<PAGE>   1
                                     [LOGO]


                              1122 FRANKLIN AVENUE
                           GARDEN CITY, NEW YORK 11530
                                 (516) 742-9300


                                                                  March 19, 1997


Dear Stockholder:

         You are invited to attend the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of T R Financial Corp. (the "Company"), which will be held on
April 21, 1997 at 9:30 a.m. New York time at the Westbury Manor, Jericho
Turnpike, Westbury, New York. Enclosed are a Notice of the 1997 Annual Meeting
of Stockholders, Proxy Statement for the Annual Meeting, Proxy Card and 1996
Annual Report to Stockholders.

         At the Annual Meeting you will be asked to consider and vote upon: (1)
the election of four directors, each to serve for a three-year term expiring in
2000; (2) the ratification of the appointment of the firm of KPMG Peat Marwick
LLP as independent auditors for the Company for the year ending December 31,
1997; (3) the approval of the Amended and Restated T R Financial Corp. 1993
Incentive Stock Option Plan; and (4) the approval of the Roosevelt Savings Bank
Performance Compensation Plan. In addition, management will report on the
operations and activities of the Company, and there will be an opportunity for
you to ask questions about the Company's business.

         The Board of Directors of the Company has determined that an
affirmative vote on each proposal to be considered at the Annual Meeting is in
the best interests of the Company and unanimously recommends a vote "FOR" each
proposal.

         YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, THE BOARD OF DIRECTORS
URGES YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL NOT PREVENT YOU FROM
VOTING IN PERSON AT THE ANNUAL MEETING, BUT WILL ASSURE THAT YOUR VOTE IS
COUNTED IF YOU ARE UNABLE TO ATTEND. IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE
NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER IN ORDER TO BE ADMITTED TO THE ANNUAL MEETING AND TO VOTE AT
THE ANNUAL MEETING. Examples of such documentation include a broker's statement,
letter or other document confirming your ownership of shares of the Company.

         On behalf of the Board of Directors and the employees of T R Financial
Corp. and Roosevelt Savings Bank, I wish to thank you for your continued
support.

                                   Sincerely,


                                   /s/ John M. Tsimbinos
                                   ---------------------
                                   John M. Tsimbinos
                                   Chairman of the Board and
                                     Chief Executive Officer
<PAGE>   2
                                     [LOGO]

                              1122 FRANKLIN AVENUE
                           GARDEN CITY, NEW YORK 11530
                                 (516) 742-9300

                NOTICE OF THE 1997 ANNUAL MEETING OF STOCKHOLDERS

                          TO BE HELD ON APRIL 21, 1997

         NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders
(the "Annual Meeting") of T R Financial Corp. (the "Company") will be held on
April 21, 1997 at 9:30 a.m. New York time at the Westbury Manor, Jericho
Turnpike, Westbury, New York for the following purposes:

         1.       To elect four directors, each to serve for a three-year term
                  expiring at the 2000 annual meeting and until their respective
                  successors have been duly elected and qualified;

         2.       To ratify the appointment of the firm of KPMG Peat Marwick LLP
                  as independent auditors for the Company for the year ending
                  December 31, 1997;

         3.       To approve the Amended and Restated T R Financial Corp. 1993
                  Incentive Stock Option Plan;

         4.       To approve the Roosevelt Savings Bank Performance Compensation
                  Plan; and

         5.       To transact such other business as may properly come before
                  the Annual Meeting or any adjournment or postponement thereof.
                  As of the date hereof, the Board of Directors is not aware of
                  any such other business.

         Pursuant to the Bylaws of the Company, the Board of Directors has fixed
the close of business on March 5, 1997 as the record date for the determination
of stockholders entitled to notice of and to vote at the Annual Meeting and at
any adjournment or postponement thereof. A list of stockholders entitled to vote
at the Annual Meeting will be available for inspection at 1122 Franklin Avenue,
Garden City, New York, for a period of ten days prior to the Annual Meeting and
will also be available at the Annual Meeting.

         A copy of the 1996 Annual Report to Stockholders of the Company, which
for purposes of the regulations of the Federal Deposit Insurance Corporation
serves as the Annual Disclosure Statement of Roosevelt Savings Bank, a wholly
owned subsidiary of the Company, accompanies this Notice of the 1997 Annual
Meeting of Stockholders. Stockholders may obtain, free of charge, an additional
copy of the Annual Report by writing to Theodore S. Ayvas, Assistant Vice
President, Roosevelt Savings Bank, 1122 Franklin Avenue, Garden City, New York
11530, or calling (516) 739-4219.

         YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, THE BOARD OF DIRECTORS
URGES YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

                               By Order of the Board of Directors,

                               /s/ Ira H. Kramer
                               -------------------
                               Ira H. Kramer
                               Corporate Secretary
Garden City, New York
March 19, 1997
<PAGE>   3
                                     [LOGO]

                              1122 FRANKLIN AVENUE
                           GARDEN CITY, NEW YORK 11530
                                 (516) 742-9300


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



                             PROXY STATEMENT FOR THE
                       1997 ANNUAL MEETING OF STOCKHOLDERS

                          TO BE HELD ON APRIL 21, 1997


                               GENERAL INFORMATION

GENERAL

         This Proxy Statement and the accompanying Proxy Card are being mailed
to stockholders of T R Financial Corp. ("T R Financial" or the "Company") on or
about March 19, 1997 in connection with the solicitation of proxies by the Board
of Directors of the Company to be used at the 1997 Annual Meeting of
Stockholders (the "Annual Meeting") to be held on April 21, 1997 at 9:30 a.m.
New York time at the Westbury Manor, Jericho Turnpike, Westbury, New York, and
at any adjournment or postponement thereof.

         As more fully described in this Proxy Statement, the purpose of the
Annual Meeting is (1) to elect four directors, each to serve for a three-year
term expiring at the 2000 annual meeting and until their respective successors
have been duly elected and qualified; (2) to ratify the appointment of the firm
of KPMG Peat Marwick LLP as independent auditors for the Company for the year
ending December 31, 1997; (3) to approve the Amended and Restated T R Financial
Corp. 1993 Incentive Stock Option Plan; (4) to approve the Roosevelt Savings
Bank Performance Compensation Plan; and (5) to transact such other business as
may properly come before the Annual Meeting or any adjournment or postponement
thereof. As of the date hereof, the Board of Directors is not aware of any such
other business.


RECORD DATE AND VOTING

         The Board of Directors of the Company has fixed the close of business
on March 5, 1997 as the record date (the "Record Date") for the determination of
the holders of the Company's issued and outstanding common stock, par value $.01
per share (the "Common Stock") entitled to receive notice of and to vote at the
Annual Meeting. Only holders of Common Stock at the close of business on the
Record Date will be entitled to vote at the Annual Meeting and at any
adjournment or postponement thereof. At the close of business on the Record
Date, there were 8,806,244 shares of Common Stock outstanding. The presence, in
person or by proxy, of the holders of at least a majority of the total number of
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum thereat.

         Each holder of shares of Common Stock outstanding on the Record Date
will be entitled to one vote for each share held of record (except for shares
held in excess of the Limit, as defined below) upon each matter properly
submitted at the Annual Meeting and at any adjournment or postponement thereof.
As
<PAGE>   4
provided in the Company's Certificate of Incorporation, record holders of Common
Stock who beneficially own in excess of 10% of the outstanding shares of Common
Stock (the "Limit") are not entitled to any vote with respect to the shares held
in excess of the Limit. A person or entity is deemed to beneficially own shares
owned by an affiliate as well as persons acting in concert with such person or
entity. The Company's Certificate of Incorporation authorizes the Board of
Directors (i) to make all determinations necessary to implement and apply the
Limit, including determining whether persons or entities are acting in concert
and (ii) to demand that any person who is reasonably believed to beneficially
own Common Stock in excess of the Limit supply information to the Company to
enable the Board of Directors to implement and apply the Limit.

         If the enclosed Proxy Card is properly executed and received by the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions indicated thereon. IF
NO INSTRUCTIONS ARE GIVEN, EXECUTED PROXIES WILL BE VOTED FOR ELECTION OF EACH
OF THE FOUR NOMINEES FOR DIRECTOR, AND FOR EACH OF THE OTHER PROPOSALS SET FORTH
IN THE ACCOMPANYING NOTICE OF THE 1997 ANNUAL MEETING OF STOCKHOLDERS.

         Management is not aware of any matters other than those set forth in
the Notice of the 1997 Annual Meeting of Stockholders that may be brought before
the Annual Meeting. If any other matters properly come before the Annual
Meeting, the persons named in the accompanying Proxy Card will vote the shares
represented by all properly executed proxies on such matters in such manner as
shall be determined by a majority of the Board of Directors of the Company.


VOTE REQUIRED

         The vote required for each proposal is set forth in the discussion of
such proposal under the caption "-- Vote Required."


REVOCABILITY OF PROXIES

         The presence of a stockholder at the Annual Meeting will not
automatically revoke such stockholder's proxy. However, a stockholder may revoke
a proxy at any time prior to its exercise by (1) filing a written notice of
revocation with the Corporate Secretary of the Company, (2) delivering to the
Corporate Secretary of the Company prior to the Annual Meeting a duly executed
proxy bearing a later date or (3) attending the Annual Meeting, filing a written
notice of revocation with the secretary of the meeting and voting in person. IF
YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL
NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO BE ADMITTED TO
THE ANNUAL MEETING AND TO VOTE AT THE ANNUAL MEETING. Examples of such
documentation include a broker's statement, letter or other document confirming
your ownership of shares of the Company.


SOLICITATION OF PROXIES

         The Company will bear the cost of soliciting proxies from its
stockholders. In addition to the solicitation of proxies by mail, D.F. King &
Co., Inc., a proxy solicitation firm, will assist the Company in soliciting
proxies for the Annual Meeting and will be paid a fee estimated to be $5,500,
plus out-of-pocket expenses. Proxies may also be solicited personally, by
telephone, facsimile or other means by directors, officers and employees of the
Company or its subsidiaries, without additional compensation. The Company will
also request persons, firms and corporations holding shares in their names or in
the name of their nominees, which are beneficially owned by others, to forward
proxy materials to and obtain proxies from such beneficial owners, and will
reimburse such record holders for their reasonable expenses incurred in
connection therewith.


                                        2
<PAGE>   5
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

         Officers and employees of the Bank and the Company are eligible to be
granted stock options under the T R Financial Corp. 1993 Incentive Stock Option
Plan, as amended and restated ("Option Plan"), which is subject to stockholder
approval. See "Proposal 3 -- Approval of the Amended and Restated T R Financial
Corp. 1993 Incentive Stock Option Plan." Certain officers of the Bank and the
Company are eligible to be granted awards under the Roosevelt Savings Bank
Performance Compensation Plan ("Performance Compensation Plan"), which is
subject to stockholder approval. See "Proposal 4 -- Approval of the Roosevelt
Savings Bank Performance Compensation Plan."


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

         The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock as of February 28, 1997. Other than those
persons listed below, the Company is not aware of any person who is the
beneficial owner of more than 5% of the Company's outstanding shares of Common
Stock as of February 28, 1997. For the purposes of the following table and the
table set forth under "Stock Ownership of Management," in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), a person is deemed to "beneficially own" any securities (a) over which
such person has, directly or indirectly, sole or shared voting or investment
power, or (b) of which such person has the right to acquire beneficial
ownership, including the right to acquire beneficial ownership by the exercise
of stock options, within 60 days after February 28, 1997. As used herein,
"voting power" includes the power to vote, or direct the voting of, such
securities, and "investment power" includes the power to dispose, or direct the
disposition of, such securities.

<TABLE>
<CAPTION>
                                                      AMOUNT AND         PERCENT
                                                      NATURE OF        OWNERSHIP OF
TITLE OF CLASS    NAME AND ADDRESS                    BENEFICIAL       COMMON STOCK
 OF SECURITY      OF BENEFICIAL OWNER                 OWNERSHIP       OUTSTANDING(1)
 -----------      -------------------                 ---------       --------------
<S>               <C>                                 <C>             <C>  
Common Stock      T R Financial Corp.                 1,058,969(2)         12.0%
                  Employee Stock Ownership Plan
                     and Trust (the "ESOP")
                  1122 Franklin Avenue
                  Garden City, New York 11530

Common Stock      John M. Tsimbinos                     587,778(3)          6.5%
                  Chairman of the Board and
                     Chief Executive Officer
                  T R Financial Corp.
                  1122 Franklin Avenue
                  Garden City, New York 11530

Common Stock      Private Capital Management, Inc.      488,300(4)          5.5%
                  3003 Tamiami Trail North
                  Naples, Florida 34103
</TABLE>

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

(1)      Calculated based upon 8,806,152 shares of Common Stock outstanding as
         of February 28, 1997, except that the percentage with respect to Mr.
         Tsimbinos has been calculated on the basis of such number of shares
         outstanding, plus 262,014 shares which Mr. Tsimbinos has the right to
         acquire within 60 days after February 28, 1997 by the exercise of stock
         options.

                                              (footnotes continued on next page)


                                        3
<PAGE>   6
(2)      The Administrative Committee of the Company, consisting of Messrs.
         Eisen, Galgano, Genovese, Kowatch, Loser, Orr and Voutsinas, all of
         whom are non-employee directors, administers the ESOP as a committee.
         An unrelated third party, State Street Bank and Trust Company, is the
         trustee for the ESOP (the "ESOP Trustee"). The Administrative Committee
         may instruct the ESOP Trustee regarding investment of funds contributed
         to the ESOP. Each member of the Administrative Committee disclaims
         beneficial ownership of the shares of Common Stock held in the ESOP.
         Common Stock purchased by the ESOP is released from a suspense account
         and allocated to participants annually based on contributions made to
         the ESOP by the Company. Shares released from the suspense account are
         allocated among participants in proportion to their compensation, as
         defined in the ESOP, for the year the contributions are made, up to the
         limits permitted under the Internal Revenue Code of 1986, as amended
         (the "Code"). The ESOP Trustee must vote all allocated shares held in
         the ESOP in accordance with the instructions of participants. Shares of
         Common Stock are allocated to participants under the ESOP as of
         December 31st of each year. As of December 31, 1996, 431,216 shares of
         Common Stock in the ESOP had been allocated, but not distributed, to
         participants. Under the ESOP, unallocated shares will be voted by the
         ESOP Trustee in a manner calculated to most accurately reflect the
         voting instructions received from participants regarding the allocated
         shares so long as such vote is in accordance with the requirements of
         the Employee Retirement Income Security Act of 1974, as amended.

(3)      Includes 262,014 shares which Mr. Tsimbinos has the right to acquire
         beneficial ownership of by the exercise of stock options granted
         pursuant to the Option Plan at the time of the Company's initial public
         offering in 1993. Also includes (a) 7,499 shares held in trust pursuant
         to the ESOP that have been allocated to Mr. Tsimbinos's account and as
         to which he has sole voting power but no investment power, except in
         limited circumstances, (b) 27,862 shares held in the Employer Stock
         Fund of the Roosevelt Savings Bank Salary Reduction Plan in RSI
         Retirement Trust (the "401(k) Plan") as to which he has shared voting
         and investment power, (c) 37,323 shares held in the Supplemental
         Executive Retirement Plan of Roosevelt Savings Bank (the "SERP") as to
         which he has sole investment but no voting power and (d) 25,500 shares
         as to which he otherwise shares voting and investment power. See
         "Election of Directors -- Executive Compensation -- 1993 Incentive
         Stock Option Plan," "-- 401(k) Plan" and "-- Employee Stock Ownership
         Plan."

(4)      Based on information in a Schedule 13G, dated February 14, 1997, filed
         by Private Capital Management, Inc., an investment advisor registered
         under Section 203 of the Investment Advisors Act of 1940, as amended.
         Private Capital Management, Inc. has shared dispositive power over all
         of the shares shown.


                                        4
<PAGE>   7
STOCK OWNERSHIP OF MANAGEMENT

         The following table sets forth information with respect to the shares
of Common Stock beneficially owned by each director of the Company, by each
Named Executive Officer of the Company identified in the Summary Compensation
Table included on page 15 of this Proxy Statement and all directors and
executive officers of the Company or the Company's wholly owned subsidiary,
Roosevelt Savings Bank (the "Bank"), as a group as of February 28, 1997. Except
as otherwise indicated, each person and each group shown in the table has sole
voting and investment power with respect to the shares of Common Stock
indicated.

<TABLE>
<CAPTION>
                                                               AMOUNT AND NATURE OF     PERCENT OWNERSHIP
                                                               BENEFICIAL OWNERSHIP         OF COMMON
         NAME                           TITLE(1)                (2)(3)(4)(5)(6)(7)    STOCK OUTSTANDING (8)
         ----                           --------                ------------------    ---------------------
<S>                     <C>                                    <C>                    <C> 
John M. Tsimbinos       Chairman of the Board and Chief                587,778                 6.5%
                          Executive Officer, Director
A. Gordon Nutt          President and Chief Administrative             125,981                 1.4%
                          Officer, Director
Maureen E. Clancy       Director                                        33,342                   *
Robert F. Eisen, Sr.    Director                                        41,667                   *
Michael P. Galgano      Director                                        49,924                   *
Leonard Genovese        Director                                        32,235                   *
Edward J. Kowatch       Director                                        18,666                   *
Ernest L. Loser         Director                                        31,151                   *
John C. Mesloh          Director                                        32,652                   *
James E. Orr, Jr.       Director                                        54,535                   *
Spiros J. Voutsinas     Director                                        42,486                   *
William R. Kuhn         Executive Vice President and                   106,060                 1.2%
                          Chief Real Estate Lending Officer
Dennis E. Henchy        Executive Vice President and                   105,652                 1.2%
                          Chief Financial Officer
John J. DeRusso         Senior Vice President                            5,501                   *
Ira H. Kramer           Senior Vice President and                       50,930                   *
                          Corporate Secretary
All directors and executive officers as a group
  (15 persons)                                                       1,318,560(9)             13.9%
</TABLE>

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

*        Less than 1% of outstanding Common Stock.

