<Page>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
                                (AMENDMENT NO. 1)

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

                   For the fiscal year ended December 31, 2001
                                       OR

     / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

            For the transition period from __________ to ___________
                          Commission File No.: 1-13503

                           Staten Island Bancorp, Inc.
            ---------------------------------------------------------
             (Exact name of registrant as specified in its charter)

Delaware                                                        13-3958850
--------------------------------------------------------------------------------
(State or other jurisdiction                                (I.R.S. Employer of
incorporation or organization)                            Identification Number)

1535 Richmond Avenue
Staten Island, New York                                            10314
--------------------------------------------------------------------------------
     (Address)                                                  (Zip Code)

       Registrant's telephone number, including area code: (718) 447-8880

   Securities registered pursuant to Section 12(g) of the Act: Not Applicable
           Securities registered pursuant to Section 12(b) of the Act:
                     Common Stock (par value $.01 per share)
--------------------------------------------------------------------------------
                                (Title of Class)

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

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

<Page>

Based upon the $19.22 closing price of the Registrant's common stock as of March
26, 2002, the aggregate market value of the 53,909,765 shares of the
Registrant's common stock deemed to be held by non-affiliates of the Registrant
was $1.0 billion. Although directors and executive officers of the Registrant
and certain of its employee benefit plans were assumed to be "affiliates" of the
Registrant for purposes of this calculation, the classification is not to be
interpreted as an admission of such status.

Number of shares of Common Stock outstanding as of March 26, 2002: 61,874,940

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the 2002 Annual Meeting of
Stockholders are incorporated into Part III, Items 10 through 13 of this Form
10-K.

<Page>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                         PAGE NO.
                                                                         --------
<S>                                                                       <C>
EXPLANATORY NOTE                                                            1

                                     PART I

ITEM 1.  BUSINESS
    Business                                                                5
    Market Area and Competition                                             7
    Lending Activities                                                      8
    Mortgage Banking Activities                                            18
    Asset Quality                                                          21
    Securities Activities                                                  26
    Sources of Funds                                                       29
    Trust Activities                                                       33
    Subsidiaries                                                           33
    Employees                                                              34
    Regulation-General                                                     35
    Regulation of Savings and Loan Holding Companies                       35
    Regulation of Federal Savings Banks                                    37
    Taxation-Federal Taxation                                              43
    State and Local Taxation                                               45

                                     PART II

ITEM 6.  SELECTED FINANCIAL DATA                                           46

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS                               47

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                       65

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE                              110

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
         AND REPORTS ON FORM 8-K                                          110
</Table>

                                        i
<Page>

EXPLANATORY NOTE

     This Amendment No. 1 on Form 10-K/A amends Items 1, 6, 7, 8, 9 and 15
(previously Item 14) of the Annual Report on Form 10-K of Staten Island Bancorp,
Inc. (the "Company") for the fiscal year ended December 31, 2001, which was
originally filed on April 1, 2002 (the "Original Filing"). As discussed below,
the Company's consolidated financial statements at and for the year ended
December 31, 2001 included herein have been restated. Except for financial
statement information and related disclosures that are specifically related to
the restatement, all information contained in this report is stated as of the
date of the Original Filing. This amendment does not otherwise update
information in the Original Filing to reflect facts or events occurring
subsequent to the date of the Original Filing.

     RESTATEMENT. The Company previously announced that it would restate its
financial results for the year ended December 31, 2001 due to certain
adjustments which are summarized below.

     During the third quarter of 2002, management determined that certain stock
options issued under the Company's Amended and Restated 1998 Stock Option Plan
(the "Stock Option Plan") were exercised under a net cash settlement method,
whereby the Company, in effect, repurchased the option shares under the
Company's on-going stock repurchase programs and remitted the excess of the fair
market value of the shares over the exercise price to the employee. Under
existing accounting standards, the existence of these transactions conducted in
this manner required that compensation expense be recorded from the inception
date of the plan, on all exercised or vested and unexercised, options equal to
the difference between the option exercise price and the fair value of the stock
at the exercise date (or at the financial reporting date, whichever is earlier).
Increases or decreases in the value of the stock options are subsequently
reflected as additional charges or credits to compensation expense in the
respective financial reporting period during the time in which this exercise
method was allowed. Primarily as a result of variable plan accounting on the
Stock Option Plan, other expenses for the year ended December 31, 2001,
increased by $28.6 million (pre-tax) from the previously reported amount.
Effective September 24, 2002, the Company discontinued the practice which led to
this accounting treatment; therefore, for quarterly reporting periods subsequent
to September 30, 2002, no additional charges or credits to compensation expense
will occur as a result of this plan activity.

     Management also determined that certain securities (primarily
collateralized bond obligations "CBOs") with a total carrying value of $24.5
million were other than temporarily impaired at December 31, 2001, and,
accordingly, impairment charges of $14.5 million (pre-tax) are reflected in the
Company's restated financial statements at and for the year ended December 31,
2001. This adjustment does not affect total stockholders' equity at December 31,
2001, as this charge was previously reflected as unrealized depreciation at
December 31, 2001, which is shown as a component of stockholders' equity. The
Company previously took impairment charges of $500,000 (pre-tax) and $7.4
million (pre-tax) for the three months ended March 31, 2002 and June 30, 2002,
respectively, against these securities; these charges have been reversed in the
respective quarters, and quarterly pre-tax income increased by these same
amounts. During the quarter ended September 30, 2002, the Company sold all of
its remaining $14.3 million of

                                        1
<Page>

CBOs as part of a securities portfolio restructuring.

     The Company had not previously reflected dividends paid on unallocated
shares in its Employee Stock Ownership Plan ("ESOP") as compensation expense. As
a result, the Company has restated its financial statements to reflect
additional compensation expense of $1.4 million (pre-tax) for the year ended
December 31, 2001. The Company will record future dividends on unallocated
shares as compensation expense.

     The Company previously recognized revenues and expenses on loans when loans
were sold by its subsidiary, SIB Mortgage Corp. (the "Mortgage Company" or
"SIBMC"), subject to take out commitments. From the time a loan is shipped to
the time payment is received by the Mortgage Company, a period of five to 30
days typically elapses. The Company has now determined that gains on loans sold
should be recognized at the time payment is received rather than at the time
loans are shipped. Due to this timing difference, the Company's restated
financial results reflect a reduction of gain on loan sales of $2.8 million
(pre-tax) for the year ended December 31, 2001 compared to the previously
reported amount.

     Additionally, the Company has revised certain estimates related to certain
deferred loan origination costs and fees and its restated financial statements
reflect an increase in net deferred costs of $1.1 million (pre-tax) compared to
the previously reported amount for the year ended December 31, 2001. Changes in
net deferred costs are reflected in the income statement as increases or
decreases to gain on sale of mortgage loans.

     The Company's restated financial statements also reflect previously
unrecorded market appreciation in unallocated forward sales commitments by the
Mortgage Company of $1.0 million (pre-tax) for the year ended December 31, 2001.

     The following is a summary of the effect of restatement on the Company's
consolidated financial statements at or for the periods reflected.

<Table>
<Caption>
                                                            Selected Balance Sheet Data
                                                               At December 31, 2001
                                                        ----------------------------------
                                                         As Previously            As
                                                           Reported            Restated
                                                        ----------------------------------
                                                                  000's omitted
<S>                                                       <C>                 <C>
Loans held for sale                                       $ 1,187,373         $ 1,185,593
Other assets                                                  189,558             202,945
Total assets                                                5,993,446           6,005,053
Additional paid-in capital                                    543,123             569,959
Retained earnings                                             340,270             317,208
Accumulated other comprehensive income, net of tax              1,917               9,750
Total stockholders' equity                                    552,196             563,803
</Table>

                                        2
<Page>

<Table>
<Caption>
                                                      Summary Income Statement Data
                                                  For the Year Ended December 31, 2001
                                               -------------------------------------------
                                                   As Previously               As
                                                      Reported              Restated
                                               ----------------------  -------------------
                                                  000's omitted, except per share data
<S>                                                 <C>                   <C>
Loan fees and gains                                 $ 109,249             $  108,489
Securities transactions                                  (107)               (14,613)
Total other expense                                   168,570                197,167
Income before provision for income taxes              113,562                 69,699
Provision for income taxes                             43,483                 23,966
Net income                                             70,079                 45,733
Earnings per share:
  Basic                                                  1.16                   0.76
  Diluted                                                1.15                   0.75
</Table>

<Table>
<Caption>
                                                                          Selected Cash Flow Data
                                                                    For the Year Ended December 31, 2001
                                                                  ----------------------------------------
                                                                     As Previously               As
                                                                       Reported              Restated
                                                                  -------------------   ------------------
                                                                                000's omitted
<S>                                                                     <C>                   <C>
Net Income                                                              $    70,079           $    45,733

Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
     Realized loss on sale of available for sale securities                     107                14,613
     Expense charge relating to allocation and earned portions of
       employee benefit plans                                                10,066                39,973
     (Increase) in other assets                                             (35,503)              (41,770)
     (Increase) decrease in deferred income taxes                               235               (14,080)
       Net cash provided by (used in) operating activities                   70,798(1)           (984,680)

Cash flows from investing activities:
     Net cash provided by (used in) investing activities                   (670,995)(1)           388,683

Cash flows from financing activities:
     Cash dividends paid                                                    (21,179)              (19,418)
     Net cash provided by financing activities                              650,940(1)            646,740

Net increase in cash and cash equivalents                               $    50,743(2)        $    50,743
</Table>

----------
(1)     The previously reported amounts for net cash provided by (used in)
        operating activities, investing activities and financing activities have
        been adjusted for the effect of the restatement.

(2)     As indicated, there has been no change in the net increase in cash and
        cash equivalents as a result of the restatement or due to
        reclassifications.

     In October 2002, shortly after the Company announced its intention to
restate its financial statements, it was informed by staff of the U.S.
Securities and Exchange Commission ("SEC") that the SEC is conducting an
informal inquiry with respect to certain of the matters reflected in the
announcement. The Company is cooperating fully with the inquiry.

                                        3
<Page>

     Additional detail regarding the restatement is included in Note 17 of the
"Notes to Consolidated Financial Statements" included in Item 8 of this Annual
Report on Form 10-K/A.

     RISKS RELATING TO ARTHUR ANDERSEN LLP. Arthur Andersen LLP previously
audited the Company's financial statements at December 31, 2001 and for the
three years then ended. As previously indicated, the Company has restated its
financial statements at and for the year ended December 31, 2001 and has revised
the related Notes to Financial Statements as appropriate. As discussed in Item 9
of this Form 10-K/A, the Company changed independent accountants on June 10,
2002. The Company's financial statements at and for the year ended December 31,
2001, as restated, have been audited by PricewaterhouseCoopers LLP whose report
thereon is included in Item 8 of this Annual Report on Form 10-K/A. Arthur
Andersen LLP has not reissued its previous report on the Company's financial
statements, which previous report is included in Item 8 hereof, nor has it
furnished an updated consent with respect to the incorporation by reference of
such financial statements into the Company's registration statements on Form
S-8. Arthur Andersen LLP has not participated in the preparation or review of
this Annual Report on Form 10-K/A. On June 15, 2002, Arthur Andersen LLP was
convicted in Federal court of obstruction of justice. Arthur Andersen LLP has
ceased practice before the Securities and Exchange Commission. You may have no
effective remedy against Arthur Andersen LLP in connection with any material
misstatement or omission in the Company's financial statements at and for the
years ended December 31, 2000 or 1999 included herein or related disclosure,
particularly in the event that Arthur Andersen LLP ceases to exist or becomes
insolvent as a result of the conviction or other proceedings against Arthur
Andersen LLP.

     IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT ON FORM 10-K/A
INCLUDES CERTAIN "FORWARD-LOOKING STATEMENTS," AS DEFINED IN THE SECURITIES ACT
OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934, BASED ON CURRENT MANAGEMENT
EXPECTATIONS. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
MANAGEMENT EXPECTATIONS. SUCH FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS
REGARDING THE COMPANY'S INTENTIONS, BELIEFS OR CURRENT EXPECTATIONS AS WELL AS
THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. STOCKHOLDERS AND POTENTIAL
STOCKHOLDERS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE FUTURE RESULTS TO VARY FROM
CURRENT MANAGEMENT EXPECTATIONS INCLUDE, BUT ARE NOT LIMITED TO, GENERAL
ECONOMIC CONDITIONS, LEGISLATIVE AND REGULATORY CHANGES, MONETARY AND FISCAL
POLICIES OF THE FEDERAL GOVERNMENT, CHANGES IN TAX POLICIES, RATES AND
REGULATIONS OF FEDERAL, STATE AND LOCAL TAX AUTHORITIES, CHANGES IN INTEREST
RATES, DEPOSIT FLOWS, COST OF FUNDS, DEMAND FOR LOAN PRODUCTS, DEMAND FOR
FINANCIAL SERVICES, COMPETITION, CHANGES IN THE QUALITY OR COMPOSITION OF THE
COMPANY'S LOAN AND INVESTMENT PORTFOLIOS, CHANGES IN ACCOUNTING PRINCIPLES,
POLICIES OR GUIDELINES AND OTHER ECONOMIC, COMPETITIVE, GOVERNMENTAL AND
TECHNOLOGICAL FACTORS AFFECTING THE COMPANY'S OPERATIONS, MARKETS, PRODUCTS,
SERVICES AND FEES. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF
UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.

                                        4
<Page>

PART I
ITEM 1.  BUSINESS

     Staten Island Bancorp, Inc. is a Delaware corporation organized in July
1997 by SI Bank & Trust (the "Bank" or "SIBT"), formerly Staten Island Savings
Bank, for the purpose of becoming a unitary holding company of the Bank. The
Bank's conversion from the mutual to stock form and the concurrent offer and
sale of the Company's common stock was consummated on December 22, 1997. The
only significant assets of the Company are the capital stock of the Bank, the
Company's loan to the ESOP and investment securities.

     The business and management of the Company consists primarily of the
business and management of the Bank. The Company neither owns nor leases any
property, but instead uses the premises and equipment of the Bank. At the
present time, the Company does not intend to employ any persons other than
officers of the Bank and the Company utilizes the support staff of the Bank from
time to time. Additional employees will be hired as appropriate to the extent
the Company expands or changes its business in the future.

     The Company manages its operations to focus on two strategic goals:
fulfilling its role as a banking institution for both individuals and businesses
and as national provider of single-family mortgage loan products. Accordingly,
the Company is managed through two segments: Community Banking and Mortgage
Banking.

     The Company's executive office is located at the executive office of the
Bank at 1535 Richmond Avenue, Staten Island, New York 10314, and its telephone
number is (718) 447-8880.

     SI BANK & TRUST. The Bank was originally founded as a New York State
chartered savings bank in 1864. The Bank maintains a network of 17 full-service
branch offices located in Staten Island, New York, two branch offices located in
Brooklyn, New York, three limited service branch offices in Staten Island and 13
full service branch offices in Ocean, Monmouth, Union and Middlesex counties of
New Jersey. During the second quarter of 2002, the Bank opened an additional
full service branch office in each of Middlesex and Ocean counties of New
Jersey. The Bank also maintains a lending center and Trust Department on Staten
Island along with a commercial lending office in Brooklyn.

     The Bank has served the communities and residents of Staten Island for over
136 years and, more recently, the borough of Brooklyn and certain counties in
the State of New Jersey. As of June 30, 2001 (the latest available data), the
Bank had the largest market share of any depository institution on Staten Island
with over 28.0% of the total deposits. Historically, the Bank also has been
among the leaders in terms of the number and amount of residential mortgage loan
originations in Staten Island. SIBT's operating strategy emphasizes customer
service and convenience and, in a large part, the Bank attributes its commitment
to maintaining customer satisfaction for its market share position. The Bank
attempts to differentiate itself from its competitors by providing the type of
personalized customer service not generally available from larger banks, while
offering a greater variety of products and services than is typically available
from smaller local depository institutions. The Bank has an experienced
management team directing its operations. The Bank's Chairman and Chief
Executive Officer and President

                                        5
<Page>

and Chief Operating Officer have 36 years and 32 years, respectively, of service
with the Bank while the other executive officers of the Bank have an average of
14 years of service with SIBT.

     On September 5, 2000 the Bank changed its name to SI Bank & Trust to
reflect the expansion into new product lines and new geographic markets which
has taken place over the past five years. In 1995, the Bank acquired a $315.0
million commercial bank and became the leading provider of both consumer,
commercial and small business services in its primary market area of Staten
Island. At the same time, the Bank acquired a branch in Brooklyn and a Trust and
Investment Department. Since that acquisition, the Bank has achieved significant
growth in its commercial checking and loan business and remains the dominant
provider of such services on Staten Island. Geographic expansion into the State
of New Jersey occurred in 2000 along with a new branch in Brooklyn. Over the
past five years, the Bank has transformed itself into a full service community
bank and its new name, reflects its geographic and product diversity.

     The Bank continues to facilitate its growth and geographic expansion
through acquisitions and de-novo branching. On January 14, 2000, the Company
acquired First State Bancorp, the holding company for First State Bank, Howell,
New Jersey. The branch system of First State Bank, which was merged with and
into SI Bank & Trust, consisted of four branches in Ocean County and two in
Monmouth County, New Jersey. In December 2000, the Bank opened a new branch in
Jackson, New Jersey. Four new branches were opened in 2002 in New Jersey. At the
time of its acquisition, First State Bancorp had $374.0 million in assets and
$319.0 million in deposits.

     In August 2000, the Bank opened a new branch in Brooklyn, New York. During
2001, the deposits at our two Brooklyn locations grew by 50% and now exceed
$147.0 million in the aggregate.

     On December 8, 2000, the Company purchased four additional branches in New
Jersey. Three of these branches are located in Union County and one is in
Middlesex County, New Jersey. The deposits acquired in this transaction were
$41.0 million. The Bank's deposits in the State of New Jersey grew by 45% in the
year 2001 and now exceed $580.0 million.

     The Bank is subject to examination and comprehensive regulation by the
Office of Thrift Supervision ("OTS"), which is the Bank's chartering authority
and primary federal regulator. The Bank is also regulated by the Federal Deposit
Insurance Corporation ("FDIC"), which is the administrator of the Bank Insurance
Fund ("BIF"). In addition, the Bank is subject to certain reserve requirements
established by the Board of Governors of the Federal Reserve System ("FRB") and
is a member of the Federal Home Loan Bank ("FHLB") of New York, which is one of
the 12 regional banks comprising the FHLB System.

     SI Bank & Trust's executive office is located at 1535 Richmond Avenue,
Staten Island, New York 10304, and its telephone number is (718) 447-8880.

                                        6
<Page>

     SIB MORTGAGE CORP. SIB Mortgage Corp., a wholly owned subsidiary of the
Bank, originates residential mortgage loans in 42 states. SIB Mortgage Corp. was
incorporated in 1998 in the State of New Jersey to acquire the residential
lending operations and substantially all of the assets of Ivy Mortgage Corp.
enabling the Bank to enter the mortgage banking business and become a national
originator of single family residential loans. The Mortgage Company originates
loans and sells them into the secondary market generating fee income for the
Bank. The Bank also retains for its portfolio certain higher yielding loans
originated by the Mortgage Company. The nation-wide mortgage banking operation
has reduced the Bank's traditional dependence on the economy of Staten Island
and, to a larger extent, New York City.

     In 1999, the Bank formed American Construction Lending Services, Inc.
("ACLS") which operated as a wholly owned subsidiary, headquartered in
Wallingford, Connecticut, until March 2001 when the operation of ACLS was merged
with and into SIBMC to operate as the ACLS Division of SIBMC. ACLS was formed in
1999 to provide construction lending in various states, however, in 2001 the
Bank determined to discontinue a majority of the construction lending through
ACLS and merge it into SIBMC and primarily do construction lending through the
Bank. The Bank anticipates that the loans in the ACLS Division will payoff over
the next 12 to 18 months.

     SIBMC which operates as a separate business segment (Mortgage Banking) had
$4.0 billion in loan originations and loan sales of $2.9 billion for the twelve
months ended December 31, 2001. SIBMC had earnings for the year 2001 of $13.0
million and at December 31, 2001 the total assets of SIBMC were $1.5 billion.

     SIBMC's executive office is located at 3040 Route 22 West, Branchburg, NJ
08876 and its telephone number is 908-243-2600.

MARKET AREA AND COMPETITION

     The Company faces significant competition both in making loans and in
attracting deposits. There are a significant number of financial institutions
located within the Company's market area, many of which have greater financial
resources than the Company. The Company's competition for loans comes
principally from commercial banks, other savings banks, savings associations and
mortgage-banking companies. The Company's most direct competition for deposits
has historically come from savings associations, other savings banks, commercial
banks and credit unions. The Company faces additional competition for deposits
from short-term money market funds and other corporate and government securities
funds and from other non-depository financial institutions such as brokerage
firms and insurance companies.

                                        7
<Page>

LENDING ACTIVITIES

     GENERAL. At December 31, 2001, the Company's total net loans held for
investment amounted to $2.8 billion or 46.7% of the Company's total assets at
such date. The Bank's primary emphasis has been, and continues to be, the
origination of loans secured by first liens on single-family residences (which
includes one-to-four-family residences) located primarily in Staten Island and,
to a lesser extent, other areas in New York City. At December 31, 2001, $2.1
billion or 73.5% of the Company's net loan portfolio were secured by
single-family residences of which $802.5 million were located on Staten Island
and an additional $576.4 million were located in other areas of New York City.
Since the acquisition of Ivy Mortgage, the Bank has retained for its portfolio
$425.0 million of higher yielding one-to four-family residential loans
originated by the Mortgage Company to lessen its dependence on the New York City
economy and increase the yield on its loan portfolio.

     In addition to loans secured by single-family residential real estate, the
Company's mortgage loan portfolio includes loans secured by commercial real
estate, which amounted to $335.3 million or 12.0% of the net loan portfolio at
December 31, 2001, construction and land loans, which totaled $245.5 million or
8.8% of the net loan portfolio at December 31, 2001, home equity loans, which
totaled $12.8 million or 0.5% of the net loan portfolio at December 31, 2001,
and loans secured by multi-family (over four units) residential properties,
which amounted to $48.8 million or 1.7% of the net loan portfolio at December
31, 2001. In addition to mortgage loans, the Company originates various other
loans including commercial business loans and consumer loans. At December 31,
2001, the Company's total other loans amounted to $111.0 million or 4.0% of the
net loan portfolio.

     The types of loans that the Company may originate are subject to federal
and state law and regulations. Interest rates charged by the Company on loans
are affected principally by the demand for such loans, the supply of money
available for lending purposes and the rates offered by its competitors. These
factors are, in turn, affected by general and economic conditions, the monetary
policy of the federal government, including the Federal Reserve Board,
legislative tax policies and governmental budgetary matters.

                                        8
<Page>

LOAN PORTFOLIO COMPOSITION. The following table sets forth the composition of
the Company's held for investment loan portfolio at the dates indicated.

<Table>
<Caption>
                                                                        At December 31,
                                    ----------------------------------------------------------------------------------------
                                         2001 (Restated)                      2000                           1999
                                    ---------------------------    --------------------------     --------------------------
                                                    Percent of                    Percent of                      Percent of
                                      Amount          Total          Amount          Total          Amount          Total
                                    -----------    -----------     -----------    -----------     -----------    -----------
                                                                    (Dollars in Thousands)
<S>                                 <C>                 <C>        <C>                 <C>        <C>                 <C>
Mortgage loans:(1)
  Single-family residential         $ 2,062,897          73.50%    $ 2,206,972           77.5%    $ 1,737,913          80.83%
  Multi-family residential               48,783           1.74          49,034           1.72          42,501           1.98
  Commercial real estate                335,260          11.95         307,407          10.80         223,809          10.41
  Construction and land                 245,515           8.75         152,956           5.37          60,105           2.80
  Home equity                            12,815           0.46          10,699           0.38           5,390           0.25
                                    -----------    -----------     -----------    -----------     -----------    -----------
    Total mortgage loans              2,705,270          96.39%      2,727,068          95.77%      2,069,718          96.27%

Other loans:
  Student loans                             288           0.01%            333           0.01%            657           0.03%
  Passbook loans                          7,477           0.26           6,237           0.22           5,357           0.25
  Commercial business loans              60,898           2.17          52,980           1.86          33,646           1.56
  Other consumer loans                   42,356           1.51          63,984           2.25          49,395           2.30
                                    -----------    -----------     -----------    -----------     -----------    -----------

    Total other loans                   111,019           3.95         123,534           4.34          89,055           4.14
                                    -----------    -----------     -----------    -----------     -----------    -----------

    Total loans                       2,816,289         100.34%      2,850,602         100.10%      2,158,773         100.41%
Less:
  Premium (discount) on
    loans purchased                       5,135           0.18           5,713           0.20           4,640           0.22
  Allowance for loan losses             (20,041)         (0.71)        (14,638)         (0.51)        (14,271)         (0.66)
  Deferred loan costs, (fees) net         5,236           0.19           5,983           0.21             897           0.04
                                    -----------    -----------     -----------    -----------     -----------    -----------
Net loans                           $ 2,806,619         100.00%    $ 2,847,660         100.00%    $ 2,150,039         100.00%
                                    ===========    ===========     ===========    ===========     ===========    ===========

<Caption>
                                                         At December 31,
                                    ---------------------------------------------------------
                                               1998                           1997
                                    ---------------------------    --------------------------
                                                    Percent of                    Percent of
                                      Amount          Total          Amount          Total
                                    -----------    -----------     -----------    -----------
                                                      (Dollars in Thousands)
<S>                                 <C>                 <C>        <C>                 <C>
Mortgage loans:(1)
  Single-family residential         $ 1,187,212          81.48%    $   863,694          79.76%
  Multi-family residential               33,328           2.29          28,218           2.61
  Commercial real estate                137,720           9.45         120,084          11.09
  Construction and land                  42,420           2.91          40,476           3.74

  Home equity                             6,121           0.42           6,538           0.60
                                    -----------    -----------     -----------    -----------
    Total mortgage loans              1,406,801          96.55%      1,059,010          97.80%

Other loans:
  Student loans                             940           0.06%          4,033           0.37%
  Passbook loans                          5,989           0.41           6,929           0.64
  Commercial business loans              36,592           2.51          19,559           1.81

  Other consumer loans                   24,070           1.65          13,212           1.22
                                    -----------    -----------     -----------    -----------

    Total other loans                    67,591           4.63          43,733           4.04%
                                    -----------    -----------     -----------    -----------

    Total loans                       1,474,392         101.19%      1,102,743         101.84%
Less:
  Premium (discount) on
    loans purchased                       1,194           0.08            (729)         (0.07)
  Allowance for loan losses             (16,617)         (1.14)        (15,709)         (1.45)
  Deferred loan costs, (fees) net        (1,910)         (0.13)         (3,387)         (0.32)
                                    -----------    -----------     -----------    -----------
Net loans                           $ 1,457,059         100.00%    $ 1,082,918         100.00%
                                    ===========    ===========     ===========    ===========
</Table>

----------
(1) Mortgage loans held for sale at December 31, 2001, 2000, 1999 and 1998 were
$1.2 billion, $116.2 million, $47.0 million and $78.0 million, respectively, are
not included in this table.

                                        9
<Page>

LOAN ACTIVITY. The following table sets forth the Company's activity in its
total loan portfolio, including loans held for sale.

<Table>
<Caption>
                                                   Years Ended December 31,
                                          ------------------------------------------
                                              2001
                                           (Restated)        2000          1999
                                          ------------   ------------   ------------
                                                    (Dollars in Thousands)
<S>                                       <C>            <C>            <C>
Total loans held at beginning of period   $  2,962,197   $  2,203,302   $  1,550,834
Originations of loans:
  Mortgage loans:
    Single-family residential                4,408,052      1,395,115      1,333,757
    Multi-family residential                     5,069          9,907         14,372
    Commercial real estate                      77,044         70,665        126,561
    Construction and land                      344,955        147,212         51,051
  Home equity                                   11,291          7,359          2,545
  Other loans:
    Student loans                                  638            871          1,475
    Passbook loans                               9,865          8,873          5,302
    Commercial business loans                   59,442         62,774         56,625
    Other consumer loans                         5,691          9,681         15,771
                                          ------------   ------------   ------------
    Total originations                       4,922,047      1,712,457      1,607,459

Purchases of loans:(1)
  Mortgage loans:
    Single-family residential             $    382,243         55,549             --
    Multi-family residential                        --          3,020             --
    Commercial real estate                          --         49,358             --
    Construction and land                       87,818         35,155             --
  Home equity                                       --          3,566             --
Other loans:
  Passbook loans                                    --          3,608             --
  Commercial business loans                         --          5,235             --
  Other consumer loans                           2,119         12,866         16,088
                                          ------------   ------------   ------------
    Total purchases                            472,180        168,357         16,088
                                          ------------   ------------   ------------
  Total originations and purchases           5,394,227      1,880,814      1,623,547
                                          ------------   ------------   ------------

Loans sold:
  Mortgage loans:
    Single-family residential                3,179,238        730,506        644,557
                                          ------------   ------------   ------------
      Total loans sold                       3,179,238        730,506        644,557
                                          ------------   ------------   ------------

Transfers to real estate owned                     279            930            325
Transfers to repossessed assets                    404            244             --
Charge-offs                                      4,265          1,928          1,260
Repayments                                   1,184,793        388,311        324,937
                                          ------------   ------------   ------------
Net activity in loans                        1,025,248        758,895        652,468
                                          ------------   ------------   ------------
Gross loans held at end of period         $  3,987,445   $  2,962,197   $  2,203,302
                                          ============   ============   ============
</Table>

----------
(1) The year 2000 includes as purchases the following amounts acquired from
First State Bank, single-family residential $19.5 million, multi-family
residential $3.0 million, commercial real estate $49.4 million, construction and
land $7.4 million, commercial loans $5.2 million, passbook loans $3.6 million
and consumer loans $2.1 million.

                                       10
<Page>

     The lending activities of SIBT are subject to written underwriting
standards and loan origination procedures established by management and approved
by the Bank's Board of Directors.

     The Bank's primary source of loan applications for residential mortgages
are independent mortgage brokers throughout the tri-state area of Connecticut,
New Jersey and New York, a group of whom are authorized to accept and process
applications on the Bank's behalf. Applications for mortgages and other loans
are also taken at all of the Bank's branch offices. In addition, the Bank's
business development officers, loan officers and branch managers call on
individuals in the Bank's market area in order to solicit new loan originations
as well as other banking relationships. All loan applications are forwarded to
the Bank's loan origination center for underwriting and approval. The Bank's
employees at the loan origination center supervise the process of obtaining
credit reports, appraisals and other documentation involved with a loan. The
Bank requires that a property appraisal be obtained in connection with all new
mortgage loans. Property appraisals are performed by an independent appraiser
from a list approved by the Bank's Board of Directors. SIBT requires that title
insurance and hazard insurance be maintained on all collateral properties
(except for home equity loans and home secured loans) and that flood insurance
be maintained if the property is within a designated flood plain.

     Certain officers of the Bank have been authorized by the Board of Directors
to approve loans up to certain designated amounts. The Loan Review Committee of
the Board of Directors must approve all loans where new monies advanced would
increase borrower's or guarantor's total outstanding credit with the Bank above
$2.0 million but not exceeding $10.0 million. Loans in excess of $7.5 million
must be approved by the full Board of Directors of the Bank.

     A federal savings association generally may not make loans to one borrower
and related entities in an amount which exceeds 15% of its unimpaired capital
and surplus, although loans in an amount equal to an additional 10% of
unimpaired capital and surplus may be made to a borrower if the loans are fully
secured by readily marketable securities. However, the Bank maintains a more
restrictive limit of loans to any one borrower and related entities of 5% of the
Bank's unimpaired capital and surplus, or $21.5 million at December 31, 2001. As
of December 31, 2001, the Bank's largest concentration of loans to any one
borrower and related entities (excluding intra-company loans) was $16.6 million
($9.3 million outstanding and $7.3 million unfunded) and these loans were
performing in accordance with their terms.

     SINGLE-FAMILY RESIDENTIAL LOANS. Substantially all of the Company's
single-family residential mortgage loans consist of conventional loans.
Conventional loans are loans that are neither insured by the Federal Housing
Administration ("FHA") or partially guaranteed by the Department of Veterans
Affairs ("VA"). Approximately 39% of the Company's single-family residential
mortgage loans retained in the portfolio are secured by properties located in
Staten Island and an additional 28% are secured by properties in other areas of
New York City. As of December 31, 2001, $2.1 billion, or 73.5%, of the Company's
net loans consisted of single - family residential mortgage loans. The Bank
originated $659.4 million of single-family residential mortgage loans during the
year ended December 31, 2001 compared to $635.0 million and $714.7 million in
2000 and 1999, respectively.

                                       11
<Page>

     During the year 2001, the Bank sold $314.0 million of single family
residential loans, primarily fixed rate loans, to maintain and improve the
Bank's level of interest rate risk. To a lesser extent, the sales were used as a
source of funds for the origination of higher yielding adjustable rate loans.
The Bank anticipates that a significant portion of its future new loan
originations will continue to be single-family residential mortgage loans and
that its fixed-rate loan originations will be sold into the secondary market
rather than being held in portfolio.

     The Bank's residential mortgage loans have either fixed-rates of interest
or interest rates which adjust periodically during the term of the loan.
Fixed-rate loans generally have maturities ranging from 10 to 30 years and are
fully amortizing with monthly or bi-weekly loan payments sufficient to repay the
total amount of the loan with interest by the end of the loan term. The Bank's
fixed-rate loans generally are originated under terms, conditions and
documentation which permit them to be sold to U.S. Government-sponsored
agencies, such as the Federal Home Loan Mortgage Corporation ("FHLMC"), and
other investors in the secondary market for mortgages. At December 31, 2001,
$1.1 billion, or 53.9%, of the Bank's single-family residential mortgage loans
were fixed-rate loans. Substantially all of the Bank's single-family residential
mortgage loans contain due-on-sale clauses, which permit the Bank to declare the
unpaid balance to be due and payable upon the sale or transfer of any interest
in the property securing the loan. The Bank enforces such due-on-sale clauses.

     The adjustable-rate single-family residential mortgage ("ARM") loans
currently offered by the Bank have interest rates which adjust every one, three
or five years in accordance with a designated index such as one-, three- or
five-year U.S. Treasury obligations adjusted to a constant maturity ("CMT"),
plus a stipulated margin. In addition, the Bank offers an ARM with a fixed-rate
for the first ten years which adjusts on an annual basis thereafter. At December
31, 2001, the Bank's five-year and ten-year ARM loans amounted to $486.5 million
and $242.7 million, respectively. The Bank's adjustable-rate single-family
residential real estate loans generally have a cap of 2% to 5% on any increase
or decrease in the interest rate at any adjustment date, and include a specified
cap on the maximum interest rate over the life of the loan, which cap is
generally 5% or 6% above the initial rate. The Bank may offer ARM loans with
initial rates which are below the fully indexed rate. Such loans generally are
underwritten based on the fully indexed rate. The Bank's adjustable-rate loans
require that any payment adjustment resulting from a change in the interest rate
of an adjustable-rate loan be sufficient to result in full amortization of the
loan by the end of the loan term and, thus, do not permit any of the increased
payment to be added to the principal amount of the loan, or so-called negative
amortization. At December 31, 2001, $959.7 million or 46.1% of the Bank's
single-family residential mortgage loans were adjustable-rate loans compared to
$1.1 billion or 48.4% at December 31, 2000.

