indicated, the high and
low sales prices of the Common Stock based on the NYSE Composite Tape and cash
dividends declared per share of Common Stock.

<TABLE>
<CAPTION>
                                                                 SALES PRICE
                                                              -----------------          DIVIDENDS
                                                              HIGH          LOW          DECLARED
                                                              ----          ---          ---------
<S>                                                           <C>           <C>          <C>
1999:
  Fourth quarter............................................  $19 11/16     $14 3/4        $0.06
  Third quarter.............................................   21 13/16      16 1/4         0.06
  Second quarter............................................   25 1/8        19 13/16       0.06
  First quarter.............................................   27 3/16       22             0.05

1998:
  Fourth quarter............................................  $28           $17 1/8        $0.05
  Third quarter.............................................   33 1/16       18 1/4         0.05
  Second quarter............................................   32 1/2        27 5/8         0.05
  First quarter.............................................   31 1/4        23             0.04
</TABLE>

     The Board periodically considers the payment of dividends on the Common
Stock, taking into account the Company's financial condition and level of net
income, its future prospects, economic conditions, industry practices and other
factors, including the dividend restrictions described in "Regulation and
Supervision -- Restrictions on Capital Distributions" under Item 1, "Business."

                                       17
<PAGE>   20

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                      AT OR FOR THE YEAR ENDED DECEMBER 31,
                                       -------------------------------------------------------------------
                                          1999          1998          1997          1996          1995
                                       -----------   -----------   -----------   -----------   -----------
                                                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                    <C>           <C>           <C>           <C>           <C>
EARNINGS SUMMARY
Net interest income..................  $   578,485   $   527,233   $   483,062   $   461,295   $   409,626
Provision for loan losses............       29,500        32,000        49,000        41,000        39,650
Non-interest income..................      568,243       525,030       145,291        85,978        74,712
Non-interest expense:
  General and administrative
    expense..........................      589,470       561,863       336,962       301,690       297,949
  Amortization of mortgage servicing
    assets...........................      122,786        92,291        29,751        19,382        20,652
  Amortization of goodwill...........       18,520        11,487         4,501         1,177           844
  SAIF recapitalization
    assessment.......................           --            --            --        26,280            --
  Restructuring and
    related expense..................           --            --         9,931         3,504        15,331
                                       -----------   -----------   -----------   -----------   -----------
         Total non-interest
           expense...................      730,776       665,641       381,145       352,033       334,776
                                       -----------   -----------   -----------   -----------   -----------
Income before income tax expense and
  extraordinary items................      386,452       354,622       198,208       154,240       109,912
Income tax expense...................      142,512       113,479        75,034        49,984        47,727
                                       -----------   -----------   -----------   -----------   -----------
Income before extraordinary items....      243,940       241,143       123,174       104,256        62,185
Extraordinary items -- losses on
  early extinguishment of debt, net
  of tax benefits....................       (4,127)       (4,057)       (1,460)           --            --
                                       -----------   -----------   -----------   -----------   -----------
Net income...........................  $   239,813   $   237,086   $   121,714   $   104,256   $    62,185
                                       ===========   ===========   ===========   ===========   ===========
PER COMMON SHARE
Basic earnings:
  Income before extraordinary
    items............................  $      2.19   $      2.13   $      1.15   $      1.00   $      0.63
  Net income.........................         2.15          2.09          1.14          1.00          0.63
Diluted earnings:
  Income before extraordinary
    items............................         2.17          2.09          1.13          0.96          0.57
  Net income.........................         2.13          2.06          1.12          0.96          0.57
Cash dividends declared..............         0.23          0.19          0.12            --            --
Dividend payout ratio................        10.70%         9.09%        10.53%           --%           --%
Book value at December 31,...........  $     13.67   $     12.42   $     11.30   $      9.76   $     10.25

PERFORMANCE RATIOS
Return on average assets.............         1.09%         1.11%         0.60%         0.52%         0.30%
Return on average stockholders'
  equity.............................        16.46         17.84         11.04         10.36          6.56
Interest rate spread.................         2.97          2.68          2.42          2.29          1.98
Net interest margin..................         2.91          2.68          2.51          2.40          2.07
Non-interest income to total
  revenues...........................        49.55         49.90         23.12         15.71         15.43
Efficiency ratio.....................        51.40         54.59         51.98         51.83         57.11
</TABLE>

                                       18
<PAGE>   21

<TABLE>
<CAPTION>
                                                      AT OR FOR THE YEAR ENDED DECEMBER 31,
                                       -------------------------------------------------------------------
                                          1999          1998          1997          1996          1995
                                       -----------   -----------   -----------   -----------   -----------
                                                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                    <C>           <C>           <C>           <C>           <C>
BALANCE SHEET SUMMARY
Total assets.........................  $23,921,325   $22,320,850   $21,848,000   $18,870,108   $20,326,620
Securities available for sale........    3,849,676     3,329,444     4,992,304     2,589,572     4,070,865
Securities held to maturity..........           --            --            --     4,363,971     5,085,736
Loans held for sale..................    1,733,667     3,884,886     1,841,862       115,325       139,370
Loans receivable.....................   15,207,054    12,748,068    12,984,507    10,738,057     9,830,313
Allowance for loan losses............      140,296       105,081       104,718       106,495       128,295
Deposits.............................   14,261,449    13,651,460    13,847,275    12,856,739    12,572,203
Stockholders' equity.................    1,516,105     1,385,665     1,314,858     1,022,337       976,530

ASSET QUALITY
Non-performing assets................  $    86,053   $    83,343   $   146,749   $   244,845   $   315,800
Non-performing assets to total
  assets.............................         0.36%         0.37%         0.67%         1.30%         1.55%
Non-accrual loans to loans
  receivable.........................         0.46          0.43          0.92          1.78          2.60
Allowance for loan losses to loans
  receivable.........................         0.92          0.82          0.81          0.99          1.31
Allowance for loan losses to
  non-accrual loans..................       202.27        190.67         88.01         55.58         50.29
CAPITAL RATIOS
Stockholders' equity to total
  assets.............................         6.34%         6.21%         6.02%         5.42%         4.80%
Average stockholders' equity to
  average total assets...............         6.63          6.21          5.46          5.05          4.62
Dime FSB:
  Tangible and core..................         5.90          5.82          5.64          6.06          5.16
  Tier 1 risk-based..................         8.80          9.58         10.29         11.96         10.76
  Total risk-based...................        10.33         10.37         11.17         13.08         12.01
OTHER DATA
Loans serviced for others(1).........  $37,110,485   $27,009,693   $21,986,111   $11,036,624   $ 9,514,560
Common shares outstanding (in
  thousands).........................      110,895       111,570       116,358       104,744        99,706
</TABLE>

---------------
(1) Excludes loans being subserviced by the Company.

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

RECENT ACQUISITION ACTIVITY

     The following is a discussion of acquisitions consummated by the Company
during 1999. Each of these acquisitions was accounted for as a purchase.
Accordingly, the results of these acquisitions are reflected in the Company's
financial statements for the periods subsequent to their respective acquisition
dates.

     On October 18, 1999, the Company acquired KeyBank's Long Island banking
franchise, which included 28 branches. In connection with the KeyBank Branch
Acquisition, the Company acquired assets of $1.1 billion, including cash of
$614.4 million and loans receivable of $501.9 million, and assumed liabilities
of $1.3 billion, substantially all of which were deposits.

                                       19
<PAGE>   22

     On August 1, 1999, the Company acquired Citibank's indirect automobile
finance business for $906.7 million in cash. In connection with the Citibank
Auto Business Acquisition, the Company acquired assets of $953.0 million,
consisting substantially of loans receivable, and assumed deposits of $51.1
million.

     On May 21, 1999, Lakeview was acquired by the Company. Lakeview was the
holding company for Lakeview Savings Bank, which operated 11 branches in
northern New Jersey. At the date of the Lakeview Acquisition, Lakeview had
consolidated assets of $560.6 million, including loans receivable of $286.9
million, and consolidated liabilities of $515.9 million, including deposits of
$461.9 million. Under the terms of the related agreement, holders of Lakeview's
common stock received either 0.9 of a share of Common Stock or $24.26 in cash
for each outstanding share of Lakeview common stock. In connection therewith,
the Holding Company issued 2,852,321 shares of Common Stock from treasury at an
assigned value of $69.2 million and paid a total of $41.4 million in cash.

     On February 16, 1999, the Company acquired certain assets, which were not
material, and the leases on all of the 15 residential real estate loan
production offices of T&N Mortgage, Inc., headquartered in Monroe, Louisiana for
$5.1 million in cash.

     Total goodwill arising from the acquisitions consummated during 1999
amounted to $324.7 million. This goodwill is being amortized over periods
ranging from 10 to 18 years.

RECENT DEVELOPMENTS

     On September 15, 1999, the Holding Company entered into the Merger
Agreement with Hudson, the holding company for Hudson United Bank, a New Jersey
state-chartered commercial bank. At December 31, 1999, Hudson, on a consolidated
basis, had assets of $9.7 billion, deposits of $6.5 billion and stockholders'
equity of $519.2 million. The Merger Agreement, among other things, provides
that: (i) Hudson is to merge with and into the Holding Company, with the Holding
Company as the surviving legal entity, in a transaction accounted for as a
pooling of interests; (ii) the combined company is to remain a Delaware
corporation but is to change its name to Dime United Bancorp, Inc. ("Dime
United"); (iii) each issued share of Common Stock is to be combined into 0.60255
of a share of Dime United common stock; and (iv) each outstanding share of
Hudson common stock is to be converted into one share of Dime United common
stock. In connection with the Merger, Dime FSB is to merge with and into Hudson
United Bank, with Hudson United Bank as the surviving legal entity and the
combined institution to remain as a New Jersey state-chartered commercial bank
under the name "DimeBank." The Merger remains subject to the approval of various
regulatory agencies and the respective stockholders of the Holding Company and
Hudson. Either the Holding Company or Hudson may terminate the Merger Agreement
if the Merger is not consummated by June 30, 2000.

     On February 10, 2000, the Holding Company and Hudson mailed a joint proxy
statement/prospectus, dated February 9, 2000, to their respective stockholders.
This document notified stockholders that each of the Holding Company and Hudson
intended to hold special stockholders meetings on March 15, 2000 to consider
approval of the Merger.

     On March 5, 2000, North Fork announced its intention to make a hostile bid
to acquire all of the outstanding shares of Common Stock and to terminate the
Merger. On March 6, 2000, North Fork filed preliminary proxy materials with the
Securities and Exchange Commission (the "Commission") with which it proposed to
solicit proxies to vote against the Merger.

     On March 8, 2000, the Holding Company mailed to its stockholders a
supplement to the February 9, 2000 joint proxy statement/prospectus stating,
among other things, its recommendation that Dime Stockholders not tender shares
of Common Stock in North Fork's offer, if and when it commenced. On March 9,
2000, the Holding Company and Hudson announced that they were both voluntarily
postponing their respective special stockholders meetings until March 24, 2000
in order to allow information to be disseminated.

     On March 13, 2000, North Fork mailed definitive proxy solicitation
materials to Dime Stockholders in order to solicit proxies against the Merger.
On March 15, 2000, North Fork formally commenced the Exchange Offer. Pursuant to
the terms of the Exchange Offer, Dime Stockholders would receive 0.9302 shares
                                       20
<PAGE>   23

of North Fork's common stock and $2.00 in cash for each share of Common Stock
tendered to North Fork. The Exchange Offer is conditioned on the satisfaction of
a number of factors, including, but not limited to: (i) termination of the
Merger Agreement; (ii) the Holding Company entering into a merger agreement with
North Fork; (iii) receipt of required regulatory approvals; and (iv) the rights
under the Stockholder Protection Rights Plan, dated as of October 20, 1995,
between the Holding Company and The First National Bank of Boston, as rights
agent, not being applicable. On March 20, 2000, the Board formally recommended
that Dime Stockholders reject the Exchange Offer by not tendering Common Stock
to North Fork. On that date, the Holding Company and Hudson postponed their
respective special stockholders meetings to May 17, 2000 and May 18, 2000,
respectively. On March 23, 2000, North Fork extended the expiration date of the
Exchange Offer from April 14, 2000 to midnight on May 31, 2000.

     For a discussion of various litigation by and against the Company in
connection with the Exchange Offer and the Merger, see Item 3, "Legal
Proceedings."

RESULTS OF OPERATIONS

  General

     The Company reported net income for 1999 of $239.8 million, as compared
with $237.1 million for 1998 and $121.7 million for 1997. Diluted earnings per
common share increased to $2.13 for 1999 from $2.06 for 1998 and $1.12 for 1997.
The Company's returns on average stockholders' equity and average assets for
1999 were 16.46% and 1.09%, respectively, as compared with 17.84% and 1.11%,
respectively, for 1998 and 11.04% and 0.60%, respectively, for 1997.

     Net income in 1999, as compared with 1998, benefited from growth in
revenues (net interest income plus non-interest income) of $94.5 million, or
9.0%, principally due to higher net interest income and fee income, and a $2.5
million reduction in the provision for loan losses. The level of net income in
1999, as compared with 1998, was unfavorably affected by a $65.1 million
increase in non-interest expense and an increase in the Company's effective
income tax rate from 32.0% for 1998, which reflected certain tax planning
strategies, to 36.9% for 1999. The overall improvement in net income reflects
the benefits of acquisitions completed during 1999. Net income in each of 1999
and 1998 was reduced by $4.1 million as a result of after-tax extraordinary
losses on the early extinguishment of debt.

     The $115.4 million, or 94.8%, increase in net income in 1998, as compared
with 1997, was fueled by revenue growth of $423.9 million, or 67.5%. The growth
in net income also reflected a $17.0 million decrease in the provision for loan
losses and a reduction in the effective income tax rate of approximately 590
basis points. The impact of these factors was partially offset by an increase of
$284.5 million in non-interest expense. The significant increases in
non-interest income and non-interest expense were principally due to the
Company's expansion of its mortgage banking operations, largely as a result of
the NAMC Acquisition.

     Operating earnings, which represent net income adjusted for the effects of
certain non-recurring or unusual items, amounted to $243.9 million for 1999, up
12.4% from $217.1 million for 1998, which had increased 38.2% from $157.1
million for 1997. Diluted operating earnings per common share increased to $2.17
for 1999 from $1.89 for 1998 and $1.45 for 1997. On an operating earnings basis,
the returns on average stockholders' equity and average assets rose to 16.74%
and 1.11%, respectively, for 1999 from 16.34% and 1.02%, respectively, for 1998
and 14.25% and 0.78%, respectively, for 1997.

                                       21
<PAGE>   24

     The following table presents reconcilements of operating earnings to
reported net income for the year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Operating earnings.................................  $243,940    $217,081    $157,083
Items not included in operating earnings:
  Net losses related to balance sheet
     restructurings................................        --        (635)    (25,247)
  Net charges and adjustments related to
     acquisitions..................................        --          --     (21,431)
  Gain on sale of branch...........................        --       9,512          --
  Other, net.......................................        --       1,172      (8,014)
  Income tax effect on above items.................        --      (3,717)     20,783
  Adjustment to conform internal tax expense to
     corporate tax expense.........................        --      17,730          --
  Extraordinary losses on early extinguishment of
     debt, net of tax benefits.....................    (4,127)     (4,057)     (1,460)
                                                     --------    --------    --------
     Net adjustments after tax.....................    (4,127)     20,005     (35,369)
                                                     --------    --------    --------
Reported net income................................  $239,813    $237,086    $121,714
                                                     ========    ========    ========
</TABLE>

     Cash operating earnings, which represent operating earnings after the
exclusion of the after-tax effect of amortization of goodwill, totaled $260.2
million for 1999, up 14.0% from 1998. Cash operating earnings for 1998 were
$228.2 million, or 41.5% higher than the $161.3 million for 1997. Diluted cash
operating earnings per common share were $2.31 for 1999, as compared with $1.98
for 1998 and $1.48 for 1997. On a cash operating earnings basis, the returns on
average stockholders' equity and average assets increased to 22.88% and 1.20%,
respectively, for 1999 from 20.76% and 1.08%, respectively, for 1998 and 15.60%
and 0.80%, respectively, for 1997.

     The Company believes that operating earnings and cash operating earnings
basis information, when taken in conjunction with reported results, provide
useful information in evaluating performance on a comparable basis, although
neither operating earnings nor cash operating earnings is currently a required
basis for reporting financial results under generally accepted accounting
principles.

  Net Interest Income

     Net interest income amounted to $578.5 million for 1999, up 9.7% from
$527.2 million for 1998, which had increased 9.1% from $483.1 million for 1997.
Contributing significantly to these increases was growth in the net interest
margin. During 1999, the net interest margin was 2.91%, as compared with 2.68%
for 1998 and 2.51% for 1997. The year-to-year increases in net interest income
also reflect, to a lesser extent, growth in average interest-earning assets of
$193.4 million in 1999 and $399.1 million in 1998, as compared with the
respective prior years.

     The 23 basis point increase in the net interest margin in 1999, as compared
with 1998, was driven by a sharp reduction in the cost of average
interest-bearing liabilities, but also reflects a steepening of the interest
rate yield curve and, despite an overall decline in the yield on average
interest-earning assets, beneficial shifts in the mix of average
interest-earning assets. The cost of average interest-bearing liabilities for
1999 was 4.18%, down 36 basis points from 1998, primarily reflecting a generally
lower short-term interest rate environment as well as the Company's deposit
pricing strategy, particularly with respect to its time deposits. Also
contributing to the lower cost of funds was the affect of an increase in the
percentage of core deposits to total deposits. The Company's core deposits
consist of demand, savings and money market deposits and are generally less
costly than the Company's time deposits and borrowed funds. During 1999, core
deposits represented 52.6% of average total deposits, up from 45.6% for 1998.
The yield on average interest-earning assets of 7.15% for 1999 was down 7 basis
points from 1998. The reduction in the yield on average interest-earning assets
was mitigated by the effects of the Company's strategy during 1999 to increase
the aggregate percentage of its commercial real estate, consumer and business
loans receivable (which generally have higher

                                       22
<PAGE>   25

yields than the Company's residential real estate loans receivable) to total
loans receivable. The aggregate average balance of commercial real estate,
consumer and business loans increased $1.7 billion, or 49.8%, in 1999, as
compared with 1998, and represented 37.7% of average total loans receivable for
1999, up from 26.1% for 1998. These increases reflect the effects of
acquisitions during 1999 as well as internal growth.

     The improvement in the net interest margin in 1998 from 1997 of 17 basis
points, which occurred despite the unfavorable interest rate yield curve during
1998, was principally attributable to a reduction of 22 basis points in the cost
of average interest-bearing liabilities due, in large part, to lower deposit
costs. The higher net interest margin also reflected growth in the yield on
average interest-earning assets to 7.22% for 1998 from 7.18% for 1997.
Contributing to the increase in the yield were favorable changes in the
interest-earning asset mix and higher yields on securities, partially offset by
a 28 basis point reduction in the yield on average loans. The favorable changes
in the interest-earning asset mix included a shift to loans from MBS, which have
historically provided lower yields than the Company's loans. Average loans
increased $3.7 billion year-to-year and represented 80.8% of average total
interest-earning assets for 1998, up from 63.0% for 1997. Average MBS declined
$3.0 billion year-to-year and represented 15.9% of average total
interest-earning assets for 1998, down from 32.1% for 1997. The reduction in the
yield on average loans for 1998, as compared with 1997, was principally due to
the lower long-term interest rate environment during 1998, partially offset by
sales of certain relatively lower-yielding portfolio loans during that year.

                                       23
<PAGE>   26

     The following table sets forth, for the years indicated, the Company's
consolidated average statement of financial condition, net interest income,
interest rate spread and net interest margin. Average balances are computed on a
daily basis. Non-accrual loans are included in average balances in the table
below.
<TABLE>
<CAPTION>
                                                   1999                                 1998
                                    ----------------------------------   ----------------------------------
                                                               AVERAGE                              AVERAGE
                                      AVERAGE                  YIELD/      AVERAGE                  YIELD/
                                      BALANCE      INTEREST     COST       BALANCE      INTEREST     COST
                                    -----------   ----------   -------   -----------   ----------   -------
                                                            (DOLLARS IN THOUSANDS)
<S>                                 <C>           <C>          <C>       <C>           <C>          <C>
ASSETS
INTEREST-EARNING ASSETS:
Loans:
  Loans held for sale.............  $ 2,342,293   $  163,992    7.00%    $ 2,898,297   $  210,083    7.25%
  Loans receivable:
    Residential real estate.......    8,391,769      580,390    6.92       9,597,357      664,319    6.92
    Commercial real estate........    2,967,934      228,571    7.70       2,359,295      200,015    8.48
    Consumer......................    1,617,255      132,213    8.18         861,247       71,003    8.24
    Business......................      489,232       39,740    8.12         166,061       13,944    8.40
                                    -----------   ----------             -----------   ----------
        Total loans receivable....   13,466,190      980,914    7.28      12,983,960      949,281    7.31
                                    -----------   ----------             -----------   ----------
        Total loans...............   15,808,483    1,144,906    7.24      15,882,257    1,159,364    7.30
                                    -----------   ----------             -----------   ----------
Securities:
  MBS.............................    3,328,408      222,385    6.68       3,127,022      214,922    6.87
  Other...........................      696,144       50,296    7.22         553,822       40,797    7.37
                                    -----------   ----------             -----------   ----------
        Total securities..........    4,024,552      272,681    6.78       3,680,844      255,719    6.95
                                    -----------   ----------             -----------   ----------
Money market investments..........       28,212        1,511    5.36         104,744        5,802    5.54
                                    -----------   ----------             -----------   ----------
        Total interest-earning
          assets..................   19,861,247    1,419,098    7.15      19,667,845    1,420,885    7.22
                                    -----------   ----------             -----------   ----------
Other assets......................    2,101,711                            1,715,973
                                    -----------                          -----------
Total assets......................  $21,962,958                          $21,383,818
                                    ===========                          ===========
LIABILITIES AND STOCKHOLDERS'
  EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
  Core:
    Demand........................  $ 1,887,867        7,253    0.38     $ 1,824,434        8,797    0.48
    Savings.......................    2,351,428       51,498    2.19       2,322,103       49,537    2.13
    Money market..................    2,874,486      109,080    3.79       2,163,046       83,420    3.86
                                    -----------   ----------             -----------   ----------
        Total core................    7,113,781      167,831    2.36       6,309,583      141,754    2.25
                                    -----------   ----------             -----------   ----------
  Time............................    6,409,747      314,175    4.90       7,528,081      404,073    5.37
                                    -----------   ----------             -----------   ----------
        Total deposits............   13,523,528      482,006    3.56      13,837,664      545,827    3.94
                                    -----------   ----------             -----------   ----------
Borrowed funds:
  Federal funds purchased and
    securities sold under
    agreements to repurchase......    3,175,249      163,682    5.15       1,803,181       99,851    5.54
  Other short-term borrowings.....    2,278,970      120,112    5.27       3,099,978      175,878    5.67
  Other...........................    1,133,427       74,813    6.60         964,398       72,096    7.48
                                    -----------   ----------             -----------   ----------
        Total borrowed funds......    6,587,646      358,607    5.44       5,867,557      347,825    5.93
                                    -----------   ----------             -----------   ----------
        Total interest-bearing
          liabilities.............   20,111,174      840,613    4.18      19,705,221      893,652    4.54
                                    -----------   ----------             -----------   ----------
Other liabilities.................      394,846                              349,691
Stockholders' equity..............    1,456,938                            1,328,906
                                    -----------                          -----------
Total liabilities and
  stockholders' equity............  $21,962,958                          $21,383,818
                                    ===========                          ===========
Net interest income...............                $  578,485                           $  527,233
                                                  ==========                           ==========
Interest rate spread..............                              2.97                                 2.68
Net interest margin...............                              2.91                                 2.68

<CAPTION>
                                                   1997
                                    ----------------------------------
                                                               AVERAGE
                                      AVERAGE                  YIELD/
                                      BALANCE      INTEREST     COST
                                    -----------   ----------   -------
                                          (DOLLARS IN THOUSANDS)
<S>                                 <C>           <C>          <C>
ASSETS
INTEREST-EARNING ASSETS:
Loans:
  Loans held for sale.............  $   582,364   $   43,919    7.54%
  Loans receivable:
    Residential real estate.......    8,583,301      616,586    7.18
    Commercial real estate........    2,193,661      191,111    8.71
    Consumer......................      730,106       63,222    8.66
    Business......................       54,050        5,052    9.35
                                    -----------   ----------
        Total loans receivable....   11,561,118      875,971    7.58
                                    -----------   ----------
        Total loans...............   12,143,482      919,890    7.58
                                    -----------   ----------
Securities:
  MBS.............................    6,176,259      406,781    6.59
  Other...........................      362,538       23,774    6.56
                                    -----------   ----------
        Total securities..........    6,538,797      430,555    6.58
                                    -----------   ----------
Money market investments..........      586,500       32,370    5.52
                                    -----------   ----------
        Total interest-earning
          assets..................   19,268,779    1,382,815    7.18
                                    -----------   ----------
Other assets......................      923,409
                                    -----------
Total assets......................  $20,192,188
                                    ===========
LIABILITIES AND STOCKHOLDERS'
  EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
  Core:
    Demand........................  $ 1,267,547        8,012    0.63
    Savings.......................    2,468,652       60,689    2.46
    Money market..................    1,953,931       72,723    3.72
                                    -----------   ----------
        Total core................    5,690,130      141,424    2.49
                                    -----------   ----------
  Time............................    7,556,076      417,935    5.53
                                    -----------   ----------
        Total deposits............   13,246,206      559,359    4.22
                                    -----------   ----------
Borrowed funds:
  Federal funds purchased and
    securities sold under
    agreements to repurchase......    3,628,681      206,822    5.70
  Other short-term borrowings.....      919,635       53,238    5.79
  Other...........................    1,102,646       80,334    7.29
                                    -----------   ----------
        Total borrowed funds......    5,650,962      340,394    6.02
                                    -----------   ----------
        Total interest-bearing
          liabilities.............   18,897,168      899,753    4.76
                                    -----------   ----------
Other liabilities.................      192,941
Stockholders' equity..............    1,102,079
                                    -----------
Total liabilities and
  stockholders' equity............  $20,192,188
                                    ===========
Net interest income...............                $  483,062
                                                  ==========
Interest rate spread..............                              2.42
Net interest margin...............                              2.51
</TABLE>

                                       24
<PAGE>   27

     The following table sets forth, for the years indicated, the changes in
interest income and interest expense for each major component of
interest-earning assets and interest-bearing liabilities and the amounts
attributable to changes in average balances (volume) and average interest rates
(rate). The changes in interest income and interest expense attributable to
changes in both volume and rate have been allocated proportionately to the
changes due to volume and the changes due to rate.

<TABLE>
<CAPTION>
                                           1999 VERSUS 1998                    1998 VERSUS 1997
                                    -------------------------------    ---------------------------------
                                          INCREASE (DECREASE)                 INCREASE (DECREASE)
                                    -------------------------------    ---------------------------------
                                     DUE TO     DUE TO                  DUE TO      DUE TO
                                     VOLUME      RATE       TOTAL       VOLUME       RATE        TOTAL
                                    --------    -------    --------    --------    --------    ---------
                                                               (IN THOUSANDS)
<S>                                 <C>         <C>        <C>         <C>         <C>         <C>
INTEREST INCOME
Loans:
  Loans held for sale.............  $(39,135)   $(6,956)   $(46,091)   $167,936    $ (1,772)   $ 166,164
  Loans receivable:
    Residential real estate.......   (83,381)      (548)    (83,929)     70,817     (23,084)      47,733
    Commercial real estate........    48,111    (19,555)     28,556      14,144      (5,240)       8,904
    Consumer......................    61,810       (600)     61,210      10,926      (3,145)       7,781
    Business......................    26,266       (470)     25,796       9,455        (563)       8,892
                                    --------    -------    --------    --------    --------    ---------
         Total loans receivable...    52,806    (21,173)     31,633     105,342     (32,032)      73,310
                                    --------    -------    --------    --------    --------    ---------
         Total loans..............    13,671    (28,129)    (14,458)    273,278     (33,804)     239,474
                                    --------    -------    --------    --------    --------    ---------
Securities:
  MBS.............................    13,572     (6,109)      7,463    (208,867)     17,008     (191,859)
  Other securities................    10,297       (798)      9,499      13,798       3,225       17,023
                                    --------    -------    --------    --------    --------    ---------
         Total securities.........    23,869     (6,907)     16,962    (195,069)     20,233     (174,836)
                                    --------    -------    --------    --------    --------    ---------
Money market investments..........    (4,105)      (186)     (4,291)    (26,685)        117      (26,568)
                                    --------    -------    --------    --------    --------    ---------
         Total interest income....    33,435    (35,222)     (1,787)     51,524     (13,454)      38,070
                                    --------    -------    --------    --------    --------    ---------
INTEREST EXPENSE
Deposits:
  Core:
    Demand........................       297     (1,841)     (1,544)      2,978      (2,193)         785
    Savings.......................       631      1,330       1,961      (3,455)     (7,697)     (11,152)
    Money market..................    27,018     (1,358)     25,660       7,994       2,703       10,697
                                    --------    -------    --------    --------    --------    ---------
         Total core...............    27,946     (1,869)     26,077       7,517      (7,187)         330
                                    --------    -------    --------    --------    --------    ---------
    Time..........................   (56,738)   (33,160)    (89,898)     (1,543)    (12,319)     (13,862)
                                    --------    -------    --------    --------    --------    ---------
         Total deposits...........   (28,792)   (35,029)    (63,821)      5,974     (19,506)     (13,532)
                                    --------    -------    --------    --------    --------    ---------
Borrowed funds:
  Federal funds purchased and
    securities sold under
    agreements to repurchase......    71,166     (7,335)     63,831    (101,245)     (5,726)    (106,971)
  Other short-term borrowings.....   (43,971)   (11,795)    (55,766)    123,723      (1,083)     122,640
  Other...........................    11,749     (9,032)      2,717     (10,290)      2,052       (8,238)
                                    --------    -------    --------    --------    --------    ---------
         Total borrowed funds.....    38,944    (28,162)     10,782      12,188      (4,757)       7,431
                                    --------    -------    --------    --------    --------    ---------
         Total interest expense...    10,152    (63,191)    (53,039)     18,162     (24,263)      (6,101)
                                    --------    -------    --------    --------    --------    ---------
Net interest income...............  $ 23,283    $27,969    $ 51,252    $ 33,362    $ 10,809    $  44,171
                                    ========    =======    ========    ========    ========    =========
</TABLE>

  Provision for Loan Losses

     The provision for loan losses, which is predicated upon the Company's
assessment of the adequacy of its allowance for loan losses (see "Management of
Credit Risk -- Allowance for Loan Losses"), amounted to $29.5 million for 1999.
This compares with $32.0 million for 1998 and $49.0 million for 1997, which
included

                                       25
<PAGE>   28

a $14.0 million special provision associated with the sales of approximately
$126 million of non-performing residential real estate assets in May 1997 (the
"NPA Sales").

     Net loan charge-offs amounted to $13.6 million in 1999, down from $31.6
million in 1998 and $64.0 million in 1997. Net loan charge-offs for 1998
included charge-offs of $9.1 million associated with a bulk sale during December
1998 of approximately $53 million of non-performing loans (the "NPL Sale"),
substantially all of which were residential real estate loans. Net loan
charge-offs during 1997 included charge-offs of $35.8 million associated with
the NPA Sales.

  Non-Interest Income

     General.  Non-interest income amounted to $568.2 million for 1999, up 8.2%
from $525.0 million for 1998, which followed a 261% increase from $145.3 million
for 1997. Although net gains on sales activities declined $44.0 million in 1999
from 1998, non-interest income rose $43.2 million year-to-year as growth was
experienced in all other non-interest income categories. The significant
increase in non-interest income in 1998, as compared with 1997, was
predominantly due to the full year effect of the NAMC Acquisition. For 1999,
non-interest income represented 49.6% of total revenues. This compares with
49.9% for 1998 and 23.1% for 1997.

     Loan Servicing and Production Fees.  Loan servicing and production fees
amounted to $267.5 million for 1999, an increase of $68.0 million, or 34.1%,
from 1998. Such fees were $199.5 million for 1998, representing growth of $125.5
million, or 169%, from the prior year. Loan servicing fees increased to $189.1
million for 1999 from $111.9 million for 1998 and $60.8 million for 1997 as a
result of growth in the mortgage loan servicing portfolio, as well as changes in
its characteristics. Loan production fees amounted to $78.4 million for 1999, as
compared with $87.6 million for 1998 and $13.3 million for 1997. The decline in
loan production fees in 1999, as compared with 1998, was due to the unfavorable
effect on residential real estate loan production, particularly loan refinancing
activity, of the relatively higher long-term interest rate environment during
1999. The increase in loan production fees in 1998 from 1997 was attributable to
a higher level of residential real estate loan production resulting from the
relatively lower long-term interest rate environment that existed during 1998
and the Company's expansion of its residential real estate loan production
capabilities.

     The Company's portfolio of mortgage loans serviced for others (excluding
loans being subserviced by the Company) amounted to $37.1 billion at year-end
1999, as compared with $27.0 billion one-year earlier and $22.0 billion at the
end of 1997. This portfolio consists substantially of residential real estate
loans, the underlying weighted average coupon rates of which were 7.25%, 7.37%
and 7.88% at December 31, 1999, 1998 and 1997, respectively. The year-to-year
increases in the loan servicing portfolio occurred despite sales of mortgage
servicing rights (see "Net Gains on Sales Activities"). In connection with its
sales of mortgage servicing rights, the Company was subservicing $1.3 billion of
loans at December 31, 1999, as compared with $7.9 billion at the end of 1998 and
$3.0 billion at the end of 1997. The Company receives fees for subservicing
loans until the transfer of the servicing responsibility to the purchasers of
the mortgage servicing rights.

     Banking Service Fees.  Banking service fees totaled $51.8 million for 1999,
up 25.0% from $41.4 million for 1998, which had increased 30.3% from $31.8
million for 1997. These increases were reflective of higher transaction volumes,
changes in the Company's fee structure and the introduction of certain fee-based
services. Contributing to the growth in the level of transactions in 1999, as
compared with 1998, was the impact of certain of the Company's acquisitions
during 1999. The higher volume of transactions in 1998, as compared with 1997,
was partially due to an expanded network of automated teller machines.

     Securities and Insurance Brokerage Fees.  Securities and insurance
brokerage fees were $36.7 million for 1999, 12.1% higher than the level in the
previous year. This increase was primarily associated with sales of annuity and
insurance products. For 1998, securities and insurance brokerage fees amounted
to $32.7 million, up 37.9% from $23.7 million for 1997. This growth was largely
driven by an $8.5 million increase in insurance fees, principally due to the
expansion of the Company's insurance product line and the number of states in
which the products are sold as a result of the NAMC Acquisition (pursuant to
which the Company also acquired NAMC's insurance subsidiaries).

                                       26
<PAGE>   29

     Net Gains on Sales Activities.  Net gains on sales activities amounted to
$200.4 million for 1999. In comparison, net gains on sales activities were
$244.5 million for 1998 and $12.0 million for 1997.

     Net gains on sales of loans held for sale totaled $186.1 million for 1999,
down from $217.3 million for 1998, which had increased from $23.2 million for
1997. The net gains during 1998 were reduced by losses of approximately $11
million associated with certain relatively lower-yielding loans that were
transferred from loans receivable to loans held for sale in connection with a
balance sheet restructuring initiative. Sales of loans held for sale amounted to
$22.5 billion during 1999, down $4.3 billion from 1998, primarily due to the
effect on loans held for sale production of the relatively higher long-term
interest rate environment during 1999. During 1998, sales of loans held for sale
amounted to $26.8 billion, up from $4.7 billion during 1997. This increase,
while largely attributable to the Company's expanded mortgage banking
operations, also reflected the significant loan refinancing activity that
resulted, in large part, from the relatively lower long-term interest rate
environment during 1998.

     Securities-related net gains (losses) were $2.1 million for 1999, as
compared with $21.9 million for 1998 and $(17.8) million for 1997. The net gains
during 1998 were substantially associated with sales of $1.9 billion of
securities, including virtually all of the $1.4 billion of MBS that had been
designated for sale in connection with the transfer of the Company's entire
securities held to maturity portfolio to its securities available for sale
portfolio as part of a balance sheet restructuring initiative implemented in
December 1997. At that time, the Company recognized a loss of $25.2 million
associated with the write-down to estimated fair value of those MBS designated
for sale with unrealized losses (which contributed substantially to the
securities-related net losses recognized in 1997), but subsequent movements in
interest rates resulted in higher than initially anticipated sales prices.

     Net gains on sales of mortgage servicing rights totaled $12.1 million for
1999, as compared with $2.0 million for 1998 and $6.9 million for 1997. During
1999, the Company sold $7.0 billion of mortgage servicing rights, including $4.7
billion in a bulk sale in connection with its overall risk-management program.
During 1998 and 1997, mortgage servicing rights sales amounted to $13.3 billion
and $3.0 billion, respectively, all of which were consummated in connection with
this program.

     Net gains on sales activities for 1998 included a gain of $9.5 million on
the sale, in August 1998, of Dime FSB's sole remaining Florida branch. At the
time of sale, this branch had deposits of $207.2 million.

     All other net gains (losses) amounted to $0.1 million for 1999, $(6.2)
million for 1998 and $(0.3) million for 1997. The net losses during 1998 were
largely associated with the termination of certain derivative financial
instrument agreements.

     Other.  Other non-interest income was $11.8 million in 1999, as compared
with $6.9 million in 1998 and $3.7 million in 1997. The year-to-year increases
were largely associated with income derived from a bank-owned life insurance
program, in connection with which the Company made investments of $50.0 million
during the fourth quarter of 1999 and $150.0 million during the third quarter of
1997. In general, under this program, the Company purchases, owns, and is the
beneficiary of insurance policies on the lives of certain employees who consent
to being covered under the program in order to help defray certain costs
associated with the Company's employee benefit plans.

  Non-Interest Expense

     General.  Non-interest expense amounted to $730.8 million for 1999, an
increase of $65.1 million, or 9.8%, from 1998. The expense growth reflects
increases in amortization of mortgage servicing assets and goodwill, together
with higher general and administrative ("G&A") expense, primarily associated
with the Company's mortgage banking operations and acquisitions completed during
1999. During 1998, non-interest expense was $665.6 million, up $284.5 million,
or 74.6%, from 1997. This increase was largely the result of the full year
effect of the NAMC Acquisition, coupled with the Company's expansion of its
mortgage banking operations during 1998 in furtherance of its strategy in this
area at that time and in response to the relatively high level of loan demand
during that year.

                                       27
<PAGE>   30

     G&A Expense.  G&A expense amounted to $589.5 million for 1999. This
compares with $561.9 million in 1998 and $337.0 million in 1997.

     Compensation and employee benefits expense totaled $303.8 million for 1999,
an increase of $33.7 million, or 12.5%, from the prior year, which was primarily
due to a higher average number of full-time equivalent employees ("FTEs"). The
growth in average FTEs was largely associated with the Company's mortgage
banking operations, as well as acquisitions consummated during 1999. Average
FTEs associated with the Company's mortgage banking operations increased during
1999, as compared with the prior year, due to a higher level of FTEs during the
first half of 1999. During the second half of 1999, in response to the slowing
of residential real estate loan production, the average number of mortgage
banking FTEs was decreased significantly. Compensation and employee benefits
expense increased to $270.1 million for 1998 from $157.9 million for 1997,
largely reflective of the Company's expansion of its mortgage banking
operations, primarily due to the NAMC Acquisition, and to a much lesser extent,
higher levels of commissions and incentives and normal merit increases.

     The Company's complement of FTEs numbered 6,928 at the end of 1999, down
from 7,123 one-year earlier, which had increased from 6,000 at the end of 1997.
The decline during 1999 was substantially attributable to a reduction in the
mortgage banking-related FTEs of approximately 660, or 13%, the impact of which
was partially offset by staff additions attributable to acquisitions during
1999. The growth in 1998, as compared with 1997, was largely associated with the
Company's expansion of its mortgage banking operations.

     Occupancy and equipment expense was $103.7 million for 1999, up $11.2
million, or 12.1%, from 1998. This increase was largely due to a rise in rent
expense as a result of a higher average level of residential real estate loan
production facilities, acquisitions consummated during 1999 and normal rental
increases. The overall increase in rent expense was mitigated, to a limited
degree, by the reduction in the Company's residential real estate loan
production operations during the second half of 1999. As a result of the KeyBank
Branch Acquisition and the Lakeview Acquisition, the Company's banking branch
network grew 41.1% during 1999 and totaled 127 branches at the end of 1999. Also
contributing to the year-to-year increase in occupancy and equipment expense,
although to a lesser extent, was higher depreciation and amortization expense
associated with, among other factors, technology-related initiatives and
acquisitions consummated during 1999. Occupancy and equipment expense totaled
$92.5 million for 1998, up $28.9 million, or 45.4%, as compared with 1997. This
increase was largely associated with the Company's expanded mortgage banking
operations, particularly as a result of the NAMC Acquisition, but also reflects,
among other factors, the effects of technology-related initiatives.

     Other G&A expense declined $17.3 million, or 8.7%, in 1999, as compared
with 1998. Contributing significantly to the decline, which occurred despite the
effect of acquisitions during 1999, was a reduction in the expense associated
with the Company's plan to prepare its computer systems, software, applications,
hardware and facility systems to properly process dates beyond December 31, 1999
(the "Year 2000 Plan"), which is further described under the heading "Year 2000
Issue" below. Other G&A expense rose $83.8 million, or 72.6%, in 1998, as
compared with 1997, largely due to the Company's business expansion efforts. The
following table provides details of other G&A expense for the year ended
December 31 (in thousands):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Data processing and communications.................  $ 48,555    $ 43,782    $ 27,292
Professional services..............................    18,318      22,107      13,179
Postage and messenger services.....................    17,257      16,846       8,781
Marketing and promotional..........................    16,475      20,785      15,831
Stationery, printing and supplies..................    12,738      13,366       7,881
Year 2000 plan.....................................     5,491      16,197       1,286
Other..............................................    63,225      66,266      41,279
                                                     --------    --------    --------
Total other G&A expense............................  $182,059    $199,349    $115,529
                                                     ========    ========    ========
</TABLE>

                                       28
<PAGE>   31

     Amortization of Mortgage Servicing Assets.  Amortization of mortgage
servicing assets amounted to $122.8 million for 1999, an increase of $30.5
million from 1998. This increase was largely reflective of growth in the average
balance of mortgage servicing assets, the effect of which was partially offset
by a slowing of prepayment activity of the loans underlying the mortgage
servicing assets portfolio in response to the comparatively higher long-term
interest rate environment during 1999. Amortization of mortgage servicing assets
increased to $92.3 million for 1998 from $29.8 million for 1997. This increase
was also largely due to growth in the average balance of mortgage servicing
assets, but, to a lesser extent, also reflected the impact of accelerated
prepayments of the underlying loans that resulted from the relatively lower
long-term interest rate environment in 1998. The Company was not required to
recognize impairment of its mortgage servicing assets during 1999, 1998 or 1997.