(1)      Titles are for both the Company and the Bank.

(2)      The figures shown include shares with the right to acquire beneficial
         ownership by the exercise of stock options pursuant to the Option Plan
         or the T R Financial Corp. 1993 Stock Option Plan for Outside Directors
         (the "Directors' Option Plan") as follows: Mr. Tsimbinos, 262,014
         shares; Mr. Nutt, 65,550 shares; Ms. Clancy, 20,485 shares; Mr. Eisen,
         20,447 shares; Mr. Galgano, 25,947 shares; Mr. Genovese, 20,485 shares;
         Mr. Kowatch, 15,947 shares; Mr. Loser, 20,485 shares; Mr. Mesloh,
         20,485 shares; Mr. Orr, 34,140 shares; Mr. Voutsinas, 20,485 shares;
         Mr. Kuhn, 65,550 shares; Mr. Henchy, 65,550 shares; Mr. Kramer, 29,565
         shares; and all directors and executive officers as a group, 687,135
         shares. See "Election of Directors -- Directors' Compensation --
         Directors' Option Plan" and "-- Executive Compensation -- 1993
         Incentive Stock Option Plan."

                                              (footnotes continued on next page)


                                        5
<PAGE>   8
(3)      The figures shown include shares held in trust pursuant to the ESOP
         that have been allocated as of December 31, 1996 to individual accounts
         as follows: Mr. Tsimbinos, 7,499 shares; Mr. Nutt, 7,499 shares; Mr.
         Kuhn, 7,393 shares; Mr. Henchy, 7,300 shares; Mr. DeRusso, 1,693; Mr.
         Kramer, 6,502 shares; and all directors and executive officers as a
         group, 37,886 shares. Such persons have sole voting power but no
         investment power, except in limited circumstances, as to such shares.
         The figures shown do not include 627,753 shares held in trust pursuant
         to the ESOP that have not been allocated to any individual's account
         and as to which the members of the Company's Administrative Committee
         (consisting of Messrs. Eisen, Galgano, Genovese, Kowatch, Loser, Orr
         and Voutsinas) may be deemed to share investment power, and as to which
         each of the participants identified in the table may be deemed to share
         voting power, thereby causing each such person to be deemed a
         beneficial owner of such shares. Each of the members of the
         Administrative Committee and the participants included in the table
         disclaims beneficial ownership of the unallocated shares in the ESOP.
         See "Election of Directors -- Executive Compensation -- Employee Stock
         Ownership Plan."

(4)      The figures shown include shares held in the Employer Stock Fund of the
         401(k) Plan as to which each person identified has shared voting and
         investment power as follows: Mr. Tsimbinos, 27,862 shares; Mr. Nutt,
         13,678 shares; Mr. Kuhn, 12,502 shares; Mr. Henchy, 12,561 shares; Mr.
         DeRusso, 479 shares; and Mr. Kramer, 4,819 shares; and all executive
         officers as a group, 71,901 shares. See "Election of Directors --
         Executive Compensation -- 401(k) Plan."

(5)      The figures shown include shares held in the SERP as to which each
         person identified has sole investment but no voting power as follows:
         Mr. Tsimbinos, 37,323 shares; Mr. Nutt, 5,848 shares; Mr. Kuhn, 4,019
         shares; Mr. Henchy, 3,751 shares; Mr. DeRusso, 329; and Mr. Kramer, 257
         shares; and all executive officers as a group, 51,527 shares. See
         "Election of Directors -- Retirement Plan and Supplemental Executive
         Retirement Plan -- Supplemental Executive Retirement Plan."

(6)      The figures shown include shares over which individuals share voting
         and investment power (other than as disclosed in notes 3, 4 and 5) as
         follows: Mr. Tsimbinos, 25,500 shares; Mr. Nutt, 5,000 shares; Ms.
         Clancy, 5,107 shares; Mr. Eisen, 2,900 shares; Mr. Galgano, 8,300
         shares; Mr. Loser, 2,916 shares; Mr. Orr, 6,475 shares; Mr. Voutsinas,
         1,516 shares; Mr. Kuhn, 5,936 shares; Mr. Henchy, 750 shares; and Mr.
         Kramer, 697 shares; and all executive officers as a group, 65,097
         shares.

(7)      The figures shown include shares held under the Roosevelt Savings Bank
         Recognition and Retention Plan for Officers (the "Officers' RRP"), over
         which each individual has sole voting power but no investment power, as
         follows: Mr. Kramer, 7,097 shares. See "Election of Directors --
         Executive Compensation -- Bank Recognition and Retention Plan for
         Officers."

(8)      Percentages with respect to each person or group of persons have been
         calculated on the basis of 8,806,152 shares of Common Stock, the number
         of shares of Common Stock outstanding as of February 28, 1997, plus the
         number of shares of Common Stock which such person or group of persons
         has the right to acquire within 60 days after February 28, 1997 by the
         exercise of stock options.

(9)      The figure shown includes 65,097 shares over which the Company's
         directors and executive officers share voting and investment power
         (other than as disclosed in notes 3, 4 and 5). The figure shown also
         includes 7,097 shares allocated to Mr. Kramer and held in trust
         pursuant to the Officers' RRP, as to which such executive officer has
         sole voting power but no investment power. The figure shown does not
         include 5,790 shares of unallocated stock held in trust pursuant to the
         Officers' RRP, as to which the executive officers with restricted stock
         awards have shared voting power but no investment power, thereby
         causing each such person to be deemed a beneficial owner of such
         unallocated shares. The figure shown also does not include 15,500
         shares of unallocated stock held in trust pursuant to the Roosevelt
         Savings Bank Recognition and Retention Plan for Outside Directors (the
         "Directors' RRP"), as to which the members of the Company's
         Administrative Committee may be deemed to share investment power and
         voting power, thereby causing each member of the Administrative
         Committee to be deemed a beneficial owner of such unallocated shares.
         Each of the directors and executive officers included in the table
         disclaims beneficial ownership of the unallocated shares under the
         Officers' RRP and under the Directors' RRP. The Directors' RRP was
         terminated in January 1997, and all assets remaining in the trust for
         the Directors' RRP will be returned to the Bank. See "Election of
         Directors -- Executive Compensation -- Bank Recognition and Retention
         Plan for Officers."


                                        6
<PAGE>   9
                                  PROPOSAL ONE

                              ELECTION OF DIRECTORS

GENERAL

         The Certificate of Incorporation and Bylaws of the Company provide that
the Board of Directors shall be divided into three classes. The directors of
each class serve for a term of three years, with one class elected each year. In
all cases, directors serve until their successors are elected and qualified.
Currently, the Board of Directors of the Company consists of 11 members.

         The terms of four directors expire at the Annual Meeting. Each of the
four incumbent directors, John M. Tsimbinos, Edward J. Kowatch, James E. Orr,
Jr. and Spiros J. Voutsinas, has been nominated by the Board of Directors,
acting as the Nominating Committee, to be re-elected at the Annual Meeting, each
to serve for a three-year term expiring at the 2000 annual meeting and until
their successors are otherwise duly elected and qualified. Each nominee has
consented to being named in this Proxy Statement and to serve if elected.
However, if any nominee should become unable to serve, the proxies received in
response to this solicitation that were voted in favor of such nominee will be
voted for the election of such other person as shall be designated by the Board
of Directors of the Company, unless the Board of Directors shall determine to
further reduce the number of directors pursuant to the Bylaws of the Company. In
any event, proxies cannot be voted for a greater number of persons than the four
nominees named.


VOTE REQUIRED

         Directors are elected by a plurality of the votes cast in person or by
proxy at the Annual Meeting. The holders of Common Stock may not vote their
shares cumulatively for the election of directors. Shares underlying broker
non-votes or held in excess of the Limit will not be counted as having been
voted in person or by proxy and will have no effect on the election of
directors.


INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS

         The following table sets forth certain information with respect to each
nominee for election as a director and each continuing director whose term does
not expire at the Annual Meeting. There are no arrangements or understandings
between the Company and any director or nominee pursuant to which such person
was elected or nominated to be a director of the Company. For information with
respect to security ownership of directors, see "General Information -- Stock
Ownership of Management."

<TABLE>
<CAPTION>
                                       END OF                                         DIRECTOR
           NAME              AGE(1)     TERM      POSITION HELD WITH THE COMPANY      SINCE(2)
           ----              ------     ----      ------------------------------      --------
<S>                          <C>       <C>       <C>                                  <C>
NOMINEES FOR A THREE-YEAR
  TERM EXPIRING IN 2000

John M. Tsimbinos              59       1997     Chairman of the Board, Chief            1982
                                                    Executive Officer and Director
Edward J. Kowatch              72       1997     Director                                1988
James E. Orr, Jr.              73       1997     Director                                1978
Spiros J. Voutsinas            63       1997     Director                                1992
</TABLE>

                                                  (table continued on next page)


                                        7
<PAGE>   10
<TABLE>
<CAPTION>
                                  END OF                                       DIRECTOR
         NAME           AGE(1)     TERM     POSITION HELD WITH THE COMPANY     SINCE(2)
         ----           ------     ----     ------------------------------     --------
<S>                     <C>       <C>       <C>                                <C> 
CONTINUING DIRECTORS

A. Gordon Nutt            62       1998     President, Chief Administrative      1991
                                               Officer and Director
Maureen E. Clancy         64       1999     Director                             1993
Robert F. Eisen, Sr.      76       1999     Director                             1987
Michael P. Galgano        71       1998     Director                             1986
Leonard Genovese          64       1999     Director                             1992
Ernest L. Loser           71       1999     Director                             1992
John C. Mesloh            62       1998     Director                             1992
</TABLE>

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

(1)      At February 28, 1997.

(2)      Includes terms as trustee of the Bank and of predecessor affiliated
         institutions prior to the incorporation of the Company on February 12,
         1993.


         The principal occupation and business experience of each nominee for
election as director and each continuing director are set forth below.


NOMINEES FOR ELECTION AS DIRECTORS

         JOHN M. TSIMBINOS, Chairman of the Board and Chief Executive Officer of
the Company, has been a Director of the Bank since July 20, 1982, having
commenced his employment with the Bank on February 24, 1982. On April 1, 1983,
he became President and Chief Executive Officer, serving in such capacity until
December 15, 1992, when he was elected Chairman of the Board and Chief Executive
Officer of the Bank. Mr. Tsimbinos has over 35 years of experience in the
banking industry. He is a director of America's Community Bankers and serves on
various committees thereof. He also serves on various committees of the
Community Bankers Association of New York State. Mr. Tsimbinos is a director of
Institutional Investors Capital Appreciation Fund, Inc., which is a registered
investment company under the Investment Company Act of 1940, as amended. He also
serves on the boards of various other business, professional, community and
philanthropic organizations, such as Golden Eagle Sales Corp., a wholly owned
subsidiary of Columbian Mutual Life Insurance Company, and the Advisory Board of
the Neighborhood Housing Services of New York City, Inc. Mr. Tsimbinos has also
served as a director and Vice Chairman of the Federal Home Loan Bank of New York
and as Chairman of its Executive Committee. Mr. Tsimbinos was an adjunct
professor at Queens College and taught evening and Saturday courses in money and
banking, corporate finance and economics from 1964 to 1972. He has a B.A. from
The City College of New York, and an M.B.A. in Finance and Investments from the
Baruch School of Business and Public Administration. He has also studied at the
Graduate School of Savings Banking at Brown University and the program for
management development at the Harvard Business School.

         EDWARD J. KOWATCH has been a Director of the Bank since February 16,
1988. Mr. Kowatch currently serves as Chairperson of the Loan and Investment
Committee of the Bank. Mr. Kowatch retired as Chief Executive Officer of the
Retirement System for Savings Institutions. He is presently a director of and
consultant for Retirement System Group, Inc., which provides retirement and
investment related services. Mr. Kowatch is a former director of Ban Ser Corp.,
which provides insurance products and services.

         JAMES E. ORR, JR. has been a Director of the Bank since June 14, 1978.
Mr. Orr currently serves as Chairperson of the Executive Committee of the Bank.
He is the retired Chairman and Chief Executive Officer of Busby Metals, Inc. of
Hauppauge, New York, a distributor of metal products. He continues as a
consultant to Busby Metals. He is a former Trustee of the Copper and Brass
Servicenter Association, and a former Chairman of Zoning Appeals of the
Incorporated Village of Garden City, New York.


                                        8
<PAGE>   11
         SPIROS J. VOUTSINAS has been a Director of the Bank since February 18,
1992. He is currently President of Omega Capital, Inc., a real estate
development and syndication firm. He is a member of the board of the Hellenic
American Chamber of Commerce. Mr. Voutsinas retired in 1988 as an executive vice
president and director of a major New York savings institution with over 28
years of experience in the banking industry.


         THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
               VOTE "FOR" THE NOMINEES FOR ELECTION AS DIRECTORS.


CONTINUING DIRECTORS

         A. GORDON NUTT, President and Chief Administrative Officer of the
Company, has been a Director of the Bank since May 21, 1991, and was elected
President and Chief Administrative Officer of the Bank on December 15, 1992. In
1983, Mr. Nutt joined the Bank as a Senior Vice President and Chief
Administrative Officer. Mr. Nutt has over 35 years experience in the banking
industry and has held a variety of senior level management positions. He has a
B.A. from Brooklyn College and has completed the Graduate School of Savings
Banking program at Brown University.

         MAUREEN E. CLANCY has been a Director of the Bank since May 18, 1993.
She has been a licensed insurance broker since 1959. Ms. Clancy is the
Secretary-Treasurer of Clancy & Clancy Brokerage Ltd., an insurance agency
established in 1956. Ms. Clancy served as Trustee of the Village of Garden City
from 1986-1990 and was deputy mayor from 1989-1990. She is a past President of
the Mineola-Garden City Rotary Club and is serving as President of the Garden
City Chamber of Commerce for the 1995-1997 term.

         ROBERT F. EISEN, SR. has been a Director of the Bank since June 16,
1987. He serves as Chairperson of the Audit Committee of the Company and the
Bank. Mr. Eisen retired as President of Greenwood Mills, Inc., a textile
manufacturer, and was a registered lobbyist representing the textile industry in
Washington, D.C. Mr. Eisen served as a trustee for a major savings institution
and also as a director of Londontown Manufacturing Company before joining the
Board of Roosevelt Savings Bank. He holds an Honorary Doctorate Degree in
Commercial Science from St. John's University.

         MICHAEL P. GALGANO has been a Director of the Bank since February 18,
1986. Mr. Galgano was a principal with Dorman & Wilson, Inc., a mortgage banking
firm, and retired as a Senior Vice President and regional manager of the Long
Island office after having been employed at such company for over 24 years. He
currently has his own real estate financial consulting practice. He is an MAI
designated member of the Appraisal Institute and has the designation of CRE in
the American Society of Real Estate Counselors. Mr. Galgano is a past Chairman
of the Real Estate Practitioners' Institute at Long Island University and also
served as mayor of the Incorporated Village of Brookville, New York for over 15
years.

         LEONARD GENOVESE has been a Director of the Bank since June 16, 1992.
He is currently Chairman, President and Chief Executive Officer of Genovese Drug
Stores, Inc. At the present time, he is also Chairman of St. Christopher-Ottilie
Services for Children and Families and a board member of the National
Association of Chain Drug Stores, Kellwood Company, AID Auto Stores and the
National Center for Disability Services.

         ERNEST L. LOSER has been a Director of the Bank since March 17, 1992.
Mr. Loser serves as Chairperson of the Human Resources Committee and the
Compensation Committee of the Company and the Bank. He retired as a Senior Vice
President in charge of the Institutional Trust Group for The Chase Manhattan
Bank, N.A., where he had been employed for 35 years.

         JOHN C. MESLOH has been a Director of the Bank since July 21, 1992. Mr.
Mesloh currently serves as Chairperson of the Planning Committee of the Bank. He
retired as a Vice President from the New York City office of Pfizer, Inc., a
pharmaceutical manufacturer, after 23 years of service. Mr. Mesloh is a
certified public accountant and is a member of the Financial Executives
Institute. He is a past President of the Board of the Lutheran Church of
Resurrection, Garden City. Mr. Mesloh is a former member of the Garden City


                                        9
<PAGE>   12
Board of Education and was President of the Garden City Athletic Association. He
is currently President of T&C Restorations, Inc. in Mineola.


BOARD AND COMMITTEE MEETINGS

         The Company's Board of Directors met five times during 1996. The Board
of Directors has appointed the Administrative Committee, Audit Committee and
Compensation Committee as standing committees. The Board of Directors serves as
the Nominating Committee. Additional committees may be authorized by the Board
of Directors. During 1996, all directors of the Company and the Bank attended at
least 75% (except Mr. Genovese, who attended at least 71%) of the total meetings
held during the period of their service on the Board of Directors of each of the
Company and the Bank and committees thereof. The principal responsibilities of
the standing committees and the number of meetings held during 1996 appear
below.

         ADMINISTRATIVE COMMITTEE. The Administrative Committee is responsible
for administering the Option Plan, including determining grants of Options under
the Option Plan, for administering certain parts of the ESOP and for
administering the Officers' RRP. The Administrative Committee met two times
during 1996. Messrs. Eisen, Galgano, Genovese, Kowatch, Loser, Orr and Voutsinas
currently comprise the Administrative Committee.

         AUDIT COMMITTEE. The Audit Committee is charged with the responsibility
of annually examining the records and affairs of the Company to assess its
financial condition and presenting a report of examination to the Board of
Directors. The Audit Committee also makes other examinations directed by the
Board of Directors. The Audit Committee met four times during 1996. Messrs.
Eisen, Genovese, Loser, Mesloh, Orr and Voutsinas and Ms. Clancy currently
comprise the Audit Committee.

         COMPENSATION COMMITTEE. The Compensation Committee annually reviews and
makes recommendations to the Board of Directors regarding the compensation of
the Company's senior officers, including the Chairman of the Board and Chief
Executive Officer. The Compensation Committee met two times during 1996. Messrs.
Eisen, Galgano, Genovese, Kowatch, Loser, Orr and Voutsinas currently comprise
the Compensation Committee.