     Adjustable-rate loans decrease the risks associated with changes in
interest rates but involve other risks, primarily because as interest rates
increase, the loan payment by the borrower increases to the extent permitted by
the terms of the loan, thereby increasing the potential for default. Moreover,
as with fixed-rate loans, as interest rates increase, the marketability of the
underlying collateral property may be adversely affected by higher interest
rates. The Bank believes that these risks, which have not had a material adverse
effect on the Bank to date, generally, are less than the risks associated with
holding fixed-rate loans in a rising

                                       12
<Page>

interest rate environment.

     The volume and types of ARMs originated by the Bank have been affected by
such market factors as the level of interest rates, competition, consumer
preferences and availability of funds. Accordingly, although the Bank will
continue to offer single-family ARMs, there can be no assurance that in the
future the Bank will be able to originate a sufficient volume of single-family
ARMs to increase or maintain the proportion that these loans bear to total
loans.

     The Bank's single-family residential mortgage loans generally do not exceed
$1.0 million. In addition, the maximum loan-to-value ("LTV") ratio for the
Bank's single-family residential mortgage loans, generally, is 95% of the
appraised value of the secured property, provided, however, that private
mortgage insurance is obtained on the portion of the principal amount that
exceeds 80% of the appraised value. Loans purchased by the Bank from SIBMC are
underwritten on substantially similar terms as loans originated directly by the
Bank.

     At December 31, 2001, the Company's home equity loans amounted to $12.8
million or 0.5% of the Company's net loans. The Bank offers floating and
fixed-rate home equity lines of credit. Home equity loans, like single-family
residential mortgage loans, are secured by the underlying equity in the
borrower's residence. However, the Bank generally obtains a second mortgage
position to secure home equity loans. The Bank's home equity loans generally
require LTV ratios of 80% or less after taking into consideration any first
mortgage loan.

     COMMERCIAL REAL ESTATE LOANS AND MULTI-FAMILY RESIDENTIAL LOANS. At
December 31, 2001, the Company's commercial real estate loans and multi-family
residential mortgage loans amounted to $335.3 million and $48.8 million,
respectively, or 12.0% and 1.7%, respectively, of the Company's net loan
portfolio. Commercial real estate and multi-family residential real estate loans
often have adjustable interest rates, shorter terms to maturity and higher
yields than the Bank's single-family residential real estate loans. Because of
such factors, in recent years the Bank has increased its efforts in originating
commercial real estate loans and multi-family residential loans.

     The Bank's commercial real estate loans generally are secured by small
office buildings, retail and industrial use buildings, strip shopping centers
and other commercial uses located in the Bank's market area. The Bank's
commercial real estate loans seldom exceed $1.5 million and as of December 31,
2001, the average size of the Bank's commercial real estate loans was
approximately $400,000. The Bank originated $77.0 million of commercial real
estate loans during the year ended December 31, 2001 compared to $70.7 million
and $126.6 million of commercial real estate loan originations in 2000 and 1999,
respectively.

     The Bank's multi-family residential real estate loans are concentrated in
Brooklyn and, to a lesser extent, Staten Island. The Bank originated $5.1
million of multi-family residential real estate loans during the year ended
December 31, 2001 compared to $9.9 million and $14.4 million of originations in
2000 and 1999, respectively. The Bank generally has not been a substantial
originator of multi-family residential real estate loans due to, among other
factors, the relatively limited amount of apartment and other multi-family
properties in Staten Island.

                                       13
<Page>

     The Bank's commercial real estate and multi-family residential loans
generally are five- or ten-year adjustable-rate loans indexed to the
five-year U.S. Treasury obligation adjusted to a CMT, plus a margin.
Generally, fees of between 0.50% and 1.50% of the principal loan balance are
charged to the borrower upon closing. The Bank generally charges prepayment
penalties on commercial real estate and multi-family residential mortgage
loans. Although terms for multi-family residential and commercial real estate
loans may vary, the Bank's underwriting standards generally provide for terms
of up to 25 years with amortization of principal over the term of the loan
and LTV ratios of not more than 75%. Generally, the Bank obtains personal
guarantees of the principals as additional security for commercial real
estate and multi-family residential loans.

     The Bank evaluates various aspects of commercial and multi-family
residential real estate loan transactions in an effort to mitigate risk to the
extent possible. In underwriting these loans, consideration is given to the
stability of the property's cash flow history, future operating projections,
current and projected occupancy, position in the market, location and physical
condition. The Bank has also generally imposed a debt coverage ratio (the ratio
of net cash from operations before payment of debt service to debt service) of
not less than 1.25%. The underwriting analysis also includes credit checks and a
review of the financial condition of the borrower and guarantor, if applicable.
An appraisal report is prepared by an independent appraiser commissioned by the
Bank to substantiate property values for every commercial real estate and
multi-family loan transaction. All appraisal reports are reviewed by the Bank
prior to the closing of the loan.

     Commercial real estate and multi-family residential lending entails
substantially different risks when compared to single-family residential lending
because such loans often involve large loan balances to single borrowers and
because the payment experience on such loans is typically dependent on the
successful operation of the project or the borrower's business. These risks can
also be significantly affected by supply and demand conditions in the local
market for apartments, offices, warehouses, or other commercial space. The Bank
attempts to minimize its risk exposure by limiting such lending to proven
businesses, only considering properties with existing operating performance
which can be analyzed, requiring conservative debt coverage ratios and
periodically monitoring the operation and physical condition of the collateral.

     As of December 31, 2001, $4.1 million or 1.2% of the Bank's commercial real
estate loans and none of its multi-family residential real estate loans were on
non-accrual status.

     CONSTRUCTION AND LAND LOANS. In 1999, the Bank formed American Construction
Lending Services, Inc. (ACLS) which operated as a wholly owned subsidiary of the
Bank, until March 2001 when the operations of ACLS were merged with and into
SIBMC. ACLS is now operated as a division of SIBMC and is known as the "ACLS
Division" which is operated primarily to meet requests from SIBMC locations. In
2001 the level of originations was driven by outstanding construction loan
commitments and un-funded balances from previously originated construction
loans. The current portfolio of the ACLS Division, which totaled $178.2 million
at December 31, 2001 consists primarily of residential construction loans to
builders and individuals along with four warehouse funding agreements for
residential construction loans totaling $88.7 million. The loans in the
warehouse funding agreements are serviced by the company that originates the
loan and are paid off when they are sold as permanent loans. SIBMC

                                       14
<Page>

has informed these borrowers that they are discontinuing this type of lending
and, as a result, the Company expects these loans to be paid off over the next
12 to 18 months. Construction loans in the ACLS Division portfolio have been
underwritten and are serviced under the same guidelines used by the Bank.

     The Company originates and services its construction and land loans through
the ACLS division of SIBMC and the Bank. The construction loans originated by
the ACLS Division and the Bank are primarily residential construction loans to
real estate builders and, to a lesser extent, residential construction loans to
individuals who have a contract with a builder for the construction of their
residence. ACLS and the Bank will also originate construction loans for
multi-family projects and non-residential property. While the terms of the
construction and land loans offered by the Bank and the ACLS Division are
substantially similar, the Bank restricts its lending to the New York
metropolitan area while the ACLS division has a presence in six states. At
December 31, 2001, the Company's construction and land loan portfolio amounted
to $245.5 million or 8.8% of the Company's net loan portfolio of which $120.1
million consisted of residential construction loans, $6.1 million of
multi-family construction loans, $27.7 million of non-residential construction
loans and $91.6 million of land loans. In addition, at such date the Company had
$49.0 million of undisbursed funds for construction loans in process. The Bank
and ACLS disbursed $345.0 million of construction and land loans during the year
ended December 31, 2001 compared to $147.2 million and $51.1 million of
construction loans in 2000 and 1999, respectively. At December 31, 2001 the
outstanding principal balance of construction loans in the ACLS Division loan
portfolio was $143.9 million. The Company anticipates that these loans will
paydown over the next twelve months to eighteen months since there will be
limited new loans added to the portfolio.

     The Company's construction loans generally have floating rates of interest
for a term of up to two years. Construction loans to builders are typically made
with a maximum loan to value ratio of 75%. The Company's construction loans to
builders are made on either a pre-sold or speculative (unsold) basis. However,
the Company generally limits the number of unsold homes under construction to
its builders, with the amount dependent on the reputation of the builder, the
present outstanding obligations of the builder, the location of the property and
prior sales of homes in the development and the surrounding area. The Company
generally limits the number of construction loans for speculative units to two
to four model homes per project.

     Prior to making a commitment to fund a construction loan, the Company
requires an appraisal of the property by independent appraisers approved by the
Board of Directors. The Company's staff also reviews and inspects each project
at the commencement of construction and prior to every disbursement of funds
during the term of the construction loan. Loan proceeds are disbursed after
inspections of the project based on a percentage of completion. The Company
requires monthly interest payments during the construction term.

     The Company originates land loans to developers for the purpose of holding
or developing the land (i.e., roads, sewer and water) for sale. Such loans are
secured by a lien on the property, are generally limited to 70% of the appraised
value of the security property and are typically made for a period of up to two
years with a floating interest rate based on the prime rate. The Company
requires monthly interest payments during the term of the land loan. The

                                       15
<Page>

principal of the loan is reduced as lots are sold and released. In addition, the
Bank generally obtains personal guarantees from its borrowers and originates
such loans to developers with whom it has established relationships.

     Construction and land lending generally is considered to involve a higher
level of risk as compared to permanent single-family residential lending, due to
the concentration of principal in a limited number of loans and borrowers and
the effects of general economic conditions on developers and builders. Moreover,
a construction loan can involve additional risks because of the inherent
difficulty in estimating both a property's value at completion of the project
and the estimated cost (including interest) of the project. The nature of these
loans is such that they are generally more difficult to evaluate and monitor. In
addition, speculative construction loans to a builder are secured by unsold
homes and thus pose a greater potential risk to the Company than construction
loans to individuals on their personal residences.

     The Company has attempted to minimize the foregoing risks by, among other
things, limiting the extent of its construction and land lending to primarily
residential properties. In addition, the Company has adopted strict underwriting
guidelines and other requirements for loans which are believed to involve higher
elements of credit risk. It is also the Company's policy, when possible, to
obtain personal guarantees from the principals of its corporate borrowers on its
construction and land loans.

     At December 31, 2001 the Company had $2.1 million of construction and land
loans that were on non-accrual status. Management also is working closely with
two builders which have loans with outstanding balances of $10.0 million and
unfunded commitments of $3.0 million that are more than 30 but less than 90 days
delinquent with regard to interest payments and which became non-accruing in the
first quarter of 2002. These loans are for two residential construction projects
in the State of California and one in the State of Florida. Based on the current
appraised values of the properties securing these loans, which currently exceed
the outstanding balances and monies due on the loans, management anticipates
that the Company would incur minimal losses, if any, in the event that any or
all of these loans are placed in foreclosure, although significant additional
advances may be required in order to complete construction.

     OTHER LOANS. The Company offers a variety of other or non-mortgage loans
through the Bank. Such other loans, which include commercial business loans,
passbook loans, student loans, overdraft loans, manufactured home loans and a
variety of other personal loans, amounted to $111.0 million or 4.0% of the
Company's net loan portfolio at December 31, 2001.

     At December 31, 2001, the Company's commercial business loans amounted to
$60.9 million or 2.2% of the Company's net loan portfolio. The Bank's commercial
business loans have a term of up to five years and may have either fixed-rates
of interest or, to a lesser extent, floating rates tied to the prime rate. The
Bank's commercial business loans are made to small to medium sized businesses
within the Bank's market area. A substantial portion of the Bank's small
business loans is unsecured with the remainder generally secured by perfected
security interests in accounts receivable and inventory or other corporate
assets. The Bank generally obtains personal guarantees from the principals of
the borrower with respect to all commercial business loans. In addition, the
Bank may extend loans for a commercial business purpose which are

                                       16
<Page>

secured by a mortgage on the proprietor's home or the business property. In such
cases, the loan, while underwritten to commercial business loan standards, is
reported as a single-family or commercial real estate mortgage loan, as the case
may be. Commercial business loans generally are deemed to involve a greater
degree of risk than single-family residential mortgage loans.

     The Bank's commercial business loans include discounted loans, which
amounted to $4.7 million or 0.2% of the Bank's loans at December 31, 2001. The
Bank's discounted loans, which are made primarily to local businesses, are
designed to provide an interim source of financing and require no payment of
principal or interest until the due date of the loan, which may be up to one
year but generally is 60 or 90 days from the date of origination. While the
borrower is contractually obligated to repay the entire face amount of the loan
at maturity, the Bank advances only a portion of the face amount with the
difference constituting the interest component. In addition to personal
guarantees, discounted loans may also be secured by perfected security interests
in receivables and/ or certain other assets of the Company. However, due to the
lack of an amortization schedule and, in certain cases, the absence of perfected
security interests, discounted loans, generally, may be deemed to involve a
greater risk of loss than single-family residential mortgage loans.

     At December 31, 2001, included in total other consumer loans was $27.9
million of loans primarily secured by manufactured housing. This represents 1.0%
of the Bank's net loan portfolio. The Bank purchases these loans after a review
of the loan documentation and underwriting, which is prepared by the company
originating the loan. The majority of the loans are secured by manufactured
housing and are located primarily in the northeastern section of the country.
The Bank services the loan, when necessary, and is assisted by a third party in
the collection process. The Bank has discontinued purchasing these loans and
anticipates that the balances these loans will payoff over a period of time.

     The balance of the Bank's other loans consists of loans secured by savings
accounts, loans on overdraft accounts, home improvement loans, student loans and
various other personal loans.

     LOAN ORIGINATION COSTS AND FEES. In addition to interest earned on loans,
the Bank receives loan origination fees or "points" on a portion of the loans it
originates. Loan points are a percentage of the principal amount of the mortgage
loan and are charged to the borrower in connection with the origination of the
loan. Loan costs, which are deferred, are primarily the direct costs to
originate a loan, fees paid to brokers and mortgage taxes which are charged in
certain states that the Bank operates in.

     In accordance with SFAS No. 91, which addresses the accounting for
non-refundable fees and costs associated with originating or acquiring loans,
the Bank's loan origination fees and certain related direct loan origination
costs and fees are offset, and the resulting net amount is deferred and
amortized as an adjustment to interest income over the contractual life,
adjusted for prepayments, of the related loans resulting in an adjustment to the
yield of such loans. For loans that are sold by the Bank, the unamortized
portion of the deferred fees and costs is an adjustment to the gain or loss on
the sale. At December 31, 2001, the Bank had $5.2 million of such net deferred
loan costs.

                                       17
<Page>

MORTGAGE BANKING ACTIVITIES

     SIB Mortgage Corp., a wholly owned subsidiary of the Bank, doing business
as "Ivy Mortgage" conducts mortgage banking in 42 states.

     SIBMC's primary business is to originate residential loans and sell them
either into the secondary market with servicing released, or, to a lesser
extent, to the Bank for retention in its portfolio. SIBMC services its loans
held for sale on an interim basis and its loans held for investment which
consist of residential permanent and construction loans. SIBMC has no loan
servicing asset recorded on its balance sheet since it currently sells all
servicing rights that it originates.

     SIBMC sources loans through approximately 150 retail commissioned loan
officers who solicit business through realtors, financial planners, insurance
agents and other referral sources. SIBMC also derives applications from
third-party sources, such as mortgage brokers, and from the Internet. Loan
applications are generally processed on a de-centralized basis in one of SIBMC's
network of 72 offices in 42 states. SIBMC's primary method of credit
underwriting the loans is to electronically submit the necessary data to the
major mortgage agencies' (FHLMC or FNMA) automated underwriting facilities.
SIBMC also has underwriters in all of its regions who manually underwrite loans
that are not eligible for agency submission, in which case, loans are originated
for re-sale to individual investors in the secondary market. All credit
decisions are based on the individual investor's underwriting guidelines. In
most instances, SIBMC is delegated to make underwriting decisions for its
private investors either directly or through automated intelligence. Generally,
all properties securing loans must be appraised by a licensed appraiser. Credit
reports, flood zone certifications and real estate tax certifications are
required on all loans. SIBMC also requires title insurance, hazard insurance and
flood insurance when a loan is determined to be in a flood zone. SIBMC's
underwriters are authorized to approve loans based on the individual investors
delegated authority. All limits also are subject to the Bank's limitations and
SIBMC is subject to the same limitations as the Bank for loans to one borrower.

     SIBMC's loan originations for 2001 were $4.0 billion compared to $760.1
million in 2000 and $708.5 million in 1999. The record level of originations for
2001 was driven by the level of refinance transactions due to the favorable
interest rate environment during the year and the geographic expansion of SIBMC
into 15 additional states. These origination levels resulted in record loan
sales in 2001 of $2.9 billion compared to loan sales of $503.0 million in 2000
and $643.0 million in 1999. To meet the demands from the increased loan
origination volumes, SIBMC expanded its back office operations to both service
and transfer loans to investors. Management will continue to seek new markets to
enter either through new offices or acquisitions to maintain and increase the
level of loan originations.

     The Bank has provided SIBMC with a $1.4 billion line of credit to finance
its loan originations and a working capital line of $15.0 million. At December
31, 2001, $1.3 billion was outstanding on such line of credit for loan
originations. The working capital line of credit to SIBMC for day-to-day
operating expenses was not drawn on as of December 31, 2001. Interest paid by
SIBMC on such intra-Company loans is eliminated upon consolidation in the
Company's

                                       18
<Page>

financial statements.

     In the fourth quarter of 2001, SIBMC entered into a mortgage repurchase
agreement with an international bank as an additional source of funding. The
$150.0 million line of credit is collateralized by loans held by SIBMC. The Bank
guarantees the line of credit by agreeing to, among other things, repurchase
loans that remain on the line for more than 60 days. The balance outstanding on
the line as of December 31, 2001 was $66.0 million. In February 2002, SIBMC
entered into a substantially similar agreement for an additional $150.0 million
with a second bank.

     SIBMC originates loans which conform to the underwriting standards for
purchase by the FHLMC and FNMA ("conforming loans") as well as FHA loans, VA
loans and non-conforming loans. Non-conforming loans generally consist of loans
which, primarily because of size or other underwriting technicalities, do not
satisfy the guidelines for resale to FNMA or FHLMC and other private secondary
market investors at the time of origination. During the year ended December 31,
2001, non-conforming conventional loans represented approximately 20% of SIBMC's
total volume of mortgage loans originated.

     Retail loan origination activities performed by SIBMC include soliciting,
completing and processing mortgage loan applications and preparing and
organizing the necessary loan documentation. Loan applications are examined for
compliance with underwriting criteria and, if all requirements are met, SIBMC
issues a commitment to the prospective borrower specifying the amount of the
loan and the loan origination fees, points and closing costs to be paid by the
borrower or seller and the date on which the commitment expires.

     In the course of originating mortgage loans, SIBMC collects certain fees
from the borrower including, but not limited to, origination, application,
appraisal, credit and other fees. The amount of fees vary depending upon the
origination channel. Certain fees are received at the time an application is
taken while other fees are collected at closing.

     In the normal course of originating mortgage loan, SIBMC collects
certain fees from the borrower. The amount, type of fees collected and the
timing of when the fees are collected vary depending upon the origination
channel and the type of loan as well as SIBMC's objectives concerning
volumes and regulatory compliance. SIBMC also incurs certain costs associated
with loan origination, processing and underwriting. These fees include out of
pocket fees paid to third parties as well as personnel and other direct
operating costs. In accordance with SFAS 91, SIBMC defers direct loan fees
and costs incurred throughout the origination process and amortizes them over
the contractual life of the loan under the interest method as an adjustment
to yield.

                                       19
<Page>

     At December 31, 2001, SIBMC had $673.8 million in commitments to originate
one-to four-family residential mortgage loans. In the normal course of business
borrowers may elect to "lock-in" the interest rate on the loan. The term of
lock-in ranges from three days prior to closing up to one year prior to closing.
The Mortgage Company has implemented a hedging strategy designed to mitigate the
risk associated with price movements caused by changes in market rates of
interest. The hedging strategy consists of "locking" the loan directly with the
intended investor or to a larger extent "selling forward" mortgage-backed
securities of a comparable coupon. To the extent that the loans are agency
eligible they will be delivered into that security or the trade is assigned
along with the loan to a third party. To the extent that the loans being hedged
are not agency eligible, the Mortgage Company will buy back the forward sale to
close the position to eliminate the hedge and deliver the loans to the investor
on a bulk basis. These transactions are primarily with nationally recognized
brokerage firms.

     The unallocated forward securities sales of $248.0 million at December 31,
2001 had a market appreciation of $1.0 million which was recorded as a gain on
sale.

     The challenge in hedging is estimating the percentage of approved loans
that will eventually close when SIBMC has given a forward interest rate
commitment to the borrower. In a rising interest rate environment, a larger
percentage of loans will close than originally estimated because borrowers will
not be able to get a better rate from another lender. In a declining rate
environment, a smaller percentage of loans will close because borrowers will go
to another lender to get a lower rate or negotiate a lower rate with SIBMC. In
the case of rising rates SIBMC may have insufficient hedges to cover its
exposure and in the case of falling interest rates there will be too many hedges
to deliver into, which means SIBMC would be forced to repurchase a portion of
its hedges at a loss. In an effort to protect itself against the volatility of
the closing rate on its pipeline of mortgage loans, a sensitivity report is run
daily to estimate the effect on earnings given a three percentage point movement
in the price of the underlying mortgage loans. SIBMC uses this report to adjust
the forward sales daily to reduce the fluctuations on estimated earnings,
primarily due to changes in the value of the pipeline of mortgage loans and the
corresponding hedges.

     SIBMC had $856.2 million in commitments to sell loans at December 31, 2001.
SIBMC records the gain or loss on loan sales at the time the loan is funded.
When SIBMC sells loans, pursuant to relatively standard representations and
warranties, it assumes limited recourse for first payment defaults, fraud and
non-compliance with its investors' underwriting guidelines. The first payment
default recourse is generally limited to a loan that goes into foreclosure where
the delinquency occurred within the first 90 days after a loan is sold to an
investor. The recourse obligation for fraud and non-compliance to underwriting
standards is generally for the life of the loan. During 2001, SIBMC repurchased
$5.8 million in loans and incurred losses of $1.4 million due to these recourse
obligations. During 2000, SIBMC repurchased one loan for $220,000 and incurred a
loss of approximately $5,000.

                                       20
<Page>

ASSET QUALITY

     GENERAL. As a part of the Company's efforts to improve its asset quality,
it has enhanced the loan review area, along with developing and implementing an
asset classification system which now includes single-family residential loans.
All of the Bank's assets are subject to review under this classification system.
Loans are periodically reviewed and the classifications are reviewed by the
Board of Directors on at least a quarterly basis.

     When a borrower fails to make a required payment on a loan, the Company
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made 16 days after a payment is due. In most cases,
deficiencies are cured promptly. If a delinquency continues, late charges are
assessed and additional efforts are made to collect the loan. While the Company
generally prefers to work with borrowers to resolve such problems, when the
account becomes 90 days delinquent, the Company institutes foreclosure or other
proceedings, as necessary, to minimize any potential loss.

     Loans are placed on non-accrual status when, in the judgment of management,
the probability of collection of interest is deemed to be doubtful and the value
of the collateral is not sufficient to satisfy all interest, principal and
potential costs due on the loan. Prior to 1998, the Company's policy was to
cease accruing interest on any loan which was 90 days or more past due as to
principal or interest. Commencing in 1998, management reviews the collateral
value, payment history of individual secured loans along with the financial
condition of the borrower to determine the accrual status of the loan when they
approach 90 days past due. When a loan is placed on non-accrual status,
previously accrued unpaid interest is deducted from interest income. At December
31, 2001, the Company had $15.1 million of loans in non-accrual status compared
to $9.8 million as of December 31, 2000 and $12.5 million as of December 31,
1999.

     Real estate acquired by the Company as a result of foreclosure or
deed-in-lieu of foreclosure and repossessed assets is classified as real estate
owned until sold. These foreclosed assets are considered held for sale and are
carried at the lower of fair value minus the estimated costs to sell the
property. After the date of acquisition, all costs incurred in maintaining the
property are expensed. The Company performs ongoing inspections of the
properties and adjusts the carrying value as needed. The Company attempts to
sell all properties through brokers and its own personnel. At December 31, 2001,
the Company had $1.2 million in these properties compared to $893,000 as of
December 31, 2000.

                                       21
<Page>

     DELINQUENT LOANS. The following table sets forth information concerning
delinquent loans that are still accruing in the held for investment and held for
sale loan portfolio at December 31, 2001, in dollar amounts and as a percentage
of each category of the Company's loan portfolio. The amounts presented
represent the total outstanding principal balances of the related loans, rather
than the actual payment amounts which are past due.

<Table>
<Caption>
                                    30-59 Days                 60-89 Days               90 Days or More
                              -----------------------    -----------------------    -----------------------
                                           Percent of                 Percent of                 Percent of
                                              Loan                       Loan                       Loan
                                Amount      Category       Amount      Category       Amount      Category
                              ----------   ----------    ----------   ----------    ----------   ----------
                                                          (Dollars in Thousands)
<S>                           <C>                <C>     <C>                <C>     <C>                <C>
Mortgage loans:
  Single-family residential   $   15,634         0.76%   $    5,945         0.29%   $    5,432         0.26%
  Multi-family residential           567         1.16           162         0.33            --         0.00
  Commercial real estate           3,848         1.15         1,510         0.45            --         0.00
  Construction and land            9,113         3.71         5,339         2.17           509         0.21
  Home equity                         62         0.48           258         2.01            30         0.23
                              ----------                 ----------                 ----------
Total mortgage loans              29,224         1.08        13,214         0.49         5,971         0.22
                              ----------                 ----------                 ----------

Other loans:
  Commercial business loans        1,257         2.93            42         0.10           774         1.80
  Other loans                      2,645         3.89           586         0.86           468         0.69
                              ----------                 ----------                 ----------
    Total other loans              3,902         3.51           628         0.57         1,242         1.12
                              ----------                 ----------                 ----------
    Total delinquent loans    $   33,126         1.18%   $   13,842         0.49%   $    7,213         0.26%
                              ==========                 ==========                 ==========
</Table>

                                       22
<Page>

     LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING AND NON-ACCRUING ASSETS.
The following table sets forth information with respect to, non-accruing loans,
and other real estate owned and loans past due 90 days or more and still
accruing in the held for investment and held for sale loan portfolio.

<Table>
<Caption>
                                                         Years Ended December 31,
                                         --------------------------------------------------------
                                           2001        2000        1999        1998        1997
                                         --------    --------    --------    --------    --------
                                                          (Dollars in Thousands)
<S>                                      <C>         <C>         <C>         <C>         <C>
Non-Accruing Assets:
  Mortgage loans:
    Single-family residential            $  7,663    $  3,335    $  2,899    $  7,067    $  9,395
    Multi-family residential                   --         340          --         131         319
    Commercial real estate                  4,086       2,979       5,568       6,534       8,436
    Construction and land                   2,117         524       1,793       1,761       1,131
    Home equity                                38           5         106         212         545
  Other loans:
    Commercial business loans                 558       1,482       1,783         346         835
    Other consumer loans                      631       1,111         325         181         570
                                         --------    --------    --------    --------    --------
        Total non-accrual loans            15,093       9,776      12,474      16,232      21,231
  Other real estate owned                     996         762         887         849         618
  Other repossessed assets                    231         131          --          --          --
                                         --------    --------    --------    --------    --------
    Total non-accruing assets              16,320      10,669      13,361      17,081      21,849

Loans past due 90 days or more and
   still accruing                           7,213       7,068       6,886       7,422          --
                                         --------    --------    --------    --------    --------
Non-accruing assets and loans past due
  90 days or more and still accruing     $ 23,533    $ 17,737    $ 20,247    $ 24,503    $ 21,849
                                         ========    ========    ========    ========    ========

Non-accruing assets to total loans
  including held for sale                    0.41%       0.36%       0.62%       1.16%       1.98%
Non-accruing assets to total assets          0.27%       0.20%       0.30%       0.45%       0.82%
Non-accruing loans to total loans
  including held for sale                    0.38%       0.33%       0.58%       1.10%       1.93%
Non-accruing loans to total assets           0.25%       0.19%       0.28%       0.43%       0.80%
</Table>

     Non-accrual loans and other real estate owned at December 31, 2001 totaled
$16.3 million, up from $10.7 million at December 31, 2000 and $13.4 million at
December 31, 1999.

     The interest income that would have been recorded during the year ended
December 31, 2001 if all of the Company's non-accrual loans at the end of such
period had been current in accordance with their terms during such period was
$935,000. The actual amount of interest recorded as income (on a cash basis) on
such loans during 2001 amounted to $46,000.

     CLASSIFIED AND CRITICIZED ASSETS. Federal regulations require that each
insured institution classify its assets on a regular basis. Furthermore, in
connection with examinations of insured institutions, federal examiners have
authority to identify problem assets and, if appropriate, classify them. There
are three classifications for problem assets: "substandard," "doubtful" and
"loss." Substandard assets have one or more defined weaknesses and are
characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that the
weaknesses make collection or liquidation in full on the

                                       23
<Page>

basis of currently existing facts, conditions and values questionable and there
is a high probability of loss. An asset classified as a loss is considered
uncollectible and of such little value that continuance as an asset of the
institution is not warranted. Another category designated as "special mention"
also must be established and maintained for assets which do not currently expose
an insured institution to a sufficient degree of risk to warrant classification
as substandard, doubtful or loss.

     For the twelve months ended December 31, 2001 classified assets
increased by $34.1 million to $60.1 million at December 31, 2001. The primary
reasons for this increase was the downward trend in the local economy, the
growth and changing mix of the loan portfolio, the increase in past due and
non-accrual loans, the three past-due construction loans previously mentioned
and the increased emphasis placed on loan review as evidenced by the
inclusion of single-family residential mortgage loans in our asset
classification system. In response to this increase, management continues to
enhance its loan servicing and collection procedures along with continued
emphasis on loan review and loan underwriting. The assets were classified
into the following categories at December 31, 2001, substandard $40.1
million, special mention $19.1 million, doubtful $382,000 and loss $246,000.

     ALLOWANCE FOR LOAN LOSSES. The Company's allowance for loan losses was
$20.0 million at December 31, 2001 or 132.8% of non-accrual loans and 0.50% of
the Company's total loans receivable, including loans held for sale, at such
date. The level of the allowance for loan losses is intended to be maintained at
a level sufficient to absorb all estimated, probable losses inherent in the loan
portfolio. In determining the appropriate level of the allowance for loan losses
and accordingly, the level of the provision for loan losses, the Company on a
quarterly basis reviews the mix and volume of the portfolio and its inherent
risks, the level of non-accruing loans and delinquencies, historical loss
experience, local and national economic conditions including the direction of
real estate values and current trends in regulatory supervision. As a result of
current economic conditions, an increase in the level of non-accruing loans, the
volume of loan originations, and current events in the Bank's primary market
area, the provision for loan losses was $8.8 million for the year ended December
31, 2001 compared to a provision of $652,000 for the year ended December 31,
2000.

                                       24
<Page>

     The following table sets forth the activity in the Company's allowance for
loan losses during the periods indicated.

<Table>
<Caption>
                                                         Year Ended December 31,
                                        ---------------------------------------------------------
                                          2001        2000        1999         1998        1997
                                        --------    --------    --------     --------    --------
                                                          (Dollars in Thousands)
<S>                                     <C>         <C>         <C>          <C>         <C>
Allowance at beginning of period        $ 14,638    $ 14,271    $ 16,617     $ 15,709    $  9,977
Provisions (Benefit)                       8,757         652      (1,843)       1,594       6,003
Increase as a result of acquisition           --         847          --           96          --
Charge-offs:
  Mortgage loans:
    Single-family residential              1,854         120         148          358         501
    Multi-family residential                  --          --          --           31         100
    Commercial real estate                    --         134         474          344         210
    Construction and land                     --           6          --           --          --
  Other loans                              2,411       1,926       1,043        1,386         507
                                        --------    --------    --------     --------    --------
    Total charge-offs                      4,265       2,186       1,665        2,119       1,318
Recoveries:
  Mortgage loans:
    Single-family residential                131          19         456          267         533
    Multi-family residential                  --          --          --           --          --
    Commercial real estate                    --          27          34          210         251
    Construction and land                     --          --          --            3          10
  Other loans                                780       1,008         672          857         253
                                        --------    --------    --------     --------    --------
    Total recoveries                         911       1,054       1,162        1,337       1,047

Allowance at end of period              $ 20,041    $ 14,638    $ 14,271     $ 16,617    $ 15,709
                                        ========    ========    ========     ========    ========
Allowance for loan losses to total
  non-accruing loans at end of period     132.78%     149.73%     114.40%      102.37%      73.69%
                                        ========    ========    ========     ========    ========
Allowance for loan losses to total
  loans at end of period(1)                 0.50%       0.49%       0.66%        1.07%       1.42%
                                        ========    ========    ========     ========    ========
</Table>

----------
(1)  Calculated on the basis of total loans including loans held for sale.

     The following table sets forth information concerning the allocation of the
Company's allowance for loan losses by loan category at the dates indicated.

<Table>
<Caption>
                                                                 At December 31,
             ---------------------------------------------------------------------------------------------------------------------
                    2001                    2000                    1999                    1998                    1997
             ---------------------   ---------------------   ---------------------   ---------------------   ---------------------
                       Percent of              Percent of              Percent of              Percent of              Percent of
                        Loans in                Loans in                Loans in                Loans in                Loans in
                          Each                    Each                    Each                    Each                    Each
                       Category to             Category to             Category to             Category to             Category to
              Amount   Gross Loans    Amount   Gross Loans    Amount   Gross Loans    Amount   Gross Loans    Amount   Gross Loans
             --------  -----------   --------  -----------   --------  -----------   --------  -----------   --------  -----------
                                                            (Dollars in Thousands)
<S>          <C>            <C>      <C>            <C>      <C>            <C>      <C>            <C>      <C>            <C>
Residential     8,463        73.96%     2,686        77.88%     5,890        81.08%     5,562        81.90%     5,853        80.36%
Commercial      7,599        24.60      9,237        19.75      5,579        16.75      7,721        17.16      6,696        19.25
Other loans     3,979         1.78      2,715         2.48      2,802         2.58      3,334         2.12      3,160         2.23
             --------  -----------   --------  -----------   --------  -----------   --------  -----------   --------   ----------
    Total    $ 20,041       100.34%  $ 14,638       100.11%  $ 14,271       100.41%  $ 16,617       101.18%  $ 15,709       101.84%
             ========  ===========   ========  ===========   ========  ===========   ========  ===========   ========   ==========
</Table>

     The Company will continue to monitor and modify its allowance for loan
losses as conditions dictate. While management believes, based on information
currently available, the Bank's allowance for loan losses is sufficient to cover
losses inherent in its loan portfolio at this time, no assurance can be given
that the Company's level of allowance for loan losses will be

                                       25
<Page>

sufficient to absorb future loan losses incurred by the Company, or that future
adjustments to the allowance for loan losses will not be necessary if economic
and other conditions differ substantially from those conditions used by
management to determine the current level of the allowance for loan losses. In
addition, the OTS, as an integral part of its examination process, periodically
reviews the Company's allowance for loan losses. Such agency may require the
Company to make adjustments to the loan loss reserve based upon their own
judgments which could differ from those of management.