     At December 31, 1999, the Company's mortgage servicing assets (including
related derivative financial instruments hedging such assets) had a carrying
value of $980.9 million and an estimated fair value of $1,027.4 million.

     In a declining long-term interest rate environment, actual or expected
prepayments of the loans underlying the Company's mortgage servicing assets
portfolio may increase, which could have an adverse impact on the value of such
assets. In connection therewith, the Company uses certain derivative financial
instruments to hedge its mortgage servicing assets (see "Asset/Liability
Management -- Derivative Financial Instruments").

     In addition, the Company has periodically consummated bulk sales of
mortgage servicing rights in an effort to reduce the prepayment risk associated
with its mortgage servicing assets portfolio. The amount of mortgage servicing
rights sold in such sales amounted to $4.7 billion in 1999, $13.3 billion in
1998 and $3.0 billion in 1997.

     Amortization of Goodwill.  Amortization of goodwill was $18.5 million in
1999, up $7.0 million from the prior year as a result of acquisitions
consummated during 1999. Amortization of goodwill increased to $11.5 million in
1998 from $4.5 million in 1997, primarily due to the NAMC Acquisition.

     Restructuring and Related Expense.  In connection with the NAMC
Acquisition, the Company incurred restructuring and related expense of $9.9
million during 1997. No such expense was incurred during 1999 or 1998.

  Income Tax Expense

     Income tax expense for 1999 was $142.5 million, up $29.0 million from 1998
as a result of an increase in the effective income tax rate, coupled with higher
pre-tax income. Income tax expense rose to $113.5 million in 1998 from $75.0
million in 1997 due to growth in pre-tax income, the effect of which was
partially offset by a decline in the effective income tax rate. The Company's
effective income tax rate was 36.9% in 1999, as compared with 32.0% in 1998 and
37.9% in 1997. The effective income tax rate in 1998 was favorably affected by a
restructuring of assets within the legal entities that comprise the Company's
affiliated group.

  Extraordinary Items

     During 1999, 1998 and 1997, the Company recognized after-tax extraordinary
losses of $4.1 million, $4.1 million and $1.5 million, respectively, on the
early extinguishment of certain relatively higher-costing long-term debt. On a
pre-tax basis, these losses amounted to $7.2 million in 1999, $7.1 million in
1998 and $2.4 million in 1997.

YEAR 2000 ISSUE

     During 1999, the Company successfully completed the implementation, testing
and validation of year 2000-capable versions of all of its mission-critical
systems and experienced no significant operational problems during the rollover
to the year 2000. To date, the Company has not experienced any significant
issues relating to the inability of its computer systems, or the computer
systems of its significant third-party contractors, to properly process dates
beyond December 31, 1999. The Company will continue to monitor its
mission-critical

                                       29
<PAGE>   32

systems throughout the year 2000. Management, however, does not expect that any
significant problem related to the year 2000 issue will occur.

     Cumulatively, since commencing its year 2000 efforts in 1997, the Company
has incurred approximately $23 million of pre-tax expense in connection with its
Year 2000 Plan. The Company currently anticipates that it will not incur
significant additional expense relating to the Year 2000 Plan. The total expense
substantially reflects consulting fees associated with software remediation,
project management and programming, as well as ancillary items, but does not
include such items as the cost of Company personnel involved in the Year 2000
Plan or capital expenditures that would have been made regardless of the issues
associated with the impending year 2000.

ASSET/LIABILITY MANAGEMENT

  General

     The Company's asset/liability management is governed by policies that are
reviewed and approved annually by the Boards of Directors of the Holding Company
and Dime FSB, which oversee the development and execution of risk management
strategies in furtherance of these policies. The Asset/Liability Management
Committee, which is comprised of members of the Company's senior management,
monitors the Company's interest rate risk position and related strategies.

  Market Risk

     In general, market risk is the sensitivity of income to variations in
interest rates, foreign currency exchange rates, commodity prices, and other
relevant market rates or prices, such as prices of equities. The Company's
market rate sensitive instruments include interest-earning assets,
interest-bearing liabilities and derivative financial instruments.

     The Company enters into market rate sensitive instruments in connection
with its various business operations, particularly its mortgage banking
activities. Loans originated, and the related commitments to originate loans
that will be sold, represent market risk that is realized in a short period of
time, generally two to three months.

     The Company's primary source of market risk exposure arises from changes in
United States interest rates and the effects thereof on mortgage prepayment and
closing behavior, as well as depositors' choices ("interest rate risk"). Changes
in these interest rates will result in changes in the Company's earnings and the
market value of its assets and liabilities. The Company does not have any
material exposure to foreign exchange rate risk or commodity price risk.
Movements in equity prices may have an indirect, but limited, effect on certain
of the Company's business activities or the value of credit sensitive loans and
securities.

  Interest Rate Risk Management

     The Company manages its interest rate risk through strategies designed to
maintain acceptable levels of interest rate exposure throughout a range of
interest rate environments. These strategies are intended not only to protect
the Company from significant long-term declines in net interest income as a
result of certain changes in the interest rate environment, but also to mitigate
the negative effect of certain interest rate changes upon the Company's mortgage
banking operating results. The Company seeks to contain its interest rate risk
within a band that it believes is manageable and prudent given its capital and
income generating capacity. As a component of its interest rate risk management
process, the Company employs various derivative financial instruments.

     The Company's sensitivity to interest rates is driven primarily by the
mismatch between the term to maturity or repricing of its interest-earning
assets and that of its interest-bearing liabilities. Historically, the Company's
interest-bearing liabilities have repriced or matured, on average, sooner than
its interest-earning assets.

                                       30
<PAGE>   33

     The Company is also exposed to interest rate risk arising from the "option
risk" embedded in many of the Company's interest-earning assets. For example,
mortgages and the mortgages underlying MBS may contain prepayment options,
interim and lifetime interest rate caps and other such features affected by
changes in interest rates. Prepayment option risk affects mortgage-related
assets in both rising and falling interest rate environments as the financial
incentive to refinance a mortgage loan is directly related to the level of the
existing interest rate on the loan relative to current market interest rates.

     Extension risk on mortgage-related assets is the risk that the duration of
such assets may increase as a result of declining prepayments due to rising
interest rates. Certain mortgage-related assets are more sensitive to changes in
interest rates than others, resulting in a higher risk profile. Because the
Company's interest-bearing liabilities are not similarly affected, the gap
between the duration of the Company's interest-earning assets and
interest-bearing liabilities generally increases as interest rates rise. In
addition, in a rising interest rate environment, adjustable-rate assets may
reach interim or lifetime interest rate caps, thereby limiting the amount of
their upward adjustment, which effectively lengthens the duration of such
assets.

     Lower interest rate environments may also present interest rate risk
exposure. In general, lower interest rate environments tend to accelerate loan
prepayment rates, thus reducing the duration of mortgage-related assets and
accelerating the amortization of any premiums paid in the acquisition of these
assets. The amortization of any premiums over a shorter than expected term
causes yields on the related assets to decline from anticipated levels. In
addition, unanticipated accelerated prepayment rates increase the likelihood of
potential losses of net future servicing revenues associated with the Company's
mortgage servicing assets.

     The Company is also exposed to interest rate risk resulting from certain
changes in the shape of the yield curve (particularly a flattening or
inversion -- also called "yield curve twist risk" -- of the yield curve) and to
differing indices upon which the yield on the Company's interest-earning assets
and the cost of its interest-bearing liabilities are based ("basis risk").

     As further described below, in evaluating and managing its interest rate
risk, the Company employs simulation models to help assess its interest rate
risk exposure and the impact of alternate interest rate scenarios, which
consider the effects of adjustable-rate loan indices, periodic and lifetime
interest rate adjustment caps, estimated loan prepayments, anticipated deposit
retention rates and other dynamics of the Company's portfolios of
interest-earning assets and interest-bearing liabilities.

  Derivative Financial Instruments

     The Company currently uses a variety of derivative financial instruments to
assist in managing its interest rate risk exposures. While the Company's use of
derivative financial instruments in managing its interest rate exposures has
served to mitigate the unfavorable effects that changes in interest rates may
have on its results of operations, the Company continues to be subject to
interest rate risk.

     Interest Rate Risk-Management Instruments.  The Company's assets have
historically repriced or matured at a longer term than the liabilities used to
fund those assets. At December 31, 1999, the Company used the following
derivative financial instruments in its efforts to reduce its repricing risk:
(i) interest rate swaps, where, based on the notional amount of the related
agreement, the Company makes fixed-rate payments and receives variable-rate
payments, all of which are tied to the one- or three-month London Interbank
Offered Rate ("LIBOR"); (ii) interest rate cap corridors, where, in exchange for
the payment of a premium to the counterparty, the Company receives the amount by
which one-month LIBOR exceeds a specified strike rate up to a maximum rate, as
applied to the notional amount of the related agreement; and (iii) interest rate
futures, where the Company pays any increase, or receives any decrease, in the
market value of the underlying financial instrument.

                                       31
<PAGE>   34

     The following table sets forth the derivative financial instruments used by
the Company at December 31, 1999 for interest rate risk-management purposes,
segregated by the activities that they hedge (dollars in thousands):

<TABLE>
<CAPTION>
                                                                       WEIGHTED AVERAGE
                                                     ESTIMATED    ---------------------------
                                        NOTIONAL       FAIR       FIXED-RATE    VARIABLE-RATE
                                         AMOUNT        VALUE       PAYABLE       RECEIVABLE
                                       ----------    ---------    ----------    -------------
<S>                                    <C>           <C>          <C>           <C>
Interest rate swaps hedging:
  Securities available for sale(1)...  $  578,253     $ 6,270        6.09%          6.32%
  Loans receivable(1)................   1,682,125      39,157        6.34           6.42
  Short-term borrowings(1)...........     875,000       5,510        5.88           6.33
Interest rate cap corridors hedging:
  Securities available for sale(2)...      45,810       2,354          --             --
  Loans receivable(3)................     234,894      11,845          --             --
Interest rate futures hedging:
  Securities available for sale......     360,000          --          --             --
  Loans receivable...................     175,900          --          --             --
                                       ----------     -------
Total................................  $3,951,982     $65,136
                                       ==========     =======
</TABLE>

---------------
(1) Variable rates receivable are presented on the basis of rates in effect at
    December 31, 1999; however, actual repricings of the interest rate swaps
    will be based on the applicable interest rates in effect at the actual
    repricing dates.

(2) The weighted average strike rate was 4.92% and the weighted average maximum
    rate was 5.92%.

(3) The weighted average strike rate was 4.93% and the weighted average maximum
    rate was 5.93%.

     Activity in derivative financial instruments used for interest rate
risk-management purposes is summarized in the following table for the years
shown (in thousands):

<TABLE>
<CAPTION>
                              INTEREST     INTEREST    INTEREST     INTEREST                INTEREST
                                RATE         RATE        RATE         RATE        SHORT     RATE CAP
                               SWAPS         CAPS      SWAPTIONS     FUTURES      SALES     CORRIDORS      TOTAL
                             ----------   ----------   ---------   -----------   --------   ---------   -----------
<S>                          <C>          <C>          <C>         <C>           <C>        <C>         <C>
Balance at December 31,
  1996.....................  $1,110,216   $1,234,424   $     --    $        --   $     --   $     --    $ 2,344,640
Additions..................     904,837           --     40,000        275,400         --         --      1,220,237
Amortization and
  maturities...............    (502,698)    (225,033)        --             --         --         --       (727,731)
Terminations...............          --           --         --       (275,400)        --         --       (275,400)
                             ----------   ----------   --------    -----------   --------   --------    -----------
    Balance at December 31,
      1997.................   1,512,355    1,009,391     40,000             --         --         --      2,561,746
Additions..................     993,937           --         --        704,100     85,000         --      1,783,037
Amortization and
  maturities...............    (297,649)    (439,399)        --       (250,000)        --         --       (987,048)
Terminations...............    (243,855)          --         --       (154,100)   (85,000)        --       (482,955)
Reclassification to trading
  assets...................          --     (361,000)        --             --         --         --       (361,000)
                             ----------   ----------   --------    -----------   --------   --------    -----------
    Balance at December 31,
      1998.................   1,964,788      208,992     40,000        300,000         --         --      2,513,780
Additions..................   1,660,228           --         --      1,729,100         --    280,704      3,670,032
Amortization and
  maturities...............    (262,846)    (208,992)   (40,000)      (300,000)        --         --       (811,838)
Terminations...............    (226,792)          --         --     (1,193,200)        --         --     (1,419,992)
                             ----------   ----------   --------    -----------   --------   --------    -----------
Balance at December 31,
  1999.....................  $3,135,378   $       --   $     --    $   535,900   $     --   $280,704    $ 3,951,982
                             ==========   ==========   ========    ===========   ========   ========    ===========
</TABLE>

     Mortgage Banking Risk-Management Instruments.  At December 31, 1999, the
Company used the following derivative financial instruments to protect against
the adverse impact on the value of the Company's

                                       32
<PAGE>   35

mortgage servicing assets of substantial declines in long-term interest rates
and the consequent increase in mortgage prepayment rates: (i) interest rate
floors, where, in exchange for the payment of a premium to the counterparty, the
Company receives the excess of a specified strike rate over a designated market
interest rate (generally constant maturity Treasury or swap indices), as applied
to the notional amount of the related agreement; (ii) interest rate swaps, where
the Company receives a fixed rate and pays a variable rate tied to one- or
three-month LIBOR; (iii) interest rate swaptions, where, in exchange for the
payment of a premium to the counterparty, the Company, at a future date, has the
right to enter into interest rate swap agreements; and (iv) principal-only
swaps, where the Company: (a) receives the discount realized on the underlying
principal-only security and pays a variable rate based on one-month LIBOR as
applied to the notional amount of the agreement; and (b) pays or receives
changes in the market value of the underlying principal-only security.

     Two major classes of derivative financial instruments were used by the
Company at December 31, 1999 to hedge the risk in its loans held for sale and
related commitment pipeline. To the extent that the Company estimates that it
will have loans to sell, the Company sells loans into the forward MBS market.
Such short sales are similar in composition as to term and coupon with the loans
held in, or expected to be funded into, the loans held for sale portfolio. In
addition, because the amount of loans that the Company will fund, as compared
with the total amount of loans that it has committed to fund, is uncertain, the
Company purchased put options on MBS and interest rate futures.

     The following table sets forth the derivative financial instruments used by
the Company at December 31, 1999 in connection with its mortgage banking
activities, segregated by the activities that they hedge (dollars in thousands):

<TABLE>
<CAPTION>
                                                                      WEIGHTED AVERAGE
                                                    ESTIMATED    ---------------------------
                                       NOTIONAL       FAIR       VARIABLE-RATE    FIXED-RATE
                                        AMOUNT        VALUE         PAYABLE       RECEIVABLE
                                      ----------    ---------    -------------    ----------
<S>                                   <C>           <C>          <C>              <C>
Interest rate floors hedging
  mortgage servicing assets(1)......  $2,885,000    $ 13,912           --%             --%
Interest rate swaps hedging mortgage
  servicing assets(2)...............   1,452,000     (68,235)        6.39            6.06
Interest rate swaptions hedging
  mortgage servicing assets(3)......   1,445,000      53,446           --              --
Principal-only swaps hedging
  mortgage servicing assets(2)......      51,085         173         6.64              --
Forward contracts hedging loans held
  for sale..........................   1,960,407      24,168           --              --
Put options purchased hedging loans
  held for sale.....................      74,000         488           --              --
                                      ----------    --------
Total...............................  $7,867,492    $ 23,952
                                      ==========    ========
</TABLE>

---------------
(1) The weighted average strike rate was 5.80%.

(2) Variable rates payable are presented on the basis of rates in effect at
    December 31 1999; however, actual repricings will be based on the applicable
    interest rates in effect at the actual repricing dates.

(3) The weighted average strike rate was 6.93%.

                                       33
<PAGE>   36

     Activity in derivative financial instruments used to hedge mortgage
servicing assets is summarized in the following table for the years shown (in
thousands):

<TABLE>
<CAPTION>
                          INTEREST      INTEREST    INTEREST     INTEREST     PRINCIPAL
                            RATE          RATE        RATE         RATE         ONLY        FORWARD
                           FLOORS        SWAPS        CAPS       SWAPTIONS      SWAPS      CONTRACTS       TOTAL
                         -----------   ----------   ---------   -----------   ---------   -----------   -----------
<S>                      <C>           <C>          <C>         <C>           <C>         <C>           <C>
Balance at December 31,
  1996.................  $   996,498   $       --   $      --   $        --    $    --    $        --   $   996,498
Additions..............    1,585,000      400,000          --            --         --             --     1,985,000
Amortization...........     (196,984)          --          --            --         --             --      (196,984)
                         -----------   ----------   ---------   -----------    -------    -----------   -----------
Balance at December 31,
  1997.................    2,384,514      400,000          --            --         --             --     2,784,514
Additions..............    2,025,000      400,000     400,000            --         --             --     2,825,000
Amortization and
  maturities...........     (421,746)          --          --            --         --             --      (421,746)
Terminations...........   (1,585,000)          --          --            --         --             --    (1,585,000)
                         -----------   ----------   ---------   -----------    -------    -----------   -----------
Balance at December 31,
  1998.................    2,402,768      800,000     400,000            --         --             --     3,602,768
Additions..............    2,285,000      752,000          --     2,745,000     53,222      2,540,000     8,375,222
Amortization and
  maturities...........     (377,768)          --          --            --     (2,137)            --      (379,905)
Terminations...........   (1,425,000)    (100,000)   (400,000)   (1,300,000)        --     (2,540,000)   (5,765,000)
                         -----------   ----------   ---------   -----------    -------    -----------   -----------
Balance at December 31,
  1999.................  $ 2,885,000   $1,452,000   $      --   $ 1,445,000    $51,085    $        --   $ 5,833,085
                         ===========   ==========   =========   ===========    =======    ===========   ===========
</TABLE>

     For additional information concerning the Company's derivative financial
instruments, see Notes 1 and 22 of Notes to Consolidated Financial Statements in
Item 8, "Financial Statements and Supplementary Data."

  Asset/Liability Repricing

     The measurement of differences (or "gaps") between the Company's
interest-earning assets and interest-bearing liabilities that mature or reprice
within a period of time is one indication of the Company's sensitivity to
changes in interest rates. A negative gap generally indicates that, in a period
of rising interest rates, deposit and borrowing costs will increase more rapidly
than the yield on loans and securities and, therefore, reduce the Company's net
interest margin and net interest income. The opposite effect will generally
occur in a declining interest rate environment. Although the Company has a large
portfolio of adjustable-rate assets, the protection afforded by such assets in
the event of substantial rises in interest rates for extended time periods is
limited due to interest rate reset delays, periodic and lifetime interest rate
caps, payment caps and the fact that indices used to reprice a portion of the
Company's adjustable-rate assets lag changes in market rates. Moreover, in
declining interest rate environments or certain shifts in the shape of the yield
curve, these assets may prepay at significantly faster rates than otherwise
anticipated. It should also be noted that the Company's gap measurement reflects
broad judgmental assumptions with regard to repricing intervals for certain
assets and liabilities.

     The following table reflects the repricing of the Company's
interest-earning assets, interest-bearing liabilities and related derivative
financial instruments at December 31, 1999. The amount of each asset, liability
or derivative financial instrument is included in the table at the earlier of
the next repricing date or maturity. Prepayment assumptions for loans and MBS
used in preparing the table are based upon industry standards as well as the
Company's experience and estimates. Non-accrual loans have been included in the

                                       34
<PAGE>   37

"Over One Through Three Years" category. Demand deposits, money market deposits
and savings accounts are allocated to the various repricing intervals in the
table based on the Company's experience and estimates.

<TABLE>
<CAPTION>
                                                            PROJECTED REPRICING
                                                     ---------------------------------
                                                                   OVER ONE
                                                                   THROUGH      OVER
                                                     ONE YEAR       THREE       THREE
                                                     OR LESS        YEARS       YEARS      TOTAL
                                                     --------      --------    -------    -------
                                                                (DOLLARS IN MILLIONS)
<S>                                                  <C>           <C>         <C>        <C>
Interest-earning assets:
  Loans held for sale..............................  $ 1,734       $    --     $    --    $ 1,734
  Loans receivable.................................    5,749         3,648       5,810     15,207
  MBS..............................................    1,148           677       1,870      3,695
  Other............................................       17             2         659        678
                                                     -------       -------     -------    -------
          Total interest-earning assets............    8,648         4,327       8,339     21,314
                                                     -------       -------     -------    -------
Interest-bearing liabilities:
  Deposits.........................................    6,888         3,412       3,961     14,261
  Borrowed funds...................................    6,990           383         373      7,746
                                                     -------       -------     -------    -------
          Total interest-bearing liabilities.......   13,878         3,795       4,334     22,007
                                                     -------       -------     -------    -------
Periodic gap before impact of derivative financial
  instruments......................................   (5,230)          532       4,005       (693)
Impact of derivative financial instruments.........    3,017        (1,357)     (1,660)        --
                                                     -------       -------     -------    -------
Periodic gap.......................................  $(2,213)      $  (825)    $ 2,345    $  (693)
                                                     =======       =======     =======    =======
Cumulative gap.....................................  $(2,213)      $(3,038)    $  (693)
                                                     =======       =======     =======
Cumulative gap as a percentage of total assets.....     (9.3)%       (12.7)%      (2.9)%
</TABLE>

     The Company also utilizes complex simulation models to perform a
sensitivity analysis by which it estimates the potential change in its net
interest income over selected time periods resulting from hypothetical changes
in interest rates. This analysis evaluates the interest rate sensitivity of all
of the Company's interest-earning assets, interest-bearing liabilities and
derivative financial instruments by measuring the impact of changing rates on
12-month projected interest income and interest expense. The Company estimates
that, over a 12-month period, its net interest income would decrease by
approximately 4.0% and increase by approximately 3.8% in the event of an
instantaneous and sustained 100 basis point increase and decrease in interest
rates, respectively.

     This analysis requires the Company to make certain assumptions regarding
prepayments of loans and securities, reinvestment of cash flow, deposit
retention, availability of external funding, and the spread between market rates
on interest-earning assets and interest-bearing liabilities. The Company relies
upon industry data, as well as its own experience, in developing the estimates
required for this interest rate sensitivity analysis.

     The Company has developed policies addressing limits on changes in 12-month
projected net interest income for specific instantaneous and sustained shocks in
interest rates. The Company also utilizes market value of portfolio equity and
duration of equity analyses in the management of its interest rate risk.

MANAGEMENT OF CREDIT RISK

  General

     The Company's credit risk arises from the possibility that borrowers,
issuers, or counterparties will not perform in accordance with contractual
terms. The Company has a process of credit risk controls and management
procedures by which it monitors and manages its level of credit risk.

                                       35
<PAGE>   38

  Non-Performing Assets

     The Company's non-performing assets, which consist of non-accrual loans and
other real estate owned ("ORE"), net, amounted to $86.1 million at December 31,
1999, up $2.7 million, or 3.3%, from the end of 1998. Non-accrual loans are all
loans 90 days or more delinquent, as well as loans less than 90 days past due
for which the full collectability of contractual principal or interest payments
is doubtful. When a loan is placed on non-accrual status, any accrued but unpaid
interest income on the loan is reversed and future interest income on the loan
is recognized only if actually received by the Company and full collection of
principal is not in doubt. Loans are generally returned to accrual status when
principal and interest payments are current, full collectability of principal
and interest is reasonably assured, and a consistent record of performance has
been demonstrated. Loans modified in a troubled debt restructuring ("TDR") that
have demonstrated a sufficient payment history to warrant return to performing
status are not included within non-accrual loans (see "Loans Modified in a
TDR").

     The Company generally has pursued a loan-by-loan/property-by-property
disposition strategy with respect to its non-performing assets, while also
considering the appropriateness of alternate disposition strategies, including
bulk sales of non-performing assets such as the NPL Sale and the NPA Sales.

     The following table presents the components of the Company's non-performing
assets at December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                 1999       1998        1997        1996        1995
                                -------    -------    --------    --------    --------
<S>                             <C>        <C>        <C>         <C>         <C>
Non-accrual loans:
  Residential real estate:
     Permanent................  $50,991    $37,261    $ 90,488    $163,156    $206,230
     Construction.............      302        510         510         635         840
                                -------    -------    --------    --------    --------
          Total residential
            real estate.......   51,293     37,771      90,998     163,791     207,070
                                -------    -------    --------    --------    --------
  Commercial real estate:
     Permanent................    5,049     11,833      21,601      17,375      34,618
     Construction.............      159        159         159       3,672       4,427
                                -------    -------    --------    --------    --------
          Total commercial
            real estate.......    5,208     11,992      21,760      21,047      39,045
                                -------    -------    --------    --------    --------
  Consumer....................   10,424      5,292       5,719       6,645       8,263
  Business....................    2,437         56         511         107         741
                                -------    -------    --------    --------    --------
          Total non-accrual
            loans.............   69,362     55,111     118,988     191,590     255,119
                                -------    -------    --------    --------    --------
ORE, net:
  Residential real estate.....    9,978     15,170      20,228      36,182      38,799
  Commercial real estate......    6,963     14,505       9,255      20,367      24,952
  Allowance for losses........     (250)    (1,443)     (1,722)     (3,294)     (3,070)
                                -------    -------    --------    --------    --------
          Total ORE, net......   16,691     28,232      27,761      53,255      60,681
                                -------    -------    --------    --------    --------
Total non-performing assets...  $86,053    $83,343    $146,749    $244,845    $315,800
                                =======    =======    ========    ========    ========
Non-performing assets to total
  assets......................     0.36%      0.37%       0.67%       1.30%       1.55%
Non-accrual loans to loans
  receivable..................     0.46       0.43        0.92        1.78        2.60
</TABLE>

     The Company continues to expand its lending activities and product mix. The
Company intends to continue to monitor closely the effects of these efforts on
the overall risk profile of its loans receivable portfolio, which the Company
expects will continue to change over time.

                                       36
<PAGE>   39

     The level of loans delinquent less than 90 days may, to some degree, be an
indicator of future levels of non-performing assets. The following table sets
forth, at December 31, 1999, such delinquent loans of the Company, net of those
already in non-performing status (in thousands):

<TABLE>
<CAPTION>
                                                             DELINQUENCY PERIOD
                                                        -----------------------------
                                                         30-59      60-89
                                                         DAYS       DAYS       TOTAL
                                                        -------    -------    -------
<S>                                                     <C>        <C>        <C>
Residential real estate...............................  $26,494    $ 8,819    $35,313
Commercial real estate................................      658      5,210      5,868
Consumer..............................................   18,298      5,698     23,996
Business..............................................    5,944      2,077      8,021
                                                        -------    -------    -------
Total.................................................  $51,394    $21,804    $73,198
                                                        =======    =======    =======
</TABLE>

  Loans Modified in a TDR

     When borrowers encounter financial hardship but are able to demonstrate to
the Company's satisfaction an ability and willingness to resume regular monthly
payments, the Company may provide them with an opportunity to restructure the
terms of their loans. These arrangements, which are negotiated individually,
generally provide for interest rates that are lower than those initially
contracted for, but which may be higher or lower than current market interest
rates for loans with comparable risk, and may, in some instances, include a
reduction in the principal amount of the loan. The Company evaluates the costs
associated with any particular restructuring arrangement and may enter into such
an arrangement if it believes it is economically beneficial for the Company to
do so.

     The following table sets forth the Company's loans that have been modified
in a TDR, excluding those classified as non-accrual loans, at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                  1999       1998       1997        1996        1995
                                 -------    -------    -------    --------    --------
<S>                              <C>        <C>        <C>        <C>         <C>
Residential real estate........  $ 5,520    $ 6,159    $37,532    $ 42,684    $ 43,090
Commercial real estate.........    5,800      6,039     46,677     170,323     159,097
                                 -------    -------    -------    --------    --------
Total loans modified in a
  TDR..........................  $11,320    $12,198    $84,209    $213,007    $202,187
                                 =======    =======    =======    ========    ========
</TABLE>

  Allowance for Loan Losses

     The Company's allowance for loan losses is intended to be maintained at a
level sufficient to absorb all estimable and probable losses inherent in the
loans receivable portfolio. In determining the appropriate level of the
allowance for loan losses and, accordingly, the level of the provision for loan
losses, the Company reviews its loans receivable portfolio on at least a
quarterly basis, taking into account its impaired loans, the size, composition
and risk profile of the portfolio, delinquency levels, historical loss
experience, cure rates on delinquent loans, economic conditions and other
pertinent factors, such as assumptions and projections of future conditions.
While the Company believes that the allowance for loan losses is adequate,
additions to the allowance for loan losses may be necessary in the event of
future adverse changes in economic and other conditions that the Company is
unable to predict.

     The Company's allowance for loan losses amounted to $140.3 million at
December 31, 1999, an increase of $35.2 million, or 33.5%, from the level
one-year earlier. This increase was primarily reflective of overall growth in
the loans receivable portfolio and changes in its risk characteristics.

                                       37
<PAGE>   40

     The following table sets forth the activity in the Company's allowance for
loan losses for the year ended December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                          1999        1998        1997        1996        1995
                                        --------    --------    --------    --------    --------
<S>                                     <C>         <C>         <C>         <C>         <C>
Balance at beginning of year..........  $105,081    $104,718    $106,495    $128,295    $170,383
Provision for loan losses(1)..........    29,500      32,000      49,000      41,000      39,650
Additions due to acquisitions.........    19,277          --      13,249          --          --
Loan charge-offs:
  Residential real estate(2)..........   (14,681)    (34,175)    (61,235)    (52,191)    (46,131)
  Commercial real estate..............    (1,329)     (2,956)     (5,984)    (13,244)    (37,759)
  Consumer............................    (5,892)     (2,891)     (4,161)     (5,371)     (8,172)
  Business............................       (82)        (45)       (228)       (490)        (26)
                                        --------    --------    --------    --------    --------
      Total loan charge-offs..........   (21,984)    (40,067)    (71,608)    (71,296)    (92,088)
                                        --------    --------    --------    --------    --------
Loan recoveries:
  Residential real estate.............     2,517       3,465       3,652       5,093       5,220
  Commercial real estate..............     3,707       3,292       2,006         977       1,552
  Consumer............................     2,171       1,629       1,833       2,292       2,482
  Business............................        27          44          91         134       1,096
                                        --------    --------    --------    --------    --------
      Total loan recoveries...........     8,422       8,430       7,582       8,496      10,350
                                        --------    --------    --------    --------    --------
         Net loan charge-offs.........   (13,562)    (31,637)    (64,026)    (62,800)    (81,738)
                                        --------    --------    --------    --------    --------
Balance at end of year................  $140,296    $105,081    $104,718    $106,495    $128,295
                                        ========    ========    ========    ========    ========
Net loan charge-offs during the year
  to average loans receivable
  outstanding during the year.........     0.10%       0.24%       0.55%       0.61%       0.86%
Allowance for loan losses to loans
  receivable at year end..............      0.92        0.82        0.81        0.99        1.31
Allowance for loan losses to
  non-accrual loans at year end.......    202.27      190.67       88.01       55.58       50.29
</TABLE>

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

(1) The provision for loan losses for 1997 included $14.0 million associated
    with the NPA Sales.

(2) Loan charge-offs for 1998 and 1997 included $9.1 million associated with the
    NPL Sale and $35.8 million associated with the NPA Sales, respectively.

                                       38
<PAGE>   41

     The following table sets forth, at December 31 for the years indicated, the
Company's allocation of the allowance for loan losses by category of loans
receivable and the percentage of each category of loans receivable to total
loans receivable (dollars in thousands).

<TABLE>
<CAPTION>
                                        1999        1998        1997        1996        1995
                                      --------    --------    --------    --------    --------
<S>                                   <C>         <C>         <C>         <C>         <C>
Allocation of allowance for loan losses(1):
  Residential real estate...........  $ 62,625    $ 47,509    $ 49,494    $ 59,228    $ 68,177
  Commercial real estate............    43,360      42,430      47,394      39,872      51,138
  Consumer..........................    22,836       5,262       4,724       5,652       6,881
  Business..........................    11,475       3,880       1,606       1,743       2,099
  Unallocated.......................        --       6,000       1,500          --          --
                                      --------    --------    --------    --------    --------
Total allowance for loan losses.....  $140,296    $105,081    $104,718    $106,495    $128,295
                                      ========    ========    ========    ========    ========
Loans receivable category to total
  loans receivable:
  Residential real estate...........      53.9%       70.0%       75.8%       75.2%       73.0%
  Commercial real estate............      22.9        20.1        17.4        17.6        18.9
  Consumer..........................      16.4         7.6         6.0         6.8         7.7
  Business..........................       6.8         2.3         0.8         0.4         0.4
                                      --------    --------    --------    --------    --------
Total...............................     100.0%      100.0%      100.0%      100.0%      100.0%
                                      ========    ========    ========    ========    ========
</TABLE>

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

(1) The portions of the allowance for loan losses allocated to the listed loan
    categories, as well as any unallocated portion, are available to absorb
    losses for any of the listed loan categories.

     The Company has developed models and other analytic tools to assist in the
assessment of estimable and probable losses inherent in both the non-performing
and performing residential real estate loan and consumer loan portfolios. The
Company periodically reviews and refines these models, analyzing the continuing
validity of the assumptions used, comparing actual experience to that projected
in the models and modifying those assumptions as may, in the Company's judgment,
be appropriate. The Company also regularly analyzes economic trends and
underlying portfolio trends, such as changes in geographic and property type mix
and loan seasoning. The results of these reviews and analyses, which may yield a
range of values, are evaluated in determining the need during any period for
additions to the allowance for loan losses for residential real estate loans and
consumer loans. However, it should be noted that these various models and
analyses depend upon a large number of estimates and assumptions, especially
with respect to future economic and market conditions and borrower behavior,
that are subject to change, and it is entirely likely that future events will
vary in some respects from those predicted by any particular model or analysis.

     The adequacy of the allowance for loan losses for the Company's commercial
real estate loan and business loan portfolios is based in part on a loan-by-loan
analysis that includes a risk-rating system. The Company's Asset Quality Review
Department ("AQRD") provides an independent review of the analyses performed by
management with respect to commercial real estate loans and business loans,
including the respective risk ratings assigned to such loans. Pursuant to the
Company's policy, the AQRD conducts an annual review of all commercial real
estate loans and business loans that have been assigned certain risk ratings,
with the balance of these loan portfolios reviewed on a test basis.

  MBS

     Of the $3.5 billion carrying value of the Company's MBS portfolio at
December 31, 1999, $2.7 billion were issued by entities other than FHLMC, GNMA
and FNMA. These privately-issued MBS have generally been underwritten by large
investment banking firms, with the timely payment of principal and interest on
these securities supported ("credit enhanced") in varying degrees by either
insurance issued by a financial guarantee insurer, letters of credit or
subordination techniques. Privately-issued MBS are subject to certain
credit-related risks normally not associated with MBS issued by FHLMC, GNMA and
FNMA, including the

                                       39
<PAGE>   42

limited loss protection generally provided by the various forms of credit
enhancements, as losses in excess of certain levels are not protected.
Furthermore, the credit enhancement itself is subject to the creditworthiness of
the provider. Thus, in the event that a provider of a credit enhancement does
not fulfill its obligations, the MBS holder could be subject to risk of loss
similar to a purchaser of a whole loan pool. While substantially all of the
privately-issued MBS held by the Company at December 31, 1999 were rated "AA" or
better by one or more of the nationally recognized securities rating agencies,
no assurance can be given that such ratings will be maintained.

     The following table sets forth, by issuer, the aggregate estimated fair
value (which was equal to the carrying value) of the Company's privately-issued
MBS that exceeded 10% of stockholders' equity at December 31, 1999 (in
thousands):

<TABLE>
<CAPTION>
                                                              ESTIMATED
NAME OF ISSUER                                                FAIR VALUE
--------------                                                ----------
<S>                                                           <C>
Green Tree Financial Corporation............................   $283,119
Structured Asset Securities Corporation.....................    260,245
</TABLE>

  Derivative Financial Instruments

     The level of credit risk associated with derivative financial instruments
depends on a variety of factors, including the estimated fair value of the
instrument, the collateral maintained, the use of master netting arrangements
and the ability of the counterparty to comply with its contractual obligations.
In the event of default by a counterparty, the Company would be subject to an
economic loss that corresponds to the cost to replace the agreement. The
Company's credit risk associated with its use of derivative financial
instruments amounted to $73.9 million at December 31, 1999 and $40.8 million at
December 31, 1998. There were no past due amounts related to the Company's
derivative financial instruments at December 31, 1999 or 1998.

FINANCIAL CONDITION

  General

     The Company's total assets amounted to $23.9 billion at December 31, 1999,
an increase of $1.6 billion, or 7.2%, from $22.3 billion at the end of 1998.
This growth was fueled by increases in commercial real estate, consumer and
business loans receivable, reflecting both internal growth and acquisitions
completed during 1999, and, to a lesser extent, a higher level of securities
available for sale. Partially offsetting these factors were reductions in the
Company's residential real estate loans held for sale into the secondary market
and for portfolio.

  Securities Available for Sale

     Securities available for sale rose to $3.8 billion at December 31, 1999
from $3.3 billion at the end of 1998. This increase primarily reflects growth in
privately-issued MBS in connection with the Company's balance sheet management
strategy. During 1999, the Company purchased $2.3 billion of securities
available for sale. Sales of securities available for sale during 1999 totaled
$1.4 billion. These sales included substantially all of the MBS associated with
$698.6 million of loans receivable that were securitized during the year.

                                       40
<PAGE>   43

     The following table presents the carrying value of the Company's securities
available for sale at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                    1999          1998          1997
                                                 ----------    ----------    ----------
<S>                                              <C>           <C>           <C>
MBS:
  Pass-through securities:
     Privately-issued..........................  $2,245,491    $1,775,264    $2,851,007
     U.S. government agencies..................     845,159     1,008,921       598,711
  Collateralized mortgage obligations:
     Privately-issued..........................     408,945       179,484     1,336,690
     U.S. government agencies..................      18,093            --       115,356
  Interest-only................................         499           628         1,129
                                                 ----------    ----------    ----------
          Total MBS............................   3,518,187     2,964,297     4,902,893
                                                 ----------    ----------    ----------
Other debt securities:
  U.S. government and federal agencies.........          --         3,525         8,638
  State and municipal..........................      15,112        12,834        36,291
  Domestic corporate...........................     304,081       343,095        35,359
  Foreign government...........................         500           500           500
                                                 ----------    ----------    ----------
          Total other debt securities..........     319,693       359,954        80,788
                                                 ----------    ----------    ----------
Equity securities..............................      11,796         5,193         8,623
                                                 ----------    ----------    ----------
Total securities available for sale............  $3,849,676    $3,329,444    $4,992,304
                                                 ==========    ==========    ==========
</TABLE>

     At December 31, 1999, the Company's securities available for sale portfolio
had gross unrealized gains of $15.4 million and gross unrealized losses of
$165.1 million. This compares with gross unrealized gains of $25.8 million and
gross unrealized losses of $31.5 million at the end of 1998 and gross unrealized
gains of $22.1 million and gross unrealized losses of $37.4 million at the end
of 1997. These gross unrealized gains and losses reflect normal market
conditions and vary, either positively or negatively, based primarily on changes
in general levels of market interest rates relative to the yields on the
securities in the portfolio.

  Loans Held for Sale

     Loans held for sale into the secondary market in connection with the
Company's mortgage banking activities declined to $1.7 billion at December 31,
1999 from $3.9 billion at December 31, 1998. Production of such loans totaled
$20.5 billion during 1999, a reduction of $7.3 billion, or 26.2% from the prior
year. The decline in loan production resulted, in large part, from the higher
interest rate environment during 1999.

  Loans Receivable

     The Company's loans receivable (exclusive of the allowance for loan losses)
totaled $15.2 billion at December 31, 1999, up 19.3% from $12.7 billion at
year-end 1998. Contributing significantly to this growth was the overall impact
of the Citibank Auto Business Acquisition, the KeyBank Branch Acquisition and
the Lakeview Acquisition. In connection with these acquisitions, the Company
acquired a total of $1.7 billion of loans receivable, of which 59.1% were
consumer loans, 29.3% were business loans, 6.6% were commercial real estate
loans and 5.0% were residential real estate loans. These acquisitions
accelerated the Company's strategy to increase the aggregate percentage of its
commercial real estate, consumer and business loans receivable to total loans
receivable. During 1999, commercial real estate, consumer and business loans
receivable increased, in total, by $3.2 billion, or 83.0%, while residential
real estate loans receivable decreased $719.7 million, or 8.1%. In total,
commercial real estate, consumer and business loans receivable represented 46.1%
of total loans receivable at December 31, 1999, up from 30.0% one-year earlier
and 24.2% at year-end 1997.

                                       41
<PAGE>   44

     Residential real estate loans receivable amounted to $8.2 billion at the
end of 1999, down from $8.9 billion at the end of 1998. This decline resulted
from runoff and the securitization of $698.6 million of loans, which more than
offset the $1.9 billion of loans produced for this portfolio and loans acquired
in acquisitions.

     Commercial real estate loans receivable totaled $3.5 billion at year-end
1999, which was $915.1 million higher than the level one-year earlier. The 35.6%
increase in these loans was largely reflective of the fact that loan production
outpaced runoff. During 1999, production of commercial real estate loans totaled
$1.4 billion, an increase of $262.0 million, or 23.2%, from the level in 1998.
At December 31, 1999, the commercial real estate loan portfolio consisted
primarily of loans secured by multifamily properties (51%), office buildings
(21%), and shopping centers (18%).