         NOMINATING COMMITTEE. The Board of Directors, acting as the Nominating
Committee, met in January 1997 to select the nominees for election as directors
at the Annual Meeting. In accordance with the Bylaws of the Company, no
nominations for election as directors, except those made by the Board of
Directors acting as the Nominating Committee, shall be voted upon at the Annual
Meeting unless properly made by a stockholder in accordance with the procedures
set forth below under "Additional Information -- Stockholder's Notice of
Business to be Conducted at the Annual Meeting." No nominations for directors
were received from stockholders for the elections to be held at the Annual
Meeting.


DIRECTORS' COMPENSATION

         RETAINER AND FEES. In 1996, Directors of the Bank who were not
employees of the Bank or the Company received a retainer at an annualized rate
of $20,000 and a fee of $750 for each Board of Directors meeting of the Bank
attended and $350 for each committee meeting of the Bank attended. Directors of
the Company who were not employees of the Company or the Bank received a
retainer at an annualized rate of $5,000 and a fee of $500 for each Board of
Directors meeting of the Company attended.

         DIRECTORS' OPTION PLAN. Directors are eligible to receive options to
purchase shares of Common Stock pursuant to the T R Financial Corp. 1993 Stock
Option Plan for Outside Directors (the "Directors' Option Plan"). The Directors'
Option Plan authorizes the grant of stock options to purchase Company Common
Stock (and limited rights) equal to 404,224 shares. Under the Directors' Option
Plan, at the time of the Bank's


                                       10
<PAGE>   13
conversion to stock form and the Company's initial public offering in 1993, each
non-officer director who served on the Board of the Bank was granted a fixed
number of options. The exercise price of such options was $9.00 per share, and
the options became exercisable on June 29, 1994 (one year following the date of
the grant). All options granted under the Directors' Option Plan expire on the
tenth anniversary of the date of grant, or, if earlier, one year following
termination of service for any reason other than removal for cause.

         In January 1997, the Directors' Option Plan was amended and restated to
provide for annual grants to each outside director of non-statutory stock
options ("Non-statutory Options") to purchase 1,200 shares of Common Stock, or
such lesser number of shares as remain under the Directors' Option Plan. The
exercise price of such options is the fair market value of the shares of Common
Stock on the date of the grant, and such options vest at a rate of 33 1/3% per
year after the date of the grant, with full vesting in the event of death,
disability, change in control or retirement, as defined in such plan.

         TERMINATION OF THE ROOSEVELT SAVINGS BANK RECOGNITION AND RETENTION
PLAN FOR OUTSIDE DIRECTORS. At the time of the Bank's conversion to stock form
in 1993, each non-officer director who served on the Board of Directors of the
Bank was granted a fixed number of shares of Common Stock pursuant to the
Roosevelt Savings Bank Recognition and Retention Plan for Outside Directors (the
"Directors' RRP"). Since these awards, no further shares under the Directors'
RRP have been awarded and all prior awards have vested and been distributed. The
Board of Directors of the Bank terminated the Directors' RRP, effective in
January 1997, and directed the trustee of the Directors' RRP to return to the
Bank all of the remaining assets of the trust maintained for the Directors' RRP.


COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

         The following Report of the Company's Compensation Committee is
provided in accordance with the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Pursuant to such rules and regulations, this
Report shall not be deemed "soliciting material" filed with the SEC subject to
Regulation 14A or 14C of the SEC or subject to Section 18 of the Exchange Act.

         The Human Resources Committee of the Bank (the "Human Resources
Committee") is responsible for establishing the policies which govern employee
compensation and stock ownership programs. The Compensation Committee of the
Company (the "Compensation Committee") is comprised of the Human Resources
Committee members who are not officers of the Bank or the Company. The
Compensation Committee annually reviews and makes recommendations to the Board
of Directors regarding the compensation of the Company's executive officers,
including the compensation of Mr. Tsimbinos, the Chairman of the Board and Chief
Executive Officer ("CEO") of the Company. Messrs. Tsimbinos, Nutt, Kuhn, Henchy,
DeRusso and Kramer are the executive officers of both the Bank and the Company,
and they receive no additional compensation for their service with the Company.

         The overall compensation structure of the Company is aimed at
establishing a total compensation package that both rewards strong individual
performance and Company performance and remains competitive with compensation
levels at comparable banking institutions. In connection with the conversion of
the Bank from mutual to stock form and the initial public offering of the
Company in 1993, the Bank, as part of its ongoing management of executive
compensation, utilized the services of its outside compensation consulting firm
to advise the Human Resources Committee with respect to the Company's
compensation programs for executive officers adopted at the time of the
conversion. As part of the Compensation Committee's review of the Company's
compensation programs in 1996, the Bank utilized the services of the same
compensation consulting firm as to whether changes in such programs would be
appropriate given the passage of time since the conversion. The compensation
consultant prepared a detailed report and met with the Compensation Committee to
review its recommendations. The report contained a comparison of the performance
of the Bank to that of a peer group of twelve other New York-based public
banking institutions each having total assets


                                       11
<PAGE>   14
in excess of $1 billion. The relative performance was measured using key
financial performance factors for the years 1992 through 1995.

         The compensation consultant's report also included an analysis of the
relative value of the annual salary, performance compensation and stock benefits
received by the Company's executive officers as compared to such types of
compensation at the same group of public banking institutions. The peer group
selected is different than the companies included in the Nasdaq Composite Index
and Nasdaq Bank Composite Index used in the Performance Graph on page 14 of this
Proxy Statement since these two indices reflect the stock performance of a
significantly broader group of companies and financial institutions.

         Based upon its review of the facts and the advice of the Bank's
compensation consultant, the Compensation Committee concluded that, in order to
continue to give the Company's executive officers incentive to keep performing
at their current and higher levels, the Company's compensation program should
continue to be aligned with the level of performance achieved by the Bank
relative to the peer group, as well as taking into account the officer's
individual responsibility and performance. In accordance with the compensation
consultant's recommendations, the Compensation Committee also concluded that an
executive's total pay level should continue to be considered when making
individual changes to annual salary, annual incentive compensation or long-term
incentive compensation.

         INCENTIVE COMPENSATION. The Compensation Committee believes that
incentive compensation should be an integral component of the Company's total
compensation package. In this regard, the Bank maintains a performance
compensation program (the "Performance Compensation Program") which provides for
cash payments based upon the annual performance of the Bank in comparison to a
pre-established target goal and, in the case of certain executive officers, the
individual performance of the executive officer. In order to assure that
incentive awards to Messrs. Tsimbinos, Nutt, Kuhn and Henchy are tax deductible
by the Company as "performance-based" compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), the Bank adopted,
effective January 23, 1997, the Performance Compensation Plan. The Performance
Compensation Plan is a written plan that is substantively equivalent to the
existing Performance Compensation Program, except for certain limitations,
requirements and provisions required under Section 162(m) of the Code in order
to assure that the Company may take tax deductions for the payments made under
the Performance Compensation Plan. One of the requirements of Section 162(m) of
the Code is that the Performance Compensation Plan, as described on pages 27
through 29 of this Proxy Statement, must be approved by the stockholders of the
Company.

         STOCK OWNERSHIP PROGRAMS. The Compensation Committee believes that
providing executive officers with significant stock ownership and stock options
aligns the interests of executive officers with the interests of stockholders.
In this regard, the Company adopted the ESOP at the time of the Company's
initial public offering in 1993. Additionally, the stockholders of the Company
approved the Option Plan and the Roosevelt Savings Bank Recognition and
Retention Plan for Officers (the "Officers' RRP"), each adopted by the Company
and the Bank, respectively, at the time of the Company's initial public offering
in 1993.

         In connection with the Company's initial public offering, the Company
granted stock options under the Option Plan at an exercise price equal to the
actual purchase price of the shares issued in the initial public offering. These
grants were awarded to provide an incentive for future performance by giving
full and part-time employees, including the executive officers, equity interests
in the Company. The size of the grants to executive officers were based in part
on the practices of other similar institutions and in part on the performance
and position of the executive officer in the organization. Since these grants,
no further stock options under the Option Plan have been granted to the
Company's executive officers, except as described below. The Officers' RRP is
designed to encourage executive officers to remain with the Company. At the time
of the initial public offering in 1993, the Company made awards under the
Officers' RRP to Messrs. Tsimbinos, Nutt, Kuhn, Henchy and Kramer. Since these
awards, no further shares under the Officers' RRP have been awarded to the
Company's executive officers.


                                       12
<PAGE>   15
         The Company has amended the Option Plan, subject to stockholder
approval as described on pages 23 through 27 of this Proxy Statement, to
increase the number of shares of Common Stock available for option awards and to
assure that Non-statutory Options awarded pursuant to the Option Plan are tax
deductible by the Company as "performance-based" compensation under Section
162(m) of the Code. At the recommendation of the Bank's compensation consultant,
the Administrative Committee which administers the Option Plan granted stock
options to certain officers of the Bank in January 1997 and, pursuant to the
Option Plan, will consider annual grants of stock options in the future. In each
case, the exercise price of the stock option is equal to the fair market value
of the stock on the day the stock option is granted.

         CHIEF EXECUTIVE OFFICER. The Compensation Committee reviewed the
performance of Mr. Tsimbinos as CEO of the Bank and the Company over the past
year. The Compensation Committee concluded that his performance was outstanding,
in terms of the achievement of the Bank's and the Company's goals and objectives
as set forth in the Bank's strategic operating plan, the record level of profits
attained for 1996, the building of a solid and talented management team and the
management of the Bank's growth since the successful conversion of the Bank and
the initial public offering of the Company. Mr. Tsimbinos also actively
participated in a variety of outside organizations and causes which served to
benefit the Company and the banking industry.

         Based upon the analysis in the report of the Bank's compensation
consultant and the outstanding financial performance of the Company and the Bank
during 1996, the Compensation Committee recommended, and the Board of Directors
approved, that an additional 5% be added to the targeted award of the
Performance Compensation Program for Mr. Tsimbinos for 1996. In addition, the
Compensation Committee recommended, and the Board of Directors approved, an
increase in the targeted award under the Performance Compensation Plan for Mr.
Tsimbinos from 45% to 50% of his annual salary for 1997. As previously noted,
the Performance Compensation Plan does not differ substantively from the
previously applicable Performance Compensation Program, except for certain
limitations, requirements and provisions required under Section 162(m) of the
Code. The Compensation Committee also recommended, and the Board of Directors
approved, an increase in Mr. Tsimbinos's annual salary from $570,000 to $600,000
for 1997. There was no increase in Mr. Tsimbinos's annual salary in 1996 over
the 1995 rate. These actions were consistent with the findings and
recommendations made by the Bank's compensation consultant regarding the mix of
incentive compensation to annual salary and result in a compensation level
appropriate to industry standards.

                  Ernest L. Loser, Chairperson           Leonard Genovese
                  Edward J. Kowatch, Vice Chairperson    James E. Orr, Jr.
                  Robert F. Eisen, Sr.                   Spiros J. Voutsinas
                  Michael P. Galgano


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         One of the responsibilities of the Compensation Committee of the Board
of Directors of the Company is to determine the level of compensation for
executive officers of the Bank. The members of the Human Resources Committee who
are not officers of the Bank or the Company acted as the Compensation Committee
for 1996 and consisted of Messrs. Eisen, Galgano, Genovese, Kowatch, Loser, Orr
and Voutsinas. There are no interlocks, as defined under the rules and
regulations of the SEC, between members of the Compensation Committee or
executive officers of the Company and corporations with respect to which such
persons are affiliated, or otherwise.


                                       13
<PAGE>   16
                                PERFORMANCE GRAPH

         Pursuant to the rules and regulations of the SEC, the graph below
compares the performance of T R Financial Corp. Common Stock with that of the
Nasdaq Composite Index (U.S. Companies) and the Nasdaq Bank Composite Index
(banks and bank holding companies, over 99% of which are based in the United
States) from June 29, 1993, the date of the Company's initial public offering,
through December 31, 1996. The graph is based on an investment of $100 on June
29, 1993 at the initial public offering price of $9.00 and assumes the
reinvestment of all dividends paid in additional shares of the same class of
equity securities as those below.

                               T R Financial Corp.

[TOTAL RETURN PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
                                               PERIOD ENDING
                       -------------------------------------------------------
INDEX                  6/29/93    12/31/93    12/31/94    12/31/95    12/31/96
------------------------------------------------------------------------------
<S>                    <C>        <C>         <C>         <C>         <C>    
T R FINANCIAL CORP.    $100.00     $143.06     $146.41     $289.91     $413.69
NASDAQ - TOTAL US       100.00      111.00      108.50      153.44      188.74
NASDAQ - BANKS          100.00      107.25      106.86      159.15      210.38
</TABLE>

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

Note:    There can be no assurance that the performance of T R Financial Corp.
         Common Stock will continue into the future with the same or similar
         trends depicted in the graph above.


                                       14
<PAGE>   17
EXECUTIVE COMPENSATION

         The following Summary Compensation Table includes individual
compensation information on the Chief Executive Officer and the next five most
highly paid executive officers whose base salary and bonus exceeded $100,000 in
1996 (the "Named Executive Officers") for services rendered in all capacities to
the Company and the Bank during the years ended December 31, 1996, 1995 and
1994.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                         ANNUAL                       LONG TERM
                                                     COMPENSATION(1)           COMPENSATION AWARDS(2)
                                                     ---------------           ----------------------
                                                                            RESTRICTED                    ALL OTHER
                                                                               STOCK                       COMPEN-
                                                 SALARY(3)    BONUS(4)       AWARDS(5)    OPTIONS(6)      SATION(7)
NAME AND PRINCIPAL POSITION              YEAR       ($)          ($)            ($)           (#)            ($)
---------------------------              ----       ---          ---            ---           ---            ---
<S>                                      <C>     <C>          <C>           <C>           <C>             <C>    
John M. Tsimbinos                        1996     570,000      319,200          --             --          354,529
Chairman of the Board and                1995     570,000      323,190          --             --          278,526
   Chief Executive Officer               1994     530,000      258,640          --             --          166,684

A. Gordon Nutt                           1996     230,000      103,040          --             --          134,112
President and Chief                      1995     215,000       94,815          --             --          102,916
   Administrative Officer                1994     200,000       73,200          --             --           60,493

William R. Kuhn                          1996     200,000       67,200          --             --          109,111
Executive Vice President and             1995     195,000       61,425          --             --           90,459
   Chief Real Estate Lending Officer     1994     185,000       56,425          --             --           55,524

Dennis E. Henchy                         1996     192,500       64,680          --             --          104,829
Executive Vice President                 1995     185,000       58,275          --             --           85,926
   and Chief Financial Officer           1994     175,000       53,375          --             --           52,204

John J. DeRusso (8)                      1996     145,000       32,480          --             --           76,132
Senior Vice President                    1995     140,000       35,280          --             --               --
                                         1994       9,154          100          --             --               --

Ira H. Kramer                            1996     140,000       31,360          --             --           72,771
Senior Vice President                    1995     125,000       31,500          --             --           55,796
   and Corporate Secretary               1994     110,000       26,840          --             --           28,994
</TABLE>

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

(1)      For 1994, 1995 and 1996, there were no (a) perquisites over the lesser
         of $50,000 or 10% of the individual's total salary and bonus for the
         year; (b) payments of above-market or preferential earnings on deferred
         compensation; (c) payments of earnings with respect to long-term
         incentive plans prior to settlement; (d) tax payment reimbursements; or
         (e) preferential discounts on stock.

(2)      For 1994, 1995 and 1996, there were no payouts or awards under any
         long-term incentive plan because the Bank and the Company did not
         maintain any long-term incentive plans.

(3)      Salary includes the amount of each individual's contributions to the
         401(k) Plan.

                                              (footnotes continued on next page)


                                       15
<PAGE>   18
(4)      Bonus consists of payments under the Bank's Performance Compensation
         Program and reflects amounts earned for each year, although such bonus
         is paid in the subsequent year. For a description of this plan, see "--
         Performance Compensation Program." Subject to stockholder approval at
         the Annual Meeting, future bonuses to the four most highly compensated
         executive officers will be awarded under the Bank's Performance
         Compensation Plan. For a complete description of this plan, see
         Proposal 4 on pages 27 through 29 of this Proxy Statement. Bonuses to
         the other executive officers will continue to be awarded under the
         Performance Compensation Program.

(5)      Upon the Company's initial public offering in 1993, Messrs. Tsimbinos,
         Nutt, Kuhn, Henchy and Kramer were awarded 109,250, 28,405, 28,405,
         28,405 and 17,738 shares of Common Stock, respectively, under the
         Officers' RRP. The awards to Messrs. Tsimbinos, Nutt, Kuhn and Henchy
         vested at a rate of 33 1/3% per year commencing on June 29, 1994. The
         award to Mr. Kramer vests at a rate of 20% per year commencing on June
         29, 1994. As of December 31, 1996, the awards to Messrs. Tsimbinos,
         Nutt, Kuhn and Henchy had fully vested, and the number of shares held
         under the Officers' RRP for Mr. Kramer was 7,097. The value of these
         shares at December 31, 1996 was $251,944. This dollar amount is based
         upon $35.50 per share for 1996, the closing price of the Common Stock
         as reported on the Nasdaq Stock Market on December 31, 1996. Dividends
         are paid on shares awarded pursuant to the Officers' RRP to the same
         extent as paid on the Company's outstanding shares of Common Stock.

(6)      No options were earned or granted pursuant to the Option Plan in 1994,
         1995 or 1996. For a discussion of the terms of the grants and vesting
         of Options, see "-- 1993 Incentive Stock Option Plan" and the
         corresponding table.