SECURITIES ACTIVITIES

     GENERAL. As of December 31, 2001, the Company had securities totaling $1.5
billion or 25.5% of the Company's total assets at such date. The unrealized
appreciation on the Company's securities available for sale amounted to $9.8
million, net of income taxes, as of December 31, 2001. The securities investment
policy of the Company, which has been established by the Board of Directors, is
designed, among other things, to assist the Company in its asset/liability
management policies. The investment policy emphasizes principal preservation,
favorable returns on investments, maintaining liquidity within designated
guidelines, minimizing credit risk and maintaining flexibility. The current
securities investment policies permit investments in various types of assets
including obligations of the U.S. Treasury and federal agencies, investment
grade corporate obligations, various types of mortgage-backed and
mortgage-related securities, commercial paper, certificates of deposit, equities
and federal funds sold to financial institutions approved by the Board of
Directors.

     The Company's securities portfolio, on a non-consolidated basis, as of
December 31, 2001 was $69.4 million, consisting of equity investments and
certain corporate bonds which are not permitted investments for a federally
chartered thrift.

     At December 31, 2001, all of the Company's securities were classified as
available for sale. Such classification provides the Company with the
flexibility to sell securities if deemed appropriate in response to, among other
factors, changes in interest rates. Securities classified as available for sale
are carried at fair value. Unrealized gains and losses on available for sale
securities are recognized as direct increases or decreases in equity, net of
applicable income taxes.

                                       26
<Page>

     SECURITIES PORTFOLIO ACTIVITY. The following table sets forth the activity
in the Company's aggregate securities portfolio during the periods indicated.

<Table>
<Caption>
                                                               Year Ended December 31,
                                                     ------------------------------------------
                                                     2001 (Restated)       2000         1999
                                                     ---------------   -----------  -----------
                                                                (Dollars in Thousands)
<S>                                                   <C>              <C>          <C>
Securities at beginning of period                     $   1,888,946    $ 1,963,954  $ 2,029,041
Purchases:
  U.S. Government and agencies                                   --        219,313      121,954
  State and municipals                                           --          1,515           --
  Agency mortgage-backed securities                         193,731         65,589      153,489
  Agency CMOs                                                13,974         10,981       66,637
  Private CMOs                                                   --             16       38,130
  Other debt securities                                      88,844         45,180       44,497
  Marketable equity securities                               40,479         39,038       92,408
                                                      -------------    -----------  -----------
Total purchases                                             337,028        381,632      517,115

Sales:
  U.S. Government and agencies                               10,000        198,212           --
  State and municipals                                           --             --           --
  Agency mortgage-backed securities                          76,410         26,075           --
  Agency CMOs                                                    --            645           --
  Private CMOs                                                   --             --           --
  Other debt securities                                      59,496         39,797       23,681
  Marketable equity securities                               66,350         45,493       52,576
                                                      -------------    -----------  -----------
Total sales                                                 212,256        310,222       76,257

Repayments and prepayments:
  U.S. Government and agencies                              112,730          8,100       33,050
  State and municipals                                          115            140           --
  Agency mortgage-backed securities                         195,000        139,847      240,177
  Agency CMOs                                               109,018         35,805       46,949
  Private CMOs                                               76,058         24,592       69,754
  Other debt securities                                         170            103           --
  Marketable equity securities                                1,250             --           --
                                                      -------------    -----------  -----------
    Total repayment and prepayments                         494,341        208,587      389,930

Accretion of discount and (amortization of premium)             499          1,227      (10,497)
Write-down for other than temporary impairment              (14,506)            --       (9,069)
Unrealized gains or (losses) on available-for-sale
  securities                                                 23,269         60,942      (96,449)
                                                      -------------    -----------  -----------
Securities at end of period                           $   1,528,639    $ 1,888,946  $ 1,963,954
                                                      =============    ===========  ===========
</Table>

     MORTGAGE-BACKED AND MORTGAGE-RELATED SECURITIES. The Company purchases
mortgage-backed securities and mortgage-related securities in order to generate
positive interest rate spreads with minimal administrative expense, lower its
credit risk as a result of guarantees provided by FNMA, FHLMC and GNMA, increase
the liquidity of the Company and utilize these securities as collateral for
borrowing. The Company has primarily invested in mortgage-backed and mortgage-
related securities issued or sponsored by private issuers, and by GNMA, FNMA and
FHLMC. At December 31, 2001, the Company's securities included $1.1 billion, or
18.6% of total assets, of mortgage-backed and mortgage-related securities. At
such date, 13.0% of the mortgage-backed and mortgage-related securities were
adjustable rate and 87.0% were fixed rate. The portfolio of mortgage-backed and
mortgage-related securities had a weighted

                                       27
<Page>

average yield of 6.42%, and an anticipated or estimated duration of 3.28 years
as of December 31, 2001.

     The portfolio of mortgage-backed and mortgage-related securities consisted
of mortgage-backed securities of $642.6 million, or 10.7% of total assets,
and CMO's of $473.3 million, or 7.9% of total assets at December 31, 2001. The
mortgage backed securities were issued or guaranteed by GNMA, FHLMC or FNMA and
$130.1 million of the CMOs were issued or guaranteed by FHLMC and GNMA and
$343.2 million were privately issued and are all rated AAA.

     U.S. GOVERNMENT AND AGENCY OBLIGATIONS. At December 31, 2001, the Company's
U.S. Government securities portfolio totaled $1.1 million with a weighted
average maturity of 0.9 years. The U.S. Government agency securities portfolio,
consisting of callable securities, totaled $56.5 million with a weighted average
maturity of 7.2 years and a weighted average life of 0.6 years to the call date.

     OTHER SECURITIES. At December 31, 2001 the Company's other securities
totaled $178.3 million or 3.0% of total assets. Other securities consist of
$176.8 million in corporate bonds, $1.3 million in municipal bonds and $250,000
in foreign bonds. The corporate bonds consist of $126.7 in fixed rate bonds and
$50.1 million in adjustable-rate bonds using three month LIBOR as the primary
index. The weighted average maturity of the corporate bond portfolio is 23.9
years.

     In the corporate bond portfolio, at December 31, 2001, the Company held
four bonds whose carrying value was written down by an aggregate of $14.5
million in the fourth quarter of 2001 based on management's decision that these
bonds were other than temporarily impaired. Three of these issues were
collateralized bond obligations which accounted for $9.7 million of the
write-down in the fourth quarter of 2001. The fourth bond, which was corporate
debt, was written down by $4.8 million in the fourth quarter of 2001. At
December 31, 2001, the carrying value of these four bonds was $10.0 million
compared to a carrying value of $24.5 million for the four bonds at December 31,
2000. The Company will continue to monitor the status of individual securities
issues in its securities available for sale portfolio and, in accordance with
generally accepted accounting principles, determine if any securities are
permanently impaired and record impairment charges if necessary.

                                       28
<Page>

     The following table sets forth certain information regarding the
contractual maturities of the Bank's U.S. Government Agency obligations and
other securities (all of which were classified as available for sale) at
December 31, 2001.

<Table>
<Caption>
                                                                   At December 31, 2001
                         ---------------------------------------------------------------------------------------------------------
                          Maturing      Weighted      Maturing     Weighted    Maturing in    Weighted     Maturing     Weighted
                          in Under      Average       in Under     Average        Under       Average       in Over     Average
                           1 Year        Yield        1-5 Years     Yield      6-10 Years      Yield       10 Years       Yield
                         -----------  -----------   -----------  -----------   -----------  -----------   -----------  -----------
                                                                  (Dollars in Thousands)
<S>                      <C>                <C>     <C>                 <C>    <C>                 <C>    <C>                 <C>
U.S. Government and
  federal agency
  obligations            $     1,000        11.63%  $        --         0.00%  $    55,775         6.21%  $        --         0.00%
Other securities                  25         6.75        23,320         5.74        37,785         7.17       140,547         7.84
                         -----------                -----------                -----------                -----------
                         $     1,025                $    23,320                $    93,560                $   140,547
                         ===========                ===========                ===========                ===========
</Table>

     EQUITY SECURITIES. At December 31, 2001 the Company's investment in equity
securities was $176.8 million or 3% of assets. The equity investment consisted
primarily of $102.9 million in FHLB stock, $34.3 million in mutual funds, $19.8
million in preferred stock and $19.7 million in common stock. The required level
of investment in FHLB stock as a member is the higher of 5% of the amount of
advances the Bank has outstanding with the FHLB or 1% of residential mortgage
loans. There is no market for the Company's FHLB stock, however, when the
required level of ownership declines, the FHLB repurchases the stock. All equity
investments are classified as available for sale.

SOURCES OF FUNDS

     GENERAL. Deposits, repayments and prepayments of loans and securities,
proceeds from sales of loans and securities, proceeds from maturing securities
and cash flows from operations are the primary sources of the Company's funds
for use in lending, investing and for other general purposes. The Company also
utilizes borrowings, primarily FHLB advances and reverse repurchase agreements,
to fund its operations when needed.

     Depending upon market conditions and funding needs, the Bank at times will
use brokered CDs as an alternative source of funds. The brokered CDs will be
issued by nationally recognized brokerage firms approved by the Board of
Directors. At December 31, 2001 and 2000 the balance in brokered CDs was $134.9
million and $74.9 million, respectively.

     DEPOSITS. The Bank offers a variety of deposit accounts which have a range
of interest rates and terms. At December 31, 2001, the Bank's deposit accounts
consisted of savings (including club accounts), NOW accounts, checking accounts,
money market accounts and certificates of deposit ("CDs") (including brokered
CDs). The Bank also offers certificates of deposit accounts with balances in
excess of $100,000 at preferential rates (jumbo certificates) and also
Individual Retirement Accounts ("IRA") and other qualified plan accounts. While
jumbo certificate of deposit accounts are accepted by the Bank at preferential
rates, other than brokered CDs, the Bank does not solicit such deposits outside
of its market area as such deposits are more difficult to retain than core
deposits. To enhance the deposit products it offers, build customer
relationships and increase market share in certain markets, the Bank offered a
new money market account (that also required the opening of a corresponding
checking account) in

                                       29
<Page>

2001.

     At December 31, 2001, the Bank's deposits totaled $2.9 billion, of which
83.3% were interest bearing deposits at such date. Core deposits (savings
accounts, non-interest bearing commercial and retail demand deposits, money
market accounts and NOW accounts) were $1.8 billion or 62.6% of total deposits
and certificates of deposit were $1.1 billion or 37.4% of total deposits.
Included in the Bank's certificates of deposit were $134.9 million of brokered
deposits at December 31, 2001. Although the Bank has a significant portion of
its deposits in core deposits, management monitors the activity in these
accounts and, based on historical experience and the Bank's current pricing
strategy, believes it will continue to retain a large portion of these deposits.
The Bank is not limited with respect to the rates it may offer on deposit
products.

     The flow of deposits is influenced significantly by general economic
conditions, changes in prevailing interest rates and competition. The Bank's
deposits are primarily obtained from the areas in which its branch offices are
located. The Bank relies primarily on competitive pricing of its deposit
products, customer service and long standing relationships with customers to
attract and retain deposits. The Bank also utilizes traditional marketing
methods including television, radio and print media and direct mail programs to
attract new customers and deposits.

     In addition, the Bank's business development officers have actively
solicited, through individual meetings and other contacts, deposit accounts,
particularly commercial accounts. To attract and retain commercial deposit
accounts, the Bank offers a complete line of commercial account products and
services. The Bank's lending officers and branch managers have increased their
efforts to solicit new deposits from the Bank's loan customers and other
residents and businesses in their market area.

     The Bank's market areas are Staten Island, New York, Brooklyn, New York and
the following counties in New Jersey, Ocean, Monmouth, Union and Middlesex.
Staten Island, which represents 70.2% of the Bank's total deposits continues to
be the Bank's primary market area. The Bank continues to hold over 28% of the
deposits in the Staten Island market which as of June 30, 2001 was the highest
percentage held by any one institution on Staten Island.

     For the year ended December 31, 2001, deposits, before interest credited,
increased $474.3 million compared with an increase of $88.1 million in 2000
excluding the $368.4 million acquired in acquisitions. Inclusive of interest
credited, deposits increased $556.1 million in 2001 and $525.0 million in 2000
including acquired deposits.

                                       30
<Page>

     The following table sets forth the activity in the Bank's deposits during
the periods indicated.

<Table>
<Caption>
                                                  Year Ended December 31,
                                          ----------------------------------------
                                              2001          2000          1999
                                          ------------  ------------  ------------
                                                   (Dollars in Thousands)
<S>                                       <C>           <C>           <C>
Beginning balance                         $  2,345,213  $  1,820,233  $  1,729,060
Net increase excluding acquired deposits       474,265        88,145        42,065
Acquired deposits                                   --       368,438            --
Interest credited                               81,850        68,397        49,108
                                          ------------  ------------  ------------
Increase in deposits                           556,115       524,980        91,173
                                          ------------  ------------  ------------
Ending balance                            $  2,901,328  $  2,345,213  $  1,820,233
                                          ============  ============  ============
</Table>

     The following table sets forth, by various interest rate categories, the
certificates of deposit with the Bank at the dates indicated.

<Table>
<Caption>
                            Year Ended December 31,
                     ------------------------------------
                         2001         2000        1999
                     -----------   ----------  ----------
                            (Dollars in Thousands)
<S>                  <C>           <C>         <C>
0.00 to 2.99%        $   250,444   $       --  $      343
3.00 to 3.99%            268,821          292       1,912
4.00 to 4.99%            295,784      216,385     406,285
5.00 to 6.99%            256,381      694,684     162,666
7.00 to 8.99%             12,470       36,223       1,837
                     -----------   ----------  ----------
Total                $ 1,083,900   $  947,584  $  573,043
                     ===========   ==========  ==========
</Table>

     WEIGHTED AVERAGE RATE. The following table sets forth the amount and
remaining maturities of the Bank's certificates of deposit at December 31, 2001.

<Table>
<Caption>
                               Over Six Months   Over One Year   Over Two Years
                  Six Months       Through          Through         Through          Over
                   And Less        One Year        Two Years      Three Years     Three Years
                  ----------   ---------------   -------------   --------------   -----------
                                            (Dollars in Thousands)
<S>               <C>          <C>               <C>             <C>              <C>
0.00 to $ 2.99%   $  154,520   $        64,499   $      14,716   $            8   $    16,701
3.00 to 3.99%        104,438            91,311          64,117            8,328           626
4.00 to 4.99%         95,524           152,853          20,589           16,340        10,478
5.00 to 6.99%        134,077            34,437          45,340           13,361        29,166
7.00 to 8.99%          1,395               347             862               --         9,867
                  ----------   ---------------   -------------   --------------   -----------
Total             $  489,954   $       343,447   $     145,624   $       38,037   $    66,838
                  ==========   ===============   =============   ==============   ===========
</Table>

                                       31
<Page>

     As of December 31, 2001, the aggregate amount of outstanding certificates
of deposit in amounts greater than or equal to $100,000 was approximately $285.2
million. The following table presents the maturity of these certificates of
deposit at such date.

<Table>
<Caption>
                                     December 31, 2001
                                 --------------------------
                                   (Dollars in Thousands)
<S>                                      <C>
3 months or less                         $ 114,746
Over 3 months through 6 months              47,141
Over 6 months through 12 months             82,326
Over 12 months                              40,945
                                         ---------
                                         $ 285,158
                                         =========
</Table>

     The following table sets forth the average dollar amount of deposits in the
various types of deposit accounts offered by the Bank at the dates indicated.

<Table>
<Caption>
                                                      Year Ended December 31,
                           -----------------------------------------------------------------------------
                                     2001                       2000                       1999
                           -----------------------    -----------------------    -----------------------
                                         Weighted                   Weighted                   Weighted
                             Average     Average        Average     Average        Average     Average
                             Balance       Rate         Balance       Rate         Balance       Rate
                           -----------  ----------    -----------  ----------    -----------  ----------
                                                       (Dollars in Thousands)
<S>                        <C>                <C>     <C>                <C>     <C>                <C>
Savings accounts           $   817,890        2.18%   $   793,908        2.45%   $   752,131        2.49%
Certificates of deposits     1,017,634        5.22        827,504        5.41        556,635        4.76
Money market accounts          228,297        3.70        129,002        3.20         87,983        2.96
NOW accounts                   101,981        1.83         90,085        2.03         77,088        2.01
Demand deposits                453,120                    382,814                    321,414
                           -----------                -----------                -----------
    Total                  $ 2,618,922        3.10%   $ 2,223,313        3.16%   $ 1,795,251        2.75%
                           ===========  ==========    ===========  ==========    ===========  ==========
</Table>

     BORROWED FUNDS. The Company's borrowings at December 31, 2001 were $2.5
billion or 40.9% of assets and consisted of primarily FHLB advances secured by
the Bank's residential loan portfolio and reverse repurchase agreements entered
into with the FHLB and nationally recognized securities brokerage firms. FHLB
advances and reverse repurchase agreements were $1.7 billion and $660.4 million,
respectively, at December 31, 2001. SIBMC entered into repurchase agreements of
$150.0 million each in the fourth quarter of 2001 and first quarter of 2002 with
two individual financial institutions. SIBMC's obligations under these
repurchase agreements are fully guaranteed by the Bank. The outstanding balances
of the repurchase agreement was $66.3 million at December 31, 2001.

     In 2001, borrowings were used to fund certain higher yielding loan
originations primarily at SIBMC. The Company intends to reduce borrowings as a
percentage of assets in the year 2002 and to continue to emphasize more
traditional funding sources such as deposit growth in all markets.

                                       32
<Page>

     The following table sets forth information with respect to the Company's
borrowings at and during the periods indicated.

<Table>
<Caption>
                                    At or For the Year Ended December 31,
                                  -----------------------------------------
                                      2001           2000           1999
                                  -----------    -----------    -----------
                                           (Dollars in Thousands)
<S>                               <C>            <C>            <C>
Maximum month-end balance         $ 2,535,392    $ 2,249,963    $ 2,049,372
Average balance                   $ 2,399,963    $ 2,147,718    $ 1,674,990
Year end balance                  $ 2,451,762    $ 2,241,011    $ 2,049,372
Weighted average interest rate:
At end of year                           4.64%          6.28%          5.65%
During the year                          5.39%          6.19%          5.36%
</Table>

TRUST ACTIVITIES

     The Bank also provides a full range of trust and investment services, and
acts as executor or administrator of estates and as trustee for various types of
trusts. Trust and investment services are offered through the Bank's Trust
Department which was acquired in 1995. Fiduciary and investment services are
provided primarily to persons and entities located in our banking branch market
area. Services offered include fiduciary services for trusts and estates, money
management, custodial services and pension and employee benefits consulting. As
of December 31, 2001, the Trust Department maintained approximately 357
trust/fiduciary accounts with an aggregate value of $289.2 million.

     The accounts maintained by the Trust/Investment Services Division consist
of "managed" and "non-managed" accounts. "Managed" accounts are those for which
the Bank has responsibility for administration and investment management and/or
investment advice. "Non-managed" accounts are those accounts for which the Bank
merely acts as a custodian. The Company receives fees depending upon the level
and type of service provided. The Trust Department administers various trust
accounts (revocable, irrevocable, charitable trusts, and trusts under wills),
agency accounts (various investment fund products), estate accounts and employee
benefit plan accounts (assorted plans and IRA accounts). Two trust officers and
related staff are assigned to the Trust Department. The administration of trust
and fiduciary accounts are monitored by the Trust Investment Committee of the
Board of Directors of SI Bank & Trust as well as a management committee
consisting of certain senior officers of the Bank.

SUBSIDIARIES

     SIB Mortgage Corp., doing business as Ivy Mortgage, (SIBMC) is a wholly
owned subsidiary of the Bank incorporated in the State of New Jersey in 1998.
SIBMC currently originates loans in 42 states and had assets totaling $1.5
billion at December 31, 2001.

     SIB Investment Corporation ("SIBIC") is a wholly owned subsidiary of the
Bank that was incorporated in the State of New Jersey in 1998 for the purpose of
managing certain investments of the Bank. The Bank transferred the common stock
and a majority of the preferred stock of SIFC to SIBIC. The consolidated assets
of SIBIC at December 31, 2001 were $906.6 million.

                                       33
<Page>

     Staten Island Funding Corporation ("SIFC") is a wholly owned subsidiary of
SIBIC incorporated in the State of Maryland in 1998 for the purpose of
establishing a real estate investment trust ("REIT"). The Bank transferred real
estate mortgage loans totaling $648.0 million, net, to SIFC in 1998. In return,
the Bank received all the shares of common stock and preferred stock in SIFC.
The assets of SIFC totaled $655.9 million at December 31, 2001.

     SIB Financial Services Corporation ("SIBFSC") is a wholly owned subsidiary
of the Bank incorporated in the State of New York in 2000. SIBFSC was formed as
a licensed life insurance agency to sell the products of SBLI USA Mutual
Insurance Company, Inc. SIBFSC had assets of $712,000 as of December 31, 2001.

EMPLOYEES

     The Bank had 606 full-time employees and 217 part-time employees at
December 31, 2001. SIBMC had 771 full-time employees and 137 part-time employees
at December 31, 2001. None of these employees are represented by a collective
bargaining agreement and the Bank and SIBMC believes that it enjoys good
relations with its personnel.

                                       34
<Page>

                                   REGULATION

GENERAL

     The Bank is a federally chartered and insured savings bank subject to
extensive regulation and supervision by the OTS, as the primary federal
regulator of savings associations, and the FDIC, as the administrator of the
Bank Insurance Fund ("BIF").

     The federal banking laws contain numerous provisions affecting various
aspects of the business and operations of savings associations and savings and
loan holding companies. The following description of statutory and regulatory
provisions and proposals, which is not intended to be a complete description of
these provisions or their effects on the Company or the Bank, is qualified in
its entirety by reference to the particular statutory or regulatory provisions
or proposals.

REGULATION OF SAVINGS AND LOAN HOLDING COMPANIES

     HOLDING COMPANY ACQUISITIONS. The Company is a savings and loan holding
company within the meaning of the Home Owners' Loan Act, as amended ("HOLA").
The HOLA and OTS regulations generally prohibit a savings and loan holding
company, without prior OTS approval, from acquiring, directly or indirectly, the
ownership or control of any other savings association or savings and loan
holding company, or all, or substantially all, of the assets or more than 5% of
the voting shares thereof. These provisions also prohibit, among other things,
any director or officer of a savings and loan holding company, or any individual
who owns or controls more than 25% of the voting shares of such holding company,
from acquiring control of any savings association not a subsidiary of such
savings and loan holding company, unless the acquisition is approved by the OTS.

     HOLDING COMPANY ACTIVITIES. The Company operates as a unitary savings and
loan holding company. Generally, there are limited restrictions on the
activities of a unitary savings and loan holding company which applied to become
or was a unitary savings and loan holding company prior to May 4, 1999 and its
non-savings association subsidiaries.

     Under the enacted Gramm-Leach-Bliley Act of 1999 (the "GLBA"), companies
which applied to the OTS after May 4, 1999 to become unitary savings and loan
holding companies are restricted to engaging in those activities traditionally
permitted to multiple savings and loan holding companies. Under the GLBA, no
company may acquire control of a savings and loan holding company after May 4,
1999, unless the company is engaged only in activities traditionally permitted
to a multiple savings and loan holding company or newly permitted to a financial
holding company under Section 4(k) of the Bank Holding Company Act. Corporate
reorganizations are permitted, but the transfer of grandfathered unitary thrift
holding company status through acquisition is not permitted.

     If the Director of the OTS determines that there is reasonable cause to
believe that the continuation by a savings and loan holding company of an
activity constitutes a serious risk to the financial safety, soundness or
stability of its subsidiary savings institution, the Director may

                                       35
<Page>

impose such restrictions as deemed necessary to address such risk, including
limiting (i) payment of dividends by the savings institution; (ii) transactions
between the savings institution and its affiliates; and (iii) any activities of
the savings institution that might create a serious risk that the liabilities of
the holding company and its affiliates may be imposed on the savings
institution. Notwithstanding the above rules as to permissible business
activities of grandfathered unitary savings and loan holding companies under the
GLBA, if the savings institution subsidiary of such a holding company fails to
meet the Qualified Thrift Lender ("QTL") test, as discussed under "Regulation of
Federal Savings Banks - Qualified Thrift Lender Test," then such unitary holding
company also shall become subject to the activities restrictions applicable to
multiple savings and loan holding companies and, unless the savings institution
requalifies as a QTL within one year thereafter, shall register as, and become
subject to the restrictions applicable to, a bank holding company.

     The GLBA also imposed new financial privacy obligations and reporting
requirements on all financial institutions. The privacy regulations require,
among other things, that financial institutions establish privacy policies and
disclose such policies to its customers at the commencement of a customer
relationship and annually thereafter. In addition, financial institutions are
required to permit customers to opt out of the financial institution's
disclosure of the customer's financial information to non-affiliated third
parties. Such regulations became mandatory as of July 1, 2001.

     The HOLA requires every savings association subsidiary of a savings and
loan holding company to give the OTS at least 30 days advance notice of any
proposed dividends to be made on its guarantee, permanent or other
non-withdrawable stock, or else such dividend will be invalid.

     AFFILIATE RESTRICTIONS. Transactions between a savings association and its
"affiliates" are subject to quantitative and qualitative restrictions under
Sections 23A and 23B of the Federal Reserve Act. Affiliates of a savings
association include, among other entities, the savings association's holding
company and companies that are under common control with the savings
association.

     In general, Sections 23A and 23B, and OTS regulations issued in connection
therewith limit the extent to which a savings association or its subsidiaries
may engage in certain "covered transactions" with affiliates to an amount equal
to 10% of the association's capital and surplus, in the case of covered
transactions with any one affiliate, and to an amount equal to 20% of such
capital and surplus, in the case of covered transactions with all affiliates. In
addition, a savings association and its subsidiaries may engage in covered
transactions and certain other transactions only on terms and under
circumstances that are substantially the same, or at least as favorable to the
savings association or its subsidiary, as those prevailing at the time for
comparable transactions with nonaffiliated companies. A "covered transaction" is
defined to include a loan or extension of credit to an affiliate; a purchase of
investment securities issued by an affiliate; a purchase of assets from an
affiliate, with certain exceptions; the acceptance of securities issued by an
affiliate as collateral for a loan or extension of credit to any party; or the
issuance of a guarantee, acceptance or letter of credit on behalf of an
affiliate.

                                       36
<Page>

     In addition, under the OTS regulations, a savings association may not make
a loan or extension of credit to an affiliate unless the affiliate is engaged
only in activities permissible for bank holding companies; a savings association
may not purchase or invest in securities of an affiliate other than shares of a
subsidiary; a savings association and its subsidiaries may not purchase a
low-quality asset from an affiliate; and covered transactions and certain other
transactions between a savings association or its subsidiaries and an affiliate
must be on terms and conditions that are consistent with safe and sound banking
practices. With certain exceptions, each loan or extension of credit by a
savings association to an affiliate must be secured by collateral with a market
value ranging from 100% to 130% (depending on the type of collateral) of the
amount of the loan or extension of credit.

     The OTS regulation generally excludes all non-bank and non-savings
association subsidiaries of savings associations from treatment as affiliates,
except to the extent that the OTS or the Federal Reserve Board decides to treat
such subsidiaries as affiliates. The regulation also requires savings
associations to make and retain records that reflect affiliate transactions in
reasonable detail, and provides that certain classes of savings associations may
be required to give the OTS prior notice of affiliate transactions.

REGULATION OF FEDERAL SAVINGS BANKS

     REGULATORY SYSTEM. As a federally insured savings bank, lending activities
and other investments of the Bank must comply with various statutory and
regulatory requirements. The Bank is regularly examined by the OTS and must file
periodic reports concerning its activities and financial condition.

     Although the OTS is the Bank's primary regulator, the FDIC has "backup
enforcement authority" over the Bank. The Bank's eligible deposit accounts are
insured by the FDIC under the BIF, up to applicable limits.

     FEDERAL HOME LOAN BANKS. The Bank is a member of the FHLB System. Among
other benefits, FHLB membership provides the Bank with a central credit
facility. The Bank is required to own capital stock in an FHLB in an amount
equal to the greater of: 1% of its aggregate outstanding principal amount of its
residential mortgage loans, home purchase contracts and similar obligations at
the beginning of each calendar year, or 5% of its FHLB advances (borrowings).
The current investment in FHLB stock is based on 5% of the Bank's borrowings
outstanding from the FHLB.

     REGULATORY CAPITAL REQUIREMENTS. OTS capital regulations require savings
banks to satisfy minimum capital standards, risk-based capital requirements, a
leverage requirement and a tangible capital requirement. Savings banks must meet
each of these standards in order to be deemed in compliance with OTS capital
requirements. In addition, the OTS may require a savings association to maintain
capital above the minimum capital levels.

     All savings banks are required to meet a minimum risk-based capital
requirement of total capital (core capital plus supplementary capital) equal to
8% of risk-weighted assets (which includes the credit risk equivalents of
certain off-balance sheet items). In calculating total capital

                                       37
<Page>

for purposes of the risk-based requirement, supplementary capital may not exceed
100% of core capital. Under the leverage requirement, a savings bank is required
to maintain core capital equal to a minimum of 3% of adjusted total assets. A
savings bank is also required to maintain tangible capital in an amount at least
equal to 1.5% of its adjusted total assets.

     These capital requirements are viewed as minimum standards by the OTS, and
most institutions are expected to maintain capital levels well above the
minimum. In addition, the OTS regulations provide that minimum capital levels
higher than those provided in the regulations may be established by the OTS for
individual savings associations, upon a determination that the savings
association's capital is or may become inadequate in view of its circumstances.
The OTS regulations provide that higher individual minimum regulatory capital
requirements may be appropriate in circumstances where, among others: (1) a
savings association has a high degree of exposure to interest rate risk,
prepayment risk, credit risk, concentration of credit risk, certain risks
arising from nontraditional activities, or similar risks or a high proportion of
off-balance sheet risk; (2) a savings association is growing, either internally
or through acquisitions, at such a rate that supervisory problems are presented
that are not dealt with adequately by OTS regulations; and (3) a savings
association may be adversely affected by the activities or condition of its
holding company, affiliates, subsidiaries or other persons or savings
associations with which it has significant business relationships. The Bank is
not subject to any such individual minimum regulatory capital requirement.

     The Bank's tangible capital ratio was 7.01%, its core capital ratio was
7.05% and its total risk-based capital ratio was 13.35% at December 31, 2001.

     The OTS and the FDIC generally are authorized to take enforcement action
against a savings association that fails to meet its capital requirements, which
action may include restrictions on operations and banking activities, the
imposition of a capital directive, a cease-and-desist order, civil money
penalties or harsher measures such as the appointment of a receiver or
conservator or a forced merger into another institution. In addition, under
current regulatory policy, an association that fails to meet its capital
requirements is prohibited from paying any dividends.

     PROMPT CORRECTIVE ACTION. The prompt corrective action regulation of the
OTS, promulgated under the Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA"), requires certain mandatory actions and authorizes certain
other discretionary actions to be taken by the OTS against a savings bank that
falls within certain undercapitalized capital categories specified in the
regulation.

     The regulation establishes five categories of capital classification: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized." Under the regulation, the
ratio of total capital to risk-weighted assets, core capital to risk-weighted
assets and the leverage ratio are used to determine an institution's capital
classification. The Bank meets the capital requirements of a "well capitalized"
institution under applicable OTS regulations.

                                       38
<Page>

     In general, the prompt corrective action regulation prohibits an insured
depository institution from declaring any dividends, making any other capital
distribution, or paying a management fee to a controlling person if, following
the distribution or payment, the institution would be within any of the three
undercapitalized categories. In addition, adequately capitalized institutions
may accept brokered deposits only with a waiver from the FDIC and are subject to
restrictions on the interest rates that can be paid on such deposits.
Undercapitalized institutions may not accept, renew or roll-over brokered
deposits.

     Institutions that are classified as undercapitalized are subject to certain
mandatory supervisory actions, including: (i) increased monitoring by the
appropriate federal banking agency for the institution and periodic review of
the institution's efforts to restore its capital, (ii) a requirement that the
institution submit a capital restoration plan acceptable to the appropriate
federal banking agency and implement that plan, and that each company having
control of the institution guarantee compliance with the capital restoration
plan in an amount not exceeding the lesser of 5% of the institution's total
assets at the time it received notice of being undercapitalized, or the amount
necessary to bring the institution into compliance with applicable capital
standards at the time it fails to comply with the plan, and (iii) a limitation
on the institution's ability to make any acquisition, open any new branch
offices, or engage in any new line of business without the prior approval of the
appropriate federal banking agency for the institution or the FDIC.

     The regulation also provides that the OTS may take any of certain
additional supervisory actions against an undercapitalized institution if the
agency determines that such actions are necessary to resolve the problems of the
institution at the least possible long-term cost to the deposit insurance fund.
These supervisory actions include: (i) requiring the institution to raise
additional capital or be acquired by another institution or holding company if
certain grounds exist, (ii) restricting transactions between the institution and
its affiliates, (iii) restricting interest rates paid by the institution on
deposits, (iv) restricting the institution's asset growth or requiring the
institution to reduce its assets, (v) requiring replacement of senior executive
officers and directors, (vi) requiring the institution to alter or terminate any
activity deemed to pose excessive risk to the institution, (vii) prohibiting
capital distributions by bank holding companies without prior approval by the
FRB, (viii) requiring the institution to divest certain subsidiaries, or
requiring the institution's holding company to divest the institution or certain
affiliates of the institution, and (ix) taking any other supervisory action that
the agency believes would better carry out the purposes of the prompt corrective
action provisions of FDICIA.

     Institutions classified as undercapitalized that fail to submit a timely,
acceptable capital restoration plan or fail to implement such a plan are subject
to the same supervisory actions as significantly undercapitalized institutions.
Significantly undercapitalized institutions are subject to the mandatory
provisions applicable to undercapitalized institutions. The regulation also
makes mandatory for significantly undercapitalized institutions certain of the
supervisory actions that are discretionary for institutions classified as
undercapitalized, creates a presumption in favor of certain discretionary
supervisory actions, and subjects significantly undercapitalized institutions to
additional restrictions, including a prohibition on paying bonuses or raises to
senior executive officers without the prior written approval of the appropriate
federal bank

                                       39
<Page>

regulatory agency. In addition, significantly undercapitalized institutions may
be subjected to certain of the restrictions applicable to critically
undercapitalized institutions.

     The regulation requires that an institution be placed into conservatorship
or receivership within 90 days after it becomes critically undercapitalized,
unless the OTS, with concurrence of the FDIC, determines that other action would
better achieve the purposes of the prompt corrective action provisions of
FDICIA. Any such determination must be renewed every 90 days. A depository
institution also must be placed into receivership if the institution continues
to be critically undercapitalized on average during the fourth quarter after the
institution initially became critically undercapitalized, unless the
institution's federal bank regulatory agency, with concurrence of the FDIC,
makes certain positive determinations with respect to the institution.