     During 1999, the most significant increase in loans receivable occurred in
the consumer loan portfolio. This portfolio grew $1.5 billion, or 156%, during
1999 and amounted to $2.5 billion at year-end 1999. Contributing significantly
to the higher balance was the impact of acquisitions during 1999, particularly
the Citibank Auto Business Acquisition. Substantially as a result of the effects
of this acquisition, automobile loans increased to $886.2 million, or 35.5% of
the consumer loan portfolio, at December 31, 1999 from $4.4 million, or less
than 1.0% of the consumer loan portfolio, one-year earlier. At the end of 1999,
home equity loans continued to represent the largest component of the consumer
loans receivable portfolio. Such loans totaled $1.5 billion at that date, or
59.7% of the consumer loans receivable portfolio, an increase of $633.3 million,
or 73.9%, from the end of 1998. Total consumer loan production during 1999 was
$1.3 billion, up 73.3% from $733.4 million during 1998. Of the total loan
production during 1999 and 1998, 70.7% and 78.2%, respectively, was associated
with home equity loans.

     Business loans receivable totaled $1.0 billion at December 31, 1999, up
$741.5 million, or 258%, from the end of 1998. The higher level of these loans
was attributable to internally generated growth and the effects of the KeyBank
Branch Acquisition and the Citibank Auto Business Acquisition, in which a total
of approximately $500 million of business loans were acquired. As a result of
the Citibank Auto Business Acquisition, the array of business loan products
offered by the Company was expanded to include automobile dealer floor plan
loans, which, at the end of 1999, comprised approximately 12% of the business
loans receivable portfolio.

     The following table summarizes the Company's loans receivable at December
31 (in thousands):

<TABLE>
<CAPTION>
                              1999          1998          1997          1996          1995
                           -----------   -----------   -----------   -----------   ----------
<S>                        <C>           <C>           <C>           <C>           <C>
Residential real estate:
  Permanent..............  $ 8,198,653   $ 8,918,170   $ 9,846,140   $ 8,071,208   $7,184,864
  Construction...........        1,467         1,647         2,453         3,697        1,948
                           -----------   -----------   -----------   -----------   ----------
          Total
            residential
            real
            estate.......    8,200,120     8,919,817     9,848,593     8,074,905    7,186,812
                           -----------   -----------   -----------   -----------   ----------
Commercial real estate:
  Permanent..............    3,285,734     2,475,462     2,206,255     1,852,904    1,808,355
  Construction...........      197,123        92,288        56,768        32,829       42,543
                           -----------   -----------   -----------   -----------   ----------
          Total
            commercial
            real
            estate.......    3,482,857     2,567,750     2,263,023     1,885,733    1,850,898
                           -----------   -----------   -----------   -----------   ----------
Consumer:
  Home equity............    1,489,669       856,389       632,006       538,065      524,716
  Automobile.............      886,176         4,443         6,298        43,661       53,947
  Other..................      119,476       112,398       135,513       152,555      178,751
                           -----------   -----------   -----------   -----------   ----------
          Total
            consumer.....    2,495,321       973,230       773,817       734,281      757,414
                           -----------   -----------   -----------   -----------   ----------
Business.................    1,028,756       287,271        99,074        43,138       35,189
                           -----------   -----------   -----------   -----------   ----------
Total loans receivable...  $15,207,054   $12,748,068   $12,984,507   $10,738,057   $9,830,313
                           ===========   ===========   ===========   ===========   ==========
</TABLE>

                                       42
<PAGE>   45

     The maturities of the principal balances of the Company's real estate
construction loans receivable and business loans receivable (excluding lease
financing receivables) at December 31, 1999 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                       REMAINING CONTRACTUAL MATURITY
                                                ---------------------------------------------
                                                  ONE       OVER ONE
                                                YEAR OR     THROUGH        OVER
                                                  LESS     FIVE YEARS   FIVE YEARS    TOTAL
                                                --------   ----------   ----------   --------
<S>                                             <C>        <C>          <C>          <C>
Residential real estate construction:
  Fixed-rate..................................  $  1,467    $     --     $     --    $  1,467
Commercial real estate construction:
  Adjustable-rate.............................  $ 88,158    $107,158           --    $195,316
  Fixed-rate..................................     2,997          --           --       2,997
                                                --------    --------     --------    --------
Total commercial real estate construction.....  $ 91,155    $107,158     $     --    $198,313
                                                ========    ========     ========    ========
Business:
  Adjustable-rate.............................  $318,868    $268,567     $ 36,049    $623,484
  Fixed-rate..................................    52,661      97,822      123,603     274,086
                                                --------    --------     --------    --------
Total business................................  $371,529    $366,389     $159,652    $897,570
                                                ========    ========     ========    ========
</TABLE>

  Deposits

     Deposits amounted to $14.3 billion at year-end 1999, up 4.5% from $13.7
billion at the end of 1998. This increase was principally driven by acquisitions
completed during the year, in which the Company assumed $1.8 billion of
deposits, the effects of which were partially offset by runoff of deposits,
primarily time deposits.

     Part of the Company's strategy with respect to its deposits is to increase
the percentage of core deposits to total deposits. During 1999, core deposits
increased $778.0 million, or 11.3%, while time deposits decreased $168.0
million, or 2.5%. At December 31, 1999, core deposits represented 53.8% of total
deposits, up from 50.6% at the end of 1998, which had increased from 43.2% at
the end of 1997.

     The following table sets forth a summary of the Company's deposits at
December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                               1999                         1998
                                     -------------------------    -------------------------
                                                    PERCENTAGE                   PERCENTAGE
                                       AMOUNT        OF TOTAL       AMOUNT        OF TOTAL
                                     -----------    ----------    -----------    ----------
<S>                                  <C>            <C>           <C>            <C>
Core:
  Demand...........................  $ 2,071,419       14.5%      $ 1,976,122       14.5%
  Savings..........................    2,407,528       16.9         2,291,782       16.8
  Money market.....................    3,201,298       22.5         2,634,312       19.3
                                     -----------      -----       -----------      -----
          Total core...............    7,680,245       53.9         6,902,216       50.6
                                     -----------      -----       -----------      -----
Time...............................    6,581,204       46.1         6,749,244       49.4
                                     -----------      -----       -----------      -----
Total deposits.....................  $14,261,449      100.0%      $13,651,460      100.0%
                                     ===========      =====       ===========      =====
</TABLE>

  Borrowed Funds

     Total borrowed funds amounted to $7.7 billion at December 31, 1999, which
represents an increase of $973.1 million, or 14.4%, from the end of 1998. This
increase was substantially associated with the funding of asset growth during
1999.

                                       43
<PAGE>   46

     Presented in the table below is the composition of the Company's borrowed
funds at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              ----------    ----------
<S>                                                           <C>           <C>
Federal funds purchased and securities sold under agreements
  to repurchase:
  Federal funds purchased...................................  $  785,000    $  474,980
  Securities sold under agreements to repurchase............     321,067     1,770,238
                                                              ----------    ----------
          Total federal funds purchased and securities sold
            under agreements to repurchase..................   1,106,067     2,245,218
                                                              ----------    ----------
Other short-term borrowings:
  FHLBNY advances...........................................   3,711,086     3,647,330
  Treasury tax and loan notes...............................   1,598,154         9,474
  Other.....................................................      12,598        99,929
                                                              ----------    ----------
          Total other short-term borrowings.................   5,321,838     3,756,733
                                                              ----------    ----------
Long-term debt:
  FHLBNY advances...........................................     751,600       429,785
  Senior notes..............................................     348,322        98,977
  Medium-term notes.........................................      48,541        51,983
  Bonds, preferred stock and loans transferred in put
     transactions...........................................      17,405        20,182
  Other.....................................................          --         7,965
                                                              ----------    ----------
          Total long-term debt..............................   1,165,868       608,892
                                                              ----------    ----------
Guaranteed preferred beneficial interests in Dime Bancorp,
  Inc.'s junior subordinated deferrable interest
  debentures................................................     152,219       162,005
                                                              ----------    ----------
Total borrowed funds........................................  $7,745,992    $6,772,848
                                                              ==========    ==========
</TABLE>

     The Company's primary source of borrowed funds at December 31, 1999 and
1998 was FHLBNY advances. In the aggregate, short- and long-term FHLBNY advances
comprised 57.6% of total borrowed funds at year-end 1999, as compared with 60.2%
at year-end 1998.

     The Holding Company, during 1999, issued $200.0 million of 6.375% senior
notes due 2001 and $150.0 million of 7.00% senior notes due 2001.

     During 1999, the Company extinguished, prior to maturity, the following
long-term debt: (i) $100.0 million of the Holding Company's 10.50% senior notes
due 2005; (ii) $3.0 million of NAMC's 7.315% medium-term notes due 2003; and
(iii) $0.2 million of NAMC's 7.29% medium-term notes due 2003. Further, during
1999, the Holding Company purchased $10.0 million of the outstanding guaranteed
preferred beneficial interests in its 9.33% junior subordinated deferrable
interest debentures.

  Stockholders' Equity

     Stockholders' equity amounted to $1.5 billion at December 31, 1999, up
$130.4 million, or 9.4%, from the end of 1998. This increase was largely due to
net income of $239.8 million, coupled with the $69.2 million value assigned to
the 2,852,321 shares of Common Stock issued in connection with the Lakeview
Acquisition. Growth in stockholders' equity was limited by an increase of $84.0
million in the Company's accumulated other comprehensive loss, treasury stock
purchases totaling $76.3 million and cash dividends declared on the Common Stock
aggregating $25.6 million, or $0.23 per common share.

     Stockholders' equity was 6.34% of total assets at the end of 1999, as
compared with 6.21% at the end of 1998. Book value per common share was $13.67
at December 31, 1999, up from $12.42 one-year earlier.

     At and during the year ended December 31, 1999, the Holding Company had one
Common Stock repurchase program in effect. This program, which was announced in
September 1998 and rescinded in

                                       44
<PAGE>   47

February 2000 in connection with the Merger, authorized the Holding Company to
repurchase up to approximately 5.6 million shares of its outstanding Common
Stock. Through December 31, 1999, the Holding Company repurchased 4.2 million
shares of its Common Stock under this program, including 3.9 million shares
during 1999. No shares of Common Stock were repurchased under this program
subsequent to the end of 1999.

LIQUIDITY

     The Company's liquidity management process focuses on ensuring that
sufficient funds exist to meet withdrawals by depositors, loan funding
commitments, debt service requirements and other financial obligations and
expenditures, as well as ensuring Dime FSB's compliance with regulatory
liquidity requirements. The liquidity position of the Company, which is
monitored on a daily basis, is managed pursuant to established policies and
guidelines.

     The Company's sources of liquidity include principal repayments on loans
and MBS, borrowings, deposits, sales of loans in connection with mortgage
banking activities, sales of securities available for sale and cash provided by
operations. The Company has access to the capital markets for issuing debt or
equity securities, as well as access to the discount window of the Federal
Reserve Bank of New York, if necessary, for the purpose of borrowing to meet
temporary liquidity needs.

     Excluding funds raised through the capital markets, the primary source of
funds of the Holding Company, on an unconsolidated basis, has been dividends
from Dime FSB, whose ability to pay dividends is subject to regulations of the
OTS (see "Regulation and Supervision -- Restrictions on Capital Distributions"
in Item 1, "Business"). At December 31, 1999, the Holding Company had an
effective shelf registration with the Commission under which it could issue an
aggregate of $150.0 million of debentures, notes or other unsecured evidences of
indebtedness. These debt securities, which may be unsubordinated or subordinated
to certain other obligations of the Holding Company, may be offered separately
or together in one or more series.

     Under existing OTS regulations, Dime FSB must maintain, for each calendar
quarter, an average daily balance of liquid assets (as defined) equal to at
least 4.0% of either (i) its liquidity base (Dime FSB's net withdrawable
accounts plus short-term borrowings) at the end of the preceding calendar
quarter or (ii) the average daily balance of its liquidity base during the
preceding quarter. For the fourth quarter of 1999, Dime FSB's liquidity ratio
was 7.49%.

REGULATORY CAPITAL

     Pursuant to OTS regulations, Dime FSB is required to maintain tangible
capital of at least 1.5% of adjusted total assets, core ("tier 1") capital of at
least 3.0% of adjusted total assets and total risk-based capital of at least
8.0% of risk-weighted assets. Dime FSB exceeded these capital requirements at
December 31, 1999.

     Under the PCA regulations adopted by the OTS pursuant to FDICIA, an
institution is considered well capitalized, the highest of five categories, if
its ratio of total risk-based capital to risk-weighted assets is 10.0% or more,
its ratio of tier 1 capital to risk-weighted assets is 6.0% or more, its ratio
of core capital to adjusted total assets is 5.0% or greater, and it is not
subject to any order or directive by the OTS to meet a specific capital level.
At December 31, 1999, Dime FSB met the published standards for a well
capitalized designation under these regulations.

     The following table sets forth Dime FSB's regulatory capital position at
December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                                    1999                   1998
                                             -------------------    -------------------
                                               AMOUNT      RATIO      AMOUNT      RATIO
                                             ----------    -----    ----------    -----
<S>                                          <C>           <C>      <C>           <C>
Tangible and core capital..................  $1,383,046     5.90%   $1,282,010     5.82%
Tier 1 risk-based capital..................   1,383,046     8.80     1,282,010     9.58
Total risk-based capital...................   1,623,342    10.33     1,387,091    10.37
</TABLE>

                                       45
<PAGE>   48

     During November 1999, Dime FSB issued $100.0 million of 8.0% subordinated
notes due November 2006, all of which were purchased by the Holding Company.
Such notes, as permitted under OTS regulations, are included in Dime FSB's total
risk-based capital at December 31, 1999.

RECENT ACCOUNTING DEVELOPMENTS

     Effective January 1, 1999, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 134, "Accounting for Mortgage-Backed
Securities Retained After the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise." SFAS No. 134, which amends SFAS No. 65,
"Accounting for Certain Mortgage Banking Activities," requires that, after the
securitization of a mortgage loan held for sale, any retained MBS should be
classified in accordance with the provisions of SFAS 115, "Accounting for
Certain Investments in Debt and Equity Securities." However, SFAS No. 134
requires that a mortgage banking enterprise classify as trading any retained MBS
that it commits to sell before or during the securitization process. The
adoption of SFAS No. 134 did not materially impact the Company's financial
condition or results of operations.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133 requires that an entity recognize all
derivative instruments as either assets or liabilities in statements of
financial position and measure those instruments at fair value. SFAS No. 133, as
amended in July 1999 by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133,"
is effective for fiscal years beginning after June 15, 2000. The Company intends
to adopt SFAS No. 133 on January 1, 2001. The Company has not completed its
evaluation of the effect that the adoption of SFAS No. 133 will have upon its
financial condition and results of operations.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Information required by this Item is contained in Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Asset/Liability Management," incorporated herein by reference.

                                       46
<PAGE>   49

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Auditors..............................  F-1
Consolidated Statements of Financial Condition..............  F-2
Consolidated Statements of Income...........................  F-3
Consolidated Statements of Changes in Stockholders'
  Equity....................................................  F-4
Consolidated Statements of Cash Flows.......................  F-5
Consolidated Statements of Comprehensive Income.............  F-6
Notes to Consolidated Financial Statements..................  F-7
</TABLE>

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

BOARD OF DIRECTORS

     Set forth below are the names, ages, and terms of, and principal
occupations and length of service on the Board for each current member of the
Board as of January 31, 2000. Periods of service as a member of the Board
includes service as a member of the Board of Directors of Anchor Bancorp and/or
the Board of Directors of Anchor FSB, and certain predecessor institutions,
prior to the formation of Anchor Bancorp in 1991, as well as service as a member
of the Board of Directors of Dime FSB prior to the formation of Dime Bancorp in
1994.

     Derrick D. Cephas joined the Board in 1994. Mr. Cephas, 48, has been a
partner in the New York law firm of Cadwalader, Wickersham & Taft since 1994.
Since November 1996, Mr. Cephas has been a director of Merrill Lynch
International Bank, an Edge Act corporation and an indirect, wholly-owned
subsidiary of Merrill Lynch & Co., Inc. He has been a director of D.E. Shaw &
Co., which serves as the direct or indirect general partner or manager of
several privately-held securities and technology businesses (including
registered broker-dealers and registered commodity pool operators), since
February 1996.

     Frederick C. Chen joined the Board in 1988. Mr. Chen, 72, is retired from
Peat Marwick Main & Co. (now KPMG LLP), a firm of certified public accountants,
where he was a senior banking partner from 1966 to 1987. He is a trustee of
Republic Funds, an investment company.

     J. Barclay Collins II joined the Board in 1993. Mr. Collins, 55, has served
as Executive Vice President and General Counsel of Amerada Hess Corporation
since 1990 and as a director since 1986.

     Richard W. Dalrymple joined the Board in 1990. Mr. Dalrymple, 56, has been
the President of Teamwork Management, Inc., an executive recruiting firm, since
its formation in 1997. Prior to the Anchor Merger in January 1995, Mr. Dalrymple
served as President, Chief Operating Officer, and a director of Anchor Bancorp
since its formation and as President, Chief Operating Officer, and a director of
Anchor FSB since 1990. Mr. Dalrymple has been a director of Waterhouse Investors
Family of Funds, Inc., a registered investment company, since 1996, and a
director of National Investors Cash Management Fund, Inc., a registered
investment company, since 1997.

     James F. Fulton joined the Board in 1981. Mr. Fulton, 69, has been
President of Fulton + Partners, Inc. (planning and design consultants) since
1966 and Chairman of the Board of Pratt Institute (an educational institution)
since 1992.

                                       47
<PAGE>   50

     Fred B. Koons joined the Board in January 1999. Mr. Koons, 55, is currently
a Senior Executive Advisor of the Holding Company and Dime FSB, having served as
Chief Executive Officer, Mortgage Banking, of the Holding Company and Dime FSB
from December 1996 until July 1, 1999. From July 1996 until he joined the
Company, Mr. Koons was a consultant to the Company regarding its mortgage
banking strategy. From 1986 until 1995, Mr. Koons served as President, Chairman
and Chief Executive Officer of Chase Manhattan Mortgage Corporation, Chairman
and Chief Executive Officer of Chase Educational Finance Corp. and Executive
Vice President of Chase Manhattan Bank, N.A. (now Chase Bank).

     Virginia M. Kopp joined the Board in 1981. Mrs. Kopp, 70, is active in
community affairs. From 1983 until her retirement in 1987, Ms. Kopp was co-owner
and operator of a retail business.

     James M. Large, Jr. joined the Board in 1989. Mr. Large, 67, has been
Chairman Emeritus of the Holding Company since April 1998. Prior to that date,
Mr. Large served as Chairman of the Board of the Holding Company since January
1995 and as the Chief Executive Officer of the Holding Company and the Chairman
of the Board and Chief Executive Officer of Dime FSB from January 1995 until his
retirement at the end of 1996. Prior to the Anchor Merger, Mr. Large was
Chairman of the Board and Chief Executive Officer of Anchor Bancorp since its
formation and Chairman of the Board and Chief Executive Officer of Anchor FSB
since April 1989.

     Margaret Osmer-McQuade joined the Board in 1980. Ms. Osmer-McQuade, 61, has
served as President of Qualitas International, an international consulting firm,
since 1993, and a director of Riverside Capital International LLC, an asset
management company, since 1997.

     John Morning joined the Board in 1979. Mr. Morning, 68, has been President
of John Morning Design, Inc. (a graphic design firm) since 1960.

     Sally Hernandez-Pinero joined the Board in 1994. Ms. Hernandez-Pinero, 46,
has served as Senior Vice President for Corporate Affairs of The Related
Companies, L.P. (a low income real estate syndicator and owner/manager of
multi-family residential property) since May 1999. From June 1998 until she
assumed her current position, Ms. Hernandez-Pinero served as a managing director
of the Fannie Mae American Communities Fund. From October 1994 until May 1998,
Ms. Hernandez-Pinero was of counsel to the law firm of Kalkines, Arky, Zall &
Bernstein. She is a director of Consolidated Edison, Inc. (a public utility) and
Accuhealth, Inc. (a health care firm).

     Paul A. Qualben, M.D. joined the Board in 1965. Dr. Qualben, 75, is a
physician in Brooklyn, New York and serves as a psychiatric consultant to
Evangelical Lutheran Church in America, the Norwegian Christian Home and Health
Center, the Eger Health Care Center of Staten Island, and Wagner College. He is
the former Director of Psychiatry at Lutheran Medical Center.

     Eugene G. Schulz, Jr. joined the Board in 1959. Mr. Schulz, 69, served as
Vice Chairman and General Counsel of Anchor FSB prior to his retirement in 1989.

     Howard Smith joined the Board in 1965. Mr. Smith, 69, has been President of
Virginia Dare Extract Co., Inc., Brooklyn, New York, a manufacturer of flavors,
since 1960. He is the Chairman of Lutheran Medical Center and the Chairman of
Augustana Lutheran Home.

     Norman R. Smith, Ed.D. joined the Board in 1993. Dr. Smith, 53, has served
as President of Wagner College, Staten Island, New York since 1988.

     Lawrence J. Toal joined the Board in 1991. Mr. Toal, 62, became the
Chairman of the Board of the Holding Company in April 1998 and the Chief
Executive Officer of the Holding Company and the Chairman of the Board and Chief
Executive Officer of Dime FSB in January 1997. He has been the President and
Chief Operating Officer of the Holding Company since its formation and the
President and Chief Operating Officer of Dime FSB since 1991. Mr. Toal has been
a director of Waterhouse Investors Cash Management Fund, Inc., a registered
investment company, since December 1995, and a director of SBLI Mutual Life
Insurance Company, Inc., since January 2000.

                                       48
<PAGE>   51

     Ira T. Wender joined the Board in 1992. Mr. Wender, 73, is the sole owner
of Ira T. Wender, P.C., which has provided services as of counsel since 1994 to,
and which held a partnership interest from 1988 through 1993 in, the law firm of
Patterson, Belknap, Webb & Tyler LLP. He is a director of REFAC Technology,
Inc., United Investors Realty Trust and Deotexis, Inc.

EXECUTIVE OFFICERS

     The following table sets forth the name, age, and position of each
executive officer of the Company as of January 31, 2000 and the year in which
such person joined the Company:

<TABLE>
<CAPTION>
                                                                               WITH THE
                                                                               COMPANY
NAME                    AGE       POSITIONS AND OFFICES WITH THE COMPANY        SINCE
----                    ---       --------------------------------------       --------
<S>                     <C>    <C>                                             <C>
Lawrence J. Toal......  62     Chairman of the Board, Chief Executive            1991
                               Officer, President and Chief Operating
                                 Officer
Gene C. Brooks........  50     Director of the Office of the Secretary and       1995
                               Senior Legal Advisor
Anthony R.                     Chief Financial Officer                           1997
  Burriesci...........  52
D. James Daras........  46     Treasurer and Asset/Liability Executive           1990
James E. Kelly........  48     General Counsel                                   1987
Richard A. Mirro......  48     Chief Executive Officer, Mortgage Banking         1996
Carlos R. Munoz.......  64     Chief Credit and Risk Management Officer          1995
Peyton R. Patterson...  43     General Manager, Consumer Financial Services      1996
</TABLE>

     Mr. Daras has been employed by the Company in the positions stated above
for more than five years. The principal occupation for at least the last five
years of each other executive officer who is not a member of the Board is set
forth below:

     Mr. Brooks, who joined Anchor FSB in July 1987, served as Vice President
and General Counsel of Anchor Bancorp from its formation until the Anchor Merger
and as Secretary of Anchor Bancorp from March 1993 until the Anchor Merger. He
was General Counsel of the Company from April 1995 to January 1998, at which
time he assumed his present position.

     Mr. Burriesci joined the Company in July 1997 as Chief Financial Officer.
From 1990 until he joined the Company, he held various finance-related positions
with First Fidelity Bancorporation, the most recent of which was Executive Vice
President and Corporate Controller, until it was acquired by First Union
Corporation in 1996, where he served as Executive Vice President-Finance and
Administration and Chief Financial Officer-Northern Region.

     Mr. Kelly has served in various legal and business positions with the
Company since joining Dime FSB in January 1987, including as assistant to the
President from February 1992 to March 1995 and thereafter as Deputy General
Counsel until he assumed his present position in January 1998.

     Mr. Mirro joined the Company in 1996 as President and Chief Operating
Officer, Mortgage Banking and assumed his present position in July 1999. Prior
to joining the Company, he was Chairman and Chief Executive Officer of Fleet
Mortgage Group from July 1996 to September 1996. From 1986 until joining Fleet
Mortgage Group, Mr. Mirro held various positions with Chase Manhattan Mortgage
Corporation, the most recent of which was President.

     Mr. Munoz joined the Company in April 1995 as Chief Credit Officer and
assumed his present position in January 1997. Prior to joining the Company, he
served in various positions with Citibank, where he was most recently Senior
Vice President and a member of the Credit Policy Committee. In that position, he
had been responsible at various times for credit management and oversight of
part or all of Citibank's worldwide consumer banking activities, as well as
Private Banking and Global Finance in Latin America.

                                       49
<PAGE>   52

     Ms. Patterson joined the Company in May 1996 as General Manager, Consumer
Lending and assumed her present position in June 1997. From 1989 until she
joined the Company, Ms. Patterson held several positions with Chemical Bank,
including most recently as General Manager of its Consumer Asset Group, until
the merger of that institution with Chase Manhattan Bank, N.A. in 1996, when she
became the Director of Marketing for its National Consumer Services Division.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires Dime
Bancorp's directors and specified officers to file reports of ownership and
changes in ownership of their equity securities of Dime Bancorp with the
Commission and the NYSE and to furnish Dime Bancorp with copies of all such
reports.

     Based solely upon a review of the copies of these Form 3, 4, and 5 reports
and amendments thereto received by Dime Bancorp, and certain written
representations received from such persons, Dime Bancorp believes that all
applicable filing requirements were complied with for 1999, and Dime Bancorp
does not know of any such persons who may have failed to file on a timely basis
any required form, except as follows: John Morning, a director of Dime Bancorp,
did not timely file a Form 4 reflecting the sale of 2,500 shares of Common Stock
on August 5, 1999 and D. James Daras, an executive officer of Dime Bancorp, did
not timely file a Form 5 reporting the receipt of a gift of 300 shares of Common
Stock by a trust for the benefit of his minor son on September 3, 1998.

ITEM 11.  EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     During 1999, the primary responsibility for determining the compensation of
Dime's executive officers was held by the Compensation Committee, subject to
review and appropriate approval by the Board.

     Principles.  For 1999, the Compensation Committee's guiding principles for
its compensation program reflect the same objectives as had been set in prior
years: (1) to enable Dime to recruit and retain the highest quality executive
talent available to it; and (2) to motivate Dime's executives to achieve and
sustain a superior level of corporate performance, since consistently superior
performance will result in superior returns to stockholders. Recruitment and
retention objectives are addressed by providing total compensation opportunities
that are competitive relative to the market with which Dime competes for talent.
In that regard, Dime recognizes that its own growth in recent years and its
expanded emphasis on commercial banking activities, as well as the enormous
changes taking place within the banking industry and the increasing competition
from other segments of the financial services industry, have significantly
broadened the range of institutions with which it can -- and must -- compete for
talent. Thus, the Compensation Committee believes that an important component of
its guiding principles must also be frequent monitoring of competitive practices
and an openness to adapting Dime's compensation practices to meet changing
conditions within the broad financial services industry and to foster Dime's
objectives of increasing its commercial banking orientation.

     While operating within a competitive framework, the Compensation Committee
pursues its motivational objectives by giving greater emphasis to those
components of the total compensation package that reward performance, in order
to reinforce the linkage of rewards with the achievement of business results
and, ultimately, with the financial interests of stockholders. Thus, while the
principal components of compensation (base salary, annual incentive and
long-term incentive), as well as benefits, are generally set at or near
competitive levels, emphasis is placed on variable pay, with the intention that
total actual pay be aligned with performance relative to Dime's short- and
long-term objectives. The effect of this pay-for-performance orientation should
be that truly superior performance will result in total compensation that
exceeds the median total compensation range of the comparative group, while
mediocre performance will result in total compensation that is less than the
median range of that group. In particular, as the ultimate measure of
performance is return to stockholders, the compensation program, particularly
for more senior executives, should be designed to ensure that management has a
substantial proprietary financial interest in the return realized by
stockholders.

                                       50
<PAGE>   53

     Practices.  Because of the scope and complexity of Dime's activities in a
rapidly changing financial services industry, it is imperative that Dime
attract, retain and motivate the most qualified and talented executives
available to it. Dime competes for executives with a variety of financial
services companies, including commercial banks and other institutional lenders,
large thrifts, mortgage banking companies and investment banking firms. The
Compensation Committee, based in part on a thorough analysis of Dime's executive
compensation levels by independent outside compensation consultants and assisted
by third-party data collection and analysis, annually reviews Dime's executive
compensation practices within the framework discussed above and compares them
with the executive compensation practices of other financial services companies
with which Dime competes for executive talent.

     As discussed in last year's Compensation Committee Report, Dime, in late
1997, undertook a thorough review of its compensation practices following the
acquisition of NAMC, and the results of that review were reflected in executive
compensation for 1998. For 1999, Dime continued the practices it had followed in
the prior year. Thus, Dime's independent compensation consultants analyzed
publicly reported senior management compensation at a peer group of institutions
(both thrifts and banks) throughout the country, which for 1999 consisted of 13
institutions, with median assets of $24.9 billion. This data was then adjusted
upward to reflect the generally higher cash compensation levels in the New York
City Metropolitan Area. They then further assessed publicly reported
compensation at five New York-based money-center/superregional banks (adjusted
downward to reflect size and revenue differentials), in order to take into
account the fact that Dime now draws much of its executive talent from the large
commercial banks located in New York City, as evidenced by the significant
number of Dime's executive officers who have previously served in senior
positions at such institutions immediately prior to joining Dime. Finally, for
those senior officer positions where comparable publicly reported peer group and
money-center/superregional bank data was generally not readily available,
published survey data was analyzed, including information on financial services
companies comparable in asset size to the peer group and to the
money-center/superregional group (adjusted on the same basis described above). A
functional matching approach was used to compare each of the executive positions
at Dime to market-surveyed positions based on similarity of responsibilities,
with appropriate adjustments being made as necessary to reflect any differences
therein. All data analyzed was, if necessary, adjusted upward to take into
account any time differential from the periods for which the data was reported.
The information from these various analyses then provided the starting point for
the Compensation Committee's approach to fixing the principal components of
executive compensation for 1999.

     With respect to base salaries, the foregoing analysis showed that the base
salaries of most of Dime's senior officers were below both peer group and
money-center/superregional bank medians. For 1999, salaries for executive
officers were adjusted upward by, on average, approximately 11%, but generally
remained below the average of the peer group and money-center/superregional bank
medians described above. For 1999, consistent with these increases, the annual
salary for Mr. Toal, the Chief Executive Officer, was increased by 10% to
$825,000, which was slightly above the average of the peer group and
money-center/superregional bank medians.

     With respect to incentives, and as described above, a fundamental tenet of
Dime's incentive compensation philosophy is to reward performance based
primarily on objective standards. Short-term incentives, payable in cash, are
geared to the accomplishment of Dime's key annual business plan objectives.

     For 1999, cash incentives were awarded to senior officers under Dime's
stockholder-approved Senior Officer Incentive Plan. Under this plan, for a given
performance period (usually a calendar year), the Compensation Committee at the
beginning of the performance period designates officers who are eligible to
participate and specifies one or more levels of performance goals. These
performance goals must be based upon one or more of earnings per share, return
on equity and return on assets. The Compensation Committee then establishes
individual target incentive opportunities for each participating officer, as
well as a preset formula for determining the range within which incentive levels
may vary with the level of the performance goals reached. The amounts that would
otherwise be payable under the plan based on the level of performance goals
reached may then be decreased, but not increased, in the discretion of the
Compensation Committee. This plan is intended to qualify awards payable
thereunder as "qualified performance-based compensation"

                                       51
<PAGE>   54

under Section 162(m) of the Internal Revenue Code, thereby ensuring full
deductibility of compensation payable under the plan to any executive officers
whose total compensation may exceed $1 million.

     For 1999, all of the executive officers named in the Summary Compensation
Table below were designated as participants in the Senior Officer Incentive
Plan. Performance goals for 1999, as for 1998, were based on the greater of
Dime's earnings per share or adjusted earnings per share (such an adjustment
would generally eliminate any extraordinary items, as determined in accordance
with generally accepted accounting principles, certain restructuring charges and
charges relating to discontinued operations, any profit or loss attributable to
business operations of an entity acquired by Dime during the performance period,
and any goodwill expense attributable to such acquired entity, that would
otherwise be included in earnings per share). Depending on the level of
performance goal achieved, a participant's incentive award could range between 0
and 200% of his or her individual target incentive (subject to a maximum annual
individual award limit with respect to awards under the Senior Officer Incentive
Plan of $1,500,000). In order to assist the Compensation Committee in setting
individual target incentives, Dime's independent compensation consultants
analyzed the same sources as discussed above with respect to the determination
of annual salaries, using for comparison purposes a three year average of
publicly reported compensation (expressed as a percentage of base salary),
without adjustment, for the executive officers named in the Summary Compensation
Table. For 1999, individual targets for plan participants were on average close
to the median of the peer group, although generally well below the median of the
money-center/superregional bank group. For 1999, Mr. Toal's target incentive
under the plan remained at 100% of his annual salary. This percentage, which was
determined on a basis consistent with plan participant target incentive
opportunities generally, was well below the midpoint of the combined survey
analysis. For 1999, Dime reported record earnings per share, substantially
exceeding the performance targets under the plan, and therefore participants
qualified for award opportunities of 200% of target incentive amount (subject to
maximum award limits under the plan). In then considering whether and to what
extent to use its discretion to reduce the cash incentives for which the
participants in the Senior Officer Incentive Plan were otherwise eligible, the
Compensation Committee considered at length the extent to which the significant
drop in Dime's stock price during 1999 should weigh against not only
management's success in producing earnings per share in excess of the targets
set forth in the plan, but also Dime's other significant operating achievements
during the year. In particular, the Compensation Committee noted such factors
as:

     -- attaining a 14% growth in annual operating earnings per share, and
        continuing a streak of 14 consecutive quarters of rising operating
        earnings, despite a difficult rate environment and sharply declining
        mortgage banking activity;

     -- significant increases for 1999 in nearly all major performance measures,
        including return on equity and return on assets, from 1998, itself a
        record year; and

     -- the substantial expansion of Dime's commercial banking businesses during
        1999, including a 73% increase in consumer loan originations and a 217%
        increase in business loan originations, in part as a result of the
        strategic acquisitions during the year of Citibank's auto finance
        business and of Keybank's commercial banking franchise on Long Island,
        resulting in an increase in non-residential loans from 30% to 46% of
        loans outstanding during the course of the year.

     The Compensation Committee further considered that the purposes of
short-term incentives, which drive accomplishment of annual business goals,
should not be conflated with those of long-term incentives, which assure that a
significant portion of an executive's potential compensation is conditioned upon
the achievement and maintenance -- over multi-year periods -- of returns to
stockholders.

     After weighing all these factors, the Compensation Committee concluded that
it was important to maintain the link between the accomplishment of clearly
defined and pre-set business objectives and a specific component of annual
compensation. In this regard, it was clear that, for 1999, management had not
only met but substantially exceeded these annual operating targets. While this
in turn led the Compensation Committee to conclude that the payment of
incentives as provided for in the plan was warranted, the Compensation Committee
also concluded that maximum awards under the plan, even if otherwise earned,
should not be paid where the return to stockholders for the year had been below
par. Accordingly, awards to executive officers

                                       52
<PAGE>   55

under the plan were reduced. In the case of Mr. Toal, the incentive awarded for
1999 was $1,125,000, as compared with a maximum award of $1,500,000 for which he
was eligible under the plan.

     Long-term incentives are provided in the form of stock and stock-based
grants. As discussed in last year's Compensation Committee Report, the
Compensation Committee has adopted an equity stake approach, which seeks to
establish a desirable level of equity participation for senior executives,
expressed as a percentage of Common Stock outstanding that is to be subject to
annual option grants, with the appropriate percentage of Common Stock to be
subject to such grants being determined by reference to competitive practices.
For 1999, the Compensation Committee determined to maintain the same stock
option grant guidelines as for 1998 (with adjustments being made to individual
grants based on considerations including individual performance and experience).
For 1999, as for 1998, grants were made in the form of non-qualified options to
purchase Common Stock. These non-qualified options generally vest over a three
year period (subject to accelerated vesting in certain circumstances, including
a change in control), have expiration dates 11 years from the date of grant and
have exercise prices equal to the fair market value per share of Common Stock on
the date of grant, which was deemed to be the closing price of such stock on the
NYSE on that date. In January 1999, Mr. Toal received non-qualified options to
purchase 120,000 shares of Common Stock at fair market value on the date of
grant, an increase over the 94,800 non-qualified options awarded to Mr. Toal in
1998, but still substantially below the average of the peer group and
money-center/superregional bank medians described above. The Compensation
Committee believes that this increase in the number of stock options granted was
consistent with the Compensation Committee's preference for emphasizing
long-term incentive compensation, the value of which is tied to stockholder
return.

     Also, although not an aspect of cash or incentive compensation, Dime seeks
to attract and retain executives by providing a variety of benefit plans and
programs generally designed to be competitive with those provided by other
financial services companies. See "Executive Compensation" below for a
description of these plans and programs as currently in effect.

     The Compensation Committee's policy is to structure executive compensation
in a time and manner intended to limit the likelihood that current compensation
will exceed the limits for deductibility prescribed by Section 162(m) of the
Internal Revenue Code. In furtherance of this policy, Dime adopted, with
stockholder approval, the Senior Officer Incentive Plan, under which cash
incentive awards to senior officers are made in a manner intended to qualify
them for full deductibility under the Internal Revenue Code. This policy
continued to be operative for 1999; however, the Compensation Committee retains
discretion to make exceptions to this policy, and in determining whether to do
so the Compensation Committee may consider a number of factors, including the
tax position of Dime, the materiality of amounts likely to be involved and any
potential ramifications of the loss of flexibility to respond to unforeseeable
changes in circumstances.

     Finally, in determining compensation levels and targets within the
framework discussed above, the Compensation Committee takes into full account
applicable regulatory restrictions on the compensation of executive officers.

                                       53
<PAGE>   56

     Executive compensation is a constantly evolving field. The Compensation
Committee monitors trends in this area, as well as changes in law, regulation
and accounting practice, that may affect either its compensation philosophy or
its practices. Accordingly, the Compensation Committee at all times reserves the
right to alter its approach in response to changing conditions. In particular,
the Compensation Committee expects that for 2000, in the wake of Dime's merger
with Hudson, the past compensation practices of both Dime and Hudson will be
carefully re-evaluated with a view to determining the practices that will best
suit the combined institution, Dime United.

                                          THE COMPENSATION COMMITTEE:

                                               IRA T. WENDER, CHAIRMAN
                                               DERRICK D. CEPHAS
                                               J. BARCLAY COLLINS II
                                               MARGARET OSMER-McQUADE
                                               DR. PAUL A. QUALBEN
                                               HOWARD SMITH
                                               DR. NORMAN R. SMITH

                                       54
<PAGE>   57

EXECUTIVE COMPENSATION

     The following table sets forth information concerning the compensation for
services in all capacities to Dime for the fiscal years ended December 31, 1999,
1998 and 1997 of those persons who were, at December 31, 1999, (a) the Chief
Executive Officer of Dime Bancorp and (b) the other four most highly compensated
executive officers of Dime Bancorp (collectively with the Chief Executive
Officer, the "named executive officers").

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                     LONG-TERM
                                            ANNUAL COMPENSATION                 COMPENSATION AWARDS
                                    ------------------------------------     -------------------------
                                                               OTHER         RESTRICTED    SECURITIES
                                                               ANNUAL          STOCK       UNDERLYING       ALL OTHER
NAME AND PRINCIPAL POSITION  YEAR    SALARY     BONUS(1)    COMPENSATION     AWARDS(2)    OPTIONS/SARS   COMPENSATION(3)
---------------------------  ----   --------   ----------   ------------     ----------   ------------   ---------------
<S>                          <C>    <C>        <C>          <C>              <C>          <C>            <C>
Lawrence J. Toal(4)......    1999   $825,000   $1,125,000     $     0        $        0     120,000         $ 48,321
  Chief Executive Officer    1998    750,000    1,204,810(5)     5,617        1,631,070      94,800          164,581
                             1997    650,000      800,000           0                 0      78,000           39,000
Anthony R. Burriesci(6)...   1999    400,000      479,683       3,070                 0      40,000           23,002
  Chief Financial Officer    1998    375,000      401,620(7)     4,666          699,840      36,700           56,769
                             1997    166,923      385,000(8)    20,776          577,500      90,000                0
Richard A. Mirro.........    1999    400,000      400,000       2,087                 0      40,000           25,375
  Chief Executive Officer,   1998    375,000      502,310(9)     3,696           62,226      36,700           20,125
  Mortgage Banking           1997    350,000      395,000(10)     8,349               0      54,500                0
Peyton R. Patterson......    1999    325,000      303,747       3,070                 0      30,000           18,869
  General Manager,           1998    275,000      201,040(11)     4,876         441,180      24,600           49,312
  Consumer Financial         1997    225,000      170,000           0                 0      16,000            8,827
  Services
Carlos R. Munoz..........    1999    350,000      230,000       3,070                 0      35,000           20,311
  Chief Credit and Risk      1998    325,000      231,250(12)     4,302         522,450      33,400           55,086
  Management Officer         1997    300,000      175,000           0                 0      18,000           18,000
</TABLE>

---------------
 (1) Bonuses are reported in the year that the named executive officer rendered
     the services to which the bonus relates, even though the amounts shown may
     actually be paid to the named executive officer in a subsequent year.

 (2) Except as noted, restricted stock awards generally vest in three equal
     installments on the third, fourth, and fifth anniversary of the date of
     grant. At December 31, 1999, Mr. Toal held 58,807 shares of restricted
     stock having a value of $830,649 (3,207 shares of which were scheduled to
     vest in equal installments on January 30, 2000 and January 30, 2001); Mr.
     Burriesci held 37,047 shares of restricted stock having a value of $523,289
     (1,080 shares of which were scheduled to vest in equal installments on
     January 30, 2000 and January 30, 2001 and 11,667 shares of which were
     scheduled to vest on January 24, 2000); Mr. Mirro held 14,874 shares of
     restricted stock having a value of $210,095 (1,540 shares of which were
     scheduled to vest in equal installments on January 29, 2000 and January 29,
     2001); Ms. Patterson held 19,328 shares of restricted stock having a value
     of $273,008 (694 shares of which were scheduled to vest in equal
     installments on January 30, 2000 and January 30, 2001); and Mr. Munoz held
     21,601 shares of restricted stock having a value of $305,114 (834 shares of
     which were scheduled to vest in equal installments on January 30, 2000 and
     January 30, 2001). Dividends are paid, and other distributions made, on all
     shares of restricted stock to the same extent that dividends are declared
     and paid, or other distributions are made, on shares of Common Stock in
     general, provided such shares of restricted stock are held on the record
     date determined for the payment of dividends, or the making of other
     distributions, if any, on the Common Stock.