(7)      Includes the value of allocations under the Company's ESOP, which for
         1996 totalled $60,102 for each of Messrs. Tsimbinos, Nutt, Kuhn,
         Henchy, DeRusso and Kramer. Also includes the Bank's matching
         contributions to the 401(k) Plan, a cash or deferred plan designed to
         be qualified under Sections 401(a) and 401(k) of the Code, which for
         1996, totalled $4,380 for Mr. Tsimbinos, $4,500 for each of Messrs.
         Nutt, Kuhn and Henchy, $4,350 for Mr. DeRusso and $4,362 for Mr.
         Kramer. Also includes the Bank's contributions to the trust established
         for the SERP (excluding amounts contributed with respect to
         supplemental retirement benefits thereunder) with respect to
         supplemental 401(k) plan benefits and supplemental ESOP benefits, which
         for 1996 totalled $290,047 for Mr. Tsimbinos, $69,510 for Mr. Nutt,
         $44,509 for Mr. Kuhn, $40,227 for Mr. Henchy, $11,680 for Mr. DeRusso
         and $8,307 for Mr. Kramer. The 1996 dollar amounts are based on $35.50
         per share, the closing price of the Common Stock as reported on the
         Nasdaq Stock Market on December 31, 1996. See "-- 401(k) Plan," "--
         Employee Stock Ownership Plan" and "Retirement Plan and Supplemental
         Executive Retirement Plan -- Supplemental Executive Retirement Plan."

(8)      Mr. DeRusso commenced employment with the Bank in November 1994. At
         such time, he was not eligible to participate in the formula based
         portion of the Bank's Performance Compensation Program for 1994, but he
         did receive a fixed payment for 1994 based on his employment
         commencement date. Mr. DeRusso did not receive any awards, grants or
         allocations pursuant to the Officers' RRP, the Option Plan, the ESOP
         and the 401(k) Plan for 1994 and 1995.


         EMPLOYMENT AGREEMENTS. The Bank and the Company have entered into
employment agreements with Messrs. Tsimbinos, Nutt, Kuhn, Henchy, DeRusso and
Kramer. The employment agreements are intended to ensure that the Bank and the
Company will be able to continue to maintain a stable and competent management
base. The continued success of the Bank and the Company depends to a significant
degree on the skills and competence of these executive officers.

         The Bank's employment agreements, as amended, and the Company's
employment agreements, as amended (collectively, the "Employment Agreements"),
are substantially similar. The Employment Agreements provide for initial
three-year terms with respect to Messrs. Tsimbinos and Nutt, two-year terms with
respect to Messrs. Kuhn, Henchy and Kramer and a one-year term with respect to
Mr. DeRusso (each an "Executive"). Each contract provides for daily extensions
such that the term of the contract will always be three years for Messrs.
Tsimbinos and Nutt, two years for Messrs. Kuhn, Henchy and Kramer and one year
for Mr. DeRusso unless written notice of termination of such extensions is
provided by either party, but in no event may the term of the agreement extend
beyond the last day of the month in which the Executive attains the age of 65,
or, for Messrs. Tsimbinos and Nutt, the age of 68. The Employment Agreements
provide for a base salary which is reviewed annually. The Employment Agreements
do not preclude termination of the Executive's employment by the Bank or the
Company for "cause" at any time. In the event the Bank or the Company chooses to
terminate the Executive's employment for reasons other than for cause, or in the
event of the Executive's resignation from the Bank or the Company upon (i)
failure to re-elect the


                                       16
<PAGE>   19
Executive to his current office or offices (or a more senior office) or, if
currently a member of the Board of Directors, to renominate the Executive for
election to the Board of Directors, (ii) a material adverse change in the
Executive's functions, duties or responsibilities, or relocation of his
principal place of employment, or (iii) liquidation or dissolution of the Bank
or the Company, the Executive, or in the event of death, his beneficiaries,
would be entitled to receive payments and benefits under the Employment
Agreement. Such payments and benefits would generally include a lump sum payment
equal to (a) his earned but unpaid salary as of the date of termination, (b) the
present value of the amount the Executive would have earned in salary had he
continued working through the unexpired term of the Employment Agreement and (c)
the present value of the additional benefits to which he would have been
entitled under all of the Bank's or the Company's employee benefit plans had he
continued working through the unexpired term of the Employment Agreement at the
rate of salary in effect on his date of termination, including, in the case of
Messrs. Tsimbinos and Nutt, an additional two years of service credit under the
supplemental retirement benefit portion of the Supplemental Executive Retirement
Plan of Roosevelt Savings Bank (the "SERP"). Each Executive would also be
entitled to continued insurance coverage through the unexpired term of the
Employment Agreement at the same level as of his date of termination, except
that for Messrs. Tsimbinos and Nutt, the insurance coverage would continue for
their lifetimes. Each Executive would also be entitled to the payments that
would have been paid under any incentive plan as if he had continued working
through the unexpired term of the Employment Agreement and had earned an
incentive award in each calendar year that ends during the unexpired term of the
Employment Agreement in an amount equal to the product of the average rate for
the four highest compensated officers of the Company and the salary that would
have been paid during such calendar year.

         If termination of employment, whether voluntary or involuntary, follows
a change in control of the Bank or the Company, the Executive or, in the event
of death, his beneficiaries, would be entitled to the severance pay as described
above, except that the unexpired term of the Employment Agreement would be five
years from the date of the change in control for Messrs. Tsimbinos and Nutt,
three years from the date of the change in control for Messrs. Kuhn, Henchy and
Kramer, and one year from the date of the change in control for Mr. DeRusso, and
that the payments under any incentive plan would be based on the maximum
attainable rate under such plan. The payments made to an Executive upon or
following a change in control of the Bank or the Company may result in an
"excess parachute payment" as defined under Section 280G of the Code, which may
result in the imposition of a 20% federal excise tax on the Executive and a
denial of the deduction for such excess amounts to the Bank and the Company.
Under the Employment Agreements, the Company would indemnify the Executive for
any such excise tax and for any additional income, excise and employment taxes
imposed as a result of such indemnification. A "change in control" is generally
defined to mean, during the term of the Employment Agreement, an event that
would be reported in response to Item 1(a) of the Current Report on Form 8-K, or
the acquisition of Company or Bank stock that would require Federal Reserve
Board approval under the Bank Holding Company Act of 1956, as amended, or
approval under the Change in Bank Control Act, as amended, or the acquisition by
a person or group of persons of 20% or more of the Bank's or the Company's
Common Stock or a tender offer, exchange offer, merger or other form of business
combination, sale of assets, or contested election of directors which results in
a change of a majority of the Board of Directors. Payments to the Executives
under the Bank's Employment Agreements are guaranteed by the Company in the
event that payments or benefits are not paid by the Bank.

         1993 INCENTIVE STOCK OPTION PLAN. The Board of Directors of the Company
has amended the Option Plan, effective in January 1997, to increase the number
of shares of Common Stock available for option awards, to assure that
Non-statutory Options awarded pursuant to the Option Plan are tax deductible by
the Company as "performance-based" compensation under Section 162(m) of the Code
and to include certain other changes. The amended Option Plan is subject to
stockholder approval at the Annual Meeting because, among other reasons, Section
162(m) of the Code requires such approval. For a full description of the amended
Option Plan, see Proposal 3 on pages 23 through 27 of this Proxy Statement.


                                       17
<PAGE>   20
         The following table provides information on the number of shares of
Common Stock acquired during 1996 through the exercise of options or SARs, or
represented by unexercised options or SARs held by the CEO and the other Named
Executive Officers as of December 31, 1996.


                   AGGREGATED OPTION/SAR EXERCISES DURING 1996
                       AND 1996 YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                                      NUMBER OF                    VALUE OF UNEXERCISED
                                SHARES           VALUE          SECURITIES UNDERLYING                  IN-THE-MONEY
                               ACQUIRED        REALIZED       UNEXERCISED OPTIONS/SARS                 OPTIONS/SARS
                                  ON              ON              AT YEAR-END 1996                   AT YEAR-END 1996
                               EXERCISE        EXERCISE                  (#)                              ($)(2)
          NAME                   (#)            ($)(1)        EXERCISABLE/UNEXERCISABLE          EXERCISABLE/UNEXERCISABLE
          ----                  -----          --------       -------------------------          -------------------------
<S>                            <C>             <C>            <C>                                <C>         
John M. Tsimbinos                --               --               262,014  / 0                         6,943,371 /  0
A. Gordon Nutt                   --               --                65,550  / 0                         1,737,075 /  0
William R. Kuhn                  --               --                65,550  / 0                         1,737,075 /  0
Dennis E. Henchy                 --               --                65,550  / 0                         1,737,075 /  0
John J. DeRusso                  --               --                    --  /--                                -- / --
Ira H. Kramer                    --               --                29,565  / 0                           783,473 /  0
</TABLE>

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

(1)      Based upon the difference between the average market price of the
         Common Stock as reported on the Nasdaq Stock Market on the date of
         exercise and the $9.00 exercise price of the options.

(2)      Based upon the difference between $35.50, the closing price of the
         Common Stock as reported on the Nasdaq Stock Market on December 31,
         1996, and the $9.00 exercise price of the options.


         PERFORMANCE COMPENSATION PROGRAM. The Bank maintains the Performance
Compensation Program, which is a discretionary program covering all employees of
the Bank, except for certain executive officers covered by the Performance
Compensation Plan discussed below. The Performance Compensation Program provides
generally for cash awards to individual employees based upon the annual
performance of the Bank in comparison to its pre-established goal and the
individual performance of such employees. Prior to the Board's adoption of the
Performance Compensation Plan in January 1997, Messrs. Tsimbinos, Nutt, Kuhn and
Henchy were also covered under the Performance Compensation Program. Any awards
such officers received under the Performance Compensation Program were based
entirely on the Bank's achievement of its annual performance goal.

         PERFORMANCE COMPENSATION PLAN. The Board of Directors of the Bank has
adopted the Performance Compensation Plan, effective in January 1997, in order
to assure that the incentive payment awards to Messrs. Tsimbinos, Nutt, Kuhn and
Henchy are tax deductible by the Company as "performance-based" compensation
under Section 162(m) of the Code. The Performance Compensation Plan is a written
plan that is substantively equivalent to the existing Performance Compensation
Program, except for certain limitations and provisions required under Section
162(m) of the Code. The Performance Compensation Plan is subject to stockholder
approval at the Annual Meeting because Section 162(m) of the Code requires such
approval. For a full description of the Performance Compensation Plan, see
Proposal 4 on pages 27 through 29 of this Proxy Statement.

         BANK RECOGNITION AND RETENTION PLAN FOR OFFICERS. Executive officers of
the Bank are eligible to receive awards of shares of Common Stock pursuant to
the Officers' RRP. The awards are granted at the discretion of the
Administrative Committee. Awards to officers become vested over a period of
years as determined under the Officers' RRP. Awards become 100% vested upon
termination of employment due to


                                       18
<PAGE>   21
death, disability or retirement of the officer, or following a change in control
of the Bank or the Company. In the event that, before reaching retirement, an
officer terminates employment with the Bank or the Company, the unvested portion
of the officer's award will be forfeited. When awards become vested and shares
of Common Stock are distributed in accordance with the Officers' RRP, the
participants also receive amounts equal to any accrued dividends with respect
thereto. Prior to vesting, recipients of awards may direct the voting of the
shares allocated to them. Unallocated shares will be voted by the trustee of the
Officers' RRP in the same proportion as the shares that have been awarded.
Vested shares are distributed to recipients as soon as practicable following the
day on which they vested.

         At the time of the Company's initial public offering in 1993, awards
under the Officers' RRP were granted to Messrs. Tsimbinos, Nutt, Kuhn, Henchy
and Kramer. Since these awards, no further awards have been granted to the
Company's executive officers under the Officers' RRP.

         401(k) PLAN. The Bank maintains the Roosevelt Savings Bank Salary
Reduction Plan in RSI Retirement Trust (the "401(k) Plan"), which is a
tax-qualified, defined contribution plan designed to be qualified under Section
401(a) and Section 401(k) of the Code. Full-time salaried employees of the Bank
become eligible to join the 401(k) Plan following the completion of one year of
service with the Bank. Under the 401(k) Plan, subject to the limitations imposed
under Section 401(a)(17), Section 401(k) and Section 415 of the Code, a
participant may elect to defer not less than 2% and not more than 6% of his or
her compensation by directing the Bank to contribute such amount to the 401(k)
Plan on his or her behalf. No after-tax voluntary contributions may currently be
made to the 401(k) Plan. The Bank makes matching contributions to the 401(k)
Plan equal to 50% of a participant's elective deferrals, up to a maximum of 3%
of the participant's compensation for the plan year. A participant's
"compensation" for purposes of the 401(k) Plan is generally defined as a
participant's base compensation from the Bank, including salary reduction
contributions to the 401(k) Plan and wage continuation payments to an employee
who is absent due to an illness or disability of a short-term nature, but
excluding overtime pay, bonuses, commissions and contributions made by the Bank
to any other pension, insurance, welfare or any other employee benefit or
deferred compensation plan. Participants are always 100% vested in their
contributions, in matching contributions and in the earnings thereon. The 401(k)
Plan provides for in-service hardship distributions, and for in-service
non-hardship distributions of certain after-tax contributions made prior to
January 1, 1989. Distributions from the 401(k) Plan are made upon or after
termination of service in a lump sum or over a period not to exceed 20 years.

         The 401(k) Plan includes a fund that invests primarily in shares of the
Company's Common Stock (the "Employer Stock Fund"). Participants investing in
the Employer Stock Fund direct the trustee how to vote the shares of the Common
Stock held by such fund, based on their proportionate interests in the fund.
Upon distribution of the participant's account, the participant will have the
choice of having his or her account paid to him or her in Common Stock (to the
extent invested in the Employer Stock Fund) or in cash. As of December 31, 1996,
the 401(k) Plan had $16,665,436 in total assets, of which $10,327,767 was
invested in the Employer Stock Fund.

         EMPLOYEE STOCK OWNERSHIP PLAN. The Company has established the ESOP for
eligible employees of the Company and its affiliates, including the Bank.
Full-time salaried employees become eligible for participation in the ESOP on
the entry date following the completion of a year of service. As part of the
Company's initial public offering, the ESOP borrowed funds from the Company to
purchase 1,081,575 shares of the Common Stock issued in the Company's initial
public offering in 1993. Collateral for the loan was the Common Stock purchased
by the ESOP. The loan is being repaid principally from employer cash
contributions to the ESOP over a period of approximately ten years. The interest
rate for the loan is equal to the average prime interest rate as published by
The Wall Street Journal during the applicable quarter plus 150 basis points.
Shares of Common Stock purchased by the ESOP and pledged as collateral for the
loan are held in a suspense account and released for allocation among
participants annually in amounts proportionate to the repayment of the loan.


                                       19
<PAGE>   22
         Contributions to the ESOP and shares released from the suspense account
are allocated among ESOP participants on the basis of compensation for the year
of allocation, subject to the limitations imposed under Section 401(a)(17) and
Section 415 of the Code. A participant's "compensation" for purposes of the ESOP
is generally defined as a participant's base compensation from the Bank,
including salary reduction contributions to the 401(k) Plan and wage
continuation payments to an employee who is absent due to an illness or
disability of a short-term nature, plus bonuses and overtime pay, but excluding
commissions and contributions made by the Bank to any other pension, insurance,
welfare or any other employee benefit or deferred compensation plan. Benefits
generally become vested over a seven-year period with 10% becoming vested after
the first year of credited service and an additional 10% becoming vested for the
second, third and fourth years of credited service. An additional 20% of the
benefit will become vested each year thereafter until participants are 100%
vested after seven years. However, in the event of a change in control, as
defined by the ESOP, any unvested portion of benefits shall vest immediately and
all unallocated shares and cash held in the suspense account will be allocated
among participants. The ESOP generally provides that, upon certain changes in
control as described in the ESOP, unallocated shares in the ESOP will be sold to
repay any outstanding loan and all remaining unallocated shares or proceeds
thereof will be allocated among participants who were employed immediately
preceding the change in control in proportion to compensation for that part of
the year prior to the change in control. In the event of a change in control,
the ESOP provides that no amount credited to a participant's account as a result
of the repayment of any outstanding loan will be treated as an annual addition
for purposes of the limitations under Section 415 of the Code and, if any amount
cannot be allocated in the year of the change in control because of these
limitations, it will be allocated in subsequent years to those persons who were
participants immediately preceding the change in control and who continue to be
participants.

         Prior to the completion of a year of credited service, a participant
who terminates employment for reasons other than death, retirement, or
disability will not receive any benefit under the ESOP. Forfeitures are
reallocated annually among remaining participating employees in the same
proportion as the annual allocation that is made on the basis of compensation.
Benefits are generally payable in the form of stock upon death, retirement,
disability or termination of service.


RETIREMENT PLAN AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

         RETIREMENT PLAN. The Bank maintains the Retirement Plan of Roosevelt
Savings Bank in RSI Retirement Trust (the "Retirement Plan"), which is a
tax-qualified, defined benefit plan designed to be qualified under Section
401(a) of the Code. The Retirement Plan generally covers full-time salaried
employees who have attained the age of 21 and have completed one year of
service. Employees compensated on an hourly or on a contract basis, leased
employees and employees who work outside the Bank's offices in connection with
the operation and maintenance of buildings or other properties acquired through
foreclosure or deed, are not eligible to participate in the Retirement Plan. The
Bank makes quarterly contributions to the Retirement Plan in amounts necessary
to satisfy the minimum funding requirements under the Employee Retirement Income
Security Act of 1974, as amended.

         A participant is fully vested in his or her benefit under the
Retirement Plan upon retirement at the age of 65, or if later, the fifth
anniversary of the participant's initial participation in the Retirement Plan.
The annual benefit provided to a participant under the Retirement Plan, subject
to the limitations imposed under Section 401(a)(17) and Section 415 of the Code,
is equal to 2% of the participant's average annual earnings, multiplied by the
number of years, and any fraction thereof, of service credited to the
participant for benefit purposes not in excess of 30 years, plus l% of average
annual earnings multiplied by the number of years, and any fraction thereof, of
credited service in excess of 30 years. A participant's "average annual
earnings" for purposes of the Retirement Plan is the average of his or her
annual compensation for the 36 consecutive calendar months with the highest
average during his or her final 120 months of credited service (or the total
number of months of credited service if the total is less than 120 months). A
participant's "compensation"


                                       20
<PAGE>   23
for purposes of the Retirement Plan is generally defined as a participant's base
compensation, including salary reduction contributions to the 401(k) Plan and
wage continuation payments to an employee who is absent due to an illness or
disability of a short-term nature, but excluding overtime pay, bonuses,
commissions and contributions made by the Bank to any other pension, insurance,
welfare or any other employee benefit or deferred compensation plan. A
participant's annual benefit under the Retirement Plan is limited to 60% of his
or her average annual earnings. Retirement Plan benefits are also payable upon
termination due to disability and death.