     Critically undercapitalized institutions are also subject to the
restrictions generally applicable to significantly undercapitalized institutions
and to a number of other severe restrictions. Critically undercapitalized
institutions may be prohibited from engaging in a number of activities,
including entering into certain transactions or paying interest above a certain
rate on new or renewed liabilities.

     If the OTS determines that an institution is in an unsafe or unsound
condition, or if the institution is deemed to be engaging in an unsafe and
unsound practice, the OTS may, if the institution is well capitalized,
reclassify it as adequately capitalized; if the institution is adequately
capitalized but not well capitalized, require it to comply with restrictions
applicable to undercapitalized institutions; and, if the institution is
undercapitalized, require it to comply with certain restrictions applicable to
significantly undercapitalized institutions.

     At December 31, 2001, the Bank was in the "well-capitalized" category for
purposes of the above regulations and as such is not subject to any of the above
mentioned restrictions.

     CONSERVATORSHIP/RECEIVERSHIP. In addition to the grounds discussed under
"Prompt Corrective Action," the OTS (and, under certain circumstances, the FDIC)
may appoint a conservator or receiver for a savings association if any one or
more of a number of circumstances exist, including, without limitation, the
following: (i) the institution's assets are less than its obligations to
creditors and others, (ii) a substantial dissipation of assets or earnings due
to any violation of law or any unsafe or unsound practice, (iii) an unsafe or
unsound condition to transact business, (iv) a willful violation of a final
cease-and-desist order, (v) the concealment of the institution's books, papers,
records or assets or refusal to submit such items for inspection to any examiner
or lawful agent of the appropriate federal banking agency or state bank or
savings association supervisor, (vi) the institution is likely to be unable to
pay its obligations or meet its depositors' demands in the normal course of
business, (vii) the institution has incurred, or is likely to incur, losses that
will deplete all or substantially all of its capital, and there is no reasonable
prospect for the institution to become adequately capitalized without federal
assistance, (viii) any violation of law or unsafe or unsound practice that is
likely to cause insolvency or substantial dissipation of assets or earnings,
weaken the institution's condition, or otherwise seriously prejudice the
interests of the institution's depositors or the federal deposit insurance fund,
(ix) the institution is undercapitalized and the institution has no reasonable
prospect of becoming adequately capitalized, fails to become adequately
capitalized when

                                       40
<Page>

required to do so, fails to submit a timely and acceptable capital restoration
plan, or materially fails to implement an accepted capital restoration plan, (x)
the institution is critically undercapitalized or otherwise has substantially
insufficient capital, or (xi) the institution is found guilty of certain
criminal offenses related to money laundering.

     ENFORCEMENT POWERS. The OTS and, under certain circumstances the FDIC, have
substantial enforcement authority with respect to savings associations,
including authority to bring various enforcement actions against a savings
association and any of its "institution-affiliated parties" (a term defined to
include, among other persons, directors, officers, employees, controlling
stockholders, agents and stockholders who participate in the conduct of the
affairs of the institution). This enforcement authority includes, without
limitation: (i) the ability to terminate a savings association's deposit
insurance, (ii) institute cease-and-desist proceedings, (iii) bring suspension,
removal, prohibition and criminal proceedings against institution-affiliated
parties, and (iv) assess substantial civil money penalties. As part of a
cease-and-desist order, the agencies may require a savings association or an
institution-affiliated party to take affirmative action to correct conditions
resulting from that party's actions, including to make restitution or provide
reimbursement, indemnification or guarantee against loss; restrict the growth of
the institution; and rescind agreements and contracts.

     CAPITAL DISTRIBUTION REGULATION. As a subsidiary of a savings and loan
holding company the Bank is required to provide advance notice to the OTS of any
proposed capital distribution on its capital stock.

     QUALIFIED THRIFT LENDER TEST. All savings institutions are required to meet
a QTL test to avoid certain restrictions on their operations. A savings
institution that does not meet the QTL test must either convert to a bank
charter or comply with the following restrictions on its operation. Upon the
expiration of three years from the date the savings institution ceases to be a
QTL, it must cease any activity and not retain any investment not permissible
for a national bank and immediately repay any outstanding FHLB advances (subject
to safety and soundness consideration).

     Currently, the QTL test under HOLA regulations requires that 65% of an
institution's "portfolio assets" (as defined) consist of certain housing and
consumer-related assets on a monthly average basis in nine out of every 12
months. Assets that qualify without limit for inclusion as part of the 65%
requirement are loans made to purchase, refinance, construct, improve or repair
domestic residential housing and manufactured housing; home equity loans;
mortgage-backed securities (where the mortgages are secured by domestic
residential housing or manufactured housing); stock issued by the FHLB; and
direct or indirect obligations of the FDIC. In addition, small business loans,
credit card loans, student loans and loans for personal, family and household
purposes are allowed to be included without limitation as qualified investments.
The following assets, among others, also may be included in meeting the test
subject to an overall limit of 20% of the savings institution's portfolio
assets: 50% of residential mortgage loans originated and sold within 90 days of
origination; 100% of consumer and educational loans (limited to 10% of total
portfolio assets); and stock issued by the FHLMC or the FNMA. Portfolio assets
consist of total assets minus the sum of (i) goodwill and other intangible
assets, (ii) property used by the savings institution to conduct its business,
and (iii)

                                       41
<Page>

liquid assets up to 20% of the institution's total assets.

     At December 31, 2001, under the expanded QTL test, approximately 93.8% of
the Bank's portfolio assets were qualified thrift investments.

     OTS regulations also permit a savings association to qualify as a QTL by
qualifying under the Code as a "domestic building and loan association." The
Bank is a domestic building and loan association as defined in the Code.

     FDIC ASSESSMENTS. The deposits of the Bank are insured to the maximum
extent permitted by the BIF, which is administered by the FDIC, and are backed
by the full faith and credit of the U.S. Government. As insurer, the FDIC is
authorized to conduct examinations of, and to require reporting by, FDIC-insured
institutions. It also may prohibit any FDIC-insured institution from engaging in
any activity the FDIC determines by regulation or order to pose a serious threat
to the FDIC. The FDIC also has the authority to initiate enforcement actions
against savings institutions, after giving the OTS an opportunity to take such
action.

     The FDIC may terminate the deposit insurance of any insured depository
institution, including the Bank, if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance temporarily during the hearing
process for the permanent termination of insurance, if the institution has no
tangible capital. If insurance of accounts is terminated, the accounts at the
institution at the time of the termination, less subsequent withdrawals, shall
continue to be insured for a period of six months to two years, as determined by
the FDIC. Management is aware of no existing circumstances which would result in
termination of the Bank's deposit insurance.

     The FDIC's deposit insurance premiums are assessed through a risk-based
system under which all insured depository institutions are placed into one of
nine categories and assessed insurance premiums based upon their level of
capital and supervisory evaluation. Under the system, institutions classified as
well capitalized and considered healthy pay the lowest premium while
institutions that are less than adequately capitalized and considered of
substantial supervisory concern pay the highest premium. Risk classification of
all insured institutions is made by the FDIC for each semi-annual assessment
period. The Bank paid $465,000 in insurance deposit premiums during 2001.

     COMMUNITY REINVESTMENT ACT AND THE FAIR LENDING LAWS. Savings associations
have a responsibility under the Community Reinvestment Act ("CRA") and related
regulations of the OTS to help meet the credit needs of their communities,
including low-and moderate-income neighborhoods. In addition, the Equal Credit
Opportunity Act and the Fair Housing Act (together, the "Fair Lending Laws")
prohibit lenders from discriminating in their lending practices on the basis of
characteristics specified in those statutes. An institution's failure to comply
with the provisions of CRA could, at a minimum, result in regulatory
restrictions on its activities, and failure to comply with the Fair Lending Laws
could result in enforcement actions by the OTS, as well as other federal
regulatory agencies and the Department of Justice.

                                       42
<Page>

     SAFETY AND SOUNDNESS GUIDELINES. The OTS and the other federal banking
agencies have established guidelines for safety and soundness, addressing
operational and managerial, as well as compensation matters for insured
financial institutions. Institutions failing to meet these standards are
required to submit compliance plans to their appropriate federal regulators. The
OTS and the other agencies have also established guidelines regarding asset
quality and earnings standards for insured institutions.

     CHANGE OF CONTROL. Subject to certain limited exceptions, no company can
acquire control of a savings association without the prior approval of the OTS,
and no individual may acquire control of a savings association if the OTS
objects. Any company that acquires control of a savings association becomes a
savings and loan holding company subject to extensive registration, examination
and regulation by the OTS. Conclusive control exists, among other ways, when an
acquiring party acquires more than 25% of any class of voting stock of a savings
association or savings and loan holding company, or controls in any manner the
election of a majority of the directors of the company. In addition, a
rebuttable presumption of control exists if, among other things, a person
acquires more than 10% of any class of a savings association or savings and loan
holding company's voting stock (or 25% of any class of stock) and, in either
case, any of certain additional control factors exist.

     Companies subject to the Bank Holding Company Act that acquire or own
savings associations are no longer defined as savings and loan holding companies
under the HOLA and, therefore, are not generally subject to supervision and
regulation by the OTS. OTS approval is no longer required for a bank holding
company to acquire control of a savings association, although the OTS has a
consultative role with the FRB in examination, enforcement and acquisition
matters.

                                    TAXATION

FEDERAL TAXATION

     GENERAL. The Company and the Bank are subject to federal income taxation in
the same general manner as other corporations with some exceptions discussed
below. The following discussion of federal taxation is intended only to
summarize certain pertinent federal income tax matters and is not a
comprehensive description of the tax rules applicable to the Bank. The Bank's
federal income tax returns have been audited or closed without audit by the IRS
through 1996.

     METHOD OF ACCOUNTING. For federal income tax purposes, the Bank currently
reports its income and expenses on the accrual method of accounting and uses a
tax year ending December 31 for filing its consolidated federal income tax
returns. The Small Business Protection Act of 1996 (the "1996 Act") eliminated
the use of the reserve method of accounting for bad debt reserves by savings
institutions, effective for taxable years beginning after 1995.

                                       43
<Page>

     BAD DEBT RESERVES. Prior to the 1996 Act, the Bank was permitted to
establish a reserve for bad debts and to make annual additions to the reserve.
These additions could, within specified formula limits, be deducted in arriving
at the Bank's taxable income. As a result of the 1996 Act, the Bank must use the
specific charge-off method in computing its bad debt deduction beginning with
its 1996 Federal tax return. In addition, the federal legislation requires the
recapture (over a six year period) of the excess of tax bad debt reserves at
December 31, 1995 over those established as of December 31, 1987. The amount of
such reserve subject to recapture as of December 31, 2001 is approximately $2.4
million. The Bank began to recapture the reserve in 1998.

     As discussed more fully below, the Bank and subsidiaries file combined New
York State Franchise and New York City Financial Corporation tax returns. The
basis of the determination of each tax is the greater of a tax on entire net
income (or on alternative entire net income) or a tax computed on taxable
assets. However, for state purposes, New York State enacted legislation in 1996,
which among other things, decoupled the Federal and New York State tax laws
regarding thrift bad debt deductions and permits the continued use of the bad
debt reserve method under section 593. Thus, provided the Bank continues to
satisfy certain definitional tests and other conditions, for New York State and
City income tax purposes, the Bank is permitted to continue to use the special
reserve method for bad debt deductions. The deductible annual addition to the
state reserve may be computed using a specific formula based on the Bank's loss
history ("Experience Method") or a statutory percentage equal to 32% of the
Bank's New York State or City taxable income ("Percentage Method").

     TAXABLE DISTRIBUTIONS AND RECAPTURE. Prior to the 1996 Act, bad debt
reserves created prior to January 1, 1988 were subject to recapture into taxable
income should the Bank fail to meet certain thrift asset and definitional tests.
New federal legislation eliminated these thrift related recapture rules.
However, under current law, pre-1988 reserves remain subject to recapture should
the Bank make certain non-dividend distributions or cease to maintain a bank
charter.

     At December 31, 2001 the Bank's total federal pre-1988 reserve was
approximately $11.7 million. This reserve reflects the cumulative effects of
federal tax deductions by the Bank for which no Federal income tax provision has
been made.

     MINIMUM TAX. The Code imposes an alternative minimum tax ("AMT") at a rate
of 20% on a base of regular taxable income plus certain tax preferences
("alternative minimum taxable income" or "AMTI"). The AMT is payable to the
extent such AMTI is in excess of an exemption amount. Net operating losses can
offset no more than 90% of AMTI. Certain payments of alternative minimum tax may
be used as credits against regular tax liabilities in future years. The Bank has
not been subject to the alternative minimum tax and has no such amounts
available as credits for carryover.

     NET OPERATING LOSS CARRYOVERS. A financial institution may carry back net
operating losses to the preceding two taxable years and forward to the
succeeding 20 taxable years. This provision applies to tax years beginning after
August 5, 1997. At December 31, 2001, the Bank had no net operating loss
carryforwards for federal income tax purposes.

                                       44
<Page>

     CORPORATE DIVIDENDS-RECEIVED DEDUCTION. The Company may exclude from its
income 100% of dividends received from the Bank as a member of the same
affiliated group of corporations. The corporate dividends-received deduction is
80% in the case of dividends received from corporations with which a corporate
recipient does not file a consolidated tax return and corporations which own
less than 20% of the stock of a corporation distributing a dividend may deduct
only 70% of dividends received or accrued on their behalf.

STATE AND LOCAL TAXATION

     NEW YORK STATE AND NEW YORK CITY TAXATION. The Company and the Bank report
income on a combined calendar year basis to both New York State and New York
City. New York State Franchise Tax on corporations is imposed in an amount equal
to the greater of (a) 8.5% of "entire net income" allocable to New York State
(b) 3.00% of "alternative entire net income" allocable to New York State (c)
0.01% of the average value of assets allocable to New York State or (d) nominal
minimum tax. Entire net income is based on federal taxable income, subject to
certain modifications. Alternative entire net income is equal to entire net
income without certain modifications. The New York City Corporation Tax is
imposed using similar alternative taxable income methods and rates.

     A temporary Metropolitan Transportation Business Tax Surcharge on Banking
corporations doing business in the Metropolitan District has been applied since
1982. The Bank transacts a significant portion of its business within this
District and is subject to this surcharge. For the tax year ended December 31,
2001, the surcharge rate is 17% of the state franchise tax liability.

     DELAWARE STATE TAXATION. As a Delaware holding company not earning income
in Delaware, the Company is exempt from Delaware corporate income tax, but, is
required to file an annual report with and pay an annual franchise tax to the
State of Delaware. The tax is imposed as a percentage of the capital base of the
Company with an annual maximum of $150,000. The Delaware tax for 2001 was
$150,000. SIBMC is subject to taxes for the additional states that they operate
in.

                                       45
<Page>

ITEM 6.  SELECTED FINANCIAL DATA.

     The following selected historical financial data at and for the five years
ended December 31, 2001 is derived in part from the audited financial statements
of Staten Island Bancorp, Inc. (the "Company"). The selected historical
financial data set forth below should be read in conjunction with the historical
financial statements of the Company, including the related notes included
elsewhere herein. All per share amounts have been adjusted for the two-for-one
stock split in the year 2001.

<Table>
<Caption>
                                                                    At December 31,
                                     -------------------------------------------------------------------------
                                     2001 (Restated)       2000          1999          1998          1997
                                     ---------------    ------------  ------------  ------------  ------------
                                                           (000's omitted, except share data)
<S>                                    <C>              <C>           <C>           <C>           <C>
SELECTED FINANCIAL CONDITION DATA:

Total assets                           $  6,005,053     $  5,240,864  $  4,489,314  $  3,776,947  $  2,651,170
Securities available for sale             1,528,639        1,888,946     1,963,954     2,029,041     1,350,918
Loans, net                                2,806,619        2,847,660     2,150,039     1,457,058     1,082,918
Loans held for sale                       1,185,593          116,163        46,588        77,943            --
Intangible assets(1)                         58,871           62,447        15,432        17,701        18,414
Deposits                                  2,901,328        2,345,213     1,820,233     1,729,061     1,623,652
Borrowings                                2,451,762        2,241,011     2,049,411     1,344,517       250,042
Stockholders' equity                        563,803          585,532       571,377       669,042       685,886
Tangible book value per share                  8.08             7.49          7.19          7.45          7.40
Common shares outstanding                62,487,286       69,841,974    77,387,246    87,409,624    90,260,624
</Table>

<Table>
<Caption>
                                                                 For the Year Ended December 31,
                                             ----------------------------------------------------------------
                                             2001 (Restated)     2000        1999         1998        1997
                                             ---------------   ---------   ---------    ---------   ---------
                                                               (000's omitted, except share data)
<S>                                          <C>               <C>         <C>          <C>         <C>
SELECTED OPERATING DATA:

Net interest income                          $       162,405   $ 140,684   $ 138,409    $ 121,072   $  86,755
Provision (benefit) for loan losses                    8,757         652      (1,843)       1,594       6,003
Other income                                         113,218      43,562      30,853       10,380       7,454
Charitable contribution to SI Bank & Trust
  Community Foundation                                    --          --          --           --      25,817
Other expenses                                       197,167      96,760      82,971       55,918      42,908
Income tax expense                                    23,966      32,908      35,259       29,678       4,932
Net income                                            45,733      53,926      52,875       44,262      14,549
Earnings (loss) per share fully diluted                 0.75        0.80        0.70         0.53       (0.15)(3)

Cash dividends paid per share                           0.32        0.26        0.21         0.12          --
</Table>

<Table>
<Caption>
                                                                At or For the Year Ended December 31,
                                                      -------------------------------------------------------
                                                      2001 (Restated)     2000      1999      1998      1997
                                                      ---------------    ------    ------    ------    ------
<S>                                                            <C>       <C>       <C>       <C>       <C>
KEY OPERATING RATIOS:

Performance Ratios:(2)(3):
   Return on average assets                                      0.81%     1.09%     1.28%     1.45%     0.70%
   Return on average equity                                      7.92      9.61      8.44      6.39      7.79
   Average interest-earning assets to average
     interest-bearing liabilities                              114.92    117.83    125.65    139.98    118.70
   Interest rate spread(4)                                       2.50      2.22      2.60      2.93      3.82
   Net interest margin(4)                                        3.10      2.99      3.50      4.13      4.39
   Non-interest expenses, exclusive of
      amortization of intangible assets, to average
      assets                                                     3.39      1.85      1.93      1.76      1.96
Asset Quality Ratios:
   Non-accruing assets to total assets at end of
      period(5)                                                  0.27      0.20      0.30      0.45      0.83
   Allowance for loans losses to non-accruing                  132.78    149.73    114.40    102.37     73.69
      loans at end of period
   Allowance for loan losses to total loans at end               0.50      0.49      0.65      1.07      1.42
      of period(6)
Capital Ratios:
   Average equity to average assets(3)                          10.21     11.35     15.17     22.64      8.96
   Tangible equity to assets at end of period                    8.28     10.09     13.01     16.84     24.78
   Total capital to risk-weighted assets                        14.41     18.77     25.58     35.93     59.62
</Table>

                                       46
<Page>

----------

(1)  Consists of excess of cost over fair value of net assets acquired
     ("goodwill"), core deposit intangibles and loan servicing assets which
     amounted to $52.9 million, $2.4 million and $3.6 million, respectively, at
     December 31, 2001.

(2)  With the exception of end of period ratios, all ratios are based on average
     daily balances during the respective periods.

(3)  The conversion proceeds were received on December 22, 1997 and have been
     reflected in the performance and other ratios as of that date. Per share
     information for 1997 is since conversion.

(4)  Interest rate spread represents the difference between the weighted average
     yield on interest-earning assets and the weighted average cost of
     interest-bearing liabilities; net interest margin represents net interest
     income as a percentage of average interest-earning assets.

(5)  Non-accruing assets consist of non-accrual loans and real estate acquired
     through foreclosure or by deed-in-lieu thereof.

(6)  Calculated on the basis of total loans including loans held for sale.

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

     GENERAL. As previously indicated in the Explanatory Note commencing at page
1 of this Annual Report on Form 10-K/A, the Company has restated its financial
statements at and for the year ended December 31, 2001. The Company's restated
financial statements are included in Item 8 hereof. The primary differences in
the restated financial statements to the previously reported amounts were due to
adjustments in the Company's accounting for its Stock Option Plan to reflect
variable plan accounting, which resulted in additional non-cash compensation
expenses of $27.2 million (pre-tax) for the year ended December 31, 2001, and
additional impairment charges of $14.5 million (pre-tax) taken in the fourth
quarter of 2001 on certain securities. In addition, adjustments were made to the
accounting for dividends paid on unallocated shares in the Company's ESOP, on
the proper timing for recognizing gains on loans sold by SIBMC, on deferred loan
fees and costs and on previously unrecorded market appreciation in unallocated
forward securities sales by SIBMC in 2001. As a result of such adjustments, the
Company's net income was $45.7 million, or $0.75 per diluted share, for the year
ended December 31, 2001 rather than the $70.1 million, or $1.15 per diluted
share, previously reported. The discussion below has been revised to reflect the
adjustments to the Company's financial statements. For additional information on
the restatement, see also Note 17 of the "Notes to Consolidated Financial
Statements" included in Item 8 hereof.

     The following discussion is intended to assist in understanding the
financial condition and results of operations of Staten Island Bancorp, Inc. The
information contained in this section

                                       47
<Page>

should be read in conjunction with the Financial Statements and the accompanying
Notes to Financial Statements and the other sections contained in this Annual
Report.

     The Company's results of operations depend primarily on its net interest
income, which is the difference between interest income on interest-earning
assets and interest expense on interest-bearing liabilities. The Company's
results of operations also are affected by the provision or benefit for loan
losses, the level of its non-interest income, the largest portion of which is
composed of gains on the sales of loans by the Company's mortgage-banking
subsidiary, SIB Mortgage Corp., and expenses and income tax expense.

     ASSET AND LIABILITY MANAGEMENT. The principal goal of the Company's
interest rate risk management is to minimize the potential of adverse effects of
material and prolonged increases or decreases in interest rates on the Company's
results of operations. The Company evaluates the inherent interest rate risk in
certain balance sheet accounts in an effort to determine the acceptable level of
interest rate risk exposure based on the Company's business plan, operating
environment, capital, liquidity requirements and performance objectives. The
Board of Directors sets limits for earnings at risk and the net portfolio value
("NPV") ratio in order to reduce the potential vulnerability of the Company's
operations to changes in interest rates. The Company's Asset and Liability
Management Committee ("ALCO") is comprised of members of the Company's
management under the direction of the Board of Directors. The purpose of the
ALCO is to coordinate asset and liability management consistent with the
Company's business plan and Board approved policies and limits. The ALCO
establishes and monitors the volume and mix of assets and funding sources taking
into account relative costs and spreads, interest rate sensitivity and liquidity
needs. The objectives are to manage assets and funding sources to produce
results that are consistent with liquidity, capital adequacy, growth, risk and
profitability goals. The ALCO generally meets on a monthly basis to review,
among other things, economic conditions and interest rate outlook, current and
projected liquidity needs and capital positions, anticipated changes in the
volume and mix of assets and liabilities and interest rate risk exposure limits
compared to current projections pursuant to "gap analysis" and income
simulations. At each meeting, the ALCO recommends appropriate strategy changes
based on such review which are then reported to the Board of Directors.

     MARKET RISK. The Company's primary market risk is interest rate volatility
due to the potential impact on net interest income and the market value of all
interest-earning assets and interest-bearing liabilities. The Company is not
subject to foreign exchange or commodity price risk and the Company does not own
any trading assets. The real estate loan portfolio of the Company is
concentrated primarily within the New York metropolitan area, making it subject
to the risks associated with the local economy.

INTEREST RATE SENSITIVITY.

     Interest rate sensitivity is a measure of the difference between amounts of
interest-earning assets and interest-bearing liabilities which either reprice or
mature within a given period of time. The difference, or the interest rate
repricing "gap," provides an indication of the extent by which an institution's
interest rate spread will be affected by changes in interest rates. A gap is
considered positive when the amount of interest-rate sensitive assets exceeds
the amount of

                                       48
<Page>

interest-rate sensitive liabilities, and is considered negative when the amount
of interest-rate sensitive liabilities exceeds the amount of interest-rate
sensitive assets. Generally, during a period of rising interest rates, a
negative gap within shorter maturities would adversely affect net interest
income, while a positive gap within shorter maturities would result in an
increase in net interest income. During a period of falling interest rates, a
negative gap within shorter maturities would result in an increase in net
interest income while a positive gap within shorter maturities would have the
opposite effect. As of December 31, 2001, the ratio of the Company's one-year
interest rate gap to total assets was a positive 10.8% and its ratio of
interest-earning assets to interest-bearing liabilities maturing or repricing
within one year was 131.0%.

     The static gap analysis alone is not a complete representation of interest
rate risk since it fails to account for changes in prepayment speeds on the
Company's loan and investment portfolios in different rate environments and does
not address the extent to which rates on assets or liabilities may change or
reprice. The behavior of deposit balances will also vary with changes in the
customer mix, management's pricing strategies and changes in the general level
of interest rates. Thus, gap analysis does not provide a comprehensive
presentation of the possible risks to income embedded in the balance sheet,
customer structure and various management strategies.

     To measure earnings at risk, ALCO makes extensive use of an earnings
simulation model in the formation of its interest rate risk management
strategies. The model uses management assumptions concerning the repricing of
assets and liabilities, as well as business volumes projected under a variety of
interest rate scenarios. These scenarios incorporate interest rate increases of
200 basis points and decreases of 100 basis points over a twelve-month period.

     Management's assumptions for prepayments in the loan portfolio and pricing
of the Company's deposit products are based on management's review of past
behavior of the Company's depositors and borrowers in response to changes in
both general market interest rates and rates offered by the Company's savings
bank subsidiary, SI Bank & Trust. These assumptions represent management's
estimates and do not necessarily reflect actual results.

     At December 31, 2001, based on this model, the Company's potential earnings
at risk due to a gradual 200 basis point rise or a gradual 100 basis point
decline in market interest rates over the next twelve months was a 11.8%
decrease in projected net income for the year 2002 in a rising rate environment,
and a 22.2% increase in projected net income for the year 2002 in a declining
rate environment. The change in earnings in the different rate environments is
primarily due to the projected change in the level of loan originations at SIB
Mortgage Corp. and the change in spreads on loan sales in the different rate
environments.

     Management has included all financial instruments and assumptions which are
expected to have a material effect in calculating the Company's potential net
income. These measures of risk represent the Company's exposure to interest rate
movements at a particular point in time. The ALCO monitors the Company's risk
profile on a quarterly basis, or as needed, to monitor the effects of movement
in interest rates and also any changes or developments in the Company's core
business.

                                       49
<Page>

     The Company also reviews the market value of portfolio equity ("NPV") which
is defined as the net present value of an institution's existing assets,
liabilities and off balance sheet instruments on a quarterly basis. The OTS
monitors the Bank's interest rate risk through this calculation, which they
prepare quarterly, based on data provided by the Bank. In addition, the Company
prepares its NPV calculation based on its own assumptions which could vary from
those used by the OTS. The following table summarizes the anticipated maturities
or repricing of the Company's interest-earning assets and interest-bearing
liabilities as of December 31, 2001 based on the information and assumptions set
forth in the notes below.

<Table>
<Caption>
                                          Within        Four to        More than        More than
                                          Three          Twelve       One Year to     Three Years to      Over Five
                                          Months         Months       Three Years       Five Years          Years          Total
                                       -----------    -----------     -----------     --------------     -----------    -----------
                                                                            (000's omitted)
<S>                                    <C>            <C>             <C>             <C>                <C>            <C>
Interest-earning assets:
Loans receivable (1)(2):
  Mortgage loans:
     Fixed rate                        $    95,702    $   244,965     $   430,078     $      238,851     $   261,646    $ 1,271,242
     Adjustable rate                     1,471,691        331,490         443,680            168,059         181,323      2,596,243
  Other loans                               26,465          9,251          22,396             18,248          28,500        104,860
Securities
  Non-mortgage(3)                          107,195          4,992          38,024             21,494         255,286        426,991
  Mortgage-backed fixed rate(4)             86,932        230,932         295,315            172,220         170,444        955,843
  Mortgage-backed adjustable rate(4)        16,163         36,833          45,149             43,163           1,391        142,699
Other interest-earning assets               38,000             --              --                 --              --         38,000
                                       -----------    -----------     -----------     --------------     -----------    -----------
  Total interest-earning assets          1,842,148        858,463       1,274,642            662,035         898,590      5,535,878
Interest-bearing liabilities:
  Deposits
    NOW/escrow accounts(5)                  12,288         36,864          45,167             11,956          26,569        132,844
    Savings accounts(5)                     36,891        110,674         225,687            147,565         347,211        868,028
    Money market deposit accounts(5)        69,235        207,706          38,561             18,404          16,652        350,558
    Certificates of deposit                300,347        533,054         183,661             57,432           9,406      1,083,900
  Other borrowings                         336,268        418,200         853,370            445,898         398,026      2,451,762
                                       -----------    -----------     -----------     --------------     -----------    -----------
  Total interest-bearing liabilities       755,029      1,306,498       1,346,446            681,255         797,864      4,887,092
                                       ===========    ===========     ===========     ==============     ===========    ===========
Excess (deficiency) of
  interest-earning assets over
  interest-bearing liabilities           1,087,119       (448,035)        (71,804)           (19,220)        100,726        648,786
                                       ===========    ===========     ===========     ==============     ===========    ===========

Cumulative excess (deficiency) of
  interest-earning assets over
  interest-bearing liabilities         $ 1,087,119    $   639,084     $   567,280     $      548,060     $   648,786
                                       ===========    ===========     ===========     ==============     ===========
Cumulative excess (deficiency) of
  interest-earning assets over
  interest-bearing liabilities as a
  percent of assets                          18.10%         10.64%           9.45%              9.13%          10.80%
                                       ===========     ==========     ===========     ==============     ===========
</Table>

----------
(1)  Adjustable-rate loans are included in the period in which interest rates
     are next scheduled to adjust rather than in the period in which they are
     due. Fixed-rate loans are included in the periods in which they are
     scheduled to be repaid, based on scheduled amortization, as adjusted to
     take into account estimated prepayments in the current rate environment and
     loans held for sale are included in the time period they are expected to be
     sold.
(2)  Balances have been reduced for non-accruing loans, which amounted to $15.1
     million at December 31, 2001.
(3)  Based on contractual maturities.
(4)  Reflects estimated prepayments in the current interest rate environment.
(5)  Although the Company's NOW accounts, passbook savings accounts and money
     market deposit accounts are subject to immediate withdrawal, management
     considers a substantial amount of such accounts to be core deposits having
     significantly longer effective maturities. The decay rates used on these
     accounts are based on the latest available OTS assumptions and should not
     be regarded as indicative of the actual withdrawals that may be experienced
     by the Company. If all of the Company's NOW accounts, passbook savings
     accounts and money market deposit accounts had been assumed to be subject
     to repricing within one year, interest-bearing liabilities which were
     estimated to mature or reprice within one year would have exceeded
     interest-earning assets with comparable characteristics by $238.7 million
     or 4.0% of total assets.

                                       50
<Page>

     Certain assumptions are contained in the previous table which affect the
presentation therein. Although certain assets and liabilities may have similar
maturities or periods of repricing, they may react in different degrees to
changes in market interest rates. The interest rates on certain types of assets
and liabilities may fluctuate in advance of changes in market interest rates,
while interest rates of other types of assets and liabilities lag behind changes
in market interest rates. Certain assets, such as adjustable-rate mortgage
loans, have features which restrict changes in interest rates on a short-term
basis and over the life of the asset. In the event of a change in interest
rates, prepayment and early withdrawal levels would likely deviate significantly
from those assumed in calculating the table.

CRITICAL ACCOUNTING POLICIES

     ACCOUNTING FOR POSSIBLE LOAN LOSSES. The Company calculates its allowance
for loan losses in accordance with Statement of Financial Accounting Standards
No. 5, "Accounting for Contingencies" ("SFAS 5"). This accounting standard is
used to determine the allowance associated with large groups of smaller balance
homogeneous loans that are collectively evaluated for impairment. The allowance
for loan losses represents management's estimate of probable but unconfirmed
asset impairment in the loan portfolio as of the date of the financial
statements.

     In determining the adequacy of the allowance for loan losses for the
Company's loan portfolio, management completes a general valuation allowance
("GVA") analysis prior to the end of each quarterly reporting period. The GVA
analysis stratifies the Company's mortgage and home equity loans. Each category
is further segregated into various risk rating categories. Percentages, which
consider historical loss trends, are applied to the resulting risk rated
categories.

     All other loans, that do not have specific reserves assigned, also have
reserves assigned based on historical loss percentages and the resulting risk
rated categories within each loan portfolio. Management combines the results of
the GVA analysis with judgments concerning macro-economic conditions and
portfolio concentrations to determine the appropriate level of the allowance for
loan losses.

     Due to inherent limitations in using modeling techniques and GVA
percentages, the Company also maintains an unallocated reserve. This reserve
addresses short-term changes in the Company's loan products and portfolio
growth, in addition to changes in the macro-economic environment. At the end of
each quarter, management determines the adequacy of the unallocated reserve to
address these risks. The allowance for loan losses is reviewed and approved by
the Company's Board of Directors on a quarterly basis.

     INVESTMENT SECURITIES. The Company has investments in both private issuers
and government sponsored agencies. The Company's investments are primarily
mortgage backed securities and debt issues. The Company's investments are
carried at fair value based on quoted market prices with changes in fair value
recorded through the "other comprehensive income" component of stockholders'
equity.

                                       51
<Page>

     Declines in the fair value of investments are reviewed to determine if they
are other than temporary in nature. Declines in value that are judged other than
temporary in nature are recognized in the consolidated statements of income. For
investments other than asset-backed investments, the Company's policy is to
treat a decline in the investment's quoted marked price exceeding 20% that has
lasted for more then six months as an other than temporary decline in value. For
asset-backed securities, the Company will consider the impairment other than
temporary when there is significant deterioration in the collateral value
supporting these securities resulting in a negative impact on anticipated cash
flows.

     DERIVATIVE FINANCIAL INSTRUMENTS. On January 1, 2001 the Company adopted
SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133") which defines forward sale commitments as derivative financial
instruments. In accordance with SFAS 133, derivative financial instruments are
recognized in the statement of financial condition at fair value while changes
in the fair value are recognized in the consolidated statement of income in
2001. Prior to January 1, 2001 the Company did not recognize forward sale
commitments in the consolidated statement of financial condition. In addition,
as of December 31, 2001 and 2000, the Company did not recognize the value of
interest rate lock commitments in the statement of financial position.