 (3) For the year ended December 31, 1999, the amounts set forth reflect
     matching and supplemental allocations by Dime Bancorp on behalf of each of
     the named executive officers under certain defined contribution plans and
     arrangements.

                                       55
<PAGE>   58

 (4) Mr. Toal became Chief Executive Officer of Dime Bancorp (and Chairman of
     the Board and Chief Executive Officer of Dime FSB) on January 1, 1997 and
     Chairman of the Board of Dime Bancorp on April 30, 1998.

 (5) The amount shown represents an incentive bonus for 1998 of $1,200,000 and a
     cash award equal to the purchase price of 4,810 shares of restricted stock.

 (6) Mr. Burriesci joined Dime Bancorp in July 1997 at an annual rate of salary
     of $350,000.

 (7) The amount shown represents an incentive bonus for 1998 of $400,000 and a
     cash award equal to the purchase price of 1,620 shares of restricted stock.

 (8) The amount shown represents a $150,000 cash bonus paid to Mr. Burriesci
     upon joining Dime Bancorp in July 1997, an incentive bonus for 1997 of
     $200,000 and a cash award equal to the purchase price of 35,000 shares of
     restricted stock.

 (9) The amount shown represents an incentive bonus for 1998 of $500,000 and a
     cash award equal to the purchase price of 2,310 shares of restricted stock.

(10) The amount shown represents an incentive bonus for 1997 of $375,000 and a
     cash award equal to the purchase price of 20,000 shares of restricted
     stock.

(11) The amount shown represents an incentive bonus for 1998 of $200,000 and a
     cash award equal to the purchase price of 1,040 shares of restricted stock.

(12) The amount shown represents an incentive bonus for 1998 of $230,000 and a
     cash award equal to the purchase price of 1,250 shares of restricted stock.

     The following table contains information concerning the grant of options to
purchase Common Stock and limited tandem stock appreciation rights ("SARs") to
the named executive officers during the year ended December 31, 1999.

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                          INDIVIDUAL GRANTS
                            ------------------------------------------------------------------------------
                             NUMBER OF        % OF TOTAL
                             SECURITIES      OPTIONS/SARS
                             UNDERLYING       GRANTED TO      EXERCISE OR                     GRANT DATE
                            OPTIONS/SARS     EMPLOYEES IN         BASE        EXPIRATION       PRESENT
NAME                         GRANTED(1)     FISCAL YEAR(2)    PRICE ($/SH)       DATE       VALUE($)(3)(4)
----                        ------------    --------------    ------------    ----------    --------------
<S>                         <C>             <C>               <C>             <C>           <C>
Lawrence J. Toal..........    120,000            4.35%          $ 24.25        1/29/10        $1,990,440
Anthony R. Burriesci......     40,000            1.45             24.25        1/29/10           663,480
Richard A. Mirro..........     40,000            1.45            23.875        1/28/10           653,220
Peyton R. Patterson.......     30,000            1.09             24.25        1/29/10           497,610
Carlos R. Munoz...........     35,000            1.27             24.25        1/29/10           580,545
</TABLE>

---------------
(1) The options shown become exercisable at a rate of one-third per year
    commencing one year from the date of the grant. All of the awards reflected
    in the table consisted of options with limited tandem SARs. The tandem SARs
    shown are only exercisable within the 60-day period following the occurrence
    of certain specified changes in ownership or control of Dime Bancorp or
    certain of its subsidiaries and are payable on the basis of the highest
    price paid for the Common Stock during the 90-day period ending on the day
    of the change in ownership or control.

(2) The percentage set forth in this column reflects the relationship between
    the number of options (with limited tandem SARs) granted to the named
    executive officer and the number of options (whether or not with limited
    tandem SARs) granted to all employees in the fiscal year.

(3) The estimated value shown, which was determined by application of the
    Black-Scholes option pricing model, was developed solely for purposes of
    comparative disclosure in accordance with the regulations of the Commission
    and does not necessarily reflect Dime Bancorp's view of the appropriate
    value or methodology for purposes of financial reporting. Use of this model
    should not be viewed in any way as a

                                       56
<PAGE>   59

    forecast of the future performance of the Common Stock, volatility or
    dividend policy. No adjustments have been made for forfeitures or
    non-transferability.

(4) The estimated present value of the options shown is based upon historical
    experience and for the options granted to each of the named executive
    officers, except Mr. Mirro, is $16.587 per share. The estimated present
    value of the options shown for Mr. Mirro is $16.330 per share. Volatility
    calculated over 180 trading days prior to the date of grant was: .59.

    Risk-Free Rate of Return, representing the interest rate on a United States
    Treasury security with a maturity date corresponding to the term of the
    options: 5.11%.

    Dividend Yield for each of the options granted is .786%.

    Time of Exercise for all options shown: 11 years.

     The following table sets forth information with respect to exercised
options during 1999, as well as the aggregate number of unexercised options to
purchase Common Stock granted in all years to the named executive officers and
held by them as of December 31, 1999 and the value of unexercised in-the-money
options (i.e., options that had a positive spread between the exercise price of
such option and the fair market value of the Common Stock) as of December 31,
1999. Dime has not granted any freestanding SARs to the named executive
officers.

              AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                     AND FISCAL YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                                     NUMBER OF
                                                                    SECURITIES            VALUE OF
                                                                    UNDERLYING           UNEXERCISED
                                                                    UNEXERCISED         IN-THE-MONEY
                                                                  OPTIONS/SARS AT        OPTIONS AT
                                                                 DECEMBER 31, 1999    DECEMBER 31, 1999
                                        SHARES                   -----------------    -----------------
                                       ACQUIRED       VALUE        EXERCISABLE/         EXERCISABLE/
NAME                                  ON EXERCISE    REALIZED      UNEXERCISABLE        UNEXERCISABLE
----                                  -----------    --------    -----------------    -----------------
<S>                                   <C>            <C>         <C>                  <C>
Lawrence J. Toal....................         0       $     0      448,658/209,200       $3,178,242/0
Anthony R. Burriesci................         0             0       72,233/ 94,467                0/0
Richard A. Mirro....................         0             0       66,733/ 64,467                0/0
Peyton R. Patterson.................     6,667        40,835       13,533/ 51,734                0/0
Carlos R. Munoz.....................    12,000        11,250       29,333/ 63,267           65,975/0
</TABLE>

                                       57
<PAGE>   60

     The following table shows the estimated annual pension benefits payable to
a covered member at normal retirement age (age 65) under the Retirement Plan of
Dime Bancorp, Inc. and the Benefit Restoration Plan of The Dime Savings Bank of
New York, FSB based on compensation covered under the plans and years of
creditable service with Dime FSB or certain affiliates of Dime. The Benefit
Restoration Plan provides benefits that would otherwise be denied a member
because of certain limitations on benefits under the Retirement Plan imposed by
the Internal Revenue Code.

                               PENSION PLAN TABLE

<TABLE>
<CAPTION>
                                                    YEARS OF CREDITABLE SERVICE
                                      --------------------------------------------------------
REMUNERATION                          15 YEARS    20 YEARS    25 YEARS    30 YEARS    35 YEARS
------------                          --------    --------    --------    --------    --------
<S>                                   <C>         <C>         <C>         <C>         <C>
$ 125,000...........................  $ 32,813    $ 43,750    $ 54,688    $ 65,625    $ 75,000
   150,000..........................    39,375      52,500      65,625      78,750      90,000
   175,000..........................    45,938      61,250      76,563      91,875     105,000
   200,000..........................    52,500      70,000      87,500     105,000     120,000
   225,000..........................    59,063      78,750      98,438     118,125     135,000
   250,000..........................    65,625      87,500     109,375     131,250     150,000
   300,000..........................    78,750     105,000     131,250     157,500     180,000
   350,000..........................    91,875     122,500     153,125     183,750     210,000
   400,000..........................   105,000     140,000     175,000     210,000     240,000
   450,000..........................   118,125     157,500     196,875     236,250     270,000
   500,000..........................   131,250     175,000     218,750     262,500     300,000
   600,000..........................   157,500     210,000     262,500     315,000     360,000
   700,000..........................   183,750     245,000     306,250     367,500     420,000
   800,000..........................   210,000     280,000     350,000     420,000     480,000
   900,000..........................   236,250     315,000     393,750     472,500     540,000
 1,000,000..........................   262,500     350,000     437,500     525,000     600,000
</TABLE>

     A member's compensation covered by the plans is the product of 12 times his
or her average monthly compensation for the 36 consecutive months of service
during which the member's compensation was the highest or, if the member's
service is less than 36 months, then for the entire period of service. For these
purposes, covered compensation for the named executive officers includes salary,
but not bonus and other annual compensation, reported in the "Annual
Compensation" columns of the Summary Compensation Table. The benefit levels set
forth in the Pension Plan Table are based on the years of creditable service
shown in the table, continued existence of the plans without material change,
and payment of benefits in the form of a single life annuity (rather than in
other available forms). The benefits listed in the Pension Plan Table are not
subject to any reduction for Social Security contributions or benefits or any
other offset (although certain minimum benefits provided under the plans with
respect to certain prior service are subject to a deduction measured by Social
Security benefits, or by an offset with respect to compensation earned that is
not in excess of Social Security covered compensation). However, such benefits
reflect the application of the maximum benefit limit under the plans of 60% of
covered compensation.

     Dime also maintains the Dime Bancorp, Inc. Supplemental Executive
Retirement Plan ("SERP"). The SERP provides for an annual benefit equal to a
pension goal percentage (between 30% and 60%) multiplied by Average Compensation
(as defined) payable over the life of each SERP participant after the
participant's retirement at or after age 65 or, in certain instances, a reduced
50% or 100% joint and survivor annuity form of benefit. Additional forms of
benefit, including 5-,10-, or 15-year-certain life annuities, are available, and
the Compensation Committee can direct that an actuarially equivalent lump sum be
paid at termination of service in lieu of an annuity. For these purposes, unless
otherwise provided by the Compensation Committee within the SERP's parameters,
Average Compensation is the highest average annual base salary and certain other
taxable cash-based compensation (other than sign-on bonus or other amounts paid
in connection with grants of rights to purchase restricted stock) earned over
three consecutive years out of the participant's last ten years

                                       58
<PAGE>   61

of employment (or such other period designated by the Compensation Committee),
with incentive compensation deemed allocated and paid over the period over which
it was earned. The SERP benefit is offset by other retirement benefits provided
under qualified defined benefit plans of Dime Bancorp and Dime FSB (such as the
Retirement Plan), as well as the Benefit Restoration Plan and other contractual
benefits to the extent they relate to the benefits under a Dime qualified
defined benefit plan. The SERP provides that benefits may commence, in a reduced
amount, if the participant terminates service before age 65 but, unless the
Compensation Committee directs otherwise, no earlier than age 55. The SERP also
provides for a death benefit to be paid to a participant's surviving spouse or
minor children in the event that the participant dies prior to the start of his
or her benefits under the SERP. Death benefits will not commence to be paid
until the month that the participant would have attained age 55 had he or she
lived. Benefits under the SERP generally vest based on the period of employment
by the participant, with partial vesting after five years, increasing to full
vesting after ten years. The SERP counts service both before and during SERP
participation for these purposes. Accelerated vesting applies in the event of
certain terminations of employment after a change in control (as defined) and
the Compensation Committee can alter the vesting schedule (but with limits on
such alteration rights upon a change in control). Except with respect to vesting
rights, and except to the extent that compensation considered under the SERP may
increase over a period of time, the SERP benefit does not increase based on
years of service.

     Mr. Toal's SERP goal was set at 60% by amendment of his employment
agreement effective as of October 22, 1999. As of December 31, 1999, therefore,
Mr. Toal had accrued a SERP benefit (which will be offset by his Retirement Plan
and related Benefit Restoration Plan benefits), commencing at age 65 in the form
of a single life annuity, of approximately $1,070,000. Mr. Toal was then 80%
vested in that benefit.

     Mr. Burriesci has a SERP goal that has been set at 50%. Under Mr.
Burriesci's employment agreement, he is also provided with a benefit based on a
doubling of Retirement Plan and related Benefit Restoration Plan accruals
(offset by actual Retirement Plan and related Benefit Restoration Plan benefits)
during the first ten years of his employment, with that benefit vesting after
three years. Those benefits (in which Mr. Burriesci is not yet vested) will act
as an offset of Mr. Burriesci's SERP benefit. Based on compensation earned
through December 31, 1999, Mr. Burriesci's SERP benefit, which will be offset by
Retirement Plan and related Benefit Restoration Plan benefits, as well as the
additional contractual benefit described above, commencing at age 65 in the form
of a single life annuity, is approximately $404,321. Mr. Burriesci has not yet
vested in that benefit.

     Each of Messrs. Mirro and Munoz and Ms. Patterson has a SERP goal that has
been set at 50%. Based on compensation earned through December 31, 1999, the
SERP benefit (which will be offset by Retirement Plan and related Benefit
Restoration Plan benefits) accrued, commencing at age 65 in the form of a single
life annuity, by Mr. Mirro is approximately $400,000, by Mr. Munoz is
approximately $268,333 and by Ms. Patterson is approximately $249,791. As of
December 31, 1999, none of these officers was vested in their respective SERP
benefits.

     The respective completed years of creditable service under the Retirement
Plan and, as appropriate, the Benefit Restoration Plan and the years of service
for vesting in SERP benefits as of December 31, 1999 for each of the named
executive officers is as follows: Lawrence J. Toal, eight years; Anthony R.
Burriesci, two years; Richard A. Mirro, three years; Peyton R. Patterson, three
years; and Carlos R. Munoz, four years.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

     Dime FSB has employment agreements with each of Messrs. Toal, Burriesci,
Mirro and Munoz, as well as with Ms. Patterson.

     Agreement with Mr. Toal.  Effective as of October 22, 1999, the employment
agreement, dated January 30, 1998, between Dime FSB and Mr. Toal was amended.
The current term of Mr. Toal's agreement extends to December 31, 2002. Dime
Bancorp is jointly and severally liable for the obligations of Dime FSB under
Mr. Toal's agreement.

     Mr. Toal's agreement provides that he will serve, throughout its term, as
Chief Executive Officer and Chairman of the Board of each of Dime Bancorp and
Dime FSB. Under his agreement, Mr. Toal received a

                                       59
<PAGE>   62

base salary of $825,000 in 1999, which may be subsequently increased (but not
decreased) by the Board of Directors. For 2000, Mr. Toal's base salary has been
increased to $900,000. (Mr. Toal also will be eligible to participate in an
annual cash bonus program (with a target bonus opportunity of at least 50% of
his base salary) and long-term incentive program and is provided with certain
perquisites such as financial planning benefits, club memberships and a car and
driver.

     Under his agreement, Mr. Toal also participates in the SERP, with a pension
goal of not less than 60% based on average compensation and vesting over ten
years of service. (Mr. Toal's SERP benefit is described in more detail above.)
However, pursuant to the agreement, Mr. Toal will be fully vested in his SERP
benefit in the event of a termination of his employment (other than for cause)
in connection with a change in control (as described below) that otherwise would
trigger a right to change in control-related benefits. In the event of any other
involuntary termination of Mr. Toal's employment (other than for cause), Mr.
Toal will receive service credit for SERP vesting purposes as if he had remained
in employment until the end of the term of his agreement then in effect. In
addition, when applying the average compensation definition under the SERP, in
the event of any termination of Mr. Toal's employment that would trigger a right
to change in control-related benefits, or any other involuntary termination of
Mr. Toal's employment (other than for cause), average compensation will be
determined as if Mr. Toal had continued service throughout the then applicable
term of his agreement and earned an assumed annual bonus based upon a formula
set forth in that agreement. Mr. Toal's agreement also provides that if, at or
after age 65, the amounts payable to him under the SERP and other defined
benefit plans of Dime Bancorp and affiliates, when stated in the form of a
single life annuity, do not equal at least $1,235,000, he will be entitled, upon
retirement, to additional payments so that his total retirement benefit,
expressed as a single life annuity, at or after age 65, will not be less than
that amount.

     In the event of Mr. Toal's disability, his agreement provides that Mr. Toal
will receive a sum equal to his annual salary in the first year of such
disability and a sum equal to 75% of his annual salary for each year thereafter
throughout the duration of the disability up to age 65, with continued life,
medical, and dental coverage for the same period.

     If Mr. Toal's employment is terminated by Dime FSB (other than for cause),
Mr. Toal will receive a lump sum payment equal to two times his annual salary,
as well as continuation, until the later to occur of the 18-month anniversary of
the date of termination or the end of the remaining term of his agreement at the
effective date of termination, of life, medical and dental insurance coverage,
subject to certain conditions. If Mr. Toal voluntarily terminates his employment
(except as provided below), generally no additional benefits will be provided to
him. Similarly, in general, no continuing benefits are otherwise to be provided
to Mr. Toal upon the expiration of the term of his agreement on his 65th
birthday, other than the SERP, the Key Executive Life Insurance/Death Benefit
Plan described below, and other retiree benefits otherwise payable to him.

     Mr. Toal's agreement also provides for specified benefits following a
"change in control." For these purposes, a "change in control" is generally
defined to include (1) the acquisition of more than 35% of the voting power of
Dime Bancorp by any person, entity or group; (2) if the individuals who were
members of the Board of Directors on July 24, 1997, and others whose appointment
or nomination was recommended by a vote of 2/3 of the directors in office on
July 24, 1997 (or by other directors who themselves previously satisfied this
requirement), cease to constitute a majority of the Board; (3) a merger or
consolidation of Dime Bancorp or any direct or indirect subsidiary of Dime
Bancorp unless Dime Bancorp voting securities outstanding before the event
continue to represent (in combination with securities held under an employee
benefit plan of Dime Bancorp or any subsidiary) at least 65% of the outstanding
voting securities of the surviving entity after the merger or consolidation, or
unless the merger or consolidation was effected solely to implement a
recapitalization of Dime Bancorp or Dime FSB where no person, entity or group
becomes the owner of 35% or more of the voting securities of Dime Bancorp or
Dime FSB; (4) the execution of a binding agreement for one of the events
described in (1) or (3) (unless abandoned); and (5) certain sales of
substantially all of Dime Bancorp's consolidated assets, as well as certain
other circumstances specified in Mr. Toal's agreement.

                                       60
<PAGE>   63

     If following a change in control Mr. Toal's employment is involuntarily
terminated (other than for cause) during the term of his agreement in effect at
the time of the change in control, or if Mr. Toal terminates his employment
during such term after (a) he has not been re-elected to the positions set forth
above (or, if Dime Bancorp or Dime FSB is not the surviving ultimate parent
entity in the transaction giving rise to the change in control, elected as chief
executive officer of the ultimate parent entity), (b) there has been a notice of
non-renewal of Mr. Toal's agreement other than for cause, or (c) there is a
material change in Mr. Toal's functions, duties, or responsibilities to a level
of lesser responsibility, importance, or scope, Mr. Toal will be entitled to the
SERP enhancement described above, as well as other benefits. These additional
benefits include a lump sum equal to three times his "Annual Compensation," as
well as (to the extent permissible under the underlying plan) continued
exercisability of all vested stock options as if there had not been a
termination of employment (including options that vest upon Mr. Toal's
retirement), and continued disability, medical, and dental insurance coverage
for Mr. Toal and his spouse for the remainder of their lives, subject to certain
conditions. For these purposes, "Annual Compensation" at any time means the sum
of his annual salary plus an assumed annual bonus based upon a formula set forth
in Mr. Toal's agreement.

     Agreement with Mr. Burriesci.  Effective as of January 30, 1998, Dime FSB
entered into an employment agreement with Mr. Burriesci, which also replaced a
previous agreement. The term of Mr. Burriesci's agreement extends to March 1,
2003, with automatic renewal applying each March 1st, absent earlier non-
renewal. Dime Bancorp is jointly and severally liable for the obligations of
Dime FSB under Mr. Burriesci's agreement.

     Mr. Burriesci's agreement provides that he will serve as Chief Financial
Officer of Dime Bancorp and Dime FSB, and provides an annual salary during the
period of the agreement ending July 1, 2000, at the rate of $375,000. This
annual salary is subject to periodic review and possible increase, or up to a
25% decrease (but not below the level set forth above). Under an Agreement
Regarding Initial Employment Terms effective as of July 1, 1997, Mr. Burriesci
effectively had a minimum target cash incentive opportunity for 1999 of 50% of
base pay as in effect on December 31, 1999. Mr. Burriesci's initial terms
agreement also provides for a promise of long-term incentive awards in the form
of options with a value of at least 75% of base pay for each of 1999 and 2000,
to the extent approved by the Compensation Committee, and provides for certain
perquisites.

     Pursuant to the terms of his employment agreement, Mr. Burriesci also
participates in the SERP, with a pension goal of not less than 50% of average
SERP-covered compensation (as more fully described above). Mr. Burriesci's
agreement also provides for a benefit based upon a doubling of Retirement Plan
and related Benefit Restoration Plan accruals (offset by actual Retirement Plan
accruals) during the first ten years of his employment, with vesting of that
benefit after three years. This benefit will act as an offset of Mr. Burriesci's
SERP benefit, if one is payable.

     In the event of Mr. Burriesci's permanent disability, Dime FSB will pay Mr.
Burriesci his annual salary for up to one year, less the maximum benefit
available under Dime insurance coverage, and will generally continue to provide
certain benefits for the remaining term of Mr. Burriesci's agreement then in
effect. If Mr. Burriesci's employment is terminated without cause, Dime FSB will
continue to pay him his annual salary (as in effect at the termination date) for
18 months, as well as generally continue certain benefits for the same period.
Under Mr. Burriesci's Agreement Regarding Initial Employment Terms, Mr.
Burriesci will also have full vesting of the restricted stock and options
granted in connection with the commencement of his employment if his employment
is involuntarily terminated other than for cause.

     Mr. Burriesci's agreement also provides for enhanced severance benefits (in
lieu of the termination benefits described above) following a change in control
(defined in the same manner as under Mr. Toal's agreement). If, after a covered
change in control, Mr. Burriesci's employment is terminated by Dime FSB (other
than for cause), or if Mr. Burriesci terminates his employment during the term
in effect at the time of the change in control after a decrease in his annual
salary (to a level below that which applied before the change in control) or a
material downgrading of his duties or responsibilities from those in effect
immediately prior to the change in control, the enhanced benefits will be
payable. In either of those events, Mr. Burriesci is to be entitled to (i)
payment equal to three times the sum of his annual salary and target cash
incentives for

                                       61
<PAGE>   64

which Mr. Burriesci was eligible (for the year in question) immediately before
the termination, and (ii) continuation of all life, disability, medical and
dental insurance coverage for the remaining term of his agreement at the time of
the termination, subject to certain conditions. Mr. Burriesci's agreement also
includes a provision for continued exercisability of all vested options for the
remainder of their terms and continued vesting and exercisability of all
non-vested options as if there had not been a termination of service upon a
change in control (to the extent permitted by the relevant plan under which the
options were granted). In the event of a termination of service triggering
change in control benefits, Mr. Burriesci will also fully vest in his SERP
benefit and be eligible for a payment to make up any amount forfeited under any
qualified defined contribution plan of Dime Bancorp and the related provisions
of the Benefit Restoration Plan.

     Agreement with Mr. Mirro.  Effective as of December 21, 1998, Dime FSB
entered into an employment agreement with Mr. Mirro, which replaced a previous
agreement. The term of Mr. Mirro's agreement currently extends to March 1, 2003,
with automatic renewal applying each March 1st, absent earlier non-renewal.

     Mr. Mirro's agreement provides that he will serve as Chief Executive
Officer of Dime Savings' mortgage banking subsidiary, NAMC, with his salary as
Chief Executive Officer of NAMC at a minimum rate of $375,000 subject to
periodic review and possible increase, or up to a 25% decrease.

     Pursuant to the terms of his employment agreement, Mr. Mirro also
participates in the SERP, with a pension goal of not less than 50% of average
SERP-covered compensation (as more fully described above). In the event of Mr.
Mirro's permanent disability, Dime FSB will pay Mr. Mirro his annual salary for
up to one year, less the maximum benefit available under Dime insurance
coverage, and will generally continue to provide certain benefits for the
remaining term of Mr. Mirro's agreement then in effect.

     If Mr. Mirro's employment is terminated without cause, Dime FSB will
continue to pay Mr. Mirro his annual salary (as in effect at the termination
date) plus his target bonus amount (as in effect for the year of the
termination) for two years, as well as generally continue certain benefits for
the same period. In such circumstance, Mr. Mirro's stock options and restricted
stock will also fully vest. If Mr. Mirro's principal place of employment is
moved more than 75 miles from Tampa, Florida, he has the right, for a 30-day
period, to treat such relocation as a termination by Dime FSB without cause,
entitling him to these termination benefits. He also has a right to these
termination benefits if his agreement is not renewed, if, within 30 days of his
receipt of notice of non-renewal, he elects to treat the non-renewal as an
involuntary termination.

     Mr. Mirro's agreement also provides for enhanced severance benefits
(generally in lieu of the termination benefits described above) in certain
circumstances following a change in control (defined in the same manner as under
Mr. Toal's agreement). If, after a covered change in control, Mr. Mirro's
employment is terminated by Mr. Mirro during the term of his agreement in effect
at the time of the change in control after a decrease in his annual salary (to a
level below that which applied before the change in control) or a material
downgrading of his duties or responsibilities from those in effect immediately
prior to the change in control, the enhanced severance benefits will be payable.
The enhanced severance benefits will also be payable if Mr. Mirro terminates his
employment for any reason during the 90-day period starting six months after
certain change in control events, provided that Mr. Mirro gives notice of his
intent to so terminate within 30-days after the change in control. (The period
between Mr. Mirro's notice and the termination date is referred to as the notice
period.) If Dime FSB involuntarily terminates Mr. Mirro's employment within the
notice period described above (including the providing of a notice of
non-renewal of Mr. Mirro's agreement) by any means other than at the direction
of Mr. Toal in his capacity as Chairman of the Board of Directors, Chief
Executive Officer or President of Dime FSB (but other than for cause), or even
if by Mr. Toal in such capacity but for reasons other than Mr. Mirro's
performance (other than for cause), the enhanced severance benefits will be
payable. If Dime FSB involuntarily terminates Mr. Mirro's employment other than
during the notice period but during the remaining term of his agreement in
effect at the time of the change in control, for any reason (other than for
cause), and by any permitted means (including the providing of a notice of
non-renewal of Mr. Mirro's agreement), the enhanced severance benefits will be
payable.

     Where the enhanced severance benefits are payable, they will include (i)
payment equal to three times the sum or Mr. Mirro's annual salary and target
cash incentives for which Mr. Mirro was eligible (for the year
                                       62
<PAGE>   65

in question) immediately before the termination, and (ii) continuation of life,
disability, medical and dental insurance coverage for the remaining term of his
agreement at the time of the termination, subject to certain conditions. Mr.
Mirro's agreement also includes a provision for exercisability of all vested
options for the remainder of their terms and continued vesting (to the extent
not otherwise subject to accelerated vesting) and exercisability of all
non-vested options as if there had not been a termination of service upon a
change in control (to the extent permitted by the relevant plan under which the
options were granted). In the event of a termination of service triggering
change in control benefits, Mr. Mirro will be eligible for a payment to make up
any amount forfeited under Dime Bancorp's Retirement 401(k) Plan and the related
provisions of the Benefit Restoration Plan. If Mr. Mirro is involuntarily
terminated within the term in effect at the time of a change in control, or if
he terminates his employment after a material downgrading of his duties or
responsibilities from those in effect immediately prior to the change in control
or a reduction in his salary, he will fully vest in his SERP benefits. If he
otherwise voluntarily terminates his employment in a manner making him eligible
for the enhanced severance benefits, he will be entitled to a benefit calculated
as if he were fully vested in Dime FSB's defined benefit pension plan and the
related provisions of the Benefit Restoration Plan (but which benefit would
constitute an offset of any other SERP benefits that may be payable to him).

     If Mr. Mirro provides notice of his intent to terminate his employment
within 30 days after a change in control, with that termination to take effect
during the 90-day period starting six months after the change in control (with
the period between Mr. Mirro's notice and his announced termination date
referred to again as the notice period), and Dime FSB terminates Mr. Mirro's
employment during the notice period by action of Mr. Toal in his capacity as
Chairman of the Board, Chief Executive Officer or President of Dime FSB, for
reasons of Mr. Mirro's performance (but not constituting termination for cause),
Mr. Mirro will be entitled to all of the enhanced severance benefits that
otherwise apply in the event of an involuntary termination after a change in
control as described above, except that instead of receiving a payment equal to
three times the sum of his annual salary and target cash incentives for which he
was eligible (for the year in question) immediately before the termination, the
payment will be equal to two times such sum.

     Other Agreements.  Mr. Munoz and Ms. Patterson are each party to an
employment agreement with Dime FSB, with a current term until March 1, 2003.
Each agreement was entered into as of January 30, 1998 and replaced an earlier
agreement. Each agreement provides for automatic renewal each March 1st, absent
earlier non-renewal.

     Each of the employment agreements with Mr. Munoz and Ms. Patterson provides
for an annual salary that is subject to periodic review and possible increase or
up to a 25% decrease. If the individual becomes permanently disabled and his
employment agreement is terminated by Dime FSB for that reason, Dime FSB will
pay the individual his or her annual salary for up to one year, less the maximum
benefit available under Dime's disability insurance coverage and will generally
continue to provide certain benefits for the remaining term in effect.

     Each of these employment agreements provides for SERP participation, with a
pension goal of not less than 50% of average SERP-covered compensation.
Additionally, these employment agreements provide that, if Dime FSB terminates
the individual's employment without cause, he or she is generally entitled to a
continuation of salary and certain benefits for a period of between six and 18
months, depending on his or her length of employment and his or her age at the
time of termination.

     Each of the employment agreements with Mr. Munoz and Ms. Patterson provides
for certain severance payments and benefits following a change in control of
Dime FSB if the employment agreement is terminated by (a) Dime FSB without cause
or (b) the individual during the term in effect at the time of the change in
control after a decrease in his or her annual salary or a material downgrading
in duties or responsibilities. For these purposes, a change in control is
defined in the same manner as under Mr. Toal's agreement. The benefits to be
provided to each of these individuals in such events will be (i) payment equal
to three times the sum of his or her annual salary and target cash incentives
for which he or she was eligible immediately before the termination, and (ii)
continuation of all life, disability, medical, and dental insurance coverage for
the remaining term of the employment agreement at the time of the termination
(as long as continued

                                       63
<PAGE>   66

contributions are made by the employee). These agreements also include a
provision for continued exercisability of all vested stock options for the
remainder of their terms and continued vesting and exercisability of all
non-vested stock options as if there had not been a termination of service upon
a change in control (to the extent permitted by the relevant plan under which
the options were granted). These agreements additionally include a provision for
full vesting of SERP benefits, and a payment to make up any amount forfeited
under any qualified defined contribution plan of Dime Bancorp and the related
provisions of the Benefit Restoration Plan, in the event of a termination of
service triggering change in control benefits.

     Ms. Patterson is also party to an Agreement Regarding Initial Employment
Terms, dated June 11, 1996, that provides for a promise of long-term incentive
awards equal in value to 60% of base pay, to the extent approved by the
Compensation Committee, and provides for certain perquisites.

     Miscellaneous.  Each of the employment agreements for Messrs. Toal,
Burriesci, Mirro and Munoz, and for Ms, Patterson, provides that, if the amounts
become payable other than as a result of events following a change in control,
and if those amounts would be deemed to constitute parachute payments within the
meaning of Section 280G of the Internal Revenue Code that would, when added to
other similar amounts, result in an excise tax under Section 4999 of the
Internal Revenue Code, they will be reduced to avoid the imposition of such
excise tax. However, the SERP benefit described above will not be so reduced. In
the event of a change in control, or in the absence of a change in control, in
the event that the SERP benefit results in the imposition of such an excise tax
(but after the reduction of other benefits, as described above), Dime FSB will
make an additional payment or payments so as to provide the executive with the
benefits he or she would have received in the absence of such tax. Dime FSB will
not be entitled to a federal income tax deduction for any "excess parachute
payments," including any additional amounts paid pursuant to the "gross-up"
provisions of the respective employment agreements with regard to such taxes.

     Each of the foregoing employment agreements includes provisions
conditioning payments thereunder on compliance with statutory and regulatory
restrictions.

     Each of Messrs. Toal, Burriesci, Mirro, and Munoz and Ms. Patterson
participates in the Key Executive Life Insurance/Death Benefit Plan of Dime FSB
(the "Key Life Plan"), which provides life insurance coverage during their
employment generally up to six times the sum of the named executive officer's
base salary plus target incentive amounts for the preceding year, for which the
participant pays a scheduled premium. If the participant terminates employment
when eligible to "Retire" (for these purposes, when the participant retires
under the Retirement Plan or otherwise after attaining age 55 and completing 5
years of service), the life insurance coverage converts into the right to a
death benefit in the same amount for each of the named executive officers, with
no additional contributions required by the participant. If the participant
terminates employment before he or she is eligible to Retire, the participant
may continue life insurance coverage until age 65 by paying the required
premiums and, at that age, can convert to such death benefit, to the extent such
benefit has otherwise vested. Vesting in the death benefit depends on service
with Dime as a participant in the Key Life Plan, with graded vesting over ten
years and full vesting upon retirement under the Retirement Plan or otherwise
after attaining age 55 and completing 5 years of service. Full vesting in the
death benefit also applies for certain participants (including all of the named
executive officers) in the event of certain "change in control" events, as
defined in the Key Life Plan, with other change in control events resulting in
full vesting only if the participant's service terminates involuntarily or after
a reduction in salary or a material downgrading in duties or responsibilities.
For Mr. Toal, full vesting occurred in connection with the Anchor Merger.

     In addition to the severance payments and benefits described above, awards
of stock options, restricted stock, and certain other stock-based awards to Dime
employees, including the named executive officers, will generally vest upon a
change in control of Dime.

DIRECTOR COMPENSATION

     During 1999, outside directors were paid an annual retainer fee of $30,000.
Outside directors were entitled to receive a fee of $1,500 for each board
meeting of Dime FSB or Dime Bancorp attended in person, $1,200 for each
committee meeting attended in person and $1,000 for each board or committee
meeting
                                       64
<PAGE>   67

attended by telephone conference. However, whenever concurrent or consecutive
meetings were held by both Dime Bancorp and Dime FSB, each director waived the
fees with respect to one of those entities. Additionally, the Chairperson of
each of Dime's standing committees receives an annual fee of $4,000.

     Outside directors may choose to defer all or a portion of their cash
compensation pursuant to a Deferred Compensation Plan. If an outside director
defers his or her compensation, it will be payable at a later date (generally
not less than three years after the year in which it would otherwise have been
payable and not later than the later of the calendar quarter in which the
director attains age 75 or the fourth quarter after the termination of service
of the director) and, at that time, may be paid (pursuant to the director's
election) in a lump sum, in installments, or converted to an annuity form.
Payments may also be made in the event of certain changes in control or upon
certain circumstances of financial hardship. (Different payout rules apply with
respect to the payment of amounts deferred prior to August 1994.) During the
period of the deferral, amounts deferred are credited with earnings based upon
the director's election from among several different deemed investments, which
currently include phantom units of Common Stock.

     In addition, Dime has maintained a Retainer Continuation Plan for its
outside directors since 1988. Under the Retainer Continuation Plan, a
participating outside director is entitled to receive an annual benefit, payable
for life commencing when the director ceases to serve on the Board, equal to the
basic annual retainer paid to outside directors for the last calendar year in
which he or she served on the Board. The amount of this benefit will be adjusted
actuarially if a payment option other than a single-life annuity is chosen, and
if the director's death were to occur before benefit payments have begun, his or
her beneficiary will be paid a benefit that is the actuarial equivalent of the
benefit that would have been payable to the director. The total benefit to be
payable to a director under the Retainer Continuation Plan will not be less, in
the aggregate, than the present value of the director's benefit based on the
amount accrued as of January 1, 1997 as described below. This plan was amended
in 1996 and, as a result, is no longer open to new directors. The only current
outside director participating in the Retainer Continuation Plan is Mrs. Kopp.

     Each of the other then current outside directors, who elected, pursuant to
the 1996 amendment, to have a lump sum amount that was determined to reflect the
present value of their benefit under that plan accrued as of January 1, 1997, as
well as a 3.5% inflation factor, credited to, and payable as a fully vested
benefit under, the director Deferred Compensation Plan, will no longer receive
any benefits under the Retainer Continuation Plan. The amount credited to the
Deferred Compensation Plan for the outside director was required to be deemed
invested in phantom units of Dime's common stock until the earlier of the
director's attaining age 73 or the second anniversary of the transfer. For
purposes of the initial deemed investment in phantom stock, the value of the
stock was based on the average closing price of Dime's common stock during each
trading day in the 12-month period preceding the date of the initial phantom
stock investment. A similar average value based on closing prices of Dime's
common stock during the preceding 12-month period will apply when determining
the value of the phantom stock the first time a director directs that the
amounts that were credited as a result of this transfer from the Retainer
Continuation Plan are no longer to be deemed invested in phantom stock. A
special valuation will also apply in the event of a change in control of Dime.
Payment of the credited amounts (and earnings thereon) can be made in a lump
sum, in installments, or in the form of an annuity and will commence at the end
of the quarter following the director's termination of service, unless the
director elects a different commencement date. However, the benefit commencement
date could not be any earlier than the first date that the director was
otherwise permitted to direct the deemed investment of the transferred amount
out of phantom stock.

     Under the Dime Bancorp, Inc. 1997 Stock Incentive Plan for Outside
Directors, awards of options to purchase shares of Common Stock, SARs, rights to
purchase shares of restricted stock, or deferred stock may be made to outside
directors of the board of directors of Dime Bancorp or an eligible subsidiary of
Dime Bancorp. As of January 31, 2000, there are 15 outside directors of Dime
Bancorp eligible to participate in this plan. During 1999, the outside directors
were each awarded the right to purchase 1,000 shares of restricted stock at a
price of $.01 per share under this plan.

     During 1999, in connection with his services as Chairman Emeritus of Dime
Bancorp, Mr. Large received a retainer fee and meeting fees under the same terms
as other outside directors plus a consulting fee of $8,334

                                       65
<PAGE>   68

per month. This consulting arrangement is reviewed periodically and may be
adjusted as warranted in light of the time commitment required of Mr. Large in
connection with the performance of the requested duties. Mr. Large's consulting
services as Chairman Emeritus include significant time related to the conduct of
Dime's "goodwill" litigation against the federal government (as described in
Item 3, "Legal Proceedings"), as well as such other tasks as may reasonably be
requested from time to time by the Chief Executive Officer of Dime Bancorp.

     During 1999, in connection with his services as Chief Executive Officer of
NAMC through June 30, 1999, Mr. Koons received compensation in the amount of
$200,000. Thereafter, as Senior Executive Advisor to NAMC, Mr. Koons received
compensation in the amount of $125,000, pursuant to the terms of his employment
agreement, which was effective as of December 15, 1998. The term of Mr. Koons'
agreement extends until June 30, 2002.

     Mr. Koons' agreement provides that he would serve as an Executive Vice
President of Dime Bancorp and Dime FSB and as Chief Executive Officer of NAMC
through at least June 30, 1999. His agreement also provides that he will
continue as an employee of Dime FSB after he ceases serving as Chief Executive
Officer of NAMC, through the end of the term of his agreement.

     Under his agreement, Mr. Koons was required to devote substantially all of
his business time to his duties under the agreement through June 30, 1999. Since
that date, Mr. Koons has been required to devote a lesser amount of time to his
duties under the agreement and is permitted to engage in certain other
non-competitive activities. Mr. Koons' agreement provides for annualized salary
at a rate of $375,000 for the period ending June 30, 1999. For the period from
July 1, 1999 through June 30, 2000, Mr. Koons' agreement provides for a salary
at the rate of $250,000, and for each of the 12-month periods thereafter for a
salary at the rate of $175,000, in each case subject to increase on a per diem
basis if Mr. Koons works for more than an agreed upon minimum number of days in
each such period.

     Pursuant to the terms of his agreement, Mr. Koons also participates in the
SERP, with a pension goal of not less than 50%, and other terms as specified in
his SERP grant (described above). Mr. Koons is also provided with supplemental
benefits to the extent he is otherwise unable, on account of his employment
status, to participate in the Retirement Plan and the Benefit Restoration Plan
(with such benefits acting as an offset of his SERP benefit) and a supplemental
payment to the extent he is otherwise unable, on account of such status, to
participate in Dime Bancorp's qualified defined contribution plan and the
related provisions of the Benefit Restoration Plan.

     In the event of Mr. Koons' permanent disability, Dime FSB will pay Mr.
Koons his annual salary for up to one year, less the maximum benefit available
under the Dime FSB disability insurance coverage, and will generally continue to
provide certain benefits for the remaining term of the agreement. If Mr. Koons'
employment is terminated without cause, Dime FSB will pay him a lump sum equal
to his aggregate salary payable for the remaining term of Mr. Koons' agreement
(assuming he works the minimum number of agreed-upon days set forth in his
agreement), as well as generally continue certain benefits for such remaining
term. Mr. Koons has the right under the agreement to treat any relocation of his
principal place of business more than 75 miles from Tampa, Florida as a
termination without cause, if he makes an election to so treat it within 30 days
of the relocation. Under Mr. Koons' agreement, to the extent permitted by the
relevant plan, upon an involuntary termination of Mr. Koons' employment (other
than for cause), or a termination upon a relocation treated (by Mr. Koons'
election) as an involuntary termination without cause, grants of options and
restricted stock previously made to Mr. Koons generally will vest (and, with
respect to options, become exercisable). Upon an involuntary termination without
cause, to the extent permitted, options will remain exercisable by Mr. Koons for
their remaining terms. (An Agreement Regarding Initial Employment Terms with Mr.
Koons dated December 2, 1996 provides for exercisability for the full remaining
term, to the extent vested, of the options therein promised (with a value of 60%
of his base pay) for grant during the first two years of his employment in the
event of any termination of his employment other than for cause.)