         At December 31, 1996 the market value of the Retirement Plan trust fund
was $19,337,583. The Bank's contribution to the Retirement Plan for 1996 was
$726,582.

         SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Bank maintains the SERP for
designated salaried executive officers of the Bank to compensate such
individuals who participate in the Bank's Retirement Plan, ESOP and the 401(k)
Plan, but whose benefits otherwise receivable under such benefit plans are
limited by Sections 402(g), 401(a)(17) and 415 of the Code. Payment of benefits
under the SERP is triggered by the same events triggering payment under the
Bank's Retirement Plan, ESOP and 401(k) Plan. The SERP also provides that, if
allocations under the ESOP in the case of a change in control are limited by
Section 415 of the Code, the SERP benefit with respect to the ESOP for all
eligible employees will be determined by taking into account the allocation of
the unallocated shares and cash in accordance with the amendment to the ESOP.
This additional SERP benefit will not be reduced by any subsequent allocation of
unallocated shares or cash in the years following the change in control.

         The SERP is an unfunded plan. All obligations arising under the SERP
are payable from the general assets of the Bank. However, the Bank has
established a trust (the "SERP Trust"), the assets of which will be used to pay
the benefits under the SERP, except in the event of the insolvency of the Bank,
in which case the assets of the SERP Trust would be used to satisfy the claims
of the Bank's general creditors.

         PENSION PLAN TABLE. The following table sets forth the estimated annual
benefits payable under the Retirement Plan and the retirement benefit portion of
the SERP upon retirement at age 65 in calendar year 1997, expressed in the form
of a single life annuity, for the average annual earnings and years of credited
service specified.

                              PENSION PLAN TABLE(1)

<TABLE>
<CAPTION>
            AVERAGE                                     YEARS OF CREDITED SERVICE
            ANNUAL                                      -------------------------
           EARNINGS                15              20              25              30             35(2)
           --------                --              --              --              --             -----
          <S>                  <C>             <C>             <C>             <C>             <C>     
          $100,000             $ 30,000        $ 40,000        $ 50,000        $ 60,000        $ 60,000
           200,000(4)            60,000          80,000         100,000         120,000(3)      120,000(3)
           300,000(4)            90,000         120,000(3)      150,000(3)      180,000(3)      180,000(3)
           400,000(4)           120,000(3)      160,000(3)      200,000(3)      240,000(3)      240,000(3)
           500,000(4)           150,000(3)      200,000(3)      250,000(3)      300,000(3)      300,000(3)
           700,000(4)           210,000(3)      280,000(3)      350,000(3)      420,000(3)      420,000(3)
           900,000(4)           270,000(3)      360,000(3)      450,000(3)      540,000(3)      540,000(3)
</TABLE>

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

(1)     The annual benefits shown in the table above assume the participant
        would receive his retirement benefits under the Retirement Plan and the
        SERP in the form of a straight life annuity at normal retirement age.

(2)     Normal retirement benefits are limited to 60% of average annual
        earnings.

                                              (footnotes continued on next page)


                                       21
<PAGE>   24
(3)     These are hypothetical benefits based upon the Retirement Plan's normal
        retirement benefit formula. The maximum annual benefit permitted under
        Section 415 of the Code in 1996 is $120,000 and in 1997 is $125,000, or
        if higher, a member's current accrued benefit as of December 31, 1982
        (but not more than $136,425). The $125,000 ceiling will be adjusted to
        reflect cost of living increases after 1997 in accordance with Section
        415 of the Code. The SERP will provide the difference between the
        amounts appearing in this table and the maximum amount allowed by the
        Code.

(4)     The benefits shown corresponding to these compensation ranges are
        hypothetical benefits based upon the Retirement Plan's normal retirement
        benefit formula. Under Section 401(a)(17) of the Code, a participant's
        compensation in excess of $200,000 (as adjusted to reflect
        cost-of-living increases) is disregarded for purposes of determining
        average annual earnings in plan years beginning in or after 1989 but
        before 1994. Benefits accrued as of the last day of the plan year
        beginning in 1988 on the basis of compensation in excess of $200,000 are
        preserved. The $200,000 limit was increased to $209,200 in 1990,
        $222,220 in 1991, $228,860 in 1992, and $235,840 in 1993. The limitation
        was reduced to $150,000 for plan years beginning in 1994 through 1996
        and is $160,000 for plan years beginning in 1997. The limitation will be
        adjusted to reflect cost of living increases after 1997 in accordance
        with Section 401(a)(17) of the Code. The table reflects amounts payable
        in conjunction with the SERP.


The following table sets forth the years of credited service (i.e., benefit
service) as of December 31, 1996 for each of the individuals named in the
Summary Compensation Table.

<TABLE>
<CAPTION>
                                          CREDITED SERVICE
                                          ----------------
                                           YEARS    MONTHS
                                           -----    ------
                      <S>                 <C>       <C>
                      John M. Tsimbinos      14       10
                      A. Gordon Nutt         13        6
                      William R. Kuhn        22        6
                      Dennis E. Henchy       21        8
                      John J. DeRusso         2        1
                      Ira H. Kramer          13        7
</TABLE>


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         From time to time the Bank makes mortgage loans and consumer loans to
its executive officers and to members of the immediate families of its executive
officers and directors, to the extent consistent with applicable laws and
regulations. Such loans are made in the ordinary course of business and on the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and do not and will not
involve more than the normal risk of collectibility or present other unfavorable
features. The outstanding principal balance of such loans to executive officers
and family members of executive officers and directors totaled $209,614 as of
December 31, 1996.


COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Under the securities laws of the United States, the Company's
directors, its executive officers, and any person holding more than ten percent
of the Company's Common Stock are required to file initial reports of ownership
of the Company's Common Stock and reports of changes in that ownership to the
SEC. Specific due dates for these reports have been established and the Company
is required to disclose in this Proxy Statement any failure to file by these
dates during 1996. All of such filing requirements of the Company's directors
and executive officers were satisfied during 1996, based upon their written
representations and copies of the reports that they have filed with the SEC.


                                       22
<PAGE>   25
                                  PROPOSAL TWO

               RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

GENERAL

         The Board of Directors has appointed the firm of KPMG Peat Marwick LLP
to continue as independent auditors for the Company for the year ending December
31, 1997, subject to ratification of such appointment by the Company's
stockholders. Representatives of KPMG Peat Marwick LLP are expected to be
present at the Annual Meeting. The representatives will have an opportunity to
make a statement if they desire to do so and will be available to respond to
questions.


VOTE REQUIRED

         Ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock represented in person or by
proxy at the Annual Meeting and entitled to vote thereon. ACCORDINGLY, SHARES AS
TO WHICH THE "ABSTAIN" BOX HAS BEEN SELECTED ON THE PROXY CARD WITH RESPECT TO
PROPOSAL 2 WILL BE COUNTED AS PRESENT AND ENTITLED TO VOTE AND WILL HAVE THE
EFFECT OF A VOTE AGAINST PROPOSAL 2. IN CONTRAST, SHARES UNDERLYING BROKER
NON-VOTES OR HELD IN EXCESS OF THE LIMIT WILL NOT BE COUNTED AS PRESENT AND
ENTITLED TO VOTE AND WILL HAVE NO EFFECT ON THE VOTE FOR PROPOSAL 2.


           THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
                     THE RATIFICATION OF THE APPOINTMENT OF
                  KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS
                                FOR THE COMPANY.




                                 PROPOSAL THREE

                      APPROVAL OF THE AMENDED AND RESTATED
              T R FINANCIAL CORP. 1993 INCENTIVE STOCK OPTION PLAN

GENERAL PLAN INFORMATION

         The Board of Directors of the Company has, subject to approval by the
stockholders of the Company, amended and restated the T R Financial Corp. 1993
Incentive Stock Option Plan, effective as of January 23, 1997, which is
hereinafter referred to as the "Option Plan." The Option Plan was initially
adopted on June 29, 1993 and was approved by the stockholders of the Company on
December 13, 1993. The Option Plan provides for the grant of options to purchase
Common Stock of the Company ("Options") to certain officers and employees of the
Company and its affiliates. The full text of the Option Plan, as amended and
restated, to which reference is made, is set forth as Appendix A to this Proxy
Statement. The amendments to the Option Plan and the principal provisions of the
Option Plan are described in the summary below, which summary is qualified in
its entirety by such reference. The failure to obtain stockholder approval of
the Option Plan, as amended and restated, will not affect the validity of the
Option Plan prior to its amendment and restatement, or any Options granted
thereunder. In such event, the Option Plan as in effect prior to such amendment
and restatement, and any Options granted thereunder, will continue in full force
and effect.


                                       23
<PAGE>   26
PURPOSE OF THE AMENDMENTS

         The Company has amended the Option Plan, subject to stockholder
approval, (i) to increase the number of shares of Common Stock available for
awards, (ii) to assure that Non-statutory Options awarded pursuant to the Option
Plan are considered to be "performance-based" compensation under Section 162(m)
of the Code and (iii) to make certain other changes. The amendments increase the
number of shares of Common Stock reserved for purchase pursuant to the exercise
of Options granted under the Option Plan so that awards will be available to
provide those employees of the Company and its affiliates, upon whose judgment,
initiative and efforts the successful conduct of the business of the Company and
its affiliates largely depends, with an additional incentive to perform in a
superior manner. In addition, Options will be available to attract people of
experience and ability to the service of the Company.

         Section 162(m) of the Code generally limits an employer's tax
deductions for certain executives' compensation as described below. See "--
Federal Income Tax Consequences." However, the regulations under Section 162(m)
of the Code provide that certain compensation will not be subject to the
limitations of Section 162 of the Code if such compensation qualifies as
"performance-based" compensation. Compensation attributable to stock options is
considered to satisfy the requirements for "performance-based" compensation if
(i) such options are granted by a committee consisting of at least two "outside
directors," (ii) the plan under which such options are granted states the
maximum number of shares with respect to which options may be granted during a
specified period to any employee and (iii) under the terms of the option, the
amount of compensation any employee could receive is based solely on an increase
in the value of the stock after the date of the grant.


DESCRIPTION OF THE AMENDMENTS TO THE OPTION PLAN

         The Option Plan has been amended to increase the number of shares of
Common Stock reserved for purchase pursuant to the exercise of Options granted
under the Option Plan from 688,275 shares of Common Stock to 1,288,275 shares of
Common Stock.

         The amendments also provide that the maximum number of shares of Common
Stock for which Options under the Option Plan may be granted to any participant
during any plan year may not exceed 100,000 shares of Common Stock. The
amendments further provide that the Option Plan will be administered by a
committee of two or more members of the Board of Directors, each of whom shall
be both a "non-employee director," as such term is defined under Rule 16b-3
under the Exchange Act and an "outside director," as such term is defined under
Section 162(m) of the Code.


DESCRIPTION OF THE AMENDED AND RESTATED OPTION PLAN

         STOCK SUBJECT TO THE OPTION PLAN. The Company has reserved 1,288,275
shares of Common Stock for issuance upon the exercise of Options, which shares
may be authorized and unissued shares or shares previously issued and reacquired
by the Company. Any shares of Common Stock subject to Options granted under the
Option Plan which expire or are terminated, forfeited or cancelled without
having been exercised or vested in full, shall again be available for purposes
of the Option Plan. As of March 5, 1997, the closing price of the Common Stock
was $36.25 (as reported on the Nasdaq Stock Market on such date).

         ADMINISTRATION. The Option Plan is administered by the Administrative
Committee (the "Committee"), which consists of two or more non-employee members
of the Board of Directors. The Committee will determine, within the limitations
of the Option Plan, the officers and employees to whom Options will be granted,
the number of shares subject to each Option, the terms of such Options
(including


                                       24
<PAGE>   27
provisions regarding exercisability and acceleration of exercisability) and the
procedures by which the Options may be exercised.

      ELIGIBILITY. An employee of the Company, the Bank or any affiliate who is
selected by the Committee is eligible to participate in the Option Plan as a
Participant.

      TERMS AND CONDITIONS OF OPTIONS. The Committee will award discretionary
grants of Options to Participants. The Committee determines the exercise price
for each Option granted to a Participant at the time of grant, which will be at
least the fair market value of the underlying Common Stock on the date of grant.
Under the Option Plan, the term fair market value is generally defined, with
respect to a share of Common Stock on a specified date, as the closing price of
the Common Stock as reported on the Nasdaq Stock Market on such date. The
Committee may also establish a vesting schedule or other terms and conditions
applicable to a particular Option, in its discretion; provided, however, that
all options will be fully exercisable in the event the optionee terminates
employment due to death, Disability, Retirement or a Change in Control (each as
defined in the Option Plan). The option period during which an individual may
exercise such Option (the "Option Period") will generally commence on the date
of grant and will expire no later than ten years from such date. The Option
Period will expire earlier, if so specified by the Committee, or (i) upon the
last day of the three-month period commencing on the date of the Participant's
termination of employment with the Company or its affiliates, other than on
account of death, Disability, Retirement or a Termination for Cause (as defined
in the Option Plan); (ii) the last day of the one-year period commencing on the
date of the Participant's termination of employment due to death, Disability or
Retirement or (iii) the date the Participant ceases to be an employee due to a
Termination for Cause.

      The Option Plan provides for the grant of options which are treated for
federal income tax purposes as "incentive stock options" ("ISOs"), Non-statutory
Options and certain limited stock appreciation rights ("Limited Rights"). ISOs
are subject to certain restrictions under the Code. Unless otherwise designated
by the Committee, Options granted under the Option Plan will be Non-statutory
Options, will generally be exercisable at a price per share equal to the fair
market value of a share of Common Stock on the date of the Option grant and will
be exercisable for a period of ten years after the date of grant. In no event
may an Option be granted with an exercise price per share that is less than the
fair market value of a share of Common Stock on the date when the Option is
granted.

      Upon the exercise of an Option, the exercise price must be paid in full.
Payment may be made (i) in cash, (ii) pursuant to a "cashless exercise" of an
Option in accordance with applicable securities laws or (iii) with Common Stock
already owned by the Option holder. No Options may be transferred other than by
will or the laws of descent and distribution, and may only be exercised during
the Option holder's lifetime by such Option holder or by a guardian or legal
representative of the Option holder.

      ADJUSTMENTS. In the event of any merger, consolidation, or other business
reorganization in which the Company is the surviving entity, and in the event of
any stock split, stock dividend or other event generally affecting the number of
shares of Common Stock held by each person who is then a holder of shares on the
record date for such event, the number of shares covered by each outstanding
Option and the number of shares available under the Option Plan may be adjusted
according to the provisions of the Option Plan to prevent dilution or
enlargement of the rights of Participants.

      TERMS AND CONDITIONS OF LIMITED RIGHTS. Each Option granted under the
Option Plan may be accompanied by a Limited Right that is exercisable only upon
a Change in Control (as defined in the Option Plan). Upon exercise of a Limited
Right, the optionee will be entitled to receive a lump sum cash payment equal to
the difference between the exercise price of the related Option and the fair
market value of the shares of Common Stock subject to the Option on the date of
exercise in lieu of purchasing the Common Stock underlying the Option. Upon the
exercise of a Limited Right, the related Option will cease to be exercisable,
and upon the exercise or termination of an Option, the related Limited Right
will terminate.


                                      25
<PAGE>   28
      SURRENDER OF OPTIONS. In the event of a Participant's termination of
employment due to death, Disability or Retirement, if requested by the
Participant or his representative, the Committee may elect, in its discretion,
to pay the Participant, in exchange for the surrender of such Participant's
Options, an amount equal to the difference between the fair market value of the
Common Stock on the date of the Participant's termination of employment and the
exercise price of the Option, multiplied by the number of Options surrendered.


TERMINATION OR AMENDMENT OF THE OPTION PLAN

      Unless sooner terminated, the Option Plan will terminate automatically on
the day preceding the tenth anniversary of the Option Plan's initial effective
date. The Board of Directors may amend or terminate the Option Plan in whole or
in part at any time prior to the tenth anniversary of the Option Plan's initial
effective date. However, in order to comply with the requirements of Section
162(m) of the Code, any amendment that amends a material term of the Option Plan
will be subject to the approval of the stockholders of the Company. In the event
of any suspension or termination of the Option Plan, all Options granted under
the Option Plan that are outstanding on the date of such suspension or
termination will remain outstanding under the terms of the agreements granting
such Options.


FEDERAL INCOME TAX CONSEQUENCES

      The following discussion is intended only as a summary and does not
purport to be a comprehensive description of the federal tax laws, regulations
and policies affecting the Company and recipients of ISOs, Non-statutory Options
and Limited Rights that may be granted under the Option Plan. Any change in
applicable law or regulation or in the policies of various taxing authorities
may have a material effect on the discussion contained herein.

      There are no federal income tax consequences for the Company or the Option
holder at the time an ISO is granted or upon the exercise of an ISO. If there is
no sale or other disposition of the shares acquired upon the exercise of an ISO
within two years after the date the ISO was granted, or within one year after
the exercise of the ISO, then at no time will any amount be deductible by the
Company with respect to the ISO. If the Option holder exercises an ISO and sells
or otherwise disposes of the shares so acquired after satisfying the foregoing
holding period requirements, then the Option holder will realize a capital gain
or loss on the sale or disposition. If the Option holder exercises the ISO and
sells or disposes of the shares prior to satisfying the foregoing holding period
requirements, then an amount equal to the difference between the amount realized
upon the sale or other disposition of the shares and the price paid for such
shares upon the exercise of the ISO will be includible in the ordinary income of
such person, and such amount will ordinarily be deductible by the Company at the
time it is includible in such person's income.