     The Mortgage Company currently utilizes certain derivative instruments,
primarily forward delivery sale commitments, in its efforts to manage interest
rate risk associated with its mortgage loan interest-rate lock commitments and
mortgage loans held for sale. Prior to the closing and funds disbursement on a
single-family residential mortgage loan, the Mortgage Company generally extends
an interest-rate lock commitment to the borrower. Such commitment obligates the
Mortgage Company to close the mortgage loan at a specified rate of interest
provided the conditions to closing are satisfied. However, a period of 15 to 90
days, or more, generally elapses between the time such commitment is issued and
the time that the Mortgage Company sells the closed mortgage loan into the
secondary market. During such time, the Mortgage Company is subject to risk that
market rates of interest may change, since the price that investors will pay for
mortgage loans purchased from the Mortgage Company is dependent, in part, on the
difference between the interest rate on such loans and the then current rate.
Rates are based on long-term (generally 10-year) U.S. Treasury bonds plus a
margin (with any such difference referred to as the spread). If market rates of
interest rise, the spread between locked loans and the U.S. Treasury rate will
widen and investors generally will pay less to purchase such loans resulting in
a reduction in the amount of the Mortgage Company's gain recognized on sale or,
possibly, a loss. In an effort to mitigate such interest rate risk,
substantially at the same time the Mortgage Company extends an interest rate
lock commitment to its borrower, the Mortgage Company enters into forward
delivery sales commitments. Pursuant to the forward sales commitment, the
Mortgage Company agrees to deliver whole mortgage loans to various investors or
to issue Fannie Mae and/or Freddie Mac mortgage-backed securities.

CHANGES IN FINANCIAL CONDITION

     GENERAL. The Company recorded assets of $6.0 billion at December 31, 2001
and $5.2 billion at December 31, 2000. The asset growth of $764.2 million or
14.6% was driven by a record level of new originations of residential
single-family mortgage loans at the Bank's

                                       52
<Page>

mortgage banking subsidiary, SIB Mortgage Corp., doing business as "Ivy
Mortgage." As a result of the loan origination volume at the Mortgage Company,
loans held for sale increased by $1.1 billion from $116.2 million at December
31, 2000 to $1.2 billion at December 31, 2001. The source of funding for asset
growth during 2001 was a $556.1 million increase in deposits, a $210.8 million
increase in borrowed funds and a $360.3 million decrease in the securities
portfolio.

     CASH AND CASH EQUIVALENTS. Cash and cash equivalents, which consists of
cash and due from banks, money market accounts, other interest-bearing deposits
and federal funds sold amounted to $154.8 million at December 31, 2001 compared
to $104.1 million at December 31, 2000.

     LOANS. The Company's net loan portfolio, inclusive of loans held for sale,
increased $1.0 billion to $4.0 billion at December 31, 2001. This increase was
due to record loan originations of $4.9 billion of which $4.0 billion were
originations by the Mortgage Company. The originations were partially offset by
loan sales of $3.2 billion of which $2.9 billion were loan sales at the Mortgage
Company. The Bank had loan sales of $314.0 million which consisted primarily of
new loan originations with longer terms and fixed rates of interest. The Bank
also retained for its own portfolio $119.9 million in relatively higher yielding
adjustable-rate loans originated by the Mortgage Company. Loan demand continued
to be primarily for one to four family residential loans, however, the Bank also
had $427.1 million in commercial real estate, multi-family residential and
construction loan originations in 2001. The record growth in loan originations
was driven by the low interest rate environment resulting in a record number of
refinance transactions and the geographic expansion of the Mortgage Company into
15 additional states. The Bank continued its business development efforts to
increase residential loan originations by working closely with local mortgage
brokers and adding a residential loan originator to its staff. The commercial
lending area continued its expansion into the State of New Jersey and increased
its presence in the local market.

     SECURITIES. Securities amounted to $1.5 billion or 25.5% of assets at
December 31, 2001 compared to $1.9 billion or 36.0% of assets at December 31,
2000. The decrease of $360.3 million or 19.1% was due to amortization,
prepayments and maturities of $494.3 million and sales of $212.3 million. This
decrease was partially offset by purchases of $337.0 million of which $207.7
million were mortgage-backed securities and CMOs issued by U.S. government
agencies. The net decrease in the securities portfolio is consistent with
management's strategy to reallocate cash flows from the securities portfolio
into higher yielding loans. All of the Company's securities were classified as
available for sale at both December 31, 2001 and 2000.

     DEPOSITS. Deposits increased $556.1 million or 23.7% to $2.9 billion at
December 31, 2001 compared to $2.3 billion at December 31, 2000. The increase
was driven by growth in our new markets, primarily the State of New Jersey, with
the introduction of a new money market account to compete with brokerage firms
and to develop core banking relationships. The increase of $556.1 million was
due to an increase of $208.2 million in money market accounts, an increase of
$107.8 million in savings accounts, an increase of $83.2 million in demand
deposits, an increase of $76.3 million in retail certificates of deposit, an
increase of $20.7 million in NOW accounts and an increase of $60.0 million in
brokered CDs.

                                       53
<Page>

     Core deposits, which consist of savings, money market, NOW and demand
deposits, totaled $1.8 billion or 62.6% of deposits at December 31, 2001
compared to $1.4 billion or 59.6% of total deposits at December 31, 2000. The
Bank expanded its business development efforts in 2001 to retain current and
obtain new commercial business relationships. The Company believes that its
business development efforts, along with quality customer service, will enable
the Bank to maintain its high ratio of demand deposits and strong core deposit
base.

     BORROWED FUNDS. The Company's borrowings at December 31, 2001 were $2.5
billion or 40.8% of assets compared to $2.2 billion or 42.8% of assets at
December 31, 2000, which represents an increase of $210.8 million or 9.4%. The
Company utilized borrowings in 2001 primarily to fund the growth of higher
yielding loans held for sale at the Mortgage Company. The borrowings consist of
reverse repurchase agreements with the FHLB and nationally recognized brokerage
firms, advances from the FHLB which are secured by the one to four family
residential loan portfolio, overnight lines of credit with two national banks
and a secured line of credit with an international bank. Presently, the Company
intends to reduce the utilization of borrowings to fund long-term asset growth
and to put more emphasis on traditional sources of funding such as deposit
growth.

     STOCKHOLDERS' EQUITY. Stockholders' equity amounted to $563.8 million at
December 31, 2001 and $585.5 million at December 31, 2000, or 9.4% and 11.2% of
total assets at such dates, respectively. The decrease of $21.7 million was due
to the repurchase of 7.7 million shares of the Company's common stock at a cost
of $104.4 million, as the Company continued its stock repurchase program which
has resulted in 27.8 million shares of common stock being purchased for treasury
at an aggregate cost of $292.7 million and aggregate cash dividend payments of
$19.4 million. These decreases were partially offset by net income of $45.7
million, an allocation of ESOP and Recognition and Retention Plan ("RRP") shares
resulting in an increase of $12.7 million, the exercise of 324,858 stock options
resulting in an increase of $3.7 million, an increase of $27.2 million due to
variable plan accounting for the Company's stock option plan and an increase of
$12.7 million in the unrealized appreciation on securities available for sale,
net of taxes. The tangible book value per share was $8.08 at December 31, 2001
compared to $7.49 at December 31, 2000.

     AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID. The
following table sets forth, for the periods indicated, information regarding (i)
the total dollar amount of interest income from interest-earning assets and the
resultant average yields; (ii) the total dollar amount of interest expense on
interest-bearing liabilities and the resultant average rate; (iii) net interest
income; (iv) interest rate spreads; and (v) net interest margin. Information is
based on average daily balances during the indicated periods.

                                       54
<Page>

<Table>
<Caption>
                                                                     Years Ended December 31,
                                -------------------------------------------------------------------------------------------------
                                                2001 (Restated)                                         2000
                                -----------------------------------------------    ----------------------------------------------
                                   Average                          Average           Average                           Average
                                   Balance         Interest        Yield/Cost         Balance          Interest       Yield/Cost
                                -------------    -------------    -----------      -------------    -------------   -------------
                                                                        (000's omitted)
<S>                             <C>              <C>                     <C>       <C>              <C>                    <C>
Interest-earning assets:
Loans receivable(1)
  Real estate loans             $   3,366,083    $     248,875             7.39%   $   2,540,580    $     194,128            7.64%
  Other loans                         115,454           10,537             9.13          107,699           10,426            9.68
                                -------------    -------------                     -------------    -------------
    Total loans                     3,481,537          259,412             7.45        2,648,279          204,554            7.72
Securities                          1,722,506          112,466             6.53        2,025,188          137,848            6.81
Other interest-earning
  assets(2)                            43,065            1,105             2.57           25,743            1,402            5.44
                                -------------    -------------                     -------------    -------------
Total interest-earning assets       5,247,108          372,983             7.11        4,699,210          343,804            7.32
Non-interest-earning assets           406,711    -------------  ---------------          244,255    -------------   -------------
                                -------------                                      -------------
Total assets                    $   5,653,819                                      $   4,943,465
                                =============                                      =============
Interest-bearing liabilities:
Deposits:
  NOW and money
    market deposits             $     330,278           10,309             3.12%   $     219,087            5,960            2.72%
  Savings and escrow accounts         817,890           17,811             2.18          793,908           19,488            2.45
  Certificates of deposits          1,017,634           53,071             5.22          827,504           44,781            5.41
                                -------------    -------------                     -------------    -------------
    Total deposits                  2,165,802           81,191             3.75        1,840,499           70,229            3.82
Total borrowings                    2,399,963          129,387             5.39        2,147,718          132,891            6.19
                                -------------    -------------                     -------------    -------------
Total interest-bearing
  liabilities                       4,565,765          210,578             4.61        3,988,217          203,120            5.09
                                                 -------------  ---------------                     -------------   -------------
Non-interest-bearing
  liabilities(3)                      510,692                                            394,180
                                -------------                                      -------------
Total liabilities                   5,076,457                                          4,382,397
Stockholders' equity                  577,362                                            561,068
                                -------------                                      -------------
Total liabilities and
  stockholders' equity          $   5,653,819                                      $   4,943,465
                                =============                                      =============
Net interest-earning assets     $     681,343                                      $     710,993
                                =============                                      =============
Net interest income/interest
  rate spread                                    $     162,405             2.50%                    $     140,684            2.22%
                                                 =============  ===============                     =============   =============
Net interest margin                                                        3.10%                                             2.99%
Ratio of average                                                ===============                                     =============
  interest-earning assets
  to average interest-bearing
  liabilities                                                            114.92%                                           117.83%
                                                                ===============                                     =============

<Caption>
                                           Years Ended December 31,
                                ---------------------------------------------
                                                    1999
                                ---------------------------------------------
                                   Average                         Average
                                   Balance         Interest       Yield/Cost
                                -------------   -------------   -------------
                                               (000's omitted)
<S>                             <C>             <C>                    <C>
Interest-earning assets:
Loans receivable(1)
  Real estate loans             $   1,739,898   $     131,978            7.59%
  Other loans                          77,054           7,219            9.37
                                -------------   -------------
    Total loans                     1,816,952         139,197            7.66
Securities                          2,089,829         136,023            6.51
Other interest-earning
  assets(2)                            49,679           2,253            4.53
                                -------------   -------------
Total interest-earning assets       3,956,460         277,473            7.01
                                                -------------   -------------
Non-interest-earning assets           173,512
                                -------------
Total assets                    $   4,129,972
                                =============
Interest-bearing liabilities:
Deposits:
  NOW and money
    market deposits             $     165,071           4,152            2.52%
  Savings and escrow accounts         752,131          18,716            2.49
  Certificates of deposits            556,635          26,477            4.76
                                -------------   -------------
    Total deposits                  1,473,837          49,345            3.35
Total borrowings                    1,674,990          89,719            5.36
                                -------------   -------------
Total interest-bearing
  liabilities                       3,148,827         139,064            4.42
                                                -------------   -------------
Non-interest-bearing
  liabilities(3)                      354,671
                                -------------
Total liabilities                   3,503,498
Stockholders' equity                  626,474
                                -------------
Total liabilities and
  stockholders' equity          $   4,129,972
                                =============
Net interest-earning assets     $     807,633
                                =============
Net interest income/interest
  rate spread                                   $     138,409            2.60%
                                                =============   =============
Net interest margin                                                      3.50%
                                                                =============
Ratio of average
  interest-earning assets
  to average interest-bearing
  liabilities
                                                                       125.65%
                                                                =============
</Table>

----------
(1)  The average balance of loans receivable includes non-accruing loans,
     interest on which is recognized on a cash basis, and loans held for sale.
(2)  Includes money market accounts, Federal Funds sold and interest-earning
     bank deposits.
(3)  Consists primarily of demand deposit accounts.

                                       55
<Page>

RATE/VOLUME ANALYSIS

     The following table sets forth the effects of changing rates and volumes on
net interest income of the Company. Information is provided with respect to (i)
effects on interest income attributable to changes in volume (changes in volume
multiplied by prior rate); (ii) effects on interest income attributable to
changes in rate (changes in rate multiplied by prior volume); and (iii) changes
in rate/volume (change in rate multiplied by change in volume). The change in
interest due to both volume and rate has been allocated proportionately between
volume and rate based on the absolute dollar amounts of the change in each.

<Table>
<Caption>
                                         2001 (Restated) compared to 2000        2000 compared to 1999
                                         --------------------------------    --------------------------------
                                                  Change due to                       Change due to
                                         --------------------------------    --------------------------------
                                           Rate       Volume      Total        Rate       Volume      Total
                                         --------    --------    --------    --------    --------    --------
                                                                    000's omitted
<S>                                      <C>         <C>         <C>         <C>         <C>         <C>
Interest-Earning Assets:
    Loans Receivable:
       Real estate loans                 $ (6,473)   $ 61,220    $ 54,747    $    976    $ 61,174    $ 62,150
       Other loans                           (616)        727         111         248       2,959       3,207
                                         --------    --------    --------    --------    --------    --------
          Total loans                      (7,089)     61,947      54,858       1,224      64,133      65,357
    Securities                             (5,439)    (19,943)    (25,382)      6,110      (4,285)      1,825
    Other interest-earning assets            (961)        664        (297)        388      (1,239)       (851)
                                         --------    --------    --------    --------    --------    --------
       Total interest-earning assets      (13,489)     42,668      29,179       7,722      58,609      66,331
                                         --------    --------    --------    --------    --------    --------

Interest-Bearing Liabilities:
    Deposits:
       NOW and Money Market accounts          979       3,370       4,349         361       1,447       1,808
       Savings and Escrow accounts         (2,252)        575      (1,677)       (256)      1,028         772
       Certificates of Deposit             (1,676)      9,966       8,290       4,037      14,267      18,304
                                         --------    --------    --------    --------    --------    --------
          Total                            (2,949)     13,911      10,962       4,142      16,742      20,884
    Borrowings                            (18,153)     14,649      (3,504)     15,316      27,856      43,172
                                         --------    --------    --------    --------    --------    --------
    Total interest-bearing liabilities    (21,102)     28,560       7,458      19,458      44,598      64,056
                                         --------    --------    --------    --------    --------    --------

Net Change in Net Interest Income        $  7,613    $ 14,108    $ 21,721    $(11,736)   $ 14,011    $  2,275
                                         ========    ========    ========    ========    ========    ========
</Table>

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2001 AND
2000

GENERAL.

     The Company reported net income of $45.7 million or $0.75 on a diluted per
share basis for the year ended December 31, 2001 compared to net income of $53.9
million or $0.80 on a diluted per share basis for the year ended December 31,
2000.

     The $8.2 million decrease in net income for the year ended December 31,
2001 compared to the year ended December 31, 2000 was primarily due to a $100.4
million increase in other expenses and a $8.1 million increase in the provision
for loan losses. These decreases were partially offset by a $69.7 million
increase in other income, a $21.7 million increase in net interest income and an
$8.9 million decrease in the provision for income taxes.

                                       56
<Page>

INTEREST INCOME.

     Interest income increased $29.2 million for the year ended December 31,
2001 due to an increase of $54.9 million in interest income from loans partially
offset by a $25.4 million decrease in interest income from securities. The
increase in interest income on loans was due primarily to an $833.3 million or
31.5% increase in the average balance of the loan portfolio. The increase in the
average balance of the loan portfolio was due to the record level of
originations by both the Mortgage Company and the Bank during the year. This was
the result of the significant increase in mortgage refinancings, the geographic
expansion of the Mortgage Company, the Bank's continued business development
efforts in its market areas and the continued success of its mortgage broker
program. The decrease in interest income on securities was primarily due to a
$302.7 million decline in the average balance of the securities portfolio due to
management's strategy to reinvest a majority of the cash flows generated by the
portfolio into higher yielding loan originations. The lower interest rate
environment in 2001 resulted in a decline of 27 basis points in the average
yield of the loan portfolio to 7.45% for the year 2001 while the average yield
on the securities portfolio declined 28 basis points to 6.53% for the same time
period. To mitigate the declining rate environment to some extent, the Company
continues to retain higher yielding loans for its own portfolio that were
originated by the Mortgage Company.

INTEREST EXPENSE.

     The Company recorded interest expense of $210.6 million for the year ended
December 31, 2001 compared to $203.1 million for the year ended December 31,
2000, an increase of $7.5 million or 3.7%. The reasons for the increase were an
$8.3 million increase in interest expense on certificates of deposit and a $4.3
million increase in interest expense on money market and NOW accounts. These
increases were partially offset by a $3.5 million decrease in interest expense
on borrowed funds and a $1.7 million decrease in interest expense on savings
accounts. The increase in interest expense on certificates of deposit was due to
a $190.1 million increase in the average balance of certificates of deposit
partially offset by a 19 basis point decline in the average cost of certificates
of deposit to 5.22% for the year 2001. The increase in the average balance of
certificates of deposit was primarily due to the growth in the Bank's new market
areas and, to a lesser extent, the $60.0 million increase in brokered CDs in the
fourth quarter of 2001. The decline in the average cost was reflective of the
declining interest rate environment during the year 2001. The increase in
interest expense for money market and NOW accounts was due to a $111.2 million
increase in the average balance of money market and NOW accounts and a 40 basis
point increase in the average cost of money market and NOW accounts to 3.12% for
the year ended December 31, 2001. These increases were due to the introduction
of a new money market product to develop banking relationships in new market
areas. The decline in interest expense on savings accounts is due to a 27 basis
point decline in the average cost to 2.18% for the year ended December 31, 2001
primarily due to a reduction of the savings account rate to 2% as of October 1,
2001. The decline in interest expense on borrowed funds was due to an 80 basis
point decline in the average cost of borrowed funds to 5.39% for the year 2001
partially offset by an increase of $252.2 million in the average balance of
borrowed funds. The decline in the average cost of borrowings primarily reflects
the rollover of borrowings to lower rates due to the declining rate environment
in 2001, however, management did take the opportunity to extend the

                                       57
<Page>

maturities of certain borrowings in order to control the interest expense on
borrowings in the future. The increase in the average balance of borrowed funds
was due to the use of borrowings to fund originations of higher yielding loans
at the Mortgage Company. In 2002, the Bank plans to continue its business
development efforts and quality service levels in its efforts to maintain
current depositors and also to obtain new deposits. The planned opening of four
new branches in 2002 is also expected to moderate, to a certain extent, the
Company's reliance on borrowed funds.

NET INTEREST INCOME.

     Net interest income for 2001 was $162.4 million compared to $140.7 million
for 2000. The increase of $21.7 million or 15.4% was due to an increase of $29.2
million in interest income which was offset by a $7.5 million increase in
interest expense. The increase in interest income was due to an increase of
$547.9 million in the average balance of interest-earning assets which was
partially offset by a 21 basis point decline in the average yield on
interest-earning assets to 7.11% for 2001 from 7.32% for 2000. The increase in
interest expense was due to a $577.5 million increase in the average balance of
interest-bearing liabilities partially offset by a 48 basis point decline in the
average cost of interest-bearing liabilities to 4.61% for 2001 from 5.09% for
2000. The net interest rate spread and margin increased to 2.50% and 3.10%,
respectively, for the year ended December 31, 2001 from 2.22% and 2.99%,
respectively, for the year ended December 31, 2000. Such increases were due to
the rollover of the Company's interest-bearing liabilities to lower rates faster
than the repricing of the Company's assets to lower rates. During 2002, the
Company expects to continue to rely on the Mortgage Company to originate
relatively higher yielding loans for retention in the Company's portfolio as a
primary part of our efforts to maintain the yield on interest-earning assets. In
addition, we also plan to closely monitor the repricing of our interest-bearing
liabilities in our efforts to maintain or reduce the average cost of
interest-bearing liabilities.

PROVISION FOR LOAN LOSSES.

     The provision for loan losses was $8.8 million for the year ended December
31, 2001 compared to a provision of $652,000 for the year ended December 31,
2000. The provision for loan losses is based on management's review of the
adequacy of the loan loss reserve which includes monitoring the mix and volume
of the portfolio and its inherent risks, the level of non-accruing loans and
delinquencies, local economic conditions and current trends in regulatory
supervision. Due to current economic conditions, an increase in non-accruing
loans, the volumes of loan originations and current events in the Company's
primary market area, management deemed an $8.8 million provision for loan losses
during the year ended December 31, 2001 to be prudent.

     During 2001, the level of the Company's non-accruing loans increased $5.3
million or 54.4% to $15.1 million at December 31, 2001. The Company's net loan
chargeoffs were $3.4 million for the year ended December 31, 2001 compared to
$1.1 million for the year ended December 31, 2000. The Company's allowance for
loan losses was $20.0 million at December 31, 2001 or 132.8% of non-accrual
loans at such date compared to $14.6 million at December 31, 2000 or 149.7% of
non-accrual loans at such date. While the level of non-accruing loans

                                       58
<Page>

increased during the year, management believes that the Company's credit quality
remains strong, primarily due to the concentration in the loan portfolio of one
to four family residential mortgage loans, sound credit underwriting standards
for new loan originations and proactive procedures in addressing problem and
non-accruing loans which included the hiring of various loan servicing and
collection professionals during the year.

OTHER INCOME.

     During 2001, other income increased by $69.7 million from $43.5 million in
2000 to $113.2 million for 2001. The increase was primarily due to a $70.6
million increase in net gains on loan sales, a $10.6 million increase in loan
fees, and a $2.5 million increase in service and fee income, which increases
were partially offset by a $14.0 million increase in net losses on securities
transactions. The increase in gains on loan sales and loan fees was due to the
record volume of loan originations at the Mortgage Company resulting in net
gains on loan sales of $91.8 million in the year ended December 31, 2001. The
increase in service and fee income was primarily due to an increase in deposit
related fees due to increased volumes and an increase in certain fee charges.

     Net securities losses for the year ended December 31, 2001 were $14.6
million compared to net securities losses of $569,000 for the year ended
December 31, 2000. The net securities losses in 2001 were primarily due to the
Company recording an impairment charge on four corporate bonds, three of which
were collateralized bond obligations. In the fourth quarter of 2001, due to
significant deterioration in the collateral value supporting the collateralized
bond obligations and the resultant negative impact on anticipated cash flows,
the Company recorded a $9.7 million impairment charge in accordance with
generally accepted accounting principles reducing the carrying value of these
three securities to $5.3 million at December 31, 2001. With respect to the
fourth bond, which was corporate debt, the Company reduced its carrying value to
$4.7 million by recording a $4.8 million impairment charge in the fourth quarter
of 2001 due to an extended period of market value depreciation and declining
credit quality of the issuer.

OTHER EXPENSES.

     Other expenses for the year ended December 31, 2001 were $197.2 million or
103.8% more than other expenses of $96.8 million for the year ended December 31
2000. The increase in other expenses in 2001 was attributable to a $45.6 million
increase in personnel expense, a $39.7 million increase in commissions paid, a
$3.0 million increase in occupancy and equipment expense and an $8.8 million
increase in other expenses. The increase in personnel expense was attributable
to the $27.2 million non-cash compensation expense relating to the Stock Option
Plan, as well as increased staff levels and normal merit pay increases.
Management determined that certain stock options were exercised under a net cash
settlement method, whereby the Company, in effect, repurchased the option shares
under the Company's on-going stock repurchase programs and remitted the excess
of the fair market value of the shares over the exercise price to the employee.
Under existing accounting standards, the existence of these transactions
conducted in this manner required that compensation expense be recorded from the
inception of the plan, on all exercised or vested and granted options equal to
the difference between the option exercise price and the fair market value of
the stock at the exercise date or

                                       59
<Page>

financial reporting date, whichever is earlier. The increase in staff levels was
primarily due to the expansion of the Mortgage Company resulting in increases in
staff for loan originations and loan servicing. The increase in commission
expense was due to the increase in volumes and the mix of loans originated by
the Mortgage Company. The increase in occupancy and equipment expense was
primarily due to the geographic expansion of the Mortgage Company into 15
additional states and additional property and equipment expense due to business
growth and expansion at the Bank. The increase in other expenses was due
primarily to the geographic expansion of the Mortgage Company and the record
volumes of originations in the year 2001.

PROVISION FOR INCOME TAXES.

     The provision for income taxes was $24.0 million for the year ended
December 31, 2001 compared to $32.9 million for the year ended December 31,
2000. The decrease of $8.9 million in the provision for income taxes was
primarily due to a $17.1 million decrease in net income before taxes and the
decrease in the effective tax rate from 37.9% for 2000 to 34.4% for 2001.

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000 AND
1999

     GENERAL. The Company reported net income of $53.9 million or $.80 on a
diluted per share basis for the year ended December 31, 2000 compared to net
income of $52.9 million or $.70 on a diluted per share basis for the year ended
December 31, 1999.

     The increase in net income for the year ended December 31, 2000 compared to
the year ended December 31, 1999 was primarily due to an increase in net
interest income of $2.3 million, an increase in other income of $12.7 million
and a reduction in the provision for income taxes of $2.4 million. These
increases to income were partially offset by a $13.8 million increase in total
other expenses and an increase of $2.5 million in the provision (benefit) for
loan losses.

INTEREST INCOME.

     The increase in interest income of $66.3 million for the year ended
December 31, 2000 compared to the year ended December 31, 1999 was primarily due
to a $65.4 million increase in interest income from loans. The increase in
interest income on loans was due primarily to an $831.3 million or 45.8%
increase in the average balance of the loan portfolio primarily as a result of
increased loan demand and the Company's continued efforts to expand loan
activity through its business development program, mortgage broker program,
geographic expansion and increased loan originations by its lending subsidiary,
Ivy Mortgage. The average balance of the securities portfolio declined by $64.6
million during 2000, primarily as a result of management's strategy to fund loan
originations with cash flows generated by the securities portfolio. The increase
in the average yield of interest earning assets was due to a six basis point
increase in the average yield on loans and a 31 basis point increase in the
average yield of the securities portfolio primarily due to the rising rate
environment during 2000 resulting in the repricing and the origination of loans
at higher average yields.

                                       60
<Page>

INTEREST EXPENSE.

     The Company recorded interest expense of $203.1 million for the year ended
December 31, 2000 compared to $139.1 million for the year ended December 31,
1999, an increase of $64.1 million or 46.1%. The primary reason for the increase
was a $43.2 million increase in interest on borrowed funds and an $18.3 million
increase in interest on certificates of deposit. The increase in interest
expense on borrowed funds was due to an increase of $472.7 million in the
average balance of borrowed funds and an 83 basis point increase in the average
cost to 6.19% for 2000 from 5.36% for 1999. The increase in the average balance
of borrowed funds was primarily due to the Company's program to fund asset
growth with borrowed funds at acceptable spreads during 1999 and, to a lesser
extent, the use of borrowed funds to fund the acquisition of First State Bancorp
("FSB") in 2000 and to fund certain adjustable rate loan originations. The
average cost of borrowings increased due to the rising interest rate environment
throughout most of 2000 resulting in borrowings repricing to higher rates. The
increase in interest expense on certificates of deposit was due to an increase
of $270.9 million in the average balance of certificates of deposit primarily
due to the acquisition of FSB and an increase of 65 basis points in the average
cost of certificates of deposit to 5.41% for 2000 from 4.76% for 1999. This
increase in the average cost was primarily due to the rising interest rate
environment during most of the year increasing the cost of new money and
maturing deposits. The increase in the average cost of the Company's deposits
during 2000 compared to 1999 was also affected by the initiation of a brokered
CD program in June 2000. In an effort to reduce its utilization of borrowings
and increase its deposits as a relative source of funds, the Company began a
program of using certain national securities firms to provide additional CD
depositors. The Company's brokered CDs, which amounted to $74.9 million at
December 31, 2000, had a weighted average cost of 7.0% for the year. Brokered
CDs generally have a higher cost than non-brokered CDs and are more subject to
withdrawal as the customers generally are seeking to obtain higher yielding
deposits from institutions throughout the country and have little or no
allegiance to any particular institution. Such customers are likely to withdraw
their CDs at the end of their term if a more competitive rate is available
elsewhere.

NET INTEREST INCOME.

     Net interest income was $140.7 million for 2000 compared to $138.4 million
for 1999. The increase of $2.3 million was due to a $66.3 million increase in
interest income which was partially offset by a $64.1 million increase in
interest expense. The increase in interest income was due to a $742.7 million
increase in the average balance of interest-earning assets and an increase in
the average yield on interest-earning assets from 7.01% for 1999 to 7.32% for
2000. The increase in interest expense was due to an increase of $839.4 million
in the average balance of interest-bearing liabilities and a 67 basis point
increase in the average cost from 4.42% in 1999 to 5.09% in 2000 due to the
rising interest rate environment during the year and the changing mix of
deposits primarily due to the acquisition of FSB. The net interest rate spread
and margin decreased to 2.22% and 2.99%, respectively, for the year ended 2000
from 2.60% and 3.50%, respectively, for the year ended December 31, 1999. Such
decreases were primarily due to rollovers of its interest-bearing liabilities to
higher costing market rates faster than its interest-earning assets repricing to
higher yields. The downward trend of interest rates commencing in the fourth
quarter of 2000 stabilized the compression of the Company's interest

                                       61
<Page>

rate spread and margin.

PROVISION (BENEFIT) FOR LOAN LOSSES.

     The provision for loan losses was $652,000 for the year ended December 31,
2000 compared to a benefit of $1.8 million for the year ended December 31, 1999.
During 2000, the level of non-accrual loans decreased by $2.7 million or 21.6%.
The Company's net loan charge-offs were $1.1 million for the year ended December
31, 2000 compared to $503,000 for the year ended December 31, 1999. During 2000,
the quality of the loan portfolio remained strong. However, due to the changing
dollar mix of commercial and construction loans, among other factors, management
deemed it prudent to add $652,000 to the allowance for loan losses during 2000
compared to a benefit of $1.8 million for the year 1999. The Company's allowance
for loan losses was $14.6 million at December 31, 2000 or 149.7% of non-accrual
loans at such date compared to $14.3 million at December 31, 1999, or 114.4% of
non-accrual loans at such date.

OTHER INCOME.

     During 2000, other income exclusive of net losses on securities
transactions and a one time pension curtailment gain of $4.1 million in 1999,
increased $11.8 million or 36.7% to $44.1 million. This increase was due to a
$6.8 million increase in service and fee income primarily as a result of a $4.2
million increase in the cash surrender value of bank owned life insurance
("BOLI"). To a lesser extent, the increase was also caused by an increase in
deposit related fees and premium income from the sale of life insurance. Other
income also increased $5.0 million primarily due to a $3.4 million increase in
net gains on loan sales and a $1.6 million increase in other loan related fees
generated at the Company's mortgage banking subsidiary as a result of increased
volumes of loan originations.

     The decrease in net securities losses to $569,000 for the year 2000
compared to net securities losses of $5.5 million for the year 1999 was due to
the $9.0 million writedown of certain corporate bonds held in the Company's
available for sale portfolio partially offset by $3.5 million in net gains
realized from various securities sales in 1999. The sale of $310.0 million
securities in the year 2000 were used to fund loan originations.

OTHER EXPENSES.

     Other expenses for the year ended December 31, 2000 were $96.8 million or
16.6% more than other expenses of $83.0 million for the year ended December 31,
1999. The increase in other expenses in 2000 was attributable to a $3.4 million
increase in personnel expense, a $3.4 million increase in commission expense, a
$1.9 million increase in occupancy and equipment expense and a $2.9 million
increase in amortization expense of intangible assets. The increase in personnel
costs was primarily due to the Company's expansion into the State of New Jersey
where it added 11 new branch offices during the year, the opening of an
additional office in Brooklyn and annual merit pay increases. The increase in
commission expense was due to the increase in volumes and mix of loans
originated by the Mortgage Company. The increase in occupancy and equipment
expense was due to the previously mentioned expansion by the Bank and the
geographic expansion of the Mortgage Company. The increase in the amortization

                                       62
<Page>

expense of intangible assets was due to the goodwill amortization associated
with the FSB acquisition in January 2000.

PROVISION FOR INCOME TAXES.

     The Company's effective tax rate was 37.9% for 2000 compared to 40.0% for
1999. The provision for the year included miscellaneous tax adjustments as the
result of the Company's finalization of its tax returns for 1999. Excluding
these miscellaneous tax adjustments the effective tax rate would have been
38.4%. The reduction of the effective tax rate was due to various tax planning
strategies.

LIQUIDITY AND CAPITAL.

     The Company's liquidity is a product of its operating, investing and
financing activities. The Company's primary sources of funds are deposits,
repayments, prepayments and maturities of outstanding loans and mortgage-backed
securities, maturities of investment securities and other short-term investments
and funds provided from operations. While scheduled payments from the repayment
of loans and mortgage-related securities and maturing investment securities and
short-term investments are relatively predictable sources of funds, deposit
flows and loan prepayments are greatly influenced by general interest rates,
economic conditions and competition. In addition, the Company invests excess
funds in federal funds sold and other short-term interest-earning assets which
provide liquidity to meet lending requirements. Historically, the Bank relied
almost exclusively on its deposits as a source of funds. Commencing in late
1997, the Company began a leveraging program whereby it used borrowings, such as
FHLB advances and reverse repurchase agreements as an additional source of funds
to fund asset growth at acceptable spreads. This leveraging strategy continued
throughout 1998, 1999 and, to a lesser extent, 2000. During the year ended
December 31, 2001, the Company used borrowed funds primarily to fund loan
originations at the Mortgage Company. At December 31, 2001 such borrowings
amounted to $2.5 billion.

     Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments
such as federal funds sold. On a longer term basis, the Company maintains a
strategy of investing in various lending products. The Company uses its sources
of funds primarily to meet its ongoing commitments, to pay maturing certificates
of deposit and savings withdrawals, fund loan commitments and maintain a
portfolio of mortgage-backed and mortgage-related securities and investment
securities. At December 31, 2001 the total approved loan origination commitments
outstanding amounted to $845.3 million and unused credit lines equaled $74.2
million. At the same date, the unadvanced portion of construction loans totaled
$49.0 million. Certificates of deposit scheduled to mature in one year or less
at December 31, 2001 totaled $833.4 million. Investment securities scheduled to
mature in one year or less at December 31, 2001 totaled $1.1 million and
amortization from investments and loans is projected at $1.2 billion for the
year 2002. Based on historical experience, the current pricing strategy and the
strong core deposit base management believes that a significant portion of
maturing deposits will remain with the Company. The Company anticipates that it
will continue to have sufficient funds, together with borrowings, to meet its
current commitments.

                                       63
<Page>

     At December 31, 2001 the Bank's capital ratios exceeded all the regulatory
requirements. Under OTS regulations, the Bank is required to comply with each of
three separate capital adequacy standards: tangible capital of $412.0 million or
7.01% of adjusted assets compared to a requirement of $88.1 million or 1.50% of
adjusted assets, core capital of $414.4 million or 7.05% of adjusted assets
compared to a requirement of $235.0 million or 4% of adjusted assets and risk
based capital of $431.6 million or 13.35% of risk weighed assets compared to a
requirement of $258.7 million or 8% of risk weighted assets.