     Mr. Koons' agreement provides for enhanced severance benefits following a
change in control (defined in the same manner as under Mr. Toal's agreement).
Those benefits will be payable if, after a covered change in control, Mr. Koons'
employment is terminated by Dime FSB (other than for cause), or if Mr. Koons
                                       66
<PAGE>   69

terminates his employment during the term in effect at the time of the change in
control after a decrease in his annual salary (not otherwise contemplated by his
agreement) or a material downgrading of his duties or responsibilities from
those contemplated under Mr. Koons' agreement. In either of those events, Mr.
Koons is to be entitled to payment equal to three times his annual salary
(assuming for these purposes that he works the minimum number of agreed upon
full-time equivalent days during any of the periods set forth in Mr. Koons'
agreement), and continuation of all life, disability, medical and dental
insurance coverage for the remaining term of his agreement, subject to certain
conditions. Mr. Koons' agreement also would then provide for continued
exercisability of all vested options for the remainder of their terms, and
immediate vesting and continued exercisability of all restricted stock and
non-vested options held by Mr. Koons, as if there had not been such a
termination of service upon the change in control (to the extent permitted by
the relevant plan under which the options were granted). In the event of a
termination of service triggering change in control benefits, Mr. Koons will
also fully vest in his SERP benefit and be eligible for a payment to make up any
amount forfeited under Dime's 401(k) plan or any other qualified defined
contribution plan of Dime Bancorp and the related provisions of the Benefit
Restoration Plan.

COMPARISON OF FIVE-YEAR RETURN TO STOCKHOLDERS

     Set forth below is a line-graph presentation comparing, for the period
commencing on the market close on December 31, 1994 through and including
December 31, 1999, the yearly percentage change in Dime's cumulative total
stockholder return with the cumulative total return of the Standard & Poor's
("S&P") 500 Stock Index and the S&P Financial Index.(1)

                      [Total Return Performance Chart]

<TABLE>
<CAPTION>
                                                   DIME BANCORP, INC.                S&P 500               S&P FINANCIAL INDEX
                                                   ------------------                -------               -------------------
<S>                                             <C>                         <C>                         <C>
Dec 94                                                   100.00                      100.00                      100.00
Dec 95                                                   150.00                      137.58                      143.72
Dec 96                                                   190.32                      169.03                      189.49
Dec 97                                                   392.69                      225.44                      275.49
Dec 98                                                   343.09                      289.79                      301.88
Dec 99                                                   199.89                      350.78                      308.49
</TABLE>

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

(1) Assumes $100 invested on December 31, 1994 in each of the Common Stock, the
    S&P 500 Stock Index, and the S&P Financial Index. Total return assumes
    reinvestment of dividends and other distributions.

                                       67
<PAGE>   70

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information as of March 20, 2000 (except as
noted below) as to Common Stock owned by (a) each of Dime Bancorp's current
directors, (b) each of the named executive officers, (c) all of Dime Bancorp's
directors and executive officers as a group, and (d) each person who, to Dime's
knowledge, beneficially owned more than 5% of the outstanding Common Stock at
December 31, 1999.

<TABLE>
<CAPTION>
                                                                   SHARES OF        PERCENT OF
                                                                  COMMON STOCK      OUTSTANDING
                                                                  BENEFICIALLY        COMMON
NAME OF BENEFICIAL OWNER (AND ADDRESS OF OWNERS OF MORE THAN 5%)    OWNED(1)           STOCK
----------------------------------------------------------------  ------------      -----------
<S>                                                               <C>               <C>
Lawrence J. Toal..............................................       912,384(2)           *
Derrick D. Cephas.............................................        11,000(3)           *
Frederick C. Chen.............................................        21,860              *
J. Barclay Collins II.........................................         9,000              *
Richard W. Dalrymple..........................................        18,549(4)           *
James F. Fulton...............................................        13,162(5)           *
Sally Hernandez-Pinero........................................         6,100              *
Fred B. Koons.................................................       114,359(4)           *
Virginia M. Kopp..............................................        15,245(6)           *
James M. Large, Jr............................................       407,276              *
John Morning..................................................         7,905              *
Margaret Osmer-McQuade........................................        28,738(7)           *
Paul A. Qualben...............................................        30,006              *
Eugene G. Schulz, Jr..........................................        17,158              *
Howard Smith..................................................        58,000              *
Norman R. Smith...............................................         9,000              *
Ira T. Wender.................................................        25,875              *
Anthony R. Burriesci..........................................       218,786              *
Richard A. Mirro..............................................       181,981(4)           *
Carlos R. Munoz...............................................       106,482              *
Peyton R. Patterson...........................................       105,432              *
All directors and executive officers as a group (24 persons)...    2,823,225(4)        2.54%
J.P. Morgan & Co. Incorporated................................     7,058,056(8)        6.37%
  60 Wall Street
  New York, NY 10260
Wellington Management Company, LLP............................     6,951,800(9)        6.13%
  75 State Street
  Boston, MA 02109
Vanguard Windsor Funds........................................     6,859,200(10)       6.04%
  c/o Wellington Management Company, LLP
  75 State Street
  Boston, MA 02109
</TABLE>

---------------
  *  Less than 1%.

 (1) The directors, executive officers, and group named in the table above have
     sole or shared voting power or investment power with respect to the shares
     listed in the table. Certain of such shares are restricted stock that may
     be subject to repurchase by Dime Bancorp under certain circumstances. The
     share amounts listed include shares of Common Stock that the following
     persons have the right to acquire within 60 days from March 20, 2000:
     Lawrence J. Toal, 546,258; each of Derrick D. Cephas, Frederick C. Chen,
     James F. Fulton, Sally Hernandez-Pinero, Virginia M. Kopp, John Morning,
     Margaret Osmer-McQuade, Paul A. Qualben, and Ira T. Wender, 1,000; each of
     J. Barclay Collins II, Richard W. Dalrymple, Eugene G. Schulz, Jr., Howard
     Smith, and Norman R. Smith, 4,000; James M.

                                       68
<PAGE>   71

     Large, Jr., 256,334; Fred B. Koons, 62,799; Anthony R. Burriesci, 127,799;
     Richard A. Mirro, 92,299; Carlos R. Munoz, 58,132; Peyton R. Patterson,
     37,067; and all current directors and executive officers as a group,
     1,495,587.

 (2) Includes 334 shares held by Mr. Toal's spouse, as to which he disclaims
     beneficial ownership.

 (3) Includes an aggregate of 2,000 shares owned by or in trust for Mr. Cephas'
     children, as to which he disclaims beneficial ownership.

 (4) Includes shares held by the Trustee of Dime's 401(k) plan with respect to
     the account of the individual or certain members of the group based on
     reports dated as of December 31, 1999.

 (5) Includes an aggregate of 832 shares owned by or in trust for Mr. Fulton's
     spouse, as to which he disclaims beneficial ownership.

 (6) Includes an aggregate of 3,000 shares owned by or in trust for Mrs. Kopp's
     spouse, as to which she disclaims beneficial ownership.

 (7) Includes 7,000 shares owned in trust for Ms. Osmer-McQuade's spouse, as to
     which she disclaims beneficial ownership.

 (8) The information as to J.P. Morgan & Co. Incorporated ("J.P. Morgan") is
     derived from a Schedule 13G, filed by J.P. Morgan on February 10, 2000,
     which states that, as of December 31, 1999, J.P. Morgan, directly or
     through certain of its subsidiaries, including Morgan Guaranty Trust
     Company of New York, J.P. Morgan Investment Management, Inc., J.P. Morgan
     Florida Federal Savings Bank and Morgan Tokyo Bank, had sole voting power
     with regard to 4,448,620 of the shares indicated above, shared voting power
     with regard to none of such shares, sole dispositive power with regard to
     6,901,456 of such shares, and shared dispositive power with regard to none
     of such shares.

 (9) The information as to Wellington Management Company, LLP ("Wellington") is
     derived from a Schedule 13G, filed by Wellington on February 11, 2000,
     which states that, as of December 31, 1999, Wellington, directly or through
     its subsidiary, Wellington Trust Company, NA, had sole voting power with
     regard to none of the shares indicated above, shared voting power with
     regard to 2,600 of such shares, sole dispositive power with regard to none
     of such shares, and shared dispositive power with regard to 6,951,800 of
     such shares. The 6,951,800 shares beneficially held by Wellington includes
     6,859,200 shares beneficially held by Vanguard Windsor Funds (see note (10)
     below).

(10) The information as to Vanguard Windsor Funds ("Vanguard") is derived from a
     Schedule 13G, filed by Vanguard on February 8, 2000, which states that, as
     of December 31, 1999, Vanguard had sole voting power with regard to
     6,859,200 of the shares indicated above, shared voting power with regard to
     none of such shares, sole dispositive power with regard to none of such
     shares, and shared dispositive power with regard to 6,859,200 of such
     shares.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN TRANSACTIONS

     Ira T. Wender, a director, is the sole owner of Ira T. Wender, P.C., which
has provided service as of counsel to the law firm of Patterson, Belknap, Webb &
Tyler LLP since January 1994. Patterson, Belknap, Webb & Tyler LLP provided
legal services to Dime in 1999 involving general corporate, commercial real
estate lending, litigation, executive compensation and employee benefit matters.
Dime has retained that firm to provide legal services during 2000 but cannot at
present reasonably estimate the amount of related legal fees to be incurred.

     In January 1997, Dime FSB entered into an agreement with Teamwork
Management, Inc., a corporation wholly-owned by Richard W. Dalrymple, a director
of Dime, pursuant to which Teamwork Management provides Dime FSB with certain
executive recruiting services. It is currently contemplated that additional
recruiting assignments may be given by Dime FSB to Teamwork Management in the
future pursuant to this agreement as the need arises. However, because the
nature and amount of such additional assignments, if any, are not currently
known, Dime cannot at present reasonably estimate the amount of any payments
that may be made to Teamwork Management in consideration for such future
services.

                                       69
<PAGE>   72

LOANS TO MANAGEMENT

     Directors and officers of Dime and its associates were customers of and had
transactions, including loans, with Dime FSB in the ordinary course of business
during 1999. All of such loans were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unaffiliated persons (except that Dime FSB's policy
is to waive certain closing costs with respect to mortgage loans made to
employees), and none of such transactions involved more than the normal risk of
collectability or presented other unfavorable features.

                                    PART IV

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

(a)(1) FINANCIAL STATEMENTS

     See Item 8, "Financial Statements and Supplementary Data."

(a)(2) FINANCIAL STATEMENT SCHEDULES

     All financial statement schedules for the Holding Company and its
subsidiaries have been included in the consolidated financial statements or the
related notes or they are either inapplicable or not required.

(a)(3) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     IDENTIFICATION OF EXHIBIT
-------                    -------------------------
<C>       <S>
 2.1      Agreement and Plan of Merger, dated as of September 15,
          1999, by and between Hudson and the Holding Company, as
          amended and restated on December 27, 1999 (incorporated by
          reference to Appendix A to the Proxy Statement/Prospectus
          included in the Holding Company's Registration Statement on
          Form S-4, filed with the Commission on February 8, 2000 (the
          "Hudson S-4") (No. 333-96345)).
 2.2      Dime Stock Option Agreement, dated as of September 16, 1999,
          between the Holding Company and Hudson (included as Appendix
          B to the Proxy Statement/Prospectus included in the Hudson
          S-4).
 2.3      Hudson Stock Option Agreement, dated as of September 16,
          1999, between Hudson and the Holding Company (included as
          Appendix C to the Proxy Statement/Prospectus included in the
          Hudson S-4).
3(i)      Amended and Restated Certificate of Incorporation of the
          Holding Company (incorporated by reference to Exhibit 3.1 to
          the Holding Company's Quarterly Report on Form 10-Q for the
          quarter ended March 31, 1998, filed with the Commission on
          May 15, 1998 (Commission File No. 001-13094)).
3(ii)     By-laws of the Holding Company (incorporated by reference to
          Exhibit 3 to the Holding Company's Quarterly Report on Form
          10-Q for the quarter ended June 30, 1997, filed with the
          Commission on August 14, 1997 (Commission File No.
          001-13094)).
 4.1      Stockholder Protection Rights Agreement, dated as of October
          20, 1995, between the Holding Company and the First National
          Bank of Boston, as Rights Agent (incorporated by reference
          to Exhibit (1) of the Registration Statement on Form 8-A of
          the Holding Company filed with the Commission on November 3,
          1995 (Commission File No. 001-13094)).
 4.2      None of the outstanding instruments defining the rights of
          holders of long-term debt of the Holding Company represent
          long-term debt in excess of 10% of the total assets of the
          Holding Company. The Holding Company hereby agrees to
          furnish to the Commission, upon request, a copy of any such
          instrument.
</TABLE>

                                       70
<PAGE>   73

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     IDENTIFICATION OF EXHIBIT
-------                    -------------------------
<C>       <S>
10.1  *   Employment Agreement, dated as of January 30, 1998, between
          Dime FSB and Lawrence J. Toal (incorporated by reference to
          Exhibit 10.1 to the Holding Company's Annual Report on Form
          10-K for the fiscal year ended December 31, 1997, filed with
          the Commission on March 31, 1998 (the "1997 10-K")
          (Commission File No. 001-13094)) as amended by an Amendment
          to Employment Agreement, dated as of October 22, 1999, among
          the Holding Company, Dime FSB and Lawrence J. Toal
          (incorporated by reference to Exhibit 10.2 to the Hudson
          S-4).
10.2  *   Agreement providing for joint and several liability of the
          Holding Company, dated as of January 30, 1998, between the
          Holding Company and Lawrence J. Toal (incorporated by
          reference to Exhibit 10.2 to the 1997 10-K).
10.3  *   Employment Agreement, dated as of January 30, 1998, between
          Dime FSB and Anthony R. Burriesci (incorporated by reference
          to Exhibit 10.3 to the 1997 10-K).
10.4  *   Agreement providing for joint and several liability of the
          Holding Company, dated as of January 30, 1998, between the
          Holding Company and Anthony R. Burriesci (incorporated by
          reference to Exhibit 10.4 to the 1997 10-K).
10.5  *   Letter Agreement regarding initial employment terms, dated
          as of July 1, 1997 (the "Burriesci Letter Agreement"),
          between Dime FSB and Anthony R. Burriesci (incorporated by
          reference to Exhibit 10.5 to the 1997 10-K).
10.6  *   Amendment of the Burriesci Letter Agreement, effective as of
          July 24, 1997, between Dime FSB and Anthony R. Burriesci
          (incorporated by reference to Exhibit 10.6 to the 1997
          10-K).
10.7  *   Employment Agreement, dated as of December 21, 1998, between
          Dime FSB and Richard A. Mirro.
10.8  *   Letter Agreement regarding initial employment terms, dated
          as of December 19, 1996 (the "Mirro Letter Agreement"),
          between Dime FSB and Richard A. Mirro.
10.9  *   Amendment of the Mirro Letter Agreement, effective as of May
          12, 1997, between Dime FSB and Richard A. Mirro.
10.10 *   Employment Agreement, dated as of January 30, 1998, between
          Dime FSB and Peyton R. Patterson.
10.11 *   Letter Agreement regarding initial employment terms, dated
          as of June 11, 1996, between Dime FSB and Peyton R.
          Patterson.
10.12 *   Employment Agreement, dated as of January 30, 1998, between
          Dime FSB and Carlos R. Munoz (incorporated by reference to
          Exhibit 10.12 to the 1997 10-K).
10.13 *   Dime Bancorp, Inc. Stock Incentive Plan, as amended by an
          amendment effective April 27, 1994 (the "Stock Incentive
          Plan") (incorporated by reference to Exhibit 4.1 to the
          Holding Company's Registration Statement on Form S-8, filed
          with the Commission on January 18, 1995 (No. 33-88552)).
10.14 *   Amendment, effective September 19, 1997, to the Stock
          Incentive Plan (incorporated by reference to Exhibit 10.14
          to the 1997 10-K).
10.15 *   Dime Bancorp, Inc. 1991 Stock Incentive Plan, as amended and
          restated effective February 29, 1996 (the "1991 Stock
          Incentive Plan") (incorporated by reference to Exhibit 4.1
          to the Holding Company's Registration Statement on Form S-8,
          filed with the Commission on May 24, 1996 (No. 333-04477)).
10.16 *   Amendment, effective as of March 27, 1998, to the 1991 Stock
          Incentive Plan (incorporated by reference to Exhibit 10.18
          to the Holding Company's Annual Report on Form 10-K for the
          fiscal year ended December 31, 1998, filed with the
          Commission on March 31, 1999 (the "1998 10-K") (Commission
          File No. 001-13094)).
10.17 *   Amendment, effective June 25, 1998, to the 1991 Stock
          Incentive Plan (incorporated by reference to Exhibit 10.19
          to the 1998 10-K).
</TABLE>

                                       71
<PAGE>   74

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     IDENTIFICATION OF EXHIBIT
-------                    -------------------------
<C>       <S>
10.18 *   Amendment, effective as of October 1, 1996, to the 1991
          Stock Incentive Plan (incorporated by reference to Exhibit
          10.9 to the 1996 10-K).
10.19 *   Amendment, effective September 19, 1997, to the 1991 Stock
          Incentive Plan (incorporated by reference to Exhibit 10.17
          to the 1997 10-K).
10.20 *   Dime Bancorp, Inc. Stock Incentive Plan for Outside
          Directors (the "Outside Directors Plan"), as amended
          effective April 27, 1994 (incorporated by reference to
          Exhibit 4.1 to the Holding Company's Registration Statement
          on Form S-8, filed with the Commission on January 18, 1995
          (No. 33-88560)).
10.21 *   Amendment, effective September 19, 1997, to the Outside
          Directors Plan (incorporated by reference to Exhibit 10.19
          to the 1997 10-K).
10.22 *   The Dime Savings Bank of New York, FSB Deferred Compensation
          Plan, as amended by the First Amendment through the Fourth
          Amendment thereof (incorporated by reference to Exhibit
          10.14 to the Holding Company's Annual Report on Form 10-K
          for the fiscal year ended December 31, 1994, filed with the
          Commission on March 31, 1995 (the "1994 10-K") (Commission
          File No. 001-13094)).
10.23 *   Deferred Compensation Plan for Board Members of The Dime
          Savings Bank of New York, FSB, as amended and restated
          effective as of July 24, 1997 (incorporated by reference to
          Exhibit 10.21 to the 1997 10-K).
10.24 *   Benefit Restoration Plan of The Dime Savings Bank of New
          York, FSB, amended and restated effective as of October 1,
          1996 (incorporated by reference to Exhibit 10.14 to the 1996
          10-K).
10.25 *   Retainer Continuation Plan for Independent Directors of The
          Dime Savings Bank of New York, FSB (the "Retainer
          Continuation Plan") (incorporated by reference to Exhibit
          10.24 to Dime FSB's Annual Report on Form 10-K for the
          fiscal year ended December 31, 1993, filed with the
          Commission on September 16, 1994 as Exhibit A to the Holding
          Company's Report on Form 8-K dated that date (Commission
          File No. 001-13094)).
10.26 *   Amendment, effective as of January 13, 1995, to the Retainer
          Continuation Plan (incorporated by reference to Exhibit
          10.13 to the 1995 10-K).
10.27 *   Amendment, effective as of December 31, 1996, to the
          Retainer Continuation Plan (incorporated by reference to
          Exhibit 10.17 to the 1996 10-K).
10.28 *   Amendment, effective March 1, 1997, to the Retainer
          Continuation Plan (incorporated by reference to Exhibit
          10.18 to the 1996 10-K).
10.29 *   Amendment, effective July 24, 1997, to the Retainer
          Continuation Plan (incorporated by reference to Exhibit
          10.27 to the 1997 10-K).
10.30 *   Key Executive Life Insurance/Death Benefit Plan of The Dime
          Savings Bank of New York, FSB, amended and restated
          effective as of April 1, 1999 as amended by an Amendment,
          effective as of April 1, 1999.
10.31 *   Dime Bancorp, Inc. 1990 Stock Option Plan (formerly Anchor
          Bancorp, Inc. 1990 Stock Option Plan), as amended effective
          as of January 13, 1995 (incorporated by reference to Exhibit
          4.1 to the Holding Company's Registration Statement on Form
          S-8, filed with the Commission on January 18, 1995 (No.
          33-88554)).
10.32 *   Dime Bancorp, Inc. 1992 Stock Option Plan (formerly Anchor
          Bancorp, Inc. 1992 Stock Option Plan), as amended effective
          as of January 13, 1995 (the "1992 Stock Option Plan")
          (incorporated by reference to Exhibit 4.1 to the Holding
          Company's Registration Statement on Form S-8, filed with the
          Commission on January 18, 1995 (No. 33-88556)).
10.33 *   Amendment, effective June 1, 1996, to the 1992 Stock Option
          Plan (incorporated by reference to Exhibit 10.23 to the 1996
          10-K).
</TABLE>

                                       72
<PAGE>   75

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     IDENTIFICATION OF EXHIBIT
-------                    -------------------------
<C>       <S>
10.34 *   Amendment, effective September 19, 1997, to the 1992 Stock
          Option Plan (incorporated by reference to Exhibit 10.33 to
          the 1997 10-K).
10.35 *   Amendment, effective as of March 27, 1998, to the 1992 Stock
          Option Plan (incorporated by reference to Exhibit 10.36 to
          the 1998 10-K).
10.36 *   Dime Bancorp, Inc. Supplemental Executive Retirement Plan
          (the "SERP"), amended and restated effective as of December
          2, 1997 (incorporated by reference to Exhibit 10.34 to the
          1997 10-K).
10.37 *   Amendment, effective January 29, 1998, to the SERP
          (incorporated by reference to Exhibit 10.35 to the 1997
          10-K).
10.38 *   Amendment, effective June 24, 1999, to the SERP.
10.39 *   Dime Bancorp, Inc. Voluntary Deferred Compensation Plan, as
          amended and restated effective as of July 24, 1997
          (incorporated by reference to Exhibit 10.36 to the 1997
          10-K).
10.40 *   Dime Bancorp, Inc. Voluntary Deferred Compensation Plan for
          Directors (the "Director Deferred Compensation Plan"), as
          amended and restated effective as of July 24, 1997
          (incorporated by reference to Exhibit 10.37 to the 1997
          10-K).
10.41 *   Amendment, effective March 26, 1998, to the Director
          Deferred Compensation Plan (incorporated by reference to
          Exhibit 10.41 to the 1998 10-K).
10.42 *   Amendment, effective October 1, 1999, to the Director
          Deferred Compensation Plan.
10.43 *   Dime Bancorp, Inc. Officer Incentive Plan (the "Officer
          Incentive Plan"), as amended and restated effective as of
          July 24, 1997 (incorporated by reference to Exhibit 10.38 to
          the 1997 10-K).
10.44 *   Amendment, effective as of January 1, 1998, to the Officer
          Incentive Plan (incorporated by reference to Exhibit 10.43
          to the 1998 10-K).
10.45 *   Amendment, effective as of January 1, 2000, to the Officer
          Incentive Plan.
10.46 *   Dime Bancorp, Inc. Senior Officer Incentive Plan, effective
          April 30, 1998 (incorporated by reference to Exhibit 10.44
          to the 1998 10-K).
10.47 *   Anchor Savings Bank FSB Supplemental Executive Retirement
          Plan, assumed by Dime FSB (incorporated by reference to
          Exhibit 10.11 to the Anchor Bancorp Annual Report on Form
          10-K for the fiscal year ended June 30, 1992 (Commission
          File No. 33-37720)).
10.48 *   Dime Bancorp, Inc. 1997 Stock Incentive Plan for Outside
          Directors, as amended and restated effective March 27, 1998
          (incorporated by reference to Exhibit 10.46 to the 1998
          10-K).
10.49 *   Dime Bancorp, Inc. Incentive Stock Option Plan (formerly
          North American Mortgage Company Incentive Stock Option
          Plan), effective as of October 15, 1997 (incorporated by
          reference to Exhibit 4.1 to the Holding Company's Amendment
          No. 1 to the Registration Statement on Form S-4 on Form S-8,
          filed with the Commission on October 15, 1997 (No.
          333-35565)).
12        Ratio of Earnings to Fixed Charges.
21        List of Subsidiaries.
23        Consent of KPMG LLP.
</TABLE>

                                       73
<PAGE>   76

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     IDENTIFICATION OF EXHIBIT
-------                    -------------------------
<C>       <S>
24        Powers of Attorney.
27        Financial Data Schedule (filed electronically).
</TABLE>

---------------
* Management Contract or Compensatory Plan or Arrangement.

(b) REPORTS ON FORM 8-K

     During the three-month period ended December 31, 1999, the Holding Company
filed with the Commission one Current Report on Form 8-K, dated October 20,
1999, containing the press release announcing the Company's consolidated
financial results for the three- and nine-month periods ended September 30,
1999.

                                       74
<PAGE>   77

                                   SIGNATURES

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

                                          DIME BANCORP, INC.

                                          By: /s/   LAWRENCE J. TOAL
                                            ------------------------------------
                                                      Lawrence J. Toal
                                                Chairman of the Board, Chief
                                                      Executive Officer,
                                               President and Chief Operating
                                                           Officer

                                                       March 28, 2000
                                                       --------------
                                                            Date

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 28, 2000 by the following persons on
behalf of the registrant and in the capacities indicated.

<TABLE>
<CAPTION>
                       SIGNATURE                                            CAPACITY
                       ---------                                            --------
<C>                                                       <S>
                  /s/ LAWRENCE J. TOAL                    Chairman of the Board, Chief Executive
--------------------------------------------------------  Officer, President and Chief Operating
                    Lawrence J. Toal                      Officer (Principal Executive Officer)

                           *                              Director
--------------------------------------------------------
                    Derrick D. Cepha

                           *                              Director
--------------------------------------------------------
                   Frederick C. Chen

                           *                              Director
--------------------------------------------------------
                 J. Barclay Collins II

                           *                              Director
--------------------------------------------------------
                  Richard W. Dalrymple

                           *                              Director
--------------------------------------------------------
                    James F. Fulton

                           *                              Director
--------------------------------------------------------
                     Fred B. Koons

                           *                              Director
--------------------------------------------------------
                    Virginia M. Kopp
</TABLE>

                                       75
<PAGE>   78

<TABLE>
<CAPTION>
                       SIGNATURE                                            CAPACITY
                       ---------                                            --------
<C>                                                       <S>
                           *                              Director
--------------------------------------------------------
                  James M. Large, Jr.

                           *                              Director
--------------------------------------------------------
                      John Morning

                           *                              Director
--------------------------------------------------------
                 Margaret Osmer-McQuade

                           *                              Director
--------------------------------------------------------
                 Sally Hernandez-Pinero

                           *                              Director
--------------------------------------------------------
                  Dr. Paul A. Qualben

                           *                              Director
--------------------------------------------------------
                 Eugene G. Schulz, Jr.

                           *                              Director
--------------------------------------------------------
                      Howard Smith

                           *                              Director
--------------------------------------------------------
                  Dr. Norman R. Smith

                           *                              Director
--------------------------------------------------------
                     Ira T. Wender

                /s/ ANTHONY R. BURRIESCI                  Chief Financial Officer (Principal Financial
--------------------------------------------------------  Officer)
                  Anthony R. Burriesci

                  /s/ JOHN F. KENNEDY                     Controller (Principal Accounting Officer)
--------------------------------------------------------
                    John F. Kennedy

               *By: /s/ LAWRENCE J. TOAL
  ---------------------------------------------------
                    Lawrence J. Toal
                    Attorney-in-Fact
</TABLE>

                                       76
<PAGE>   79

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Dime Bancorp, Inc.:

     We have audited the accompanying consolidated statements of financial
condition of Dime Bancorp, Inc. and subsidiaries (Dime) as of December 31, 1999
and 1998, and the related consolidated statements of income, changes in
stockholders' equity, cash flows and comprehensive income for each of the years
in the three-year period ended December 31, 1999. These consolidated financial
statements are the responsibility of Dime's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dime
Bancorp, Inc. and subsidiaries as of December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles.

/s/ KPMG LLP

New York, New York
January 20, 2000

                                       F-1
<PAGE>   80

                      DIME BANCORP, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              --------------------------
                                                                 1999           1998
                                                              -----------    -----------
<S>                                                           <C>            <C>
ASSETS
Cash and due from banks.....................................  $   414,289    $   279,490
Money market investments....................................       18,166         78,287
Securities available for sale...............................    3,849,676      3,329,444
Federal Home Loan Bank of New York stock....................      328,732        324,106
Loans held for sale.........................................    1,733,667      3,884,886
Loans receivable, net:
  Residential real estate loans.............................    8,200,120      8,919,817
  Commercial real estate loans..............................    3,482,857      2,567,750
  Consumer loans............................................    2,495,321        973,230
  Business loans............................................    1,028,756        287,271
  Allowance for loan losses.................................     (140,296)      (105,081)
                                                              -----------    -----------
          Total loans receivable, net.......................   15,066,758     12,642,987
                                                              -----------    -----------
Premises and equipment, net.................................      207,373        170,879
Mortgage servicing assets...................................      980,934        692,473
Goodwill....................................................      531,415        225,222
Other assets................................................      790,315        693,076
                                                              -----------    -----------
Total assets................................................  $23,921,325    $22,320,850
                                                              ===========    ===========
LIABILITIES
Deposits....................................................  $14,261,449    $13,651,460
Federal funds purchased and securities sold under agreements
  to repurchase.............................................    1,106,067      2,245,218
Other short-term borrowings.................................    5,321,838      3,756,733
Long-term debt..............................................    1,165,868        608,892
Guaranteed preferred beneficial interests in Dime Bancorp,
  Inc.'s junior subordinated deferrable interest
  debentures................................................      152,219        162,005
Other liabilities...........................................      397,779        510,877
                                                              -----------    -----------
          Total liabilities.................................   22,405,220     20,935,185
                                                              -----------    -----------
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share (350,000,000 shares
  authorized and 120,252,459 shares issued).................        1,203          1,203
Additional paid-in capital..................................    1,166,530      1,165,251
Retained earnings...........................................      670,343        463,907
Treasury stock, at cost (9,357,589 shares in 1999 and
  8,682,858 shares in 1998).................................     (230,035)      (233,965)
Accumulated other comprehensive loss........................      (87,257)        (3,285)
Unearned compensation.......................................       (4,679)        (7,446)
                                                              -----------    -----------
          Total stockholders' equity........................    1,516,105      1,385,665
                                                              -----------    -----------
Total liabilities and stockholders' equity..................  $23,921,325    $22,320,850
                                                              ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-2
<PAGE>   81

                      DIME BANCORP, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                               FOR THE YEAR ENDED DECEMBER 31,
                                                             ------------------------------------
                                                                1999         1998         1997
                                                             ----------   ----------   ----------
<S>                                                          <C>          <C>          <C>
INTEREST INCOME
Residential real estate loans..............................  $  744,382   $  874,402   $  660,505
Commercial real estate loans...............................     228,571      200,015      191,111
Consumer loans.............................................     132,213       71,003       63,222
Business loans.............................................      39,740       13,944        5,052
Mortgage-backed securities.................................     222,385      214,922      406,781
Other securities...........................................      50,296       40,797       23,774
Money market investments...................................       1,511        5,802       32,370
                                                             ----------   ----------   ----------
          Total interest income............................   1,419,098    1,420,885    1,382,815
                                                             ----------   ----------   ----------
INTEREST EXPENSE
Deposits...................................................     482,006      545,827      559,359
Borrowed funds.............................................     358,607      347,825      340,394
                                                             ----------   ----------   ----------
          Total interest expense...........................     840,613      893,652      899,753
                                                             ----------   ----------   ----------
          Net interest income..............................     578,485      527,233      483,062
Provision for loan losses..................................      29,500       32,000       49,000
                                                             ----------   ----------   ----------
          Net interest income after provision for loan
            losses.........................................     548,985      495,233      434,062
                                                             ----------   ----------   ----------
NON-INTEREST INCOME
Loan servicing and production fees.........................     267,520      199,504       74,038
Banking service fees.......................................      51,798       41,428       31,796
Securities and insurance brokerage fees....................      36,710       32,736       23,737
Net gains on sales activities..............................     200,427      244,451       12,036
Other......................................................      11,788        6,911        3,684
                                                             ----------   ----------   ----------
          Total non-interest income........................     568,243      525,030      145,291
                                                             ----------   ----------   ----------
NON-INTEREST EXPENSE
General and administrative expense:
  Compensation and employee benefits.......................     303,750      270,062      157,851
  Occupancy and equipment..................................     103,661       92,452       63,582
  Other....................................................     182,059      199,349      115,529
                                                             ----------   ----------   ----------
          Total general and administrative expense.........     589,470      561,863      336,962
Amortization of mortgage servicing assets..................     122,786       92,291       29,751
Amortization of goodwill...................................      18,520       11,487        4,501
Restructuring and related expense..........................          --           --        9,931
                                                             ----------   ----------   ----------
          Total non-interest expense.......................     730,776      665,641      381,145
                                                             ----------   ----------   ----------
Income before income tax expense and extraordinary items...     386,452      354,622      198,208
Income tax expense.........................................     142,512      113,479       75,034
                                                             ----------   ----------   ----------
Income before extraordinary items..........................     243,940      241,143      123,174
Extraordinary items -- losses on early extinguishment of
  debt, net of tax benefits of $3,044 in 1999, $2,993 in
  1998 and $895 in 1997....................................      (4,127)      (4,057)      (1,460)
                                                             ----------   ----------   ----------
Net income.................................................  $  239,813   $  237,086   $  121,714
                                                             ==========   ==========   ==========
PER COMMON SHARE
Basic earnings:
  Income before extraordinary items........................  $     2.19   $     2.13   $     1.15
  Extraordinary items......................................       (0.04)       (0.04)       (0.01)
                                                             ----------   ----------   ----------
  Net income...............................................  $     2.15   $     2.09   $     1.14
                                                             ==========   ==========   ==========
Diluted earnings:
  Income before extraordinary items........................  $     2.17   $     2.09   $     1.13
  Extraordinary items......................................       (0.04)       (0.03)       (0.01)
                                                             ----------   ----------   ----------
  Net income...............................................  $     2.13   $     2.06   $     1.12
                                                             ==========   ==========   ==========
Cash dividends declared....................................  $     0.23   $     0.19   $     0.12
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-3
<PAGE>   82

                      DIME BANCORP, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                            FOR THE YEAR ENDED DECEMBER 31,
                                                         --------------------------------------
                                                            1999          1998          1997
                                                         ----------    ----------    ----------
<S>                                                      <C>           <C>           <C>
COMMON STOCK
Balance at beginning of year...........................  $    1,203    $    1,203    $    1,083
Common stock issued in connection with acquisition.....          --            --           120
                                                         ----------    ----------    ----------
  Balance at end of year...............................       1,203         1,203         1,203
                                                         ----------    ----------    ----------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year...........................   1,165,251     1,158,221       914,386
Common and treasury stock issued under employee stock
  plans, net...........................................          --           (45)       (4,235)
Common and treasury stock issued in connection with
  acquisition..........................................          --            --       220,659
Fair value adjustment on stock options issued in
  connection with acquisition..........................          --            --        21,389
Other..................................................       1,279         7,075         6,022
                                                         ----------    ----------    ----------
  Balance at end of year...............................   1,166,530     1,165,251     1,158,221
                                                         ----------    ----------    ----------
RETAINED EARNINGS
Balance at beginning of year...........................     463,907       261,201       158,956
Net income.............................................     239,813       237,086       121,714
Cash dividends declared on common stock................     (25,626)      (21,550)      (12,892)
Treasury stock issued under employee stock plans,
  net..................................................      (3,495)      (12,830)       (6,577)
Treasury stock issued in connection with acquisition...      (4,256)           --            --
                                                         ----------    ----------    ----------
  Balance at end of year...............................     670,343       463,907       261,201
                                                         ----------    ----------    ----------
TREASURY STOCK, AT COST
Balance at beginning of year...........................    (233,965)      (95,221)      (51,498)
Treasury stock purchased...............................     (76,346)     (177,970)     (200,354)
Treasury stock issued under employee stock plans,
  net..................................................       6,823        39,226        26,305
Treasury stock issued in connection with acquisition...      73,453            --       130,326
                                                         ----------    ----------    ----------
  Balance at end of year...............................    (230,035)     (233,965)      (95,221)
                                                         ----------    ----------    ----------
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at beginning of year...........................      (3,285)       (9,534)           22
Other comprehensive (loss) income......................     (83,972)        6,249        (9,556)
                                                         ----------    ----------    ----------
  Balance at end of year...............................     (87,257)       (3,285)       (9,534)
                                                         ----------    ----------    ----------
UNEARNED COMPENSATION
Balance at beginning of year...........................      (7,446)       (1,012)         (612)
Restricted stock activity, net.........................        (168)       (9,250)       (1,126)
Amortization of unearned compensation..................       2,935         2,816           726
                                                         ----------    ----------    ----------
  Balance at end of year...............................      (4,679)       (7,446)       (1,012)
                                                         ----------    ----------    ----------
Total stockholders' equity.............................  $1,516,105    $1,385,665    $1,314,858
                                                         ==========    ==========    ==========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-4
<PAGE>   83

                      DIME BANCORP, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              FOR THE YEAR ENDED DECEMBER 31,
                                                          ---------------------------------------
                                                             1999          1998          1997
                                                          -----------   -----------   -----------
<S>                                                       <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..............................................  $   239,813   $   237,086   $   121,714
Adjustments to reconcile net income to net cash provided
  (used) by operating activities:
  Provision for loan losses.............................       29,500        32,000        49,000
  Depreciation, amortization and accretion, net.........      203,290       177,680        85,967
  Provision for deferred income tax expense.............       99,245        53,406        64,270
  Net securities (gains) losses.........................       (2,062)      (21,855)       17,794
  Losses on early extinguishment of debt................        7,171         7,050         2,355
  Gain on sale of branch................................           --        (9,512)           --
  Net decrease (increase) in loans held for sale........    2,151,219    (2,343,136)     (760,523)
  Other, net............................................     (455,227)     (384,202)         (198)
                                                          -----------   -----------   -----------
          Net cash provided (used) by operating
            activities..................................    2,272,949    (2,251,483)     (419,621)
                                                          -----------   -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale..............   (2,312,470)   (1,723,719)   (1,196,330)
Purchases of securities held to maturity................           --            --       (80,411)
Proceeds from sales of securities available for sale....    1,377,601     1,922,949     1,720,817
Proceeds from maturities of securities available for
  sale and held to maturity.............................      919,952     1,491,072     1,505,518
Net purchases of Federal Home Loan Bank of New York
  stock.................................................           --       (20,819)      (31,111)
Loans receivable originated and purchased, net of
  principal payments....................................   (1,493,645)     (264,105)   (1,843,796)
Proceeds from sales of loans............................       64,507       702,253        82,369
Net cash paid in acquisitions...........................     (309,206)           --       (41,234)
Net cash paid upon divestiture of branch................           --      (197,662)           --
Proceeds from sales of other real estate owned..........       19,861        19,855        58,315
Net purchases of premises and equipment.................      (48,770)      (48,415)      (29,011)
                                                          -----------   -----------   -----------
          Net cash (used) provided by investing
            activities..................................   (1,782,170)    1,881,409       145,126
                                                          -----------   -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits.....................   (1,237,555)       11,125       292,887
Net increase in borrowings with original maturities of
  three months or less..................................      550,824       402,623       126,164
Proceeds from other borrowings..........................    1,219,445       799,818     1,492,632
Repayments of other borrowings..........................     (850,003)     (755,823)   (1,174,045)
Proceeds from net issuances of common and treasury
  stock.................................................        3,160        17,101        14,332
Purchases of treasury stock.............................      (76,346)     (177,970)     (200,354)
Cash dividends paid on common stock.....................      (25,626)      (21,550)      (12,892)
Other...................................................           --            --         3,781
                                                          -----------   -----------   -----------
          Net cash (used) provided by financing
            activities..................................     (416,101)      275,324       542,505
                                                          -----------   -----------   -----------
Net increase (decrease) in cash and cash equivalents....       74,678       (94,750)      268,010
Cash and cash equivalents at beginning of year..........      357,777       452,527       184,517
                                                          -----------   -----------   -----------
Cash and cash equivalents at end of year................  $   432,455   $   357,777   $   452,527
                                                          ===========   ===========   ===========
Supplemental cash flow information:
  Interest payments on deposits and borrowed funds......  $   838,798   $   903,619   $   883,423
  Income tax payments (refunds), net....................        2,130        22,869          (381)
Supplemental non-cash investing information:
  Securities available for sale transferred to trading
     securities.........................................      252,098            --            --
  Securities held to maturity transferred to securities
     available for sale.................................           --            --     3,587,063
  Securitization of loans receivable....................      698,554            --            --
  Loans held for sale transferred to loans receivable...           --       779,719            --
  Loans receivable transferred to other real estate
     owned..............................................        7,160        18,917        17,996
  Loans receivable transferred to loans held for sale...           --       296,608            --
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-5
<PAGE>   84

                      DIME BANCORP, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             FOR THE YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               1999        1998        1997
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
Net income.................................................  $239,813    $237,086    $121,714
Other comprehensive (loss) income:
  Net unrealized (loss) gain on securities available for
     sale:
     Unrealized holding (loss) gain arising during the
       year, net of deferred income tax (benefit) expense
       of $(59,167) in 1999, $12,699 in 1998 and $(12,629)
       in 1997.............................................   (82,770)     18,825     (20,600)
     Reclassification adjustment for net (gains) losses
       included in net income, net of income tax expense
       (benefit) of $860 in 1999, $9,279 in 1998 and
       $(6,769) in 1997....................................    (1,202)    (12,576)     11,044
                                                             --------    --------    --------
       Other comprehensive income (loss)...................   (83,972)      6,249      (9,556)
                                                             --------    --------    --------
Comprehensive income.......................................  $155,841    $243,335    $112,158
                                                             ========    ========    ========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-6
<PAGE>   85

                      DIME BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Dime Bancorp, Inc. (the "Holding Company") is a unitary savings and loan
holding company organized under the laws of the State of Delaware in 1994. The
principal subsidiary of the Holding Company is The Dime Savings Bank of New
York, FSB ("Dime FSB"). The accounting policies applied by the Holding Company
and its subsidiaries (collectively, the "Company") conform with generally
accepted accounting principles and prevailing practices within the financial
services industry.

     The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires the Company to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
statement of financial condition and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

     The Company provides a diversified range of financial services and products
to individuals and businesses. At December 31, 1999, the Company operated 127
banking branches located in the greater New York City metropolitan area and
conducted its mortgage banking operations nationwide through offices located in
41 states.