      With respect to the grant of Non-statutory Options and Limited Rights,
there are no federal income tax consequences for the Company or the Option
holder at the date of the grant. Upon the exercise of a Non-statutory Option, an
amount equal to the difference between the fair market value of the shares to be
purchased on the date of exercise and the exercise price of such shares is
generally includible in the ordinary income of the person exercising such
Non-statutory Option, although such inclusion may be at a later date in the case
of an Option holder whose disposition of such shares could result in liability
under Section 16(b) of the Exchange Act. The Company will ordinarily be entitled
to a deduction for federal income tax purposes at the time the Option holder is
taxed on the exercise of the Non-statutory Option equal to the amount which the
Option holder is required to include as ordinary income. Section 162(m) of the
Code may limit the Company's deductions of compensation in excess of $1 million
per year for the five most highly paid executives named in the Company's Proxy
Statement, but provides for certain exceptions to such limitations for
"performance-based" compensation. The Company intends the Option Plan to comply
with the


                                      26
<PAGE>   29
requirements for an exception to Section 162(m) of the Code applicable to stock
option plans so that the Company's deduction for compensation related to the
exercise of Options would not be subject to the deduction limitation set forth
in Section 162(m) of the Code.

      Upon exercise of a Limited Right, the amount of cash or the fair market
value of the shares received, determined on the date of exercise, is generally
includible in the ordinary income of the person exercising the Limited Right,
although such inclusion may be at a later date in the case of an Option holder
who receives stock on the exercise of a Limited Right and whose disposition of
such shares could result in liability under Section 16(b) of the Exchange Act.
The Company will ordinarily be entitled to a deduction for federal income tax
purposes at the time the Option holder is taxed on the exercise of the Limited
Right, equal to the amount which the Option holder is required to include as
ordinary income.

      The foregoing statements are intended to summarize the general principles
of current federal income tax law applicable to Options and Limited Rights that
may be granted under the Option Plan. State and local tax consequences may also
be significant.


VOTE REQUIRED

      Pursuant to the regulations under Section 162(m) of the Code, the Option
Plan must be approved by the holders of a majority of the outstanding shares of
Common Stock represented in person or by proxy at the Annual Meeting and
entitled to vote thereon. ACCORDINGLY, SHARES AS TO WHICH THE "ABSTAIN" BOX HAS
BEEN SELECTED ON THE PROXY CARD WITH RESPECT TO PROPOSAL 3 WILL BE COUNTED AS
PRESENT AND ENTITLED TO VOTE AND WILL HAVE THE EFFECT OF A VOTE AGAINST PROPOSAL
3. IN CONTRAST, SHARES UNDERLYING BROKER NON-VOTES OR HELD IN EXCESS OF THE
LIMIT WILL NOT BE COUNTED AS PRESENT AND ENTITLED TO VOTE AND WILL HAVE NO
EFFECT ON THE VOTE WITH RESPECT TO PROPOSAL 3.


           THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
                    THE APPROVAL OF THE AMENDED AND RESTATED
              T R FINANCIAL CORP. 1993 INCENTIVE STOCK OPTION PLAN.




                                  PROPOSAL FOUR

                     APPROVAL OF THE ROOSEVELT SAVINGS BANK
                          PERFORMANCE COMPENSATION PLAN

GENERAL PLAN INFORMATION

      The Board of Directors of the Bank has adopted the Performance
Compensation Plan, subject to approval by the stockholders of the Company. The
Performance Compensation Plan provides for cash awards ("Performance Awards") to
certain officers of the Company, the Bank or any of their affiliates. The full
text of the Performance Compensation Plan, to which reference is made, is set
forth as Appendix B to this Proxy Statement. The principal provisions of the
Performance Compensation Plan are described in the summary below, which summary
is qualified in its entirety by such reference.


                                       27
<PAGE>   30
PURPOSE OF PERFORMANCE COMPENSATION PLAN

      The purpose of the Performance Compensation Plan is to promote the growth
and profitability of the Bank, to provide certain key officers of the Bank and
its affiliates with an incentive to achieve business objectives, to attract and
retain individuals of outstanding competence and to provide a means of
compensating such individuals for their contributions to the Bank in a manner
which permits such compensation to be deductible by the Bank for federal income
tax purposes.

      It is the intention of the Bank that the Performance Awards granted under
the Performance Compensation Plan qualify as "performance-based" compensation
under Section 162(m) of the Code. Section 162(m) of the Code generally limits an
employer's tax deduction for certain of its executives' compensation, unless
such compensation qualifies as "performance-based" compensation.


DESCRIPTION OF THE PERFORMANCE COMPENSATION PLAN

      ADMINISTRATION. The Performance Compensation Plan is administered by the
Compensation Committee (the "Committee"), which consists of two or more
Disinterested Board Members (as defined in the Performance Compensation Plan) of
the Bank, each of whom shall be an "outside director," as such term is defined
under Section 162(m) of the Code. The Committee will determine, within the
limitations of the Performance Compensation Plan, the officers to whom
Performance Awards will be granted and the performance goal such officers must
meet ("Performance Goal") to obtain such Performance Awards.

      ELIGIBILITY. An officer of the Bank, the Company or any affiliate who is
selected by the Committee is eligible to participate in the Performance
Compensation Plan as an "Eligible Employee." As of March 5, 1997, there were
four Eligible Employees, Messrs. Tsimbinos, Nutt, Kuhn and Henchy.

      PERFORMANCE GOAL. During the first 90 days of each year, the Committee
will establish a Performance Goal, which for the 1997 plan year will be based
upon the Company's 1997 consolidated pre-tax income with certain adjustments
that the Committee determines to be appropriate; provided, however, that any
such adjustments comply with the requirements of Section 162(m) of the Code. For
plan years after 1997, the Performance Goal may also take into account the
Company's return on equity or average equity as compared to such returns of a
peer group of other financial institutions, determined over a specified period.
Once established, such Performance Goal for the year may not be changed or
adjusted, unless the Committee determines that an adjustment which decreases or
eliminates the amount of an Eligible Employee's Performance Award is necessary
due to external changes or other unanticipated business conditions.

      PERFORMANCE AWARDS. If the Bank satisfies the preestablished Performance
Goal for a particular year, each Eligible Employee is eligible to receive a
Performance Award for such year. A Performance Award awarded to any Eligible
Employee may not exceed the lesser of (a) 175% of such Eligible Employee's base
salary for such year or (b) $1,750,000. At the end of each year, provided that
the Performance Goal established has been met, the Committee will certify in
writing the amount of the Performance Award to be granted to such Eligible
Employee. Such Performance Award will be paid to the Eligible Employee, in the
form and manner determined by the Committee, as soon as practicable following
the date the Committee determines the amount of such Performance Award.

      If an Eligible Employee terminates employment with the Bank during any
year or following the end of such year, but prior to the payment of a
Performance Award earned for such year, the Eligible Employee will be deemed to
have forfeited any right to receive such Performance Award. However, if an
Eligible Employee's termination of employment occurs after the end of a year for
which such Eligible Employee would have received a Performance Award, and such
termination is due to death, Disability, Retirement or a Change in Control (each
as defined in the Performance Compensation Plan), such Performance Award will
not be


                                       28
<PAGE>   31
forfeited. In such a case, the Performance Award will be paid in the form and
manner determined by the Committee as soon as practicable after the Committee
determines the amount of such Performance Award. In the event of a termination
of employment following the end of the year due to a Change in Control, the
Performance Award will be paid on the date of such Change in Control.


TERMINATION OR AMENDMENT OF THE PERFORMANCE COMPENSATION PLAN

      The Board of Directors of the Bank may amend or terminate the Performance
Compensation Plan in whole or in part at any time. However, in order to comply
with the requirements of Section 162(m) of the Code, any amendment that amends a
material term of the Performance Compensation Plan will be subject to the
approval of the stockholders of the Company.


VOTE REQUIRED

      Pursuant to the regulations under Section 162(m) of the Code, the
Performance Compensation Plan must be approved by the holders of a majority of
the outstanding shares of Common Stock represented in person or by proxy at the
Annual Meeting and entitled to vote thereon. ACCORDINGLY, SHARES AS TO WHICH THE
"ABSTAIN" BOX HAS BEEN SELECTED ON THE PROXY CARD WITH RESPECT TO PROPOSAL 4
WILL BE COUNTED AS PRESENT AND ENTITLED TO VOTE AND WILL HAVE THE EFFECT OF A
VOTE AGAINST PROPOSAL 4. IN CONTRAST, SHARES UNDERLYING BROKER NON-VOTES OR HELD
IN EXCESS OF THE LIMIT WILL NOT BE COUNTED AS PRESENT AND ENTITLED TO VOTE AND
WILL HAVE NO EFFECT ON THE VOTE WITH RESPECT TO PROPOSAL 4.


           THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
                   THE APPROVAL OF THE ROOSEVELT SAVINGS BANK
                         PERFORMANCE COMPENSATION PLAN.


                                       29
<PAGE>   32
                               NEW PLAN BENEFITS

      The following table provides information on the benefits that will be
received by the executive officers of the Company pursuant to the Option Plan
and the Performance Compensation Plan, subject to the requirements of such
plans, if such plans are approved by the stockholders at the Annual Meeting.

     T R FINANCIAL CORP. 1993 STOCK OPTION PLAN (AS AMENDED AND RESTATED)
           AND ROOSEVELT SAVINGS BANK PERFORMANCE COMPENSATION PLAN

<TABLE>
<CAPTION>
                                                                                                              Performance
                                                                                                             Compensation
                                                                    1993 STOCK OPTION PLAN(1)(2)                Plan(2)
                                                                    ----------------------------                -------

               Name/Position                                          #                   $ Value               $ Value
               -------------                                        ------                -------               -------
<S>                                                                 <C>                   <C>                   <C>
John M. Tsimbinos, Chairman of the Board and Chief                  35,000                   --                  319,200
Executive Officer

A. Gordon Nutt,  President and Chief Administrative Officer         15,500                   --                  103,040

William R. Kuhn, Executive Vice President and Chief Real             7,000                   --                   67,200
Estate Lending Officer

Dennis E. Henchy, Executive Vice President and Chief                 7,000                   --                   64,680
Financial Officer

John J. DeRusso, Senior Vice President                              10,000                   --                      N/A

Ira H. Kramer, Senior Vice President and Corporate                   5,000                   --                      N/A
Secretary

All Executive Officers as a Group (6 Persons)                       79,500                   --                  554,120

All Outside Directors as a Group (9 Persons)                           N/A                  N/A                      N/A

All Nominees for Outside Directors (3 Persons)                         N/A                  N/A                      N/A

All Employees as a Group for Option Plan                           120,100                   --                      N/A
(22 Persons)

All Employees as a Group for Performance Compensation                  N/A                  N/A                  554,120
Plan (4 Persons)
</TABLE>

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

(1)    The Option Plan was amended and restated by the Board of Directors, and
       the Options set forth in the above table were granted by the
       Administrative Committee, on January 23, 1997, subject to stockholder
       approval of the Option Plan. The exercise price of such Options is equal
       to the closing price of the Common Stock on the date of grant. The
       closing price of the Common Stock on January 23, 1997 was $33.75. Such
       Options will generally expire on the tenth anniversary of the date of the
       grant.

(2)    The amounts to be awarded under the Bank's Performance Compensation Plan
       for 1997 are not yet determinable. The amounts provided for each of the
       four executive officers eligible to receive an award under the
       Performance Compensation Plan for 1997 reflect awards to each such
       executive officer under the Bank's Performance Compensation Program for
       1996. For 1996, 477 employees of the Bank were paid awards under the
       Performance Compensation Program aggregating $1,623,482. As noted
       previously, the Performance Compensation Plan is substantively equivalent
       to the existing Performance Compensation Program, except for certain
       limitations, requirements and provisions required under Section 162(m) of
       the Code in order to assure that the Company may take tax deductions for
       the payments made under the Performance Compensation Plan.


                                      30
<PAGE>   33
                             ADDITIONAL INFORMATION

STOCKHOLDER'S NOTICE OF BUSINESS TO BE CONDUCTED AT THE ANNUAL MEETING

       The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an annual meeting or to nominate
any person for election to the Board of Directors. To properly bring business
before an annual meeting or to nominate any person for election to the Board of
Directors, a stockholder must be a stockholder of record entitled to vote with
respect thereto, and the stockholder must give timely notice thereof in writing
to the Corporate Secretary of the Company.

       To be timely, a stockholder's notice must be delivered to and received by
the Corporate Secretary not less than 90 days prior to the date of the annual
meeting. However, if less than 100 days notice or prior disclosure of the date
of the meeting is given to stockholders, notice must be received not later than
the close of business on the tenth day following the day on which such notice of
the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Corporate Secretary shall set forth such information
as required by the Bylaws of the Company. Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement and proxy card
relating to an annual meeting any stockholder proposal or nomination which does
not meet all of the requirements for inclusion established by the SEC in effect
at the time such proposal or nomination is received.


DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING

       Any stockholder wishing to have a proposal considered for inclusion in
the Company's proxy statement and proxy card relating to the 1998 annual meeting
of stockholders must, in addition to other applicable requirements, set forth
such proposal in writing and file it with the Corporate Secretary of the Company
on or before November 18, 1997, pursuant to the proxy soliciting regulations of
the SEC. Any such proposal will be subject to 17 C.F.R. Section 240.14a-8 of the
rules and regulations promulgated by the SEC under the Exchange Act.


                                  OTHER MATTERS

       As of the date of this Proxy Statement, the Board of Directors does not
know of any other matters to be brought before the stockholders at the Annual
Meeting. If, however, any other matters not now known are properly brought
before the meeting, the persons named in the accompanying Proxy Card will vote
the shares represented by all properly executed proxies on such matters in such
manner as shall be determined by a majority of the Board of Directors.


                              FINANCIAL STATEMENTS

       A copy of the 1996 Annual Report to Stockholders for the year ended
December 31, 1996, containing consolidated statements of financial condition as
of December 31, 1996 and December 31, 1995 and related consolidated statements
of income, changes in stockholders' equity and cash flows for each of the years
ended December 31, 1996, 1995 and 1994, prepared in conformity with generally
accepted accounting principles, accompanies this Proxy Statement. The
consolidated financial statements have been audited by KPMG Peat Marwick LLP
whose report thereon appears in the Annual Report. The Annual Report serves as
the Bank's Annual Disclosure Statement for purposes of the regulations of the
Federal Deposit Insurance Corporation. Upon request, stockholders will be
furnished, free of charge, an additional copy of the Annual Report.


                                      31
<PAGE>   34
       The Company is required to file an annual report on Form 10-K for the
year ended December 31, 1996 with the SEC. Stockholders may obtain, free of
charge, a copy of such annual report (excluding exhibits) by writing to Theodore
S. Ayvas, Assistant Vice President, Roosevelt Savings Bank, 1122 Franklin
Avenue, Garden City, New York 11530.


            TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL
            MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN
                       THE ACCOMPANYING PROXY CARD IN THE
                         POSTAGE-PAID ENVELOPE PROVIDED.


                                       32
<PAGE>   35
                                                                    APPENDIX A



                               T R FINANCIAL CORP.

                              1993 INCENTIVE STOCK
                                   OPTION PLAN



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










                              ADOPTED JUNE 29, 1993
                              AMENDED AND RESTATED
                        EFFECTIVE AS OF JANUARY 23, 1997
<PAGE>   36
                               T R FINANCIAL CORP.

                        1993 INCENTIVE STOCK OPTION PLAN
              AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 23, 1997


1.    PURPOSE.

      The purpose of the T R Financial Corp. 1993 Incentive Stock Option Plan,
as amended and restated as of January 23, 1997 (the "Plan"), is to advance the
interests of T R Financial Corp. (the "Company") and its stockholders by
providing those employees of the Company and its Affiliates, as hereinafter
defined, including Roosevelt Savings Bank (the "Bank"), upon whose judgment,
initiative and efforts the successful conduct of the business of the Company and
its Affiliates largely depends, with additional incentive to perform in a
superior manner. A purpose of the Plan is also to attract people of experience
and ability to the service of the Company and its Affiliates.

2.    DEFINITIONS.

      The following definitions shall apply for the purposes of this Plan,
unless a different meaning is plainly indicated by the context:

      (a) "Affiliate" means (i) a member of a controlled group of corporations
of which the Company is a member or (ii) an unincorporated trade or business
which is under common control with the Company as determined in accordance with
Section 414(c) of the Code and the regulations issued thereunder. For purposes
hereof, a "controlled group of corporations" shall mean a controlled group of
corporations as defined in Section 1563(a) of the Code determined without regard
to Sections 1563(a)(4) and (e)(3)(C).

      (b) "Award" means a grant of Non-Statutory Stock Options, Incentive Stock
Options, and/or Limited Rights under the provisions of this Plan.

      (c) "Beneficiary" means the person or persons designated by a Participant,
or otherwise determined to be entitled to a benefit under the Plan, under
Section 14.

      (d) "Board of Directors" or "Board" means the board of directors of the
Company.