IMPACT OF INFLATION AND CHANGING PRICES.

     The consolidated financial data presented herein have been prepared in
accordance with generally accepted accounting principles, which require the
measurement of financial position and operating results in terms of historical
dollars, without considering changes in relative purchasing power over time due
to inflation. Unlike most industrial companies, virtually all of the Company's
assets and liabilities are monetary in nature. As a result, interest rates
generally have a more significant impact on a financial institution's
performance than does the effect of inflation.

                                       64
<Page>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                   Staten Island Bancorp, Inc. and Subsidiary
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           December 31, 2001 and 2000

<Table>
<Caption>
                                                                                2001 (Restated)                 2000
                                                                               ----------------            --------------
                                                                                   (000's omitted, except share data)
<S>                                                                               <C>                        <C>
ASSETS
Assets:
  Cash and due from banks                                                         $   116,846                $    92,103
  Federal funds sold                                                                   38,000                     12,000
  Securities available for sale                                                     1,528,639                  1,888,946
  Loans, net of allowance for loan losses of $20.0 million and $14.6 million
    at December 31, 2001 and 2000, respectively                                     2,806,619                  2,847,660
  Loans held for sale                                                               1,185,593                    116,163
  Accrued interest receivable                                                          28,601                     30,905
  Premises and equipment, net                                                          38,939                     31,883
  Intangible assets, net                                                               58,871                     62,447
  Other assets                                                                        202,945                    158,757
                                                                                  -----------                -----------
    Total assets                                                                  $ 6,005,053                $ 5,240,864
                                                                                  ===========                ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits
    Savings                                                                       $   868,028                $   760,238
    Certificates of deposit                                                         1,083,900                    947,584
    Money market                                                                      350,558                    142,394
    NOW accounts                                                                      115,349                     94,699
    Demand deposits                                                                   483,493                    400,298
                                                                                  -----------                -----------
       Total deposits                                                               2,901,328                  2,345,213
  Borrowed funds                                                                    2,451,762                  2,241,011
  Advances from borrowers for taxes and insurance                                      17,495                     11,534
  Accrued interest and other liabilities                                               70,665                     57,574
                                                                                  -----------                -----------
    Total liabilities                                                               5,441,250                  4,655,332
                                                                                  ===========                ===========

Commitments and Contingencies (Note 12)
Stockholders' Equity:
  Common stock, par value $.01 per share, 100,000,000 shares authorized,
  90,260,624 issued and 62,487,286 outstanding at December 31, 2001
  and 90,260,624 issued and 69,841,974 outstanding at December 31, 2000                   903                        451
  Additional paid-in capital                                                          569,959                    537,744
  Retained earnings                                                                   317,208                    291,345
  Unallocated common stock held by ESOP                                               (30,215)                   (32,962)
  Unearned common stock held by RRP                                                   (14,333)                   (19,784)
  Less--Treasury stock (27,773,338 and 20,418,650 shares at
    December 31, 2001 and 2000, respectively), at cost                               (289,469)                  (188,321)
                                                                                  -----------                -----------
                                                                                      554,053                    588,473
  Accumulated other comprehensive income (loss), net of taxes                           9,750                     (2,941)
                                                                                  -----------                -----------
      Total stockholders' equity                                                      563,803                    585,532
                                                                                  -----------                -----------
      Total liabilities and stockholders' equity                                  $ 6,005,053                $ 5,240,864
                                                                                  ===========                ===========
</Table>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                       65
<Page>

                   Staten Island Bancorp, Inc. and Subsidiary
                        CONSOLIDATED STATEMENTS OF INCOME
              For the Years Ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                       2001 (Restated)       2000           1999
                                                                       ---------------    ---------       ---------
                                                                             (000's omitted, except share data)
<S>                                                                       <C>             <C>             <C>
Interest Income:
  Loans                                                                   $ 259,412       $ 204,554       $ 139,197
  Securities available for sale                                             112,466         137,848         136,023
  Other earning assets                                                        1,105           1,402           2,253
                                                                          ---------       ---------       ---------
    Total interest income                                                   372,983         343,804         277,473
                                                                          ---------       ---------       ---------

Interest Expense:
  Borrowed funds                                                            129,387         132,891          89,719
  Certificates of deposit                                                    53,071          44,781          26,477
  Savings and escrow                                                         17,811          19,488          18,716
  Money market and NOW                                                       10,309           5,960           4,152
                                                                          ---------       ---------       ---------
    Total interest expense                                                  210,578         203,120         139,064
                                                                          ---------       ---------       ---------
    Net interest income                                                     162,405         140,684         138,409
Provision (Benefit) for Loan Losses                                           8,757             652          (1,843)
                                                                          ---------       ---------       ---------

    Net interest income after provision (benefit) for loan losses           153,648         140,032         140,252
                                                                          ---------       ---------       ---------

Other Income (Loss):
  Service and fee income                                                     19,342          16,878          10,057
  Net gain on loan sales                                                     91,829          21,218          17,783
  Loan fees                                                                  16,660           6,035           4,451
  Defined benefit plan curtailment gain                                          --              --           4,093
  Securities transactions, losses                                           (14,613)           (569)         (5,531)
                                                                          ---------       ---------       ---------
    Total other income                                                      113,218          43,562          30,853
                                                                          ---------       ---------       ---------

Other Expenses:
  Personnel                                                                  90,108          44,500          41,146
  Commissions                                                                51,687          11,954           8,573
  Occupancy and equipment                                                    12,819           9,827           7,912
  Data processing                                                             6,015           5,352           4,448
  Amortization of intangible assets                                           5,343           5,179           2,236
  Professional fees                                                           4,255           2,566           2,063
  Marketing                                                                   2,504           1,769           1,464
  Other                                                                      24,436          15,613          15,129
                                                                          ---------       ---------       ---------
    Total other expenses                                                    197,167          96,760          82,971
                                                                          ---------       ---------       ---------
Income before provision for income taxes                                     69,699          86,834          88,134

Provision for Income Taxes                                                   23,966          32,908          35,259
                                                                          ---------       ---------       ---------
Net income                                                                $  45,733       $  53,926       $  52,875
                                                                          =========       =========       =========
Earnings per Share:
    Basic                                                                 $    0.76       $    0.80       $    0.70
    Diluted                                                                    0.75            0.80            0.70
</Table>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                       66
<Page>

                   Staten Island Bancorp, Inc. and Subsidiary
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (RESTATED)
              For the Years Ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                          Unallocated     Unearned
                                                              Additional    Common         Common
                                                   Common      Paid-in    Stock Held    Stock Held by                  Comprehensive
                                                   Stock       Capital     by ESOP          RRP        Treasury Stock      Income
                                                  ---------   ----------  -----------   -------------  --------------  -------------
                                                                        (000's omitted, except share data)

<S>                                               <C>         <C>          <C>            <C>            <C>             <C>
Balance, January 1, 1999                          $     451   $ 534,464    $ (38,456)     $ (30,873)     $ (27,480)      $      --
  Allocation of 457,808
    ESOP shares                                          --       1,484        2,747             --             --              --
  Earned RRP shares                                      --         591           --          5,434             --              --
  Treasury stock purchases                               --          --           --             --        (93,669)             --
    (10,022,378 shares), at cost
  Cash dividends paid                                    --          --           --             --             --              --
  Change in unrealized
    appreciation (depreciation)
    on securities, net of tax                            --          --           --             --             --         (50,153)
  Net income                                             --          --           --             --             --          52,875
                                                  ---------   ---------    ---------      ---------      ---------       ---------
  Comprehensive income                                                                                                   $   2,722
                                                                                                                         =========

Balance, December 31, 1999                              451     536,539      (35,709)       (25,439)      (121,149)             --
  Allocation of 457,808
    ESOP shares                                          --       1,360        2,747             --             --              --
  Earned RRP shares                                      --        (155)          --          5,655             --              --
  Treasury stock purchases
    (7,545,272 shares), at cost                          --          --           --             --        (67,172)             --
  Cash dividends paid                                    --          --           --             --             --              --
  Change in unrealized
    appreciation (depreciation)
    on securities, net of tax                            --          --           --             --             --          31,690
  Valuation adjustment for
    deferred tax benefit                                 --          --           --             --             --              --
  Net income                                             --          --           --             --             --          53,926
                                                  ---------   ---------    ---------      ---------      ---------       ---------
  Comprehensive income                                                                                                   $  85,616
                                                                                                                         =========

Balance, December 31, 2000                              451     537,744      (32,962)       (19,784)      (188,321)             --
  Allocation of 457,808
    ESOP shares                                          --       2,378        2,747             --             --              --
  Earned RRP shares                                      --       2,163           --          5,451             --              --
  Treasury stock purchases
    (7,679,546), at cost                                 --          --           --             --       (104,362)             --
  Cash dividends paid                                    --          --           --             --             --              --
  Exercise of 324,858
    stock options                                        --         440           --             --          3,214              --
  Compensation expense from
    variable award plan                                  --      27,234           --             --             --              --
  Change in unrealized
    appreciation (depreciation)
    on securities, net of
    reclassification adjustment
    and tax effect                                       --          --           --             --             --          12,691
  Stock dividends
    (45,130,312 shares)                                 452          --           --             --             --              --
  Net income                                             --          --           --             --             --          45,733
                                                  ---------   ---------    ---------      ---------      ---------       ---------
  Comprehensive income                                                                                                   $  58,424
                                                                                                                         =========

Balance, December 31, 2001                        $     903   $ 569,959    $ (30,215)     $ (14,333)     $(289,469)
                                                  =========   =========    =========      =========      =========
</Table>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS

                                       67
<Page>

                   Staten Island Bancorp, Inc. and Subsidiary
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (RESTATED)
                                  (CONTINUED)
              For the Years Ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                              Accumulated
                                                                                 Other
                                                                             Comprehensive
                                                                             Income (Loss),
                                                          Retained Earnings    Net of Tax         Total
                                                          -----------------  --------------     ---------
<S>                                                           <C>              <C>              <C>
Balance, January 1, 1999                                      $ 215,414        $  15,522        $ 669,042
  Allocation of 457,808 ESOP shares                                  --               --            4,231
  Earned RRP shares                                                  --               --            6,025
  Treasury stock purchases                                           --               --          (93,669)
    (10,022,378 shares), at cost
  Cash dividends paid                                           (16,974)              --          (16,974)
  Change in unrealized
    appreciation (depreciation)
    on securities, net of tax                                        --          (50,153)         (50,153)
    Net income                                                   52,875               --           52,875
                                                              ---------        ---------        ---------
  Comprehensive income

Balance, December 31, 1999                                      251,315          (34,631)         571,377
  Allocation of 457,808
    ESOP shares                                                      --               --            4,107
  Earned RRP shares                                                  --               --            5,500
  Treasury stock purchases
    (7,545,272 shares), at cost                                      --               --          (67,172)
  Cash dividends paid                                           (18,764)              --          (18,764)
  Change in unrealized
    appreciation (depreciation
    on securities, net of tax                                        --           31,690           31,690
  Valuation adjustment for
    deferred tax benefit                                          4,868               --            4,868
  Net income                                                     53,926               --           53,926
                                                              ---------        ---------        ---------
  Comprehensive income

Balance, December 31, 2000                                      291,345           (2,941)         585,532
  Allocation of 457,808
    ESOP shares                                                      --               --            5,125
  Earned RRP shares                                                  --               --            7,614
  Treasury stock purchases
    (7,679,546), at cost                                             --               --         (104,362)
  Cash dividends paid                                           (19,418)              --          (19,418)
  Exercise of 324,858
    stock options                                                    --               --            3,654
  Compensation expense from variable
    award plan                                                       --               --           27,234
  Change in unrealized
    appreciation (depreciation)
    on securities, net of  reclassification
    adjustment and tax effect                                        --           12,691           12,691
  Stock dividends
    (45,130,312 shares)                                            (452)              --               --
  Net income                                                     45,733               --           45,733
                                                              ---------        ---------        ---------
  Comprehensive income

Balance, December 31, 2001                                    $ 317,208        $   9,750        $ 563,803
                                                              =========        =========        =========
</Table>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                       68
<Page>

                   Staten Island Bancorp, Inc. and Subsidiary
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Years Ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                         2001 (Restated)      2000           1999
                                                                         --------------- -------------  ------------
                                                                                        (000's omitted)
<S>                                                                        <C>            <C>            <C>
Cash Flows from Operating Activities:
Net income                                                                 $    45,733    $    53,926    $    52,875
Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
    Depreciation                                                                 4,106          3,292          2,543
    (Accretion) and amortization of bond and mortgage
       premiums                                                                   (606)        (1,246)         4,715
    Amortization of intangible assets                                            5,343          5,179          2,236
    Realized loss on sale of available-for-sale securities                      14,613            569          5,531
    Expense charge relating to allocation and earned
       portions of employee benefit plans                                       39,973          9,607         10,256
    Provision (benefit) for loan losses                                          8,757            652         (1,843)
    Origination of loans held for sale                                      (3,804,338)      (731,762)      (616,647)
    Purchase of loans held for sale                                           (118,812)       (17,857)            --
    Proceeds from sale of loans held for sale                                2,863,590        503,105        642,616
    Increase (decrease) in deferred loan fees                                   (8,545)        (5,086)         1,512
    (Increase) decrease in accrued interest receivable                           2,304         (3,085)        (4,232)
    Increase in other assets                                                   (41,770)       (27,993)       (99,264)
    Increase in accrued interest and other liabilities                          19,052         17,775         13,966
    (Increase) decrease in deferred income taxes                               (14,080)         6,590          3,352
                                                                           -----------    -----------    -----------
        Net cash provided by (used in) operating activities                   (984,680)      (186,334)        17,616
                                                                           ===========    ===========    ===========

Cash Flows from Investing Activities:
  Maturities and amortization of available-for-sale securities                 494,341        208,587        389,930
  Sales of available-for-sale securities                                       212,256        310,222         76,257
  Purchases of available-for-sale securities                                  (337,028)      (159,473)      (517,115)
  Principal collected on loans                                               1,185,703        389,365        326,098
  Loans made to customers                                                   (1,117,709)      (980,695)      (990,812)
  Purchase of loans                                                           (353,368)       (56,688)       (16,088)
  Sales of loans                                                               315,650        227,401          1,941
  Capital expenditures                                                         (11,162)        (5,396)        (4,961)
  Acquisition of First State Bank, net of cash acquired                             --        (46,688)            --
                                                                           -----------    -----------    -----------
        Net cash provided by (used in) investing activities                    388,683       (113,365)      (734,750)
                                                                           -----------    -----------    -----------

Cash Flows from Financing Activities:
  Net increase in deposit accounts                                             556,115        196,740         91,172
  Increase in borrowings                                                       210,751        191,600        704,894
  Cash dividends paid                                                          (19,418)       (18,764)       (16,974)
  Purchase of treasury stock                                                  (104,362)       (67,172)       (93,669)
  Exercise of stock options                                                      3,654             --             --
                                                                           -----------    -----------    -----------
        Net cash provided by financing activities                              646,740        302,404        685,423
                                                                           -----------    -----------    -----------
Net increase (decrease) in cash and cash equivalents                            50,743          2,705        (31,711)

Cash and Cash Equivalents, beginning of year                                   104,103        101,398        133,109
                                                                           -----------    -----------    -----------
Cash and Cash Equivalents, end of year                                     $   154,846    $   104,103    $   101,398
                                                                           ===========    ===========    ===========

Supplemental Disclosure of Cash Flow Information:
  Cash paid for--
    Interest                                                               $   222,735    $   197,141    $   131,043
    Income taxes                                                                17,599         25,109         31,300
  Acquisition of First State Bank--
    Fair value of assets acquired                                                   --        370,579             --
    Fair value of liabilities assumed                                               --        331,280             --
  Stock dividend                                                                   452             --             --
</Table>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                       69
<Page>

Staten Island Bancorp, Inc. and Subsidiary-NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS- December 31, 2001, 2000 and 1999

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accounting and reporting policies of Staten Island Bancorp, Inc. (the
"Company") and subsidiary conform to generally accepted accounting principles
and to general practice within the banking industry.

     Certain reclassifications have been made to the prior-year amounts to
conform with current-year presentation.

     The Company has restated its financial statements at and for the year ended
December 31, 2001. See Note 17 of the Notes to Consolidated Financial
Statements.

     The following is a description of the more significant policies which the
Company follows in preparing and presenting its consolidated financial
statements.

     BASIS OF PRESENTATION. The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary SI Bank &
Trust (the "Bank"). The Bank's wholly owned subsidiaries are SIB Mortgage Corp.
(the "Mortgage Company"), SIB Investment Corporation ("SIBIC"), Staten Island
Funding Corporation ("SIFC") and SIB Financial Services Corporation ("SIBFSC").
All significant intercompany transactions and balances are eliminated in
consolidation.

     The Mortgage Company was set up to acquire the operations of Ivy Mortgage.
SIFC was set up as a real estate investment trust, SIBIC was set up to hold
certain Bank investments and SIBFSC was formed as a licensed life insurance
agency to sell the products of the SBLI USA Mutual Life Insurance Co.

     As more fully discussed in Note 2, Staten Island Bancorp, Inc., a Delaware
corporation, was organized by the Bank for the purpose of acquiring all of the
capital stock of the Bank pursuant to the conversion of the Bank from a
federally chartered mutual savings bank to a federally chartered stock savings
bank. The Company is subject to the financial reporting requirements of the
Securities Exchange Act of 1934, as amended.

     In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the reported assets, liabilities,
revenues and expenses as of the dates of the financial statements. Actual
results could differ significantly from those estimates.

     CASH AND CASH EQUIVALENTS. For purposes of reporting cash flows, cash and
cash equivalents include cash and due from banks, money market deposits,
interest-bearing certificates of deposit and federal funds sold for the years
ended December 31, 2001, 2000 and 1999.

                                       70
<Page>

     SECURITIES AVAILABLE FOR SALE. In accordance with Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," debt and equity securities used as part of the
Company's asset/liability management that may be sold in response to changes in
interest rates are reported at fair value, with unrealized gains and losses
excluded from earnings and reported on an after-tax basis in a separate
component of stockholders' equity. Gains and losses on the disposition of
securities are recognized on the specific identification method in the period
during which they occur. Premiums and discounts on mortgage-backed securities
are amortized over the average life of the security using a method which
approximates the level yield method.

     LOANS. Loans are stated at the principal amount outstanding, net of
unearned income, loan origination fees and costs, and an allowance for loan
losses. Loan origination fees and costs are recognized in interest income as an
adjustment to yield over the life of the loan or at the time of the sale of the
loan for loans held in the portfolio and loans held for sale. Premiums and
discounts on purchased mortgages are amortized over the average life of the loan
using a method which approximates the level yield method.

     Loans are placed on non-accrual status when the interest or principal
payments are 90 days past due unless, in the opinion of management, collection
is deemed probable. When interest accruals are discontinued, the recognition of
interest income ceases and previously accrued interest remaining unpaid is
reversed against income. Cash payments received are applied to principal, and
interest income is recognized when management determines that the financial
condition and payment record of the borrower warrant the recognition of income.
The Bank has defined its impaired loans as its non-accrual loans under the
guidance of SFAS No. 114, entitled, "Accounting by Creditors for Impairment of a
Loan." Pursuant to this accounting guidance, a valuation allowance is recorded
on impaired loans to reflect the difference, if any, between the loan face value
and the present value of projected cash flows, observable fair value or
collateral value. This valuation allowance is reported within the overall
allowance for loan losses.

     LOANS HELD FOR SALE. Loans held for sale arise out of the Mortgage
Company's operations and are carried at the lower of cost or market as
determined by outstanding commitments from investors or current investor yield
requirements.

     ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is established by
management through provisions for loan losses charged against income. Amounts
deemed to be uncollectible are charged against the allowance for loan losses and
subsequent recoveries, if any, are credited to the allowance.

     The amount of the allowance for loan losses is inherently subjective, as it
requires making material estimates which may vary from actual results. These
estimates are evaluated periodically and, as adjustments become necessary, they
are reflected in operations during the periods in which they become known.
Considerations in this evaluation include past and anticipated loss experience,
current portfolio composition and evaluation of real estate collateral, as well
as current and anticipated economic conditions. In the opinion of management,
the allowance, when taken as a whole, is adequate to absorb estimated loan
losses inherent in the

                                       71
<Page>

Company's entire loan portfolio.

     DERIVATIVE FINANCIAL INSTRUMENTS. The Mortgage Company currently utilizes
certain derivative instruments, primarily forward delivery sale commitments, in
its efforts to manage interest rate risk associated with its mortgage loan
interest-rate locked commitments and mortgage loans held for sale. On January 1,
2001, the Company adopted SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities," ("SFAS 133") which defines forward sale commitments as
derivative financial instruments. In accordance with SFAS 133, derivative
financial instruments are recognized in the statement of financial condition at
fair value while changes in the fair value are recognized in the consolidated
statement of income for years ending after December 31, 2000. Prior to January
1, 2001, the Company accounted for forward sale commitments as off-balance sheet
financial instruments. In addition, as of December 31, 2001 and 2000, the
Company accounted for interest rate locked commitments as off-balance sheet
financial instruments.

     PREMISES AND EQUIPMENT. Premises and equipment are carried at cost, less
allowance for depreciation and amortization applied on a straight-line basis
over the estimated useful lives of 10 to 50 years for buildings and improvements
and 3 to 10 years for furniture, fixtures and equipment.

     INVESTMENTS IN REAL ESTATE. Investments in real estate consist of real
estate acquired through foreclosure or by deed in lieu of foreclosure and assets
repossessed (owned real estate, or "ORE"). ORE properties are carried at the
lower of cost or fair value at the date of foreclosure (new cost basis) and at
the lower of the new cost basis or fair value less estimated selling costs
thereafter.

     GOODWILL AND OTHER INTANGIBLES. Goodwill, representing the excess of
purchase price over the fair value of net assets acquired using the purchase
method of accounting, was amortized using the straight-line method over periods
not exceeding 20 years through 2001. See "New Accounting Pronouncements," below,
for new accounting guidance for business combinations and goodwill.

     SEGMENT REPORTING. For internal management purposes, the Company has
identified two business segments: Community Banking and Mortgage Banking.
Further information regarding these business segments is set forth in Note 15 of
the Notes to Consolidated Financial Statements.

     DEMAND DEPOSITS. Each of the Bank's commercial and personal demand
(checking) accounts and NOW accounts has a related interest-bearing money market
sweep account. The sole purpose of the sweep accounts is to reduce the
non-interest-bearing reserve balances that the Bank is required to maintain with
the Federal Reserve Bank, and thereby increase funds available for investment.
Although the sweep accounts are classified as money market accounts for
regulatory purposes, they are included in demand deposits and NOW accounts in
the accompanying consolidated statements of financial condition.

                                       72
<Page>

     COMPREHENSIVE INCOME. Comprehensive income includes net income and all
other changes in equity during a period, except those resulting from investments
by owners and distribution to owners. Other comprehensive income includes
revenues, expenses, gains and losses that under generally accepted accounting
principles are included in comprehensive income but excluded from net income.

     Comprehensive income and accumulated other comprehensive income are
reported, net of related income taxes. Accumulated other comprehensive income
consists solely of unrealized holding gains and losses on available-for-sale
securities. Additional information on the components of comprehensive income is
set forth in Note 20 of the Notes to Consolidated Financial Statements.

     INCOME TAXES. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to the differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases ("temporary differences"). Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which temporary differences are expected to be recovered
or settled. No valuation allowance is provided for deferred tax assets due to
the fact that management believes that the results of future operations will
generate sufficient taxable income to realize the deferred tax assets. The
effect of changes in tax laws or rates on deferred tax assets and liabilities is
recognized in the period that includes the enactment date.

     COMMON STOCK. On November 19, 2001, the Company paid a stock dividend of
one share for each share of stock held (two-for-one stock split) to shareholders
of record on November 5, 2001. At year-end, the amount of shares outstanding
were 62,487,286. All share amounts and earnings per share amounts have been
adjusted to reflect the stock split.

     EARNINGS PER SHARE. Earnings per share are computed by dividing net income
by the weighted average number of shares of common stock and potential common
shares outstanding, adjusted for the unallocated or unearned portion of shares
held by the Employee Stock Ownership Plan ("ESOP") and Recognition and Retention
Plan ("RRP").

     STOCK-BASED COMPENSATION. The Company accounted for its Stock Option Plan
as a variable award plan using the intrinsic value method prescribed in
Accounting Principles Board Opinion ("APB") No. 25 and recorded compensation
expense on all granted options equal to the difference between the option
exercise price and the fair market value of the Company's common stock at the
exercise date or at the financial reporting date, whichever is earlier. Under
this method, to the extent that the market value of the underlying stock exceeds
the stock option exercise price, increases or decreases in the value of stock
options are reflected as additional charges or credits to compensation expense.
Effective September 24, 2002, management rescinded the method of cashless
exercise under the Stock Option Plan that had required the recognition of
compensation expense, and reestablished the Stock Option Plan as a fixed award
plan under APB No. 25. Therefore, no additional compensation expense will be
recognized after this effective date.

     TREASURY STOCK. Repurchases of common stock are recorded as treasury stock
at cost.

                                       73
<Page>

     BANK OWNED LIFE INSURANCE ("BOLI"). In August 1999, the Bank invested in
BOLI policies to fund certain future employee benefit costs. The Bank's
investment totaled approximately $100 million and the Bank is the primary
beneficiary of these policies. The cash surrender value of the BOLI policies as
of December 31, 2001 was $116.7 million and is recorded in the Company's
consolidated statements of financial condition as other assets, and the change
in the cash surrender value is recorded as other income in the consolidated
statements of income.

     NEW ACCOUNTING PRONOUNCEMENTS. In July 2001, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 141, "Business Combinations" ("SFAS
141"). SFAS 141 establishes new standards for accounting and reporting
requirements for business combinations. SFAS 141 requires that the purchase
method of accounting be used for all business combinations and prohibits use of
the pooling-of-interest method of accounting for business combinations. SFAS 141
is effective for all business combinations initiated after June 30, 2001. The
Company has not entered into any business combinations since the release of this
standard.

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS 142, which supercedes APB Opinion No. 17, "Intangible
Assets," establishes new standards for goodwill and other intangible assets
acquired in a business combination. SFAS 142 eliminates amortization of goodwill
and instead requires an impairment test to be performed annually. The Company
adopted SFAS No. 142 effective January 1, 2002. As of December 31, 2001, the
Company had goodwill of $55,275,000, of which $2,395,000 comprised deposit
intangibles. The Company anticipates that the adoption of the statement will
result in the reduction of amortization expense by $4.1 million per annum and
anticipates no write-downs due to impairment at this time.

     On March 13, 2002, the FASB issued guidance on Derivative Implementation
Group Issue C13, "When a Loan Commitment is Included in the Scope of Statement
133" ("Issue C13"). Issue C13 provides clear guidance as to when a mortgage loan
interest rate locked commitment must be accounted for as a derivative
instrument. Based upon this guidance, the Company has identified certain loan
commitments that should be accounted for as derivative instruments. The impact
of adopting the guidance with respect to Issue C13 on July 1, 2002 will be a net
after-tax credit of $4.7 million and will be reflected as a cumulative change in
accounting treatment in the Company's statement of income for the year ended
December 31, 2002.

     On November 25, 2002, the FASB issued FASB Interpretation No. 45 ("FIN
45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness to Others." FIN 45 addresses the
accounting for and disclosure of guarantees and requires a guarantor to
recognize a liability for the fair value of the obligation it assumes under the
guarantee, effective December 31, 2002. The adoption of this interpretation is
not expected to have a significant impact on the Company.

                                       74
<Page>

2. ORGANIZATION/FORM OF OWNERSHIP

     The Bank was originally founded as a New York State chartered savings bank
in 1864. In 1997, the Bank converted to a federally chartered stock savings bank
with the concurrent formation of a holding company and an initial public
offering ("IPO") of common stock. The Bank is a community savings bank providing
a complete line of retail and commercial banking services along with trust
services and life insurance sales. Through its subsidiary, SIB Mortgage Corp.,
the Bank originates residential mortgage loans in 42 states and sells them into
the secondary market. Individual customer deposits are insured up to $100,000 by
the Federal Deposit Insurance Corporation ("FDIC"). The Bank's primary regulator
is the Office of Thrift Supervision ("OTS").

3. ACQUISITIONS

     On January 14, 2000, the Company acquired First State Bancorp, the holding
company for First State Bank, which operated six full-service branches in the
State of New Jersey. First State Bancorp, a bank holding company with assets
over $370 million, was acquired for cash consideration totaling $84.5 million,
including transaction costs. The acquisition has been accounted for using the
purchase method of accounting, and accordingly, the purchase price has been
allocated to the assets acquired and the liabilities assumed based upon fair
value at the date of acquisition. The excess of the purchase price over the fair
value of the net assets acquired was $45.5 million and has been recorded as
goodwill and amortized on a straight-line basis over 15 years. Effective January
1, 2002, goodwill will be evaluated for impairment under the guidance of SFAS
142, as discussed under "New Accounting Pronouncements" in Note 1, above.

4. REGULATORY MATTERS

     The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") imposes a number of mandatory supervisory measures on banks and
thrift institutions. One of the items FDICIA imposed was certain minimum capital
requirements or classifications. Such classifications are used by the FDIC and
other bank regulatory agencies to determine matters ranging from each
institution's semiannual FDIC deposit insurance premium assessments to approvals
of applications authorizing institutions to grow their asset size or otherwise
expand business activities. Under OTS capital regulations, the Bank is required
to comply with each of three separate capital adequacy standards. Set forth
below is a summary of the Bank's compliance with OTS capital standards as of
December 31, 2001 and 2000. (000's omitted):

<Table>
<Caption>
                                                                            December 31, 2001 (Restated)
                                                             --------------------------------------------------------
                                                              Actual         Percent          Required       Percent
                                                             --------       ---------         --------       --------
<S>                                                          <C>              <C>             <C>             <C>
SI Bank & Trust:
  Tangible capital                                           $412,002          7.01  %        $ 88,123        1.50  %
  Core capital                                                414,397          7.05            235,089        4.00
  Risk-based capital                                          431,612         13.35            258,734        8.00
Staten Island Bancorp:
  Tangible capital                                           $491,018          8.28  %              --          --
  Core capital                                                493,413          8.31                 --          --
  Risk-based capital                                          516,187         14.41                 --          --
</Table>

                                       75
<Page>

<Table>
<Caption>
                                                                                 December 31, 2000
                                                             --------------------------------------------------------
                                                              Actual         Percent          Required       Percent
                                                             --------       ---------         --------       --------
<S>                                                          <C>              <C>             <C>             <C>
SI Bank & Trust:
  Tangible capital                                           $382,150          7.53  %        $ 76,151        1.50  %
  Core capital                                                383,089          7.54            203,107        4.00
  Risk-based capital                                          396,837         15.06            210,751        8.00
Staten Island Bancorp:
  Tangible capital                                           $522,326         10.09  %              --          --
  Core capital                                                523,265         10.10                 --          --
  Risk-based capital                                          537,903         18.77                 --          --
</Table>

     As part of the IPO in December 1997, in accordance with the requirements of
the OTS, the Bank established a liquidation account for $183,947,000 which was
equal to its capital as of the date of the latest consolidated statement of
financial condition (September 30, 1997) appearing in the IPO prospectus
supplement. The liquidation account is reduced to the extent that eligible
account holders have reduced their qualifying deposits. Subsequent increases in
deposits do not restore an eligible account holder's interest in the liquidation
account. In the event of a complete liquidation of the Bank, each eligible
account holder will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the adjusted qualifying balances for
accounts then held. This account had a balance of $34,843,000 at December 31,
2001.

     In addition to the restriction described above, the Company may not declare
or pay cash dividends on or repurchase any of its shares of common stock if the
effect thereof would cause stockholders' equity to be reduced below applicable
regulatory capital maintenance requirements or if such declaration and payment
would otherwise violate regulatory requirements.

                                       76
<Page>

5. INVESTMENT SECURITIES - SECURITIES AVAILABLE FOR SALE

     The amortized cost and approximate market value of securities available for
sale are summarized as follows:

<Table>
<Caption>
                                                                     December 31, 2001
                                                                        (Restated)
                                        ------------------------------------------------------------------------
                                                                 Gross              Gross
                                                              Unrealized          Unrealized            Market
                                        Amortized Cost          Gains               Losses              Value
                                        --------------       -----------         ------------        -----------
                                                                      (000's omitted)
<S>                                      <C>                 <C>                  <C>                <C>
Debt securities:
  U.S. Government
    and agencies                         $    56,511         $     1,041          $        --        $    57,552
  GNMA, FNMA and
    FHLMC mortgage
    participation
    certificates                             632,706              10,355                 (453)           642,608
  Agency CMOs                                128,564               1,888                 (336)           130,116
  Privately issued CMOs                      337,272               5,929                   --            343,201
  Other                                      185,214               2,260               (9,147)           178,327
                                         -----------         -----------          -----------        -----------
                                           1,340,267              21,473               (9,936)         1,351,804
Marketable
  equity securities:
    Common stocks                             16,279               4,461                 (996)            19,744
    FHLB stock                               102,900                  --                   --            102,900
    Preferred stocks                          20,352                 224                 (734)            19,842
    Mutual funds                              31,229               4,205               (1,085)            34,349
                                         -----------         -----------          -----------        -----------
                                             170,760               8,890               (2,815)           176,835
                                         -----------         -----------          -----------        -----------
      Total securities
        available for sale               $ 1,511,027         $    30,363          $   (12,751)       $ 1,528,639
                                         ===========         ===========          ===========        ===========
</Table>

                                       77
<Page>

<Table>
<Caption>
                                                                       December 31, 2000
                                        ------------------------------------------------------------------------
                                                                   Gross            Gross
                                                                Unrealized        Unrealized           Market
                                        Amortized Cost            Gains             Losses              Value
                                        --------------         -----------        ------------       -----------
                                                                      (000's omitted)
<S>                                      <C>                   <C>                <C>                <C>
Debt securities:
  U.S. Government and agencies           $   178,351           $       865        $    (1,130)       $   178,086
  GNMA, FNMA and
    FHLMC mortgage
    participation
    certificates                             712,292                 7,000             (2,064)           717,228
  Agency CMOs                                223,224                   657             (2,614)           221,267
  Privately issued CMOs                      412,374                   601             (2,223)           410,752
  Other                                      170,480                   947            (13,530)           157,897
                                         -----------           -----------        -----------        -----------
                                           1,696,721                10,070            (21,561)         1,685,230
Marketable
  equity securities:
    Common stocks                             18,082                 7,349               (897)            24,534
    FHLB stock                                80,550                    --                 --             80,550
    Preferred stocks                          69,913                   130             (7,155)            62,888
    Mutual funds                              29,337                 6,691               (284)            35,744
                                         -----------           -----------        -----------        -----------
                                             197,882                14,170             (8,336)           203,716
                                         -----------           -----------        -----------        -----------
      Total securities
        available for sale               $ 1,894,603           $    24,240        $   (29,897)       $ 1,888,946
                                         ===========           ===========        ===========        ===========
</Table>

The amortized cost and market value of debt securities available for sale at
December 31, 2001 and 2000, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.