     The following is a description of the Company's significant accounting
policies.

  Basis of Presentation

     The accompanying consolidated financial statements include the accounts of
the Holding Company and its subsidiaries, all of which are wholly-owned, after
the elimination of all significant intercompany balances and transactions.
Certain amounts in prior years have been reclassified to conform with the
current year presentation.

  Securities

     Securities that the Company has the positive intent and ability to hold to
maturity are classified as held to maturity and are carried at amortized cost.
The Company did not maintain a securities held to maturity portfolio during 1999
or 1998. Securities purchased for the objective of selling them in the near term
and mortgage-backed securities ("MBS") held for sale in connection with mortgage
banking activities are classified as trading securities and are carried at
estimated fair value with unrealized gains and losses recognized in operations.
Securities not otherwise classified as held to maturity or trading are
classified as available for sale and are carried at estimated fair value with
unrealized gains and losses, net of the related income tax effect, reported in a
separate component of stockholders' equity.

     The amortization of premiums and accretion of discounts on securities is
recognized in income using the interest method over the lives of the securities,
adjusted, in the case of MBS, for actual prepayments. Gains and losses on sales
of securities are recognized using the specific identification method.

     The carrying value of a security is reduced through a write-down charged to
income in the event the Company determines that an other than temporary
impairment in value has occurred.

  Loans

     Loans held for sale are carried at the lower of cost or market value, as
determined on an aggregate basis. Net unrealized losses are recognized in a
valuation allowance by charges to income. Premiums, discounts and certain
origination fees and costs on loans held for sale are deferred and recognized as
a component of the gain or loss on sale. Gains and losses on sales of loans held
for sale are recognized at the settlement dates and are determined by the
difference between the sales proceeds and the carrying value of the loans.

                                       F-7
<PAGE>   86
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Loans receivable are generally carried at unpaid principal balances
adjusted for unamortized premiums, unearned discounts and deferred loan
origination fees and costs, which are recognized as yield adjustments over the
lives of the loans using the interest method.

     Loans are placed on non-accrual status upon becoming 90 days contractually
past due as to principal or interest, or at an earlier date if the full
collectability of principal or interest is doubtful. Interest income previously
accrued but not collected at the date a loan is placed on non-accrual status is
reversed against interest income. Cash receipts on a non-accrual loan are
applied to principal and interest in accordance with its contractual terms
unless full payment of principal is not expected, in which case cash receipts,
whether designated as principal or interest, are applied as a reduction of the
carrying value of the loan. A non-accrual loan is generally returned to accrual
status when principal and interest payments are current, full collectability of
principal and interest is reasonably assured and a consistent record of
performance has been demonstrated.

     A loan is deemed a troubled debt restructuring ("TDR") by the Company when
modifications of a concessionary nature are made to the loan's original
contractual terms due to a deterioration in the borrower's financial condition.

     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
114, "Accounting by Creditors for Impairment of a Loan," as amended, the Company
considers a loan falling within its scope impaired when, based upon current
information and events, it is probable that it will be unable to collect all
amounts due, both principal and interest, according to the contractual terms of
the loan agreement. SFAS No. 114 does not apply to loans held for sale or those
large groups of smaller-balance homogeneous loans that are collectively
evaluated for impairment. Loans reviewed by the Company for impairment are
limited to residential real estate loans receivable modified in a TDR since
January 1, 1995, business loans receivable and commercial real estate loans
receivable. Specific factors used in the impaired loan identification process
include, but are not limited to, delinquency status, loan-to-value ratio, the
condition of the underlying collateral, credit history, and debt coverage. At a
minimum, loans reviewed for impairment by the Company are classified as impaired
when delinquent more than six months. Impaired loans are principally measured
using the present value of expected future cash flows discounted at the loan's
effective interest rate or the fair value of the collateral for collateral
dependent loans. For impaired loans on non-accrual status, cash receipts are
applied, and interest income recognized, pursuant to the discussion above for
non-accrual loans. For all other impaired loans, cash receipts are applied to
principal and interest in accordance with the contractual terms of the loan and
interest income is recognized on the accrual basis.

  Allowance for Loan Losses

     The allowance for loan losses is maintained at a level the Company believes
is sufficient to provide for losses inherent in its loans receivable portfolio.
The allowance for loan losses is increased by loss provisions charged to
operations and decreased by charge-offs (net of recoveries). In determining the
appropriate level of the allowance for loan losses, the Company reviews its
loans receivable portfolio on at least a quarterly basis, taking into account
its impaired loans, the size, composition and risk profile of the portfolio,
delinquency levels, historical loss experience, cure rates on delinquent loans,
economic conditions and other pertinent factors, such as assumptions and
projections of future conditions.

  Premises and Equipment

     Premises and equipment are carried at cost less accumulated depreciation
and amortization. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets. Leasehold improvements are amortized
using the straight-line method over the lesser of the terms of their respective
leases or estimated useful lives.

                                       F-8
<PAGE>   87
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Mortgage Servicing Assets

     The Company recognizes, as separate assets, the rights to service mortgage
loans, whether those rights are acquired through loan purchase or loan
origination activities. The initial recognition of originated mortgage servicing
assets is predicated upon an allocation of the total cost of the related loans
between the loans and the loan servicing rights based on their relative
estimated fair values. Purchased mortgage servicing assets are recorded at cost.
Mortgage servicing assets are amortized in proportion to and over the period of
estimated net servicing income. On a quarterly basis, mortgage servicing assets
are assessed for impairment based upon their estimated fair value. For purposes
of such assessments, the Company stratifies its mortgage servicing assets by
underlying loan type and interest rate. Impairment of mortgage servicing assets
is recognized through a valuation allowance for each impaired stratum with the
individual allowances adjusted in subsequent periods to reflect changes in the
measurement of impairment. The estimated fair value of each strata is determined
through a discounted cash flow analysis of future cash flows incorporating
numerous assumptions including servicing income, servicing costs, market
discount rates, prepayment speeds, and default rates.

  Other Real Estate Owned ("ORE")

     ORE, which consists of real estate acquired in satisfaction of loans, is
carried at the lower of cost or estimated fair value less estimated selling
costs. Write-downs required at the time of acquisition are charged to the
allowance for loan losses. Subsequent to acquisition, the Company maintains an
allowance for actual and potential future declines in value.

  Goodwill

     Goodwill is generally amortized using the straight-line method over periods
ranging from 10 to 25 years. Goodwill is reviewed for possible impairment when
events or changes in circumstances indicate that the carrying amount may not be
recoverable.

  Income Taxes

     Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. If necessary, deferred tax assets are
reduced to the amount that, based on available evidence, will more than likely
be realized.

  Earnings Per Common Share

     Basic earnings per common share have been computed by dividing net income
by the weighted average number of shares of the Holding Company's common stock
("Common Stock") outstanding during the period. Diluted earnings per common
share have been computed by dividing net income by the sum of the weighted
average number of shares of Common Stock and dilutive Common Stock equivalents
outstanding (using the treasury stock method) during the period.

  Consolidated Statements of Cash Flows

     For purposes of the Consolidated Statements of Cash Flows, cash and cash
equivalents include cash and due from banks and money market investments.

                                       F-9
<PAGE>   88
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Cash flows associated with derivative financial instruments used by the
Company for risk-management purposes are classified in the accompanying
Consolidated Statements of Cash Flows in the same category as the cash flows
from the asset or liability being hedged.

  Derivative Financial Instruments

     Risk-Management Instruments.  The Company uses a variety of derivative
financial instruments as part of its interest rate risk-management strategy and
to manage certain risks associated with its mortgage banking activities.
Derivative financial instruments used for these purposes must be designated as a
hedge at their inception and must remain effective as a hedge throughout their
contractual terms. If the effectiveness of the derivative financial instrument
as a hedge is not maintained, the instrument is accounted for as a trading
instrument.

     For those derivative financial instruments used to modify the interest rate
characteristics of designated interest-earning assets or interest-bearing
liabilities, net amounts payable or receivable on the instruments are accrued as
an adjustment to interest income or interest expense of the designated assets or
liabilities. The estimated fair values of such derivative financial instruments
are not reflected in the Company's consolidated financial statements unless
designated to securities available for sale, in which case the derivative
financial instruments are carried at estimated fair value with unrealized gains
and losses, net of related income taxes, reported in a separate component of
stockholders' equity.

     For forward contracts and options used in connection with the Company's
mortgage banking activities, realized gains and losses are recognized in
operations in the period settlement occurs. Unrealized gains and losses on such
derivative financial instruments are included in the computation of the lower of
cost or market valuation of loans held for sale.

     Unrealized gains and losses on derivative financial instruments used to
hedge mortgage servicing assets are considered in the determination of the
estimated fair value of such assets.

     Premiums paid on derivative financial instruments used for risk-management
purposes are deferred as a component of the carrying value of the designated
assets or liabilities and amortized against income over the terms of the
contracts.

     In the event of the early termination of a derivative financial instrument
contract used for risk-management purposes, any resulting gain or loss is
deferred, as an adjustment of the carrying value of the designated assets or
liabilities. Such gains or losses on terminated interest rate futures contracts
are recognized in operations over the remaining life of the designated assets or
liabilities. Gains and losses resulting from the early termination of other
derivative financial instruments are recognized in operations over the shorter
of the remaining life of the designated assets or liabilities or the derivative
financial instrument agreement. If the designated assets or liabilities are
subsequently sold or otherwise disposed of, any remaining deferred gains or
losses are recognized in operations.

     If the balance of a hedged asset or liability declines below the notional
value of the related derivative financial instrument, the Company may
redesignate, at fair value, the derivative financial instrument to other assets
or liabilities or discontinue hedge accounting with respect to the portion of
the notional amount that exceeds the balance. When hedge accounting is
discontinued, derivative financial instruments are accounted for as trading
instruments.

     Trading Instruments.  Derivative financial instruments held for trading
purposes are carried at estimated fair value with realized and unrealized gains
and losses recognized in operations. The fair value of trading derivative
financial instruments in gain positions is reported in the Consolidated
Statements of Financial Condition in "Other assets," whereas the fair value of
such instruments in loss positions is reported in "Other liabilities."

                                      F-10
<PAGE>   89
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Comprehensive Income

     Effective as of January 1, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income," which establishes standards for reporting and
displaying comprehensive income and its components in a full set of general
purpose financial statements. Comprehensive income, which includes net income
and other comprehensive income, is defined as the change in equity during a
period from all transactions and other events and circumstances from non-owner
sources.

NOTE 2 -- BUSINESS COMBINATIONS

     On September 15, 1999, the Holding Company entered into a definitive
agreement and plan of merger (as subsequently amended, the "Merger Agreement")
with Hudson United Bancorp ("Hudson"), a New Jersey corporation headquartered in
Mahwah, New Jersey and the holding company for Hudson United Bank, a New Jersey
state-chartered commercial bank. At December 31, 1999, Hudson, on a consolidated
basis, had assets of $9.7 billion, deposits of $6.5 billion and stockholders'
equity of $519.2 million. The Merger Agreement, among other things, provides
that: (i) Hudson is to merge with and into the Holding Company in a transaction
accounted for as a pooling of interests (the "Merger"); (ii) the combined
company is to change its name to Dime United Bancorp, Inc. ("Dime United");
(iii) each issued share of Common Stock is to be combined into 0.60255 of a
share of Dime United common stock; and (iv) each outstanding share of Hudson
common stock is to be converted into one share of Dime United common stock. In
connection with the Merger, Dime FSB is to merge with and into Hudson United
Bank, with the combined institution to operate as a New Jersey state-chartered
commercial bank under the name "DimeBank." The Merger remains subject to the
approval of various regulatory agencies and the respective stockholders of the
Holding Company and Hudson. Either the Holding Company or Hudson may terminate
the Merger Agreement if the Merger is not consummated by June 30, 2000.

     For a discussion of recent developments regarding the Merger and certain
actions taken by North Fork Bancorporation, Inc. ("North Fork") related thereto,
see Note 23, "Commitments and Contingent Liabilities" and Note 28, "Subsequent
Events."

     Presented below is a discussion of acquisitions consummated by the Company
during the three-year period ended December 31, 1999. Each of these acquisitions
was accounted for as a purchase. Accordingly, the results of these acquisitions
are reflected in the Company's financial statements for the periods subsequent
to their respective acquisition dates.

     On October 18, 1999, the Company acquired KeyBank National Association's
Long Island banking franchise, which included 28 branches. In connection with
this acquisition, the Company acquired assets of $1.1 billion, including cash of
$614.4 million and loans receivable of $501.9 million, and assumed liabilities
of $1.3 billion, substantially all of which were deposits. Goodwill arising from
this acquisition amounted to $216.8 million, including $208.4 million associated
with the premium paid on the deposits assumed. This goodwill is being amortized
on a straight-line basis over 15 years.

     On August 1, 1999, the Company acquired Citibank, N.A.'s indirect
automobile finance business for $906.7 million in cash. In connection therewith,
the Company acquired assets of $953.0 million, consisting substantially of loans
receivable, and assumed deposits of $51.1 million. Goodwill recorded in
connection with this acquisition was $25.0 million and is being amortized on a
straight-line basis over 10 years.

     On May 21, 1999, Lakeview Financial Corp. ("Lakeview") was acquired by the
Company (the "Lakeview Acquisition"). Lakeview was the holding company for
Lakeview Savings Bank, which operated 11 branches in northern New Jersey. At the
date of acquisition, Lakeview had consolidated assets of $560.6 million,
including loans receivable of $286.9 million, and consolidated liabilities of
$515.9 million, including deposits of $461.9 million. Under the terms of the
related agreement, holders of Lakeview's common stock received either 0.9 of a
share of Common Stock or $24.26 in cash for each outstanding share of Lakeview
                                      F-11
<PAGE>   90
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

common stock. In connection therewith, the Holding Company issued 2,852,321
shares of Common Stock from treasury at an assigned value of $69.2 million and
paid a total of $41.4 million in cash. Goodwill of $79.0 million was generated
by the Lakeview Acquisition and is being amortized over 18 years using the
straight-line method.

     On February 16, 1999, the Company acquired certain assets, which were not
material, and the leases on all of the 15 residential real estate loan
production offices of T&N Mortgage, Inc., headquartered in Monroe, Louisiana,
for $5.1 million in cash. Goodwill arising from this acquisition totaled $3.9
million and is being amortized on a straight-line basis over 10 years.

     On October 15, 1997, North American Mortgage Company ("NAMC"), a mortgage
banking company headquartered in Santa Rosa, California, was acquired by the
Company (the "NAMC Acquisition"). At the date of acquisition, NAMC operated in
30 states and had assets of $1.5 billion, liabilities of $1.3 billion and a
portfolio of loans serviced for others of approximately $12 billion. In
connection with the NAMC Acquisition, each outstanding share of NAMC's common
stock was converted into 1.37 shares of Common Stock (the "NAMC Exchange
Ratio"), and each outstanding option issued by NAMC to acquire NAMC's common
stock was converted, after giving effect to the NAMC Exchange Ratio, into an
option to purchase Common Stock. As a result, the Holding Company issued
19,437,741 shares of Common Stock (of which 7,479,664 were issued from treasury)
with an assigned value of $351.1 million and options to purchase 1,862,087
shares of Common Stock with an estimated fair value of $21.4 million. Goodwill
recorded in connection with the NAMC Acquisition amounted to $188.8 million and
is being amortized on a straight-line basis over 25 years.

     In allocating the purchase price of NAMC, the Company recorded a $19.6
million restructuring liability. This liability included $10.0 million
associated with personnel-related costs for NAMC employees, primarily severance
benefits, and $9.6 million associated with transaction fees and other
acquisition-related costs. Cash payments and other reductions charged to this
restructuring liability totaled $0.9 million in 1999, $8.7 million in 1998 and
$9.8 million in 1997. The balance in this restructuring liability was $0.2
million at the end of 1999.

     In connection with the NAMC Acquisition, the Company incurred expenses
during 1997 of $9.9 million associated with its employees and operations. Such
expenses are reflected in the accompanying Consolidated Statements of Income
under the caption "Restructuring and related expense."

     On April 30, 1997, the Company acquired BFS Bankorp, Inc. ("BFS") for $93.3
million in cash. BFS was the holding company for Bankers Federal Savings FSB,
which operated five New York City branches. At the date of acquisition, BFS had
consolidated assets of $634.1 million, including loans receivable of $591.9
million, and consolidated liabilities of $579.2 million, including deposits of
$445.5 million. Goodwill arising from the acquisition of BFS amounted to $41.6
million and is being amortized over 15 years using the straight-line method.

NOTE 3 -- CASH AND CASH EQUIVALENTS

     Cash and cash equivalents were comprised of the following at December 31
(in thousands):

<TABLE>
<CAPTION>
                                                                1999        1998
                                                              --------    --------
<S>                                                           <C>         <C>
Cash and due from banks.....................................  $414,289    $279,490
Money market investments:
  Interest-earning deposits in banks........................    11,255       5,937
  Federal funds sold........................................        --      45,000
  Other.....................................................     6,911      27,350
                                                              --------    --------
          Total money market investments....................    18,166      78,287
                                                              --------    --------
  Total cash and cash equivalents...........................  $432,455    $357,777
                                                              ========    ========
</TABLE>

                                      F-12
<PAGE>   91
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 -- SECURITIES

     The amortized cost and estimated fair value of securities available for
sale, as well as related gross unrealized gains and losses, were as follows at
December 31 (in thousands):

<TABLE>
<CAPTION>
                                             1999                                          1998
                         --------------------------------------------   -------------------------------------------
                                       GROSS UNREALIZED                              GROSS UNREALIZED
                         AMORTIZED    ------------------   ESTIMATED    AMORTIZED    -----------------   ESTIMATED
                            COST       GAINS     LOSSES    FAIR VALUE      COST       GAINS    LOSSES    FAIR VALUE
                         ----------   -------   --------   ----------   ----------   -------   -------   ----------
<S>                      <C>          <C>       <C>        <C>          <C>          <C>       <C>       <C>
MBS:
  Pass-through
    securities:
    Privately-issued...  $2,296,046   $13,241   $ 63,796   $2,245,491   $1,795,369   $ 4,876   $24,981   $1,775,264
    U.S. government
      agencies.........     886,854       622     42,317      845,159    1,002,850     8,500     2,429    1,008,921
  Collateralized
    mortgage
    obligations:
    Privately-issued...     422,938       175     14,168      408,945      179,407       748       671      179,484
    U.S. government
      agencies.........      18,726        --        633       18,093           --        --        --           --
  Interest-only........         940        --        441          499        1,286        --       658          628
                         ----------   -------   --------   ----------   ----------   -------   -------   ----------
         Total MBS.....   3,625,504    14,038    121,355    3,518,187    2,978,912    14,124    28,739    2,964,297
                         ----------   -------   --------   ----------   ----------   -------   -------   ----------
Other debt securities:
  U.S. government and
    federal agencies...          --        --         --           --        3,492        33        --        3,525
  State and
    municipal..........      15,478        80        446       15,112       13,036       180       382       12,834
  Domestic corporate...     345,410     1,119     42,448      304,081      333,683    11,279     1,867      343,095
  Foreign government...         500        --         --          500          500        --        --          500
                         ----------   -------   --------   ----------   ----------   -------   -------   ----------
         Total other
           debt
          securities...     361,388     1,199     42,894      319,693      350,711    11,492     2,249      359,954
                         ----------   -------   --------   ----------   ----------   -------   -------   ----------
Equity securities......      12,490       198        892       11,796        5,529       219       555        5,193
                         ----------   -------   --------   ----------   ----------   -------   -------   ----------
Total securities
  available for sale...  $3,999,382   $15,435   $165,141   $3,849,676   $3,335,152   $25,835   $31,543   $3,329,444
                         ==========   =======   ========   ==========   ==========   =======   =======   ==========
</TABLE>

     At December 31, 1999, $3.5 billion of securities available for sale were
pledged as collateral for borrowed funds and other purposes.

                                      F-13
<PAGE>   92
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table sets forth, at December 31, 1999, the amortized cost,
estimated fair value and weighted average yield of debt securities available for
sale by period to contractual maturity (dollars in thousands):

<TABLE>
<CAPTION>
                                                                               WEIGHTED
                                                   AMORTIZED     ESTIMATED     AVERAGE
                                                      COST       FAIR VALUE    YIELD(1)
                                                   ----------    ----------    --------
<S>                                                <C>           <C>           <C>
MBS:
  Due in one year or less........................  $    2,802    $    2,795      6.66%
  Due after one through five years...............       2,872         2,846      6.72
  Due after five through ten years...............      28,088        27,890      7.46
  Due after ten years............................   3,591,742     3,484,656      6.92
                                                   ----------    ----------
          Total MBS..............................   3,625,504     3,518,187      6.92
                                                   ----------    ----------
Other debt securities:
  Due in one year or less........................       1,450         1,450      8.11
  Due after one through five years...............      13,571        13,573      8.92
  Due after five through ten years...............      12,384        13,500     11.35
  Due after ten years............................     333,983       291,170      7.55
                                                   ----------    ----------
          Total other debt securities............     361,388       319,693      7.74
                                                   ----------    ----------
Total debt securities available for sale.........  $3,986,892    $3,837,880      7.00
                                                   ==========    ==========
</TABLE>

---------------
(1) The weighted average yields are based on amortized cost.

     Information concerning sales of securities available for sale is summarized
below for the year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                    1999          1998          1997
                                                 ----------    ----------    ----------
<S>                                              <C>           <C>           <C>
Proceeds from sales............................  $1,377,601    $1,922,949    $1,720,817
Gross realized gains...........................       8,272        22,981        20,800
Gross realized losses..........................       4,530         1,010        11,890
</TABLE>

     During 1997, the Company, primarily as a result of a reassessment of its
asset/liability management strategy, transferred its entire portfolio of
securities held to maturity to its portfolio of securities available for sale.
At the date of transfer, the securities held to maturity portfolio had an
amortized cost of $3.6 billion and net unrealized pre-tax losses of
approximately $51 million. In connection with a decision made at the time of
transfer to sell $1.4 billion of the transferred securities, the Company, during
1997, wrote-down those securities with unrealized losses to estimated fair value
and recognized a pre-tax loss of $25.2 million. Substantially all of the
securities designated for sale have been sold.

     During 1999, the Company transferred certain MBS from its securities
available for sale portfolio to its trading securities portfolio. At the date of
transfer, these MBS had an estimated fair value of $252.1 million and net
unrealized losses of $1.7 million. The net unrealized losses, which consisted of
gross unrealized losses of $1.8 million and gross unrealized gains of $0.1
million, were charged to operations at the date of transfer.

     At December 31, 1999, the Company's trading securities portfolio had an
estimated fair value of $177.0 million. Such securities are included under the
caption "Other assets" in the accompanying Consolidated Statement of Financial
Condition. The Company did not maintain a trading securities portfolio at the
end of 1998.

                                      F-14
<PAGE>   93
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5 -- LOANS RECEIVABLE, NET

     A summary of loans receivable, net, is as follows at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                                               1999           1998
                                                            -----------    -----------
<S>                                                         <C>            <C>
Loans receivable:
  Residential real estate:
     Permanent............................................  $ 8,198,653    $ 8,918,170
     Construction.........................................        1,467          1,647
                                                            -----------    -----------
          Total residential real estate...................    8,200,120      8,919,817
                                                            -----------    -----------
  Commercial real estate:
     Permanent............................................    3,285,734      2,475,462
     Construction.........................................      197,123         92,288
                                                            -----------    -----------
          Total commercial real estate....................    3,482,857      2,567,750
                                                            -----------    -----------
  Consumer:
     Home equity..........................................    1,489,669        856,389
     Automobile...........................................      886,176          4,443
     Other................................................      119,476        112,398
                                                            -----------    -----------
          Total consumer..................................    2,495,321        973,230
                                                            -----------    -----------
  Business................................................    1,028,756        287,271
                                                            -----------    -----------
          Total loans receivable(1).......................   15,207,054     12,748,068
                                                            -----------    -----------
Allowance for loan losses.................................     (140,296)      (105,081)
                                                            -----------    -----------
Total loans receivable, net...............................  $15,066,758    $12,642,987
                                                            ===========    ===========
</TABLE>

---------------
(1) Loans receivable were increased by $67.9 and $64.0 million at December 31,
    1999 and 1998, respectively, as a result of deferred net yield adjustments.

     Loans receivable totaling $6.7 billion were pledged as collateral for
borrowed funds at December 31, 1999.

     At December 31, 1999, the Company's residential real estate loans
receivable were principally secured by properties located in the states of New
York (28.8%), California (17.4%), New Jersey (7.4%), Connecticut (5.2%) and
Illinois (5.1%). At that date, the Company's commercial real estate loans
receivable were principally secured by properties in the states of New York
(63.9%), New Jersey (14.0%), Pennsylvania (5.2%) and Virginia (5.2%). Home
equity loans receivable at the end of 1999 were principally secured by
properties located in the states of New York (38.9%), California (15.8%) and New
Jersey (12.2%). Automobile loans receivable at December 31, 1999 were
principally concentrated in the states of New York (49.7%), New Jersey (29.8%)
and Connecticut (11.5%). Business loans receivable at year-end 1999 were
principally concentrated in the states of New York (68.6%) and New Jersey
(8.0%).

                                      F-15
<PAGE>   94
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Activity in the allowance for loan losses is summarized as follows for the
year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Balance at beginning of year.......................  $105,081    $104,718    $106,495
Provision for loan losses(1).......................    29,500      32,000      49,000
Additions due to acquisitions......................    19,277          --      13,249
Loan charge-offs(1)(2).............................   (21,984)    (40,067)    (71,608)
Loan recoveries....................................     8,422       8,430       7,582
                                                     --------    --------    --------
  Net loan charge-offs.............................   (13,562)    (31,637)    (64,026)
                                                     --------    --------    --------
Balance at end of year.............................  $140,296    $105,081    $104,718
                                                     ========    ========    ========
</TABLE>

---------------
(1) The provision for loan losses and loan charge-offs for 1997 included $14.0
    million and $35.8 million, respectively, associated with bulk sales of
    approximately $113 million of non-performing residential real estate loans
    in May 1997.

(2) Loan charge-offs for 1998 included $9.1 million associated with a bulk sale
    of approximately $53 million of non-performing loans in December 1998,
    substantially all of which were residential real estate loans.

     The following table sets forth non-accrual loans and loans modified in a
TDR (excluding those classified as non-accrual loans) at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                            NON-ACCRUAL LOANS     LOANS MODIFIED IN A TDR
                                            ------------------    ------------------------
                                             1999       1998        1999           1998
                                            -------    -------    ---------      ---------
<S>                                         <C>        <C>        <C>            <C>
Residential real estate...................  $51,293    $37,771     $ 5,520        $ 6,159
Commercial real estate....................    5,208     11,992       5,800          6,039
Consumer..................................   10,424      5,292          --             --
Business..................................    2,437         56          --             --
                                            -------    -------     -------        -------
Total.....................................  $69,362    $55,111     $11,320        $12,198
                                            =======    =======     =======        =======
</TABLE>

     The amount of interest income that would have been recorded on non-accrual
loans and loans modified in a TDR, if such loans had been current in accordance
with their original terms, was $6.2 million, $5.9 million and $18.7 million for
1999, 1998 and 1997, respectively. The amount of interest income that was
recorded on these loans was $1.5 million, $2.9 million and $11.5 million for
1999, 1998 and 1997, respectively.

                                      F-16
<PAGE>   95
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table sets forth information regarding the Company's impaired
loans at December 31 (in thousands):

<TABLE>
<CAPTION>
                                             1999                                  1998
                              -----------------------------------   -----------------------------------
                                            RELATED                               RELATED
                                           ALLOWANCE                             ALLOWANCE
                               RECORDED    FOR LOAN       NET        RECORDED    FOR LOAN       NET
                              INVESTMENT    LOSSES     INVESTMENT   INVESTMENT    LOSSES     INVESTMENT
                              ----------   ---------   ----------   ----------   ---------   ----------
<S>                           <C>          <C>         <C>          <C>          <C>         <C>
Residential real estate:
  With a related
     allowance..............   $ 1,174      $   (73)    $ 1,101      $   619      $   (39)    $   580
  Without a related
     allowance..............     4,741           --       4,741        3,287           --       3,287
                               -------      -------     -------      -------      -------     -------
          Total residential
            real estate.....     5,915          (73)      5,842        3,906          (39)      3,867
                               -------      -------     -------      -------      -------     -------
Commercial real estate:
  With a related
     allowance..............     8,837       (1,777)      7,060       13,861       (1,437)     12,424
Business:
  With a related
     allowance..............     2,437         (344)      2,093           56          (45)         11
                               -------      -------     -------      -------      -------     -------
Total impaired loans........   $17,189      $(2,194)    $14,995      $17,823      $(1,521)    $16,302
                               =======      =======     =======      =======      =======     =======
</TABLE>

     The Company's average recorded investment in impaired loans for 1999, 1998
and 1997 was $17.1 million, $28.1 million and $46.7 million, respectively.
Interest income recognized on impaired loans for 1999, 1998 and 1997 amounted to
$0.8 million, $1.3 million and $4.2 million, respectively.

NOTE 6 -- PREMISES AND EQUIPMENT, NET

     Premises and equipment, net, consisted of the following at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                                                1999         1998
                                                              ---------    ---------
<S>                                                           <C>          <C>
Cost:
  Land......................................................  $  18,660    $  12,263
  Buildings.................................................     99,364       87,251
  Leasehold improvements....................................     76,472       66,153
  Furniture, fixtures and equipment.........................    179,901      143,075
                                                              ---------    ---------
          Total cost........................................    374,397      308,742
Accumulated depreciation and amortization...................   (167,024)    (137,863)
                                                              ---------    ---------
Total premises and equipment, net...........................  $ 207,373    $ 170,879
                                                              =========    =========
</TABLE>

     Depreciation and amortization of premises and equipment charged to expense
amounted to $31.2 million, $28.3 million and $20.2 million for 1999, 1998 and
1997, respectively.

NOTE 7 -- LOAN SERVICING

     Mortgage loans serviced by the Company for others amounted to $38.4
billion, $34.9 billion and $25.0 billion at December 31, 1999, 1998 and 1997,
respectively. These amounts included loans of $1.3 billion, $7.9 billion and
$3.0 billion, respectively, that were being subserviced by the Company in
connection with sales of loan servicing rights.

                                      F-17
<PAGE>   96
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Mortgage servicing assets activity is summarized in the table below for the
year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Balance at beginning of year.......................  $692,473    $341,906    $127,745
Originations and purchases.........................   551,737     694,789      97,587
Acquired in the NAMC Acquisition...................        --       2,160     180,897
Sales..............................................  (162,890)   (277,871)    (56,539)
Amortization(1)....................................  (122,786)    (92,291)    (29,751)
Hedging activities, net............................    22,400      23,780      21,967
                                                     --------    --------    --------
Balance at end of year.............................  $980,934    $692,473    $341,906
                                                     ========    ========    ========
</TABLE>

---------------
(1) Includes amortization associated with derivative financial instruments
    hedging mortgage servicing assets.

     The estimated fair value of the Company's mortgage servicing assets at
December 31, 1999 was $1,027.4 million.

NOTE 8 -- ORE, NET

     ORE, net, which is included under the caption "Other assets" in the
accompanying Consolidated Statements of Financial Condition, was comprised of
the following at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                               1999       1998
                                                              -------    -------
<S>                                                           <C>        <C>
Residential real estate.....................................  $ 9,978    $15,170
Commercial real estate......................................    6,963     14,505
Allowance for losses........................................     (250)    (1,443)
                                                              -------    -------
Total ORE, net..............................................  $16,691    $28,232
                                                              =======    =======
</TABLE>

     Activity in the allowance for losses on ORE is summarized as follows for
the year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                            1999      1998      1997
                                                           ------    ------    ------
<S>                                                        <C>       <C>       <C>
Balance at beginning of year.............................  $1,443    $1,722    $3,294
Provision for losses.....................................     548       665     1,514
Charge-offs..............................................  (1,861)   (1,252)   (4,272)
Recoveries...............................................     120       308     1,186
                                                           ------    ------    ------
  Net charge-offs........................................  (1,741)     (944)   (3,086)
                                                           ------    ------    ------
Balance at end of year...................................  $  250    $1,443    $1,722
                                                           ======    ======    ======
</TABLE>

                                      F-18
<PAGE>   97
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9 -- DEPOSITS

     Deposits were comprised of the following at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                               1999           1998
                                                            -----------    -----------
<S>                                                         <C>            <C>
Demand....................................................  $ 2,071,419    $ 1,976,122
Savings...................................................    2,407,528      2,291,782
Money market..............................................    3,201,298      2,634,312
Time(1)...................................................    6,581,204      6,749,244
                                                            -----------    -----------
Total deposits............................................  $14,261,449    $13,651,460
                                                            ===========    ===========
</TABLE>

---------------
(1) Includes brokered deposits of $5.0 million at December 31, 1999 and $238.5
    million at December 31, 1998.

     Scheduled maturities of time deposits at December 31, 1999 are presented in
the table below (dollars in thousands):

<TABLE>
<CAPTION>
                                                                            WEIGHTED
                                                                            AVERAGE
                                                                            INTEREST
                                                                AMOUNT        RATE
                                                              ----------    --------
<S>                                                           <C>           <C>
Maturing in:
  2000......................................................  $5,338,145      4.94%
  2001......................................................   1,050,523      5.49
  2002......................................................      68,211      5.05
  2003......................................................      79,195      5.41
  2004......................................................      34,229      4.48
  Thereafter................................................      10,901      5.48
                                                              ----------
Total time deposits.........................................  $6,581,204      5.03
                                                              ==========
</TABLE>

     The following table sets forth the scheduled maturities of time deposits
with balances of $100,000 or more at December 31, 1999 (in thousands):

<TABLE>
<CAPTION>
                                                               AMOUNT
                                                              --------
<S>                                                           <C>
Maturing in:
  Three months or less......................................  $139,342
  Over three through six months.............................   260,619
  Over six months through one year..........................   280,404
  Over one year.............................................   149,911
                                                              --------
Total.......................................................  $830,276
                                                              ========
</TABLE>

     At December 31, 1998, time deposits with balances of $100,000 or more
amounted to $973.3 million.

                                      F-19
<PAGE>   98
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10 -- FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO
REPURCHASE

     Information concerning federal funds purchased and securities sold under
agreements to repurchase is summarized in the table below at or for the year
ended December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                           1999                    1998                    1997
                                   ---------------------   ---------------------   ---------------------
                                                WEIGHTED                WEIGHTED                WEIGHTED
                                                AVERAGE                 AVERAGE                 AVERAGE
                                                INTEREST                INTEREST                INTEREST
                                     AMOUNT       RATE       AMOUNT       RATE       AMOUNT       RATE
                                   ----------   --------   ----------   --------   ----------   --------
<S>                                <C>          <C>        <C>          <C>        <C>          <C>
At year end:
  Federal funds purchased........  $  785,000     5.13%    $  474,980     5.26%    $       --       --%
  Securities sold under
     agreements to repurchase....     321,067     5.78      1,770,238     5.35      2,975,774     5.85
                                   ----------              ----------              ----------
Total federal funds purchased and
  securities sold under
  agreements to repurchase.......  $1,106,067     5.32     $2,245,218     5.33     $2,975,774     5.85
                                   ==========              ==========              ==========
Average during the year:
  Federal funds purchased........  $1,816,260     5.17%    $  219,050     5.20%    $       --       --%
  Securities sold under
     agreements to repurchase....   1,358,989     5.14      1,584,131     5.58      3,628,681     5.70
                                   ----------              ----------              ----------
Total federal funds purchased and
  securities sold under
  agreements to repurchase.......  $3,175,249     5.15     $1,803,181     5.54     $3,628,681     5.70
                                   ==========              ==========              ==========
Maximum month-end balance during
  the year:
  Federal funds purchased........  $2,280,613              $  805,000              $       --
  Securities sold under
     agreements to repurchase....   1,841,569               2,694,808               4,265,905
</TABLE>

     Federal funds purchased and securities sold under agreements to repurchase
generally mature within thirty days of the transaction date.

     Accrued interest payable on securities sold under agreements to repurchase,
which is included under the caption "Other liabilities" in the accompanying
Consolidated Statements of Financial Condition, amounted to $0.2 million, $4.8
million and $21.0 million at December 31, 1999, 1998 and 1997, respectively.

     MBS pledged as collateral for securities sold under agreements to
repurchase were delivered to the counterparties to the transactions. The
counterparties may have loaned these MBS to other parties in the normal course
of their operations and agreed to resell to the Company the identical MBS sold.

                                      F-20
<PAGE>   99
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11 -- OTHER SHORT-TERM BORROWINGS

     Information concerning other short-term borrowings is summarized in the
table below at or for the year ended December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                           1999                    1998                    1997
                                   ---------------------   ---------------------   ---------------------
                                                WEIGHTED                WEIGHTED                WEIGHTED
                                                AVERAGE                 AVERAGE                 AVERAGE
                                                INTEREST                INTEREST                INTEREST
                                     AMOUNT       RATE       AMOUNT       RATE       AMOUNT       RATE
                                   ----------   --------   ----------   --------   ----------   --------
<S>                                <C>          <C>        <C>          <C>        <C>          <C>
At year end:
  Federal Home Loan Bank of New
     York ("FHLBNY") advances....  $3,711,086     5.12%    $3,647,330     5.80%    $2,136,675     5.96%
  Treasury tax and loan notes....   1,598,154     3.74          9,474     4.14          3,943     5.25
  Other..........................      12,598     3.99         99,929     6.49             --       --
                                   ----------              ----------              ----------
Total other short-term
  borrowings.....................  $5,321,838     4.70     $3,756,733     5.81     $2,140,618     5.96
                                   ==========              ==========              ==========
Average during the year:
  FHLBNY advances................  $2,076,887     5.29%    $3,004,269     5.67%    $  916,737     5.79%
  Treasury tax and loan notes....     170,692     4.83         64,798     5.25          2,898     5.35
  Other..........................      31,391     6.09         30,911     6.47             --       --
                                   ----------              ----------              ----------
Total other short-term
  borrowings.....................  $2,278,970     5.27     $3,099,978     5.67     $  919,635     5.79
                                   ==========              ==========              ==========
Maximum month-end balance during
  the year:
  FHLBNY advances................  $3,711,086              $3,899,375              $2,187,527
  Treasury tax and loan notes....   1,598,154                 620,000                   6,063
  Other..........................     105,495                  99,929                      --
</TABLE>

     Scheduled principal repayments of other short-term borrowings outstanding
at December 31, 1999 were $3.7 billion in January 2000, $1.2 billion in February
2000, $250.0 million in May 2000 and $125.0 million in June 2000.

     At December 31, 1999, FHLBNY short-term advances, as well as long-term
FHLBNY advances discussed in Note 12, "Long-Term Debt," were collateralized by
Dime FSB's investment in FHLBNY stock and by certain MBS and residential real
estate loans.

                                      F-21
<PAGE>   100
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12 -- LONG-TERM DEBT

     Long-term debt consisted of the following at December 31 (dollars in
thousands):

<TABLE>
<CAPTION>
                                                                 1999         1998
                                                              ----------    --------
<S>                                                           <C>           <C>
FHLBNY advances:
  Adjustable-rate; due 1999 to 2001; stated interest rates
     of 6.004% to 6.146% (1999) and 5.211% to 5.605%
     (1998).................................................  $  477,000    $200,000
  Fixed-rate; due 1999 to 2011; stated interest rates of
     5.73% to 7.44%; par value of $274,575 (1999) and
     $229,680 (1998)........................................     274,600     229,785
                                                              ----------    --------
          Total FHLBNY advances.............................     751,600     429,785
                                                              ----------    --------
Senior notes; due 2001 to 2005; stated fixed interest rates
  of 6.375% to 7.00% (1999) and 10.50% (1998); par value of
  $350,000 (1999) and $100,000 (1998).......................     348,322      98,977
Medium-term notes; due 2000 to 2003; stated fixed interest
  rates of 6.27% to 7.34%; par value of $47,800 (1999) and
  $51,000 (1998)............................................      48,541      51,983
Bonds, preferred stocks and loans transferred in put
  transactions; due 2000 to 2016; stated fixed interest
  rates of 4.08% to 8.125% (1999) and 4.08% to 8.40%
  (1998)....................................................      17,405      20,182
Other.......................................................          --       7,965
                                                              ----------    --------
Total long-term debt........................................  $1,165,868    $608,892
                                                              ==========    ========
</TABLE>

     The weighted average effective interest rate on long-term debt was 6.44% at
December 31, 1999 and 6.75% at December 31, 1998. Scheduled principal repayments
of long-term debt for the five years subsequent to December 31, 1999 were $186.5
million in 2000, $737.9 million in 2001, $21.3 million in 2002, $33.7 million in
2003 and $71.5 million in 2004.

     The senior notes are unsecured obligations of the Holding Company and are
not subordinated to any other indebtedness of the Holding Company. During 1999,
the Holding Company issued $200.0 million of 6.375% senior notes due January
2001 and $150.0 million of 7.00% senior notes due July 2001. These senior notes
are not redeemable prior to their scheduled maturity. During January 1999, the
Holding Company, at its option, redeemed all of its then outstanding $100.0
million of 10.50% senior notes that were due in November 2005. These senior
notes had been issued in 1994.

     The medium-term notes, all of which were assumed in connection with the
NAMC Acquisition, are unsecured. The terms of these notes provide for a single
principal payment at maturity. During 1999, the Company purchased $3.0 million
of 7.315% medium-term notes due in August 2003 and $0.2 million of 7.29%
medium-term notes due in August 2003.

     From 1983 to 1985, Dime FSB had entered into various borrowing agreements
under which it transferred certain tax-exempt bonds, preferred stocks and
tax-exempt loans to certain unit investment trusts and others, accompanied by
put options. During the terms of the agreements, the holders are entitled to
return the assets to Dime FSB under various circumstances at specified prices.
The underlying bonds, preferred stocks and loans transferred in the put
transactions had carrying values of $7.9 million, $1.5 million and $7.8 million,
respectively, at December 31, 1999 and $8.6 million, $3.3 million and $8.4
million, respectively, at December 31, 1998. At those dates, these borrowing
agreements were further collateralized by designated MBS.

     At December 31, 1999, the Holding Company had an effective shelf
registration with the Securities and Exchange Commission under which it could
issue an aggregate of $150.0 million of debentures, notes or other unsecured
evidences of indebtedness. These debt securities, which may be unsubordinated or
subordinated to certain other obligations of the Holding Company, may be offered
separately or together in one or more series.