      (e) "Change in Control" means an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); (ii) results
in a Change in Control of the Bank or the Company within the meaning of the
Change in Bank Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation (the "FDIC") at 12 C.F.R. Section 303.4(a)
with respect to the Bank and the Board of Governors of the Federal Reserve
System ("FRB") at 12 C.F.R. Section 225.41(b) with respect to the Company, as in
effect on the date hereof, but excluding any such Change in Control resulting
from the purchase of securities by the Company's or the Bank's tax-qualified
employee benefit plans and trusts; (iii) results in a transaction requiring
prior FRB approval under the Bank Holding Company Act of 1956, as amended, and
the regulations promulgated thereunder by the FRB at 12 C.F.R. Section 225.11,
as in effect on the date hereof, except for the Company's acquisition of the
Bank and any transaction resulting from the purchase of securities by the
Company's or the Bank's tax-qualified employee benefit plans and trusts; or (iv)
without limitation, such a Change in Control shall be deemed to have occurred at
such time as (a) any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the Bank
or the Company representing 20% or more of the Bank's or the Company's
outstanding securities except for any securities of the Bank purchased by the
Company in connection with the initial conversion


                                       A-1
<PAGE>   37
of the Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company's or the Bank's tax-qualified employee benefit plans
and trusts; or (b) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Company's stockholders was approved by the same Nominating Committee serving
under an Incumbent Board, shall be, for purposes of this clause (b), considered
as though he were a member of the Incumbent Board, but excluding, for this
purpose, any such person whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board; or (c) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Company or similar transaction occurs in which the
Bank or Company is not the resulting entity; or (d) a proxy statement shall be
distributed soliciting proxies from stockholders of the Company, by someone
other than the current management of the Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Company or Bank or
similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into cash or property or securities
not issued by the Bank or the Company; or (e) a tender offer is made for 20% or
more of the voting securities of the Bank or Company then outstanding.

      (f) "Code" means the Internal Revenue Code of 1986, as amended.

      (g) "Committee" means a committee consisting of two or more members of the
Board, each of whom (i) is not a current employee of the Company or a subsidiary
thereof, (ii) is not a former employee of the Company who receives compensation
for prior services for the Company (other than benefits under a tax-qualified
retirement plan) during the taxable year, (iii) is not currently and has not
been an officer of the Company or a subsidiary thereof, (iv) does not receive
remuneration or consideration from the Company or a subsidiary thereof, either
directly or indirectly, for services rendered in any capacity other than as a
director and (v) does not possess an interest in any other transaction, and is
not engaged in a business relationship, for which disclosure would be required
pursuant to Item 404(a) or (b) of the proxy solicitation rules of the Securities
and Exchange Commission. Each member of the Committee shall be a "non-employee
director" as such term is defined under Rule 16b-3 under the Exchange Act and an
"outside director" as such term is defined under Section 162(m) of the Code and
any regulations thereunder.

      (h) "Date of Grant" means the date an Award granted by the Committee is
effective pursuant to the terms hereof.

      (i) "Common Stock" means the Common Stock of the Company, par value $.01
per share.

      (j) "Disability" means disability as defined in the Bank's Retirement
Plan, or if not so defined, it shall mean a condition of total incapacity,
mental or physical, preventing further performance of duties with the Company or
the Bank, which the Board shall have determined, on the basis of competent
medical evidence, is likely to be permanent.

      (k) "Fair Market Value" means, with respect to a share of Common Stock on
a specified date:

            (i) the final reported sales price on the date in question (or if
      there is no reported sale on such date, on the last preceding date on
      which any reported sale occurred) as reported in the principal
      consolidated reporting system with respect to securities listed or
      admitted to trading on the principal United States securities exchange on
      which the shares of Common Stock are listed or admitted to trading; or


                                       A-2
<PAGE>   38
            (ii) if the shares of Common Stock are not listed or admitted to
      trading on any such exchange, the closing bid quotation with respect to a
      share of Common Stock on such date on the Nasdaq Stock Market, or, if no
      such quotation is provided, on another similar system, selected by the
      Committee, then in use; or

            (iii) if Sections 2(k)(i) and (ii) are not applicable, the fair
      market value of a share of Common Stock as the Committee may determine.

For purposes of the grant of Options in the Conversion, Fair Market Value shall
mean the initial public offering price of the Common Stock.

      (l) "Incentive Stock Option" means an Option granted by the Committee to a
Participant, which Option is designed as an Incentive Stock Option pursuant to
Section 8.

      (m) "Limited Right" means the right to receive an amount of cash based
upon the terms set forth in Section 9.

      (n) "Non-statutory Stock Option" means an Option granted by the Committee
to a Participant, which is not designated by the Committee as an Incentive Stock
Option.

      (o) "Option" means an Award granted under Section 7 or Section 8.

      (p) "Participant" means an employee of the Company or its Affiliates
chosen by the Committee to participate in the Plan.

      (q) "Plan" means the T R Financial Corp. 1993 Incentive Stock Option Plan,
as amended from time to time, and may be referred to as the "T R Financial Corp.
1993 Incentive Stock Option Plan."

      (r) "Plan Year(s)" means a calendar year or years commencing on or after
January 1, 1993.

      (s) "Retirement" means retirement at the normal or early retirement date
as set forth in the Retirement Plan of Roosevelt Savings Bank in RSI Retirement
Trust, or, if such plan has been terminated, in any other tax-qualified
retirement or pension plan of the Bank.

      (t) "Termination for Cause" means the termination upon an intentional
failure to perform stated duties, breach of a fiduciary duty involving personal
dishonesty, which results in material loss to the Company or one of its
Affiliates or willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order which
results in material loss to the Company or one of its Affiliates.

3.    ADMINISTRATION.

      The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it sees necessary for the proper administration of the Plan and
to make whatever determinations and interpretations in connection with the Plan
it sees as necessary or advisable. All determinations and interpretations made
by the Committee shall be binding and conclusive on all Participants in the Plan
and on their legal representatives and beneficiaries.

4.    TYPES OF AWARDS.

      Awards under the Plan may be granted in any one or a combination of:


                                       A-3
<PAGE>   39
      (a)   Non-statutory Stock Options;

      (b)   Incentive Stock Options; and

      (c)   Limited Rights

as defined below in paragraphs 7 through 9 of the Plan.

5.    STOCK SUBJECT TO THE PLAN.

      Subject to adjustment as provided in Section 15, the maximum number of
shares of Common Stock reserved for purchase pursuant to the exercise of Options
granted under the Plan is 1,288,275 shares of Common Stock. These shares of
Common Stock may be either authorized but unissued shares or shares previously
issued and reacquired by the Company. To the extent that Options or Limited
Rights are granted under the Plan, the shares underlying such Options will be
unavailable for future grants under the Plan except that, to the extent that
Options together with any related Limited Rights granted under the Plan
terminate, expire or are cancelled without having been exercised (in the case of
Limited Rights, exercised for cash), new Awards may be made with respect to
these shares.

6.    ELIGIBILITY.

      Officers and other employees of the Company or its Affiliates shall be
eligible to receive Incentive Stock Options, Non-statutory Stock Options and/or
Limited Rights under the Plan. Directors who are not employees or officers of
the Company or its Affiliates shall not be eligible to receive Awards under the
Plan.

7.    NON-STATUTORY STOCK OPTIONS.

7.1   GRANT OF NON-STATUTORY STOCK OPTIONS.

      The Committee may, from time to time, grant Non-statutory Stock Options to
eligible employees and, upon such terms and conditions as the Committee may
determine, grant Non-statutory Stock Options in exchange for and upon surrender
of previously granted Awards under this Plan. Non-statutory Stock Options
granted under this Plan are subject to the following terms and conditions:

            (a) Price. The exercise price per share of Common Stock which shall
      be deliverable upon the exercise of each Non-statutory Stock Option shall
      be determined by the Committee on the date the Option is granted. Such
      exercise price shall not be less than 100% of the Fair Market Value of the
      Company's Common Stock on the Date of Grant. Shares may be purchased only
      upon full payment of the exercise price. Non-statutory Stock Options may
      be exercised pursuant to a "cashless exercise" of an Option in accordance
      with applicable securities laws. Payment of the exercise price may be
      made, in whole or in part, through the surrender of shares of the Common
      Stock of the Company at the Fair Market Value of such shares on the date
      of surrender.

            (b) Terms of Options. The term during which each Non-statutory Stock
      Option may be exercised shall be determined by the Committee, but in no
      event shall a Non-statutory Stock Option be exercisable in whole or in
      part more than 10 years from the Date of Grant. The Committee shall
      determine the date on which each Non-statutory Stock Option shall become
      exercisable and may provide that a Non-statutory Stock Option shall become
      exercisable in installments. The shares comprising each installment may be
      purchased in whole or in part at any time after such installment becomes
      exercisable. The Committee may, in its sole discretion, accelerate the
      time at which any Non-statutory Stock Option may be exercised in whole or
      in


                                     A-4
<PAGE>   40
      part. Notwithstanding the above, in the event of a Change in Control of
      the Company, all Non-statutory Stock Options shall become immediately
      exercisable.

            (c) Termination of Employment. Upon the termination of a
      Participant's employment with the Bank or the Company for any reason other
      than Disability, Retirement, death, Change in Control or Termination for
      Cause, the Participant's Non-statutory Stock Options shall be exercisable
      only as to those shares which were immediately purchasable by the
      Participant at the date of termination and only for a period of three
      months following such termination. In the event of Termination for Cause,
      all rights under the Participant's Non-statutory Stock Options shall
      expire upon the date of such termination. In the event of the death,
      Disability, Change in Control or Retirement of any Participant, all
      Non-statutory Stock Options held by the Participant, whether or not
      exercisable at such time, shall be exercisable by the Participant or such
      Participant's legal representatives or Beneficiaries for one year or such
      longer period as determined by the Committee following the date of the
      Change in Control or the Participant's death, Retirement or cessation of
      employment due to Disability, provided that in no event shall the period
      extend beyond the expiration of the Non-statutory Stock Option term.

8.    INCENTIVE STOCK OPTIONS.

8.1   GRANT OF INCENTIVE STOCK OPTIONS.

      The Committee may, from time to time, grant Incentive Stock Options to
eligible employees. Incentive Stock Options granted pursuant to the Plan shall
be subject to the following terms and conditions:

            (a) Price. The exercise price per share of Common Stock deliverable
      upon the exercise of each Incentive Stock Option shall be not less than
      100% of the Fair Market Value of the Company's Common Stock on the Date of
      Grant. However, if at the Date of Grant a Participant owns stock
      possessing more than 10% of the total combined voting power of all classes
      of stock of the Company or of its parent or subsidiary corporation (or,
      under Section 424(d) of the Code, is deemed to own stock representing more
      than 10% of the total combined voting power of all such classes of stock,
      by reason of the ownership of such classes of stock, directly or
      indirectly, by or for his brothers and sisters (whether by the whole or
      half blood), spouse, ancestors and lineal descendants of such employee, or
      by or for any corporation, partnership, estate or trust of which such
      employee is a shareholder, partner or beneficiary), the exercise price per
      share of Common Stock deliverable upon the exercise of each Incentive
      Stock Option shall not be less than 110% of the Fair Market Value of the
      Company's Common Stock on the Date of Grant. Shares may be purchased only
      upon payment of the full exercise price. Incentive Stock Options may be
      exercised pursuant to a "cashless exercise" of an Option in accordance
      with applicable securities laws. Payment of the exercise price may be
      made, in whole or in part, through the surrender of shares of Common Stock
      of the Company at the Fair Market Value of such shares on the date of
      surrender.

            (b) Amounts of Options. Incentive Stock Options may be granted to
      any eligible employee in such amounts as determined by the Committee. In
      the case of an Option intended to qualify as an Incentive Stock Option,
      the aggregate Fair Market Value (determined as of the time the Option is
      granted) of the Common Stock with respect to which Incentive Stock Options
      granted are exercisable for the first time by the Participant during any
      calendar year (under all plans of the Participant's employer corporation
      and its parent and subsidiary corporations) shall not exceed $100,000. The
      provisions of this Section 8.1(b) shall be construed and applied in
      accordance with Section 422(d) of the Code and the regulations, if any,
      promulgated thereunder. To the extent an Award under this Section 8.1
      exceeds this $100,000 limit, the portion of the Award in excess of such
      limit shall be deemed a Non-statutory Stock Option.


                                     A-5
<PAGE>   41
            (c) Terms of Options. The term during which each Incentive Stock
      Option may be exercised shall be determined by the Committee, but in no
      event shall an Incentive Stock Option be exercisable in whole or in part
      more than 10 years from the Date of Grant. If at the time an Incentive
      Stock Option is granted to an employee, the employee owns stock
      representing more than 10% of the total combined voting power of the
      Company or of its parent or subsidiary corporation (or, under Section
      424(d) of the Code, is deemed to own stock representing more than 10% of
      the total combined voting power of all such classes of stock, by reason of
      the ownership of such classes of stock, directly or indirectly, by or for
      his brothers and sisters (whether by the whole or half blood), spouse,
      ancestors and lineal descendants of such employee, or by or for any
      corporation, partnership, estate or trust of which such employee is a
      shareholder, partner or beneficiary), the Incentive Stock Option granted
      to such employee shall not be exercisable after the expiration of five
      years from the Date of Grant. No Incentive Stock Option granted under this
      Plan is transferable except by will or the laws of descent and
      distribution and is exercisable in his lifetime only by the employee to
      whom it is granted.

            The Committee shall determine the date on which each Incentive Stock
      Option shall become exercisable and may provide that an Incentive Stock
      Option shall become exercisable in installments. The shares comprising
      each installment may be purchased in whole or in part at any time after
      such installment becomes purchasable, provided that the amount able to be
      first exercised in a given year is consistent with the terms of Section
      422 of the Code. The Committee may, in its sole discretion, accelerate the
      time at which any Incentive Stock Option may be exercised in whole or in
      part, provided that it is consistent with the terms of Section 422 of the
      Code. Notwithstanding the above, in the event of a Change in Control of
      the Company, all Incentive Stock Options shall become immediately
      exercisable.

            (d) Termination of Employment. Upon the termination of a
      Participant's employment with the Company or the Bank for any reason other
      than Disability, Retirement, Change in Control, death or Termination for
      Cause, the Participant's Incentive Stock Options shall be exercisable only
      as to those shares which were immediately purchasable by the Participant
      at the date of such termination and only for a period of three months
      following such termination. In the event of Termination for Cause, all
      rights under the Participant's Incentive Stock Options shall expire upon
      such termination. In the event of death or Disability of any employee, all
      Incentive Stock Options held by such Participant, whether or not
      exercisable at such time, shall be exercisable by the Participant or the
      Participant's legal representatives or Beneficiaries for one year
      following the date of the Participant's death or cessation of employment
      due to Disability. Upon termination of the Participant's service with the
      Company due to Retirement or a Change in Control, all Incentive Stock
      Options held by such Participant, whether or not exercisable at such time,
      shall be exercisable for a period of one year following the date of
      Participant's cessation of employment; provided, however, that such Option
      shall not be eligible for treatment as an Incentive Stock Option in the
      event such Option is exercised more than three months following the date
      of the Participant's Retirement. In no event shall the exercise period
      extend beyond the expiration of the Incentive Stock Option term.

            (e) Compliance with Code. The Options granted under this Section 8
      of the Plan are intended to qualify as incentive stock options within the
      meaning of Section 422 of the Code, but the Company makes no warranty as
      to the qualification of any Option as an incentive stock option within the
      meaning of Section 422 of the Code.


                                     A-6
<PAGE>   42
9.    LIMITED RIGHTS.

9.1   GRANT OF LIMITED RIGHTS.

      Simultaneously with the grant of any Option, the Committee may grant a
Limited Right with respect to all or some of the shares covered by such Option.
Limited Rights granted under this Plan are subject to the following terms and
conditions:

            (a) Terms of Rights. In no event shall a Limited Right be
      exercisable in whole or in part before the expiration of six months from
      the Date of Grant of the Limited Right. A Limited Right may be exercised
      only in the event of a Change in Control of the Company.

            The Limited Right may be exercised only when the underlying Option
      is eligible to be exercised, and only when the Fair Market Value of the
      underlying shares on the day of exercise is greater than the exercise
      price of the related Option.

            Upon exercise of a Limited Right, the related Option shall cease to
      be exercisable. Upon exercise or termination of an Option, any related
      Limited Rights shall terminate. The Limited Rights may be for no more than
      100% of the difference between the exercise price and the Fair Market
      Value of the Common Stock subject to the underlying Option. The Limited
      Right is transferable only when the underlying Option is transferable and
      under the same conditions.

            (b) Payment. Upon exercise of a Limited Right, the holder shall
      promptly receive from the Company an amount of cash equal to the
      difference between the Fair Market Value on the Date of Grant of the
      related Option and the Fair Market Value of the underlying shares on the
      date the Limited Right is exercised, multiplied by the number of shares
      with respect to which such Limited Right is being exercised.

            (c) Termination of Employment. Upon the termination of a
      Participant's service for any reason other than Termination for Cause, any
      Limited Rights held by the Participant shall then be exercisable for a
      period of one year following termination. In the event of Termination for
      Cause, all Limited Rights held by the Participant shall expire
      immediately. Upon termination of the Participant's employment for reason
      of death, Retirement or Disability, all Limited Rights held by such
      Participant shall be exercisable by the Participant or the Participant's
      legal representative or Beneficiaries for a period of one year from the
      date of such termination. In no event shall the period extend beyond the
      expiration of the term of the related Option.

10.   SURRENDER OF OPTIONS.

      In the event of a Participant's termination of employment as a result of
death, Disability or Retirement, the Participant (or the Participant's
Beneficiaries, personal representative(s), heir(s), or devisee(s)) may, in a
form acceptable to the Committee make application to surrender all or part of
the Options held by such Participant in exchange for a cash payment from the
Company of an amount equal to the difference between the Fair Market Value of
the Common Stock on the date of termination of employment and the exercise price
per share of the Option on the Date of Grant; provided, however, that in the
event of Retirement, the application must be submitted by the Participant within
a "window period" beginning on the third business day following the date of
release of the Company's quarterly and annual earnings statements and ending on
the twelfth business day following such date. Whether the Committee accepts such
application or determines to make payment, in whole or part, is within its
absolute and sole discretion, it being expressly understood that the Committee
is under no obligation to any Participant whatsoever to make such payments. In
the event that the Committee accepts such application and the Company determines
to make payment, such payment shall be in lieu of the exercise of the underlying
Option and such Option shall cease to be exercisable.


                                     A-7
<PAGE>   43
11.   MAXIMUM LIMITATION ON OPTIONS

      Notwithstanding anything contained herein to the contrary, the maximum
number of shares of Common Stock for which Options may be granted to any
Participant during any Plan Year shall not exceed 100,000 shares of Common
Stock.