<Table>
<Caption>
                                    December 31, 2001 (Restated)              December 31, 2000
                                   -----------------------------         -----------------------------
                                   Amortized             Market           Amortized           Market
                                      Cost               Value              Cost              Value
                                   ----------         ----------         ----------         ----------
                                                             (000's omitted)
<S>                                <C>                <C>                <C>                <C>
Due in one year or less            $    1,060         $    1,107         $    3,331         $    3,347
Due after one year
  through five years                   23,158             23,872             96,721             97,875
Due after five years
  through ten years                    83,612             84,390            124,158            121,221
Due after ten years                   133,895            126,510            124,622            113,541
                                   ----------         ----------         ----------         ----------
                                      241,725            235,879            348,832            335,984
                                   ----------         ----------         ----------         ----------
GNMA, FNMA, FHLMC
  and CMO mortgage
  participation
  certificates                      1,098,542          1,115,925          1,347,889          1,349,246
                                   ----------         ----------         ----------         ----------
                                   $1,340,267         $1,351,804         $1,696,721         $1,685,230
                                   ==========         ==========         ==========         ==========
</Table>

     Proceeds from sales and calls of securities available for sale during 2001,
2000 and 1999 were $322,540,000, $309,972,000 and $76,257,000 with realized
gross gains of $6,386,000, $8,140,000 and $8,876,000 and realized gross losses
of $20,999,000, $8,709,000 and $14,407,000, respectively. Gross losses in 2001
and 1999 include write-downs of approximately $14,506,000 and $9,000,000,
respectively, on securities whose decline in value was deemed to be other than
temporary.

                                       78
<Page>

6. LOANS

     A significant portion of the Bank's loans are to borrowers who are
domiciled in New York City. The income of many of those customers is dependent
on the economy of New York City and surrounding areas. In addition, a
significant portion of the loans domiciled in New York City are real estate
loans with mortgages on Staten Island properties, which is a borough of New York
City.

     The loans originated by the Mortgage Company are to borrowers domiciled
throughout the United States and thus are not as dependent on the economy of any
one area of the country.

     While management uses available information to provide for losses of value
on loans and foreclosed properties, future loss provisions may be necessary
based on changes in economic conditions. In addition, the Bank's regulators, as
an integral part of their examination process, periodically review the valuation
of the Bank's loans and foreclosed properties. Such regulators may require the
Bank to recognize write-downs based on judgments different from those of
management.

     Loans, net held in portfolio consist of the following at December 31, 2001
and 2000:

<Table>
<Caption>
                                                               2001 (Restated)          2000
                                                               ---------------      ------------
                                                                        (000's omitted)
<S>                                                              <C>                <C>
Loans secured by mortgages on real estate:
       1-4 family residential                                    $ 2,062,897        $ 2,206,972
       Multi-family properties                                        48,783             49,034
       Commercial properties                                         335,260            307,407
       Home equity                                                    12,815             10,699
       Construction and land                                         245,515            152,956
       Deferred origination costs and unearned income, net            10,371             11,696
                                                                 -----------        -----------

           Net loans secured by mortgages on real estate           2,715,641          2,738,764
                                                                 -----------        -----------

Other loans:
       Student                                                           288                333
       Passbook                                                        7,477              6,237
       Commercial                                                     60,898             52,980
       Other Consumer                                                 42,356             63,984
                                                                 -----------        -----------
           Net other loans                                           111,019            123,534
                                                                 -----------        -----------
           Net loans before the allowance for loan losses          2,826,660          2,862,298
Allowance for loan losses                                            (20,041)           (14,638)
                                                                 -----------        -----------

       Net loans                                                 $ 2,806,619        $ 2,847,660
                                                                 ===========        ===========
</Table>

     The Company's loans held for sale consist of mortgage loans originated for
sale by the Mortgage Company and collateralized by one-to four-family
residential real estate. As of December 31, 2001 mortgage loans held for sale
had an unpaid principal balance of $1.2 billion. Mortgage loans held for sale
are carried at the lower of cost or market on an aggregate basis and

                                       79
<Page>

are stated net of deferred loan origination costs and fees, which amounted to
$14.4 million at December 31, 2001. The following table outlines the unpaid
principal balance of mortgage loans held for sale by product type as December
31, 2001 and 2000, respectively.

<Table>
<Caption>
                                                         2001                          2000
                                                      ----------                     --------
                                                                  000's omitted
<S>                                                   <C>                            <C>
Agency eligible                                       $  509,054                     $ 53,789
FHA/VA                                                   195,723                       22,419
Jumbo                                                    253,059                       34,530
ALT-A                                                    203,763                          289
Sub-prime                                                  9,556                          568
Net deferred loan fees/costs                              14,438                        4,568
                                                      ----------                     --------
Total                                                 $1,185,593                     $116,163
                                                      ==========                     ========
</Table>

     The Mortgage Company had forward sales commitments with a notional value of
$856.2 million at December 31, 2001. Such forward sale commitments are comprised
of $192.5 million in allocated single whole loan sales, $415.7 million of
allocated bulk whole loan sales and $248.0 million of unallocated forward sale
commitments. The unallocated forward sale commitments had market appreciation of
$1.0 million at December 31, 2001, which is recognized in the consolidated
statements of financial condition and income.

     A summary of activity in the Company's allowance for loan losses for the
years ended December 31, 2001, 2000 and 1999, is as follows:

<Table>
<Caption>
                                             2001              2000              1999
                                           --------          --------          --------
                                                         (000's omitted)
<S>                                        <C>               <C>               <C>
Beginning balance                          $ 14,638          $ 14,271          $ 16,617
     Increase as a result of
       acquisition                               --               847                --
     Provision (benefit) charged
       to operations                          8,757               652            (1,843)
     Charge-offs                             (4,265)           (2,186)           (1,665)
     Recoveries                                 911             1,054             1,162
                                           --------          --------          --------

     Ending balance                        $ 20,041          $ 14,638          $ 14,271
                                           ========          ========          ========
</Table>

     Non-accrual loans of $15,093,000 and $9,766,000 at December 31, 2001 and
2000, respectively, represent the Company's recorded investment in loans for
which impairment has been recognized in accordance with SFAS No. 114 and SFAS
No. 118. The loss of interest income associated with loans on non-accrual status
was approximately $935,000, $728,000 and $746,000 for the years ended December
31, 2001, 2000 and 1999, respectively. The actual amount of interest recorded as
income (on a cash basis) on such loans amounted to $46,000, $109,000 and
$935,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

     At December 31, 2001 and 2000, the valuation allowance related to all
impaired loans totaled $11,475,000 and $8,152,000, respectively, and is included
in the allowance for loan

                                       80
<Page>

losses shown in the consolidated statements of financial condition. The average
recorded investment in impaired loans for the years ended December 31, 2001 and
2000, was approximately $13,042,000 and $12,857,000, respectively.

     At December 31, 2001 and 2000, the Company had other real estate totaling
$1,227,000 and $893,000, respectively, classified in other assets.

     At December 31, 2001 and 2000, the Company was servicing mortgages for
others totaling $342,897,000 and $262,957,000, respectively.

     At December 31, 2001 and 2000, the Bank had balances outstanding from
various officers totaling $6,005,000 and $5,706,000, respectively. During 2001,
there were loan originations of $563,000 and loan repayments of $264,000 on the
loans held by various officers of the Bank.

7. PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2001 and 2000 are summarized as follows:

<Table>
<Caption>
                                                     2001       2000
                                                  --------    --------
                                                     (000's omitted)
<S>                                               <C>         <C>
Land, building and leasehold improvements         $ 37,231    $ 28,931
Furniture, fixtures and equipment                   21,025      18,957
                                                  --------    --------
                                                    58,256      47,888
Less--Accumulated depreciation and amortization    (19,317)    (16,005)
                                                  --------    --------
                                                  $ 38,939    $ 31,883
                                                  ========    ========
</Table>

8. DUE DEPOSITORS

     Scheduled maturities of certificates of deposit at December 31, 2001 are
summarized as follows:

<Table>
<Caption>
                                                                          Weighted
                                                 Amount                 Average Rate
                                              ----------                ------------
                                                        (000's omitted)
                <S>                           <C>                          <C>
                               2002           $  833,401                   4.01%
                               2003              145,625                   4.24
                               2004               38,037                   4.81
                               2005               29,896                   3.42
                2006 and thereafter               36,941                   5.71
                                              ----------
                                              $1,083,900                   4.11%
                                              ==========
</Table>

     The aggregate amounts of outstanding certificates of deposit in
denominations of $100,000 or more at December 31, 2001 and 2000 were
approximately $298,558,000 and $226,902,000, respectively.

                                       81
<Page>

9. BORROWED FUNDS

     The Company was obligated for borrowings as follows (000's omitted):

<Table>
<Caption>
                                                                   December 31,
                                   ----------------------------------------------------------------------------
                                                 2001                                        2000
                                   --------------------------------            --------------------------------
                                                           Weighted                                    Weighted
                                                           Average                                      Average
                                      Amount                 Rate                Amount                  Rate
                                   ----------              --------            ----------              --------
<S>                                <C>                      <C>                <C>                      <C>
Repurchase
   Agreements:
   Non-FHLB                        $  432,435                4.45%             $  629,974                6.15%
   FHLB                               228,000                5.39                 263,000                5.40
FHLB Advances                       1,725,000                4.67               1,348,000                6.51
Mortgage Company
   Repurchase
   Agreement                           66,293                2.47                      --                  --
Mortgage payable                           34               12.00                      37               12.00
                                   ----------                                  ----------
                                   $2,451,762                4.64%             $2,241,011                6.28%
                                   ==========                                  ==========
</Table>

     The average balance of borrowings for the years ended December 31, 2001 and
2000 were $2,399,963,000 and $2,147,718,000, respectively. The maximum month-end
balance of borrowings for the years ended December 31, 2001 and 2000 were
$2,535,392,000 and $2,249,963,000, respectively.

     The Company's borrowings at December 31, 2001 have contractual maturities
as follows (000's omitted):

<Table>
<Caption>
                                                                              Weighted
                                                     Amount                 Average Rate
                                                  ----------                ------------
                 <S>                              <C>                          <C>
                 2002                             $  704,468                   4.16%
                 2003                                497,200                   4.41
                 2004                                406,170                   4.58
                 2005                                325,090                   5.27
                 2006                                120,800                   4.67
                 2007                                     --                     --
                 2008                                213,000                   5.42
                 2009 and thereafter                 185,034                   5.23
                                                  ----------
                                                  $2,451,762                   4.64%
                                                  ==========
</Table>

     As of December 31, 2001, $755,601,000 of investment securities and
$1,725,000,000 in mortgage loans were pledged as collateral for these borrowed
funds.

                                       82
<Page>

10. EMPLOYEE BENEFIT PLANS

     DEFINED BENEFIT PLAN. Costs of the Bank's defined benefit plan are
accounted for in accordance with SFAS No. 87. The following table sets forth the
change in benefit obligations, the change in the plan assets, the funded status
of the plan and the amounts recognized in the accompanying consolidated
financial statements at December 31, 2001 and 2000, respectively, based upon the
latest available actuarial measurement dates of December 31, 2001 and 2000,
respectively.

<Table>
<Caption>
                                                                            2001                       2000
                                                                           -------                    -------
                                                                                   (000's omitted)
<S>                                                                        <C>                        <C>
Projected benefit obligation, beginning of year                            $19,675                    $17,245
     Interest cost                                                           1,363                      1,359
     Benefits paid                                                          (1,170)                    (1,001)
     Actuarial loss                                                            148                      2,072
                                                                           -------                    -------
Projected benefit obligation, end of year                                  $20,016                    $19,675
                                                                           =======                    =======
</Table>

     The following table sets forth the plan's change in plan assets:

<Table>
<Caption>
                                                                                  2001                    2000
                                                                                -------                 -------
                                                                                       (000's omitted)
<S>                                                                             <C>                     <C>
Fair value of the plan assets, beginning of year                                $28,187                 $28,242
         Actual return on plan assets                                            (1,965)                    946
         Benefits paid                                                           (1,170)                 (1,001)
                                                                                -------                 -------

Fair value of the plan assets, end of year                                      $25,052                 $28,187
                                                                                =======                 =======

Funded status                                                                     5,036                   8,512
Unrecognized net actuarial loss (gain)                                            1,909                  (2,726)
                                                                                -------                 -------
         Prepaid cost                                                           $ 6,945                 $ 5,786
                                                                                =======                 =======
</Table>

                                       83
<Page>

The components of net pension expense are as follows:

<Table>
<Caption>
                                                 2001        2000        1999
                                               -------     -------     -------
                                                        (000's omitted)
<S>                                            <C>         <C>         <C>
Service cost-benefits earned during the year   $    --     $    --     $ 1,355
Interest cost on projected benefit
   obligation                                    1,363       1,359       1,457
Net amortization and deferral                       --          --         (15)
Expected return on plan assets                  (2,493)     (2,498)     (2,599)
Deferred Investment loss (gain)                    (29)       (330)        614
                                               -------     -------     -------

     Net pension expense (income)              $(1,159)    $(1,469)    $   812
                                               =======     =======     =======

Major assumptions utilized:
     Weighted average discount rate               7.25%       8.00%       6.75%
     Rate of increase in compensation
         levels                                     --          --        4.50
Expected long-term rate of return on
   assets                                         9.00        9.00        9.00
</Table>

     The Bank amended the defined benefit plan to freeze future benefit accruals
on December 31, 1999. In connection with the freezing of the plan and the plan's
measurement date of December 31, 1999, in accordance with SFAS No. 88, the Bank
recognized a curtailment gain of approximately $4.1 million for the year ended
December 31, 1999.

     POSTRETIREMENT BENEFITS. The Bank provides postretirement benefits,
including medical care and life insurance, which cover substantially all active
employees hired prior to December 31, 1999 upon their retirement.

     The Bank's postretirement benefits are unfunded. The following table shows
the components of the plan's accrued postretirement benefit cost included in
other liabilities in the consolidated statements of financial condition as of
December 31, 2001 and 2000:

<Table>
<Caption>
                                                   2001     2000
                                                  ------   ------
                                                  (000's omitted)
<S>                                               <C>      <C>
Accumulated postretirement benefit obligations:
     Retirees                                     $1,354   $1,262
     Other fully eligible participants             2,816    2,229
     Unrecognized gain                               345      770
     Unrecognized past service liability             359      433
                                                  ------   ------

         Accrued postretirement benefit cost      $4,874   $4,694
                                                  ======   ======
</Table>

                                       84
<Page>

     Net periodic postretirement benefit cost for 2001, 2000 and 1999 included
the following components:

<Table>
<Caption>
                                                   2001     2000     1999
                                                  -----    -----    -----
                                                       (000's omitted)
<S>                                               <C>      <C>      <C>
Service cost--benefits attributed to service
   during period                                  $ 209    $ 210    $ 217
Interest cost on accumulated postretirement
   benefit obligation                               273      270      228
Amortization of:
     Unrecognized (gain) loss                       (31)      (3)      --
     Unrecognized past service liability            (75)     (75)     (75)
                                                  -----    -----    -----

       Net periodic postretirement benefit cost   $ 376    $ 402    $ 370
                                                  =====    =====    =====
</Table>

     The average health care cost trend rate assumption significantly affects
the amounts reported. For example, a 1% increase in this rate would increase the
accumulated benefit obligation by $308,000, $263,000 and $214,000 at December
31, 2001, 2000 and 1999, respectively, and increase the net periodic cost by
$45,000, $37,000 and $43,000 for the years ended December 31, 2001, 2000 and
1999, respectively. The postretirement benefit cost components for 2001 were
calculated assuming average health care cost trend rates ranging up to 9.0% and
grading to 4.5% in 2007 and thereafter.

     401(k) PLAN. The Bank has a 401(k) plan (the "Plan") covering substantially
all full-time employees. The Plan provides for employer matching contributions
subject to a specified maximum and also contains a profit-sharing feature which
provides for contributions at the discretion of the Company. The Plan expense in
2001, 2000 and 1999 was matched through stock contributions under the ESOP. The
amounts matched for the years ended December 31, 2001, 2000 and 1999 were
approximately $686,000, $581,000 and $535,000, respectively.

     EMPLOYEE STOCK OWNERSHIP PLAN. The ESOP borrowed $41,262,000 from the
Company and used the funds to purchase 6,877,000 shares of the Company's stock
issued in the conversion. The loan has an interest rate of 8.25% and will be
repaid over a 15-year period. The loan was issued on December 19, 1997. Shares
purchased are held in a suspense account for allocation among the participants
as the loan is paid. Contributions to the ESOP and shares released from the loan
collateral are in an amount proportional to repayment of the ESOP loan. Shares
allocated are first used for the employer matching contribution for the 401(k)
plan, with the remaining shares allocated to the participants based on
compensation as described in the plan in the year of allocation. The vesting
schedule is the same as the Bank's current 401(k) plan. Forfeitures from the
401(k) matching contributions will be used to reduce future employer 401(k)
matching contributions, while forfeitures from shares allocated to the
participants will be allocated among the participants in the same way as for
contributions. There were 457,808 shares allocated in the years 2001, 2000 and
1999. The Company recorded compensation expense of $5,437,000, $1,773,000 and
$2,790,000 for the ESOP for the years ended December 31, 2001, 2000 and 1999,
respectively.

                                       85
<Page>

     RECOGNITION AND RETENTION PLAN. The Company maintains the 1998 Recognition
and Retention Plan (the "RRP"), which was implemented in July 1998, for the
directors and officers of the Bank. The objective of the RRP is to enable the
Company to provide officers and directors of the Bank with a proprietary
interest in the Company as an incentive to contribute to its success. During
1998, the RRP purchased 3,438,500 shares of the Company or 4% of the common
stock sold in the Conversion on the open market. These purchases were funded by
the Bank. Awards vest at a rate of 20% per year for directors and officers,
commencing one year from the date of award. Awards become 100% vested upon
retirement, termination of employment due to death or disability or upon change
of control. The Company recorded compensation expense of $5,991,000, $6,313,000
and $6,025,000 for the RRP for the years ended December 31, 2001, 2000 and 1999,
respectively.

     The following table sets forth the activity in the RRP:

<Table>
<Caption>
                                 2001                             2000                       1999
                      ------------------------------      --------------------      -----------------------
                       Number                              Number     Weighted       Number        Weighted
                        of               Weighted            of        Average         of          Average
                       Shares          Average Price       Shares       Price        Shares         Price
                      -------          -------------      -------     --------      -------        --------
<S>                   <C>                 <C>             <C>           <C>         <C>             <C>
Granted                    --             $   --           58,400       $ 8.93       36,400         $ 9.23
Vested                597,010              10.09          619,340        10.12      595,060          10.13
Forfeited              13,690              10.03            4,740        10.13       10,650          10.13
Shares available      369,430                             355,740                   409,400
</Table>

     STOCK OPTION PLAN. The Company maintains the 1998 Stock Option Plan (the
"Stock Option Plan"). Pursuant to the Stock Option Plan, the Company has
reserved 8,596,250 shares of common stock for future issuance, which is equal to
10% of the common stock sold in the Conversion. Under the Stock Option Plan,
stock options (which expire 10 years from the date of grant) have been granted
to the directors, officers and certain employees of the Bank and the Mortgage
Company. Each option entitles the holder to purchase one share of the Company's
common stock at an exercise price equal to the fair market value of the stock at
the date of the grant. Options will be exercisable in whole or in part over the
vesting period. The options vest ratably over a three-to five-year period.
However, all options become 100% exercisable in the event the employee
terminates his or her employment due to retirement, death or disability or upon
change of control.

     The Company accounts for the Stock Option Plan using the intrinsic value
method prescribed in APB No. 25. For the year ended December 31, 2001,
compensation expense was recorded on all outstanding options equal to the
difference between the option exercise price and the fair market value of the
Company's common stock at the exercise date or at the financial reporting date,
whichever is earlier. The resulting non-cash charge to compensation expense for
the year ended December 31, 2001 was $27,234,000. No compensation expense was
recorded during the years ended December 31, 2000 and 1999 as the market price
of the Company's common stock was below the option exercise prices. As mentioned
in Note 1, above, effective September 24, 2002,the Company has reestablished the
Stock Option Plan as a fixed plan under APB No 25.

                                       86
<Page>

     SFAS No. 123, "Accounting for Stock-Based Compensation," encourages but
does not require companies to record compensation cost for stock-based employee
compensation plans at fair value rather than the intrinsic value-based method.
The following table compares reported net income and earnings per share on a pro
forma basis, assuming that the Company accounted for stock based compensation
under SFAS 123. The effects of applying SFAS No. 123 in this pro forma
disclosure are not indicative of future amounts.

<Table>
<Caption>
                                              2001
                                           (Restated)                     2000                         1999
                                           ----------                   -------                      -------
                                                                   (000's omitted)
<S>                                          <C>                        <C>                          <C>
Net income:
     As reported                             $45,733                    $53,926                      $52,875
     Pro forma                                45,733                     53,926                       52,875
Earnings per share:
     As reported--
         Basic                                  0.76                       0.80                         0.70
         Diluted                                0.75                       0.80                         0.70
     Pro forma--
         Basic                                  0.76                       0.80                         0.70
         Diluted                                0.75                       0.80                         0.70
</Table>

     STOCK OPTION ACTIVITY. The following table sets forth stock option activity
and the weighted average fair value of options granted:

<Table>
<Caption>
                                          2001                         2000                         1999
                                  ------------------------    ------------------------      ---------------------
                                                 Weighted                     Weighted                   Weighted
                                    Number        Average       Number         Average        Number      Average
                                     of          Exercise        of           Exercise         of        Exercise
                                   Options        Price        Options          Price        Options       Price
                                  ---------      ---------    ---------       --------      ---------    --------
<S>                              <C>              <C>        <C>                <C>        <C>            <C>
Options outstanding,
  beginning of year               6,155,600       $11.34      6,092,000         $11.37      6,112,000     $11.44
     Options granted              1,484,920        14.27         90,000           9.11        182,000       9.31
     Options exercised            (324,858)        11.25             --             --             --         --
     Options forfeited             (69,400)        11.28       (26,400)          11.44      (202,000)      11.44
                                 ----------                  ----------                    ----------
Options outstanding, end of year  7,246,262        11.95      6,155,600          11.34      6,092,000      11.37
                                 ==========                  ==========                    ==========
Remaining options
  available for grant under plan  1,025,130                   2,440,650                     2,504,250
Exercisable options, end
  of year                         3,391,542        11.40      2,516,800          11.41      1,252,400      11.44
Weighted average fair
  value of options granted       $     3.89                  $     3.42                    $     3.39
</Table>

     The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model using the following weighted
average assumptions:

                                       87
<Page>

<Table>
<Caption>
                              2001     2000     1999
                             -----    -----    -----
<S>                          <C>      <C>      <C>
Risk-free interest rate       4.50%    5.50%    5.50%
Expected dividend yield       2.70     2.70     2.70
Volatility                   30.74    30.42    29.92
Expected life in years           6        6        6
</Table>

     The following table shows stock options which were outstanding and stock
options which were exercisable as of December 31, 2001.

<Table>
<Caption>
                            Options Outstanding                                         Options Exercisable
----------------------------------------------------------------------------    -------------------------------------
                                               Weighted
                                               Average
                            Outstanding       Remaining          Weighted        Exercisable
Range of Exercise              as of       Contractual Life       Average           as of            Weighted Average
     Prices                 12/31/2001        (in years)      Exercise Price      12/31/2001          Exercise Price
--------------------        -----------    ----------------   --------------     -----------         ----------------
     <S>                     <C>                 <C>              <C>             <C>                    <C>
     $ 8.040-$10.050           237,600           8.0              $ 9.255            62,400              $ 9.329
     $10.050-$12.060         5,527,542           6.0               11.438         3,329,142               11.438
     $12.060-$14.070           116,520           9.6               13.026                 0                  n/a
     $14.070-$16.080         1,364,600           9.7                14.38                 0                  n/a
                             ---------                                            ---------

                             7,246,262           6.8              $11.946         3,391,542              $11.399
                             =========                                            =========
</Table>

     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. In 1993, the Company adopted a
Supplemental Executive Retirement Plan (the "Executive Plan") for certain senior
officers that provides for payments upon retirement, death or disability. The
Company amended the Executive Plan to freeze future benefit accruals on December
31, 1999. The annual benefit is based upon annual salary (as defined) plus
interest. Net periodic pension expense for the Executive Plan for the years
ended December 31, 2001, 2000 and 1999 was approximately $134,000, $105,000 and
$556,000, respectively.

11. INCOME TAXES

     The provision for income taxes consists of the following:

<Table>
<Caption>
                                2001        2000       1999
                              --------    --------   --------
                                      (000's omitted)
<S>                           <C>         <C>        <C>
Current:
  Federal                     $ 33,613    $ 22,790   $ 26,353
  State and Local                4,433       3,528      5,554
                              --------    --------   --------
                                38,046      26,318     31,907
Deferred                       (14,080)      6,590      3,352
                              --------    --------   --------
                              $ 23,966    $ 32,908   $ 35,259
                              ========    ========   ========
</Table>

                                       88
<Page>

     The following table reconciles the federal statutory rate to the Company's
effective tax

<Table>
<Caption>
                                                                       December 31, 2001
                                                               -------------------------------
                                                                                 Percentage of
                                                                Amount           Pretax Income
                                                               --------          -------------
                                                                       (000's omitted)
<S>                                                            <C>                   <C>
Federal tax at statutory rate                                  $ 24,395              35.0%
State and local income taxes                                       (601)             (0.9)
Tax-exempt dividend income                                         (895)             (1.3)
Increase in cash surrender value of BOLI                         (2,525)             (3.6)
Amortization of goodwill                                          1,609               2.3
Other                                                             1,983               2.9
                                                               --------            ------
  Income tax provision                                         $ 23,966              34.4%
                                                               ========            ======

<Caption>
                                                                       December 31, 2000
                                                               -------------------------------
                                                                                 Percentage of
                                                                Amount           Pretax Income
                                                               --------          -------------
                                                                       (000's omitted)
<S>                                                            <C>                   <C>
Federal tax at statutory rate                                  $ 30,392              35.0%
State and local income taxes                                      2,565               3.0
Tax-exempt dividend income                                       (1,357)             (1.6)
Increase in cash surrender value of BOLI                         (2,388)             (2.8)
Amortization of goodwill                                          1,738               2.0
Other                                                             1,958               2.3
                                                               --------            ------
  Income tax provision                                         $ 32,908              37.9%
                                                               ========            ======

<Caption>
                                                                        December 31, 1999
                                                               -------------------------------
                                                                                 Percentage of
                                                                Amount           Pretax Income
                                                               --------          -------------
                                                                       (000's omitted)
<S>                                                            <C>                   <C>
Federal tax at statutory rate                                  $ 30,847              35.0%
State and local income taxes                                      4,475               5.0
Tax-exempt dividend income                                       (1,425)             (1.6)
Increase in cash surrender value of BOLI                           (926)             (1.0)
Amortization of goodwill                                            318               0.4
Other                                                             1,970               2.2
                                                               --------            ------
  Income tax provision                                         $ 35,259              40.0%
                                                               ========            ======
</Table>

                                       89
<Page>

     The following is a summary of the income tax (liability) receivable at
December 31, 2001 and 2000:

<Table>
<Caption>
                                 2001         2000
                               --------    --------
                                  (000's omitted)
<S>                            <C>         <C>
Current taxes                  $(26,367)   $ (5,691)
Deferred taxes                   31,735      25,340
                               --------    --------
                               $  5,368    $ 19,649
                               ========    ========
</Table>

     The components of the net deferred tax asset at December 31, 2001 and 2000
are as follows:

<Table>
<Caption>
                                           2001     2000
                                         -------   -------
                                           (000's omitted)
<S>                                      <C>       <C>
Assets:
  Contribution to Foundation             $ 2,353   $ 5,537
  Allowance for loan losses                8,702     5,868
  Postretirement benefit accrual           2,234     1,984
  Non-accrual loans                          740       517
  Deferred compensation                      969       975
  ESOP shares                              1,983     1,485
  Unrealized loss on AFS securities           --     6,049
  Deferred loss on impaired securities     6,515        --
  Deposit premium                          1,137        --
  Stock options                           11,652        --
  Other                                   10,824     8,969
                                         -------   -------
    Total assets                          47,109    31,384
                                         -------   -------
Liabilities:
  Bad debt recapture under Section 593       833     1,250
  Pension plan and curtailment gain        2,818     2,288
  Fixed-asset tax basis adjustment           708       662
  Bond discounts                           1,499     1,115
  Unrealized gain on AFS securities        7,842        --
  Loan servicing asset                     1,553        --
  Other                                      121       729
                                         -------   -------
    Gross deferred tax liability          15,374     6,044
                                         -------   -------
    Net deferred tax asset               $31,735   $25,340
                                         =======   =======
</Table>

     At December 31, 2001 and 2000, the deferred tax asset is included in other
assets in the accompanying consolidated financial statements.

     The net deferred tax asset at December 31, 2001 and 2000 represents the
anticipated federal, state and local tax benefits that are expected to be
realized in future years upon the utilization of the underlying tax attributes
comprising this balance. Based upon current facts, management believes it is
more likely than not that the results of future operations will generate
sufficient taxable income to realize the deferred tax assets. However, there can
be no assurance about the level of future earnings.

                                       90
<Page>

     BAD DEBT DEDUCTION. Through January 1, 1996, under Section 593 of the
Internal Revenue Code, thrift institutions such as the Bank, which met certain
definitional tests primarily relating to their assets and the nature of their
business, were permitted to establish a tax reserve for bad debts and to make
annual additions thereto, which additions may, within specified limitations, be
deducted in arriving at their taxable income. The Bank's deduction with respect
to "qualifying loans," which are generally loans secured by certain interests in
real property, was computed using an amount based on the Bank's actual loss
experience (the "Experience Method") or a percentage equal to 8% of the Bank's
taxable income (the "PTI Method"), computed without regard to this deduction and
with additional modifications and reduced by the amount of any permitted
addition to the non-qualifying reserve. Similar deductions or additions to the
Bank's bad debt reserve are permitted under the New York State Bank Franchise
Tax; however, for purposes of these taxes, the effective allowable percentage
under the PTI Method was approximately 32% rather than 8%.

     Effective January 1, 1996, Section 593 was amended, and the Bank is unable
to make additions to its federal tax bad debt reserve, however the Bank is
permitted to deduct bad debts only as they occur and is additionally required to
recapture (i.e., take into taxable income) over a six-year period, beginning
with the Bank's taxable year beginning on January 1, 1996, the excess of the
balance of its bad debt reserves as of December 31, 1995 over the balance of
such reserves as of December 31, 1987, or over a lesser amount if the Bank's
loan portfolio has decreased since December 31, 1987. Such recapture
requirements have been deferred for taxable years through December 31, 1997 as
the Bank originated a minimum amount of certain residential loans based upon the
average of the principal amounts of such loans originated by the Bank during its
six taxable years preceding January 1, 1996. The recapture requirement amount
for the year 2001 was $1.2 million. In addition, in the event of certain
distributions or a complete liquidation, the Bank would be required to recapture
pre-1988 reserve method deductions of $11.6 million. Management has no intention
of taking any such actions.

     The New York State and New York City tax law has been amended to prevent a
similar recapture of the Bank's bad debt reserve and to permit continued future
use of the bad debt reserve method for purposes of determining the Bank's New
York State and New York City tax liability. This change also provides for an
indefinite deferral of the recapture of the bad debt reserves generated for New
York State and New York City purposes.

     Should the Bank fail to meet certain statutory tests, including maintaining
at least 60% of its assets in certain qualifying assets, the Bank would be
required to include into taxable income the amount that the State and City tax
bad debt reserves exceed the corresponding Federal reserve . As of December 31,
2001 the Bank has not provided any tax liability for recognition of the Bank's
excess State and City reserves of approximately $90 and $95 million,
respectively. In addition, the Bank's qualifying asset percentage exceeded the
60% threshold at December 31, 2001.

     STATE, LOCAL AND OTHER TAXES. The Company files state and local tax returns
on a calendar-year basis. State and local taxes imposed on the Company primarily
consist of New York State franchise tax, New York City Financial Corporation
tax, Delaware franchise tax and

                                       91
<Page>

state taxes for an additional 40 states. These additional state taxes are
attributable to the operation of SIB Mortgage Corp. Inc., which has offices in
these additional locations. The Company's annual liability for New York State
and New York City purposes is the greater of a tax on income or an alternative
tax based on a specified formula. Liability for other state taxes are determined
in accordance with the applicable local tax code. The Company's liability for
Delaware franchise tax is based on the lesser of a tax based on an authorized
shares method or an assumed par value capital method; however, under each
method, the Company's total tax will not exceed $150,000.

12. COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS

     In the normal course of business, there are various outstanding commitments
and contingent liabilities, such as standby letters of credit and commitments to
extend credit, which are not reflected in the accompanying consolidated
financial statements. The Company uses the same policies in making commitments
as it does for on-balance sheet instruments. No material losses are anticipated
as a result of these transactions. The Company is contingently liable under
standby letters of credit in the amount of $4.4 million and $4.8 million at
December 31, 2001 and 2000, respectively. In addition, at December 31, 2001 and
2000, mortgage loan commitments and unused balances under revolving credit lines
approximated $1.04 billion and $469.5 million, respectively. As of December 31,
2001 and 2000, the Mortgage Company had commitments to sell loans of $856.2
million and $218.6 million, respectively.

     At December 31, 2001, the Bank had available a $50.0 million line of credit
at the Federal Home Loan Bank of New York and two Federal Funds lines of credit
for $25.0 million and $10.0 million at two commercial banking institutions.
These lines of credit were not in use at December 31, 2001. At December 31,
2001, the Mortgage Company had one line of credit for $150.0 million with a
financial institution. At December 31, 2001, the Mortgage Company had $66.3
million outstanding on this line of credit. In February 2002, the Mortgage
Company obtained an additional $150.0 million line of credit with another
financial institution.

     Total operating rental commitments on branch offices and other facilities,
which expire at various dates through May 2015, exclusive of renewal options,
are as follows (000's omitted):

<Table>
                   <S>                                 <C>
                   2002                                $ 4,299
                   2003                                  3,360
                   2004                                  2,862
                   2005 and thereafter                   5,791
                                                       -------
                                                       $16,312
                                                       =======

</Table>

     Rental expense included in the consolidated statements of income was
approximately $3,549,000, $2,213,000 and $1,648,000 for the years ended December
31, 2001, 2000 and 1999, respectively.

     In the ordinary course of business, the Bank has extended credit to various
directors, officers and their associates of the Company and its subsidiaries.
For aggregate loans

                                       92
<Page>

outstanding to related parties as of December 31, 2001, see the last paragraph
in Note 6, above, "Loans."

13. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

     CASH AND DUE FROM BANKS AND FEDERAL FUNDS SOLD. For these short-term
instruments, the carrying amount is a reasonable estimate of fair value.

     ACCRUED INTEREST. The carrying amount is a reasonable estimate of fair
value.

     SECURITIES AVAILABLE FOR SALE. Fair values for securities are based on
quoted market prices or dealer quotes. If a quoted market price is not
available, fair value is estimated using quoted market prices for similar
securities.