                                      F-22
<PAGE>   101
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 13 -- GUARANTEED PREFERRED BENEFICIAL INTERESTS IN DIME BANCORP, INC.'S
           JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES ("TRUST PREFERRED
           SECURITIES")

     On May 6, 1997, Dime Capital Trust I ("Dime Capital"), a Delaware statutory
business trust that was formed by the Holding Company, issued $200.0 million
aggregate liquidation amount of 9.33% Capital Securities, Series A (the "Series
A Capital Securities"), representing preferred beneficial interests in Dime
Capital, in an underwritten public offering and $6.2 million aggregate
liquidation amount of common beneficial interests represented by its common
securities to the Holding Company (the "Dime Capital Common Securities," and
together with the Series A Capital Securities, the "Dime Capital Securities").
In connection therewith, Dime Capital purchased $206.2 million aggregate
principal amount of 9.33% Junior Subordinated Deferrable Interest Debentures,
Series A, due May 6, 2027 (the "Series A Subordinated Debentures") issued by the
Holding Company, which amount is equal to the aggregate liquidation amount of
the Dime Capital Securities. Dime Capital is wholly-owned by the Holding Company
and exists for the sole purpose of issuing the Dime Capital Securities and
investing the proceeds thereof in the Series A Subordinated Debentures. The
Series A Subordinated Debentures, which are, and will be, the sole assets of
Dime Capital, are subordinate and junior in right of payment to all present and
future senior indebtedness of the Holding Company. The Holding Company, through:
(i) a guarantee agreement, between the Holding Company and The Chase Manhattan
Bank ("Chase"), as trustee; (ii) a trust agreement, among the Holding Company,
as depositor, Chase, as property trustee, Chase Manhattan Bank Delaware, as
Delaware trustee, certain employees or officers of the Holding Company, as
administrative trustees, and the holders from time to time of the Dime Capital
Securities; (iii) an expense agreement, between the Holding Company and Dime
Capital; (iv) the Series A Subordinated Debentures; and (v) an indenture
regarding the Series A Subordinated Debentures, between the Holding Company and
Chase, as trustee, when taken in the aggregate, has fully and unconditionally
guaranteed all of Dime Capital's obligations under the Series A Capital
Securities. The Series A Capital Securities are subject to mandatory redemption,
in whole or in part, upon the repayment of the Series A Subordinated Debentures
at their stated maturity or earlier redemption. Distributions on the Series A
Capital Securities are payable semi-annually and are reflected in the Company's
Consolidated Statements of Income under the caption "Interest expense on
borrowed funds."

     The carrying value and outstanding principal amount of the Trust Preferred
Securities was $152.2 million and $155.2 million, respectively, at December 31,
1999 and $162.0 million and $165.2 million, respectively, at December 31, 1998.
During 1999 and 1998, the Holding Company purchased $10.0 million and $34.8
million, respectively, of the outstanding Series A Capital Securities. The Trust
Preferred Securities have an effective interest rate of 9.53%.

NOTE 14 -- STOCKHOLDERS' EQUITY

  Preferred Stock

     At December 31, 1999 and 1998, the Holding Company was authorized to issue,
in one or more series, 40 million shares of preferred stock with a par value of
$0.01 per share (the "Preferred Stock"). The powers, designations, preferences
and relative, participating, optional or other rights, if any, and the
qualifications, limitations or restrictions thereof, including, but not limited
to, the number of shares of any series of Preferred Stock, the dividend rights,
redemption rights, liquidation preferences, voting rights and conversion rights
of any series is determined by the board of directors of the Holding Company
(the "Board"). As of December 31, 1999, no shares of the Preferred Stock have
ever been issued.

                                      F-23
<PAGE>   102
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Common and Treasury Stock

     The following table sets forth the Holding Company's common share activity
during the years indicated.

<TABLE>
<CAPTION>
                                                                   COMMON SHARES
                                                    -------------------------------------------
                                                                      HELD IN
                                                      ISSUED         TREASURY       OUTSTANDING
                                                    -----------    -------------    -----------
<S>                                                 <C>            <C>              <C>
Balance at December 31, 1996......................  108,262,216     (3,518,297)     104,743,919
Purchased for treasury............................           --     (9,287,100)      (9,287,100)
Issued in connection with the NAMC Acquisition....   11,958,077      7,479,664       19,437,741
Issued in connection with employee stock plans,
  net.............................................       36,166      1,427,601        1,463,767
                                                    -----------     ----------      -----------
  Balance at December 31, 1997....................  120,256,459     (3,898,132)     116,358,327
Purchased for treasury............................           --     (6,371,800)      (6,371,800)
(Repurchased) issued in connection with employee
  stock plans, net................................       (4,000)     1,587,074        1,583,074
                                                    -----------     ----------      -----------
  Balance at December 31, 1998....................  120,252,459     (8,682,858)     111,569,601
Purchased for treasury............................           --     (3,867,900)      (3,867,900)
Issued in connection with the Lakeview
  Acquisition.....................................           --      2,852,321        2,852,321
Issued in connection with employee stock plans,
  net.............................................           --        340,848          340,848
                                                    -----------     ----------      -----------
Balance at December 31, 1999......................  120,252,459     (9,357,589)     110,894,870
                                                    ===========     ==========      ===========
</TABLE>

     At December 31, 1999, 15.1 million shares of Common Stock were reserved for
future issuance under the Company's stock-based employee benefit plans.

     At December 31, 1999, the Holding Company had one Common Stock repurchase
program in effect. This program, which was announced in September 1998,
authorized the Holding Company to repurchase up to approximately 5.6 million
shares of outstanding Common Stock. Through the end of 1999, 4.2 million shares
of Common Stock were repurchased under this program. This program was rescinded
in February 2000 in connection with the Merger. No shares of Common Stock were
repurchased under this program subsequent to December 31, 1999.

  Stockholder Protection Rights Plan

     In October 1995, the Board adopted a Stockholder Protection Rights Plan
(the "Rights Plan"). Under the Rights Plan, which expires in November 2005, the
Board declared a dividend of one right on each outstanding share of Common
Stock, which was paid on November 6, 1995 to stockholders of record on that date
(the "Rights"). Until it is announced that a person or group has acquired 20% or
more of the outstanding Common Stock (an "Acquiring Person") or has commenced a
tender offer that could result in their owning 20% or more of Common Stock, the
Rights will be evidenced solely by the Holding Company's common stock
certificates, will automatically trade with the Common Stock and will not be
exercisable. Following any such announcement, separate Rights would be
distributed, with each Right entitling its owner to purchase participating
preferred stock of the Holding Company having economic and voting terms similar
to those of one share of Common Stock for an exercise price of $50.

     Upon announcement that any person or group has become an Acquiring Person
and unless the Board acts to redeem the Rights, then ten business days
thereafter (or such earlier or later date, not beyond 30 days, as the Board may
decide) (the "Flip-in Date"), each Right (other than Rights beneficially owned
by any Acquiring Person or transferee thereof, which become void) will entitle
the holder to purchase, for the $50 exercise price, a number of shares of Common
Stock having a market value of $100. In addition, if, after an Acquiring Person
gains control of the Board, the Holding Company is involved in a merger or sells
more than

                                      F-24
<PAGE>   103
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

50% of its assets or assets generating more than 50% of its operating income or
cash flow, or has entered into an agreement to do any of the foregoing (or an
Acquiring Person is to receive different treatment than all other stockholders),
each Right will entitle its holder to purchase, for the $50 exercise price, a
number of shares of common stock of the Acquiring Person having a market value
of $100. If any person or group acquires between 20% and 50% of the outstanding
Common Stock the Board may, at its option, exchange one share of such Common
Stock for each Right. The Rights may also be redeemed by the Board for $0.01 per
Right prior to the Flip-in Date.

NOTE 15 -- REGULATORY MATTERS

     Dime FSB is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulators that, if undertaken, could have a direct
material effect on the consolidated financial statements of Dime FSB and the
Company. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action ("PCA"), Dime FSB must meet specific capital guidelines
that involve quantitative measures of Dime FSB's assets, liabilities and certain
off-balance sheet items as calculated under regulatory accounting practices.
Dime FSB's regulatory capital amounts and classification are also subject to
qualitative judgments by regulators about components, risk weightings and other
factors.

     Quantitative measures established by regulation by the Office of Thrift
Supervision ("OTS") to ensure capital adequacy (the "Capital Adequacy
Regulations") require Dime FSB to maintain, as set forth in the table below,
specified minimum amounts of and ratios of tangible and core ("tier 1") capital
to adjusted total assets and of total risk-based capital to total risk-weighted
assets. Management believes that, as of December 31, 1999, Dime FSB was in
compliance with the Capital Adequacy Regulations.

     Pursuant to the Federal Deposit Insurance Corporation Improvement Act of
1991, the OTS adopted PCA regulations (the "PCA Regulations") which established
five capital categories: "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized." To be categorized as well capitalized, Dime FSB must
maintain, as set forth in the table below, specified minimum amounts and ratios
of core capital to adjusted total assets and tier 1 and total risk-based capital
to total risk-weighted assets. As of December 31, 1999, Dime FSB was categorized
as well capitalized under the regulatory framework for PCA. There are no
conditions or events since that date that management believes have changed Dime
FSB's category.

                                      F-25
<PAGE>   104
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes, at December 31 for the years shown, Dime
FSB's actual regulatory capital amounts and ratios, as well as its minimum
capital requirements under the Capital Adequacy Regulations and under the PCA
Regulations for it to be deemed well capitalized (dollars in thousands):

<TABLE>
<CAPTION>
                                                    1999                   1998
                                             -------------------    -------------------
                                               AMOUNT      RATIO      AMOUNT      RATIO
                                             ----------    -----    ----------    -----
<S>                                          <C>           <C>      <C>           <C>
Actual regulatory capital:
  Tangible and core capital................  $1,383,046     5.90%   $1,282,010     5.82%
  Tier 1 risk-based capital................   1,383,046     8.80     1,282,010     9.58
  Total risk-based capital.................   1,623,342    10.33     1,387,091    10.37
Minimum capital requirements pursuant to
  the:
  Capital Adequacy Regulations:
     Tangible capital......................     351,459     1.50       330,622     1.50
     Core capital..........................     702,919     3.00       661,243     3.00
     Total risk-based capital..............   1,257,721     8.00     1,070,282     8.00
  PCA Regulations to be deemed well
     capitalized:
     Core capital..........................   1,171,531     5.00     1,102,072     5.00
     Tier 1 risk-based capital.............     943,291     6.00       802,711     6.00
     Total risk-based capital..............   1,572,151    10.00     1,337,852    10.00
</TABLE>

     Dime FSB's ability to pay cash dividends to the Holding Company and make
other capital distributions is limited by OTS regulations. As Dime FSB is a
subsidiary of a savings and loan holding company, it is required to file a
notice with the OTS at least 30 days prior to making a capital distribution. OTS
regulations require a savings association to file an application prior to making
a capital distribution if: (i) it is not eligible for expedited treatment under
the OTS application processing rules; (ii) the total amount of all capital
distributions, including the proposed capital distribution, for the applicable
calendar year would exceed an amount equal to the savings association's net
income for that year to date plus the savings association's retained net income
for the preceding two years; (iii) the savings association would not be at least
adequately capitalized under the PCA Regulations following the distribution; or
(iv) the capital distribution would violate a prohibition contained in any
statute, regulation or agreement with the OTS (or with the FDIC) or a condition
imposed in an OTS-approved application or notice. The OTS may, under certain
circumstances, disapprove a notice or deny an application.

     Federal Reserve Board regulations require Dime FSB to maintain specified
minimum reserve balances against certain deposits. These reserves, which may
consist of vault cash and non-interest earning deposits at the Federal Reserve
Bank of New York, were $67.6 million and $39.1 million for the calculation
periods including December 31, 1999 and 1998, respectively.

                                      F-26
<PAGE>   105
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 16 -- NET GAINS ON SALES ACTIVITIES

     Net gains on sales activities were comprised of the following for the year
ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Net gains (losses) on:
  Sales of loans held for sale.....................  $186,125    $217,271    $ 23,219
  Sales of mortgage servicing rights...............    12,135       1,986       6,888
  Securities activities............................     2,062      21,855     (17,794)
  Sale of branch...................................        --       9,512          --
  Other............................................       105      (6,173)       (277)
                                                     --------    --------    --------
Total net gains on sales activities................  $200,427    $244,451    $ 12,036
                                                     ========    ========    ========
</TABLE>

NOTE 17 -- EMPLOYEE BENEFIT PLANS

  Pension and Postretirement Health Care and Life Insurance Plans

     The Company currently maintains two non-contributory, qualified, defined
benefit pension plans (the "Qualified Pension Plans"), including a plan assumed
in connection with the Lakeview Acquisition. These plans cover, except as noted,
substantially all salaried employees of the Company who meet certain age and
length of service requirements. At December 31, 1999, the assets of the
Qualified Pension Plans primarily consisted of debt securities and equity
securities, including 730,364 shares of the Common Stock. NAMC personnel are
generally covered by a plan maintained by NAMC (see "Other Plans"). The Company
also maintains various non-contributory, non-qualified, defined benefit pension
plans (the "Non-Qualified Pension Plans"). Benefits under these plans have not
been prefunded by the Company.

     In addition, the Company currently sponsors unfunded postretirement health
care and life insurance plans covering, except as noted, substantially all
salaried employees of the Company who meet certain age and length of service
requirements. Employees of NAMC, with certain exceptions, are not covered under
these plans. In general, the Company's postretirement health care plan requires
contributions from participants. Benefits under the Company's postretirement
life insurance plan are provided to participants on a non-contributory basis.

                                      F-27
<PAGE>   106
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table provides details of the changes in the benefit
obligation and fair value of plan assets for the above plans for each of the
years shown and a reconciliation, at the end of each year shown, of the funded
status of the plans with the net amount recognized in the consolidated statement
of financial condition (in thousands):

<TABLE>
<CAPTION>
                                                                           OTHER
                                            PENSION BENEFITS      POSTRETIREMENT BENEFITS
                                          --------------------    ------------------------
                                            1999        1998         1999          1998
                                          --------    --------    ----------    ----------
<S>                                       <C>         <C>         <C>           <C>
Change in benefit obligation during the
  year:
  Benefit obligation at beginning of
     year...............................  $175,811    $170,722     $ 54,701      $ 52,646
  Service cost..........................     7,423       5,989          641           653
  Interest cost.........................    12,025      11,392        3,208         3,552
  Plan participants' contributions......        --          --          163           199
  Acquisitions..........................     1,048          --          210            --
  Actuarial (gain) loss.................   (20,899)        923      (11,734)          341
  Curtailment gain......................        --          --       (5,059)           --
  Settlement gain.......................        --          --          (88)           --
  Benefits paid.........................   (14,398)    (13,215)      (2,869)       (2,690)
                                          --------    --------     --------      --------
     Benefit obligation at end of
       year.............................   161,010     175,811       39,173        54,701
                                          --------    --------     --------      --------
Change in fair value of plan assets
  during the year:
  Fair value of plan assets at beginning
     of year............................   157,236     154,117           --            --
  Actual return on plan assets..........    21,810      16,472           --            --
  Acquisitions..........................       481          --           --            --
  Employer contributions................    16,064       1,078        2,706         2,491
  Plan participants' contributions......        --          --          163           199
  Benefits paid.........................   (14,398)    (13,215)      (2,869)       (2,690)
  Administrative expenses paid..........    (1,144)     (1,216)          --            --
                                          --------    --------     --------      --------
     Fair value of plan assets at end of
       year.............................   180,049     157,236           --            --
                                          --------    --------     --------      --------
Funded status at end of year............    19,039     (18,575)     (39,173)      (54,701)
Unrecognized actuarial (gain) loss......   (16,452)     11,117      (11,888)         (346)
Unrecognized transition (asset)
  obligation............................    (1,375)     (2,220)      21,632        26,861
Unrecognized prior service cost.........     4,691       4,420           --            --
                                          --------    --------     --------      --------
Net amount recognized at end of year....  $  5,903    $ (5,258)    $(29,429)     $(28,186)
                                          ========    ========     ========      ========
</TABLE>

     During 1999, the Company settled and curtailed a portion of its
postretirement life insurance-related benefit obligation by purchasing life
insurance contracts, which transferred the primary obligation for payment of
benefits from the Company to the insurance company.

                                      F-28
<PAGE>   107
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The components of the net amounts recognized in the Company's Consolidated
Statements of Financial Condition in connection with its pension plans and
postretirement health care and life insurance plans were as follows at December
31 (in thousands):

<TABLE>
<CAPTION>
                                                                           OTHER
                                            PENSION BENEFITS      POSTRETIREMENT BENEFITS
                                          --------------------    ------------------------
                                            1999        1998         1999          1998
                                          --------    --------    ----------    ----------
<S>                                       <C>         <C>         <C>           <C>
Prepaid benefit cost....................  $ 24,857    $ 10,626     $     --      $     --
Accrued benefit liability...............   (22,590)    (19,452)     (29,429)      (28,186)
Intangible asset........................     3,636       3,568           --            --
                                          --------    --------     --------      --------
Net amount recognized...................  $  5,903    $ (5,258)    $(29,429)     $(28,186)
                                          ========    ========     ========      ========
</TABLE>

     Weighted average assumptions used by the Company in accounting for its
pension plans and postretirement health care and life insurance plans were as
follows at December 31:

<TABLE>
<CAPTION>
                                                                                OTHER
                                                                            POSTRETIREMENT
                                                        PENSION BENEFITS       BENEFITS
                                                        ----------------    --------------
                                                         1999      1998     1999     1998
                                                        ------    ------    -----    -----
<S>                                                     <C>       <C>       <C>      <C>
Discount rate.........................................   8.00%     7.00%    8.00%    7.00%
Rate of compensation increase.........................   4.00      4.00     4.00     4.00
Expected return on plan assets........................  10.00     10.00       --       --
</TABLE>

     Net periodic expense associated with the Company's pension plans and
postretirement health care and life insurance plans included the following
components for the year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                         PENSION BENEFITS           OTHER POSTRETIREMENT BENEFITS
                                  ------------------------------   -------------------------------
                                    1999       1998       1997       1999        1998       1997
                                  --------   --------   --------   ---------   --------   --------
<S>                               <C>        <C>        <C>        <C>         <C>        <C>
Service cost....................  $  7,423   $  5,989   $  4,785    $   641     $  653     $  462
Interest cost...................    12,025     11,392     11,271      3,208      3,552      3,630
Expected return on plan
  assets........................   (15,344)   (14,521)   (13,968)        --         --         --
Amortization of transition
  (asset) obligation............      (845)      (845)      (845)     1,910      1,910      1,910
Amortization of prior service
  cost..........................       858        857        910         --         --         --
Recognized actuarial loss
  (gain)........................       219        104       (728)      (146)        --         --
Curtailment gain................        --         --         --     (1,842)        --         --
Settlement gain.................        --         --         --        (33)        --         --
                                  --------   --------   --------    -------     ------     ------
Net periodic expense............  $  4,336   $  2,976   $  1,425    $ 3,738     $6,115     $6,002
                                  ========   ========   ========    =======     ======     ======
</TABLE>

     Pension plans with accumulated benefit obligations in excess of plan assets
at December 31, 1999 and 1998 consisted of the Non-Qualified Pension Plans. The
aggregate projected benefit obligation and accumulated benefit obligation of
these plans amounted to $24.3 million and $22.6 million, respectively, at
December 31, 1999 and $20.6 million and $19.5 million, respectively, at December
31, 1998.

     As of December 31, 1999, the health care cost trend rate for participants
less than 65 years old was assumed to be 8.0% for 2000, declining gradually
until a floor of 5.0% was reached in 2003. For all other participants, as of
December 31, 1999, the health care cost trend rate for each future year was
assumed to be 5.0%. Increasing the assumed health care cost trend rates by 1.0%
in each year would increase the related accumulated benefit obligation at
December 31, 1999 by $639 thousand and the aggregate of the related service and
interest cost components by $49 thousand. A 1.0% decrease in the assumed health
care cost trend

                                      F-29
<PAGE>   108
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

rates in each year would decrease the related accumulated benefit obligation by
$594 thousand and the aggregate of the related service and interest cost
components by $46 thousand.

  Other Plans

     The Company maintains a savings plan, the Retirement 401(k) Investment
Plan, which covers substantially all employees of the Company, other than those
eligible to participate in a defined contribution benefit plan assumed by the
Company in connection with the NAMC Acquisition. Under the Retirement 401(k)
Investment Plan, participants may contribute up to 15% of their base pay on a
before- or after-tax basis, up to legal limits. The Company currently makes
matching contributions equal to 100% of the first 6% of participant
contributions. Participants vest immediately in their own contributions and over
a period of five years for the Company's contributions. Each member's
contributions and matching contributions are invested, in accordance with the
member's directions, in one or any combination of available investment options.

     In connection with the NAMC Acquisition, the Company assumed the NAMC
Retirement and 401(k) Savings Plan, which covers substantially all NAMC
personnel, except those employees of NAMC covered under the Qualified Pension
Plans or the Retirement 401(k) Investment Plan. Under the provisions of the
retirement benefit component of this plan, contributions are made by the Company
equal to 4% of the participant's eligible pay. Participants vest in such
contributions over a period of seven years. The provisions of the 401(k) savings
component of this plan provide for contributions by participants of up to 15% of
their total pay on a before-tax basis, up to legal limits, and matching
contributions by the Company of up to 1.5% of a participant's eligible
compensation. Participants vest immediately in their own contributions and over
a period of four years for the Company's contributions. Contributions to the
NAMC Retirement and 401(k) Savings Plan are invested, in accordance with the
participant's direction, in one or any combination of available investment
options.

     The Company also maintains non-qualified arrangements under which
supplemental amounts in excess of those allocated under the Retirement 401(k)
Investment Plan are allocated with respect to certain employees and upon which
earnings are credited. These amounts include supplemental allocations based upon
the amounts that would otherwise be contributed as matching contributions under
the Retirement 401(k) Investment Plan on base pay that exceeds the amount for
which matching contributions are permitted to be made under the Retirement
401(k) Investment Plan.

     The aggregate expense recognized by the Company in connection with the
above plans was $10.3 million, $8.7 million and $4.9 million for 1999, 1998 and
1997, respectively.

NOTE 18 -- STOCK PLANS

  Stock Option and Stock Incentive Plans

     As of December 31, 1999, the Company, as further discussed below, had in
effect three stock incentive plans under which shares of Common Stock were
available for future grants. All options to purchase Common Stock that have been
awarded under these plans have an exercise price equal to the grant-date market
price of the Common Stock, generally vest in three equal annual installments
beginning one year from the date of grant and expire eleven years from the date
of grant.

     During 1991, the Company adopted a stock incentive plan (the "1991 SIP")
that provides for grants to all employees of stock options, stock appreciation
rights ("SARs"), restricted Common Stock, deferred Common Stock, certain loans
and tax offset payments. The 1991 SIP was amended during 1998 to, among other
things, extend its termination date to March 2008 from February 2004, increase
the number of shares of Common Stock reserved for issuance by 5,000,000 and
provide that the exercise price of options granted on or after the date of
amendment will not be less than the market price of the Common Stock at the date
of grant.

                                      F-30
<PAGE>   109
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1999, 4,173,245 shares of Common Stock remained available for
future grants under the 1991 SIP.

     The Company adopted a broad-based stock incentive plan during 1997 (the
"1997 SIP"), under which all employees, excluding certain officers, are eligible
to receive options to purchase Common Stock at an exercise price equal to the
market price of the Common Stock at the date of grant. An aggregate of 950,000
shares of Common Stock have been reserved for issuance under this plan
(including 350,000 shares reserved during 1999 and 300,000 shares reserved
during 1998), of which 90,783 shares remained available for future grants as of
December 31, 1999. The 1997 SIP does not have an established termination date,
but may be terminated at any time by the Board.

     The Holding Company's stockholders approved a stock incentive plan for
outside directors during 1997 ("the 1997 SIP for Outside Directors"). As amended
during 1998, this plan provides for discretionary grants by the Board to outside
directors of the Holding Company and its eligible direct and indirect
subsidiaries of stock options, SARs, restricted Common Stock and deferred Common
Stock. The terms of such grants are established by the Board. Under the 1997 SIP
for Outside Directors, which terminates in 2007, 350,000 shares of Common Stock
have been reserved for issuance, of which 293,500 shares remained available for
future grants as of December 31, 1999.

     At December 31, 1999, stock options remained outstanding under the
Company's Pride Shares Program, a three year broad-based stock option plan
adopted in 1997 and which terminated during 1999. Under the Pride Shares
Program, there was a grant in each of 1997 and 1998 of an option to each
eligible full-time employee and each eligible part-time employee to purchase 150
shares and 75 shares, respectively, of Common Stock. During 1999, there was a
final grant under the Pride Shares Program of an option to each eligible
full-time employee and each eligible part-time employee to purchase 200 shares
and 100 shares, respectively, of Common Stock. A total of 2,975,000 shares of
Common Stock were reserved for issuance under the Pride Shares Program,
including 975,000 shares during 1999. In total, options to purchase 2,818,025
shares of Common Stock were awarded under the Pride Shares Program. Such options
have an exercise price equal to the grant-date market price of the Common Stock
and expire eleven years from the date of grant. Vesting of stock options awarded
under the Pride Shares program generally occurs at the earlier of five years
after the date of grant or the date the Common Stock price reaches a specified
target price (as established at the date of grant) and its closing price stays
at, or rises above, that target price for five consecutive trading days. The
specified target prices for the stock options granted in 1999, 1998 and 1997
were $31.25, $36.00 and $20.00, respectively. As of December 31, 1999, the
target price vesting test has been achieved only for those stock options granted
in 1997.

     In addition, at December 31, 1999, Common Stock-based awards remained
outstanding that were granted under various stock option and stock incentive
plans that terminated in years prior to 1999.

                                      F-31
<PAGE>   110
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table provides a summary of the Company's stock option
activity for the years ended December 31, 1999, 1998 and 1997 and stock options
exercisable at the end of each of those years:

<TABLE>
<CAPTION>
                                    1999                   1998                    1997
                            --------------------   ---------------------   ---------------------
                                        WEIGHTED                WEIGHTED                WEIGHTED
                             NUMBER     AVERAGE      NUMBER     AVERAGE      NUMBER     AVERAGE
                               OF       EXERCISE       OF       EXERCISE       OF       EXERCISE
                             OPTIONS     PRICE      OPTIONS      PRICE      OPTIONS      PRICE
                            ---------   --------   ----------   --------   ----------   --------
<S>                         <C>         <C>        <C>          <C>        <C>          <C>
Outstanding at beginning
  of year.................  6,207,021    $17.30     5,553,578    $12.53     3,934,258    $ 8.96
Exchanged in connection
  with the NAMC
  Acquisition.............         --        --            --        --     1,862,087     14.18
Granted...................  2,758,075     23.56     2,081,815     29.08     1,256,875     18.92
Exercised.................   (328,282)     9.67    (1,165,912)    13.31    (1,331,525)    10.16
Expired or forfeited......   (698,406)    26.77      (262,460)    27.55      (168,117)    13.64
                            ---------              ----------              ----------
Outstanding at end of
  year....................  7,938,408     18.96     6,207,021     17.30     5,553,578     12.53
                            =========              ==========              ==========
Exercisable at end of
  year....................  4,126,453     13.45     3,654,757     11.18     4,334,583     11.27
</TABLE>

     The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
                                        OPTIONS OUTSTANDING                OPTIONS EXERCISABLE
                              ---------------------------------------      --------------------
                                          WEIGHTED                                     WEIGHTED
                               NUMBER     AVERAGE    WEIGHTED AVERAGE       NUMBER     AVERAGE
                                 OF       EXERCISE      REMAINING             OF       EXERCISE
RANGE OF EXERCISE PRICES       OPTIONS     PRICE     CONTRACTUAL LIFE       OPTIONS     PRICE
------------------------      ---------   --------   ----------------      ---------   --------
<S>                           <C>         <C>        <C>                   <C>         <C>
$ 1.13 - $ 4.91.............    477,369    $ 2.53          2.4 years         477,369    $ 2.53
  5.61 -   9.75.............  1,089,747      8.14          4.7             1,089,747      8.14
 10.09 -  14.81.............  1,294,589     12.87          7.6               965,164     12.20
 15.13 -  18.89.............  1,135,275     17.24          7.0               947,903     17.45
 20.00 -  24.63.............  1,020,100     23.71          9.9                75,338     22.37
 25.25 -  29.94.............  2,337,478     26.47          9.6               552,191     26.86
 30.13 -  31.06.............    583,850     31.04          9.2                18,741     30.85
                              ---------                                    ---------
  1.13 -  31.06.............  7,938,408     18.96          7.8             4,126,453     13.45
                              =========                                    =========
</TABLE>

     At December 31, 1999, a total of 2,520,771 limited SARs were outstanding,
all of which have been issued in tandem with stock options. These SARs are
exercisable only for a period of 60 days following the occurrence of certain
specified changes in ownership or control of the Company or certain of its
subsidiaries.

     The number of shares of restricted Common Stock issued by the Company
during 1999, 1998 and 1997 amounted to 26,750, 341,500 and 95,640, respectively.
These shares had a weighted average grant price of $0.01 in 1999, $0.84 in 1998
and $1.00 in 1997 and a weighted average grant-date fair value of $19.98 in
1999, $28.05 in 1998 and $16.76 in 1997. Restrictions generally lapse in three
equal annual installments beginning either one year or three years from the date
of grant. At December 31, 1999, 371,965 shares of restricted Common Stock were
outstanding. Compensation expense recognized in operations in connection with
restricted Common Stock awards was $2.9 million in 1999, $2.8 million in 1998
and $0.7 million in 1997.

  Employee Stock Purchase Plan

     In 1993, the Company adopted an employee stock purchase plan (the "ESPP"),
reserving 1,000,000 shares of Common Stock for purchase by eligible employees of
the Company. In 1999, the Holding Company's stockholders approved an increase in
the number of shares of Common Stock reserved for purchase under the ESPP by
2,000,000. The ESPP permits a per share purchase price of between 85% and

                                      F-32
<PAGE>   111
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

100%, as established by the Compensation Committee of the Board (the
"Compensation Committee"), of the Common Stock market price on the first date of
the relevant purchase period. The Compensation Committee also establishes the
purchase period, which may not exceed twelve months, and number of shares made
available to each eligible participant during a specified purchase period. As of
December 31, 1999, the Compensation Committee has set the per share purchase
price under the ESPP at less than 100% of the Common Stock market price at the
start of the purchase period only in 1994. Through December 31, 1999, a total of
364,559 shares of Common Stock have been purchased under the ESPP.

     The following table summarizes purchase rights activity under the ESPP for
the year ended December 31:

<TABLE>
<CAPTION>
                                                                1999       1998       1997
                                                              --------    -------    -------
<S>                                                           <C>         <C>        <C>
Outstanding at beginning of year............................   366,431     81,108     63,447
Granted(1)..................................................   458,816    411,989     88,513
Exercised...................................................        --    (79,812)   (60,602)
Expired or forfeited........................................  (464,637)   (46,854)   (10,250)
                                                              --------    -------    -------
Outstanding at end of year..................................   360,610    366,431     81,108
                                                              ========    =======    =======
</TABLE>

---------------
(1) The purchase price was $23.00 in 1999, $30.13 in 1998 and $15.38 in 1997.

  Pro Forma Data

     The Company, as permitted under SFAS No. 123, "Accounting for Stock-Based
Compensation," accounts for its stock-based compensation awards using the
intrinsic value-based method prescribed by Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees." Under this method,
compensation cost is measured by the excess, if any, of the quoted market price
of the Common Stock at date of grant, or other measurement date, over the amount
an employee is required to pay to acquire the Common Stock. Had compensation
expense for the Company's stock-based compensation plans been recognized
consistent with the fair value-based method of SFAS No. 123, the Company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below for the year ended December 31 (in thousands, except per share
data):

<TABLE>
<CAPTION>
                                    1999                  1998                  1997
                             -------------------   -------------------   -------------------
                                AS        PRO         AS        PRO         AS        PRO
                             REPORTED    FORMA     REPORTED    FORMA     REPORTED    FORMA
                             --------   --------   --------   --------   --------   --------
<S>                          <C>        <C>        <C>        <C>        <C>        <C>
Net income.................  $239,813   $231,282   $237,086   $230,522   $121,714   $117,914
Basic earnings per share...      2.15       2.08       2.09       2.03       1.14       1.11
Diluted earnings per
  share....................      2.13       2.05       2.06       2.00       1.12       1.09
</TABLE>

     In preparing the pro forma information, the fair value of each stock option
granted and each purchase right granted under the ESPP was estimated on the date
of grant using the Black-Scholes option-pricing model. The following table
presents the weighted average grant-date fair value of each stock option and
each

                                      F-33
<PAGE>   112
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ESPP purchase right granted, as well as the assumptions used in valuing such
grants, during the years ended December 31:

<TABLE>
<CAPTION>
                                              STOCK OPTIONS           ESPP PURCHASE RIGHTS
                                         ------------------------   ------------------------
                                          1999     1998     1997     1999     1998     1997
                                         ------   ------   ------   ------   ------   ------
<S>                                      <C>      <C>      <C>      <C>      <C>      <C>
Weighted average grant-date fair
  value................................  $ 9.38   $11.54   $ 7.09   $ 3.36   $ 4.34   $ 2.16
Weighted average assumptions:
  Expected life (in years).............    5.47     5.56     5.41     1.00     1.00     1.00
  Risk-free interest rate..............    5.25%    5.16%    6.30%    4.94%    5.54%    6.12%
  Common Stock volatility..............   36.51    36.94    32.07    32.98    31.00    30.00
  Dividend yield.......................    1.14     0.69     0.83     1.22     0.66     1.04
</TABLE>

NOTE 19 -- OTHER GENERAL AND ADMINISTRATIVE EXPENSE

     The following table provides details of other general and administrative
expense for the year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Data processing and communications.................  $ 48,555    $ 43,782    $ 27,292
Professional services..............................    18,318      22,107      13,179
Postage and messenger services.....................    17,257      16,846       8,781
Marketing and promotional..........................    16,475      20,785      15,831
Stationery, printing and supplies..................    12,738      13,366       7,881
Year 2000 plan.....................................     5,491      16,197       1,286
Other..............................................    63,225      66,266      41,279
                                                     --------    --------    --------
Total other general and administrative expense.....  $182,059    $199,349    $115,529
                                                     ========    ========    ========
</TABLE>

NOTE 20 -- INCOME TAXES

     Income tax expense attributable to income before extraordinary items
consisted of the following for the year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                        1999        1998       1997
                                                      --------    --------    -------
<S>                                                   <C>         <C>         <C>
Current:
  Federal...........................................  $ 32,347    $ 26,804    $ 4,432
  State and local...................................    10,920      33,269      6,332
                                                      --------    --------    -------
          Total current.............................    43,267      60,073     10,764
                                                      --------    --------    -------
Deferred:
  Federal...........................................    96,692      54,687     62,494
  State and local...................................     2,553      (1,281)     1,776
                                                      --------    --------    -------
          Total deferred............................    99,245      53,406     64,270
                                                      --------    --------    -------
Total income tax expense attributable to income
  before extraordinary items........................  $142,512    $113,479    $75,034
                                                      ========    ========    =======
</TABLE>

     Excluded from the preceding table were income tax benefits of $3.0 million
in 1999, $3.0 million in 1998 and $0.9 million in 1997 associated with the
recognition of extraordinary losses on the early extinguishment of debt. The
preceding table also excludes the tax effects recorded directly to stockholders'
equity in connection with unrealized gains and losses on securities available
for sale and certain tax benefits associated with the

                                      F-34
<PAGE>   113
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company's stock-based compensation plans. In the aggregate, these tax effects
increased stockholders' equity by $61.3 million, $3.7 million and $8.1 million
in 1999, 1998 and 1997, respectively.

     The following is a reconciliation of federal income tax expense
attributable to income before extraordinary items computed at the statutory rate
of 35.0% to the actual income tax expense attributable to income before
extraordinary items for the year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                        1999        1998       1997
                                                      --------    --------    -------
<S>                                                   <C>         <C>         <C>
Statutory federal income tax expense................  $135,258    $124,119    $69,373
Increase (decrease) in income tax expense resulting
  from:
  State and local income taxes, net of federal
     income tax benefit.............................     8,758      20,793      5,270
  Non-deductible amortization of goodwill...........     4,581       3,751      1,334
  Restructuring of assets within corporate
     entities.......................................        --     (32,129)        --
  Other, net........................................    (6,085)     (3,055)      (943)
                                                      --------    --------    -------
Total income tax expense attributable to income
  before extraordinary items........................  $142,512    $113,479    $75,034
                                                      ========    ========    =======
</TABLE>

     The Company's effective income tax rate on income before extraordinary
items was 36.9% for 1999, 32.0% for 1998 and 37.9% for 1997.

     The combined federal, state and local income tax effects of temporary
differences that gave rise to significant portions of the Company's deferred tax
assets and deferred tax liabilities were as follows at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Deferred tax assets:
  Excess tax basis and potential bad debt
     deductions relating to non-performing
     assets........................................  $ 62,845    $ 47,737    $ 54,029
  Securities.......................................    68,080       9,419      18,192
  Financial statement reserves not yet realized for
     tax purposes..................................    13,917      20,753      12,311
  Postretirement benefits other than pensions......    12,200      11,170      10,336
  Federal alternative minimum tax and general
     business tax credit carryforwards.............     4,676      11,810       9,855
  Premises and equipment...........................     1,114       2,969       2,706
  Net operating loss carryforward..................        --      22,751      73,093
  Other, net.......................................    16,995          --      12,478
                                                     --------    --------    --------
          Total deferred tax assets................   179,827     126,609     193,000
                                                     --------    --------    --------
Deferred tax liabilities:
  Mortgage servicing assets........................   132,351      55,397      67,079
  Loans receivable.................................    29,875      13,148      23,790
  Other, net.......................................        --       6,278          --
                                                     --------    --------    --------
          Total deferred tax liabilities...........   162,226      74,823      90,869
                                                     --------    --------    --------
Net deferred tax assets............................  $ 17,601    $ 51,786    $102,131
                                                     ========    ========    ========
</TABLE>

     At December 31, 1999, the Company no longer had net operating loss or
general business tax credit carryforwards for federal income tax purposes. The
Company, at December 31, 1999, had federal alternative

                                      F-35
<PAGE>   114
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

minimum tax credit carryforwards of $4.7 million, which are available to reduce
future federal income taxes without expiration.

     During 1996, federal legislation was enacted that generally eliminates the
potential recapture of federal income tax deductions arising from commonly used
methods of calculating bad debt reserves for periods prior to 1988 if an
institution with a thrift charter (such as Dime FSB) were to change to a
commercial bank charter. In addition, this legislation repealed the reserve
method of tax accounting for bad debts used by Dime FSB and other "large" thrift
institutions, effective for taxable years beginning after 1995. The legislation
also contains provisions that require the recapture in future periods of tax
reserves for periods after 1987, but such provisions have not and are not
expected to have a material impact on the Company's consolidated financial
statements. Further, New York State legislation was enacted during 1996, and New
York City legislation was enacted in March 1997, allowing thrift institutions to
continue to use the reserve method of tax accounting for bad debts and to
determine a deduction for bad debts in a manner similar to prior law.

     At December 31, 1999, Dime FSB had approximately $170 million of bad debt
reserves for New York income tax purposes for which no provision for income tax
had been made. For federal income tax purposes, approximately $180 million of
Dime FSB's previously accumulated bad debt deductions are subject to recapture
upon its distribution to the Holding Company. It is not Dime FSB's intention to
make any distributions to the Holding Company, or use the reserve in any manner,
that would create income tax liabilities for Dime FSB.

     In order for Dime FSB to be permitted to maintain a New York tax bad debt
reserve for thrifts, certain thrift definitional tests must be met, including
maintaining at least 60% of its assets in qualifying assets, as defined for tax
purposes, and maintaining a thrift charter. If Dime FSB failed to meet these
definitional tests, the transition to the reserve method permitted commercial
banks would result in an increase in the New York tax provision because a
deferred tax liability would be established to reflect the eventual recapture of
some or all of the New York bad debt reserve.

NOTE 21 -- EARNINGS PER COMMON SHARE

     The following table sets forth the computations of basic and diluted
earnings per common share for the year ended December 31 (in thousands, except
per share data):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Basic earnings per common share:
  Numerators:
     Income before extraordinary items.............  $243,940    $241,143    $123,174
     Extraordinary items...........................    (4,127)     (4,057)     (1,460)
                                                     --------    --------    --------
     Net income....................................  $239,813    $237,086    $121,714
                                                     ========    ========    ========
  Denominator:
     Weighted average number of common shares
       outstanding.................................   111,355     113,452     106,585
  Basic earnings per common share:
     Income before extraordinary items.............  $   2.19    $   2.13    $   1.15
     Extraordinary items...........................     (0.04)      (0.04)      (0.01)
                                                     --------    --------    --------
     Net income....................................  $   2.15    $   2.09    $   1.14
                                                     ========    ========    ========
</TABLE>

                                      F-36
<PAGE>   115
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Diluted earnings per common share:
  Numerators:
     Income before extraordinary items.............  $243,940    $241,143    $123,174
     Extraordinary items...........................    (4,127)     (4,057)     (1,460)
                                                     --------    --------    --------
     Net income....................................  $239,813    $237,086    $121,714
                                                     ========    ========    ========
  Denominator:
     Weighted average number of common shares
       outstanding.................................   111,355     113,452     106,585
     Weighted average number of common equivalent
       shares due to stock options, restricted
       stock and employee stock purchase rights....     1,178       1,701       2,028
                                                     --------    --------    --------
     Weighted average number of diluted common
       shares outstanding..........................   112,533     115,153     108,613
                                                     ========    ========    ========
  Diluted earnings per common share:
     Income before extraordinary items.............  $   2.17    $   2.09    $   1.13
     Extraordinary items...........................     (0.04)      (0.03)      (0.01)
                                                     --------    --------    --------
     Net income....................................  $   2.13    $   2.06    $   1.12
                                                     ========    ========    ========
</TABLE>

NOTE 22 -- DERIVATIVE FINANCIAL INSTRUMENTS

     The Company uses various derivative financial instruments as part of its
overall interest rate risk-management strategy and to manage certain risks
associated with its mortgage banking activities. For a further discussion of the
Company's objectives and strategies relating to its use of derivative financial
instruments for risk-management purposes, reference is made to Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Asset/Liability Management -- Derivative Financial Instruments."