12.   RIGHTS OF A STOCKHOLDER:  NONTRANSFERABILITY.

      No Participant shall have any rights as a stockholder with respect to any
shares covered by a Non-statutory and/or Incentive Stock Option until the date
of issuance of a stock certificate for such shares. Nothing in this Plan or in
any Award granted confers on any person any right to continue in the employment
of the Company or its Affiliates or to continue to perform services for the
Company or its Affiliates or interferes in any way with the right of the Company
or its Affiliates to terminate a Participant's services as an officer or other
employee at any time.

      No Award under the Plan shall be transferable by the optionee other than
by will or the laws of descent and distribution and may only be exercised during
his lifetime by the optionee, or by a guardian or legal representative.

13.   AGREEMENT WITH GRANTEES.

      Each Award of Options, and/or Limited Rights will be evidenced by a
written agreement, executed by the Participant and the Company or its Affiliates
which describes the conditions for receiving the Awards including the date of
Award, the exercise price, if any, applicable periods, and any other terms and
conditions as may be required by the Board of Directors or applicable securities
law.

14.   DESIGNATION OF BENEFICIARY.

      A Participant may, with the consent of the Committee, designate a person
or persons to receive, in the event of death, any Option or Limited Rights Award
to which the Participant would then be entitled. Such designation will be made
upon forms supplied by and delivered to the Company and may be revoked in
writing. If a Participant fails effectively to designate a Beneficiary, then the
Participant's estate will be deemed to be the Beneficiary.

15.   DILUTION AND OTHER ADJUSTMENTS.

      In the event of any change in the outstanding shares of Common Stock of
the Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, the Committee will
make such adjustments to previously granted Awards, to prevent dilution or
enlargement of the rights of the Participant, including any or all of the
following:

            (a) adjustments in the aggregate number or kind of shares of Common
      Stock which may be Awarded under the Plan;

            (b) adjustments in the aggregate number or kind of shares of Common
      Stock covered by Awards already made under the Plan; or

            (c) adjustments in the exercise price of outstanding Incentive
      and/or Non-statutory Stock Options, or any Limited Rights attached to such
      Options.

            No such adjustments may, however, materially change the value of
      benefits available to a Participant under a previously granted Award.


                                     A-8
<PAGE>   44
16.   WITHHOLDING.

      There may be deducted from each distribution of cash and/or Common Stock
under the Plan the amount of tax required by any governmental authority to be
withheld.

17.   AMENDMENT OF THE PLAN.

      The Board of Directors may amend, revise or terminate the Plan in whole or
in part at any time; provided, however, that, to the extent required to comply
with Section 162(m) of the Code, no such amendment or revision shall be
effective if it amends a material term of the Plan unless approved by the
holders of a majority of the voting shares of the Company. No such termination,
modification or amendment may affect the rights of a Participant under an
outstanding Award.

18.   EFFECTIVE DATE OF PLAN.

      The Plan became effective upon the consummation of the Conversion of the
Bank on June 29, 1993 (the "Effective Date") and was approved by the
stockholders of the Company on December 13, 1993. The Plan was amended and
restated as of January 23, 1997 as provided herein, and as so amended and
restated, is effective as of January 23, 1997. Following such date, the Plan, as
amended and restated, will be presented to the stockholders of the Company at
its next annual meeting of stockholders for approval for purposes of: (i)
satisfying one of the requirements of Section 422 of the Code governing the tax
treatment for Incentive Stock Options; (ii) satisfying one of the requirements
of Section 162(m) of the Code governing the tax deductibility of certain amounts
upon the exercise of certain Non-statutory Stock Options and Limited Rights; and
(iii) maintaining listing on the Nasdaq Stock Market. The failure to obtain
stockholder approval of the Plan, as amended and restated, will not affect the
validity of the Plan prior to its amendment and restatement, or any Options
granted thereunder, and in such event, the Plan as in effect prior to such
amendment and restatement, and any Options granted thereunder, shall continue in
full force and effect.

19.   TERMINATION OF THE PLAN.

      The right to grant Awards under the Plan will terminate upon the earlier
of 10 years after the Effective Date of the Plan or the issuance of Common Stock
or the exercise of Options or related Limited Rights equivalent to the maximum
number of shares reserved under the Plan as set forth in Section 5. The Board of
Directors has the right to suspend or terminate the Plan at any time, provided
that no such action will, without the consent of a Participant, adversely affect
such Participant's rights under a previously granted Award.

20.   APPLICABLE LAW.

      The Plan will be administered in accordance with the laws of the State of
Delaware.

21.   HEADINGS.

      The headings of sections are included solely for convenience of reference.
If there is any conflict between such headings and the text of the Plan, the
text shall control.


                                     A-9
<PAGE>   45
                                                                    APPENDIX B





                             ROOSEVELT SAVINGS BANK

                          PERFORMANCE COMPENSATION PLAN









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










                            ADOPTED JANUARY 23, 1997
<PAGE>   46
                             ROOSEVELT SAVINGS BANK

                          PERFORMANCE COMPENSATION PLAN


1.    PURPOSE. The purpose of the Roosevelt Savings Bank Performance
Compensation Plan (the "Plan") is to promote the growth and profitability of the
Bank, to provide certain key officers of the Bank and its Affiliates with an
incentive to achieve business objectives, to attract and retain individuals of
outstanding competence and to provide a means of compensating such individuals
for their contributions to the Bank in a manner which permits such compensation
to be deductible by the Bank for federal income tax purposes.

2.    DEFINITIONS.

      The following definitions shall apply for the purposes of this Plan,
unless a different meaning is plainly indicated by the context:

      (a) "Affiliate" means (i) a member of a controlled group of corporations
of which the Bank is a member or (ii) an unincorporated trade or business which
is under common control with the Bank as determined in accordance with Section
414(c) of the Code and the regulations issued thereunder. For purposes hereof, a
"controlled group of corporations" shall mean a controlled group of corporations
as defined in Section 1563(a) of the Code determined without regard to Sections
1563(a)(4) and (e)(3)(C).

      (b) "Bank" means Roosevelt Savings Bank and any successor thereto.

      (c) "Board" means the board of directors of the Company.

      (d) "Change in Control" means an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); (ii) results
in a Change in Control of the Bank or the Company within the meaning of the
Change in Bank Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation (the "FDIC") at 12 C.F.R. Section 303.4(a)
with respect to the Bank and the Board of Governors of the Federal Reserve
System ("FRB") at 12 C.F.R. Section 225.41(b) with respect to the Company, as in
effect on the date hereof, but excluding any such Change in Control resulting
from the purchase of securities by the Company's or the Bank's tax-qualified
employee benefit plans and trusts; (iii) results in a transaction requiring
prior FRB approval under the Bank Holding Company Act of 1956, as amended, and
the regulations promulgated thereunder by the FRB at 12 C.F.R. Section 225.11,
as in effect on the date hereof, except for the Company's acquisition of the
Bank and any transaction resulting from the purchase of securities by the
Company's or the Bank's tax-qualified employee benefit plans and trusts; or (iv)
without limitation, such a Change in Control shall be deemed to have occurred at
such time as (a) any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the Bank
or the Company representing 20% or more of the Bank's or the Company's
outstanding securities except for any securities of the Bank purchased by the
Company in connection with the initial conversion of the Bank from mutual to
stock form (the "Conversion") and any securities purchased by the Company's or
the Bank's tax-qualified employee benefit plans and trusts; or (b) individuals
who constitute the Board on the date hereof (the "Incumbent Board") cease for
any reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election was approved by
a vote of at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's stockholders was
approved by the same Nominating Committee serving under an Incumbent Board,
shall be, for purposes of this clause (b), considered as though he were a member
of the Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or threatened
election


                                     B-1
<PAGE>   47
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board; or (c) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting entity; or
(d) a proxy statement shall be distributed soliciting proxies from stockholders
of the Company, by someone other than the current management of the Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company or Bank or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Bank or the
Company; or (e) a tender offer is made for 20% or more of the voting securities
of the Bank or Company then outstanding.

      (e) "Code" means the Internal Revenue Code of 1986, as amended.

      (f) "Committee" means the Committee described in Section 4.

      (g) "Company" means T R Financial Corp. and any successor thereto.

      (h) "Disability" means a condition of total incapacity, mental or
physical, preventing further performance of duty with the Company or the Bank
which the Committee shall have determined, on the basis of competent medical
evidence, is likely to be permanent.

      (i) "Disinterested Board Member" means a member of the Board who (i) is
not a current employee of the Company or a subsidiary thereof, (ii) is not a
former employee of the Company who receives compensation for prior services
(other than benefits under a tax-qualified retirement plan) during the taxable
year, (iii) is not currently and has not been an officer of the Company or a
subsidiary thereof, (iv) does not receive consideration or remuneration from the
Company or any subsidiary thereof, either directly or indirectly, in any
capacity other than as a director and (v) does not possess an interest in any
other transaction, and is not engaged in a business relationship, for which
disclosure would be required pursuant to Item 404(a) or (b) of the proxy
solicitation rules of the Securities and Exchange Commission. A Disinterested
Board Member shall be an "outside director" as such term is defined under
Section 162(m) of the Code.

      (j) "Effective Date" means January 1, 1997, subject to the approval of
this Plan by the stockholders of the Company.

      (k) "Eligible Employee" means an employee of the Bank or the Company whom
the Committee selects to be eligible to receive a Performance Award pursuant to
the Plan.

      (l) "Employer" means the Company, the Bank, any Affiliates, and, with the
prior approval of the Board and subject to such terms and conditions as may be
imposed by the Board, any other corporation or other business organization or
institution.

      (m) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

      (n) "Performance Award" means the amount awarded under Section 6.

      (o) "Performance Goal" means the preestablished, objective performance
goal or goals described in Section 5(a).

      (p) "Plan" means the Roosevelt Savings Bank Performance Compensation Plan,
as amended from time to time, and may be referred to as the "Roosevelt Savings
Bank Performance Compensation Plan."


                                     B-2
<PAGE>   48
      (q) "Plan Year" means the calendar year.

      (r) "Share" means a share of common stock, par value $.01 per share, of T
R Financial Corp.

3.    ELIGIBILITY.

      An individual who is a key employee of the Employer or any of its
subsidiaries shall be eligible to be considered for a Performance Award under
this Plan. No later than 90 days (or such other period prescribed under Section
162(m) of the Code and the regulations thereunder) after the beginning of each
Plan Year, the Committee shall determine which individuals shall be Eligible
Employees for such Plan Year. An individual who is an Eligible Employee in one
Plan Year may be excluded from participation in a subsequent year at the
discretion of the Committee.

4.    ADMINISTRATION.

      (a) COMMITTEE. The Plan shall be administered by the members of the
Compensation Committee of the Bank, which shall consist of two or more
Disinterested Board Members. If the Committee consists of fewer than two
Disinterested Board Members, the Board shall appoint to the Committee such
additional Disinterested Board Members as shall be necessary to provide for a
Committee consisting of at least two Disinterested Board Members.

      (b) COMMITTEE ACTION. The Committee shall hold such meetings, and may make
such administrative rules and regulations, as it may deem proper. A majority of
the members of the Committee shall constitute a quorum, and the action of a
majority of the members of the Committee present at a meeting at which a quorum
is present, as well as actions taken pursuant to the unanimous written consent
of all of the members of the Committee without holding a meeting, shall be
deemed to be actions of the Committee. All actions of the Committee shall be
final and conclusive and shall be binding upon the Employer and all other
interested parties. Any person dealing with the Committee shall be fully
protected in relying upon any written notice, instruction, direction or other
communication signed by two members of the Committee or by a representative of
the Committee authorized to sign the same in its behalf.

      (c) COMMITTEE RESPONSIBILITIES. Subject to the terms and conditions of the
Plan and such limitations as may be imposed from time to time by the Board, the
Committee shall be responsible for the overall management and administration of
the Plan and shall have such authority as shall be necessary or appropriate in
order to carry out its responsibilities, including, without limitation, the
authority:

            (i) to interpret and construe the Plan, and to determine all
      questions that may arise under the Plan as to eligibility for
      participation in the Plan;

            (ii) to adopt rules and regulations and to prescribe forms for the
      operation and administration of the Plan; and

            (iii) to take any other action not inconsistent with the provisions
      of the Plan that it may deem necessary or appropriate.

5.    PERFORMANCE GOALS.

      (a) PERFORMANCE GOALS. The Committee shall establish, during the first 90
days of each Plan Year (or such other period specified in Section 162(m) of the
Code and any regulations thereunder), a Performance Goal or Performance Goals
for each Eligible Employee. The Performance Goals established by the Committee
for the 1997 Plan Year shall be based on the consolidated pre-tax income of the
Company for 1997, including any adjustments to such consolidated pre-tax income
as the


                                     B-3
<PAGE>   49
Committee deems necessary or appropriate; provided, however, that any such
adjustments thereto shall comply with the requirements of Section 162(m) of the
Code and any regulations thereunder. In Plan Years after 1997, the Performance
Goals established by the Committee may be based upon one or more of (i) the
consolidated pre-tax income of the Company for such Plan Year, (ii) the return
on equity or average equity of the Company for a specified period determined by
the Committee and (iii) any adjustments to such factors as the Committee deems
necessary or appropriate; provided, however, that such factors and any
adjustments thereto shall comply with the requirements of Section 162(m) of the
Code and any regulations thereunder.

      (b) ADJUSTMENT OF PERFORMANCE GOALS. Once established, the Performance
Goals for a particular Plan Year shall not be changed or adjusted during such
Plan Year, unless the Committee determines that such Performance Goal shall be
adjusted to decrease or eliminate the amount of an Eligible Employee's
Performance Award due to external changes or other unanticipated business
conditions; provided, however, that any such change or adjustment shall comply
with the requirements of Section 162(m) of the Code and any regulations
thereunder.

6.    PERFORMANCE AWARDS.

      An Eligible Employee shall be entitled to receive a Performance Award
pursuant to this Plan to the extent that the preestablished Performance Goal
determined by the Committee, or the applicable percentage thereof, is satisfied.
No Performance Award to an Eligible Employee may exceed the lesser of (a) 175%
of such Eligible Employee's base salary for such Plan Year or (b) $1,750,000.

7.    PAYMENT OF PERFORMANCE AWARDS.

      (a) PAYMENT OF AWARDS. As soon as practicable following the last day of
each Plan Year, provided that the Performance Goal established for an Eligible
Employee has been met, the Committee shall certify in writing that such
Performance Goal has been met and the amount of the Performance Award to be
granted to such Eligible Employee under the Plan. Such Performance Award shall
be paid in the form and manner determined by the Committee, as soon as
practicable after the Committee determines the amount of such Performance Award.

      (b) TERMINATION OF SERVICE. An Eligible Employee who terminates employment
with the Employer during any Plan Year or following the end of any Plan Year,
but prior to the payment of a Performance Award earned for such Plan Year, shall
forfeit any right to receive such Performance Award; provided, however, that if
such termination occurs after the end of the Plan Year to which the Performance
Award relates and such termination is due to death, Disability, Retirement or a
Change in Control, then, in such case and only in such case, such Performance
Award shall not be forfeited and shall be paid as if no termination of service
had occurred. Each such Performance Award shall be paid in the form and manner
determined by the Committee, as soon as practicable after the Committee
determines the amount of such Performance Award. In the event of a termination
of employment with the Employer due to a Change in Control, such Performance
Award shall be paid on the date of the Change in Control.

8.    AMENDMENT AND TERMINATION.

      (a) TERMINATION. The Board may suspend or terminate the Plan in whole or
in part at any time by giving written notice of such suspension or termination
to the Committee.

      (b) AMENDMENT. The Board may amend or revise the Plan in whole or in part
at any time; provided, however, that, to the extent required to comply with
Section 162(m) of the Code and any regulations thereunder, no such amendment or
revision shall be effective if it amends a material term of the Plan unless
approved by the affirmative vote of a majority of the votes cast by the
stockholders of the Company at a meeting duly called and held for such purpose.


                                     B-4
<PAGE>   50
9.    MISCELLANEOUS.

      (a) STATUS AS AN EMPLOYEE BENEFIT PLAN. This Plan is not intended to
satisfy the requirements for qualification under section 401(a) of the Code or
to satisfy the definitional requirements for an "employee benefit plan" under
section 3(3) of ERISA. It is intended to be a non-qualified incentive
compensation program that is exempt from the regulatory requirements of ERISA.
The Plan shall be construed and administered so as to effectuate this intent.

      (b) NO RIGHT TO CONTINUED EMPLOYMENT. Neither the establishment of the
Plan nor any provisions of the Plan nor any action of the Board or the Committee
with respect to the Plan shall be held or construed to confer upon any Eligible
Employee any right to a continuation of his or her position as an employee of
the Employer. The Employer reserves the right to dismiss any Eligible Employee
or otherwise deal with any Eligible Employee to the same extent as though the
Plan had not been adopted.

      (c) CONSTRUCTION OF LANGUAGE. Whenever appropriate in the Plan, words used
in the singular may be read in the plural, words used in the plural may be read
in the singular, and words importing the masculine gender may be read as
referring equally to the feminine or the neuter. Any reference to a section
number shall refer to a section of this Plan unless otherwise indicated.

      (d) GOVERNING LAW. The Plan shall be construed, administered and enforced
according to the laws of the State of New York without giving effect to the
conflict of laws principles thereof, except to the extent that such laws are
preempted by federal law.

      (e) HEADINGS. The headings of sections are included solely for convenience
of reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.

      (f) NON-ALIENATION OF BENEFITS. The right to receive a benefit under the
Plan shall not be subject in any manner to anticipation, alienation or
assignment, nor shall such right be liable for or subject to debts, contracts,
liabilities, engagements or torts.

      (g) TAXES. The Employer shall have the right to deduct from all amounts
paid by the Employer as a Performance Award under the Plan any taxes required by
law to be withheld with respect to such award.

      (h) REQUIRED APPROVALS. The Plan shall not be effective or implemented
unless approved by the affirmative vote of a majority of the votes cast by the
stockholders of the Company at a meeting duly called and held for such purpose.


                                     B-5