     LOANS. For loans, fair value is based on the credit and interest rate
characteristics of individual loans. These loans are stratified by type,
maturity, interest rate, underlying collateral, where applicable, and credit
quality ratings. Fair value is estimated by discounting scheduled cash flows
through estimated maturities using discount rates which in management's opinion
best reflect current market interest rates that would be charged on loans with
similar characteristics and credit quality. Credit risk concerns are reflected
by adjusting cash flow forecasts, by adjusting the discount rate or by adjusting
both.

     DEPOSIT LIABILITIES. The fair value of demand deposits, savings accounts
and certain money market deposits is the amount payable on demand at the
reporting date. The fair value of fixed-maturity certificates of deposit is
estimated using the rates currently offered for deposits of similar remaining
maturities.

     Demand deposits, savings accounts and certain money market deposits are
valued at their carrying value. In the Company's opinion, these deposits could
be sold at a premium based on management's knowledge of the results of recent
sales of financial institutions in the New York City area.

     ADVANCES FROM BORROWERS FOR TAXES AND INSURANCE. The carrying amount is a
reasonable estimate of fair value.

     BORROWED FUNDS. Fair value is based on discounted contractual cash flows
using rates which approximate the rates offered for borrowings of similar
remaining maturities.

     DERIVATIVE FINANCIAL INSTRUMENTS. The fair value of derivative financial
instruments is estimated based on quoted market prices.

     LOAN COMMITMENTS. Fair values for loan commitments are based on fees
currently charged to enter into similar

                                       93
<Page>

agreements, taking into account the remaining terms of the agreements and the
counterparties' credit standing, and are not significant since fees charged
are not material.

                                       94
<Page>

     The estimated fair values of the Company's financial instruments are as
follows (000's omitted):

<Table>
<Caption>
                                                      December 31, 2001
                                           ---------------------------------
                                           Carrying Amount        Fair Value
                                           ---------------       -----------
                                                     (Restated)
<S>                                         <C>                  <C>
Financial assets:
  Cash and due from banks                   $   116,846          $   116,846
  Federal funds sold                             38,000               38,000
  Securities available for sale               1,528,639            1,528,639
  Loans                                       4,012,253            4,052,237
    Less--Allowance for loan losses             (20,041)                  --
  Accrued interest receivable                    28,601               28,601
Financial liabilities:
  Savings and demand deposits                 1,817,428            1,817,428
  Certificates of deposit                     1,083,900            1,092,441
  Borrowed funds                              2,451,762            2,561,196
  Advances from borrowers for
    taxes and insurance                          17,495               17,495
  Accrued interest payable                       14,812               14,812
  Derivative financial instruments                1,020                1,020

<Caption>
                                                    December 31, 2000
                                           ---------------------------------
                                           Carrying Amount        Fair Value
                                           ---------------       -----------
                                                     (Restated)
<S>                                         <C>                  <C>
Financial assets:
  Cash and due from banks                   $    92,103          $    92,103
  Federal funds sold                             12,000               12,000
  Securities available for sale               1,888,946            1,888,946
  Loans                                       2,978,501            2,988,491
    Less--Allowance for loan losses             (14,638)                  --
  Accrued interest receivable                    30,905               30,905
Financial liabilities:
  Savings and demand deposits                 1,397,629            1,397,629
  Certificates of deposit                       947,584              948,650
  Borrowed funds                              2,241,011            2,277,774
  Advances from borrowers for
    taxes and insurance                          11,534               11,534
  Accrued interest payable                       26,969               26,969
</Table>

                                       95
<Page>

14. EARNINGS PER SHARE RECONCILIATION

     The following table is the reconciliation of basic and fully diluted EPS as
required under SFAS No. 128 for the years ended December 31, 2001, 2000 and
1999.

<Table>
<Caption>
                                                       For the Year Ended
                                                 December 31, 2001 (Restated)
                                          -----------------------------------------
                                                           Weighted
                                                        Average Shares  Per Share
                                            Net Income   Outstanding      Amount
                                          ------------  --------------  -----------
                                          (000's omitted, except per share amounts)
<S>                                          <C>           <C>         <C>
Basic EPS:
  Net income                                 $45,733       60,180      $   0.76
Effect of Dilutive Securities:
  Incremental shares from
  assumed exercise of
  outstanding options                             --          955         (0.01)
                                             -------       ------      --------
Diluted EPS                                  $45,733       61,135      $   0.75
                                             =======      =======      ========

<Caption>
                                                       For the Year Ended
                                                       December 31, 2000
                                          -----------------------------------------
                                                           Weighted
                                                        Average Shares  Per Share
                                            Net Income   Outstanding      Amount
                                          ------------  --------------  -----------
                                          (000's omitted, except per share amounts)
<S>                                          <C>           <C>         <C>
Basic EPS:
  Net income                                 $53,926       67,021      $   0.80
Effect of Dilutive Securities:
  Incremental shares from
  assumed exercise of
  outstanding options                             --           --            --
                                             -------       ------      --------
Diluted EPS                                  $53,926       67,021      $   0.80
                                             =======       ======      ========
</Table>

                                       96
<Page>

<Table>
<Caption>
                                                       For the Year Ended
                                                       December 31, 1999
                                          -----------------------------------------
                                                           Weighted
                                                        Average Shares  Per Share
                                            Net Income   Outstanding      Amount
                                          ------------  --------------  -----------
                                          (000's omitted, except per share amounts)
<S>                                          <C>           <C>         <C>
Basic EPS:
  Net income                                 $52,875       75,757      $   0.70
Effect of Dilutive Securities:
  Incremental shares from
  assumed exercise of
  outstanding options                             --           --            --
                                             -------       ------      --------
Diluted EPS                                  $52,875       75,757      $   0.70
                                             =======       ======      ========
</Table>

15. SEGMENT REPORTING

     The Company manages its operations in a manner to focus on two strategic
goals: fulfilling its role as a banking institution for both individuals and
businesses and as a national provider of single-family residential mortgage loan
products. Accordingly, the Company aligns its various business objectives in
support of these goals and manages the Company through two segments: Community
Banking and Mortgage Banking.

     COMMUNITY BANKING. The Company's Community Banking segment provides
traditional banking services to commercial and retail customers generally
located in areas in relatively close proximity to the Bank's branch office
locations in Staten Island and Brooklyn, New York, and New Jersey. The services
include deposit accounts and related services, residential and commercial real
estate lending, consumer lending, commercial lending, loan servicing, trust
services and life insurance products. Products and services offered by this
business segment are delivered through a multichannel distribution network,
including on-line banking.

     MORTGAGE BANKING. In November 1998, the Company formed SIB Mortgage Corp.
to enter the mortgage banking business by acquiring the assets of Ivy Mortgage
Corp. In 1999, 2000 and 2001, it was the goal of the Mortgage Company to expand
geographically to grow the level of originations and to be able to attain a
profitable level of originations in all interest rate environments.

     The Company's Mortgage Banking segment activities, which are conducted
principally through SIB Mortgage Corp., d/b/a "Ivy Mortgage," include primarily
the production of residential real estate loans either for the sale into the
secondary market or, to a lesser extent, for retention in the Company's
portfolio. The loans are originated through a network of retail and net branches
in 42 states. Loans not retained for the Company's portfolio are sold to
investors, including certain government agencies. Loans originated in 2001 were
$4.0 billion of primarily fixed-rate and adjustable-rate residential loans, and
loans sold were $2.9 billion.

                                       97
<Page>

     The segment operating revenue and operating earnings in the table below
incorporate certain intersegment transactions that the Company views as
appropriate for purposes of reflecting the contribution of certain segments,
which are eliminated in preparation of the Company's consolidated financial
statements in accordance with generally accepted accounting principles. Certain
corporate costs are not allocated between the two business segments.

SEGMENT REPORTING TABLE

<Table>
<Caption>
                                                               December 31, 2001 (Restated)
                                       ---------------------------------------------------------------------------
                                                                                 Elimination of
                                                                                  Intersegment
                                       Mortgage Banking     Community Banking         Items               Total
                                       ----------------     -----------------    --------------        ----------
                                                                     (000's omitted)
<S>                                       <C>                  <C>                  <C>                <C>
Operating revenue                         $  121,072           $  155,523           $  (972)           $  275,623
Operating expenses                            95,522              101,645                 --              197,167
Net income                                    13,017               33,328              (612)               45,733
Assets at year-end                         1,486,040            4,519,625              (612)            6,005,053

<Caption>
                                                                    December 31, 2000
                                       ---------------------------------------------------------------------------
                                                                                 Elimination of
                                                                                  Intersegment
                                       Mortgage Banking     Community Banking         Items               Total
                                       ----------------     -----------------    --------------        ----------
                                                                     (000's omitted)
<S>                                       <C>                   <C>                 <C>                <C>
Operating revenue                         $   29,030            $ 156,200           $  (984)           $  184,246
Operating expenses                            30,639               66,121                 --               96,760
Net income                                   (1,291)               55,802              (585)               53,926
Assets at year-end                           310,923            4,930,526              (585)            5,240,864

<Caption>
                                                                    December 31, 1999
                                       ---------------------------------------------------------------------------
                                                                                 Elimination of
                                                                                  Intersegment
                                       Mortgage Banking     Community Banking         Items               Total
                                       ----------------     -----------------    --------------        ----------
                                                                     (000's omitted)
<S>                                       <C>                  <C>                  <C>                <C>
Operating revenue                         $   22,155           $  148,014           $  (907)           $  169,262
Operating expenses                            25,579               57,392                --                82,971
Net income                                   (2,308)               55,714              (531)               52,875
Assets at year-end                            59,688            4,403,157              (531)            4,462,314
</Table>

                                       98
<Page>

16. STATEN ISLAND BANCORP, INC.

     The following condensed statements of financial condition as of December
31, 2001 and 2000 and condensed statements of income and cash flows for each of
the years in the three-year period ended December 31, 2001 represent the
parent-company-only financial information and should be read in conjunction with
the consolidated financial statements and the notes thereto.

CONDENSED STATEMENTS OF FINANCIAL CONDITION

<Table>
<Caption>
                                                       December 31,
                                              -----------------------------
                                              2001 (Restated)        2000
                                              ---------------     ---------
                                                      (000's omitted)
<S>                                              <C>              <C>
Assets:
  Cash                                           $  11,580        $   9,980
  Securities available for sale                     69,450          118,849
  Investment in Bank                               479,760          441,961
  ESOP loan receivable from Bank                    34,631           36,497
  Other assets                                      11,419           13,007
                                                 ---------        ---------
    Total assets                                 $ 606,840        $ 620,294
                                                 =========        =========
Liabilities:
  Loan payable to Bank                           $  40,062        $  33,191
  Accrued interest and other liabilities             2,975            1,571
                                                 ---------        ---------
    Total liabilities                               43,037           34,762
                                                 ---------        ---------
Stockholders' equity:
  Common stock                                         903              451
  Additional paid-in capital                       569,959          537,744
  Retained earnings                                317,208          291,345
  Unallocated ESOP shares                          (30,215)         (32,962)
  Unearned RRP shares                              (14,333)         (19,784)
  Less--Treasury stock (27,773,338 and
  20,418,650 shares at December 31, 2001
  and 2000, respectively), at cost                (289,469)        (188,321)
  Accumulated other comprehensive
    income (loss), net of tax                        9,750           (2,941)
                                                 ---------        ---------
      Total stockholders' equity                   563,803          585,532
                                                 ---------        ---------
      Total liabilities and
        stockholders' equity                     $ 606,840        $ 620,294
                                                 =========        =========
</Table>

                                       99
<Page>

CONDENSED STATEMENTS OF INCOME

<Table>
<Caption>
                                                          December 31,
                                         -------------------------------------------
                                         2001 (Restated)      2000            1999
                                         ---------------    --------        ---------
                                                        (000's omitted)
<S>                                         <C>             <C>             <C>
Income:
  Investment income                         $  5,159        $  9,395        $ 12,222
  Other interest income                           50              41             172
  Interest income ESOP loan                    2,954           3,101           3,236
  Other income                                   600             386              76
  Loss on sale of investments                 (1,341)           (590)         (5,555)
                                            --------        --------        --------
                                               7,422          12,333          10,151
Expenses:
  Interest expense                             3,819           4,390           1,675
  Other expense                                  423             348             483
                                            --------        --------        --------
  Income before provision for
    income taxes and equity in
    undistributed earnings of Bank             3,180           7,595           7,993
  Provision for income taxes                   1,676           3,119           3,830
                                            --------        --------        --------
    Income before equity in
      undistributed earnings of Bank           1,504           4,476           4,163
Equity in undistributed
  earnings of Bank                            44,229          49,450          48,712
                                            --------        --------        --------
    Net income                              $ 45,733        $ 53,926        $ 52,875
                                            ========        ========        ========
</Table>

                                       100
<Page>

CONDENSED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                          December 31,
                                            ------------------------------------------
                                            2001 (Restated)      2000            1999
                                            ---------------   ---------      ---------
                                                        (000's omitted)
<S>                                            <C>            <C>            <C>
Cash flows from operating activities:
  Net income                                   $  45,733      $  53,926      $  52,875
  Adjustments to reconcile net income
  to net cash provided by operating
     activities--
      Undistributed earnings of Bank             (44,229)       (49,450)       (48,712)
      Amortization of bond and
          mortgage premium                            --             (2)            74
      Loss on sale of available-for-sale
          securities                               1,341            590          1,737
      Decrease in accrued
          interest receivable                        278             87            171
      Decrease (increase) in
          other assets                             1,493           (689)            --
      (Decrease) increase in accrued
          interest payable                         1,404            447            (13)
      Decrease (increase) in deferred
          income taxes                                --         (1,676)         5,539
                                               ---------      ---------      ---------
          Net cash provided by
            operating activities                   6,020          3,233         11,671
                                               ---------      ---------      ---------
Cash flows from investing activities:
  Decrease in investment in Bank                  60,000         20,000         80,000
  Maturities of available-for-sale
      securities                                      --             --          7,428
  Sales of available-for-sale securities          75,072         52,828         66,205
  Purchases of available-for-sale
      securities                                 (24,449)       (18,538)       (66,771)
  Principal collected on ESOP loan                 1,866          1,720          1,584
                                               ---------      ---------      ---------
          Net cash provided by
               investing activities              112,489         56,010         88,446
                                               ---------      ---------      ---------
Cash flows from financing activities:
  Increase in borrowings                           6,871         33,191             --
  Dividends paid                                 (19,418)       (18,764)       (16,974)
  Purchase of treasury stock                    (104,362)       (67,172)       (93,669)
                                               ---------      ---------      ---------
          Net cash used in
               financing activities             (116,909)       (52,745)      (110,643)
                                               ---------      ---------      ---------
          Net increase (decrease) in
              cash and cash equivalents            1,600          6,498        (10,526)
Cash and cash equivalents,
    beginning of year                              9,980          3,482         14,008
                                               ---------      ---------      ---------
Cash and cash equivalents,
    end of year                                $  11,580      $   9,980      $   3,482
                                               =========      =========      =========
</Table>

                                       101
<Page>

17.  RESTATEMENT

     The Company has restated its financial results for the year ended December
31, 2001 due to certain adjustments which are summarized below.

     During the third quarter of 2002, management determined that certain stock
options issued under the Company's Amended and Restated 1998 Stock Option Plan
(the "Stock Option Plan") were exercised under a net cash settlement method,
whereby the Company, in effect, repurchased the option shares under the
Company's on-going stock repurchase programs and remitted the excess of the fair
market value of the shares over the exercise price to the employee. Under
existing accounting standards, the existence of these transactions conducted in
this manner required that compensation expense be recorded from the inception
date of the plan, on all exercised, or vested and unexercised, options equal to
the difference between the option exercise price and the fair value of the stock
at the exercise date (or at the financial reporting date, whichever is earlier).
Increases or decreases in the value of the stock options are subsequently
reflected as additional charges or credits to compensation expense in the
respective financial reporting period during the time in which this exercise
method was allowed. Primarily as a result of variable plan accounting on the
Stock Option Plan, other expenses for the year ended December 31, 2001,
increased by $28.6 million (pre-tax) from the previously reported amount.
Effective September 24, 2002, the Company discontinued the practice which led to
this accounting treatment; therefore, for quarterly reporting periods subsequent
to September 30, 2002, no additional charges or credits to compensation expense
will occur as a result of this plan activity.

     Management also determined that certain securities (primarily
collateralized bond obligations "CBOs") with a total carrying value of $24.5
million were other than temporarily impaired at December 31, 2001, and,
accordingly, impairment charges of $14.5 million (pre-tax) are reflected in the
Company's restated financial statements at and for the year ended December 31,
2001. This adjustment does not affect total stockholders' equity at December 31,
2001, as this charge was previously reflected as unrealized depreciation at
December 31, 2001, which is shown as a component of stockholders' equity. The
Company previously took impairment charges of $500,000 (pre-tax) and $7.4
million (pre-tax) for the three months ended March 31, 2002 and June 30, 2002,
respectively, against these securities; these charges have been reversed in the
respective quarters, and quarterly pre-tax income increased by these same
amounts. During the quarter ended September 30, 2002, the Company sold all of
its remaining $14.3 million of CBOs as part of a securities portfolio
restructuring.

     The Company had not previously reflected dividends paid on unallocated
shares in its Employee Stock Ownership Plan ("ESOP") as compensation expense. As
a result, the Company has restated its financial statements to reflect
additional compensation expense of $1.4 million (pre-tax) for the year ended
December 31, 2001. The Company will record future dividends on unallocated
shares as compensation expense.

     The Company previously recognized revenues and expenses on loans when loans
were sold by the Mortgage Company, subject to take out commitments. From the
time a loan is shipped to the time payment is received by the Mortgage Company,
a period of five to 30 days

                                       102
<Page>

typically elapses. The Company has now determined that gains on loans sold
should be recognized at the time payment is received rather than at the time
loans are shipped. Due to this timing difference, the Company's restated
financial results reflect a reduction of gain on loan sales of $2.8 million
(pre-tax) for the year ended December 31, 2001 compared to the previously
reported amount.

     Additionally, the Company has revised certain estimates related to deferred
loan origination costs and fees and its restated financial statements reflect an
increase in net deferred costs of $1.1 million (pre-tax) compared to the
previously reported amount for the year ended December 31, 2001. Changes in net
deferred costs are reflected in the income statement as increases or decreases
to gain on sale of mortgage loans.

     The Company's restated financial statements also reflect previously
unrecorded market appreciation in unallocated forward sale commitments by the
Mortgage Company of $1.0 million (pre-tax) for the year ended December 31, 2001.

     The following is a summary of the effect of restatement on the Company's
consolidated financial statements at or for the periods reflected.

<Table>
<Caption>
                                                                                  Selected Balance Sheet Data
                                                                                      At December 31, 2001
                                                                             --------------------------------------
                                                                              As Previously                As
                                                                                 Reported                Restated
                                                                             --------------            ------------
                                                                                        000's omitted
<S>                                                                             <C>                     <C>
Loans held for sale                                                             $1,187,373              $1,185,593
Other assets                                                                       189,558                 202,945
Total assets                                                                     5,993,446               6,005,053
Additional paid-in capital                                                         543,123                 569,959
Retained earnings                                                                  340,270                 317,208
Accumulated other comprehensive income, net of tax                                   1,917                   9,750
Total stockholders' equity                                                         552,196                 563,803
</Table>

                                       103
<Page>

<Table>
<Caption>
                                                                                 Summary Income Statement Data
                                                                             For the Year Ended December 31, 2001
                                                                             -------------------------------------
                                                                              As Previously               As
                                                                                 Reported              Restated
                                                                             --------------          -------------
                                                                             000's omitted, except per share data
<S>                                                                              <C>                   <C>
Loan fees and gains                                                              $109,249              $108,489
Securities transactions, losses                                                     (107)              (14,613)
Total other expense                                                               168,570               197,167
Income before provision for income taxes                                          113,562                69,699
Provision for income taxes                                                         43,483                23,966
Net income                                                                         70,079                45,733
Earnings per share
Basic                                                                                1.16                  0.76
Diluted                                                                              1.15                  0.75
</Table>

<Table>
<Caption>
                                                                                    Selected Cash Flow Data
                                                                             For the Year Ended December 31, 2001
                                                                             -------------------------------------
                                                                              As Previously               As
                                                                                 Reported              Restated
                                                                             --------------          -------------
                                                                                         000's omitted
<S>                                                                          <C>                     <C>
Net Income                                                                   $       70,079          $      45,733

Adjustments to reconcile net income to net cash provided by (used in)
  operating activities:
     Realized loss on sale of available for sale securities                             107                 14,613
     Expense charge relating to allocation and earned portions of
        employee benefit plans                                                       10,066                 39,973
     (Increase) in other assets                                                     (35,503)               (41,770)
     (Increase) decrease in deferred income taxes                                       235                (14,080)
        Net cash provided by (used in) operating activities                         (70,798) (1)          (984,680)

Cash flows from investing activities:
     Net cash provided by (used in) investing activities                           (670,995) (1)           388,683

Cash flows from financing activities:
     Cash dividends paid                                                            (21,179)               (19,418)
     Net cash provided by financing activities                                      650,940  (1)           646,740

Net increase in cash and cash equivalents                                    $       50,743  (2)     $      50,743
</Table>

----------
(1)  The previously reported amounts for net cash provided by (used in)
     operating activities, investing activities and financing activities have
     been adjusted for the effect of the restatement.

(2)  As indicated, there has been no change in the net increase in cash and cash
     equivalents as a result of the restatement or due to reclassifications.

                                       104
<Page>

18. TREASURY STOCK

     The Company purchased 7.7 million and 7.5 million treasury shares at an
aggregate cost of $104.4 million and $67.2 million during the years 2001 and
2000, respectively. During 2001, 324,858 shares were reissued for the exercise
of stock options. As of December 31, 2001 there are 27.8 million shares held as
treasury stock. In October 2001, the Company announced its eighth stock
repurchase program for 3.2 million shares of the Company's common stock which
represented 5% of the outstanding common stock. At December 31, 2001, 2.6
million shares remained to be repurchased from this program. The number of
shares have been adjusted for the 2-for-1 stock split in November, 2001. See
"Common Stock" in Note 1, above.

19. QUARTERLY FINANCIAL DATA (UNAUDITED)

     Selected unaudited quarterly financial data for the years ended December
31, 2001 and 2000 is presented below. All share amounts, including earnings per
share, cash dividends declared per share and stock price amounts have been
adjusted to reflect the stock dividend:

<Table>
<Caption>
                                                    Fourth               Third            Second           First
                                                    Quarter             Quarter           Quarter          Quarter
                                                  (Restated)          (Restated)        (Restated)       (Restated)
                                                  ----------          ----------        ----------       ----------
                                                               (000's omitted, except per share data)
<S>                                                <C>                 <C>               <C>              <C>
2001:
Interest income                                    $ 95,624            $ 93,977          $ 92,704         $ 90,678
Interest expense                                     49,542              52,073            54,124           54,839
Net interest income                                  46,082              41,904            38,580           35,839
Provision for loan losses                             4,957               2,600               600              600
Service and fee income                                4,958               4,793             4,701            4,890
Loan fees and gains                                  45,732              30,162            20,953           11,642
Securities transactions                            (14,677)                  61                 9              (6)
Non-interest expense                                 79,415              36,148            46,594           35,010
Income before income taxes                          (2,277)              38,172            17,049           16,755
Income taxes                                        (3,417)              15,557             6,124            5,702
Net income                                            1,140              22,615            10,925           11,053

Earnings per share
    Basic                                          $   0.02            $   0.37          $   0.18         $   0.18
    Diluted                                            0.02                0.37              0.17             0.18

Cash dividends declared
  per common share                                 $   0.09            $   0.08          $   0.08         $   0.07

Stock price per common share
    High                                           $  17.20            $  18.05          $  14.37         $  12.72
    Low                                               12.17               11.27             12.15             9.97
    Close                                             16.31               12.32             13.92            12.45
</Table>

                                       105
<Page>

<Table>
<Caption>
                                                    Fourth               Third            Second           First
                                                    Quarter             Quarter           Quarter          Quarter
                                                  ----------          ----------        ----------       ----------
                                                               (000's omitted, except per share data)
<S>                                                <C>                 <C>               <C>              <C>
2000:
  Interest income                                  $ 91,654            $ 86,540          $ 84,204         $ 81,406
  Interest expense                                   55,193              53,150            49,073           45,704
  Net interest income                                36,461              33,390            35,131           35,702
  Provision for loan losses                             611                  12                11               18
  Service and fee income                              4,634               4,262             3,903            4,079
  Loan fees and gains                                 9,035               8,329             5,580            4,309
  Securities transactions                               173                 416              (934)            (224)
  Non-interest expense                               26,335              24,786            23,281           22,358
  Income before income taxes                         23,357              21,599            20,388           21,490
  Income taxes                                        8,751               7,938             7,892            8,327
  Net income                                         14,606              13,661            12,496           13,163

  Earnings per share--
    Basic                                          $   0.22            $   0.21          $   0.18         $   0.19
    Diluted                                            0.22                0.21              0.18             0.19

Cash dividends declared
  per common share                                 $   0.07            $   0.07          $   0.06         $   0.06

  Stock price per common share--
    High                                           $  10.97            $  10.00          $   9.06         $   9.47
    Low                                                8.81                8.41              7.81             7.91
    Close                                             10.69               10.00              8.81             8.56
</Table>

20. COMPREHENSIVE INCOME

     Accounting principles generally require that recognized revenue, expenses,
gains and losses be included in net income. Although certain changes in assets
and liabilities, such as unrealized gains and losses on available-for-sale
securities, are reported as a separate component of the equity section of the
balance sheet, such items, along with net income, are components of
comprehensive income.

                                       106
<Page>

     The components of other comprehensive income and related tax effects are as
follows:

<Table>
<Caption>
                                                       Years Ended December 31,
                                               -----------------------------------
                                                  2001         2000          1999
                                               ---------    ---------    ---------
                                                          (000's omitted)
<S>                                            <C>          <C>          <C>
Unrealized holding gains (losses)
    on available for sale securities           $   8,656    $  60,373    $(101,981)

Reclassification adjustment for
   losses realized in income                      14,613          569        5,531
                                               ---------    ---------    ---------

Net unrealized gains (losses)                     23,269       60,942      (96,450)

Tax effect                                       (10,578)     (29,252)      46,297
                                               ---------    ---------    ---------

Net-of-tax amount                              $  12,691    $  31,690    $ (50,153)
                                               =========    =========    =========
</Table>

                                       107
<Page>

THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP. THIS REPORT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP AND ARTHUR
ANDERSEN LLP DID NOT CONSENT TO THE USE OF THIS REPORT IN THIS FORM 10-K/A OR
ANY PREVIOUSLY FILED REGISTRATION STATEMENTS.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
Staten Island Bancorp, Inc.:

     We have audited the accompanying consolidated statements of financial
condition of Staten Island Bancorp, Inc. (a Delaware corporation) and subsidiary
as of December 31, 2001 and 2000, and the related consolidated statements of
income, changes in stockholders' equity and cash flows for each of the three
years in the period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Staten
Island Bancorp, Inc. and subsidiary as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.

/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP

New York, New York
January 16, 2002

SUBSEQUENT TO THE DATE OF THIS REPORT, THE CONSOLIDATED STATEMENT OF FINANCIAL
CONDITION AS OF DECEMBER 31, 2001 AND THE RELATED CONSOLIDATED STATEMENTS OF
INCOME, CHANGES IN STOCKHOLDERS' EQUITY AND CASH FLOWS FOR THE YEAR THEN ENDED
WERE AUDITED BY PRICEWATERHOUSECOOPERS LLP WHOSE REPORT APPEARS ON PAGE 109 OF
THIS ANNUAL REPORT ON FORM 10-K/A. SEE THE EXPLANATORY NOTE PRECEDING ITEM 1 AND
NOTE 17 OF THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 8 OF
THIS ANNUAL REPORT ON FORM 10-K/A FOR A DISCUSSION OF THE RESTATEMENT. CERTAIN
CHANGES ALSO HAVE BEEN MADE TO THE ORIGINAL NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS, WITH RESPECT TO WHICH ARTHUR ANDERSEN LLP DID NOT AUDIT THE CHANGES.

                                       108
<Page>

Report of Independent Accountants

To the Board of Directors and
Stockholders of Staten Island Bancorp, Inc.

In our opinion, the accompanying consolidated statement of condition as of
December 31, 2001 and the related consolidated statements of income, of changes
in stockholders' equity and of cash flows present fairly, in all material
respects, the financial position of Staten Island Bancorp, Inc. and its
subsidiary (the "Company") at December 31, 2001, and the results of its
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion. The Company's financial statements as of
December 31, 2000, and for each of the two years in the period ended December
31, 2000, were audited by other independent accountants who have ceased
operations. Those independent accountants expressed an unqualified opinion on
those financial statements in their report dated January 22, 2001.

As discussed in Note 1, the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities."

As discussed in Note 17, the Company has restated its financial statements as of
December 31, 2001 and for the year then ended, previously audited by other
independent accountants who have ceased operations.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York

January 21, 2003

                                       109
<Page>

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

     On June 10, 2002, the Company ended the engagement of Arthur Andersen LLP
and retained PricewaterhouseCoopers LLP as its independent accountants. Such
change was recommended by the Audit Committee of the Company's Board of
Directors. At that time, the Company filed a Current Report on Form 8-K dated
June 10, 2002.

     Arthur Andersen LLP's reports on the Company's consolidated financial
statements as of and for the years ended December 31, 2000 and 2001 did not
contain an adverse opinion or a disclaimer of opinion, and were not qualified or
modified as to uncertainty, audit scope, or accounting principles. During the
two fiscal years ended December 31, 2000 and 2001 and through June 10, 2002,
there were no disagreements between the Company and Arthur Andersen LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Arthur Andersen LLP, would have caused Arthur Andersen LLP to
make reference to the disagreements in connection with their report on the
Company's consolidated financial statements for such years. During the fiscal
years ended December 31, 2000 and December 31, 2001 and through June 10, 2002,
there were no reportable events as defined in Item 304(a)(1)(v) of Regulation
S-K.

     The Company requested that Arthur Andersen LLP furnish it with a letter
addressed to the Securities and Exchange Commission stating whether or not
Arthur Andersen LLP agreed with the statements made by the Company in its June
10, 2002 Current Report on Form 8-K, and, if not, stating the respects in which
it did not agree. The Company provided Arthur Andersen LLP a copy of its
disclosures contained in its Current Report on Form 8-K. A copy of the letter
from Andersen stating that it found no basis for disagreement with such
disclosures was received and was attached as Exhibit 16 to the Company's Current
Report on Form 8-K, dated June 10, 2002.

     During the years ended December 31, 2000 and December 31, 2001 and through
June 10, 2002, the Company had not consulted PricewaterhouseCoopers LLP
regarding the application of accounting principles, either contemplated or
proposed, the type of audit opinion that might be rendered on the Company's
financial statements or any other matters that would be required to be reported
herein.

PART IV.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)  DOCUMENTS FILED AS PART OF THIS REPORT

(1)  The following financial statements are included in Item 8 hereof: Reports
     of Independent Auditors
     Consolidated Statements of Condition as of December 31, 2001 and 2000.

                                       110
<Page>

     Consolidated Statements of Income for the Years Ended
        December 31, 2001, 2000 and 1999.
     Consolidated Statements of Changes in Shareholders'
        Equity for the Years Ended December 31, 2001, 2000 and 1999.
     Consolidated Statements of Cash Flows for the Years
         ended December 31, 2001, 2000 and 1999.
     Notes to Consolidated Financial Statements.

(2)  All schedules for which provision is made in the applicable accounting
regulation of the SEC are omitted because of the absence of conditions under
which they are required or because the required information is included in the
consolidated financial statements and related notes thereto.
(3)  The following exhibits are filed as part of this Form 10-K, and this list
includes the Exhibit Index.

                                  EXHIBIT INDEX

<Table>
<S>               <C>
3.1*              Certificate of Incorporation of Staten Island Bancorp, Inc.
3.2*              Bylaws of Staten Island Bancorp, Inc.
4.0*              Specimen Stock Certificate of Staten Island Bancorp, Inc.
10.1*             Form of Employment Agreement among Staten Island Bancorp, Inc.,
                    SI Bank & Trust and certain executive officers.
10.2*             Form of Employment Agreement between Staten Island Bancorp, Inc.
                    and each of Harry P. Doherty and James R. Coyle.
10.3*             Form of Employment Agreement between SI Bank & Trust and each
                    of Harry P. Doherty and James R. Coyle.
10.4**            Amended and Restated 1998 Stock Option Plan
10.5**            Amended and Restated 1998 Recognition and Retention Plan and Trust
                    Agreement
10.6***           Deferred Compensation Plan
10.7****          Employment Agreement between the Bank and Ira Hoberman.
10.8*****         Supplemental Executive Retirement Plan (SERP)
10.9*****         Master Repurchase Agreement by and among Credit Suisse First
                    Boston Mortgage Capital LLC, SIB Mortgage Corp. and SI Bank &
                    Trust, dated December 14, 2001.
10.10*****        Master Repurchase Agreement by and among CDC Mortgage
                    Capital, Inc., SIB Mortgage Corp. and SI Bank & Trust, dated
                    February 12, 2002.
13.0*****         2001 Annual Report to Stockholders
21.0              Subsidiaries of the Registrant - Reference is made to "Item 1. "Business"
                    for the required information
23.0*****         Consent of Arthur Andersen, LLP
23.1              Consent of PricewaterhouseCoopers LLP
</Table>

----------

(*)       Incorporated herein by reference from the Company's Registration
           Statement on Form S-1 (Registration No. 333-32113) filed by the
           Company with the SEC.
(**)      Incorporated herein by reference from the Company's definitive proxy
           statement

                                       111
<Page>

            dated April 1, 2002.
(***)     Incorporated herein by reference from the Company's Annual Report on
           Form 10-K for the year ended December 31, 1998.
(****)    Incorporated herein by reference from the Company's Annual Report on
           Form 10-K for the year ended December 31, 2000.
(*****)   Previously filed on April 1, 2002 in the Company's Annual Report on
           Form 10-K.

(b)  REPORTS ON FORM 8-K

     Not applicable.

                                       112
<Page>

                                   SIGNATURES

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

                                      STATEN ISLAND BANCORP, INC.

Date:  February 7, 2003               By:  /s/ Harry P. Doherty
                                           -------------------------------------
                                           Harry P. Doherty
                                           Chairman and Chief Executive Officer


Date:  February 7, 2003               By:  /s/ Edward J. Klingele
                                           -------------------------------------
                                           Edward J. Klingele
                                           Senior Vice President and
                                            Chief Financial Officer

                                       113
<Page>

                                  CERTIFICATION

     I, Harry P. Doherty, Chief Executive Officer of Staten Island Bancorp,
Inc., certify that:

1.   I have reviewed this annual report on Form 10-K/A of Staten Island Bancorp,
     Inc.;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.

Date: February 7, 2003                  /s/ Harry P. Doherty
                                        ---------------------------------------
                                        Harry P. Doherty
                                        Chief Executive Officer

                                       114
<Page>

                                  CERTIFICATION

     I, Edward J. Klingele, Chief Financial Officer of Staten Island Bancorp,
Inc., certify that:

1.   I have reviewed this annual report on Form 10-K/A of Staten Island Bancorp,
     Inc.;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.

Date: February 7, 2003                  /s/ Edward J. Klingele
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                                        Edward J. Klingele
                                        Chief Financial Officer

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