     The Company, to a very limited extent, has also used derivative financial
instruments for trading purposes.

     The level of credit risk associated with derivative financial instruments
depends on a variety of factors, including the estimated fair value of the
instrument, the collateral maintained, the use of master netting arrangements
and the ability of the counterparty to comply with its contractual obligations.
In the event of default by a counterparty, the Company would be subject to an
economic loss that corresponds to the cost to replace the agreement. The
Company's credit risk associated with its use of derivative financial
instruments amounted to $73.9 million at December 31, 1999 and $40.8 million at
December 31, 1998.

     Certain of the derivative financial instruments used by the Company for
risk-management purposes at December 31, 1999 require that the Company or its
counterparty, to the extent that the market value of the position for that party
is negative, maintain collateral, subject to a minimum call, with the other
party. If the Company is subject to an initial collateral requirement, the
amount of the initial collateral modifies the collateral maintenance level.

                                      F-37
<PAGE>   116
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Risk-Management Instruments

     The following table presents the notional amount and estimated fair value
of derivative financial instruments used by the Company for risk-management
purposes at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                              1999                      1998
                                                     -----------------------   -----------------------
                                                                   ESTIMATED                 ESTIMATED
                                                      NOTIONAL       FAIR       NOTIONAL       FAIR
                                                       AMOUNT        VALUE       AMOUNT        VALUE
                                                     -----------   ---------   -----------   ---------
<S>                                                  <C>           <C>         <C>           <C>
Interest rate risk-management instruments:
  Interest rate swaps hedging:
    Securities available for sale..................  $   578,253   $  6,270    $   239,370   $ (2,416)
    Loans receivable...............................    1,682,125     39,157      1,475,418    (53,469)
    Short-term borrowings..........................      875,000      5,510        250,000     (1,222)
                                                     -----------   --------    -----------   --------
         Total interest rate swaps.................    3,135,378     50,937      1,964,788    (57,107)
                                                     -----------   --------    -----------   --------
  Interest rate cap corridors hedging:
    Securities available for sale..................       45,810      2,354             --         --
    Loans receivable...............................      234,894     11,845             --         --
                                                     -----------   --------    -----------   --------
         Total interest rate cap corridors.........      280,704     14,199             --         --
                                                     -----------   --------    -----------   --------
  Interest rate futures hedging:
    Securities available for sale..................      360,000         --             --         --
    Loans receivable...............................      175,900         --             --         --
    Short-term borrowings..........................           --         --        300,000         --
                                                     -----------   --------    -----------   --------
         Total interest rate futures...............      535,900         --        300,000         --
                                                     -----------   --------    -----------   --------
  Interest rate caps hedging:
    Securities available for sale..................           --         --        107,422         --
    Loans receivable...............................           --         --        101,570         --
                                                     -----------   --------    -----------   --------
         Total interest rate caps..................           --         --        208,992         --
                                                     -----------   --------    -----------   --------
  Interest rate swaptions hedging loans
    receivable.....................................           --         --         40,000         --
                                                     -----------   --------    -----------   --------
         Total interest rate risk-management
           instruments.............................    3,951,982     65,136      2,513,780    (57,107)
                                                     -----------   --------    -----------   --------
Mortgage banking risk-management instruments:
  Forward contracts hedging loans held for sale....    1,960,407     24,168      4,426,940     (9,976)
  Put options purchased hedging loans held for
    sale...........................................       74,000        488        143,000        211
  Interest rate floors hedging mortgage servicing
    assets.........................................    2,885,000     13,912      2,402,768     49,054
  Interest rate swaps hedging mortgage servicing
    assets.........................................    1,452,000    (68,235)       800,000     32,577
  Interest rate swaptions hedging mortgage
    servicing assets...............................    1,445,000     53,446             --         --
  Principal-only swaps hedging mortgage servicing
    assets.........................................       51,085        173             --         --
  Interest rate caps hedging mortgage servicing
    assets.........................................           --         --        400,000     16,411
                                                     -----------   --------    -----------   --------
         Total mortgage banking risk-management
           instruments.............................    7,867,492     23,952      8,172,708     88,277
                                                     -----------   --------    -----------   --------
Total risk-management instruments..................  $11,819,474   $ 89,088    $10,686,488   $ 31,170
                                                     ===========   ========    ===========   ========
</TABLE>

     Interest rate swaps used by the Company at December 31, 1999 involve the
exchange of fixed- and variable-rate interest payments based upon the specified
notional amount. Variable-rates on these agreements were all tied to the one-or
three-month London Interbank Offered Rate ("LIBOR"). The notional amount of

                                      F-38
<PAGE>   117
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

an interest rate swap agreement is not indicative of principal to be exchanged
either at its inception or maturity.

     The following table sets forth the contractual maturities of interest rate
swap agreements outstanding at December 31, 1999, as well as the related
weighted average interest rates payable and receivable at that date (dollars in
thousands):

<TABLE>
<CAPTION>
                            INTEREST RATE RISK MANAGEMENT           MORTGAGE BANKING RISK MANAGEMENT
                       ---------------------------------------   ---------------------------------------
                        NOTIONAL    FIXED-RATE   VARIABLE-RATE    NOTIONAL    VARIABLE-RATE   FIXED-RATE
                         AMOUNT      PAYABLE     RECEIVABLE(1)     AMOUNT      PAYABLE(1)     RECEIVABLE
                       ----------   ----------   -------------   ----------   -------------   ----------
<S>                    <C>          <C>          <C>             <C>          <C>             <C>
Maturing in:
  2000...............  $  760,400      5.69%         6.36%       $       --         --%            --%
  2001...............     650,609      6.14          6.32                --         --             --
  2002...............     262,444      6.56          6.29           200,000       6.48           6.08
  2003...............      58,200      6.67          6.38                --         --             --
  2004...............     138,520      6.43          6.34           275,000       6.10           6.10
  2005...............     130,696      6.58          6.23                --         --             --
  2006...............     245,032      6.60          6.39                --         --             --
  2007...............     250,578      6.31          6.48           100,000       6.49           6.32
  2008...............     455,053      5.98          6.48           400,000       6.46           5.92
  2009...............     183,846      6.64          6.47           187,000       6.47           5.81
  2011...............          --        --            --           290,000       6.39           6.28
                       ----------                                ----------
Total interest rate
  swaps..............  $3,135,378      6.16          6.38        $1,452,000       6.39           6.06
                       ==========                                ==========
</TABLE>

---------------
(1) Variable-rates are presented on the basis of rates in effect at December 31,
    1999; however, actual repricings of the interest rate swaps will be based on
    the applicable interest rates in effect at the actual repricing dates.

     Interest rate futures and forward contracts represent contracts for the
delayed delivery of securities or money market instruments in which the seller
agrees to make delivery of a specified instrument at a specified future date, at
a specified price or yield. The interest rate futures and forward contracts
outstanding at year-end 1999 mature during the first quarter of 2000.

     Under each of its interest rate cap corridor agreements outstanding at the
end of 1999, the Company, in exchange for the payment of a premium to the
counterparty, receives the amount by which a designated market interest rate
exceeds a specified strike rate up to a maximum rate, as applied to the notional
amount of the agreement. These agreements had designated market rates equal to
one-month LIBOR, a weighted average strike rate of 4.93% and a weighted average
maximum rate of 5.93%. The maturities of the interest rate cap corridors
outstanding at December 31, 1999 were $153.5 million in 2008 and $127.2 million
in 2011.

     The Company's interest rate floors outstanding at December 31, 1999
represent agreements where, in exchange for the payment of a premium to the
counterparty, the Company receives the excess of a specified strike rate over a
designated market interest rate (generally constant maturity Treasury of swap
indices), as applied to the specified notional amount. These agreements had a
weighted average strike rate of 5.80% and expected maturities of $1.2 billion in
2003, $0.8 billion in 2004, $0.3 billion in 2005 and $0.6 billion in 2009.

     Under each of its interest rate swaption agreements outstanding at the end
of 1999, the Company, in exchange for the payment of a premium to the
counterparty, has the right, but not the obligation, to enter into an interest
rate swap agreement at a future date. The weighted average strike rate of these
agreements was

                                      F-39
<PAGE>   118
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6.93%. The maturities of the notional amounts of the interest rate swaptions
outstanding at year-end 1999 were $580.0 million in 2000, $165.0 million in 2002
and $700.0 million in 2008.

     The Company's put options purchased outstanding at December 31, 1999, all
of which mature during the first quarter of 2000, give it the right, but not the
obligation, to sell to the counterparty a designated financial instrument at a
specified price during an agreed upon period of time or on a specific date. The
Company pays a premium to the counterparty for this right.

     The principal-only swaps used by the Company at the end of 1999, all of
which mature in 2000, represent agreements where the Company: (i) receives the
discount realized on the underlying principal-only security and pays a variable
rate based on one-month LIBOR as applied to the notional amount of the
agreement; and (ii) pays or receives changes in the market value of the
underlying principal-only security. Subsequent month discount amounts are based
on the previous month's market value. The weighted average interest rate payable
on the principal-only swaps outstanding at December 31, 1999 was 6.64%.

  Trading Instruments

     The Company did not hold any derivative financial instruments for trading
purposes at the end of 1999. At December 31, 1998, the Company held interest
rate caps with a notional amount of $165.0 million for trading purposes. The
estimated fair value of these interest rate caps at that date was not material.
The average estimated fair values of derivative financial instruments held for
trading purposes during 1999 and 1998 were not material.

NOTE 23 -- COMMITMENTS AND CONTINGENT LIABILITIES

     The Company has entered into non-cancelable lease agreements with respect
to Company premises and equipment that expire at various dates through the year
2022. Certain leases contain escalation clauses, which correspond with increased
real estate taxes and other operating expenses, and renewal options calling for
increased rents. Net rent expense was $46.7 million, $39.2 million, and $23.7
million for 1999, 1998 and 1997, respectively. At December 31, 1999, the
projected minimum future rental payments required under the terms of
non-cancelable leases with terms of more than one year were $34.9 million in
2000, $32.8 million in 2001, $29.0 million in 2002, $24.8 million in 2003, $20.3
million in 2004, and $77.4 million in years thereafter. The projected minimum
future rental payments have not been reduced by projected sublease rentals of
$14.8 million.

                                      F-40
<PAGE>   119
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company had the following commitments to extend credit and purchase
loans at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              ----------    ----------
<S>                                                           <C>           <C>
Commitments to extend credit:
  Residential real estate loans.............................  $  585,363    $1,289,734
  Commercial real estate loans..............................     321,220       223,486
  Consumer loans:
     Unused revolving lines of credit.......................     822,779       491,055
     Other..................................................      11,801        14,208
                                                              ----------    ----------
          Total consumer loans..............................     834,580       505,263
                                                              ----------    ----------
  Business loans:
     Unused revolving lines of credit.......................     436,591       136,868
     Other..................................................       6,544        22,247
                                                              ----------    ----------
          Total business loans..............................     443,135       159,115
                                                              ----------    ----------
          Total commitments to extend credit................   2,184,298     2,177,598
                                                              ----------    ----------
Commitments to purchase residential real estate loans.......     873,216     1,488,493
                                                              ----------    ----------
Total commitments to extend credit and purchase loans.......  $3,057,514    $3,666,091
                                                              ==========    ==========
</TABLE>

     Commitments to extend credit are agreements to lend to a customer provided
there is no violation of any condition established in the contract. Such
commitments generally have fixed expiration dates or termination clauses and may
require payment of a fee. Since certain of the commitments are expected to
expire without being drawn upon, the total commitment amounts may not represent
future cash requirements. The Company evaluates the creditworthiness of these
transactions through its lending policies. The amount of collateral obtained, if
deemed necessary by the Company upon extension of credit, is based on the
Company's credit evaluation of the borrower. The Company's maximum exposure to
credit loss for commitments to extend credit as a result of non-performance by
the counterparty is the contractual notional amount.

     The Company had letters of credit outstanding at December 31, 1999 and 1998
of $173.0 million and $62.0 million, respectively. Letters of credit represent
agreements whereby the Company guarantees the performance of a customer to a
third party. The Company requires collateral to support such agreements based on
the Company's evaluation of the creditworthiness of the customer. The credit
risk associated with letters of credit is similar to that incurred by the
Company in its lending activities.

     The Company is obligated under various limited recourse provisions
associated with certain residential and commercial real estate loans sold in
past years. The principal balance of loans sold with limited recourse amounted
to approximately $409 million and $523 million at December 31, 1999 and 1998,
respectively. The Company's exposure to credit loss on loans sold with recourse
is similar to the credit risk associated with the Company's on-balance sheet
loans receivable.

     On March 6, 2000, North Fork filed a lawsuit in the Delaware Court of
Chancery against the Holding Company, members of the Board and Hudson,
challenging a number of the provisions in the Merger Agreement and alleging,
among other things, breaches of fiduciary duties by the Board. The complaint
seeks, among other things, an order invalidating certain provisions of the
Merger Agreement, including: (i) the Holding Company's agreement not to engage
in any discussions with, or provide confidential information to, any person
making an offer to merge with or acquire the Holding Company, until the
completion of the Merger; (ii) the Board's agreement to recommend that the
Holding Company's stockholders ("Dime

                                      F-41
<PAGE>   120
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Stockholders") adopt the Merger Agreement; and (iii) the Holding Company's
agreement not to terminate the Merger Agreement prior to June 30, 2000 if Dime
Stockholders fail to adopt its terms.

     On March 9, 2000, North Fork amended its complaint to include allegations
of breach of fiduciary duties by the Board for compelling a premature
stockholder vote on the Merger Agreement and of false and misleading statements
in the Holding Company's proxy statement/prospectus supplement dated March 7,
2000. After the Holding Company postponed its special stockholders meeting on
the Merger Agreement from March 15, 2000 to March 24, 2000, North Fork withdrew
its additional motion for a temporary restraining order to enjoin the March 15th
meeting, but reserved its right to proceed in the future.

     On March 17, 2000, North Fork moved for an expedited hearing and partial
summary judgment with respect to its challenges to the provisions of the Merger
Agreement. The Holding Company intends to vigorously oppose these motions.

     The Holding Company is the subject of at least 14 putative class action
lawsuits filed on or after March 6, 2000 by Dime Stockholders: Brecher v. Toal,
et. al., Miller v. Toal, et. al., Weiss v. Toal, et. al., Susser v. Toal, et.
al., Lifshitz v. Toal, et. al., Pill v. Toal, et. al., Milite v. Toal, et. al.,
Steiner v. Toal, et. al., Shiry v. Toal, et. al., Lewis v. Toal, et. al., and
Coleman v. Toal, et. al., each filed in the Delaware Court of Chancery on March
6, 2000; Great Neck Capital Appreciation Partnership v. Dime Bancorp, Inc.,
filed in the Delaware Court of Chancery on March 7, 2000; Silverberg v. Dime
Bancorp, Inc., filed in the Supreme Court of the State of New York, County of
Queens on March 9, 2000; and Graifman v. Koons, et. al., filed in the Supreme
Court of the State of New York, County of New York, on March 15, 2000. Each of
these purported class action lawsuits alleges, among other things, breaches of
fiduciary duties by the Board and challenges the stock option granted by the
Holding Company to Hudson in connection with the Merger Agreement, purported
benefits to the Holding Company's directors and officers that will result from
the Merger, and the rejection by the Board of North Fork's exchange offer
regarding the Common Stock (the "Exchange Offer"), as further described in Note
28, "Subsequent Events."

     On March 10, 2000, the Dime Stockholder plaintiffs in some of the putative
class action lawsuits filed a motion for partial summary judgment seeking a
determination invalidating the same provisions of the Merger Agreement that were
the subject of North Fork's complaint. The Holding Company intends to vigorously
oppose these motions.

     The Holding Company believes that the various claims made against the
Holding Company and the Board are without merit. However, it is not possible to
predict the outcome of these claims at this time.

     For a discussion of various claims made against North Fork by the Holding
Company, see Note 28, Subsequent Events.

     Certain claims, suits, complaints and investigations involving the Company,
arising in the ordinary course of business, have been filed or are pending. The
Company is of the opinion, after discussion with legal counsel representing the
Company in these proceedings, that the aggregate liability or loss, if any,
arising from the ultimate disposition of these matters would not have a material
adverse effect on the Company's consolidated financial position or results of
operations.

NOTE 24 -- BUSINESS SEGMENTS

     The Company manages its operations in a manner to focus on two strategic
goals: fulfilling its role as a banking institution for both individuals and
businesses and as a national provider of residential mortgage products and
services. Accordingly, the Company aligns its various business objectives in
support of these goals. For internal management purposes, the Company has four
business segments: Retail Banking; Commercial Banking; Mortgage Banking; and
Investment Portfolio.

                                      F-42
<PAGE>   121
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The financial information provided below has been derived from the internal
profitability system used by management to monitor and manage the financial
performance of the Company. The accounting policies employed by each of the
Company's business segments are largely the same as those described in Note 1,
"Summary of Significant Accounting Policies," in all material respects, and as
such, numerous intersegment transactions are recorded to appropriately reflect
each segment's performance. The Company reflects its internal results on
interest-earning assets and interest-bearing liabilities on a matched funded
basis and accounts for intersegment revenue and transfer costs and credits based
upon estimated fair market values at the time of the transaction. Certain
indirect or overhead costs are allocated to the segments based on total assets
and other appropriate criteria. The Company views its segments' performance on
an operating earnings basis, which represent net income adjusted for the effects
of certain non-recurring or unusual items.

     The following table presents certain information regarding the Company's
business segments for the year ended December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                               TOTAL                        TOTAL
                         RETAIL      COMMERCIAL    MORTGAGE    INVESTMENT   REPORTABLE    INTERSEGMENT    OPERATING
                         BANKING      BANKING      BANKING     PORTFOLIO     SEGMENTS     ELIMINATIONS    EARNINGS
                       -----------   ----------   ----------   ----------   -----------   ------------   -----------
<S>                    <C>           <C>          <C>          <C>          <C>           <C>            <C>
1999:
Segment revenues.....  $   451,568   $  113,683   $  541,451   $   40,855   $ 1,147,557     $(30,329)    $ 1,117,228
Segment profit.......      139,269       49,863       50,692       22,327       262,151      (18,211)        243,940
Percentage of segment
  profit to total
  profit of
  reportable
  segments...........         53.1%        19.0%        19.4%         8.5%        100.0%
Segment assets at
  year-end...........  $10,902,442   $4,588,273   $3,362,991   $4,440,909   $23,294,615     $626,710     $23,921,325
1998:
Segment revenues.....  $   413,148   $   85,322   $  531,996   $   37,602   $ 1,068,068     $(57,854)    $ 1,010,214
Segment profit.......      120,244       37,373       79,417       19,238       256,272      (39,191)        217,081
Percentage of segment
  profit to total
  profit of
  reportable
  segments...........         46.9%        14.6%        31.0%         7.5%        100.0%
Segment assets at
  year-end...........  $ 9,833,981   $2,852,929   $5,464,037   $3,790,691   $21,941,638     $379,212     $22,320,850
1997:
Segment revenues.....  $   371,341   $   74,504   $  172,941   $   39,389   $   658,175     $(34,061)    $   624,114
Segment profit.......      106,968       32,973       17,854       19,849       177,644      (20,561)        157,083
Percentage of segment
  profit to total
  profit of
  reportable
  segments...........         60.2%        18.6%        10.0%        11.2%        100.0%
Segment assets at
  year-end...........  $10,478,447   $2,330,137   $2,619,872   $5,946,568   $21,375,024     $472,976     $21,848,000
</TABLE>

     For purposes of above presentation, segment revenues reflect net interest
income after provision for loan losses plus non-interest income. Segment profit
reflects tax-effected operating results. The segment revenues and profit above
incorporate certain intersegment transactions that the Company views as
appropriate for purposes of reflecting the performance of certain segments,
which are eliminated in the preparation of the consolidated financial statements
in accordance with generally accepted accounting principles.

     The Company's management views each of its business segments as if they
were stand-alone operations. As such, the results of operations for each segment
reflect entries that would be recorded for an independent enterprise, such as
charges for services rendered on their behalf by other segments or support
units, and entries

                                      F-43
<PAGE>   122
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

relating to the allocation of capital and to the purchase or sale of funds as
needed. The capital allocated to the segment generates intersegment net interest
income. Funds sold or purchased are distributed via the Company's funding center
and are provided on a matched maturity basis. These intersegment entries are
subsequently eliminated in consolidation.

     The other primary adjustments between the internal management reports and
the consolidated operating earnings relate to the production and servicing of
loans in the Company's portfolio. Loans produced that are placed in the
residential real estate loans receivable portfolio are sold to the Retail
Banking segment with an imputed market gain or loss recognized by the Mortgage
Banking segment. As a result, the impact of these transactions, and resultant
ongoing adjustments from prior periods, must be reversed as an intersegment
elimination. Mortgage Banking also receives revenue for servicing the loan
portfolio and Retail Banking is charged for this function as a reduction of its
net yield. There are no other material intersegment adjustments.

     The following table sets forth reconciliations of reportable segment
revenues and profit to the Company's consolidated totals for the year ended
December 31 (in thousands):

<TABLE>
<CAPTION>
                                                                OPERATING
                                                 OPERATING      EARNINGS       REPORTED
                                                  EARNINGS     ADJUSTMENTS      TOTALS
                                                 ----------    -----------    ----------
<S>                                              <C>           <C>            <C>
1999:
Segment revenues...............................  $1,117,228     $     --      $1,117,228
Segment profit.................................     243,940       (4,127)        239,813
1998:
Segment revenues...............................   1,010,214       10,049       1,020,263
Segment profit.................................     217,081       20,005         237,086
1997:
Segment revenues...............................     624,114      (44,761)        579,353
Segment profit.................................     157,083      (35,369)        121,714
</TABLE>

     Reconcilements of operating earnings to reported net income is provided
below for the year ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Operating earnings.................................  $243,940    $217,081    $157,083
Items not included in operating earnings:
  Net losses related to balance sheet
     restructurings................................        --        (635)    (25,247)
  Net charges and adjustments related to
     acquisitions..................................        --          --     (21,431)
  Gain on sale of branch...........................        --       9,512          --
  Other, net.......................................        --       1,172      (8,014)
  Income tax effect on above items.................        --      (3,717)     20,783
  Adjustment to conform internal tax expense to
     corporate tax expense.........................        --      17,730          --
  Extraordinary losses on early extinguishment of
     debt, net of tax benefits.....................    (4,127)     (4,057)     (1,460)
                                                     --------    --------    --------
          Net adjustments after tax................    (4,127)     20,005     (35,369)
                                                     --------    --------    --------
Reported net income................................  $239,813    $237,086    $121,714
                                                     ========    ========    ========
</TABLE>

     Additional information regarding the Company's business segments, including
a description of the products and services from which each business segment
derives its revenues, is disclosed in Item 1, "Business."

                                      F-44
<PAGE>   123
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 25 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

     SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires the disclosure, where practicable, of the fair value of on- and
off-balance sheet financial instruments. The fair value of a financial
instrument is the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any possible tax ramifications, estimated transaction
costs, or any premium or discount that could result from offering for sale at
any one time the Company's entire holdings of a particular financial instrument.
Because no active market exists for a certain portion of the Company's financial
instruments, the fair value estimates for such financial instruments are based
on judgments regarding, among other factors, future cash flows, future loss
experience, current economic conditions and risk characteristics. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect these estimates. The Company
has not included certain material items in its disclosure as such items, which
the Company believes have significant value, are not considered financial
instruments under SFAS No. 107.

     The following table sets forth the carrying values and estimated fair
values of the Company's on-balance sheet financial instruments at December 31,
1999 and 1998. For purposes of this presentation, the estimated fair values of
off-balance sheet derivative financial instruments used for risk-management
purposes have not been considered in determining the estimated fair values of
on-balance sheet financial instruments.

<TABLE>
<CAPTION>
                                           1999                          1998
                                --------------------------    --------------------------
                                 CARRYING       ESTIMATED      CARRYING       ESTIMATED
                                   VALUE       FAIR VALUE        VALUE       FAIR VALUE
                                -----------    -----------    -----------    -----------
                                                     (IN THOUSANDS)
<S>                             <C>            <C>            <C>            <C>
Financial assets:
  Cash and cash equivalents...  $   432,455    $   432,455    $   357,777    $   357,777
  Securities available for
     sale.....................    3,849,676      3,849,676      3,329,444      3,329,444
  FHLBNY stock................      328,732        328,732        324,106        324,106
  Loans held for sale.........    1,733,667      1,720,278      3,884,886      3,893,985
  Loans receivable, net(1)....   14,933,642     14,690,751     12,580,325     12,813,048
  Accrued interest
     receivable...............      104,923        104,923         97,124         97,124
  Trading securities..........      177,021        177,021             --             --
  Trading derivative financial
     instruments..............           --             --              3              3
Financial liabilities:
  Deposits....................   14,261,449     14,213,200     13,651,460     13,653,013
  Federal funds purchased and
     securities sold under
     agreements to
     repurchase...............    1,106,067      1,106,067      2,245,218      2,245,238
  Other short-term
     borrowings...............    5,321,838      5,321,607      3,756,733      3,757,335
  Long-term debt..............    1,165,868      1,152,107        608,892        615,331
  Trust Preferred
     Securities...............      152,219        151,109        162,005        176,423
  Accrued interest payable....       51,577         51,577         41,014         41,014
</TABLE>

---------------
(1) Excludes the net book value of business lease financing receivables which
    are not considered financial instruments under SFAS No. 107.

                                      F-45
<PAGE>   124
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table sets forth the carrying values and estimated fair
values of the derivative financial instruments used by the Company for
risk-management purposes at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                     1999                      1998
                                            ----------------------    ----------------------
                                            CARRYING    ESTIMATED     CARRYING    ESTIMATED
                                             VALUE      FAIR VALUE     VALUE      FAIR VALUE
                                            --------    ----------    --------    ----------
<S>                                         <C>         <C>           <C>         <C>
Interest rate swaps.......................  $   901      $(17,298)    $ 3,309      $(24,530)
Interest rate swaptions...................   33,965        53,446          46            --
Principal-only swaps......................    2,550           173          --            --
Interest rate floors......................   31,458        13,912      33,874        49,054
Interest rate cap corridors...............   10,360        14,199          --            --
Interest rate futures.....................   (2,058)           --          20            --
Forward contracts.........................       --        24,168          --        (9,976)
Put options purchased.....................      223           488       1,007           211
Interest rate caps........................       --            --      16,585        16,411
</TABLE>

     The methodologies and assumptions used by the Company in estimating the
fair values of its financial instruments are described below.

     The carrying value of cash and cash equivalents was deemed to be a
reasonable estimate of their fair value due to the short-term nature of these
items and because they do not present significant credit concerns.

     The estimated fair value of securities available for sale and trading
securities was determined by use of quoted market prices or dealer quotes.

     The fair value of FHLBNY stock was estimated to be its carrying value,
which is indicative of its redemption price.

     The estimated fair values of loans were calculated using an option-adjusted
cash flow valuation methodology. The key assumptions used in the option-adjusted
calculation were derived from quoted market prices, internal estimates and the
pricing of similar instruments.

     The estimated fair values of accrued interest receivable and payable have
been determined to equal their carrying amounts as these amounts are generally
due or payable within 90 days.

     The estimated fair value of deposits without a specified maturity, which
includes demand, savings and money market deposits, was the amount payable on
the valuation date. For fixed-maturity time deposits, fair value was estimated
based on the discounted value of contractual cash flows using current market
interest rates offered for deposits with similar remaining maturities.

     The estimated fair values of borrowed funds maturing within 90 days were
deemed to be equal to their carrying values. The estimated fair values of all
other borrowed funds were based on quoted market prices or on the discounted
value of contractual cash flows using current market interest rates for
borrowings with similar terms and remaining maturities.

     The estimated fair values of the Company's derivative financial instruments
were based upon quoted market prices, dealer quotes or pricing models.

     The Company has reviewed its outstanding commitments to extend credit,
commitments to purchase loans, letters of credit and loans sold with recourse at
December 31, 1999 and 1998 and has determined that their estimated fair values
were not material.

                                      F-46
<PAGE>   125
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 26 -- FINANCIAL STATEMENTS OF THE PARENT COMPANY

                       STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                 1999          1998
                                                              ----------    ----------
                                                                   (IN THOUSANDS)
<S>                                                           <C>           <C>
Assets:
  Cash and cash equivalents:
     Cash and due from banks................................  $      733    $      537
     Interest-earning deposits in Dime FSB..................      25,266        84,573
                                                              ----------    ----------
          Total cash and cash equivalents...................      25,999        85,110
                                                              ----------    ----------
  Securities available for sale.............................      64,032        60,012
  Subordinated notes issued by Dime FSB held to maturity....     100,000            --
  Investment in Dime FSB....................................   1,832,688     1,535,304
  Investment in non-banking subsidiaries....................       5,075         6,274
  Receivables from Dime FSB.................................          --        81,941
  Other assets..............................................      58,336        44,049
                                                              ----------    ----------
Total assets................................................  $2,086,130    $1,812,690
                                                              ==========    ==========
Liabilities and stockholders' equity:
  Liabilities:
     Securities sold to Dime FSB under agreements to
      repurchase............................................  $       --    $   17,370
     Short-term senior notes................................          --        99,929
     Long-term senior notes.................................     348,322        98,977
     Series A Subordinated Debentures.......................     202,376       202,348
     Payables to Dime FSB...................................       6,389            --
     Other liabilities......................................      13,206         6,245
                                                              ----------    ----------
          Total liabilities.................................     570,293       424,869
                                                              ----------    ----------
  Stockholders' equity......................................   1,515,837     1,387,821
                                                              ----------    ----------
Total liabilities and stockholders' equity..................  $2,086,130    $1,812,690
                                                              ==========    ==========
</TABLE>

                                      F-47
<PAGE>   126
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                             FOR THE YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               1999        1998        1997
                                                             --------    --------    --------
                                                                      (IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Income:
  Dividends from Dime FSB..................................  $ 90,000    $185,000    $159,000
  Dividends from non-banking subsidiaries..................       577         577         289
  Interest income..........................................    12,960       6,546       6,987
  Other....................................................        --         230          23
                                                             --------    --------    --------
          Total income.....................................   103,537     192,353     166,299
                                                             --------    --------    --------
Expense:
  Interest expense.........................................    38,875      34,148      31,758
  Other....................................................     3,804       3,508       3,348
                                                             --------    --------    --------
          Total expense....................................    42,679      37,656      35,106
                                                             --------    --------    --------
Income before income tax benefit, equity in undistributed
  (overdistributed) net income of subsidiaries and
  extraordinary items......................................    60,858     154,697     131,193
Income tax benefit.........................................    12,059      13,474      10,736
                                                             --------    --------    --------
Income before equity in undistributed (overdistributed) net
  income of subsidiaries and extraordinary items...........    72,917     168,171     141,929
Equity in undistributed (overdistributed) net income of
  subsidiaries.............................................   170,980      72,636     (18,755)
                                                             --------    --------    --------
Income before extraordinary items..........................   243,897     240,807     123,174
Extraordinary items -- losses on early extinguishment of
  debt, net of tax benefits of $2,555 (1999), $785 (1998)
  and $895 (1997)..........................................    (3,463)     (1,065)     (1,460)
                                                             --------    --------    --------
Net income.................................................  $240,434    $239,742    $121,714
                                                             ========    ========    ========
</TABLE>

                                      F-48
<PAGE>   127
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                             FOR THE YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               1999        1998        1997
                                                             --------    --------    --------
                                                                      (IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Cash flows from operating activities:
  Net income...............................................  $240,434    $239,742    $121,714
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Equity in (undistributed) overdistributed net income
       of subsidiaries.....................................  (170,980)    (72,636)     18,755
     Gains on sales of securities..........................        --        (213)        (23)
     Losses on early extinguishment of debt................     6,018       1,850       2,355
     Other, net............................................   (10,575)      2,314      (5,808)
                                                             --------    --------    --------
          Net cash provided by operating activities........    64,897     171,057     136,993
                                                             --------    --------    --------
Cash flows from investing activities:
  Purchases of securities available for sale...............   (10,962)   (103,111)    (29,497)
  Proceeds from sales of securities available for sale.....        --      70,573       1,597
  Purchase of subordinated notes issued by Dime FSB held to
     maturity..............................................  (100,000)         --          --
  Proceeds from maturities of securities available for sale
     and held to maturity..................................       145         292         181
  Investments in subsidiaries..............................        --          --      (6,186)
  Net cash paid in acquisition.............................   (41,279)         --          --
  Other....................................................     1,825          --          --
                                                             --------    --------    --------
          Net cash used by investing activities............  (150,271)    (32,246)    (33,905)
                                                             --------    --------    --------
Cash flows from financing activities:
  Net (decrease) increase in securities sold to Dime FSB
     under agreements to repurchase........................   (17,370)     17,370          --
  Proceeds from issuance of short-term senior notes........        --      99,818          --
  Repayment of short-term senior notes.....................  (100,000)         --          --
  Proceeds from issuance of long-term senior notes.........   347,445          --          --
  Repayments of long-term senior notes.....................  (105,000)    (45,501)    (57,681)
  Proceeds from issuance of the Series A Subordinated
     Debentures............................................        --          --     202,308
  Proceeds from issuance of Common Stock and treasury
     stock.................................................     3,160      17,101      14,332
  Purchases of treasury stock..............................   (76,346)   (177,970)   (200,354)
  Cash dividends paid on Common Stock......................   (25,626)    (21,550)    (12,892)
  Other....................................................        --          --       3,781
                                                             --------    --------    --------
          Net cash provided (used) by financing
            activities.....................................    26,263    (110,732)    (50,506)
                                                             --------    --------    --------
Net (decrease) increase in cash and cash equivalents.......   (59,111)     28,079      52,582
Cash and cash equivalents at beginning of year.............    85,110      57,031       4,449
                                                             --------    --------    --------
Cash and cash equivalents at end of year...................  $ 25,999    $ 85,110    $ 57,031
                                                             ========    ========    ========
</TABLE>

                                      F-49
<PAGE>   128
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 27 -- CONDENSED QUARTERLY CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                      1999                                        1998
                                    -----------------------------------------   -----------------------------------------
                                     FOURTH     THIRD      SECOND     FIRST      FOURTH     THIRD      SECOND     FIRST
                                    QUARTER    QUARTER    QUARTER    QUARTER    QUARTER    QUARTER    QUARTER    QUARTER
                                    --------   --------   --------   --------   --------   --------   --------   --------
                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                         (UNAUDITED)
<S>                                 <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Interest income...................  $385,713   $358,754   $335,018   $339,613   $346,986   $343,989   $357,111   $372,799
Interest expense..................   231,859    209,511    195,128    204,115    213,822    216,668    226,274    236,888
                                    --------   --------   --------   --------   --------   --------   --------   --------
    Net interest income...........   153,854    149,243    139,890    135,498    133,164    127,321    130,837    135,911
Provision for loan losses.........     7,000      7,000      7,500      8,000      8,000      8,000      8,000      8,000
                                    --------   --------   --------   --------   --------   --------   --------   --------
    Net interest income after
      provision for loan losses...   146,854    142,243    132,390    127,498    125,164    119,321    122,837    127,911
Non-interest income:
  Loan servicing and production
    fees..........................    68,474     67,402     69,716     61,928     60,604     53,819     42,631     42,450
  Banking service fees............    14,884     13,060     12,587     11,267     11,172     11,088     10,168      9,000
  Securities and insurance
    brokerage fees................     9,129      8,925     10,052      8,604      7,565      8,704      8,957      7,510
  Net gains on sales activities...    36,310     42,114     57,696     64,307     63,941     71,519     63,743     45,248
  Other...........................     3,821      2,391      2,452      3,124      1,343        751      2,491      2,326
                                    --------   --------   --------   --------   --------   --------   --------   --------
    Total non-interest income.....   132,618    133,892    152,503    149,230    144,625    145,881    127,990    106,534
                                    --------   --------   --------   --------   --------   --------   --------   --------
Non-interest expense:
  General and administrative
    expense.......................   144,097    146,116    149,661    149,596    145,324    140,689    145,408    130,442
  Amortization of mortgage
    servicing assets..............    28,989     27,940     35,200     30,657     30,826     27,633     16,897     16,935
  Amortization of goodwill........     7,917      4,230      3,497      2,876      2,933      2,839      2,836      2,879
                                    --------   --------   --------   --------   --------   --------   --------   --------
    Total non-interest expense....   181,003    178,286    188,358    183,129    179,083    171,161    165,141    150,256
                                    --------   --------   --------   --------   --------   --------   --------   --------
Income before income tax expense
  and extraordinary items.........    98,469     97,849     96,535     93,599     90,706     94,041     85,686     84,189
Income tax expense................    36,138     36,025     35,718     34,631     29,027     30,092     27,420     26,940
                                    --------   --------   --------   --------   --------   --------   --------   --------
Income before extraordinary
  items...........................    62,331     61,824     60,817     58,968     61,679     63,949     58,266     57,249
Extraordinary items -- losses on
  early extinguishment of debt,
  net of tax benefits.............        --         --         --     (4,127)        --     (4,057)        --         --
                                    --------   --------   --------   --------   --------   --------   --------   --------
Net income........................  $ 62,331   $ 61,824   $ 60,817   $ 54,841   $ 61,679   $ 59,892   $ 58,266   $ 57,249
                                    ========   ========   ========   ========   ========   ========   ========   ========
Per common share:
  Basic earnings:
    Income before extraordinary
      items.......................  $   0.56   $   0.55   $   0.54   $   0.53   $   0.55   $   0.57   $   0.51   $   0.50
    Net income....................      0.56       0.55       0.54       0.49       0.55       0.53       0.51       0.50
  Diluted earnings:
    Income before extraordinary
      items.......................      0.56       0.55       0.54       0.52       0.55       0.56       0.50       0.49
    Net income....................      0.56       0.55       0.54       0.49       0.55       0.52       0.50       0.49
  Cash dividends declared.........      0.06       0.06       0.06       0.05       0.05       0.05       0.05       0.04
</TABLE>

                                      F-50
<PAGE>   129
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 28 -- SUBSEQUENT EVENTS (UNAUDITED)

     On February 10, 2000, the Holding Company and Hudson mailed a joint proxy
statement/prospectus, dated February 9, 2000, to their respective stockholders.
This document notified stockholders that each of the Holding Company and Hudson
intended to hold special stockholders meetings on March 15, 2000 to consider
approval of the Merger.

     On March 5, 2000, North Fork announced its intention to make a hostile bid
to acquire all of the outstanding shares of Common Stock and to terminate the
Merger. On March 6, 2000, North Fork filed preliminary proxy materials with the
Securities and Exchange Commission with which it proposed to solicit proxies to
vote against the Merger.

     On March 8, 2000, the Holding Company mailed to its stockholders a
supplement to the February 9, 2000 joint proxy statement/prospectus stating,
among other things, its recommendation that Dime Stockholders not tender shares
of Common Stock in North Fork's offer, if and when it commenced. On March 9,
2000, the Holding Company and Hudson announced that they were both voluntarily
postponing their respective special stockholders meetings until March 24, 2000
in order to allow information to be disseminated.

     On March 13, 2000, North Fork mailed definitive proxy solicitation
materials to Dime Stockholders in order to solicit proxies against the Merger.
On March 15, 2000, North Fork formally commenced the Exchange Offer. Pursuant to
the terms of the Exchange Offer, Dime Stockholders would receive 0.9302 shares
of North Fork's common stock and $2.00 in cash for each share of Common Stock
tendered to North Fork. The Exchange Offer is conditioned on the satisfaction of
a number of factors, including, but not limited to: (i) termination of the
Merger Agreement; (ii) the Holding Company entering into a merger agreement with
North Fork; (iii) receipt of required regulatory approvals; and (iv) the rights
under the Stockholder Protection Rights Plan, dated as of October 20, 1995,
between the Holding Company and The First National Bank of Boston, as rights
agent, not being applicable. On March 20, 2000, the Board formally recommended
that Dime Stockholders reject the Exchange Offer by not tendering Common Stock
to North Fork. On that date, the Holding Company and Hudson postponed their
respective special stockholders meetings to May 17, 2000 and May 18, 2000,
respectively. On March 23, 2000, North Fork extended the expiration date of the
Exchange Offer from April 14, 2000 to midnight on May 31, 2000.

     On March 10, 2000, the Holding Company filed suit in the Supreme Court of
the State of New York, County of New York, against North Fork and Fleet Boston
Corporation ("Fleet Boston"). The complaint alleges violations of New York's
antitrust laws, including a conspiracy between North Fork and Fleet Boston to:
(i) diminish competition in a variety of banking markets; (ii) diminish
competition for the purchase of banks and thrifts in some markets; and (iii)
eliminate a stronger competitor (i.e., the combined institution resulting from
the Merger). In addition, the complaint alleges that Fleet Boston's divestiture
of branches from the Fleet Financial-BankBoston Corporation merger to Sovereign
Bancorp, Inc. ("Sovereign") is part of the conspiracy, as Sovereign is not
capable of competing effectively in markets with Fleet Boston and Fleet Boston
may use monopoly profits gained in those markets to fund the Exchange Offer. The
suit asks the court to: (i) enjoin North Fork and Fleet Boston from acting in
concert to acquire the Holding Company or otherwise interfere with the Merger;
(ii) enjoin the proposed branch divestiture from Fleet Boston to Sovereign and
require divestiture to a banking organization with a reasonable opportunity to
improve competition in the markets served; and (iii) declare violations of the
New York antitrust laws.

     On March 13, 2000, North Fork filed a motion in the Delaware Court of
Chancery to enjoin prosecution of the action filed by the Holding Company in New
York County, alleging that such action must be brought as counterclaims in North
Fork's lawsuit in the Delaware Court of Chancery. On March 17, 2000, the Holding
Company filed a response opposing this motion. On March 20, 2000, the Delaware
Court of Chancery refused to enjoin the Holding Company from prosecuting its
antitrust claims in the New York courts. The Holding Company intends to proceed
vigorously with this prosecution.

                                      F-51
<PAGE>   130
                      DIME BANCORP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     On March 21, 2000, the Holding Company filed suit in the United States
District Court for the Eastern District of New York against North Fork and
members of North Fork's board of directors seeking preliminary and permanent
injunctive relief in connection with alleged misrepresentations contained in
North Fork's proxy statement, dated March 13, 2000, soliciting proxies against
the Merger, in violation of the Securities Exchange Act of 1934.

     For a discussion of various litigation against the Company in connection
with the Exchange Offer and the Merger, see Note 23, "Commitments and Contingent
Liabilities."

                                      F-52